MercoPress. South Atlantic News Agency

Parmalat Calisto Tanzi sentenced to 18 years in prison for 18.6 billion bankruptcy

Calisto: where are the 5 billion USD?

The founder of Italian dairy food company Parmalat, Calisto Tanzi, has been sentenced to 18 years in prison for his role in the company's collapse seven years ago. Parmalat buckled in December 2003 under a18.6 billion US dollars hole in its accounts.

Its demise wiped out the savings of more than 100,000 small investors who had bet on Parmalat's investment-grade corporate bonds.

It was Europe's biggest corporate bankruptcy at the time.

Calisto Tanzi was found guilty of fraudulent bankruptcy and criminal conspiracy in the main trail of the case which has been dubbed “Europe's Enron”.

The three-man court also sentenced former finance director Fausto Tonna to 14 years in prison. Thirteen other former executives were found guilty, while two were cleared of the charges.

The defendants are widely expected to appeal against the ruling. But that is a process that can take years in Italy's slow-moving justice system. The court ordered defendants to pay the restructured Parmalat compensation of 2.64 billion US dollars.

It also ordered them to pay creditors a sum equal to 5% of the nominal value of shares or bonds that they had bought.

The Parmalat crisis first came to light when it revealed that a 5 billion US dollars bank account held by a Cayman Islands unit did not exist. It was then that management sought bankruptcy protection, and prosecutors launched a criminal fraud probe.

Parmalat was restructured and re-listed on the Milan bourse in 2005.