Word: fraud
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...year ago, Mikhail Khodorkovsky, a billionaire who had built Yukos into an energy powerhouse, was arrested and put on trial for alleged fraud and tax evasion, charges he says were trumped up. Since then Yukos has been hit with a $17 billion bill for back taxes, and the government is threatening to auction off the company's most valuable asset to pay them. Most Yukos accounts have been frozen, making it hard to pay suppliers and staff. But the company has called a shareholder vote for December to decide whether to file for bankruptcy protection; a principal reason it hasn...
...been following the Parmalat scandal closely. "We want to be sure that in this case, like in others, U.S. companies are receiving fair and equal treatment," he said. As for Parmalat's own management, while many executives have acknowledged to magistrates that they played a role in the fraud, most point the finger at Tanzi as the mastermind. Tanzi, however, blames others, particularly Tonna. If found guilty, both men could face jail sentences of five years or more. While some of the Parmalat executives were jailed during the initial investigation, all have since been released pending trial. Ferraris...
...other companies in Italy, Brazil, Argentina, Hungary and the U.S. "It was a reversal of logic," says Vito Zincani, the chief investigating magistrate in Parma. Usually, companies take on debt to grow. But in Parmalat's case, "they had to grow to hide the debt." The core of the fraud was a system of double billing to Italian supermarkets and other retail customers. Simply put, by billing twice for the same shipment of merchandise, Parmalat could create the impression that its accounts receivable were much larger than they really were. One of the Parmalat executives who operated the scheme, Claudio...
What struck and surprises me is the simplicity [of the Parmalat fraud]. It was almost banal...
With the help of former Parmalat executives, magistrates and forensic accountants have mapped out the system of double billing they say was at the heart of the firm's alleged fraud. They claim Parmalat secretly controlled 33 of the 104 distributors it employed in Italy through shell companies in the Netherlands Antilles. The company issued duplicate invoices and used the fictitious revenues as collateral for bank credits. It then shunted the debts into offshore, off-the-books companies. As a result, investigators say Parmalat was able to both inflate its revenues and give the appearance of reducing its debt. Here...