Italian judge jails 11 in Parmalat case

MILAN- A Milan judge sentenced 10 former Parmalat executives and a lawyer to jail on Tuesday in the first guilty ruling over the 14-billion-euro ($NZ24.29 billion) collapse of Italy's biggest listed food group, judicial sources said.

Judge Cesare Tacconi sentenced the 11 men, including Fausto Tonna, one of Parmalat founder Calisto Tanzi's closest associates, to up to two and a half years in jail for crimes including market rigging and obstructing regulators.

However, none of the convicted were expected to serve time in prison despite their role in Parmalat's collapse in 2003 in one of Europe's biggest financial scandals.

The sentences stemmed from a plea-bargain agreement with authorities that means the 11 convicted will not have to stand criminal trial in Milan.

But they could still be indicted in Parma, near Parmalat's headquarters, where a wider investigation is under way.

Other executives convicted on Tuesday included former chief financial officers Alberto Ferraris and Luciano Del Soldato, internal auditors and Tanzi's brother and son, the judicial sources told Reuters.

Prosecutors had said Tonna, a central figure in the inquiry, was the architect of Parmalat's web of holdings. He quit nine months before Parmalat's collapse and was replaced in quick succession by Ferraris and Del Soldato.

Lawyers have said the Milan plea-bargaining deal could help the accused concentrate on the investigation in Parma, where a separate team of prosecutors is looking into possible fraudulent bankruptcy, which carries a heavier potential jail sentence.

Prosecutors have been investigating suspected financial crimes since Parmalat, once one of Italy's biggest industrial groups, crumbled under the weight of billions of euros of debt.

One of Italy's best-known global brands, Parmalat stunned investors when it disclosed a 4-billion-euro hole in its accounts in December 2003.

It has since been placed under administration, led by turnaround veteran Enrico Bondi, and has slimmed down operations. From Tuesday until the end of August, Parmalat creditors will vote on a 12 billion euro debt-for-equity swap at the heart of Bondi's plan.

Parmalat then plans to relist on the stock market after the summer.

- REUTERS