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Proposal would increase jail terms for public company executives from three to six years.
Marie Leone, CFO.com | US
October 31, 2007
A bill wending its way through the Italian Parliament aims to increase the penalties now in place for executives convicted of falsifying public company accounting documents, reported Dow Jones. The proposal, introduced by Prime Minister Romano Prodi's government on Tuesday, needs the Parliament's approval before it becomes law. The Prodi government currently holds a narrow margin in the Parliament, noted the wire service.
The bill increases the maximum prison term from three years to six years for individuals convicted of filing false accounting statements. The proposal also increases the statute of limitations for violations to 30 years, from the current seven-and-a-half years, added Dow Jones.
Similar to the infamous Enron accounting debacle and bankruptcy in the U.S., Italy's business landscape has been scarred by the accounting scandal and 2003 bankruptcy of Parmalat Finanziara SpA. In July, former Parmalat CFO Fausto Tonna and one-time CEO Calisto Tanzi, were among nearly two dozen individuals indicted by an Italian judge for their role in the dairy conglomerate's demise.
In addition, Parmalat's collapse pulled its audit firms, Deloitte & Touche SpA and Dianthus, as well as several banks into the fray. In August, Deloitte & Touche and Dianthus agreed to pay $149 million in damages to settle U.S. claims stemming from the bankruptcy. In June, three banks — Merrill Lynch, Banca Monte Parma SpA, and ING Bank — agreed to pay, in aggregate, more than $96 million to settle similar lawsuits.
Also in June, Citigroup Inc., UBS AG, Deutsche Bank AG and Morgan Stanley, as well as 13 managers from those banks were indicted in Milan for failing to take steps to prevent the crimes that caused the company's collapse.
Comparing the U.S. governent's reaction to Enron — specifically the passage of the Sarbanes Oxley Act — and Italy's reaction to the Parmalat scandal, Luigi Zingales of the University of Chicago told the Economist that his native Italy took "two years and lots of bickering" to get a new law after an Enronesque scandal at Parmalat.