Italian Prime Minister Silvio Berlusconi said today his government would save food group Parmalat which has revealed a €4 billion hole in its accounts in a scandal reminiscent of the bankruptcy of Enron.
As prosecutors launched a fraud investigation at the global dairy firm, Mr Berlusconi told reporters the Economy Ministry was drawing up plans to "preserve the industrial part of Parmalat which...is part of the country's wealth".
Parmalat is one of Italy's best known brand names and has nearly 35,000 employees in 30 countries with annual revenues of more than €7.5 billion.
However, concerns about apparent risky financial investments turned into outright panic on Friday, when it announced that a document showing 3.95 billion euros held by a Cayman Islands unit had been declared false by the Bank of America.
The news, described by Mr Berlusconi as "almost incredible" raised the prospect that Parmalat might go bankrupt.
Parmalat's new emergency management team said late last night it was still looking for "the plan of action most suited to the current situation".
Under Italian bankruptcy law, Parmalat could be placed under "controlled administration" which would give it up to two years of protection from creditors while it attempts a turnaround.
Mr Berlusconi, speaking at an end-of-year news conference, said Parmalat might be discussed at a cabinet meeting on Tuesday.
The government was already under pressure over the 2002 collapse of a smaller food group, Cirio. Mr Berlusconi promised reforms to prevent similar cases in the future.