The article that I chose to use for this assignment is called Parma splat, (Jan 15th 2004, From the Economist, print edition, retrieved May 13, 2005) The article concerns the Parmalat company which was found to have been lying on their financial statements, claiming there was more income than debt. They also were able to get the Bank of Italy (a part of Bank of America) to provide a forged and false letter confirming that "Bonlat, a Parmalat subsidiary based in the Cayman Islands, had deposits of close to 4 Billion (5.5 Billion) with the bank." The chief financial officer, ten other people (including the CFO's wife) were arrested and told prosecutors that he (the CFO) "benefited personally from funds held by subsidiaries in Luxembourg, and he has alleged that the company took kickbacks from the Swedish packaging group Tetra-Pak" (the Swedish company has denied all allegations)
While reading through this article it struck me that the problems of unethical financial management are not unique to the United States as I tended to believe.
Parmalat, an Italian based business had some of the same problems as Enron and Worldcom when it came to managing finances. The Chairman and Chief Executive Officer (CEO) of Parmalat was the same person, and the non-executive directors on the board had no independence to act on the various issues faced by the company.
Parmalat apparently had a board that had more family members on it, as well as friends of the family and few people that were independent of both. It seems to me that this would cause a conflict of interest when making sure shareholders' were treated fairly.
According to the article:
Until 1999, Grant Thornton, an international network of accounting firms, was Parmalat's main auditor. But Italy's rules on the...