The founder and former head of Parmalat was detained yesterday by Italian authorities investigating how billions of euros went missing at the insolvent global food group, judicial sources said.
Calisto Tanzi was detained on a street in Italy's financial capital on the order of prosecutors probing for fraud at Parmalat, engulfed in one of Europe's biggest corporate scandals after revealing a multi-billion-euro hole in its accounts.
The scandal has raised far-reaching questions about the conduct of the group's managers, auditors and banks. It threatens billions of euros of investments by holders of shares and bonds, as well as some two billion more of bank loans.
The judicial sources said finance police seized the 65-year-old Tanzi, who stepped down as Parmalat CEO earlier this month days before the crisis erupted, in the centre of Milan.
Detained hours after Parmalat was declared insolvent, Tanzi was held on suspicion of criminal association and fraudulent bankruptcy, but he was not charged, the sources said. The charges carry a penalty of up to 10 years in jail.
Magistrates searched Tanzi's home near Parma on Wednesday and tried to question him the same day, only to find he had left Italy for an undisclosed foreign country.
Authorities decided to detain him after he returned to Italy as he could leave again, judicial sources said. They said the media-shy Tanzi would spend the night in custody in Milan's San Vittore prison and be questioned in Milan on Sunday by investigators from both Milan and Parma.
Tanzi who took over a dairy plant in 1961 and built it into a global brand was the first person held in the investigation into fraudulent bankruptcy, fraud, false accounting and market rigging.
Although Tanzi no longer heads Parmalat, his family's holding company Coloniale controls the group.