Risk & Compliance

Parmalat Accountants on the Defensive

Among those named are Italian affiliates of auditors Deloitte & Touche and Grant Thornton.
Stephen TaubMarch 23, 2004

Parmalat’s accountants helped falsify the food giant’s books and failed to blow the whistle on its finances soon enough, stated a document prepared by Italian prosecutors, according to Reuters.

Late last week prosecutors identified 29 people and three institutions that they want to put on trial for their role in Parmalat’s accounting scandal. According to the wire service, they are accused of market-rigging, false auditing, and regulatory obstruction.

Among those named are Italian affiliates of auditors Deloitte & Touche and Grant Thornton.

“It emerged that, over the years, auditors helped the group falsify its books or certified balance sheets knowing they were false; in some cases…they pushed away local auditors who were honest and/or too curious,” reported Reuters, quoting the document.

The prosecutors produced evidence to the judge that seven people had “formally or substantially” admitted they were guilty of the accusations, added the wire service.

Those who denied wrongdoing had known about various false statements by Parmalat yet “never asked for nor drew up checks nor even denounced such evident and known circumstances to [regulator] Consob or justice authorities,” prosecutors reportedly stated.

According to Reuters, Deloitte denied wrongdoing by its two auditors under investigation; Grant Thornton’s former Italian unit, renamed Italaudit, declined to comment.

Prosecutors also accused three former Bank of America employees of helping Parmalat on the financial markets despite knowing the true state of its finances, stated Reuters. The employees had “secretly drawn enormous personal benefit from the group’s work with BofA” — a benefit totaling more than $40 million, reported the wire service.