alisto Tanzi had it all. His Italian his old friend, ’s Mayor Ubaldi, was soon food empire had made calling him a Jekyll and Hyde. the former cheese and sausage Tanzi did sponsor the restoration of Parma’s shop owner immensely wealthy. 11th century basilica and gave $30,000 to Yet his image was that of a restore the church organ. Reportedly, he also rather pious family man. The Tanzis were financed programmes for AIDS patients, drug C undoubtedly Parma’s uncrowned royal fam- addicts and the poor. Just how much his lar- ily, but they happily rejected the glitzier gesse really cost him isn’t clear. lives enjoyed by many of their peers. They The Parmalat scandal came at a time when didn’t share the social cachet of ’s more Italy’s billionaire media-mogul Prime Minister, glamorous clans like the Agnellis of Fiat Silvio Berlusconi changed legislation to reduce and the Barillas of Barilla pasta, never mind rather than increase the penalties for fake Donatella Versace. They were so understated accounting, only furthering the image of Italy as that they weren’t in the gossip columnists’ having a rigged economy. sights. Not until December 2003. Yet friends, colleagues and workers alike That’s when Calisto Tanzi was arrested, reeled when Tanzi was carted away in handcuffs. accused of siphoning perhaps billions of US During his brief stay behind bars, a lawyer called dollars from Parmalat to family-owned sub- him “a broken man” and he reportedly alter- sidiaries, causing shareholders to lose their nated between weeping and wailing over having savings, and jeopardizing around 36,000 jobs lost everything and getting down on his knees to worldwide. The alleged crimes included fake pray. Meanwhile, the arrests of family members accounting and share price manipulation. and company executives were piling up. As much as US$12 billion could be missing “I said, ‘Oh, this is really big trouble!’” Parmalat’s in “Enron a la Parmigiana.” And trading of export manager Angelo Peracchi recalls. “I was Parmalat stocks and bonds on the stock shocked. I couldn’t imagine it. For food and market only resumed less than six months ago dairy products, Parmalat was number one in after a suspension of almost two years. Italy.” Unfortunately, Peracchi had just purchased “The Tanzis are not Versace-style people,” some Parmalat bonds. But his most pressing fear says Ettore Livini, a reporter for Italy’s La Repubblica newspaper. “They’re not one of the Italian dynasties who have worked in the industry for hun- dreds of years. Calisto Tanzi actually started from scratch. They did not go on holidays where Italy’s glamour people went. They were low-profile.” The dairy emperor had some toys – like two antique yachts, one a 100- foot schooner worth $10 million, and a $45 million corporate jet. He also had his famed “God’s Helicopter,” so nick- named because the devout Catholic often loaned it to high-level clergy. But Tanzi, now 68, drove a Lexus and had no chauffeur. The family villa was rather nondescript, tucked behind a clutch of citrus trees outside Parma, Guiseppe Verdi’s birthplace and the home of parma ham and parmesan cheese. There were no opulent villas Parma in Sardinia or St Moritz. Staying close to his humble roots, Tanzi’s social high point was hosting an annual Swordfish Luncheon at their villa. All this makes his fall from grace even Above: Up to US$12 billion is allegedly harder to comprehend. There are clues, though, missing in Enron a la Parmigiana to another, more complicated side. Where some Opposite page: When Calisto Tanzi held Epic, Enron-style fraud brought Calisto Tanzi, the founder of international dairy his son’s wedding reception at the Palladian- saw a kind, hardworking, generous fellow, oth- style Villa Bertozzi, near Collechchio, the owners foods giant Parmalat, to his knees in one of the biggest corporate scandals in European ers saw an aggressive risk-taker. Tanzi’s philan- asked to be paid up front. Apparently, they Scam had tired of getting paid late for the milk they history. Sue Russell asks what caused the souring of Italy’s global dairy empire thropic reputation was also questioned and even sold to Parmalat’s factory a kilometre away Companies can stand trial in Italy. Exactly how much responsibility do firms like Grant Thornton have? Accounting reviews are limited because of cost, notes Hank Boerner: “So there is a high degree of trust in the corpo- rate statements and the words of the CEO and others.” And layers of protection are missing. In the US, unlike Italy, accountants work strictly for a company’s shareholders. “They are, under law, the protectors of the truth in terms of the finan- cials of a company,” says Boerner. Calisto Tanzi’s arrest was just the beginning of his family’s ordeal. Wife Anita was also investigat- ed for allegedly transferring $850,000 between accounts. As the scandal broke, Fabio Belloni, one of Tanzi’s lawyers, confirmed to the New York Times that there were “very real and strong ten- sions within the family.” Supposedly, the patri- arch’s children didn’t visit him in jail and his son Stefano and brother Giovanni stopped speaking to him. Yet it’s not clear if the family rift was

