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Heres the skinny on Europes enormous financial scandal In the wake of the financial scandals at Enron WorldCom MCWEQ and Tyco International TYC European chief executives smugly insisted no such fraud could ever occur in Europe They spoke too soon The accounting calamity at Italian dairy-foods giant Parmalat has prosecutors scrambling to find out what happened to 85 billion to 12 billion in vanished assets That sum makes Parmalat one of the largest financial frauds in history Some questions and answers about the collapse of what was once considered a jewel of Italian capitalism ADVERTISEMENT What triggered the financial crisis Parmalat defaulted on a 185 million bond payment in mid-November That prompted auditors and banks to scrutinize company accounts Some 38 of Parmalats assets were supposedly held in a 49 billion Bank of America BAC account of a Parmalat subsidiary in the Cayman Islands But on Dec 19 Bank of America reported that no such account existed In the ensuing investigation Italian prosecutors say theyve discovered that managers simply invented assets to offset as much as 162 billion in liabilities and falsified accounts over a 15-year period forcing the 92 billion company into bankruptcy on Dec 27 Trading in Parmalat shares was suspended the same day Why is the Parmalat scandal important It reveals an alarming lack of transparency at one of Europes largest and most global companies Parmalat has 36000 employees in 30 countries and it does 33 billion in business in North America where it not only sells its trademark milk-in-a-box but also owns Black Diamond Cheese Archway Cookies LLC and Sunnydale Farms dairy Parmalats shares traded in New York and it sold more than 15 billion in bonds to US investors The US Securities Exchange Commission has sued Parmalat for misleading investors in a brazen fraud The scandal is also a fresh blow to the international accounting industry Parmalats auditor from 1990-99 was the
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