Chicago (Aug. 20, 2004) -- Bankrupt Italian dairy giant Parmalat said that it is suing its former outside auditors, Grant Thornton International and Deloitte Touche Tohmatsu, and their U.S. and Italian affiliates, to recover damages stemming from its collapse.
The suit was filed Wednesday in Cook County, Illinois, Circuit Court by Enrico Bondi, who became chairman of the firm in December 2003 after it became insolvent. The lawsuit, which seeks $10 billion, alleges that the auditors overlooked fraud and looting that nearly led to the company's downfall, according to published reports.
The suit also reportedly names Lorenzo Penca, the former chairman of the Italian arm of Grant Thornton, and Maurizio Bianchi, its former lead partner on the Parmalat audit, as "active conspirators with Parmalat's management" in the multi-billion-dollar fraud. Penca and Bianchi were among those arrested in December on charges that their actions contributed to Parmalat's bankruptcy.
The dairy giant began to unravel in mid-December, when it was discovered that an account of Parmalat subsidiary Bonlat Financing that was said to have $4.9 billion didn't exist. The firm filed for bankruptcy shortly after. An audit ordered after the scandal broke put the company's debt at about $18 billion -- eight times more than Parmalat claimed months earlier.
Grant Thornton and Deloitte issued statements dismissing the claims. In a statement, Grant Thornton International pointed out that "it was the former Grant Thornton International member firm in Italy, Grant Thornton SpA and now named Italaudit SpA, which audited the accounts of some of Parmalat’s subsidiaries." GTI severed ties with the former Italian firm in January.
"Grant Thornton International does not accept that this is a legitimate action and will defend its position vigorously," the firm said, noting that its member firms are all independent legal, financial and administrative entities. "The services provided to Parmalat were provided by the former Grant Thornton International firm in Italy, now trading as Italaudit SpA. All matters relating to Parmalat are therefore the responsibility of Italaudit SpA and not Grant Thornton International or Grant Thornton LLP."
"While Deloitte's U.S. firms have not yet seen the complaint, we are unaware of any legitimate theory for naming us as defendants," the domestic unit said in a statement. "The U.S. firms issued no audit reports on Parmalat and had nothing to do with Parmalat's alleged misconduct. Any claims against Deloitte's U.S. firms are frivolous, and we are confident we will be successful in having them dismissed."
"Parmalat is responsible for a fraud that, according to testimony to date, pervaded its former executives and board of directors and has now apparently sued Deloitte Italy on the theory that it failed to catch Parmalat for its own fraudulent actions," Deloitte's Italian arm said in a statement. "Deloitte Italy believes the lawsuit, which it has not yet seen, is entirely unjustified and it will defend its position vigorously. It was the actions of Deloitte Italy which led to the fraud being uncovered."
The lawsuit is part of Bondi's plan to seek recovery from third parties that he alleges played a role in Parmalat's collapse. Bondi is also suing Citigroup, Credit Suisse First Boston and others in separate actions.
-- Melissa Klein Aguilar
