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November 29, 2009

Parmalat settlement draws a step closer

Former Parmalat auditors Deloitte and
Grant Thornton could pay a $15 million settlement to US equity
investors relating to their roles in the Italian dairy company’s
2003 collapse if the offer is approved by a US court.

The settlement document was submitted this
month to the Manhattan Federal Court in the hope of settling a
class-action lawsuit by US equity investors over the collapse.

Deloitte Global and Deloitte US offered to pay
$8.5 million and Grant Thornton International and Grant Thornton US
will pay $6.5 million to plaintiffs.

Deloitte and Grant Thornton declined to
comment because the court has not yet ruled on the parties’ motion
for approval of the settlement agreement.

Italian dairy company Parmalat collapsed in
2003 following the discovery of one of Europe’s largest frauds. It
involved the understatement of Parmalat’s debts by nearly $10
billion and the overstatement of net assets by $16.4 billion.

The settlement requires approval of US
District Court Judge Lewis Kaplan, who presided over other Parmalat
claims launched against the firms.

In September, Kaplan dismissed claims against
Grant Thornton International and its US subsidiary, noting that
Parmalat and Parmalat Capital officers had been acting within the
scope of their employment when they engaged in a massive fraud that
ended in the collapse of the company.

“Plantiffs simply can not get around the fact
that Parmalat, by means of the transactions complained of, raised
and spent millions of euros for corporate purposes. The actions of
its agents in so doing were in furtherance of the company’s
interests even if some of the agents intended at the time they
assisted in raising the money to steal some of it from the
company,” Kaplan wrote.

Kaplan also dismissed separate lawsuits by
Parmalat subsidiary Parmalat Capital Finance Ltd against Bank of
America and both Grant Thornton entities.

These cases are important as they establish
the legal line of control between ‘umbrella’ network administration
bodies and member firms.

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