Italian prosecutors investigating the Parmalat scandal were yesterday preparing official notification to five banks that they must formally present themselves for interrogation in Milan.
Four of the world's largest financial institutions are being targeted - these are Citigroup, Morgan Stanley, Deutsche Bank and UBS.
Also being targeted by the prosecutors is the asset management arm of Banca Intesa, which is Italy's largest bank.
None of the banks nor the prosecutors' offices would comment yesterday, but people close to the process said the advisory notices were scheduled to be posted yesterday from the prosecutors' offices in Milan.
The notices tell the banks that they must send representatives to respond formally to inquiries about their role in the collapse of the Italian dairy group.
Parmalat was declared bankrupt at the end of last year, amid a huge accounting scandal. Banks and auditors have been accused of helping to obscure its true financial position .
Bank of America, the bank first closely identified with the scandal, has already received the same notification from prosecutors.
Additionally, there is a pending request for an indictment on administrative charges.
The former Italian office of Grant Thornton - which has been cut loose from the international audit group - and the Italian branch of Deloitte, are also facing indictment requests.
The trial of two former Grant Thornton auditors is scheduled to start at the end of January 2005. The prosecutors sending out notices in the next sweep of inquiries are pursuing the five banks under an untested law decree from 2001.
This law makes companies liable for any failure to prevent employees from breaking the law in the course of their work. Institutions prosecuted under the law face possible fines and restrictions on their operations in Italy.
Some of the financial institutions such as Bank of America and Citigroup are facing attacks on a number of fronts.
Investors filed a consolidated civil suit in the US this week. They are seeking billions of dollars from banks and other parties embroiled in the affair.
The investors, although they already have lead plaintiffs and lawyers, are petitioning the US courts to certify their claims as a single class action, though that request is unlikely to be granted for months.
Mr Enrico Bondi, the special administrator who is trying to resurrect the company, is refusing to honour many of the banks' claims as Parmalat creditors while, at the same time, suing the institutions in the US and Italy as part of efforts to recover money for other creditors. - (Financial Times Service)
