Bank of America Denies Role in Parmalat Collapse

The bank fights charges that it knew about the financial woes of the Italian milk company.
Stephen TaubJune 25, 2007

Defending its role in Italy’s biggest corporate scandal, Bank of America said it lost about $450 million because of the 2003 bankruptcy of Parmalat. “It will take a great deal of time before Bank of America is able to recoup those losses for our own shareholders through our continuing business in your country,” the bank stated.

In a statement, BofA acknowledged that many individual savers had invested in Parmalat bonds and stock. But the bank asserted that it “never sold a single Parmalat bond to any individual investors in Italy or in the U.S.”

The bank also acknowledged that it is the target of civil and criminal charges that it “knew of the true financial condition of Parmalat.” However, it asserted, after more than three years of investigations, it continues to be convinced that “nothing could be further from the truth.”

On Monday, BofA technical consultants were in court in Milan testifying about the relationship between the bank and Parmalat, according to the Associated Press.

“We are hopeful that all doubts on this issue will have been put to rest, and that we can start to end the enormous diversion of time and resources of both the Italian people and ourselves on this matter,” the company said in its statement.

Last week, Parmalat announced that it settled civil lawsuits stemming from the company’s collapse with three major international banks for a total of 72 million euros, or more than $96 million. Merrill Lynch agreed to pay Parmalat 29 million euros, or $39 million; Banca Monte Parma agreed to pay 35 million euros, or $46.91 million; and ING Bank agreed to pay 8 million euros, or $10.72 million.

Parmalat pointed out that it still has suits pending against Bank of America, Grant Thornton, and Citigroup in the United States.