Thefraud that results from misconduct is a global phenomenon thattouches every economic aspect. It covers a range of illegal acts anddishonest practices such as intentional parody and deception. Inother words, it is a dishonesty committed by an entity with theknowledge that it could lead to unlawful gains. Parmalat is anexample of a company that reached its collapse due to theconsequences of corporate greed (Bhasin, 2013). The fraud in thisbusiness involved immoral, illegitimate and prejudiced proceduresthat caused its downfall.
Eventhough it was amongst Italy’s key profitable enterprises and one ofthe largest food-processing corporations in the globe, Parmalat wasfaced with severe accounting scandal. In the 2002 net accounts, theexecutives at Parmalat appealed that the bookkeeping practices werein harmony with the Italian accounting standards, but this was nottrue. The internal auditor had issues including forgery of balancesheets to make the business acquire a better monetary image (Bhasin,2013). In addition, such manipulation existed as a way of concealinglosses after the team had realized the dangers of its illegalacquisition. The main contributor in the scandal was the externalAuditor. He overstayed his term beyond the authorized time-frame. Inessence, it was illegal to act in such a manner as the governmentrequired any auditor to conduct operations for three years beforechanging to another sector. Furthermore, the 9-year tenure led to theimpression that he was a non-independent certified public accountant.He had at that moment built contacts with the subordinates in themisconduct. This posed an added threat of conspiracy. In the end, hewas part of the persons who took part in the money laundering(Bhasin, 2013).
Asa solution, Parmalat’s bosses under the instruction of chiefexecutive, Mr Enrico Bondi, indicted the Bank of America and GrantThornton amongst other financial institutions. Thereafter, EnricoBondi re-registered the new Parmalat on the Milan exchange.Apparently, it still had numerous legal proceedings that it had toabide by in the country courts. Consequently, Fausto was given atwo-year prison ruling as the key mastermind of the multifacetednetwork that participated in the misconduct (Bhasin, 2013). Severalentities, as well as the Bank of America, went on trial on charges ofrigging the market. Similarly, Calisto Tanzi was sentenced for18-years.
Thetotal economic impact as a result of the greed was more than €2.1billion. Succeeding the three-year court hearings, the Milan courtdischarged three banks comprising Morgan Stanley, Deutsche Bank, andthe Bank of America, of market rigging. The prosecuting attorneydirected that close to €120m of the total revenues from theaffiliated financial institutions be locked up. On the other hand,the consumer-watch groups saw this as a way of denying consumerstheir rights. This led to another trial in an attempt to oppose thealready established verdict (Bhasin, 2013). The amount overdue ofParmalat went up to €14.3bn.
Afteran interview with an employee, who was affected by the misconducts inParmalat’s case, there was a new understanding concerning whatpeople like him think of corporate greed. They consider that wheneverofficers become party to corporate misconduct, they should face courttrials and be dismissed from their jobs. Furthermore, they think thatit is every person’s duty to make sure that moral principlesprevail in a company for growth to be realized (Bhasin, 2013). Thecase of Parmalat was an extraordinary scandal that made the businessto encounter extreme downfall because of corrupt individuals.
Bhasin,M.L., 2013. Corporate Governance and Role of the Forensic Accountant:An Exploratory Study of An Asian Country. AMITYBUSINESS REVIEW.