Milan Stock Exchange Suspends Parmalat Shares

The Milan stock exchange today suspended trading in Parmalat shares until further notice, with the move coming after the dairy group was declared insolvent at the weekend.

"Trade in financial securities issued by Parmalat Finanziaria and related covered warrants is suspended until further notice," the bourse said in a statement.

Shares in Parmalat are now virtually worthless, and have plummeted by more than 90% from a September peak of €3.1 to €0.11 on December 22. The stock has not traded since.

Parmalat's founder, Calisto Tanzi, was detained by police on Saturday as authorities attempt to unravel a scandal that has drawn comparisons with the collapse of US energy giant Enron.

Mr Tanzi is among around 20 people, including current and former Parmalat executives and outside auditors, under investigation for suspected crimes including fraud, false accounting and market rigging.

He was interrogated for six hours yesterday, but has yet to be charged. His lawyer has insisted that no money was stolen.

"No money disappeared, [there were] just non-existent assets," lawyer Michele Ributti said.

Prosecutors are investigating a black hole of at least €4bn in Parmalat's accounts, but reports suggest that as much as €10bn may have gone missing.

Investigators are also questioning Parmalat's former chief financial officer, Fausto Tonna.

Mr Tonna helped Mr Tanzi to transform Parmalat into a global company with assets in the US, Brazil and Mexico. He has reportedly told Italian investigators that the fraud dates back to the late 80s.

Parmalat officials have told investigators how the organisation set up a network of offshore companies, which were used to invent assets to offset huge liabilities on the company's published balance sheet. However, it is unclear whether any Parmalat officials personally benefited.

The company is now under the control of Enrico Bondi, who was appointed as its commissioner by the government last Wednesday.

Mr Bondi has at least six months to draw up a restructuring plan for Parmalat, which employs 36,000 people worldwide.