07 January 2004

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Everything above board and in good faith - Parmalat Malta director

- MFSA has been examining accounts from day one

By Julian Manduca
Dr Ian Stafrace, a director in all three Parmalat owned companies in Malta, yesterday told The Malta Financial and Business Times that since the Parmalat companies came to Malta, everything was "above board, and conducted in good faith."
Stafrace explained that the international media was wrong to put Malta and the Parmalat companies in Malta in a bad light, since the transactions they refer to were effected prior to the companies’ registration in Malta in April 2002.
Over past weeks various sections of the international media have suggested that missing Parmalat funds have ended up in Malta.
Stafrace said that reports appearing in some media, including the Italian magazine Panorama, were incorrect and he is reserving the right to take legal action in this regard.
One of the wrong impressions created was that soon after the Parmalat Capital Finance Limited came to Malta, it acquired Bonlat Financing Corporation, the company that held the US$5 billion that was supposedly at the Bank of America that sparked off the entire Parmalat scandal.
Stafrace pointed out that as could be seen in the accounts, Bonlat was already a subsidiary on PCFL in 2001.
In another report, according to Italian news agency ANSA, it was stated that investigators have been trying to trace Eur250 million (Lm109 million) which had disappeared from Parmalat funds and were believed to have ended up in a bank account in Malta.
It was reported that the money had been raised from a bond issue of a Brazilian company owned by the Italian food giant.

The funds had been deposited with a Cayman Islands unit of Spanish bank Santander Central Hispano and served as a guarantee for a loan made to a Dutch unit of Parmalat.
According to ANSA, however, at one point in time in 2001, this money disappeared, only to be traced during the past few days to Malta, after the Italian authorities had requested and were given information by Santander Central Hispano and unnamed banks in Malta. The Malta Financial and Business Times asked HSBC, Parmalat’s bankers in Malta whether it was aware of such funds, but at the time of going to press no reply was received. However, the Parmalat group had no companies in Malta in 2001 and all were set up in 2002.
Italian magazine Panorama has also reported that its journalists visited the countries where Parmalat had subsidiaries, and a certain Roberto Seghetti was detailed to Malta.
Seghetti, however, returned home empty handed after speaking to Dr Stafrace and Andrew Manduca, the senior partner of Deloitte and Touche, and auditors of the Parmalat companies registered in Malta. The person in charge of the audit of the Parmalat companies is Edward Camilleri.
The Malta Financial and Business Times asked Camilleri several questions related to the Parmalat accounts, but Camilleri said he would not be able to reply before today.
When The Malta Financial and Business Times asked Stafrace whether money was transferred from the Maltese companies to other Parmalat related companies, Stafrace said he could not divulge information that was not public, but added that the transactions that took place in 2002 were recorded in the accounts which are public. Asked whether any official investigations had started in Malta, Stafrace said that, up to this point, he was not aware of any.
He told The Malta Financial and Business Times that when the Parmalat companies were registered Malta in April 2002 the company was highly rated and there was nothing to suggest any wrongdoing.
Noose tightens on milked
Prosecutors and investigators in Italy are turning up the heat on Parmalat’s former finance chief and former director of Parmalat’s Malta companies Fautso Tonna. Tonna was grilled for 11 hours and taken from prison to the prosecutor’s office in Parma.
Accounting firms, banks and US banking giant Citigroup Inc are also finding themselves in the line of fire. Tonna stands accused of helping to devise an intricate web of offshore companies to hold fake accounts and non-existent assets for over a decade.
According to Panorama, Parmalat would loan money from one bank and place it in a bank in another country. On the strength of the deposit it would raise a loan from the second bank and created a daisy-chain of loans with monies criss-crossing across related companies and subsidiaries. The intricate web somehow managed to escape the notice of regulators. Tonna claims he followed instructions of Parmalat’s founder and owner Calisto Tanzi.
Tanzi has admitted to diverting 500 million Euros from the 260 or so Parmalat related companies to Tanzi family funds but claims he is unaware of how this came about.
Prosecutors and investigators are still looking for anything between 10 and 13 billion Euros which have gone missing from Parmalat’s assets.
In the US a pension fund has started a lawsuit against Citigroup and audit firms Deloitte & Touche Tohmatsu and Grant Thornton, besides Parmalat and is one of the first brought by US investors in Parmalat securities.
Parmalat’s bonds are now trading at about 20 percent of face value and its nearly worthless stock is suspended indefinitely.

MFSA confirms dubious transactions before Malta

MFSA confirms dubious transactions before Malta
The Malta Financial and Business Times yesterday contacted The Malta Financial Services Authority chairman Prof Joe Bannister to enquire as to whether the accounts of the Parmalat owned companies in Malta had been scrutinised.
Bannister said, "The MFSA started its examination of the Parmalat presence in Malta as soon as the first articles started appearing in the foreign press early last December and it immediately took action to draw up a picture of the situation.
"The MFSA has been updating its findings practically on a daily basis as new facts are uncovered and as new developments are reported. It has carried out and is carrying out its investigations with the seriousness warranted by the importance of this case and these investigations are being handled at the very highest level within the Authority."
Bannister, like Stafrace, suggested that many transactions being bandied about in the media related to Malta did not in fact have anything to do with the companies since they have been registered on the Islands.
"I wish to confirm that - on the basis of the information available to the MFSA to date - it results that the substantial transactions being mentioned in the international media were carried out before the Parmalat group started to establish a presence in Malta.
"The company known as Bonlat, where a serious forgery of a bank statement is alleged to have occurred, is not a Maltese company, but was set up in the Cayman Islands. The forgery too pre-dated the Group's presence in Malta."
Asked if MFSA has looked closely or investigated certain figures in the 2002 accounts of Parmalat Capital Finance Ltd including the USD158,367,848 due to a loss on currency exchange, and the low value of the investment in the wholly owned subsidiary Bonlat: US$2 Bannister said:
"The documents relating to all these companies, including where applicable the audited accounts are available for public scrutiny. At law, it is not and it cannot be the Registrar of Companies' function to second-guess the financial statements filed each year by the 25,000 or so active companies registered in Malta. Financial statements remain the responsibility of the directors and of the duly authorised auditors."
Asked whether the stories in the international media were affecting Malta’s reputation and implying Malta was a tax haven Bannister said the question was neither here nor there and added: "Malta seeks to offer a variety of advantages including its EU compatible company law framework which since 1965 has followed the UK company law model."

Copyright © Newsworks Ltd. Malta.
Editor: Saviour Balzan
The Malta Financial & Business Times, Newsworks Ltd, Vjal ir-Rihan, San Gwann
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