Business Opinion/John McManus: It was the former US secretary of state Henry Kissinger who said: "If I want to call Europe, whom do I call?".

One can't help feeling that something similar will be going through the heads of the Italian authorities when they turn their attention to the activities of Eurofood IFSC, the Irish subsidiary of Parmalat.

The investigating magistrates in Parma are currently trying to get their heads around the maze of entities that were used by Parmalat to invent assets and otherwise fiddle the books to the tune of €10 billion.

It seems pretty certain that at some stage they will be seeking the assistance of the Irish authorities in examining Eurofood's activities. This is because of two things. The first is the type of business carried out by Eurofood - the provision of intercompany finance - and the second is the presence on its board of two Parmalat executives - Mr Fausto Tonna and Mr Luciano Del Soldata. Both men are currently guests of the Italian government.

When they do decide to ring Ireland, the Parma magistrates are in for a treat. Eurofood is one of around 350 International Financial Services Centre companies, which are primarily involved in the provision of treasury services to their multinational parent groups.

Because they are not banks, they are not subject to prudential regulation by the Central Bank/Irish Financial Services Regulatory Authority in the normal way.

In fact, when contacted about Eurofood last week, IFSRA initially said that it had no responsibility for these types of companies, which operate under a tax certificate granted by the Minister for Finance.

The Department of Finance subsequently pointed out that the certificate is granted subject to Chapter VII of the Central Bank Act 1989. It then went on to quote from the act which states that these companies: "shall comply with such supervisory and reporting requirement or conditions relating to its business which the Bank considers prudent to impose on it from time to time for the purposes and in the interests of the proper and orderly regulation of the institution or a group of institutions (including the institution) for the purposes of the development of the Area as an International Financial Services Centre".

While this piece of legislation will never win a prize for plain English, the thrust of it seems to be that the Central Bank/IFSRA can regulate IFSC companies if it wants to. The reality would appear to be that it doesn't regulate them, although it has decided to take a look at Eurofood.

To confuse our Italian friends even further is the presence in the background of the Office of the Director of Corporate Enforcement (ODCE) who is responsible for ensuring that Eurofood complies with the requirements of Irish company law. His office is also understood to be now taking a look at Eurofood.

No doubt when they come to visit, the Italians will be surprised to hear that this somewhat chaotic situation follows a cathartic period in Irish corporate life that started with the absconding of Tony Taylor and still lives on in the Moriarty tribunal.

Both IFSRA and the ODCE, are direct results of an attempt to put in place an effective frame work to ensure that regulatory failures underlying these scandals were not repeated.

However, IFSC companies would appear to all intents and purposes to have been left unregulated. The decision - and one assumes it was a conscious decision - to do so highlights the fine line that is trod in the IFSC between a regulatory regime that is commercially attractive and one that provides enough protection to give people confidence about doing business there.

There is no doubt that the very light touch taken in regulating IFSC companies is a significant factor behind the decision of 350 companies to establish here. The prospect that such a hands-off approach lets one or two questionable companies operate here is a reasonable risk when you consider the pay-off to the Exchequer and the economy generally from IFSC companies.

Eurofood paid around €600,000 in taxes in 2002 and close to €1 million in 2001. In addition, it paid €3,500 to its auditors, the Irish office of Grant Thornton, while another €467,103 was spent on administrative expenses. The bulk of this presumably went to the Irish arm of Bank of America who administer the company.

McCann Fitzgerald, who provide legal services to the company, must also have been paid out of this. Bank of America and McCann Fitzgerald have non-executive directors on the board of the company.

The argument for having almost no regulation of IFSC companies is further strengthened by the fact that they can only carry on business outside of Ireland, and most of them only do business with other group companies.

This, of course, is of no comfort to the shareholders, customers and other victims of Parmalat, should Eurofood turn out to have been part of the fraud perpetrated on them - although there is no suggestion of this to date.

They would no doubt have expected their interests to be fully protected by the regulatory authorities of other European Union states. Particularly one that is currently the President of the European Union.