Tweet
Wow, and I thought Enron was bad. Enron was taken down by less of a discrepancy, IIRC. And Andersen was destroyed for much less.
BoA says €4bn Parmalat account does not exist
By Fred Kapner in Milan and Pedro Das Gupta in London
Published: December 19 2003 8:54 | Last Updated: December 19 2003 12:04
Parmalat on Friday said Bank of America had rejected the validity of a document stating that Bonlat, the Italian dairy group's Cayman-based subsidiary, held €3.95bn ($4.89bn) in cash and securities in a BoA account.
BoA told Grant Thornton, Bonlat's auditor, that a document dated March 6, 2003, claiming €3.95bn in cash and securities as of December 31, 2002, was not authentic, Parmalat said .
Grant Thornton had used the document to certify Bonlat's 2002 balance sheet.
Last week, Maurizio Bianchi, a Grant Thornton partner, said in an interview with Il Sole 24 Ore, an Italian financial newspaper, that the auditing firm had "received by letter confirmation of (the liquidity). And, naturally, of the existence of the securities in the portfolio of the company for which we are the auditors, including bonds emitted by Parmalat and bought back."
Mr Bianchi was not available to comment on Friday on whether the letter of confirmation had been obtained from Parmalat or directly from BoA.
Last week, Standard & Poor's said it appears to have been repeatedly misled by Parmalat. The rating agency slashed Parmalat's debt by 10 notches over 24 hours 10 days ago, from the lower limit of investment grade to one notch above default.
Deloitte & Touche, an accounting firm, is the auditor for the consolidated accounts of Parmalat, which has more than 130 subsidiaries in more than 30 countries.
In recent years, credit analysts have noted, Deloitte has reviewed an increasingly small proportion of Parmalat's stated consolidated assets.
In Parmalat's annual report for 2002, Deloitte reviewed 51 per cent of consolidated assets, down from 78 per cent three years earlier. Grant Thornton, which had handled the consolidated accounts until 1998, audited most of the rest.
Parmalat on Friday said Enrico Bondi, the new chief executive appointed on Monday, has called an extraordinary board meeting on Friday afternoon. The company said it would be initiating "the necessary urgent verifications" regarding the authenticity of the Bonlat document.
Parmalat, which has about €6bn in debt, last week barely avoided default on a €150m bond. The company is in discussions to avoid default on $400m payment due to investors in its main holding company in Brazil.
Parmalat has also been unable to track down the €4.2bn in cash and cash equivalents declared on its third-quarter balance sheet and supposedly available for the servicing of debt.
Shares in Parmalat were suspended on the Milan bourse.
By Fred Kapner in Milan and Pedro Das Gupta in London
Published: December 19 2003 8:54 | Last Updated: December 19 2003 12:04
Parmalat on Friday said Bank of America had rejected the validity of a document stating that Bonlat, the Italian dairy group's Cayman-based subsidiary, held €3.95bn ($4.89bn) in cash and securities in a BoA account.
BoA told Grant Thornton, Bonlat's auditor, that a document dated March 6, 2003, claiming €3.95bn in cash and securities as of December 31, 2002, was not authentic, Parmalat said .
Grant Thornton had used the document to certify Bonlat's 2002 balance sheet.
Last week, Maurizio Bianchi, a Grant Thornton partner, said in an interview with Il Sole 24 Ore, an Italian financial newspaper, that the auditing firm had "received by letter confirmation of (the liquidity). And, naturally, of the existence of the securities in the portfolio of the company for which we are the auditors, including bonds emitted by Parmalat and bought back."
Mr Bianchi was not available to comment on Friday on whether the letter of confirmation had been obtained from Parmalat or directly from BoA.
Last week, Standard & Poor's said it appears to have been repeatedly misled by Parmalat. The rating agency slashed Parmalat's debt by 10 notches over 24 hours 10 days ago, from the lower limit of investment grade to one notch above default.
Deloitte & Touche, an accounting firm, is the auditor for the consolidated accounts of Parmalat, which has more than 130 subsidiaries in more than 30 countries.
In recent years, credit analysts have noted, Deloitte has reviewed an increasingly small proportion of Parmalat's stated consolidated assets.
In Parmalat's annual report for 2002, Deloitte reviewed 51 per cent of consolidated assets, down from 78 per cent three years earlier. Grant Thornton, which had handled the consolidated accounts until 1998, audited most of the rest.
Parmalat on Friday said Enrico Bondi, the new chief executive appointed on Monday, has called an extraordinary board meeting on Friday afternoon. The company said it would be initiating "the necessary urgent verifications" regarding the authenticity of the Bonlat document.
Parmalat, which has about €6bn in debt, last week barely avoided default on a €150m bond. The company is in discussions to avoid default on $400m payment due to investors in its main holding company in Brazil.
Parmalat has also been unable to track down the €4.2bn in cash and cash equivalents declared on its third-quarter balance sheet and supposedly available for the servicing of debt.
Shares in Parmalat were suspended on the Milan bourse.
Comment