Prosecutors in Milan are scrutinising the role played by Eurofood IFSC, a firm based in the financial services centre in Dublin, in the issuing of bonds sold in the United States.

The Italian authorities investigating the Parmalat scandal have quizzed an Italian banker about bond issues by the Irish Parmalat subsidiary, Eurofood IFSC, based in the financial services centre in Dublin.

Prosecutors in Milan have called in Mr Antonio Luzzi of Bank of America to ask him about the role played by Eurofood IFSC in the issuing of bonds sold in the US.

Mr Luzzi is not being investigated by the authorities.

The former head of the Bank of America corporate finance unit in Italy, Mr Luca Sala, was also questioned by the prosecutors who are investigating the issuing of bonds and the use of offshore subsidiaries to hide losses by Parmalat amounting to billions of euros. Mr Luzzi worked for Mr Sala.

There was no comment from Bank of America in Dublin yesterday as to whether it had been contacted by the Italian authorities.

An employee of Bank of America in Dublin, Ms Catherine Meenaghan, is a director of Eurofood.

A judicial source said that prosecutors had contacted banks "above all foreign ones and above all about their role in the placement of bonds".

The chief executive of the Irish Financial Services Regulatory Authority (IFSRA), Mr Liam O'Reilly, said Eurofood was a "small subsidiary" of Parmalat and that his agency was working with others in relation to the matter.

"Nothing has arisen so far," he said.

The Director of Corporate Enforcement, Mr Paul Appleby, contacted the Italian authorities about Eurozone IFSC, to inform them about its existence, but has not yet been contacted other than to have his communication acknowledged. His office will not take any substantive action unless requested to do so.

There has been no allegation of any impropriety by Eurofood IFSC.

Bank of America has said its exposure in relation to Parmalat was $274 million (€217.2 million) at the end of 2003.

"We believe we are sufficiently positioned to deal with any material credit impact further down the road," the bank said.

The total exposure for banks arising from the Parmalat collapse is believed to top €1 billion.

According to its most recent set of accounts, Eurofood has been involved in the issuing of bonds worth $180 million in the US, and also in raising funds for Parmalat's operations in Venezuela.

The company also had unspecified investments of $100 million and was owed $195 million by other unnamed "group undertakings". The accounts cover 2002 and were filed last May.

Results released by Parmalat late last year described how "back-to-back" type loan transactions are carried out within the Parmalat group "by which a group company makes available a certain sum of money at a bank, which in turn uses the money to finance another group company registered in another country.

"The total value of such intercompany transactions as of September 30th, 2003 is $819 million."

Nine subsidiaries involved in such transactions were then named, including Eurofood IFSC.

The Dutch financial markets regulator AFM is investigating share and bond issues by a local unit of Parmalat.

"The AFM is investigating facts related to the financial activities of a Parmalat daughter \ in the Netherlands, in particular the issue of shares and bonds," said an AFM spokesman.

Parmalat has three Dutch-registered units in Rotterdam, including two on the above mentioned list of nine subsidiaries.

The Netherlands' top accounting body said yesterday that it had started a preliminary probe into two auditing firms which may be involved in the Parmalat scandal.

"The facts brought to us indicate that there are two accountants from one firm with one carrying out auditing tasks and the other having a management job at one of Parmalat's subsidiaries in the Netherlands," said a spokesman.

A top Dutch accountancy source, who spoke on condition of anonymity, said that two local divisions of global accounting organisation HLB International - HLB den Hartog and HLB van Daal & Partners - were being looked at.

(Additional reporting, Reuters)