Parmalat files lawsuit against Deutsche Bank
Monday, August 9th 2004, 10:08 am
By: News On 6
ROME (AP) _ Struggling dairy giant Parmalat said Monday it had filed suit against Deutsche Bank for 17 million euros ($20 million) _ the Italian company's third attempt to win restitution from international financial institutions after a massive fraud scandal.
The now-insolvent Parmalat Finanziaria SpA, which is under government-appointed administration, added that it is also asking for interest on the sum from former adviser Deutsche Bank SpA.
Parmalat, which filed the case at a court in its hometown of Parma, seeks to recover the debt its previous management repaid Deutsche Bank in December 2003 _ shortly before the dairy company was forced to declare insolvency.
A Deutsche Bank official in Italy said that the bank had no immediate comment on the case.
Parmalat's new administration argues that the transaction came at the expense of other creditors. Parmalat also said it reserves the right to seek damages in addition to the money it hopes to recover in the current suit.
The global food and dairy conglomerate is reportedly working on more suits against banks as part of a plan to recover some of the 14 billion euros in debt held by its creditors.
Over the last two weeks, Parmalat administrator Enrico Bondi filed two other suits: one seeking 290 million euros ($350 million) from Swiss bank UBS, and another seeking 8.3 billion euros ($10 billion) from Citigroup Inc.
Bondi believes that the financial institutions either abetted the company in disguising its true financial state or received money from Parmalat at the expense of other creditors when there were clear indications its finances were worse than the company had stated.
The Parmalat scandal exploded in December when the conglomerate acknowledged it didn't have the $5 billion (4 billion euros) it had claimed was in an account held by North Carolina-based Bank of America. Parmalat then went into bankruptcy protection, and prosecutors have been investigating numerous former members of the management.
Investigators in Parma have focused on the company's founder and its top officials, while Milan prosecutors have been looking into the possible role of investment banks and other financial institutions, as well as accounting businesses.
International financial institutions have insisted that they were misled by Parmalat's fraudulent bookkeeping.
Bondi is working on a restructuring plan to save Parmalat that involves slashing the number of brands from 120 to 30 and concentrating on core products, like milk, yoghurt and juice.
The plan, recently approved by the Italian government, also includes a debt-to-equity swap that offers bondholders shares in a new company being set up out of the ashes of the insolvent conglomerate.