Evidence of destroyed documents at dairy giant.

• Author: Swartz, Nikki
• Position: Up front: news, trends & analysis - Parmalat SpA

Global dairy giant Parmalat SpA is in trouble over allegations of document destruction, forged signatures, and fictional finances.

The Italian company's founder. Calisto Tanzi, was arrested on allegation of fraudulent bankruptcy and is under investigation for misappropriating $994 million over the years as well as ordering employees to destroy files to sidetrack investigators, making false statements and abusing privileged financial information. Prosecutors are also investigating two employees of Parmalat's auditor. Gram Thornton, for possible false statements in auditor communications or reports.

The scandal ranks as one of Europe's largest corporate frauds. More than $8 billion is missing, and no one seems to know, or is willing to admit, where the money has gone. Tanzi said no money had been stolen from Parmalat but admitted that the company had fake assets on its balance sheet.

Media sources report that prosecutors have uncovered evidence of falsified accounts and 15 years of fraudulent behavior at Parmalat and its subsidiaries for the dual purposes of biding losses at the company's Latin American milts and funneling money to Tanzi family businesses. Tanzi has admitted to being involved in the alleged fraud, and prosecutors also have named 20 others in their investigation, including former Parmalat Chief Financial Officer Fausto Tonna.

According to investigators, the alleged fraud at Parmalat started in the late 1980s and was revealed when Bank of America issued a statement saying that a $4.8 billion bank account purportedly held by Parmalat subsidiary Bonlat did not exist. After the news broke, prosecutors say Tonna, acting on Tanzi's instructions. ordered two employees in Parmalat's finance department to destroy records pertaining to Bonlat's accounts.

According to The Wall Street...