(), is an
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 specialising 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 worn following his
1976 German Grand Prix incident.
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.
The post-listing expansions include:
At the end of 2003, one of the biggest
Corporate Scandal s in history came to light as an
€ 8 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.
Calisto Tanzi, once a symbol of unlimited success, was detained hours after the firm was declared officially insolvent and eventually charged with financial s, 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
Parmalat into Parmatour and elsewhere. The family
Football and tourism enterprises were financial disasters; as well as Tanzi's attempt to rival
Berlusconi (another rags-to-riches Italian success story) by buying Odeon TV, only to sell it at a loss of about €45 million.
