Up to €10 billion may have disappeared from Parmalat's accounts through a worldwide series of false billings and statements made over many years, investigating magistrates believe.

Investigators have found "a whole set-up for falsifying" documents and believe executives at the large Italian dairy group invented numerous transactions at headquarters and at subsidiaries in several countries, including Singapore and the Cayman Islands, according to people who are familiar with the criminal investigation.

"It appears they would invent contracts, commercial and financial, which they would then show to banks to raise fresh cash," one insider said. The cash-raising had allowed the company to cover up operating losses. "It's not a question of finding the money. There probably is no money, or very little," he added.

If the estimates prove true, the value of Parmalat's businesses - which newly-appointed executives may attempt to sell to reimburse bondholders and other creditors - could be far lower than the €3 billion to €5.5 billion that bankers recently believed.

The details emerged following lengthy interrogations on Monday and yesterday of Mr Calisto Tanzi, the founder and former chairman and chief executive, and Mr Fausto Tonna, the long-serving chief financial officer.

Parmalat's reconstituted board was last night set to approve filing for bankruptcy protection.

The government of prime minister Mr Silvio Berlusconi yesterday issued a decree that will greatly speed up the nomination by the ministry of industry of three commissioners to oversee the bankrupt company.

The decree is meant to ensure that Mr Enrico Bondi who replaced Mr Tanzi as chairman and chief executive earlier this month - will become one of the commissioners, officials said.