Italian prosecutors demand Parmalat trial

Prosecutors investigating Italian food group Parmalat called for 29 executives and three financial institutions to stand trial for crimes in the multi-billion-euro scandal, a judicial source has said.

On the list were Parmalat founder Calisto Tanzi and the Italian affiliates of auditors Deloitte & Touche and Grant Thornton, along with that of Bank of America, for their dealings with the now-insolvent multinational, said the source, who requested anonymity.

After three months of investigations, the call for a trial by prosecutors in Milan marked a turning point in the scandal that has shaken Italy and called into question the role of some of the world's biggest banks and auditors.

Parmalat, a household name from Russia to Brazil, stunned financial markets in December when it revealed a massive hole in its accounts and slid into insolvency. Its debts have since been revealed to be more than €14 billion.

Prosecutors on Thursday handed 40 binders, including 150 interrogation transcripts, to a judge who must now decide whether to order a trial.

"(The company) could not have done all this with a couple of false documents," said Giampiero Biancolella, a lawyer for Mr Tanzi who has argued his client was not the only one to blame.

"We will see who was at the helm."

Bank of America said it would defend itself against any charges. "We do not believe that the proposed charges against our company are supported by the facts, and we will defend ourselves vigorously," the bank said in a statement.

Thursday's list included three former Bank of America employees as well as Mr Tanzi's son and his brother, former Parmalat board members and outside auditors, the source said.

All those named were accused of market-rigging - conspiring to issue false information about Parmalat's finances that misled the market. The crime is punishable by up to 10 years in jail.

Other charges sought by the prosecutors include false auditing and regulatory obstruction.

Parmalat's near collapse hit the pockets of thousands of Italian savers already smarting from other financial scandals.

But investors on Thursday said their main concern was to recover some of the missing billions, not hefty jail sentences.

"We do not want just exemplary jail sentences," said Domenico Bacci, a spokesman for investors' group Siti. "Whoever is responsible for this should pay investors back."

Under a draft rescue plan drawn up by its administrators this week, Parmalat will sell assets and swap debt for equity and may also sue banks that did business with the group.

Parmalat's administrator Enrico Bondi wants to meet creditors next week to start discussions of his rescue plan, a source close to the new management of Parmalat said on Thursday.

Prosecutors had up to yesterday, or 90 days from the start of the inquiry, to ask a judge to approve fast-track proceedings for the first batch of executives to be investigated.

Under the accelerated process, there would be no preliminary hearing - a stage which can take years to complete - and defendants could go to trial perhaps as early as next month.

If the judge were to reject the fast-track bid, prosecutors would have to seek more evidence before suspects could be tried.

Grant Thornton's former Italian unit, now renamed Italaudit, declined to comment on the trial request. Grant Thornton International said the charges, if proved, would be a "most serious breach of trust" by its former affiliate.

Deloitte said it had not been informed of a bid for a fast-track trial but said it was cooperating with the inquiry. It denied wrongdoing by its two auditors under investigation.

Thursday's request by prosecutors accused both audit firms of failing to create the mechanisms to spot company fraud.

The judicial source said prosecutors could present by late March or early April a second request for other Parmalat-linked executives and financial institutions to stand trial.

In addition to Bank of America, six foreign and Italian financial institutions are also being probed, reports have said.

Fifteen people, including Mr Tanzi, are under arrest. In a separate arm of the probe in Parma, near Parmalat's headquarters, prosecutors are investigating possible fraud within the group, with dozens of people under investigation for suspected false accounting and fraudulent bankruptcy.

The Parma prosecutors do not plan a fast-track trial. They have until June for their probe before preliminary hearings.

Authorities in the United States, Luxembourg, the Netherlands, Switzerland, Brazil, the Cayman Islands and Austria are also investigating possible crimes across Parmalat's units.