A judge in Milan delivered the first convictions related to the collapse of Parmalat Finanziaria SpA, accepting plea-bargain deals from 10 former executives and the company's former outside counsel on criminal charges that they systematically misled markets about the dairy giant's true financial condition.
The defendants agreed to plea bargains on securities-law charges.
Fausto Tonna, Parmalat's former chief financial officer, received the longest sentence, 21/2 years of imprisonment. Tonna had previously confessed to being one of the masterminds of a decade-long fraud that left Parmalat saddled with about $16.93 billion in debt before it filed for bankruptcy in December 2003.
No one in the group is expected to actually serve time in prison. Tonna and Gian Paolo Zini -- Parmalat's former outside counsel, who received a two-year sentence -- are likely to serve their sentences under house arrest or by doing community service, according to attorneys involved with the case.
The other defendants received suspended sentences because of an Italian law that waives jail terms for first-time offenders sentenced to less than two years in prison. Only Tonna and Zini's sentences are two years or more.
Tonna and his lawyer declined to comment. Zini's lawyer had no comment.
Still, the convictions marked a victory for prosecutors in their 18-month investigation into one of Europe's biggest corporate scandals. The plea deals, which were proposed by defense attorneys and agreed to by prosecutors over the past few months, preclude a potentially lengthy trial in Milan on securities-law charges.
That paves the way for a trial in Parma, Italy, related directly to the massive fraud that crippled what was once an Italian industrial icon. "The important thing now is to keep going," said Francesco Greco, head of the team of prosecutors in Milan.
The Parmalat scandal erupted when the company admitted in December 2003 that a $4.7 billion bank account it had alleged it held at Bank of America Corp. didn't actually exist. As Parmalat sought bankruptcy protection, prosecutors in both Milan and Parma pursued two different strands of investigations.
In Parma, prosecutors recently wrapped up their probe into the fraud, naming 71 former Parmalat officials and former external auditors and bankers. Those fraud charges stem from what prosecutors say was more than a decade of criminal activity at Parmalat that included falsifying company accounts and siphoning off funds for personal gain. A judge in Parma will decide whether to order a trial.
David Reilly contributed to this report.