Bank of America has appointed a provisional liquidator to Eurofood IFSC, the Dublin-based subsidiary of Italian food group Parmalat.
The bank claims it is owed around $3.5 million (€2.76 million) by the company which provided financing for several Parmalat subsidiaries. Bank of America's total exposure to Parmalat, which Italian authorities is investigating, is around €217 million.
Investigating magistrates in Italy want to trace €13 billion in assets, a significant portion of which they suspect was invented by senior executives to plug holes in Parmalat's balance sheet. A spokeswoman for Bank of America said the Eurofood debt related to financial dealings between Bank of America and Eurofood.
Last Thursday, the High Court appointed provisional liquidator Mr Pearse Farrell of accountants Farrell Grant Sparks.
Mr Declan Taite, director of corporate restructuring at Farrell Grant Sparks, said the short-term priority would be to secure the assets of Eurofood and review its books. He added that the firm expected to liaise with the administrator appointed to Parmalat by the Italian courts in due course. Mr Farrell is due to return to the High Court on February 23rd to be confirmed as liquidator.
The relationship between Parmalat and a number of banks, including Bank of America, is central to the inquiries of the Italian authorities. Parmalat issued billions of euros worth of bonds to cover its debts and also used numerous offshore firms to disguise holes in its finances that could top €13 billion.
The most recent set of Eurofood accounts - which cover the year to end-December 2002 - show it was involved in issuing bonds in the US market. In addition, it provided back-to-back finance for Parmalat's operations in South America. The Italian inquiry is focusing on these types of transaction and other matters.
An employee of Bank of America in Dublin, Ms Catherine Meenaghan, is a director of Eurofood as is Mr Ambrose Loughlin, a partner in McCann Fitzgerald, the firm's solicitors. According to Bank of America, Ms Meenaghan was on the board because Bank of America administered the company for Parmalat. A spokeswoman said yesterday that the decision to appointment a liquidator was not related to any money that might be owned for the provision of these services.
The firms' two other directors, Mr Fausto Tonna and Mr Luciano Del Soldato, are both former chief financial officers with Parmalat. Both men were arrested after the scandal along with Parmalat founder Calisto Tanzi and two outside auditors.
In total, 11 people have been arrested so far in the case in Italy, although none has been charged yet.
Problems first surfaced at Parmalat in November when it defaulted on a €185 million debt repayment. It subsequently emerged that a €4.9 billion deposit in the Bank of America account of a Parmalat subsidiary in the Cayman Island was fictitious, leading to the appointment of Mr Enrico Bondi as administrator.
Separately, a report by PwC, the firm brought in last month to audit the now-bankrupt Parmalat, details 16 payments from Parmalat in the past two years - totalling €25.5 million - to Citibank accounts belonging to Zini & Associates, Parmalat's main law firm. Fourteen payments were made from a Bank of America account.
According to the report, part of which has been seen by the Financial Times, Bank of America received $4.5 million and Kantonal Bank of Grisons in Switzerland received $3.75 million from Parmalat when, in 1999, Bank of America brought in two unknown firms, Food Holdings and Dairy Holdings, to buy 18 per cent of Parmalat's Brazilian operations.
But the two companies appear to be controlled by Parmalat itself, Italian investigators have said.
