Parmalat backs Bondi to recoup the billions

By Anthony Fletcher

- Last updated on GMT

Related tags Stock Stock market

Parmalat's administrator has weathered the storm to become the
troubled Italian dairy firm's new chief executive.

Enrico Bondi's appointment took place at a pivotal shareholder's meeting this week, in which the future direction of the company was effectively decided.

The outcome of this meeting suggests that the vast majority of shareholders still have faith in Bondi's bold strategy of winning billions of euros in lawsuits against banks, and as a result have provided him with the necessary backing to continue his plans.

Parmalat went into administration in December 2003 following the revelation that a key account with Bank of America did not exist. Holes in the firms accounts hid the fact that the company was a whopping €14 billion in debt.

Bondi, the government-appointed administrator, has sought financial compensation from some of the banks alleged to have been involved in Parmalat's collapse. But a group of Italian banks were behind a bold move to disintegrate the group in order to separate the company's manufacturing operations from a mass of legal actions related to its collapse amid fraud two years ago.

This would have cleared the way for a quick sale to a rival, and put an end to Bondi's bold strategy.

As it stands this morning however, Bondi looks set to continue his attempts at recouping the lost billions - and the company is unlikely to be split up. Parmalat shareholders also approved Bondi's chosen board of directors, and he is said to have secured an overwhelming percentage of the shareholder vote.

Bondi has already claimed €8.07 billion in damages in lawsuits filed against the group's auditors and banks. More recently, Bondi launched a €1.3 billion compensation claim against Italian banking group Sanpaolo IMI.

A first hearing is scheduled for 8 February 2006.

Parmalat has also sued banks JPMorgan Chase and Unicredito Italiano for €4.4 billion for their roles in the sale of Parmalat bonds issued from 1997 through 2001. Unicredito has consistently called the lawsuit groundless and said that it would defend its reputation, while JPMorgan has also denied any wrongdoing.

Indeed, the financial sector has repeatedly stated that it was fooled by the Parmalat fraud.

But such actions have slowly helped to turn around the company's fortunes. It was able to re-float on the Italian stock exchange earlier this year, despite the fact that Italian stock market regulator Consob raised questions over its future restructuring plans.

Related topics Dairy-based ingredients

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