An Italian judge dealt a blow to prosecutors investigating the Parmalat fraud scandal on Wednesday by rejecting their request for a fast-track trial for 32 executives and companies accused of financial crimes.
Judge Guido Piffer ruled the investigating magistrates in Milan had not provided enough evidence to justify putting the 29 individuals and three financial institutions on an accelerated trial process.
In his 29-page ruling, obtained by Reuters, Piffer said there was sufficient evidence to order eight of the accused, including Parmalat founder Calisto Tanzi and two outside auditors, to go immediately to trial.
But Piffer declined to order only some of the accused to stand trial, saying more investigation was needed to determine their roles, and he ruled that “the request for an immediate trial cannot be accepted.”
“It is a setback for the prosecutors,” said Umberto Mosetti, a partner with shareholder group Deminor, which is advising Parmalat investors.
Magistrates launched the investigation in December after Parmalat announced that a four billion-euro ($4.9 billion) bank deposit did not exist, forcing it into insolvency and triggering one of the world’s biggest financial scandals.
The prosecutors have said management conspired for more than a decade to mask billions of euros of losses at the food firm.
Last week the prosecutors requested a fast-track trial for the 29 former Parmalat executives, bankers and auditors, and for the Italian units of Bank of America and of auditors Deloitte & Touche and Grant Thornton, now renamed Italaudit.
An immediate trial would have scrapped preliminary hearings, a stage that can take years to complete, and defendants could have gone before a judge as early as April for market rigging and other financial crimes that carry possible jail sentences.
“It seems a very correct decision to me,” Tanzi’s lawyer Fabio Belloni said of the judge’s ruling.
A judicial source said the Milan prosecutors intended to close their investigation soon and then request an ordinary trial procedure. A judge would then hold closed-door hearings before deciding whether to order the accused to stand trial.
Setback
Peter Alegi, a U.S. lawyer who has lived in Italy for 40 years, said it would now take considerable time to get a Parmalat trial under way in Milan.
“It means the judge is not convinced it is an open-and-shut case,” Alegi said. “I would have been amazed if anything so complex would not have a full, preliminary hearing.”
Prosecutors want all 29 individuals and three companies to be tried for market rigging and have also accused some on the list of false auditing and obstructing the work of regulators.
“It would have been an extremely important display of effectiveness of Italian justice,” shareholder adviser Mosetti said of the fast-track procedure.
“But especially in the criminal system, speed should not come at the expense of accuracy,” he said, adding investors were more concerned about civil cases to recover their investments.
Judge Piffer said there was enough evidence to try Calisto Tanzi, his son Stefano, four other former Parmalat executives and two former outside auditors with the former Italian affiliate of Grant Thornton, Lorenzo Penca and Maurizio Bianchi.
But he said it would be better not to divide the accused into two groups on separate legal tracks as their roles in the case were not yet clear.
Magistrates in the northern Italian city of Parma, as well as authorities in several other countries including the United States, are also investigating the near-collapse of Parmalat, once Italy’s eighth-biggest industrial group.
Parmalat’s administrator Enrico Bondi last week announced a draft rescue plan including swapping much of the group’s 14 billion euros in debt for equity and selling non-core assets around the world.
He is due to meet creditors in Milan on Friday.
