Dec. 30 (Bloomberg) -- Calisto Tanzi, the former head of Parmalat Finanziaria SpA now under investigation for fraud, told magistrates he moved 500 million euros ($625.2 million) from Italy's biggest food company to businesses owned by his family, said one of Tanzi's defense lawyers.
The money was shifted into ``a series of companies that now we'll have to analyze one by one to verify the cash flows,'' Fabio Belloni told reporters outside Milan's San Vittore jail, where Tanzi is being held after his arrest Saturday.
Magistrates in Parma also are questioning Tanzi's son Stefano, said a person familiar with the probe. Stefano Tanzi is chairman of the Parma soccer team controlled by Parmalat.
Parmalat, which sells milk products, desserts and fruit juices in 30 countries, was declared insolvent Saturday by a Parma court. The maker of long-life milk, Archway cookies and Pomi pasta sauce has been unable to account for about 9 billion euros, people familiar with the probe have said.
Prosecutors in Milan and Parma are trying to keep Tanzi, 65, in jail on suspicion of committing fraud. Guido Salvini, a Milan magistrate, is reviewing the request as investigators question Tanzi again today.
Investigators
Tanzi is being probed by prosecutors in Milan and Parma for allegedly misappropriating about 800 million euros from the company, a person familiar with the investigation said yesterday.
Belloni declined to specify if the money was transferred into the Tanzi family's travel company Parmatour. Parmalat spokesman Gian Guido Oliva said Parmalat doesn't own any tourism companies. Oliva declined to comment on the funds.
Tanzi probably ``was managing the company as if it were all his, and not as if there were other shareholders,'' said Umberto Mosetti, chief executive in Italy for Brussels-based investor advocacy group Deminor, in an interview.
The head of the Italian Stock Exchange said the country must improve transparency in markets to restore investor confidence after Parmalat's insolvency. ``Transparency and investor protection must be a goal not only for Borsa Italiana but also for everyone who has a role in the market's management and development,'' said Massimo Capuano, chief executive of exchange manager Borsa Italiana SpA, in an interview.
SEC Lawsuit
The U.S. Securities and Exchange Commission yesterday sued Parmalat, alleging that Tanzi and other former executives defrauded investors through securities sold in U.S. markets.
The SEC's complaint, filed in U.S. District Court in New York, is the first legal action taken by a regulator against the company. Parmalat and top executives, including Tanzi and his son, ``engaged in one of the largest and most brazen corporate financial frauds in history,'' the SEC said..
``Our lawsuit is part of an effort to protect the integrity of U.S. markets,'' said Linda Thomsen, the SEC's deputy director of enforcement in Washington. Thomsen said SEC investigators are working closely with Italian securities regulators and that the SEC probe is continuing.
Parmalat's 2010 bonds are trading at about 16.5 percent of face value, a record low, according to London traders. The company's shares were suspended indefinitely yesterday by the Italian Exchange after plunging 63 percent Dec. 23 to 11 euro cents.
The company said in a statement that its businesses are operating ``normally'' and Parmalat intends to ``preserve'' its brands. Parmalat's main business unit, Parmalat SpA, is ``reassuring'' milk producers that they will be paid, the company said.
Parmalat, Italy's largest dairy company, says it's the largest producer of dairy products in the New York City area, with a market share of about 50 percent.
