Italy court targets foreign banks in fraud case

30th July 2009, Comments 0 comments

The 12 staff members from US bank JPMorgan, Germany's Depfa Bank and Deutsche Bank, and Swiss bank UBS are suspected of fraud during the renegotiation of the city's debt.

Milan -- Italian prosecutors will seek to charge executives from four foreign banks with fraud against the city of Milan, a court official told AFP on Tuesday.

The 12 staff members from US bank JPMorgan, Germany's Depfa Bank and Deutsche Bank, and Swiss bank UBS are suspected of fraud during the renegotiation of the city's debt.

Two former city officials are also accused in the case.

Prosecutors in Milan have now completed their investigation and will request that the accused face charges, the official said.

Milan has put potential losses from the deal at 300 million euros (425 million dollars), although the city says the full impact will not be clear for some years.

The case dates back to 2005, when the northern Italian city took a 1.7 billion euro loan as part of efforts to restructure its debt.

The charges allege that the banks did not inform the city of the risks carried by the financial derivative products that they issued in connection with the deal.

In addition, the bankers are accused of falsely promising Milan that the plan would help it make savings.

The banks allegedly made a 100 million euro profit from the debt renegotiation deal, according to prosecutors.

Milan has said the full cost to the city will only be known in 2035, when the final repayment of the loan is due.

Italian financial investigators in April seized hundreds of millions of euros belonging to the banks and the former officials.

AFP/Expatica

0 Comments To This Article