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There will be a lot of finger pointing between Parmalat SpA and Citigroup Inc. come Thursday when the Italian dairy's trial against the bank for allegedly breaching its fiduciary duty and playing a key role in its 2003 collapse begins. Parmalat is seeking $2.2 billion from Citigroup, which is the first defendant to go to trial in the U.S.
for allegedly helping conceal fraud by former Parmalat management.
The Italian dairy company had originally sought $10 billion from Citigroup, but in April Citigroup won
dismissal of a large part of an $8 billion fraud lawsuit filed by
Parmalat in New Jersey. Parmalat had argued in its 2004
suit that top Citigroup executives were actively involved in the
multibillion-euro fraud that rocked Europe and plunged the Italian
company into bankruptcy in 2003.
The company dramatically collapsed under debt of €14 billion ($22.1 billion). Parmalat's Italian bankruptcy trustee, Enrico Bondi, alleged in the suit that Citigroup had helped former management at Parmalat to shield its debt and thus bolster its revenue. The Parmalat parent emerged from its Italian bankruptcy in 2005, and earlier this month agreed to settle a fraud-related class action brought by former investors in a New York court by issuing shares worth around $37 million. Meanwhile, Citigroup is seeking $699 million from Parmalat, saying it too was a victim of the dairy company's fraud. - Maria Woehr See The Deal's Judge sides with Citigroup See The Deal's Parmalat fights on against Citi Categories Deal Video
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