There was a time during the last century when Italy became the most vibrant country, full of creativity, innovation, talent, strong industry, economic growth, great entrepreneurs… and full of money. It is in this context that Calisto Tanzi created Parmalat, a family dairy company, which would eventually become a powerful multinational, and which in 2003 became the largest European fraud in history.
Tanzi died on January 2 from a lung infection, in Parma. He was serving house arrest, after being for falsifying the accounts of his company and causing thousands of investors to lose their savings
The businessman was born in 1938 near Parma. In 1961 he had to drop out of university to take over the family business after the sudden death of his father. It was a small company, dedicated to the manufacture of salami and tomato preserves for pasta. Tanzi, who was only 22 years old, decides to enter the pasteurized milk market, which he was taking his first steps. In 1963, he founded Dietalat, which would later become Parmalat.
He made two decisions at the beginning that were the key to success: on the one hand, the pasteurization process. And on the other, , which facilitated the conservation and transport of the product. In this sense, he opted for door-to-door delivery, with trucks bearing the company’s logo. His strategy was so successful that the company grew almost 50% year after year.
“We wanted Parmalat to become the Coca Cola of milk”
Little by little, and with hardly any competition, they conquered the Italian peninsula in a few years. His ambition was huge. “We wanted Parmalat to become the Coca Cola of milk,” said Domenico Barili, former CEO of the company and Dietalat collaborator since its foundation, in statements collected by the study, from the National Autonomous University of Mexico.
In the 1970s, it took the next step: internationalization, starting with Brazil. It was only the beginning, since it had a presence in 30 countries, where it accumulated almost 200 factories, and employed 37,000 people.
The next step after starting the international expansion was the launch of new products, such as yogurts, cookies, snacks and others related to breakfast. These new lines, at their peak, came to account for 60% of the group’s sales. In the United States it became the third largest seller of cookies.
But the company’s big break came in the late 1980s, and over the next decade. He began to buy companies, to grow, and the world.
And at that time Tanzi decided to start entering other sectors. For example, he took over a television channel, Odeon, to try to fight against the tycoon Silvio Berlusconi. An operation with which he lost more than 40 million euros. He also bought a Formula 1 team, created a travel agency…
Tanzi, already a millionaire, bought his city’s soccer team, Parma
But if something gave him fame, like so many other millionaires, it was football. Now they are , before they were , but at that time, in the late 1980s, those who invested relentlessly were Italian businessmen. Calcio moved so much money at that time that it became, without a doubt, the most important competition in the world.
Tanzi, who was already in the , had a certain relationship with the world of football, as he had been a sponsor of Real Madrid’s ‘Quinta del Buitre’ for two seasons, in which he invested hundreds of millions of pesetas. But he wanted to go one step further: he bought his city club, Parma, which played in the lower divisions of Italian football.
He invested so much money in the club that he not only took it to Serie A, but it ended up becoming one of the benchmark clubs in Europe.
Calisto Tanzi, celebrating Parma’s first title
Parma did not win more because, as we said, Italian football was full of millionaires. , , , … All, curiously, were later linked, to a greater or lesser extent, with corruption.
In his interest in football and international expansion, he also acquired the Brazilian club Palmeiras, in which he made large investments in transfers, and with which he also won several titles.
But Tanzi told in one of the trials he had to attend that football was the cause of all evil. The one that made him lead the company to ruin.
Parmalat’s collapse
In November 2003, the Deloitte group, Parmalat’s auditor, refused to approve the company’s first half accounts. A surprising situation, because it had an investment rating. In December, everything explodes. Parmalat declares that it cannot face the maturity of a bond issue of 150 million. A symbol of the poor financial situation of the company, which has an annual turnover of 7,500 million. Shares plunge 47%.
On December 15, Tanzi resigns. He leaves the company that he had created 40 years earlier. Two days later, the accounting hole of almost 4,000 million euros is discovered, after Bank of America denied that the company had an account with 3,950 million in the Cayman Islands. After discovering them, Parmalat recognizes a debt of more than 7,000 million euros.
The Prosecutor’s Office initiates an investigation for alleged fraud, and that same week discovers that those 4,000 million are only part of the problem, that in reality the accounts hide many more falsehoods. Parmalat claimed to have bought back 3,000 million of his own debt, and it turned out to be a lie. The amount evaporated already amounted to 7,000 million
On December 22 the stock market crash is consummated. Parmalat shares are no longer worth anything. From 1,800 million capitalization to 0, in just one month.
Calisto Tanzi, during one of the trials
Calisto Tanzi, missing since the scandal broke out, is arrested on December 26, accused of fraud, fraudulent bankruptcy and abusive speculation. The US SEC is also suing them for misleading investors to attend a $1.5 billion bond offering while committing “one of the biggest and most brazen corporate frauds in history.”
The subsequent investigation would discover that, in reality, the hole was 14,000 million euros. The company, forced into debt to meet all the acquisitions it had made, had been falsifying its accounts for years, inflating its revenues and profits. It was the largest fraud perpetrated by a European company in history. The scandal affected more than 100,000 investors from around the world, who had bought the company’s bonds.
Day by day, all the companies in the group were declaring bankruptcy and suspending payments. Including, of course, the football team, which never raised its head again.
National trauma, rescue and purchase by the French Lactatis
For the Italians it was a very harsh reality check. One of his most admired companies, an entrepreneur who had created a world empire out of nothing, turned out to be a scam, a lie. It was a real trauma.
The Italian government had to intervene to rescue Parmalat. He put Enrico Bondi, known as ‘Agent 007’, in charge of the company, who with his knowledge, his ability to negotiate and his closeness to politicians managed to save the company. .
With Bondi at the controls, the group was recovering, although far from what it once became. By the end of the decade, the group was healthy. And in 2011 the company experienced a new convulsive moment: . The Italians, who were still traumatized by the scam, considered it a huge blow that the company passed into French hands.
Previously, in 2008, Tanzi was sentenced to 10 years in prison for fraud in the first instance, and in 2011, the Bologna Court of Appeal found him guilty of market manipulation, fraudulent bankruptcy and other charges, sentencing him to 17 years and 5 months. from prison Due to his state of health and his advanced age (72 years old at the time), he was granted house arrest, which he continued to serve until his death this year.
In his testimony before the judge, the businessman Tanzi also assured that dozens of Italian politicians had received funds from the company for years in exchange for favors to the company. .
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