The Collapse of Parmalat

Thursday, May 2, 2011, Calisto Tanzi was jailed on a conviction of market rigging related to the collapse of ‘the dairy giant empire’ Parmalat more than seven years ago. Italy’s highest court upheld Tanzi’s conviction. The Rome court reduced the sentence from ten years to eight years and one month in prison. Tanzi, along with former executives were ordered to pay the company $2.9 billion and compensate defrauded investors in an amount estimated at about $44 million. (“Ex-Parmalat Chief,” 2011). Parmalat’s bankruptcy was the largest bankruptcy in Europe and has been dubbed “Europe’s Enron”.

Calisto Tanzi started from scratch. After the passing of his father in 1961, Tanzi dropped out of college with a diploma in accountancy, to concentrate on helping his family turn-around their small sausage and cheese shop in Collecchio, Italy. When he was twenty-three he opened a small pasteurization plant near the railway station in Parma, Italy. The company was named after the town of Parma and concentrated on long-life milk. Long-life milk became the company’s trademark product. (Arie, 2004). The company diversified and grew into a global food giant, producing yoghurt, ice cream, milk, water, juice, pasta sauce and biscuits in thirty-one countries across six continents. In 1990 the company began floating shares on the Milan stock exchange. By 2003, Parmalat was active in thirty countries, employed over 30,000 employees with revenues more than $7 billion, and was ranked 369 among Forbes’ top 500 international companies. They were also ranked within the top ten in the food products industry. (Segato, 2006). Parmalat was the eighth largest company in Italy, with 5,000 dairy farms depending on the company for the bulk of their bus...

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