With justice authorities in New York stepping up an investigation into the role of US banks in the case, Fausto Tonna was taken from prison for more questioning by public prosecutors on Monday in Parma, the northern Italian city close to Parmalat Finanziaria SpA's headquarters.
Prosecutors have accused Tonna of helping build a web of offshore holding companies with fictitious assets that left the global food group with an accounting black hole investigators believe could exceed 10 billion euros ($12.7 billion).
A judicial source said former chief financial officer Tonna, reiterated during an interrogation he had obeyed instructions from Parmalat founder Calisto Tanzi.
"I was only following Tanzi's orders," he was quoted by the source as telling the prosecutors.
Earlier, Tonna turned angrily on the media, telling a group of journalists at the prosecutors' office: "I wish you and your families a slow and painful death."
Huge accounting gap
Parmalat's crisis exploded just over two weeks ago when its new managers revealed an initial four-billion-euro gap in its accounts, forcing the company to seek protection from creditors.
"I was only following Tanzi's orders"
Former Parmalat finance chief
Tanzi, also under arrest, has admitted to diverting about 500 million euros from Parmalat, in particular to family tourism companies, but denies he knew how it was done. He has also said the accounting gap could be as big as eight billion euros.
A source close to the probe said on Monday that seized documents showed cash had been pumped into AC Parma, one of Italy's top soccer clubs, which is owned by Parmalat, and more money was missing from a tourism business than previously feared.
"We get a surprise with every company we look at," he said. "There was systematic falsification and there are cracks all over the place."
Italy's market regulator Consob on Monday asked a court in Parma to annul Parmalat's 2002 accounts, showing a net profit of 252 million euros, after the group failed to comply with accounting standards.
Parmalat's government-appointed administrator, Enrico Bondi, is expected to ask Italian banks for new loans. News reports have pegged the value of the loans between 50 million and 100 million euros.
"It is likely that meetings with bankers will take place over the course of this week," a source familiar with the matter said after Bondi met restructuring advisers Mediobanca and Lazard and said work was progressing well.
Eight people have been arrested in the probe so far and are in prison for questioning. No charges have been brought.
Prosecutors are trying to piece together where the missing money went and whether anything is left. They have contacted foreign banks for information.
Ecuadorean media have said courts there would examine Parmalat's activities in the South American country, which Tanzi visited just before his arrest.
Questions have also been raised about US banks, which helped manage the sale of about eight billion euros worth of Parmalat bonds between 1997 and 2002.
Many Parmalat factories have
been closed due to the scandal
US investors bought over $1.5 billion of Parmalat bonds.
US banks investigated
Bank of America is believed to have organised private placements of some $500 million of Parmalat bonds since 1997 and has been involved in structuring other business for the group.
The bank on Monday said it was cooperating with regulators and "other authorities."
As investment bankers came under scrutiny for their Parmalat business, a banking source said they too had been misled.
"A company's accounts are audited and it's not really for investment banks to second guess the auditors," the source said.
As well as the US Securities and Exchange Commission, Manhattan District Attorney Robert Morgenthau and the US Attorney's office in Manhattan are also involved in the probe, a source familiar with the situation told Reuters over the weekend.
Italian banks Capitalia SpA , Banca Intesa , Sanpaolo IMI SpA - three of Italy's four biggest banks - have more than one billion euros in outstanding loans to the group.
Capitalia shares fell more than three percent on Monday and Intesa closed down 1.7%.
Parma's soccer club, owned by Parmalat, was due to hold a shareholders meeting on 9 January to decide on a make-or-break capital increase to cover losses worth 77 million euros, without which the club could be forced into liquidation. Parmalat might agree to cancel debts owed by the club as a solution.