Parmalat restructured and re-listed in 2005

Parmalat restructured and re-listed in 2005

An Italian court has sentenced Parmalat founder Calisto Tanzi to 18 years in prison for his role in the 2003 collapse of the dairy firm.

Tanzi was convicted of fraudulent bankruptcy and criminal association for his role in one of Europe's largest corporate bankruptcies.

The Italian dairy group filed for bankruptcy in December 2003 when it emerged that a decade-long fraud had left the company EUR14bn (US$18.54bn) in debt, eight times higher than previously claimed.

The fraud became known when Parmalat admitted that a bank account supposedly holding EUR3.9bn did not exist. Prosecutors then discovered a global web of offshore companies and documents that had been falsified.

The court in Parma ruled that Tanzi, the company's former CFO Fausto Tonna, Tanzi's brother Giovanni and several other executives were guilty of fraud that led to Parmalat's bankruptcy. Tanzi and Tonna were also ordered to pay a combined EUR2bn to Parmalat.

The court also ordered those convicted to pay creditors 5% of the nominal value of the shares or bonds they had bought in Parmalat, estimated to be around EUR30m.

Nearly two years ago, Tanzi was sentenced to ten years in prison in a separate market-rigging trial, but he continues to live in his estate near Parma.

Tanzi plans to appeal the sentence, however, it is unusual for people of his age to serve prison time in Italy.

Parmalat was restructured and re-listed on the Milan stock exchange in 2005 after being stripped of its loss-making foreign units and has refocused on its core dairy business.

The re-listed company has managed to collect around EUR2bn from banks in exchange for dropping suits the dairy firm had lodged against them, alleging they had sustained the fraud.