Parmalat is Europe’s Enron.

By:

January 23, 2011

Parmalat is a corporate disaster comparable in size and complexity to its major U.S. rivals, and thus quickly call “Europe’s Enron.”
In Italy in 1961, Calisto Tanzi took over family preserved-meat business, which he went on to found as Parmalat. After going public in 1990, Parmalat expanded at a breakneck pace during the rest of the decade, acquiring operations in the United States, Germany, France, Brazil, and South Africa. From 1995 through 2003, Parmalat went to the bond market 35 times, accumulating over $5 billion in new liabilities. With over 36,000 employees around the world, Parmalat is one of the world's largest food businesses and is the eighth largest company in Italy. (Soltani, & Soltani, 2008)
In mid-November 2003 Parmalat defaulted on a $187 million bond payment. That pressed auditors and banks to inspect company accounts. Grant Thorton SPA served as auditors for Parmalat from 1990 to 1999. The scandal may have stayed undetected if not for Italian law which required that companies must to change audit firms every nine years. In 1999 Deloitte & Touche replaced a Grant Thornton company and was the first company who started scrutinizes the nonexistent accounts. Parmalat continued to retain the Grant Thornton as auditor firm for the Cayman Islands subsidiary called Bonlat and that aroused questions about role of Grant Thornton in the fraud. That subsidiary was supposedly held the $4.9 billion in Bank of America account in the Cayman Islands. “Auditors first inquired about the Cayman Islands account in December, 2002, and received a letter on Bank of America stationery in March, 2003, confirming the existence of the account. The letter was later found to be a well done forgery by someone in Parmalat’s Collecchio headquarters. Also under question was the 2003 buy back of $3.6 billion in