Crisis-hit Parmalat shres frozen

SHARES in beleaguered Italian food group Parmalat were suspended today pending a statement. Parmalat is fighting to avoid bankruptcy and is locked in talks with creditors after finding vast holes in its accounts. A board meeting was set for this afternoon. The shares lost 63% yesterday.

Prosecutors have targeted a further 20 senior employees. Founder and former chief executive Calisto Tanzi is already being investigated over possible fraud and falsification of accounts.

The Parmalat meltdown has spread across several countries and embroiled UK accountants Grant Thornton.

The Royal Bank of Scotland is believed to have lent Parmalat less than £50m, a tiny fraction of its loan portfolio.

Parmalat admitted last week that documents showing £2.8bn of its funds held by a Cayman Islands unit were falsified. Grant Thornton's Italian unit certified the accounts of that subsidiary, Bonlat Financing Corporation.

Italian reports say the hole in Parmalat's finances could reach £7bn. A local prosecutor has said he sees a clear case of false accounting.

Deloitte & Touche audited the parent company's accounts. Grant Thornton stressed that the audit was conducted in accordance with appropriate standards and procedures.

It said the auditor had informed Italian regulators and Deloitte about concerns over Bonlat's investments. GT also pointed out the independence of its foreign units.

Parmalat missed the second installment of a £227m payment to shareholders. Parmalat had skipped the first payment last week and failed to repay a £108m euro bond earlier this month.

New chairman Enrico Bondi met the Italian government last night and is expected to call in administrators before Christmas.

The turnaround specialist replaced founder Calisto Tanzi, who resigned last week as the scandal unfolded. A criminal probe is pending.

Italy's Prime Minister Silvio Berlusconi has vowed to save Parmalat, which is Italy's eighth-largest company and employs 35,000 people in 30 countries.

Its loss-making UK yoghurt unit, Parmalat Dairies, employs some 300.