The €14 billion hole: how Parmalat's collapse brought down Parma

By the end of 2003 Parmalat employed nearly 35,000 people in 30 countries. It had grown from the milk pasteurisation plant Calisto Tanzi opened near Parma in 1961. In November it had trouble making a routine bond payment.

In the middle of December Tanzi resigned as chairman and chief executive, and Enrico Bondi took over. On 19 December Bank of America said that €3.95 billion recorded in the accounts of a Parmalat subsidiary in the Cayman Islands, Bonlat Financing Corporation, did not exist. Its lawyers later said the document showing the money was a forgery.

On Christmas Eve Parmalat filed for bankruptcy protection. On 27 December, hours after the company was declared insolvent, the finance police arrested Tanzi in central Milan, on suspicion of fraudulent bankruptcy and criminal association. He was 65.

"We are working, I hope for the best," said Bondi, now in charge of the company. "We will see if it turns out this way."

Tanzi admitted to a hole of €8 billion. It turned out to be larger. The figure later reported, time and again, was €14 billion, and it was described as the biggest bankruptcy in Europe at the time.

The club

Parmalat owned 98.7 per cent of Parma. In January 2004 the club was in emergency administration with debts estimated at €77 million, and Stefano Tanzi resigned as its president. UEFA reported that the club would look for new money and might have to sell players. Time magazine had already reported that Bondi was looking for a buyer for "the soccer team".

Adriano was sold to Inter that January. Parma finished the season, but on 28 April 2004 the club was declared insolvent.

In June 2004 it was reformed as Parma FC, under special administration, with Bondi as president and the job of finding a buyer. The club dropped the yellow and blue it had worn in the Parmalat years and went back to a white shirt with a black cross.

The selling went on. Matteo Ferrari and Matteo Brighi left in the summer of 2004. The team only just survived the following season. It needed a play-off against Bologna, and on 18 June 2005 at the Dall'Ara, the captain, Cardone, and Alberto Gilardino scored in the first half of a 2–0 win that kept Parma up and sent Carlo Mazzone's Bologna down. The same season they reached the semi-finals of the UEFA Cup, drawing 0–0 with CSKA Moscow at home and losing 3–0 in Russia. That summer Gilardino was sold to AC Milan and the goalkeeper Sébastien Frey to Fiorentina.

The money

What had paid for Parma became a matter for the courts. In 2013, Il Fatto Quotidiano reported, prosecutors in Parma alleged that about €10 million, and $11 million more, had been taken out of Parmalat through false contracts to sponsor and promote its products. The money, they said, went to Parma's players directly from the company, so that the club could meet their contracts without the cost falling on its own accounts. Calisto Tanzi and his son Stefano agreed a plea bargain with the prosecutors on that charge; the deal still needed a judge's approval.

The main cases were larger. On 18 December 2008 a court in Milan sentenced Tanzi to 10 years for market rigging and obstructing the market regulator. The seven other defendants, former executives and bankers, were acquitted. In May 2011 the Court of Cassation upheld the conviction and cut the sentence to eight years and one month. The warrant was executed the day after the ruling, and Tanzi's lawyer said he was "in a health clinic in the jail, because he is gravely ill".

In Parma, on 9 December 2010, Tanzi was sentenced to 18 years for fraudulent bankruptcy and criminal association. On appeal in Bologna in April 2012 that became 17 years and 10 months, and on 7 March 2014 the Court of Cassation confirmed the conviction and reduced the sentence to 17 years and five months.

As his health worsened, he was allowed to serve his sentence under house arrest in hospital. Calisto Tanzi died on 1 January 2022, aged 83.

Relegation

The club's administration ended when Tommaso Ghirardi bought it. It did not last in Serie A much longer.

On the last day of the 2007–08 season, 18 May 2008, Parma played Inter at the Tardini. Zlatan Ibrahimović came off the bench and scored twice, and the win made Inter champions. Parma lost 2–0 and went down, after 18 years in Serie A.

Epilogue

Ghirardi's ownership ended in another crisis. Before the end the club was sold twice for €1, first to Dastraso Holding and then, in February, to Giampietro Manenti. On 19 March 2015 Parma were declared bankrupt.

"It seems like we are zombies, walking without knowing where we are heading," said Sandro Melli, the club's team manager. "Every day they take away a part of our work and a piece of our hearts."

A new club, Parma Calcio 1913, started again in Serie D, the fourth tier, the same level at which Fiorentina had restarted in 2002. It had the backing of business figures, among them Guido Barilla, and its president was Nevio Scala, the coach who had taken Parma into Serie A and won their first European trophies. Three successive promotions took the club back to Serie A in 2018.