ITALY:EUROPE'S BIGGEST ever fraud trial gets under way in Italy today with a cast of 56 accused, nine judges and the possibility of more than 30,000 witnesses, in order to reach a verdict othe 2003 collapse of dairy group Parmalat, which left €14 billion in debts and more than 100,000 investors out of pocket.
Calisto Tanzi, Parmalat's former chief executive, is charged with fraudulent bankruptcy. He is suspected of covering up debt at the firm, which he nurtured from a small family business trading in salami into Italy's biggest food company.
Judges will wade through huge numbers of document pages to decide if Mr Tanzi and other managers at the firm, now known as "Europe's Enron", cooked the books for years before finally admitting, when they had difficulty making a bond payment, that their debt was eight times bigger than previously acknowledged. The firm declared itself insolvent and lawyers say Mr Tanzi is too frail to take the stand.
But, in a surprise move, they demanded that 33,550 small investors in the company be called as defence witnesses.
As he arrived at court last week for pre-trial meetings, defence lawyer Fabio Belloni denied this was a stunt, claiming instead that the investors' evidence would help prove that banks, not Mr Tanzi, were at fault since they knew about Parmalat's parlous state but continued to finance it.
The trial amalgamates five smaller trials and is reportedly set for 125 hearings presided over by Eleonora Fiengo, the chief judge, who must hear out senior managers, tax inspectors, auditors and private investors such as one Roman couple who received €10,000 worth of Parmalat shares as a wedding gift 10 days before the company declared insolvency.
Parmalat's new management, led by Enrico Bondi, also believes banks were at fault for keeping the company afloat and has been pursuing them through the courts, winning €1.2 billion in settlements, including €420 million from Intesa Sanpaolo, Italy's second-biggest bank.
The firm has bounced back from insolvency, announcing net profits of €673 million for 2007.
Mr Bondi is still pursuing Citigroup, Bank of America, UBS, Deutsche Bank of Germany and Credit Suisse.
Banks that have paid out have denied wrongdoing. Intesa Sanpaolo said it had been "totally unaware of the Parmalat state of insolvency", and had reached a settlement to avoid "a long-lasting and very complex litigation".
But while most bankers claim they failed to spot Parmalat's problems, one Italian was not fooled. From the mid-1990s Beppe Grillo, a stand-up comic, began to joke about the company's finances in his act. Mr Grillo has also been called as a witness in the trial, although he said he was pessimistic about the outcome because under Italian law the trial, including appeals, must wrap up by 2018.
Consumer group Federconsumatori said banks had some responsibility for the collapse, but calling thousands of witnesses was designed to ensure the trial failed.