Police raid Capitalia offices in Parmalat probes

ROME : Italian finance police searched Rome offices of the bank Capitalia in connection with the collapse of the food groups Cirio and Parmalat, judicial sources said.

The search was ordered by Parma’s public prosecutor and concerns the sale of the dairy group Eurolat by Cirio to Parmalat in 1999, the source added.

Parmalat founder Calisto Tanzi and his financial director Fauso Tonna have alleged to magistrates that they were forced by Capitalia chairman Cesare Geronzi to buy Eurolat at an inflated price so that the bank, formerly Banca di Roma, could recover money owed it by Cirio.

Geronzi has denied the allegations.

Parmalat was declared insolvent in late December after a gaping hole in its accounts was revealed.

Shortfalls totalling more than 14.2 billion euros (17.25 billion dollars) in its accounts have since emerged.

The company’s state-appointed administrator Enrico Bondi is drawing up plans to sell off assets and convert debt into Parmalat shares.