BAT
KENALKAN DIRI DAN NO MATRIKS
NADIA
KENALKAN DIRI DAN NO MATRIKS
AISYAH
KENALKAN DIRI DAN NO MATRIKS
PIA
KENALKAN DIRI DAN NO MATRIKS
LUQ
KENALKAN DIRI DAN NO MATRIKS
BACKGROUND COMPANY
BAT
Hi, we will do a group discussion about Parmalat The Europe Case. I will talk
about the summary of Parmalat company background.
Parmalat is a company that produces Italian milk and food, and one of the
world’s largest dairy supplier.
Nad
The company started in Parma, Italy in 1961 and expanded to Brazil. The
founder of Parmalat’s is Calisto Tanzi.
In 1990’s Parmalat need for cash and sell 49% of theirs share to Milan Stock
Exchange. Parmalat also made several acquisition with debt.
AISYAH
In 2001, Parmalat’s financial condition began to decline.
In 2003, Parmalat’s was caught on debt of 14 Billion Euro.
Parmalet does not have sufficient independent directors.
PIA
The Tanzi family always held a majority. The Parmalat’s Board of Director,
which consisted mostly of family member of Tanzi’s and controlled 51% of
Parmalat share.
LUQ
Also, with the help of third parties which is external auditor and the bankers.
It was not unusual for family members to override whatever internal controls
existed to perpetrate the accounting fraud
So this is the summarization of Parmalat company background.
QUESTION 1
NADIA
Based on Parmalat Case , what do you know about the fraud that Parmalat
have commit?
AISYAH
Nadia, what I have understood in Parmalat Case is One of the action
committed by Parmalat is defrauding investors through intricate financial
arrangements and bond offshore trades, as well as creating fictitious
accounts to conceal losses and falsifying books. In a great illustration of the
sort of deception done by Parmalat. Bonlat, for example, claimed that a
Cuban firm owed it $767 million for 300,000 tons of powdered milk it had
bought. This money was subsequently claimed to be owing to Parmalat.
However, the full transaction did not take place and was made up to keep
Parmalat’s liquidity a float. Auditors were unable to verify that around 200
Parmalat-created firms, such as Bonlat, CFO Fausto Tonna, for example,
perpetuated the fraud by producing bogus paperwork that he sent to the
auditors in order to fabricate the existence of the subsidiaries.
BAT
Next, action Parmalat have committed is company funds totaling almost €4
billion (approximately $5.64 billion) that were meant to be held in an account
at the Bank of America did not exist.
PIA
Then, Parmalat Finanziaria consistently over- stated its level of cash and
marketable securities. For example, at year end 2002, Parmalat Finanziaria
overstated its cash and marketable securities by at least €2.4 billion. As of
year-end 2003, Parmalat Finanziaria had overstated its assets by at least
£3.95 billion (approximately $4.9 billion).
LUQ
As of September 30, 2003, Parmalat Finanziaria had understated its reported
debt of £6.4 billion by at least £7.9billion. Parmalat Finanziaria used various
tactics to understate its debt, including
(1) eliminating approximately £3.3 billion of debt held by one of its
nominee entities
NAD
(2) recording approximately 1 billion of debt as equity through fictitious
loan participation agreements
(3) removing approximately £500 million of liabilities by falsely describing the
sale of certain receivables as nonrecourse when in fact the company retained
an obligation ensure that the receivables were ultimately paid
BAT
(4) improperly eliminating approximately £300 million of debt associated with
a Brazilian subsidiary during the sale of the subsidiary.
PIA
LUQ
If the auditors were sued for negligence. What are the defence they may use
against Parmalat?
BAT
One of the defence they may use is disclaimers of liability.
LUQ
What did you mean by disclaimers of liability? Can you explain it in more
detail?
the eyes of the reader.
LUQ
How about others?? Any idea??
compensation that can be sought from the auditor. These must be approved
when cases arise
which are Deloitte and Grant Thornton due to CFO Fausto Tonna who
