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New Parmalat Audit Shows More Debt, Less Operating Profit - 2004-01-26


A new audit of Parmalat shows the huge Italian dairy company has far greater debts than the firm reported before it collapsed into insolvency.

Monday's preliminary audit shows debts of nearly $18 billion - nearly eight times what the company earlier told officials and investors.

The draft audit also shows operating profits were overstated.

The company says when the audit is final, it will serve as a basis for the industrial, economic and financial restructuring of the Parmalat group.

Parmalat has thousands of employees and operations in 30 countries, and some suppliers have expressed concern about getting paid.

Parmalat collapsed last month amid allegations of massive fraud when a bank account that was supposed to contain five billion dollars was declared a forgery.

Eleven executives associated with the company, including founder Calisto Tanzi, have been detained for questioning, though none have been formally charged.