Parmalat’s Fall: Europe’s Enron?
In December 2003, Italian food and dairy giant, Parmalat, went bust. The dramatic fall of family-owned Parmalat was triggered when Bank of America claimed that a document showing 4 billion Euro in company’s Cayman Islands bank account is forged. Just a couple of months ago, Parmalat’s bosses had claimed a cash balance of 4.2 billion Euro but on December 19, 2003, they admitted a 4 billion Euro hole in company’s finances. Given the complex way of financial wizardry employed by Parmalat’s bosses coupled with off-balance sheet financial transactions (such as derivatives) and funds stashed away in offshore subsidiaries in Cayman Islands, there is no…