An Italian court in Milan on Monday acquitted four banks charged with failing to have adequate steps to prevent the 2003 Parmalat SpA [corporate website; JURIST news archive] dairy empire crash. Parmalat collapsed under 14 billion euros in debt and is the largest corporate collapse in Europe. Citigroup, Deutsche Bank, Morgan Stanley and Bank of America (BOA) [corporate websites] were all acquitted of an administrative charge [AP report] for failing to have adequate procedures in place to prevent the fraud that led to the collapse. Last year, former executives were convicted on criminal fraud charges. The banks argued that they too were victims of Parmalat's fraud and committed no wrongdoing. The prosecutors had sought to confiscate 120 million euro from the banks in damages and penalties.
Last December, the founder and former chief executive of Parmalat, Calisto Tanzi [NNDB profile], was convicted [JURIST report] along with 14 other former executives for the company's fraudulent bankruptcy. The court also ordered them to reimburse the company two billion euros. Last July, BOA announced that it reached a settlement [JURIST report] with Parmalat in litigation stemming from its 2003 collapse. Under the terms of the settlement, BOA will pay Pamalat USD $100 million, which includes both cash and non-cash components. The settlement resolves a $10 million lawsuit filed by Parmalat against BOA in 2004 and a counterclaim [JURIST reports] filed by BOA, alleging the company engaged in fraud and is maliciously suing the bank to shift blame. In December 2008, a Milan court in a separate case concerning stock market manipulation sentenced [JURIST report] Tanzi to 10 years in prison for his role in the company's collapse. Tanzi was the first executive to be sentenced in connection with the 14 billion euro fraud scheme in 2003 that bankrupted the company.