250 offshoot companies. The sheer scope of executives also participated in the fla- US$12 billion could be missing in the fraud was breathtaking. grant cooking of books. Two execu- “Enron a la Parmigiana.” The sheer scope Investigators believe that Parmalat’s intri- tives were arrested. cate scams went undiscovered for more than Banks and auditing firms alike of the fraud was breathtaking a decade. As Hank Boerner, a New York issues are adamant that they were com- and crisis management consultant specialis- pletely duped by Parmalat’s scams. was losing his job of 19 years. “Everyone was the grocery store and the distributor to falsely shredded documents and smashed computers. ing in governance and accountability, explains: Interestingly, lawsuits are flying in shocked, it was incredible,” he says. inflate the accounts receivable figures. Tanzi and his brother Giovanni resigned and “Corporate fraud is not always easy to detect. both directions. Parmalat is being sued That reaction reverberated through Italy and A tangle of offshore companies with fake company stock plummeted to cents a share. What can hide the bad news (and fraud) is the by Bank of America, for instance, but the international business community. It began assets and phoney profits was set up to off- The government sent corporate bailout whizz constant expansion of a company – acquisi- Enrico Bondi (recently appointed to look as though an ignoble end to Calisto set Parmalat’s exploding debts. The company’s Enrico Bondi riding in on a white horse to sal- tions and mergers bring more money, more Parmalat’s new CEO) is also on the Tanzi’s success story was inevitable. Tanzi was apparent fiscal health was a complete façade. vage Parmalat. operations, more countries for operations, offensive, filing his own lawsuits. 22 when in 1961, he dumped college after One version of events is that Calisto Tanzi On December 29, 2003, the US Securities more profits (or the claims of profits), etc. That At the time of press, a March his father’s death to run the family’s sausage ordered former CFOs Fausto Tonna and and Exchange Commission sued the bankrupt helps paper over the bad spots.” court hearing was expected to and cheese shop. Making his mark by creating Luciana del Soldato to set up the shell compa- firm for fraud (US investors bought over $1.5 Soon, auditing firms Grant Thornton and determine whether four global Parmalat’s signature Long Life milk, he diversi- nies. Tanzi claims Fausto Tonna concocted the billion worth of bonds and securities.) Tanzi, DeLoitte and Touche were dragged into the banks – Citigroup, Morgan Stanley, fied, producing yoghurts, ice cream, pasta sauce scams. Either way, things spiralled out of con- who has admitted to siphoning $630 million mess. And various international banks which Deutsche Bank and Switzerland’s UBS and biscuits. Parmalat’s products now sell under trol. The fictitious assets of one offshore sub- from Parmalat to a family-owned subsidiary, funded Parmalat at different times stand accused – and 13 bank executives should stand numerous names worldwide. In the US, Black sidiary, Bonlat Financing, grew to $8 billion. wound up under house arrest. He’s blamed the of harming the company and its shareholders trial for helping Parmalat’s former Diamond cheese and Mother’s Cookies prevail. What tipped off authorities? Various threads company’s financial woes both on the collapse by ignoring obvious signs that Parmalat was management mislead their investors. Parmalat underwent an enormous growth unravelled simultaneously with one real whop- of Latin American economies and exchange overstretched. DeLoitte denies any wrong- spurt after going public in 1990 – the Tanzis per. When Parmalat needed $180 million to rates, and on the impending bankruptcy of doing, saying its executives’ concerns were kept 51 percent of the company. Investigators redeem a bonds issue, a Bank of America account Parmatour, the debt-ridden private tourism brushed aside by Parmalat executives. Opposite page: Calisto Tanzi (second right), and his lawyers, Filippo believe it was in dire financial straits by 1993. it had claimed held $4.9 billion turned out not company headed by his daughter Francesca. Grant Thornton seems to have got down in Sgubbi (left) and Fabio Belloni (second left) Yet each year, it hid its financial losses and to exist. Disgraced CFO Fausto Tonna has since More family firms dominate Italy than any the murk, however. Due to lose Parmalat’s busi- talk strategy at Milan’s courthouse Opposite inset: An undated photograph of posted profits instead. It kept on