Major banks indicted over Parmalat scandal

Jun 13, 2007, 11:11 GMT

Milan - Judges in Milan have indicted four of the world's leading banks on charges of market rigging over their role in the collapse of Italian dairy giant Parmalat, the Ansa news agency reported Wednesday.

A total of 13 executives working for Citigroup, UBS, Deutsche Bank and Morgan Stanley are also due to appear in court in a trial whose opening hearing has been set for January 22, 2008.

'The judge has made a debatable interpretation of the law that we will challenge in court,' said Giuseppe Bana, a defence lawyer representing the Swiss concern.

The two US banks also said they would challenge the decision.

In a statement, Morgan Stanley said 'a thorough review of its Parmalat operations' had shown that it had not been made aware of the company's insolvency and that the conduct of the bank and its employees was 'correct.'

A household name in Italy, Parmalat collapsed in December 2003 under the weight of a debt mountain estimated at 14 billion euros (16.7 billion dollars).

The dairy giant folded shortly after admitting that a 4-billion- euro account held by one of its subsidiaries in the Cayman Islands did not exist.

The bankruptcy, described as Europe's biggest, stripped of their savings tens of thousands of people who had invested in Parmalat bonds and shares.

Founder Calisto Tanzi and 15 others, including auditors, risk heavy prison sentences in a separate trial currently underway in Milan.