BofA to pay Parmalat $100m to settle lawsuit

NEW YORK – Bank of America Corp has agreed to pay Parmalat SpA US$100 million to resolve a lawsuit accusing the largest US bank of helping the Italian dairy company hide debt, causing its 2003 collapse.

The settlement is among the largest in more than five years of litigation brought by Parmalat, accusing banks and auditors of helping cover up corrupt activity by former company officials. Bank of America was among four defendants that had been sued for US$10 billion each.Parmalat, best known for its long-life milk, collapsed under 14 billion euros (US$19,9 billion) of debt after uncovering a 4 billion euro (US$5,68 billion) hole in its accounts. It was restructured and relisted on the Milan bourse in 2005.Bank of America said its settlement includes a cash and non-cash component. It said more details will be made available once papers are filed with the federal court in Manhattan.As part of the settlement, Bank of America will waive claims it had asserted against Parmalat in US courts and in a bankruptcy court in Parma, Italy, where Parmalat is based.In a statement, the Charlotte, North Carolina-based bank maintained that ‘no one at Bank of America knew or could have known of the true financial condition of Parmalat.’It said the settlement may clear the way for the companies to resume doing business with each other.Other companies that Parmalat sued for US$10 billion include Citigroup Inc and the auditors Deloitte Touche Tohmatsu and Grant Thornton LLP.A US jury last October found Parmalat defrauded Citigroup and awarded the bank US$364,2 million in damages. Parmalat said in December it would appeal. Citigroup is the first defendant to go to trial in the United States over Parmalat’s collapse.Deloitte agreed in January 2007 to pay US$149 million to settle with Parmalat.Litigation against Grant Thornton is ongoing, and in February a Manhattan federal judge ruled that Parmalat investors may also seek damages from the auditor.Enrico Bondi, Parmalat’s chief executive, has recovered several hundred million dollars for the company through litigation stemming from the collapse.- Nampa-Reuters