Parmalat Scandal, 2003

INTRODUCTION
• Parmalat SpA is a dairy and food corporation founded in 1961
• In coming year became a multinational conglomerate
• Having become the leading global company in the production of long-life milk
using ultra-high-temperature processing
• the company collapsed in 2003 
• At time of crisis, Parmalat listed 214 subsidiaries in 48 different countries.
• With a $20bn hole in its accounts in what remains Europe's biggest bankruptcy.
 TIMELINE

200 200 200 200 200 200

3 4 5 6 7 9
 FINANCIAL FRAUD
IN PARAMALAT SCANDAL

• In 1990, the company’s South American subsidiary began generating

losses
• more unethical accounting conventions and self-dealing
• The fraud was eventually discovered in 2003, when Parmalat defaulted
on a €150 million bond issue despite reporting more than €4 billion in
cash and equivalents on its balance sheet.
 AFTERMATH
• December 2003: Parmalat shares delisted from stock exchange in Milan.
• 22 December 2003: The Italian government pushes for a quick bankruptcy settlement
• 27 December 2003: Parmalat is officially declared insolvent
• 2004:  Bank of America’s chief personally received more than $27 million from Parmalat delivered to a Swiss
bank account.
• 2005: Parmalat is re-listed on the Milan exchange
• 2008: Former CFO Fausto Tonna is sentenced to two and a half years in prison
• July 2009: Bank of America agrees to pay $100 million to settle charges that it helped Parmalat executives
perpetuate he fraud.
• 2010: Former CEO Calisto Tanzi is sentenced to 18 years in prison (at the age of 72).
Conclusion