The fallout from the biggest corporate scandal in European history has spread to Dublin. A company based in Dublin's Financial Services Centre has emerged as part of the complex web of offshore vehicles used by Parmalat, the Italian food company which went bust three weeks ago when a €10 billion fraud was uncovered, writes John McManus.
Eurofood IFSC Limited, an Irish subsidiary of Parmalat, provided financing facilities for companies in the group, which is now being investigated by Italian authorities. Two of Eurofood's directors have been arrested in Italy on charges of false accounting. They are Mr Fausto Tonna and Mr Luciano Del Soldato, both former chief financial officers of Parmalat.
The two men, along with the chairman and founder of Parmalat, Mr Calisto Tanzi, are being interrogated by Italian prosecutors. The investigation is focusing on companies which facilitated complex intercompany financing, whereby one part of the Parmalat group provided funds to another.
According to its most recent set of accounts, Eurofood has been involved in issuing bonds worth $180 million (€142 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.
Eurofood has two Irish non-executive directors, both of whom signed the accounts. They are Mr Ambrose Loughlin, a partner in the law firm McCann Fitzgerald, at whose offices the company is registered, and Ms Catherine Meenaghan, an employee of Bank of America, which has a substantial operation in the International Financial Services Centre (IFSC).
Mr Loughlin said he had no authority to speak on behalf of the company, which has been a client of McCann Fitzgerald since its establishment here in 1998. Ms Meenaghan declined to comment. A Bank of America spokesman said her appointment was in connection with her role at Bank of America, which administered Eurofood. He declined to comment further. The Central Bank said last night it had no direct role in regulating Eurofood, which is licensed by the Department of Finance to operate in the IFSC .
The company is audited in Ireland by the Irish office of Grant Thornton, which is the auditor to Parmalat's offshore entities. Mr Paul Raleigh, the managing partner of the Irish practice, said its audit of Eurofood had uncovered no problems and that he could not comment further on client business.
The collapse of Parmalat was triggered after it defaulted on a $185 million debt repayment last November. It then emerged that the company's executives had "invented" billions in assets through a network of offshore companies to shore up the balance sheet. These included $4.9 billion supposedly held in a Bank of America account of a Parmalat subsidiary in the Cayman Islands, which was non-existent. Italian investigators now suspect the fraud goes back over 15 years. Parmalat is Italy's eighth-largest company, with 35,000 employees in 30 countries.