Bank of America employees knew that Italian dairy foods group Parmalat had a huge hole in its accounts a week before the news was made public, a judicial source said on Monday.
Bank of America's representative in Italy learned on December 12 from the U.S. bank's New York office that an account, supposedly held by a Cayman Islands unit of Parmalat and containing 3.95 billion euros, did not exist, said the source, who spoke on condition of anonymity.
Parmalat stunned financial markets worldwide when it announced on December 19 that the account was non-existent, wiping out much of the remaining value in its shares and bonds.
Days later, the multinational filed for bankruptcy protection.
In its December 19 statement, Parmalat said Bank of America had alerted auditing firm Grant Thornton — which certified the accounts of the Cayman Islands unit, Bonlat Financing Corp. — about the missing money on December 17.
But Eros Francini, Bank of America's representative in Italy, asked an employee to call the bank's office in New York on December 12 to check up on the Bonlat account, and he was told that day the account did not exist, the source told Reuters.
"We have seized e-mails and included them in the investigation and we have testimony from a member of staff, the person who was asked to make the check," the source said.
Francini could not be reached for comment, and no one was immediately available at Bank of America in New York or Milan.
The number three U.S. bank last week said it would vigorously defend itself against any charges after prosecutors in Milan recommended that Bank of America's Italian subsidiary be put on trial for market-rigging.
Also on the trial request list were the Italian units of auditing firms Deloitte & Touche and Grant Thornton and 29 individuals including Parmalat's founder, former Parmalat executives and three ex-Bank of America executives in Italy.
Francini was not on the list of people recommended for trial drawn up by the prosecutors.
But Francini is under investigation on suspicion of breaking Italy's bankruptcy laws after Bank of America in Italy received funds from Parmalat between December 23 and 24, shortly before it was placed under protection from creditors, the source said.
The Bank of America executive would be questioned in the next few days about why he did not disclose the information about the false Bonlat bank account while Parmalat shares and bonds continued to trade on financial markets, the source added.
