CITIGROUP, the world’s biggest bank, is suing the Italian Government in an effort to recover €540 million (£370 million) lost in the collapse of Parmalat, the food company.

The US bank, Parmalat’s biggest creditor, is challenging the Government and Enrico Bondi, the state-appointed administrator to the dairy group, over restructuring plans, which it claims “trample on its rights as creditor”.

In proceedings launched yesterday in the adminstrative court of Lazio in Italy, Citigroup argued that the Ministry of Productive Activities, and the Ministry of Agriculture and Forestry, which oversee Signor Bondi, failed to ensure a fair process for considering claims. Signor Bondi is prepared to consider only €2 million of the €540 million claimed by Citigroup on the provisional list of creditors.

William Mills, chief executive of Citigroup’s Global Corporate and Investment Bank for Europe, Middle East and Africa, said: “The law requires that all creditors be treated equally during bankruptcy proceedings, and instead the rights of creditors have been trampled upon repeatedly. We believe that the plan, as approved, does not respect this fundamental principle.”

Mr Mills added: “No one has come forward with any evidence of wrongdoing by Citigroup. As Parmalat’s largest creditor and a victim of this fraud, Citigroup will pursue all opportunities for appropriate redress of its losses.”

Citigroup, along with Bank of America and the Italian affiliates of the audit firms Deloitte and Touche and Grant Thornton, is already facing a $10 billion lawsuit brought by the Parmalat administrator in America. Citigroup played a leading role in providing advice to the Italian food giant.

Most of Parmalat’s former executives have been detained and questioned in connection with the collapse, dubbed “Europe’s Enron”.

Signor Bondi alleges that the financial institutions hid the true state of Parmalat’s finances from investors while encouraging them to to buy its bonds.