by Claudio Celani
The bankruptcy of the giant food company Parmalat, warned Italian Finance Minister Giulio Tremonti on Dec. 22, runs the risk of leadingto "general corporate insolvency" in Italy, if there is a run on corporate bonds. Throughout Europe, financial operators are nervous about the enormous sums of fraudulent financial paper that went upin smoke—and about where the trail of criminal investigation will lead. A senior European financial source, for example, told EIR that Parmalat's collapse throws a spotlight on the huge volume of dirtydeals that are being run by top international banks through offshore centers such as the Cayman Islands. These deals are often used to finance political, illegal, or high-risk speculative efforts, hesaid, and the Parmalat scandal could expose this entire dirty sub-structure of the global financial system, with unforeseeable financial as well as political consequences.
Parmalat is the largestItalian food company and the fourth largest in Europe, controlling 50% of the Italian market in milk and milk-derivative products. Suddenly, it was discovered that its claimed liquidity of 4 billioneuro did not exist, and that EU 8 million in bonds of investors' money had evaporated as well. Parmalat is the largest bankruptcy in European history, representing 1.5% of Italian GNP—proportionallylarger than the combined ratio of the Enron and WorldCom bankruptcies to the U.S. GNP.
Behind Parmalat's facade as a productive agro-industrial company with 34,000 employees, hides a giant financialspeculative scheme to lure investors' money and syphon it off through a network of 260 international offshore speculative entities, where the money disappeared. It has been reported that at thereceiver-end of that scheme, the Cayman Islands-based offshore entity called Bonlat had invested $6.9 billion in interest swaps, the highest-risk derivatives operations. So far, through this scheme, at...