Citigroup facing trial in $2 billion Parmalat fraud case

20 May 2008

Citigroup Inc will be facing trial in the United States over accusations of helping corrupt insiders at Italian dairy Parmalat SpA to siphon off funds from the company before its collapse in 2003.

Citigroup, the largest US bank by assets, aided and abetted rogue Parmalat employees, a lawyer for Parmalat's chief executive told a jury at the start of a civil trial. 

Parmalat chief executive Enrico Bondi, who has run the company since 2003, is seeking more than $2 billion in damages from Citigroup for hiding Parmalat's financial condition, his lawyer said.

Bondi's attorney, Kenneth Chiate accused Citigroup of greed, cover-up, concealing of loans, and hiding corruption in order to support an exit strategy. "This case is about Citibank and how they contributed to this bankruptcy," he told the jury in the state court in Hackensack, New Jersey.

Citigroup has been accused of designing a series of off-balance sheet transactions that helped Parmalat raise cash while making it appear that the company was not taking loans.

Those transactions created opaque financial disclosures that disguised the looting at Parmalat, Chiate said, adding, "They helped them doctor the financials by concealing the loans."