Reuters: Bankruptcy News: UPDATE 1-Court trims founder jail term in Parmalat collapse

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UPDATE 1-Court trims founder jail term in Parmalat collapse Apr 23rd 2012, 10:31 By Stephen Jewkes BOLOGNA, April 23 | Mon Apr 23, 2012 6:31am EDT BOLOGNA, April 23 (Reuters) - An Italian appeal court shaved two months from an 18-year jail sentence for disgraced Parmalat founder Calisto Tanzi for spearheading the 14-billion-euro ($18.5 billion) collapse of his dairy products empire in a scandal dubbed "Europe's Enron". The sentence is one of the harshest ever issued in Italy, where jail terms for white-collar crimes are rare. The maker of long-life milk and fruit juices, now owned by France's Lactalis, buckled in December 2003 under a massive accounting hole that wiped out the savings of more than 100,000 small investors in its highly-rated corporate bonds. Tanzi, a billionaire who was Parmalat's chief executive at the time, was found guilty on charges of fraudulent bankruptcy and criminal conspiracy over what was then Europe's biggest corporate bankruptcy. He was not in court to hear the appeal court decision reducing his jail term to 17 years and 10 months from 18 years. "We will appeal the verdict in Italy's highest court," Tanzi's lawyer Fabio Belloni told Reuters. Prosecutors had pressed for a slight extension of the prison sentence for the 73-year-old entrepreneur, who is already in jail. His lawyer had asked for Tanzi, who suffers from serious heart problems, to be acquitted. Italy-based Parmalat became a major global player in the dairy food sector thanks to its pioneering of long-life milk in the 1960s. It owns several well-known global brands such as Santal fruit juices. Parmalat's accounting scandal erupted at the end of 2003 when it revealed that a Cayman Island bank account supposedly holding $4 billion did not exist. Management sought bankruptcy protection, and prosecutors launched a criminal fraud probe. Despite its investment-grade credit rating, concerns had swirled in the run-up to Parmalat's collapse over its failure to explain why it did not use the abundant cash shown on its balance sheet to slash debt. The appeal court in Bologna also cut to just below 10 years from 14 years a prison sentence for former Parmalat Chief Financial Officer Fausto Tonna, a major figure behind the fraud. Parmalat was restructured and relisted on the Milan bourse in 2005. It has recouped more than 2 billion euros from settlements with banks including U.S. investment banks Morgan Stanley and Merrill Lynch, now part of Bank of America. Link this Share this Digg this Email Reprints

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