Hundreds of investors in Parmalat have gathered in Milan for the start of criminal proceedings against the dairy giant's executives, bankers and auditors for their roles in Europe's largest corporate scandal.

More than 100,000 Italian shareholders and bondholders lost money when Parmalat sank into bankruptcy amid accusations of a £10 billion accounting black hole. The American financial watchdog, the Securities and Exchange Commission, labelled the Parmalat case "one of the most brazen corporate frauds in history".

Prosecutors are seeking to have 29 individuals plus three financial institutions - the Italian offices of Bank of America and of auditors Deloitte & Touche, and the former Italian affiliate of Grant Thornton - put on trial for market-rigging and fraud.

Today's closed-door preliminary hearing at Milan's courthouse was the first of at least two scheduled to decide on prosecutors' requests for indictments. Judge Cesare Tacconi, presiding over the case, was not expected to issue a ruling immediately.

The proceedings also opened the way for investors to make claims for civil damages.

In December it was revealed that Parmalat had falsified a document that claimed it held £3 billion in a Bank of America account. A subsequent audit of Parmalat's accounts uncovered put the company's debt at £10 billion, eight times higher than the company had previously claimed.

The Milan prosecutors have focused on the role of financial institutions, banks and other financial institutions. Alleged crimes listed on the indictment include market rigging, providing false information to auditors and blocking the work of the Italian stock market regulator, Consob.

In a separate probe, prosecutors in Parma have been investigating Calisto Tanzi, the company's founder, and other Parmalat executives.

Signor Tanzi was released from house arrest last week after spending months in jail and at hospitals, where he was treated for a chronic heart problem.

Enrico Bondi, the government-appointed turnaround expert who is working to revive Parmalat, has filed suits for billions of euros against the banks Citigroup, UBS, Deutsche Bank, Credit Suisse First Boston as well as Parmalat's former auditors.

He has said investors could receive proceeds from these suits, and that those who lost savings would be given shares in a newly listed company.

Signor Bondi has said he believes the financial institutions either abetted the company by disguising its true financial state or received money from Parmalat at the expense of other creditors.

International financial institutions have insisted they were fooled by Parmalat's fraudulent bookkeeping.

Signor Bondi is hoping to save the company by focusing on core products such as milk, yoghurt and juice and scaling down the company's international presence.

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