The Italian government Tuesday approved an emergency decree to bail out the country's eighth largest industrial group, Parmalat. The company faces collapse over a $5 billion hole in its accounts.
The Parmalat case is being referred to as Italy's Enron, in reference to the massive accounting scandal that brought down the U.S. energy giant in 2001. Investors started to panic last week when the company admitted it didn't have nearly $5 billion at a U.S. bank, as it had reported last September.
The financial situation of the large Italian food and dairy company is so serious that the Italian government has decided to step in. During a cabinet meeting Tuesday it approved a measure, which rewrites creditor protection procedures.
It allows a government-appointed commissioner to run the ailing company. Industry minister Antonio Marzano said the special commissioner would be appointed to draw up a restructuring plan to bring Parmalat back to financial health. The plan will have to be approved by the ministry.
Mr. Marzano said the commissioner will have some power to sell assets but the primary charge will be to overhaul the company. He also said the aim is to keep Parmalat in Italian hands.
The Italian government has said it will also ask the European Union to grant crisis status to the dairy industry. Parmalat makes and sells milk products, juice and other food items, and owns professional soccer teams in Italy and Brazil. It employs 36,000 people worldwide.
Prosecutors in Milan and Parma said they are investigating some 20 people in connection with the missing cash, including Parmalat's founder, Calisto Tanzi.