Former Parmalat Executives Indicted In Bankruptcy Case

MILAN, July 25 — A judge in Parma on Wednesday charged the founder of Parmalat and two powerful Italian bankers with playing key roles in the collapse of the dairy giant, which resulted in the largest corporate bankruptcy ever in Europe.

The judge, Domenico Truppa, indicted Cesare Geronzi, the chairman of the powerful investment bank Mediobanca, with fraudulent bankruptcy. Matteo Arpe, the former chief executive of the Rome-based bank Capitalia who is considered one of the rising stars of the Italian financial world, was also charged with failing to act to stop the fraud that led to the spectacular implosion of Parmalat in 2003.

Judge Truppa, who made the announcement after a hearing in Parma, where Parmalat is based, also charged more than 50 other people, including Calisto Tanzi, the companys founder and former chairman. Fausto Tonna, the former chief financial officer, who told a group of reporters after his arrest that he hoped they would burn in hell, was also charged.

Mr. Tonna is considered by prosecutors to be one of the masterminds behind the Parmalat fraud.

Mr. Tanzi and 15 other defendants are also on trial in Milan, where they face lesser charges including market manipulation and making false statements to regulators. A judge in Milan has also ordered Citigroup, Deutsche Bank, Morgan Stanley and UBS to stand trial on charges of market manipulation.

The four banks have denied the charges.

Mr. Tanzi has admitted that Parmalat began falsifying its accounts sometime in the 1980s, but the fragile house of cards did not collapse until December 2003 when it emerged that a bank account the company said held 3.9 billion euros, or $5.3 billion, did not exist. Mr. Tanzi and more than a dozen other former Parmalat employees and advisers were jailed in the weeks after the collapse, but they were all released within a few months and no one connected with the case is currently in jail.

An independent auditor later found that Parmalat had been falsifying its accounts for more than a decade and that the company had ¤14.3 billion in debt, eight times more than it said it owed.

Mr. Geronzi, who is also chairman of Capitalia, could face as many as 15 years in prison if convicted. He will not leave his position at Mediobanca while awaiting the beginning of the Parma trial next March.

Mr. Geronzi, considered by many to be one of Italys most influential bankers, has already run into legal trouble in the past few years. In addition to his alleged involvement in the demise of Parmalat, he was convicted in 2006 of contributing to the bankruptcy of Italcase, a Brescia-based company involved in real estate.

The banker is appealing that conviction, which earned him a two-year suspended sentence, and has denied wrongdoing. Part of his conviction led to temporary restrictions against him running any companies.

Mr. Geronzi and Mr. Arpe could not be reached for comment, but Capitalia in a statement said Mr. Geronzi was innocent.

Capitalia and the other Italian and international banks embroiled in the Parmalat scandal have always maintained that they operated in good faith with the dairy company and did not know that Parmalat was falsifying its accounts. In testimony to judges, Mr. Tanzi, the former Parmalat founder, has alleged that the banks were privy to his companys precarious finances and in some cases forced him to make overpriced acquisitions if he wanted to have access to future financing.

The charges Wednesday allege that Mr. Geronzi and other Capitalia executives forced Parmalat to buy an unlisted bottled water company, Ciappazzi, for more than the market value in order to get access to credit for the Tanzi familys tourism business, which was run by his daughter.

Mr. Tanzi, who has returned to a normal life and can be seen occasionally walking around the center of Parma, has tried to plea bargain in the various cases against him, but the prosecutors have refused.

Parmalat, in the meantime, has clawed its way back to respectability and profitability under the command of Enrico Bondi, its new chief executive.

The company reported Wednesday that gross operating profit rose 3.7 percent in the first half of the year to 163.3 million euros.

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