Word: parmalat
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Dates: during 2000-2009
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...hard-charging executive like Alberto Ferraris, being named chief financial officer of an $8.7 billion company was a career-making moment--and he wasn't going to let a few nagging doubts stand in his way. Since the company was Parmalat, the Italian dairy-and-food conglomerate that the U.S. Securities and Exchange Commission has charged with perpetrating "one of the largest and most brazen corporate frauds in history," and since Ferraris, 46, now faces charges of market rigging and issuing false information, he may wish he had heeded those doubts. But back in March 2003, he says, he knew...
Ferraris was brought aboard in the spring of 2003 to calm investors, who had been rattled when the outgoing CFO, Fausto Tonna, announced an unexpected new bond issue, sending Parmalat stock into a nose dive. The issue was quickly canceled. Within a few days of taking over, Ferraris made a presentation to financial analysts in Milan, stressing the company's rosy outlook: sales and earnings were up, debt was under control, and the company was awash in cash. "It was my job to patch up relations with the market," Ferraris told TIME in his lawyer's Milan office...
...over the summer, Ferraris asked two members of his staff to investigate discreetly. They came back several weeks later with a total debt estimate of ?14 billion, or $18.2 billion--more than double the amount shown on the balance sheet. Ferraris went to see Calisto Tanzi, the Parmalat founder and chief executive, whom he viewed as "an excellent person, a real entrepreneur," a charismatic but steady leader who was so proficient at mathematics that he spotted calculation errors in presentations. "I expected him to say, 'Your numbers are wrong,'" Ferraris recalls. "Instead, he said, 'Eight billion, 11 billion...
...Angeles-based headhunters Korn/Ferry International revealed that high - and in some cases increasing - numbers of European directors are declining invitations to sit on company boards. The reason? The pressures and costs involved in upholding stricter corporate governance standards in the wake of high-profile blowouts such as Enron and Parmalat. The scandals have "brought home to a greater extent the importance of quality contributions" from board directors, says Mina Gouran, head of U.K. Board Services at Korn/Ferry. Translation: nobody wants these gigs anymore, so directors might soon be in short supply. "Public companies are worried in Britain that the gene...
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...