01/19/2004: 
Fraud & Conspiracy
Il Dupe: Parmalat's 4 Billion Euro Shell Game
or, Similac Accounting
Reuters, via Yahoo analog MyWay.com:
Parmalat probe widens to include auditing firms
MILAN/PARMA, Italy, Jan 19 (Reuters) - Two Italian auditing firms linked to two of the top names in global accountancy were put under investigation on Monday by prosecutors trying to work out how billions of euros went missing at dairy giant Parmalat. Judicial sources said the Italian affiliate of Deloitte & Touche and the recently expelled unit of Grant Thornton in Italy were included in the fraud probe.
Four top auditors were already under investigation as individuals, but now the two companies themselves had been included in the probe, the sources said.
Grant Thornton's Italian office has been at the centre of the food group's crisis ever since it broke a month ago, when a four billion-euro bank account supposedly held by a Parmalat unit in the Cayman Islands was exposed as false.
The former chairman of Grant Thornton SpA and a partner, who vouched for the offshore unit, are among 10 people now under arrest in the case. The affiliate has since been expelled by the global auditor.
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Deloitte & Touche SpA certified Parmalat's group accounts, and two partners of the Italian unit are under investigation.No one was immediately available for comment at Grant Thornton's former Italian unit, now called Italaudit. Deloitte & Touche Spa had no immediate comment.
A London spokeswoman for Deloitte & Touche said the umbrella group was "absolutely not" considering the exclusion of its Italy unit from the global network.
RECONSTRUCTION
Separately on Monday, an ex-finance director and an internal auditor of Parmalat were taken from prison on Monday to the headquarters of the now insolvent food group, as investigators tried to reconstruct its accounts.
Fausto Tonna and the auditor Gianfranco Bocchi have been accused by prosecutors of being involved in fraud leading to the multi-billion-euro scandal.
Both men have said they were only following orders.
They were driven to the offices of Parmalat in Collecchio, near Parma, where a team of auditors from accounting firm PriceWaterhouseCoopers was also present to try to rebuild the food group's accounts, an investigative source said.
PriceWaterhouseCoopers was hired last month to carry out an emergency inspection of Parmalat's accounts for the new management team now in charge of the group. Also on Monday, a judge in Milan threw out a latest request for Parmalat's founder Calisto Tanzi to be moved from the city's San Vittore jail to house arrest, a judicial source said.
Investigators in Parma and Milan are piecing together how Parmalat's top management might for years have concealed a hole in the multinational's accounts which prosecutors say could turn out to be bigger than 10 billion euros ($12.70 billion).
At the centre of the scandal lie forged bank documents, inflated invoices and shell holding companies in tax havens, the prosecutors have said.
Also under scrutiny are Parmalat's dealings with banks, including the sale of bonds by the food group.
Italy's number-five bank Monte dei Paschi di Siena (BMPS) on Monday became the latest bank to count the cost of its loans and other ties to Parmalat, saying it would write down up to 65 percent of its 115 million euros of exposure to the group.
Capitalia (CPTA), the country's fourth-biggest bank by assets, was due to hold a board meeting on Monday at which writedowns for Parmalat could be discussed. Its exposure of nearly 400 million euros is the biggest among Italian banks.
Last week Bank of America (BAC) said it had $274 million in loans, credit letters and derivatives linked to Parmalat.
A former Bank of America executive in Italy is among at least 25 people under investigation and police last week took documents from the Milan office of Citigroup (C).
Investigators on Monday received the latest batch of documents seized by U.S. authorities who last month searched the home and offices of Gian Paolo Zini, a lawyer who worked for Tanzi and who is being held in prison in Parma.
