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7 more detained as Parmalat probe widens

MILAN -- Parmalat's Enron-like scandal ballooned yesterday with the detention of seven more company officials and auditors, and revelations in a document obtained by the Associated Press that one executive of the dairy giant ordered that a computer used to falsify documents be smashed with a hammer.

Prosecutors also began investigating whether officials from Bank of America Corp. may have been involved in the scandal, the Italian news agencies ANSA and APcom reported, citing prosecutors in Parma. The agencies said three Bank of America lawyers were in Parma awaiting a meeting with prosecutors.

There was no confirmation from prosecutors.

"We continue to fully cooperate with all authorities," said Bank of America spokeswoman Betsy Weinberger in Charlotte, N.C.

Meanwhile, an official from the US Securities and Exchange Commission met with prosecutors in Milan and agreed to try to work together in the investigation, a judicial official said. The SEC has sued Parmalat for "grossly overstating its assets" to US investors, who hold about $1.5 billion in its bonds and notes.

The SEC official also met with Enrico Bondi, Parmalat's government-appointed special commissioner who is in charge of the company's restructuring. Bondi next week is expected to request an emergency credit line from a group of banks to keep the company's operations going, a person familiar with the matter told Dow Jones Newswires.

The developments in the billion-dollar fraud scandal that put Italy's eighth-largest company in bankruptcy came as a judge overseeing the case, Guido Salvini, issued a document, obtained by AP, that detailed new admissions and fingerpointing by Parmalat executives and employees implicated in the scandal.

"Four times a year, the system of putting together false documents was activated on the occasion of the four balance sheet operations that the company had," the document quotes Parmalat's former chief financial officer, Fausto Tonna, as telling prosecutors a few days before he was detained yesterday.

The document quotes another official who was detained in the sweep, former financial executive Luciano Del Soldato, as saying he directed that documents be forged on a computer that had a phony Bank of America logo stored on its hard drive.

"I should specify that recently we destroyed the computer's memory," Del Soldato said.

Company employee Gianfranco Bocchi, who also was detained, said Del Soldato had instructed another employee to destroy the computer with a hammer.

Police in Milan, Parma, and Como detained seven more people in connection with the scandal and issued an arrest warrant for an eighth, Giovanni Bonici, who was in Venezuela but is expected in Italy soon, said Maurizio Raponi of Bologna's financial police, which coordinated the roundup. Besides Tonna, Del Soldato, and Bocchi, Raponi said, the other detainees are Parmalat employee Claudio Pessina; Grant Thornton auditors Lorenzo Penca, president of the company's Italy office, and partner Maurizio Bianchi; and outside legal counsel Gianpaolo Zini.

The warrants were issued by Parma prosecutors who suspect the men of criminal association leading to fraudulent bankruptcy and false accounting, among other charges.

In his ruling ordering that company founder Calisto Tanzi be held in prison pending formal indictment, Salvini accused auditors Bianchi and Penca of falsely certifying Parmalat's balance sheets and of having suggested the "fictitious operations necessary to achieve the fraudulent aims of the group." The judge said the two hatched the idea to create the Cayman Islands-based Bonlat subsidiary at the center of Parmalat's bankruptcy. Parmalat was declared insolvent and placed under Bondi's supervision when it was revealed that Bonlat didn't have $4.9 billion it had claimed was in a Bank of America account. The bank said the letter guaranteeing the money was fake.

Grant Thornton, which audited Parmalat's books from 1990 to '99, has denied any wrongdoing and said its auditors were "victims" of Parmalat's fraud.

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