expanding admitted to mocking up a letter to support the other country in Western Europe and they ness because a law demands firms change their Calisto Tanzi, his wife Anita Chiesi, and son globally, taking its camouflaged financial mess phony assets claim. In a staggeringly primitive often escape the close scrutiny that theoretical- outside auditors every nine years, GT’s Italian Stefano in Modena Above: After the scandal, Stefano Tanzi fought along with it. Myriad frauds kept this huge cut and paste job, Bank of America letterhead ly tracks a public corporation’s every move. If Unit concocted a scheme with Parmalat to spin desperately to keep his presidency of the deception going. One of the scams involved was cobbled together with assorted signatures. regulation had been tighter, Parmalat couldn’t off parts of the business which they could then football club Parma AC, but failed Right: Calisto Tanzi and his billing one shipment of merchandise both to As authorities closed in, people at Parmalat also have quietly spread its escalating debt across keep as clients. Allegedly, these Grant Thornton daughter Francesca around town in her finery while locals faced faced locals while finery her in town around swanned she that help didn’t it cham parties, pagne and farmhouse Tuscan million $2.5 of her for popular. Known more no is Parmalat, Czarina so-called the Tonna, Donatella andyour families a slow and painful death!” scandal broke, he memorably snarled, “Ian appealing wish target. you Meeting journalists after the termind. Then, Tonnais so unpopular, he makes dobelieve Tanzi’sclaim that Tonna following justTanzi’s waswas orders.thehe mas Yet some claims still but accountsfalsifying to admitted talking. is Francesca nor he neither but betrayed, very feel company,to milk said was powdered local small, a for consultant a Stefano,now on? going was what of aware very contend, they,were Or prosecutors as father? werearrested. both Stefano and she and down crashing came culpability,life Francesca’s her Whatever firm. the ran she say Others “marginal.” as role daughter’s his dismissed but it Parmalat’s into of money lion mil $638 diverted he’d that investigators to wonvarious Italian and European cups. league,and A country’sSeries the to climbed had caps.It Parmalatthe Tanzi and in feather butfailed. It was amoney loser but the ultimate footballParmaclub AC, Parma’sjoy,and pride the presidencyprestigiousof his keep to ately didn’t work for Parmalat. Stefano sibling, fought youngest desper the Laura, roles.Francesca’s fromhis family to protect them. genuineorconcocted tototry distance Calisto His famously extravagant and uppity wife, uppity and extravagant famously His has Tonna, Fausto he CFO former for As Weresiblingsthe paying their of sins the for admitted Tanzi Calisto Parmatour, for As and Stefano’s over hovers certainly fog A implemented policies that helped fraud to flourishfraudto helped that policies implemented Above: managerFausto Tonnaescortedbypolice is Opposite page: Opposite guards as he arrives at the prosecutors’arrivesthe he at as guards Italy’s Prime MinisterItaly’sPrime SilvioBerlusconi Right: headquarters at Parma’sheadquartersat LawCourt FinancierCragnottiwith Sergio FormerParmalatfinance his wifeFloraPizzichenihis - - - -

and powerful people forget they are human human are they forget people powerful and intoxicates says.“Power melted,” he feathers the to wax-held his when death his sun,to close plunging and high too flew who “Recall Icarus inflation. psychological – problem age-old an cites Jungian Association, Psychotherapist the of co-founder and Consulting Leadership Advanced of Carl principal Robinson, Psychologist name. good family’s the preserve and face save to attempt misguided gruesomely a or greed, for freedom personal and fortune his risk would Tanzi Calisto as ed,money-laundering. of accused cash $1 million in cheques. She too was arrest to tried Donatella arrested, was husband her “Thief!”followed shopped.she as her of dayThe cries savings.Angry and jobs their losing ts ofudn ta ayn a wealthy as anyone that confounding It’s - materially, has incurred what is virtually virtually is what incurred has materially, want ever could he everything TV,has who cable Adelphia of Rigas John man, year-old convincedthat the rules do not apply to them. monvalues or respect for the law. Theybecome com entitlementunconstrainedby of sense a the story that they are a breed apart and develop the very best life has to offer. Some then buyincredible into sums. They have lived newspapers, paid and in magazines the inrare celebrated air of have,”– Group)notes,International he “been Enronand Hank Greenburg of AIG(American values.and life fromnormal towerivory an away in isolated but privileged only not is someone when starts trouble says Consulting Inc, an organisational ethics expert, her.”or him for up it clean will