Parmalat
From Wikipedia, the free encyclopedia
| Parmalat SpA | |
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| Type | Public (ISE: |
|---|---|
| Founded | 1961 (Collecchio, Italy) |
| Headquarters | Italy |
| Key people | Calisto Tanzi, Founder Fausto Tonna, former CFO |
| Industry | Food |
| Revenue |  €2,979 million (2006) |
| Net income | € 251 million (2006) |
| Employees | 15,834 (2006) |
| Website | http://www.parmalat.com/ |
Parmalat SpA (ISE: IT0003826473), is an Italian dairy and food corporation. Having become the leading global company in the production of UHT milk, the company nearly disappeared altogether following accusations of financial wrongdoing against founder Calisto Tanzi, on December 27, 2003. Today, Parmalat is a company with a global presence, having major operations in Europe, Latin America, North America, Australia and South Africa. Still specialising in UHT milk and milk derivatives (yoghurts, cheeses, butters, ice creams), the group also has an interest in fruit juices. These products are distributed under well-known brand names such as Lactis, Santal, Malù, and Kyr. Its worldwide operations include almost 140 production centres. Over 36,000 workers around the world collect Parmalat pay packets, and 5,000 Italian dairy farms are dependent on the company for the bulk of their business. Its stock is listed on the Milan Stock Exchange.
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[edit] History
In 1961, Calisto Tanzi, a 22-year old college dropout, opened a small pasteurisation plant in Parma, Italy. Four decades later the company had grown into a multinational corporation diversifying into milk, dairy, beverage, bakery, and other product lines in the 1980s, becoming listed on the Milan stock exchange in 1990, and expanding further in the 1990's.
[edit] Runaway expansion
The post-listing expansions include:
- Expansion into thirty countries from six in 1990
- Parma A.C.
- Brazilian Formula One racing driver Pedro Diniz.
- Tanzi's son Stefano, president and Parmalat board member
- ParmaTour - travel group (bankrupt, sold)
- Francesca - chief executive
- TV network, Odeon TV (sold)
[edit] Financial fraud
At the end of 2003, one of the biggest corporate scandals in history came to light as an € 8 billion hole was discovered in Parmalat's accounting records.
It was in 1997 that Parmalat jumped into the world financial markets in a big way, financing several international acquisitions, especially in the Western Hemisphere, with debt. But by 2001, many of the new divisions were producing losses, and the company financing shifted largely to the use of derivatives, apparently at least in part with the intention of hiding the extent of its losses and debt.
In February 2003, chief financial officer Fausto Tonna unexpectedly announced a new €500 million bond issue. This came as a surprise both to the markets and to the CEO, Tanzi. Tanzi fired Tonna and replaced him as CFO with Alberto Ferraris.
According to an interview he later gave Time magazine, Ferraris was surprised to discover that, though now CFO, he still didn't have access to some of the corporate books, which were being handled by chief accounting officer Luciano Del Soldato. He began making some inquiries and began to suspect that the company's total debt was more than double that on the balance sheet.
The crisis became public in November when questions were raised about transactions with mutual fund Epicurum, another Cayman-based company linked to Parmalat causing its stock to plummet. Ferraris resigned less than a week later and was replaced by Del Soldato.
In December, Del Soldato resigned, unable to get cash from Epicurum fund, needed to pay debts and make bond payments. Enrico Bondi was called in to help the company. Tanzi himself resigned as chairman and CEO. Parmalat's bank, Bank of America, then released a document showing €3.95 billion in Bonlat's bank account as a forgery. Prime Minister Silvio Berlusconi initiated a fraud investigation and appointed Bondi to administer the company's rescue.
Calisto Tanzi, once a symbol of unlimited success, was detained hours after the firm was declared officially insolvent and eventually charged with financial fraud and money laundering. Italians were shocked that such a vast and established empire could crumble so quickly. Among the questionable accounting practices used by Parmalat: it sold itself credit linked notes, in effect placing a bet on its own credit worthiness in order to conjure up an asset out of thin air.
After his arrest, Tanzi reportedly admitted during questioning at Milan's San Vittore prison, that he diverted funds from Parmalatinto Parmatour and elsewhere. The family football and tourism enterprises were financial disasters; as well as Tanzi's attempt to rival Berlusconi (another rags-to-riches Italian success story) by buying Odeon TV, only to sell it at a loss of about €45 million.
[edit] See also
[edit] External links
- Parmalat International Website
- BBC "Parmalat in Bankruptcy Protection" December 24, 2003
- Parmalat dream goes sour; The Observer; January 4, 2004
- How It All Went So Sour - The inside story of Parmalat; Time Magazine; November 23, 2004.
- There is Something about Parmalat (On Directors and Gatekeepers); Simone di Castri and Francesco Benedetto on ssrn.com.
