Originally created 01/13/04

Parmalat will look to shed foreign assets

ROME -- A restructuring team looking to save embattled food giant Parmalat will likely try to sell the company's international units but hopes to keep the core domestic dairy business in Italian hands, a government minister said Monday.

Parmalat, Italy's eighth-largest company, entered bankruptcy protection last month after the company acknowledged massive and long-concealed holes in its accounts. Investigators have arrested nine people alleged to have fraudulently concealed the company's true finances, including Parmalat founder Calisto Tanzi.

Amid the growing investigation, newspaper reports said Monday that a former Parmalat chief financial officer has accused Tanzi of taking kickbacks from a Swedish food packager. In Sweden, the food packager said it was looking into the claims.

The Italian investigation was expected to focus this week on what role if any Italian and foreign banks played in the scandal. Prosecutors have been trying to ascertain whether the banks knew Parmalat's true state of affairs when they sold bonds for the company.

Meanwhile, the chief of the restructuring effort, Enrico Bondi, was working to save the company from collapse.

Agriculture minister Giovanni Alemanno met with Bondi on Monday, and described the business-turnaround experts sw129 dsf's hopes for saving Parmalat. "Optimistic is a strong word, but he seems to have confidence," the minister said.

Alemanno said Parmalat's Italian fresh milk producer Eurolat could either remain within Parmalat or be sold to local investors. "What must be avoided is a breakup that becomes the target of foreign acquisition," he said.

"The Parmalat group will probably aim to sell its foreign companies and not its Italian ones," he said.

Bondi is still working on the restructuring plan, but he appeared to be looking to divest the company of noncore assets that had dragged down the profitable parts of the company.

Parmalat employs 36,000 people and has operations in 30 countries.

Italian newspapers reported Monday that ex-CFO Fausto Tonna told prosecutors that Swedish firm AB Tetra Pak paid millions of dollars to Tanzi in exchange for packaging contracts.

Tonna's lawyer was not available for comment Monday.

The papers said Tonna told investigators that Tetra Pak, a supplier of packaging systems for milk, fruit juices, ice cream and other products, discounted its merchandise and agreed to pay a percentage to Tanzi's account.

The payments by Tetra Pak started in 1996 and were made in exchange for packaging contracts with Parmalat, the Swedish company's largest client, Tonna reportedly told prosecutors.

According to a report in La Repubblica newspaper Monday, Tetra Pak paid Tanzi between $6.4 million to $7.7 million each year from 1996 to 1999, $19 million in 2000 and $38.5 million in 2001.

The money allegedly went into an account for personal use by Tanzi or for use in other family companies outside Parmalat, the reports said.

In Sweden, Tetra Pak spokesman Joergen Haglind said Monday the company was surprised and concerned about the reports, and has launched an immediate internal investigation into the allegations.

Haglind also said the company hasn't been contacted yet by Italian officials investigating Parmalat.

Tetra Pak, which is now part of Swiss-based Tetra Laval SA, has been doing business with Parmalat since the 1960s, and the Italian company is its largest client.

Also Monday, Corriere della Sera newspaper reported that Tanzi and Tonna told prosecutors that Capitalia bank had pressured Parmalat to make unwanted acquisitions to help alleviate the bank's loan exposure to other companies. Tanzi claimed he was forced to act because Parmalat itself was greatly indebted to Capitalia.

However, Capitalia issued a statement strongly contesting these claims Monday, saying the transactions in question had been lauded by major investment banks. It argued that Tanzi and Tonna were simply seeking to avoid full responsibility for the Parmalat scandal.

Parmalat founder Tanzi has told Italian prosecutors of a 8 billion euro ($10 billion) gap in the firm's balance sheet, and that over the years up to 500 million euros ($640 million) had been diverted from Parmalat to family-run tourism businesses.

Associated Press reporter Emily Backus contributed to this report from Milan.


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