Banks cleared of criminal charges over collapse of Parmalat empire

All immediately issued statements expressing satisfaction with the ruling yesterday, which brings to an end the two-year-old trial, one of a series seeking to assign blame in the stunning corporate failure that still ranks as Europe’s largest. Parmalat collapsed under the weight of its 14 billion euro mountain of debt.

“You know better than I who are the real responsible parties who created this disaster,” Citigroup lawyer Nerio Dioda said outside the Milan court.

The four banks – Citigroup, Morgan Stanley, Deutsche Bank and Bank of America – were all cleared of an administrative charge of failing to have procedures in place that would have prevented the alleged fraud. Six bank managers also were cleared on market-rigging charges.

The banks, which claimed they were defrauded by Parmalat, always denied wrongdoing.

Calisto Tanzi, the 72-year-old Parmalat founder, has been found guilty in two trials but so far remains free. He was sentenced to 18 years in prison by a court in Parma last December on a conviction of fraudulent bankruptcy and criminal association, and to 10 years in Milan in 2008 on a conviction of market rigging and other charges. Another 16 defendants were convicted and sentenced to lesser terms.

In the Milan bank trial, prosecutors petitioned the court to confiscate 120 million euros from the four banks in damages. However, most of the defrauded bondholders had already reached a deal with banks outside court.