Parmalat Frauds
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Transcript of Parmalat Frauds
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Parmalat's Fraud
Bipul Suman
Jaipuria Institute of Management JaipurGargi Shukla
R.A.Poddar
Institute of Management
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Current ScandalsCurrent Scandals
o Enron
o Parmalat Europes Enron (2003)
o Satyam Indias Enron (2008)
o Madoff Worlds largest Ponzi Scheme
o + 35 other scandals so far totaling $37 Billion
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Company History
1961Calisto Tanzi, a 22-year old college dropout, opened a small
pasteurization plant in Parma, Italy.
1980Grown into a multinational corporation diversifying into milk,dairy, beverage, bakery and other product lines.
1990
listed on the Milan stock exchange in, and expanding furtherin the 1990s.
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Principal Divisions
o Bakery
o Fresh Foods
o Milk
o Vegetables.
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Business of Parmalat
http://en.wikipedia.org/wiki/File:Parmalat_logo.svg -
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Type Public
Founded 1961
Founder(s) Calisto Tanzi
Headquarters Collecchio, Italy
Key people Raffaele Picella (Chairman of the
board), Enrico Bondi (CEO)
Industry Food processing
Products Milk and dairy products, fruit juice, tea
Revenue 3.940 billion (2008)
Operating income 738.8 million (2008)
Profit 673.1 million (2008)
Employees 14,170 (2008)
Website http://www.parmalat.com/
http://en.wikipedia.org/wiki/File:Parmalat_logo.svg -
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Other Social investments undertaken
where [ Losses Incurred]
o GermanFormula 1
o Football Club
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Parmalat across the world
ItalyPortugalRomaniaRussia
AustraliaBotswanaCanadaColombia
CubaEcuador
BrazilChileChinaDominican Republic
HungaryMexicoSpainUnited States of
AmericaUruguay
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The Founder of Parmalat
Calisto Tanzi
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People involved in the Scam
o Former Chief Financial
Officers(CFO)
Luciano Del Soldato &
Fausto Tonna
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Arrest of Calisto Tanzi
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1997o Parmalat jumped into financial markets
o Financing several companies by acquisitions with debt.
2001o New divisions producing losses.
o Losses shifted to the use of derivatives.
2003o CFO, FautoTonna announced a new 500 million bond issue.
o This annoncement of bond issue is surprise for market & CEO (Tanzi)
o CFO(Tonna)was fired & replaced by New CEO Alberto Ferrari.
The case of Parmalat
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o In an interview to Time magazine CFO surprise to discovered.
o He still didn't have access to some of the corporate books.
o He began making some inquiries and began to suspect that
o company's total debt >double that on the balance sheet.
Statements by New CFO
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Nov 2003
o Transaction with Mutual Fund Epicurum
o And another Cayman-based company linked to Parmalat
o Both of this transaction shown company some problem with its balance
o CFO Ferraris resigned
o Replaced by Del Soldato
December 2003o Unable to get cash from Epicuram Fund for
Payment of debts and also To make bond payment.
o The CFO Del Soldato resigned
o Worked for less than 1 month
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Finallyo Bank of America released a document showing 3.95 billion in bank
account as a forgery.
o CEO Tanzi resigned
o Company officially went bankrupt
o PM Silvio Berlusconi initiated & appointed Enrico Bondi was called to
help the company
o Bondi administer companiys rescue
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Who are under investigation
o Parmalat board members
o Internal auditors
o Parmalat executives
o Deloitte & Touche
o Grant Thornton
o Bank of America
o Lawyer Bank of America's Italian unit
o Deloitte & Touche
o Grant Thornton
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Parmalat scams impact w.r.t
companies:o To Revise Company Law Directive on the Statutory Audit
function.
o It will strengthen controls over the audit profession.
o Full group auditor responsibility for consolidated accounts of agroup of companies.
o Obligatory independent audit committees for listed companies.
o Stricter auditor rotation requirements
o Strengthened sanctions
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Queries????????
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Thank You
