Italian court clears German, US banks over Parmalat

18th April 2011, Comments 0 comments

An Italian court on Monday cleared US banks Morgan Stanley, Citigroup, Bank of America, along with Germany's Deutsche Bank of charges over their involvement in the collapse of food giant Parmalat.

Five officials from the respective banks were also cleared of charges that they had organised the sale of bonds in the company even though they knew it was broke.

In January, prosecutors said they would seek 120 million euros from the four banks -- 70 million from Citigroup, 30 million from Bank of America, 14 million from Deutsche Bank and 5.9 million from Morgan Stanley.

Prosecutors also askef for fines of 900,000 euros ($1.2 million) for each of the banks, as well as jail terms for two Morgan Stanley employees, two from Deutsche Bank and one from Citigroup.

After Parmalat collapsed in December 2003, investigations showed the group had been in trouble for many years, surviving only on the back of major falsifications of its balance sheets and sophisticated financial instruments.

Swiss banking giant UBS was initially charged in this case, which began in 2008, but reached a settlement.

Parmalat's collapse, dubbed "Europe's Enron," destroyed the savings of some 135,000 people, left a gaping 14-billion-euro hole in the company's finances and ruined the image of one of Italy's leading business empires.

The company's former head, Calisto Tanzi, was sentenced to 18 years in prison and ordered to pay two billion euros back to the company, which has since emerged from bankruptcy.

© 2011 AFP

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