Parmalat bleeds small investors
Like tens of thousands of Italians, Walter Toffoletto bought Parmalat bonds thinking that Italy’s largest food group would be a rock-solid investment for the future.
Now, he’s all regrets.
“I am one of those robbed by Parmalat,” the 51-year-old office worker said on Friday in Italy‘s financial capital Milan, ruing his $18,660 investment in the global food group.
Angry, frustrated and bewildered, Italians say a multi-billion dollar scandal at the company has hurt thousands of ordinary people and underscores the need for deep reforms to prevent a costly and embarrassing repeat.
Disastrous
Parmalat, a household name in Italy, filed for bankruptcy protection on Wednesday, five days after unveiling a hole in its accounts that investigators say could exceed $12 billion.
Public prosecutors are investigating possible fraud, false accounting and market rigging at Italy‘s eighth-biggest industrial group, with some 20 people including Parmalat founder and former CEO Calisto Tanzi named in the probe.
“It’s a disaster,” said Elma Ravizza, a 27-year-old office worker strolling through central Milan with her one-year-old daughter.
“It has hit a lot of small investors, normal people. No one expected it. Everyone knew and trusted Parmalat, and now they have to suffer.”
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“It has hit a lot of small investors, normal people. No one expected it” Elma Ravizza, |
Italian newspapers have reported that 70,000 to 90,000 small investors own Parmalat stocks and bonds.
Parmalat’s plight, the most spectacular corporate crisis in Italy since the Ferruzzi conglomerate sank in the early 1990s under $20 billion of debt, sent shockwaves through the nation’s biggest banks.
Pessimistic
A blue-chip stock until the scandal broke, Parmalat has since seen its market capitalisation shrink virtually to nothing from $2.23 billion. Its bonds were recently traded at one-fifth their face value.
“At this point, I am very pessimistic that I’m going to get anything back,” Toffoletto said. “Only if Parmalat survives with these new people in charge could there be any hope.”
On wednesday the government appointed veteran corporate rescue expert Enrico Bondi as Parmalat’s commissioner, charged with saving the business within two years under a specially enacted scheme for protection from creditors.
Just 10 days earlier he had been brought in as Parmalat’s chief executive officer.
Parmalat, one of the world’s biggest producers of long-life milk and the number-three cookie maker in the United States, boasts a variety of brands around the globe including Santal drinks and Beatrice dairy products.