Parmalat 'brazen fraud' claims SEC

ITALY'S Parmalat was accused of 'one of the largest and most brazen corporate financial frauds in history' by the US Securities and Exchange Commission as its founder Calisto Tanzi told Italian investigators the hole in its accounts might be as large as £5.6bn.

He said he had also moved £350m into other firms including Parmatour, a travel firm run by his daughter. Investigators questioned Tanzi's son Stefano and other family members.

In a complaint filed in a New York federal court, the SEC said the dairy group had cheated prospective bond investors by inflating its assets by billions of dollars. Ominously for auditors, the SEC said the inflated claims came in 'audited financial statements'.

Parmalat is likely to seek protection from creditors outside Italy.

Officers of the company admitted earlier in December that the accounts were false.