Parmalat – Ten Years Since the Scandal

On December 19, 2003, Bank of America unmasked the scheme engineered by Parmalat founder Calisto Tanzi and his circle, and confirmed an almost 4 billion euro deficit for the company, which was born in Collecchio (in the province of Parma) in 1961. In the end, the total debt amounted to 14 billion.

184406723-c37b7c39-88fc-4f88-badb-27d5d9939794This chasm, a scandal greater than Enron (11 billion in 2001), was enough to devastate one of the few Italian multinational corporations, which controlled 130 societies around the world and had over 32,000 dependents. There were years of falsified balance sheets, nonexistent bank accounts, and reckless acquisitions, in what came to be defined as “the largest debt factory in European economic history,” wiping out tens of thousands of savers. The former owner, Tanzi, already 75 years old, was definitively sentenced to one year and 8 months of prison for stock manipulation, 18 years (with the possibility to appeal) for fraudulent bankruptcy with regard to the Parmalat crash, and 9 years by an intermediate appellate court for another of his possessions, Parmatour. Another 13 defendants, between managers and executives, were sentenced with the possibility to appeal. Tanzi is currently under house arrest in the hospital system in Parma, on account of his precarious health conditions. In mid-November, he plea-bargained 8 months for some works of art hidden from tax officials in a basement: paintings by Ligabue, Manet, Kandinsky, Picasso, Van Gogh, and others, which the entrepreneur had tried to salvage from the disaster. The multinational dairy corporation was put under temporary receivership and run by Enrico Bondi. In 2011, it passed into the hands of the French company Lactalis – but not without an operation that fomented disputes and controversy. Investigations followed on the sale to Parmalat of American holding LAG (Lactalis American Group) for more than one billion in cash.

The year 2013 closed with fewer margins and lower results. The crisis has worsened recently, and has forced Parmalat to review the guidelines on its balance sheets. The fault lies with the sudden weakness of demand in many important markets for the group: in Italy first of all (where the recession affects even basic items of consumption like milk), then in South Africa (where a wave of strikes has stalled the market), and Venezuela, which has been in difficulty for some months. What is more, there is a creeping increase in the price of milk on the part of the farmers. It is a mark-up that, given the weak market, cannot be entirely passed on to already reluctant consumers. The accounts, however, remain in the black: 190 million in the first nine months.

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