An Italian court handed out prison sentences to former Mediobanca chairman Cesare Geronzi and Sator fund chief Matteo Arpe on Tuesday in a case linked to the 2003 collapse of dairy group Parmalat. The court in the northern Italian city of Parma, whose verdict was read out in public, sentenced Geronzi to five years and Arpe to three years and seven months.
Both were convicted for contributing to fraudulent bankruptcy in the 2002 sale of mineral water company Ciappazzi to Parmalat. The charges dated back to when Geronzi and Arpe were top executives of Banca di Roma. Geronzi was also convicted for usury. He and Arpe have denied any wrongdoing and Arpe said he would appeal the sentence.
"This is a deeply unfair verdict," said Geronzi's lawyer Ennio Amodio. In a statement, Arpe called the court's decision "paradoxical and above all unmerited." Prosecutors say that Banca di Roma pressured Parmalat's former executives to buy the mineral water company above the market price to help another of the bank's clients in return for a loan to the dairy company's tourism business Parmatour.
A year later, Parmalat buckled under a 14 billion euros ($18.5 billion) hole in its accounts, wiping out the savings of over 100,000 small investors. Several trials related to the collapse of the dairy group, now owned by France's Lactalis, are under way. The verdict is the latest setback for veteran financier Geronzi, who earlier this year was handed a four-year sentence for his role in the 2003 bankruptcy of food company Cirio and in April quit as chairman of insurer group Generali.