Parmalat scandal widens as founder named in probe

A four-billion euro accounting scandal at Italy's Parmalat snowballed yesterday as the food group's founder and two former finance directors became targets of a criminal probe.

Parmalat's new chairman and chief executive Enrico Bondi was also considering bankruptcy protection options while politicians mulled bailing out Italy's eighth-largest industrial concern in a case that many are calling "Europe's Enron".

Following Friday's shock revelation of a huge accounting hole at the company, which media reports said could widen to 10 billion euros, a judicial source said Parmalat's founder Calisto Tanzi had been put under investigation, a week after he stepped down as chairman and CEO.

Prosecutors also named two former finance directors, Alberto Ferraris and Luciano Del Soldato, in their probe into possible false accounting, fraud and market rigging at Italy's biggest food group, judicial sources said.

Parmalat, with 35,000 employees in 30 countries, stunned markets on Friday when it said a document showing 3.95 billion euros held by Cayman Islands unit Bonlat Financing Corp had been declared false by Bank of America.

Tanzi opened his first milk pasteurisation plant in 1961 and built a dairy and food group that racked up revenues of more than 7.5 billion euros last year.

Ferraris was Parmalat CEO from March until November, when he was replaced by Del Soldato - who held the post for just over three weeks before he quit on December 9.

Both were long-standing Parmalat employees.

The missing four billion euros dwarfs a one billion-euro accounting scandal at Dutch retailer Ahold and drew comparisons with the collapse of energy giant Enron.

Media reports said the hole could be as big as 10 billion euros, making it one of Europe's biggest accounting scandals.