accounting in folks the does, he Farrell. A “Or,Patricia if psychologist clinical wrong,’” says no do can boss ‘the that belief wildinaculture whichcreatescissism run the think.”them…they to apply longer no then and the rules that govern all of us other mortals and left after being accused of misappropri of accused being after left and shot, be should employees thieving that said of Wal-Mart vice-chairman who once former Coughlin, prison. continues, “Thomas “Or,” in Gilbert years 15 to fraud?” sentenced was massive Rigas through sentence death a Hw le a w epan o a 80- an how explain we can else “How “Many of these individuals – such as Ken Lay of Page New of president Gilbert, Jack nar of matter simple a is fraud “Corporate - - -

Photography AFP; A-Link/Sipa Press; Landov Donatellatried to cash $1 million in cheques sheshopped. Theday her husband wasarrested, Angry cries of “Thief!”followed her as company.” same the from $500,000 ating othersoutside Italy as well as 36 Italian lenders.” directed at multinationals: Bank of says, “are America, notice,” he you’ll lawsuits, nine inspired Bondi- the indeed.“Even slow very be will daysafter the disgraced Fazio finally resigned. torprotection was given final approval just four tail the Bank of Italy’s powers and increase inves wrongdoing.Last December, newa law tocur havethepower moveto wherein they suspect Italy’snotoriously toothless stock regulator, will banks.cozy.too It’slittle a all sion. local twoheaded least associates At his of expan overseas for talent for internationally out reaching than rather buddies hometown shareholders. Tanzi generally hired his favoured and of accountability,expense the at cronyism less transparency More overhaul: an needs lyat work with Calisto Tanziand his cohorts. comes.”time the if and when that handle Maybe.be? theyBut believe they’llto manage Farrell. “Probably not. Do they believe they will However, Hank Boerner predicts that reforms Consob, happening. are changes tiny But desperately Italy’s system believethat Many That kind of arrogance and delusion was sure Patricia caught?”asks be to want they “Do - - - - ing gratitude for all they did for Parma and and linger Parma for did likely they all for more gratitude ing is forgive to lingness Tonnaarrogant.”wasvery he because how are you?’ They’re maybe morewith angry say, they Mr town “If Tanziin see chuckle.‘Hello, people wry a with concedes Peracchi people!”other the of money the yeswith said he loans. or “Sometimes jobs them giving by out helped had Tanzi Calisto those all cially the of Tanziaffection with family, speak espe lost$20,000, $30,000? It’s okay.” tsunami,you lose the house or your life. So you cheerfully. “We must go on. Earthquake,perspective.in catastrophe,”a not tornado,is “It sayshe investmentslost his put soon he and safe was After several months in limbo, he learned his job Peracchi,for one, isn’t crying over spilt yoghurt. wounded parties seem ready to move on. Angelo markets.US in capital seek who debt ing to all foreignequity or of issuers corporate Justice.warn strongof a as serve should That Department US maybroughtyetbythe es be Commission sued Parmalat and criminal charg Ettore Livini thinks that any seeming wil- seeming any that thinks Livini Ettore still locals loyal many everything, Despite Withpassagethetime, of Parmalat’ssomeof Exchanges and Securities US’s the Yet - - - - time already served. served. already time brief the than punishing more nothing with likely gone forever, and they are could even get dollars off of Billions sentences. reduced for return in guilty plead allowedto be will prits actions, there’s a strong chance that the key cul inwhy they’re not as enraged with the family.” healthcare for everybody – is an importantworkplace,and of pensionsstabilityfactor – Italy in place protectionsin socialhaving that think I enraged.areruined.being notare families But he concedes, “Of course, people who lost moneysavings because they’d bought Parmalat bonds,” forgiveness.of theirwheels lost people “Some vidualsthissituationinItaly alsogreasesin the thelimits ondamage that canbedone toindi Parmalat.”to attached very still in the Collechio area was out of work. They’re everybody years, about 10 for that remember they because now forgiving more bit little a are firm. They the and jobs the saved Bondi Mr “instead, explains, Livini hell,” to go to changed. everythingwasthat going “Theyfelt area,too. Theyused to hire mostly local people.” the peoplein tojobs of theygave lotcourse a buying the Parma football team,” says Livini. tool“Of they used to be remembered in the city was headquarters. Parmalat’s houses modern Collechio, thesmallvillagenearby whichnow It’swell,as just legal ongoing the in because Manifesto Il all that’s initially, shocked were people If “Probably the most important public relations reporter Andrea Rocco believesRoccoreporterAndrea ■ - -