Audit states debt now 14.3 Billion Euros
|27th Jan 2004
|Rome - A recent audit of Parmalat had found that its net debt was €14.3 billion (R130 billion), nearly eight times more than the figure it had reported months before the huge fraud scandal erupted, the dairy conglomerate said yesterday.
The fresh audit, ordered by a court-appointed administrator to discover what Parmalat's true book-keeping showed, found that net debt for the nine-month period to September 30 stood at €14.3 billion, and not at the €1.8 billion it reported then.
The latest debt figure is in line with estimates cited by economic observers in the early weeks of the scandal.
The scandal exploded in December after the firm admitted it did not have a €4 billion Bank of America account, as Parmalat had earlier stated. Bank of America has said that the letter testifying to the account was a forgery.
PricewaterhouseCoopers (PwC) did the fresh audit.
Parmalat Finanziaria said the figures came from a draft report and were "subject to change".
To provide the Milan stock market with "timely information", some of the figures in the audit report were being made public in an agreement with Italy's industry minister.
"With regard to revenues, profitability and net financial indebtedness, PwC's report highlights significant differences compared with the figures reported in the consolidated financial statement on December 31 2002 and ... on September 30 2003," Parmalat said.
The Parma-based dairy and juice giant has operations in 30 countries, including South Africa.
The scandal has sparked concerns among suppliers and employees over whether debts and salaries would be paid.
"The group is in a condition to make ongoing payments, although there have been a few exceptions" including dairy businesses in the US and Brazil, Parmalat said.
In those places, "task forces are already at work with the aim of helping local management to limit their financial requirements and to reach agreements with their local financing banks".
Italian investigators have been questioning jailed suspects in the fraud case, including company founder Calisto Tanzi.
Investigators have said they believed some of the previously unreported debt was linked to huge infusions of cash from the dairy company to tourism businesses owned by the Tanzi family.
The chief US stock market regulator suggested yesterday that investigators looking into the massive fraud might need to take action against Parmalat's bankers as well.
William Donaldson, the chairman of the US Securities and Exchange Commission, stressed that it was "too early to tell exactly what's going on at Parmalat. Clearly there's been a massive fraud."
But he said, in dissecting the recent scandal at US energy trader Enron, US authorities concluded there had been "enablement" there by financial institutions.
"We took actions against not just Enron people but against some of their bankers because we felt that the bankers knew exactly what was going on," Donaldson told a meeting organised by the European Policy Centre, a Brussels-based think-tank.