The Parmalat Scandal Research Paper Example | Topics and Well Written Essays - 1250 words

The Parmalat Scandal - Research Paper Example Parmalat employees tried to obstruct justice by shredding documents and spoiling computers. Tanzi and two members of his family were arrested. Zini of Zini legal firm was the mastermind behind the fraudulent activities while Fausto Tonna is played a key role. Parmalet’s outside counsel and ten members of its management pleaded guilty to criminal charges, but were lucky to get sentences not exceeding thirty months. While claims against Deloitte&Touche LLP and Grant&Thornton LLP were allowed to continue, a suit against Bank of America was dismissed (Markham 375). Italian prosecutors sought to cast the net wider. They indicted Deloitte &Touche, Grant & Thornton and their employees. They accused Citigroup and Morgan Stanley Deutche Bank with aiding and abetting the fraud since they were the company’s investment banks. Citigroup filed a countersuit in New Jersey claiming they were also a victim of Parmalet’s fraud (Markham 375).The scandal was an embarrassment to the Italy political establishment that had received $120 million in political contributions from Tanzi. The Parmalat scandal forced the Italian government to take measures to restore investor confidence. It passed laws that should have been passed long ago to prevent frauds such as the Parmalat scandal. However, as history has shown, there will always be a lot to be done. It takes an economic collapse or a big scandal to force legislators to seal loopholes and increase regulation (Mallin 86). The measures the Italian government took to prevent fraud were long overdue. Publicly traded companies should have been required to rotate their lead auditor’s after a brief period. The government set it at two years that should be ideal. The new laws extend the time of engagement from three years to six but limit the number of times they can be contracted (Mallin 86). The extension ensures continuity that is crucial to an auditing firm’s success. In addition, mandatory rotation