ITALY: Italy judge sentences 11 to jail in Parmalat case

A Milan judge sentenced 10 former Parmalat executives and a
lawyer to jail on Tuesday in the first guilty ruling over the
14-billion-euro (9.3-billion-pound) collapse of Italy's biggest listed
food group, judicial sources said.

Judge Cesare Tacconi sentenced
the 11 men, including Fausto Tonna, one of Parmalat founder Calisto
Tanzi's closest associates, to up to two and a half years in jail for
crimes including market rigging and obstructing regulators.

However,
none of the convicted were expected to serve time in prison as a result
of Tuesday's ruling, despite their role in Parmalat's collapse in 2003
in one of Europe's biggest financial scandals.

The sentences
stemmed from a plea-bargain agreement with authorities that means the
11 convicted will not have to stand criminal trial in Milan.

But
they could still be indicted in Parma, near Parmalat's headquarters,
where a wider investigation into dozens of suspects is underway.

The
executives convicted on Tuesday included former chief financial officer
Alberto Ferraris, internal auditors and Tanzi's brother and son, the
judicial sources told Reuters.

As Italian law waives jail terms
for first-time offenders sentenced to no more than 2 years, eight of
the 11 convicted were granted suspended sentences and will not be
required to serve time in prison.

Tonna, a former CFO who was
sentenced to 2 1/2 years, spent several months in detention in 2004 and
was expected to be allowed to work with social services instead of
returning to jail, judicial sources said.

Lawyer Gian Paolo Zini,
sentenced to 2 years, and former CFO Luciano Del Soldato, sentenced to
a year and 10 months, were also expected to work with social services
in a bid to reduce any jail sentences they might receive in other
criminal trials into the Parmalat scandal, lawyers said.

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One
of Italy's best-known global brands, Parmalat stunned investors when it
disclosed a 4-billion-euro hole in its accounts in December 2003.

It
has since been placed under administration, led by turnaround veteran
Enrico Bondi, and has slimmed down operations. From Tuesday until the
end of August, Parmalat creditors will vote on a 12 billion euro
debt-for-equity swap at the heart of Bondi's plan.

Parmalat plans to relist on the bourse after the summer.

Prosecutors
had said Tonna, a former CFO and a central figure in the inquiry, was
the architect of Parmalat's web of holdings. He quit nine months before
Parmalat's collapse and was replaced in quick succession by Ferraris
and Del Soldato.

Lawyers have said the Milan plea-bargaining deal
could help the accused concentrate on the investigation in Parma, where
a separate team of prosecutors is looking into possible fraudulent
bankruptcy, which carries a heavier potential jail sentence.

Calisto
Tanzi had also asked to plea bargain, but his request was rejected by
prosecutors and on Saturday he was sent to trial along with 15 other
executives, auditors Deloitte & Touche and the former Italian arm
of Grant Thornton.

Bank of America will go to trial in Milan as a
civil party, as the employer of three of those indicted. It has not
been sent to trial over its administrative responsibility as a firm.

Bank
of America and Deloitte have denied wrongdoing. Grant Thornton severed
links with its Italian arm in the aftermath of Parmalat's collapse.

Prosecutors
have been investigating suspected financial crimes since Parmalat, once
one of Italy's biggest industrial groups, crumbled under the weight of
billions of euros of debt.

• 186 Financial Services, Insurance and Banking