Parmalat

Infobox_Company
company_name = Parmalat S.p.A.
company_
company_type = Public (ISE|IT0003826473|PLT)
company_slogan =
foundation = 1961 (Collecchio, Italy)
location = Italy
key_people = Calisto Tanzi, Founder

Fausto Tonna, former CFO

Enrico Bondi, former CEO
industry = Food
num_employees = 15,834 (2006)
revenue = profit €2,979 million (2006)
net_income = profit € 251 million (2006)
homepage = [http://www.parmalat.com/ www.parmalat.com]

Parmalat SpA (ISE|IT0003826473|PLT), is a multinational Italian dairy and food corporation. Having become the leading global company in the production of UHT (Ultra High Temperature) milk, the company nearly disappeared altogether following accusations of financial wrongdoing against founder Calisto Tanzi, on December 27 2003. Today, Parmalat is a company with a global presence, having major operations in Europe, Latin America, North America, Australia and South Africa. Still specializing in UHT milk and milk derivatives (varieties of yoghurt, cheese, butter, ice cream, etc.), the group also has an interest in fruit juices. These products are distributed under well-known brand names such as Lactis, Santal, Malù, and Kyr. Its worldwide operations include almost 140 production centres and more than 36,000 employees, while 5,000 Italian dairy farms are dependent on the company for the bulk of their business. Its shares are listed on the Milan Stock Exchange. Their name was notable outside Italy for being emblazoned on the cap of Niki Lauda, which he always wore following his 1976 German Grand Prix incident.

History

In 1961, Calisto Tanzi, a 22-year old college dropout, opened a small pasteurisation plant in Parma, Italy. Four decades later the company had grown into a multinational corporation diversifying into milk, dairy, beverage, bakery, and other product lines in the 1980s, becoming listed on the Milan stock exchange in 1990, and expanding further in the 1990s.

Runaway expansion

The post-listing expansions include:
* Expansion into thirty countries from six in 1990
* Parma A.C.
* Brazilian Formula One racing driver Pedro Diniz.
** Tanzi's son Stefano, president and Parmalat board member
* ParmaTour - travel group (bankrupt, sold)
** Francesca - chief executive
* TV network, Odeon TV (sold)

Financial fraud

At the end of 2003, one of the biggest corporate scandals in history came to light as a €4 billion hole was discovered in Parmalat's accounting records.

It was in 1997 that Parmalat jumped into the world financial markets in a big way, financing several international acquisitions, especially in the Western Hemisphere, with debt. But by 2001, many of the new divisions were producing losses, and the company financing shifted largely to the use of derivatives, apparently at least in part with the intention of hiding the extent of its losses and debt.

In February 2003, chief financial officer Fausto Tonna unexpectedly announced a new €500 million bond issue. This came as a surprise both to the markets and to the CEO, Tanzi. Tanzi fired Tonna and replaced him as CFO with Alberto Ferraris.

According to an interview he later gave Time magazine, Ferraris was surprised to discover that, though now CFO, he still didn't have access to some of the corporate books, which were being handled by chief accounting officer Luciano Del Soldato. He began making some inquiries and began to suspect that the company's total debt was more than double that on the balance sheet.

The crisis became public in November when questions were raised about transactions with mutual fund Epicurum, another Cayman-based company linked to Parmalat causing its stock to plummet. Ferraris resigned less than a week later and was replaced by Del Soldato.

In December, Del Soldato resigned, unable to get cash from Epicurum fund, needed to pay debts and make bond payments. Enrico Bondi was called in to help the company. Tanzi himself resigned as chairman and CEO. Parmalat's bank, Bank of America, then released a document showing €3.95 billion in Bonlat's bank account as a forgery. Prime Minister Silvio Berlusconi initiated a fraud investigation and appointed Bondi to administer the company's rescue. Hundreds of thousands of investors lost their money and will never recover them. The company had to bankrupt officially but the italian state made a forgery using the legal mean of "commissariamento". The same strategy applied to Alitalia, the bankrupt flying company.

Calisto Tanzi, once a symbol of unlimited success, was detained hours after the firm was declared officially insolvent and eventually charged with financial fraud and money laundering. Italians were shocked that such a vast and established empire could crumble so quickly. Among the questionable accounting practices used by Parmalat: it sold itself credit-linked notes, in effect placing a bet on its own credit worthiness in order to conjure up an asset out of thin air.

After his arrest, Tanzi reportedly admitted during questioning at Milan's San Vittore prison, that he diverted funds from [http://www.parmalat.com/ Parmalat] into Parmatour and elsewhere. The family football and tourism enterprises were financial disasters; as well as Tanzi's attempt to rival Berlusconi by buying Odeon TV, only to sell it at a loss of about €45 million.

Parmalat in the world (now)

Directed presence

*Italy
*Portugal
*Romania
*Russia
*Australia
*Botswana
*Canada
*Colombia
*Cuba
*Ecuador
*Mozambique
*Nicaragua
*Paraguay
*South Africa
*Swaziland
*Venezuela
*Zambia

Presence under licence

*Brasil
*Chile
*China
*Mexico
*Dominican Republic
*United States of America
*Hungary
*Uruguay

ee also

* List of Italian companies
* Corporate abuse
* Gianmario Roveraro
* Beppe Grillo
* Parmalat Bankruptcy Timeline

External links

* [http://www.parmalat.net Parmalat International Website]
* [http://news.bbc.co.uk/1/hi/business/3345735.stm BBC "Parmalat in Bankruptcy Protection"] December 24, 2003
* [http://observer.guardian.co.uk/business/story/0,6903,1115471,00.html Parmalat dream goes sour] ; The Observer; January 4, 2004
* [http://www.time.com/time/europe/magazine/article/0,13005,901041129-785318,00.html How It All Went So Sour - The inside story of Parmalat] ; Time Magazine; November 23, 2004.
* [http://ssrn.com/abstract=896940 There is Something about Parmalat (On Directors and Gatekeepers)] ; Simone di Castri and Francesco Benedetto on ssrn.com.