AS ITALY’S Government yesterday prepared for one of the country’s biggest bankruptcies, parallels were being drawn between Parmalat and Enron, the collapsed US energy company.

In particular, the spotlight is being turned on the Wall Street banks that helped Parmalat to finance rapid expansion in the most tax-efficient way.

Three banks that worked on deals for both Enron and Parmalat are Citigroup, Bank of America, and Merrill Lynch. The three set up special purpose vehicles (SPVs), designed to hold assets in the case of Parmalat, or debts in the case of Enron, offshore in the most tax-efficient way.

Yesterday the three were remaining silent about their involvement in the dairy company. However, the Italian Government has already started to try to lay blame for the collapse on the banks.

An account at Bank of America, holding the assets of one of Parmalat’s 180 or so offshore entities, is central to the unfolding scandal. The bank could find no trace of £2.77 billion that Parmalat claimed was in an account held through an SPV registered in the Cayman Islands. The bank would not comment further.

Yesterday bankers defended Wall Street’s role in financing Parmalat — a company that has until now had an unblemished financial track record. They pointed out that SPVs were used by corporations all over Europe hoping to buy up offshore assets in the cheapest way.

Citigroup, the world’s biggest bank, which had a central role in the Enron collapse, has already issued a statement about a transaction that it undertook for Parmalat, its client of at least a decade.

The American bank arranged offshore financing worth €117 million for the Italian group in 1999, through a legal vehicle called Buconero — or “black hole”. Despite the bank’s tangles with regulators over its financing of Enron, this particular deal was not registered on Parmalat’s books.

Citigroup said: “Regrettably, the legal vehicle associated with this transaction was called Buconero. Today we would only do this transaction if a client agreed to provide greater disclosure.”

Again there are parallels with Enron, where the offshore vehicles were given obscure names such as Jedi, LJM and Raptor, which gave no indication of the underlying businesses.

Merrill Lynch, another key player in Enron’s financing, has also been drawn into Parmalat. The Wall Street firm helped Parmalat to set up “Sires Star”, a Grand Cayman SPV.

Under the terms of the deal, Parmalat held a €34 million investment in Sires Star. This transaction, also in 1999, does show up in Parmalat’s accounts.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive