Global Business

“I Warned Parmalat CFO”: Ex-Auditor

On trial in Italy, he says he saw an "accounting hole" developing six years before the big dairy company collapsed.
Stephen TaubJanuary 25, 2008

A former employee of Parmalat’s auditing firm says he was aware of financial irregularities at the dairy giant long before it failed.

Maurizio Bianchi, who had worked at Grant Thornton, says Parmalat had “an accounting hole” of 170 million euros six years before the Italian company collapsed in Europe’s largest bankruptcy, the Associated Press reported.

Bianchi was responding to prosecutors’ questions during a hearing in a trial in Milan. Together with Parmalat’s founder Calisto Tanzi and other former auditors and bankers, he is charged with market rigging, obstructing Italy’s market regulator, and falsifying audits, in relation to Parmalat’s 2003 failure.

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The former auditor says he reported his findings to then–Parmalat CFO Fausto Tonna, “but he told me to go ahead, and that the hole would have been filled in three years,” he told prosecutors, according to the AP report. Tonna was also charged in the Milan case and agreed to a 2 1/2-year sentence under a plea deal.

Bianchi previously was sentenced to nine years in prison in a fast-track proceeding for fraudulent bankruptcy.

When Parmalat’s scandal was finally uncovered in late 2003 and it was discovered that the accounting hole had grown to $14 billion, the company filed for bankruptcy.