Citigroup Files Suit Against Parmalat

Tuesday, October 5th 2004, 10:03 am

By: News On 6

ROME (AP) _ Financial services giant Citigroup Inc. has filed a suit in an Italian court complaining it has been treated unfairly by Parmalat's new administration following the dairy giant's bankruptcy filing.

Citigroup said Friday that the debt-to-equity plan drafted by Parmalat's government appointed commissioner Enrico Bondi and approved by the Italian Industry Ministry recognized only $2.5 million in debt due to the U.S. banking company out of $667.5 million in credit claims accepted as part of the Italian procedures that govern the Parmalat case.

Citigroup said it had filed a suit with a regional court in Rome claiming that the Italian government and Parmalat's new administration had failed to ensure a fair process for considering creditor claims.

``The law requires that all creditors be treated equally during bankruptcy proceedings, and instead the rights of creditors have been trampled on repeatedly,'' William J. Mills, chief executive of Citigroup's European division, said in the statement.

A call to Parmalat for comment was not immediately returned.

Bondi has filed a lawsuit seeking up to $10 billion in damages from Citigroup, accused it of having exacerbated the dairy group's financial distress. Bondi's advisers claim that Citigroup assisted Parmalat in hiding its true financial position by masking debt as equity.

Citigroup said in Friday's statement that there was no evidence of any wrongdoing by Citigroup, or indication that it was aware of fraud at Parmalat before the scandal exploded.

``As Parmalat's largest creditor and a victim of this fraud, Citigroup will pursue all opportunities for appropriate redress of its losses,'' Mills said in the statement.

The Parmalat scandal broke in December after the company acknowledged it didn't have nearly $5 billion it had claimed was in a Bank of America account. Shortly afterward Parmalat went into bankruptcy protection.