Parma-Splat! An Opera In Way Too Many Acts

Enron and WorldCom introduced us to the high art of massive fraud. But Parmalat and its former chief executive, Calisto Tanzi, have elevated the form to epic tragicomedy.

Calisto Tanzi

Defense and flight from fraud charges
Milan, Italy

Even by operatic standards--far-fetched plots, implausible characters, and tearful histrionics--the escalating Parmalat drama gripping Italy has proved over-the-top tragicomedy.

True, it was the great American trio of Enron, WorldCom, and Tyco that introduced us to the high art of massive corporate fraud. But Parmalat and its chief executive, Calisto Tanzi, have taken the form to new levels. Theirs is a saga not just of wrongdoing and arrogance, but one of uniquely Italian flamboyant shamelessness.

For those who haven't hung on every detail in the Italian dailies, or whose appreciation of sopranos is confined to a one-hour episode on HBO, here are program notes for this opera-in-progress.

Act I: In 1961, a young Calisto Tanzi quits university after his father dies to run the family's prosciutto factory in Collecchio, near Parma. He imports from Sweden the concept of milk packaged in cartons--then introduces a process for producing longlife milk.

Act II: Tanzi snaps up dairies in a wave of government sell-offs. His Parmalat Finanziaria SpA grows into a food giant with annual sales of $9 billion and 36,000 employees in 30 countries.

Act III: Parmalat flies into financial turbulence following a costly expansion into Latin America and the United States. Aided by his feared sotto-capo, chief financial officer Fausto Tonna, and consigliere Gian Paolo Zini, Tanzi allegedly embarks on an amateurish scam, falsifying accounts and embezzling millions of euros through shady subsidiaries.

Act IV: The game is up! The Milan stock exchange raises a red flag when Parmalat pulls a $400 million bond issue. Tonna resigns and Standard & Poor's twice downgrades its bonds. The next financial director resigns. Then another. The exchange suspends trading in Parmalat shares.

Finally, Tanzi quits. The company is declared bankrupt. Investigators searching Parmalat offices say executives have shredded key documents, ordered employees to take hammers to PCs, and forged faxes from the Bank of America in New York to pretend Parmalat had money that it didn't. They discover that a humble switchboard operator was named managing director of more than 25 Parmalat subsidiaries.

We all know how Ken Lay or Dennis Kozlowski would have responded to such epic proceedings. They would have hired lawyers, then more lawyers. On their attorneys' advice, they would have mouthed cursory denials, then either retreated to sanctimonious silence or negotiated a plea settlement. (On January 14, in fact, former Enron CFO Andrew Fastow did just that.)

Tanzi opts for a more ostentatious strategy. On the day he is supposed to be interrogated by Italian prosecutors, he flees to South America via Switzerland and Portugal. On his return, the 65-year-old is locked up in Milan's San Vittore prison. "He knew nothing about finances. He's an entrepreneur," says a lawyer in Tanzi's defense. Under questioning, however, Tanzi starts singing. He admits his involvement in fraud but says the schemes were Tonna's ideas.

Tonna is talking freely, as well. He fesses up but insists he was only following Tanzi's orders. As the act draws to a menacing close, Tonna gives journalists the malocchio and snarls, "I wish you and your families a slow and painful death!"

Bravo! Here, clearly, is an executive in touch with his emotions. So, what do we really prefer in our corporate villains? Glib weasels who heed their lawyers and manipulate the slow wheels of justice? Or executives, men of action, who boldly confront the challenge of public castigation? Neither path is particularly honorable--but the Italian way sure seems more honest. Tanzi and Tonna are, after all, merely embracing what the rest of the world tries to hide. Is there such shame in that?

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