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April 30, 2008

Grant Thornton International remains confident about results of Parmalat hearing

By Nicholas Moody

Grant Thornton International remains confident about results of Parmalat hearing

Grant Thornton International (GTI) said it remains very confident of its position in its three-year legal case against Parmalat in the US. The Italian dairy giant is pursuing a combined amount of $10 billion in separate cases against GTI, the Bank of America and Citigroup.

Judge Lewis Kaplan from the District Court for the Southern District of New York is reviewing the case’s evidence and has yet to decide whether it will proceed to trial. A court spokesperson said there was no indication when an announcement might be made about the case despite recent reports that Parmalat’s lawyers were close to convincing US authorities to proceed.

Spokesperson Nan Williams said Grant Thornton is confident of its position in the legal dispute: “We intend to defend that position vigorously and at GTI we feel we will be fully exonerated in the proceedings, should they go ahead. Some [other cases against GTI] have been dismissed so those that are left we are very confident [about]. We believe we have a very strong case based on its merits.” Williams said GTI was an umbrella organisation in which all the individual member firms were separate financial and legal entities in their own right. “GTI didn’t do any work for Parmalat so the distinction between GTI and what was [going on with] the member firm in Italy is a very important distinction in that they are totally separate financial and legal entities,” she said.

Parmalat initiated proceedings against Grant Thornton and Deloitte Global in 2004 after defaulting on more than €14 billion (then worth $17.2 billion) in debt in the largest bankruptcy case in European history. Since the original court documents were presented in 2004, Deloitte Italy agreed to pay $149 million to Parmalat, its former audit client, after reaching an out-of-court settlement in January 2007.

Legal documents obtained by IAB this month outlined Parmalat’s original allegations of professional malpractice in 2004 against Grant Thornton and Deloitte. Parmalat alleged that Grant Thornton and its member firms played a crucial role in the theft and disappearance of more than $14 billion and are liable for these losses. The writ claimed that Grant Thornton members in the US, Italy, Singapore, Venezuela, Brazil, Cayman Islands, Malta and the Netherlands were involved in auditing Parmalat “and played an integral part in the conduct, acts and omissions”. The case is being pursued in the US since Parmalat alleged key parts of the fraud occurred there.

Former Italian Grant Thornton auditors Lorenzo Penca and Maurizio Bianchi were charged with securities-market manipulation in March 2004. In January 2004, GTI expelled its Italian member firm. In July 2007, Judge Kaplan dismissed claims against Deloitte, Grant Thornton and the networks’ US firms brought about by a legal team representing Parmalat’s foreign investors. He ruled the charges were not covered by US securities law.

Nicholas Moody

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