Malta may figure in Parmalat investigations
- MFSA receives no request to investigate
The international press are scrambling to investigate
over 250 hundred companies related to Parmalat in an attempt to get
to the bottom of a web of transactions which siphoned millions from
According to the Italian daily Corriere della Sera, the press is trying
to unravel a multitude of payments between so called shell
companies in off-shore tax shelters such as Malta, the Cayman Islands
or Dutch Antilles, or elsewhere in Europe and the United States.
When The Malta Financial and Business Times contacted the Malta Financial
Services Authority, its chairman, Professor Joe Bannister said: "The
MFSA has to date received no official enquiry about anything to do with
the Parmalat affair.
"The MFSA has, since the first signals of the impending crisis
came out some three weeks ago, been doing its best to keep developments
under close review and to keep abreast of the daily stream of reports
in the international media on the unfolding Parmalat affair."
Asked about the possible damage to Maltas reputation by the Parmalat
scandal, Prof Bannister said: "From the information known to it
to date, the MFSA envisages that the participation of these Maltese
companies was a very marginal one even when viewed against a backdrop
of the 260 or so companies scattered all round the globe which formed
the Parmalat multinational.
"The well-publicised reasons for Parmalats problems are located
elsewhere. There is no reason why Malta should suffer any reputational
risk. The real issues at stake here are
quite different and seem to relate to grave allegations of forgery,
misappropriation, incorrect statements to investors and false accounting."
Professor Bannister clarified some misconceptions: "In cases such
as this, one inevitably finds some misunderstandings and confusion as
to what or which regulators should have seen or done something. You
will be aware of the very heated debate in Italy as to presumed lapses
by the Banca DItalia and the Consob.
"The Parmalat companies present in Malta are not licensed or supervised
companies, but they are normal trading entities, where all the relevant
corporate information is accessible to the public in our Registry website
facility or at the Registry itself in Mriehel.
"The identity of the shareholders is disclosed and all documents
have been duly filed as required by our company legislation, which is
very demanding and in line with UK and EU requirements. It is also interesting
note that all the three entities carry the Parmalat name and there has
never been no attempt to conceal the connection."
In Malta Parmalat set up three companies, Parmalat Malta Holding Limited,
Parmalat Trading Limited, which are Maltese companies and Parmalat Capital
Finance Limited, which is registered in Malta, but is a subsidiary of
a company registered in the Cayman Islands.
Parmalat Capital Finance Limited (PCFL) was registered in Malta on 1
April 2002, as an Oversea company and according to its accounts,
verified by Deloitte and Touche was engaged "in the business of
procuring and placing funds within the Parmalat group and in the raising
of finance for the group from institutional and other investors."
The company is exempt from exchange control regulations in terms of
an exemption given in Maltese law in 1972.
Malta is clearly considered a tax haven by many and while companies
may not have done anything illegal, they avoid the higher tax rates
faced in their home countries.
In the year ended 2002, the PCFL registered a profit of US$ 188,461,695.
That profit figure was reduced by US$ 158,367,848 due to a loss on currency
exchanges, leaving a profit of US$30,093,847.
On that profit taxation at 35 percent was US$ 10,532,846, but because
of double taxation relief of US$ 6,212,880 and an adjustment for "exempt
profits arising prior to the date of transfer of the management and
control of the company to Malta, which are not subject to Malta tax"
of US$ 2,633,211, the tax due in Malta was a mere US$ 1,686,755.
According to the Financial Times, rating agency Standard and Poor, auditors
Deloitte and Touche, analysts in London and fund managers in the US,
nobody paid attention to Parmalats companies abroad until Parmalat
admitted it could not find 40 million Euro to pay one of its bonds.
The income of PCFL declared at the year-end was of US$ 18,236,177 in
investment income and US$ 243,290,845 in net interest from group undertakings.
From those amounts were deducted finance costs of US$72,176,220 and
administrative costs of US$ 889,107. No breakdown or explanation for
the administrative costs were given in the accounts.
Professor Bannister was adamant that Maltas reputation remains
intact: "It is being repeatedly stated in the media, that these
three companies were offshore companies. In reality, none of these companies
was an offshore company. Two were actually registered here as normal
companies under the Companies Act. The third was what is known as an
oversea company which means that it is a branch or a place
of business of a company registered outside Malta. "These facts
may be easily verified at the Registry of
Companies. The registration of offshore companies stopped on the 31
December 1996 following amendments to the relevant legislation. All
the three above-mentioned Parmalat companies came to Malta much, much
Parmalats problems intensify
The eight largest Italian business finds itself gasping for breathing
space following revelations in the media on December 19 that Bank of
America Corporation was not holding about US$4.9 billion of its funds
as the Italian company had reported in September. Since then, the estimated
amount of money missing from its balance sheet has ballooned.
Founder and owner Calisto Tanzi has admitted to have taken about EUR500
million (US$624 million) from the Parmalat group. The affair has grown
into one of Europe's biggest financial scandals, hitting global banks
and small-time investors, as well as dairy farmers.
Mr Tanzi is currently in custody and being subjected to interrogation
in Italy while an inquiry has started in Ecuador as it has been suggested
that some Euro 800 million may gave been left there.
Tanzi visited Ecuador over the holiday period after a rest
in Spain. The enigmatic head of the Parmalat empire, was always considered
a serious businessman. He avoided the media limelight and surplus cash
was devoted to worthy causes such as the restoration of Parma's cathedral.
While Parma has a reputation for high-living sensuality, Mr Tanzi demonstrated
a high-minded sobriety. He told an interviewer from a popular women's
magazine that he would opt for Rita Levi Montalcini, the almost centenarian
Nobel physics laureate, as his ideal dinner companion, over the charms
of Monica Bellucci or Sharon Stone. He voiced the same serious-mindedness
in relation to business, telling a financial reporter: "What do
you mean new economy! I'm proud to belong to the old-old economy!"
Tanzi however had links with the Christian Democrats in Italy and his
family owned limousines and a valuable collection of 19 century paintings.
Encouraged by the success of Parma football club which Parmalat owned
Tanzi bought other clubs in Brazil, Russia, Mexico and Uruguay, and
was said to be jealous of the success of another Italian food magnate
Things must have started to go wrong for Tanzi as his empire expanded
too quickly and investments in television, a high advertising budget
and new expensive company headquarters must have stretched his resources.
In Malta, Labour spokesman for Industry John Attard Montalto revealed
that Parmalat was one of four companies interested to invest in Malta
when Labour was elected to government in 1996. According to Attard Montalto,
the approach was rejected when it was decided that Parmalats presence
in Malta could do more harm than good, especially to the agricultural
sector. Attard Montalto said the decision not to accept the Italian
giants was now vindicated.