A U.S. Jury found Citigroup (C) did not aid and abet a breach of fiduciary duty in Parmalat case – Bloomberg News reports. The 6-1 verdict in favor of Citi was handed down by a New Jersey state court jury after a trial lasting several months.
Parmalat, a multinational Italian dairy and food corporation with major operations in Europe, Latin America, North America, Australia and South Africa, had sought up to $2.2 billion in damages from one of the biggest U.S. banks.
Citigroup in an immediate response to the accusations called itself a victim of Parmalat’s fraud and countersued seeking $1.92 billion in damages.
Hackensack, N.J. state court jury after deliberations ruled Monday that Citi did not help executives at Parmalat S.A. loot the Italian dairy before the company collapsed in 2003, and ordered Parmalat to pay $364.2 million in damages to Citigroup after finding the co. committed fraud, negligent misrepresentation, and conversion or theft.
The dynamics of the lawsuit revolved around the pretension from lawyers of Parmalat’s chief executive, Enrico Bondi, that Citigroup was willfully blind to looting by ex-CEO Calisto Tanzi and former Chief Financial Officer Fausto Tonna, who are currently on trial in Parma, Italy, on fraudulent bankruptcy charges. Lawyers for Citigroup, a banker for Parmalat from 1994 to 2003, threw his counter-argument by saying its employees didn’t know about the looting and its reasonable safeguards were thwarted, thus disproving the premise that Citigroup aided in the fraud that destroyed Parmalat S.A.
At the end of fiscal 2003, in what’s considered to be one of the biggest corporate scandals in history – a €4 billion ($5.34 billion) hole was discovered in Parmalat’s accounting records causing hundreds of thousands of investors loose their money that will probably never be recovered.
The co. emerged from bankruptcy after a two-year reorganization under Parmalat Chief Executive Officer Enrico Bondi.
Citigroup said it was delighted the jury vindicated the bank’s position and reiterated that “Citi was the largest victim of the Parmalat fraud and not part of it.”