Irish subsidiary 'deeply involved' in Parmalat fraud

Parmalat, the Italian food giant that collapsed in 2003, has said the role of its IFSC subsidiary, Eurofood, is of fundamental…

Parmalat, the Italian food giant that collapsed in 2003, has said the role of its IFSC subsidiary, Eurofood, is of fundamental importance in its fraud case against Bank of America.

The battle for control of Eurofood reached the European Court of Justice (ECJ) yesterday, where Parmalat again tried to assert Italian jurisdiction over the IFSC company. Parmalat, which was driven into insolvency by murky offshore financing, said control of Eurofood was "central" to its fraud case.

Parmalat is seeking $10 billion (€8.1 billion) in damages for alleged fraud from Bank of America, Citigroup and former auditors, Deloitte and Grant Thornton.

"Eurofood was deeply involved in the fraud at Parmalat and, as such, all the documentation is of interest in terms of getting to the bottom of the scandal," said a Parmalat spokesman yesterday. "A large portion of the fraud involving Parmalat was at off-shore vehicles where there was little or no transparency," he added. Bank of America - which administered Eurofood on Parmalat's behalf - was not immediately available for comment.

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The bank has repeatedly denied any wrongdoing in the Parmalat case. Both sides presented their case at an oral hearing before 13 judges at the ECJ in Luxembourg yesterday.

Judges told the court they would issue a judgment on September 27th, a lawyer involved in the case told reporters.

Irish liquidators have argued that Eurofood should be liquidated in Ireland, not in Italy, because it is an Irish-registered company. Bank of America has supported this stance, which saw Pearse Farrell of Farrell Grant Sparks being appointed as Eurofood's liquidator.

The Italian courts, on the other hand, have ruled that Eurofood should come under the administration of Parmalat's liquidator, Enrico Bondi.

The dispute is a test case for the European Union's Insolvency Regulation, which was meant to simplify cross-border insolvencies.

Eurofood was structured to provide financing facilities for the Parmalat Group.

Italian authorities are believed to be particularly interested in its role in issuing bonds sold in the US.

Eurofood accounts for 2002 drawn up before the Parmalat collapse showed that Eurofood had been involved in the issuing of bonds worth $180 million in the US, and also in raising funds for Parmalat's operations in Venezuela.