Parmalat trial starts

Parmalat founder Calisto Tanzi faced a Milan judge yesterday in the first major trial over the dairy group's collapse almost two years ago in one of Europe's biggest corporate fraud scandals.

The trial got off to a slow start as just listing the civil parties occupied all of the hearing, which closed in the early afternoon. Lawyers had unexpectedly asked all the civil parties to the case to testify, meaning tens of thousands of investors who lost their savings in the crash could appear as witnesses.

Aside from Mr Tanzi, most of the 15 other Parmalat executives stayed away from the trial, which also involves two auditing firms. Giovanni Bonici, the former manager of Parmalat Venezuela, was one of the few executives in the courtroom.

"It's obviously not a beautiful day in my life," Mr Bonici told Reuters. "But I decided to be here to reiterate that I had no knowledge of the facts."

The executives were sent to trial in June after eight months of preliminary hearings, on charges including market-rigging, false auditing and of hindering the work of regulators.

The Italian office of auditors Deloitte & Touche and Grant Thornton's former Italian unit were also charged with helping Parmalat to mislead investors.

Bank of America's Italian office will appear as a civil party.

Mr Tanzi's lawyers have submitted a long list of witnesses to Chief Judge Luisa Ponti, including the chairmen of banks Capitalia and Mediobanca, officials from stock market regulator Consob and from the Bank of Italy.

"We will not escape from this trial, we will confront it. We'll present ourselves to the court as a compact group," said Mr Tanzi's lawyer, Fabio Belloni.

The next sessions on December 2 and 6 will also be dedicated to examining the huge number of civil parties - giving a taste of what is likely to be a protracted and complex trial. A decision on that part of the trial is expected by December 19.

But the Financial Times wrote yesterday lawyers could ask for the trial to be moved to Parma, near Parmalat's headquarters, where a wider investigation in underway. Such a move could delay proceedings by months.

An angry Parmalat investor outside the courtroom, who preferred not to be named, said he had lost all his money in the collapse, adding that regulators and the banks who sold the group's bonds before its downfall were also to blame.

"The stock exchange, the Bank of Italy, the auditors, the banks, everybody shares the responsibility," he said.

Under Italian law, companies can stand trial facing possible fines or even enforced closure if found guilty.

Deloitte has denied wrongdoing and Grant Thornton severed ties with its Italian unit in the weeks that followed the €14 billion accounting scandal.

In June, 10 other Parmalat executives, including several Tanzi family members, and a lawyer were sentenced to jail as part of a plea-bargain deal that spared them a trial in Milan. As first-time offenders, none of them are expected to have to spend time in prison.

Other cases are still open in Milan, where prosecutors have been investigating suspected financial crimes since Parmalat crumbled under the weight of billions of euros of debt, leaving investors with nearly worthless paper.

In July, prosecutors asked a Milan judge to send to trial Italian fund manager Nextra and four leading global banks, Citigroup, Morgan Stanley, Deutsche Bank and UBS.