Issue 217: December 2003/January 2004

 

Like water flowing downhill, consolidation and concentration
naturally flow to corruption
.

For more now than 23 years we have reported on the corruption and decline of both cooperatives (with sadness) and capitalism. In fact, The Ram’s Horn was initiated in 1980 to explain to fellow sheep farmers who had taken over their organization and why – i.e., to protect and further personal advantage and gain at the expense of the collective. Unfortunately, we have had, over the years, to document the decline and perversion of even the biggest cooperatives as they have sought to play the capitalist game of cancerous growth. In this issue, with the bankruptcy of Parmalat and Solutia, the corruption and greed of neo-liberal capitalism is starkly revealed. At the bottom of both corporations are farmers – sometimes as willing and more often as abused accomplices.

Note: €1 = $C1.62 C$1=€.61

 “turning out to be one of the biggest corporate scandals in history”

“One of Europe’s biggest corporate crises exploded last week when Parmalat’s new management team said a document had been declared false by Bank of America which purported to certify that €3.95 billion of securities and cash were held by Bonlat Financing Corp, a Cayman Islands unit of Parmalat. . . The missing €4 billion dwarfs a €1 billion accounting scandal at Dutch retailer Ahold and drew comparisons with the collapse of energy giant
Enron” – NYT, 23/12/03

Parmalat is one of Canada’s Big Three dairy processors – Saputo of Montreal and Agropur co-op are the other two. Parmalat Canada is only one of 200 subsidiaries of Parmalat, based in Collecchio, near the north-central Italian city of Parma. Italy’s eighth-largest industrial group, Parmalat had €7.6 billion (C$12.95 billion) in revenues last year from selling juice, milk and cookies in 30 countries from South America to Asia.

On Dec.19 Bank of America Corp. reported that it wasn’t holding the US$4.9 billion in Parmalat funds that the company had reported in September. Now Italian reports say a total of around US$12 billion could be missing from Parmalat accounts after what may have been 15 years of false accounting. Another €2.9 billion of Parmalat bonds had never been bought back by the firm, despite statements to the contrary on its balance sheet.

Parmalat’s Canada website says, “Our tradition of quality began in Parma, Italy in 1961. Calisto Tanzi founded Parmalat with the hope of building a solid local business to support his family. But in time, Parmalat has become much more than that. With a continued commitment to quality and innovation, Parmalat has become an international company with increasing sales year after year. Parmalat is the world’s leading producer of UHT shelf stable milk.

“Today, Parmalat is one of the largest food companies in Canada. In fact, millions of Canadians enjoy our products every day. Trusted brands like Beatrice, Lactantia, Astro, and BlackDiamond are all part of the Parmalat family. Not to mention Balderson, Cheestrings, Sargento, Olivina, Parkay and Colonial too. Which means Canadians can enjoy everything from our milk and dairy products, to fruit juices, cultured products, cheese products, table spreads and cookies. All with the highest standards of quality demanded for your family.”
www.parmalat.ca 27/12/03 (The latest press release posted on their Canadian website is dated May 23, 2003.)

 

“Italian magistrates believe they have uncovered a decade of systematic fraud at food giant Parmalat and have placed group founder Calisto Tanzi firmly at the center of a complex web of deceit. Eleven days into their probe, the magistrates say they have plotted a pattern of market rigging, false auditing, fraud and misappropriation of funds involving current and former top managers. They also accuse two executives of the Italian unit of the Grant Thornton group auditing company of having helped set up off-shore subsidiaries to hide balance sheet irregularities. Tanzi admitted on Monday that he had misappropriated company funds and falsified company accounts. Grant Thornton has denied any wrongdoing and says it was a victim of fraud. . .

“Besides creating fictitious cash flow, Tanzi also embezzled large sums of money, the two teams of magistrates say. ‘He diverted about 800 million ($1 billion) to himself and companies that were not part of the group ... and ordered the destruction of accounting documentation ... that proved the group’s financial troubles,’ the Parma magistrates’ report says. . . They added that Parmalat managers hid losses of more than seven billion euros to enable the company to return to the market for fresh funds. The group now has debts between 10 billion and 13 billion, the magistrates say.” – NYT (Reuters) 30/12/03

For a few years before 2001 the big names in dairy in Canada had been Beatrice, Dairyworld/Dairyland and Ault. Then all of a sudden the names and owners changed. Dairyworld became Agrifoods International and was then bought by Saputo, Agropur expanded outside Quebec and Beatrice and Ault were acquired by Parmalat. Overnight Parmalat became Canada’s largest dairy group with annual
revenues in the range of $1.9 billion. [see RH#150, July 1997, RH #187, Jan 2001]

Now no one wants to talk about the state of the Canadian dairy industry – and ‘industry’ it is when it is in the hands of global corporations whose sole interest is in making money for its shareholders or, in the case of Parmalat, its top executives/owners.

Of course, one does have to wonder about the rationality of the dairy farmers’ organizations in Canada that allowed – or more likely encouraged – such consolidation to take place. It was probably all done in the name of efficiency and competitiveness, but that does not mean it was in the interest of the farmers, the public, or ‘food security.’

Parmalat had a market capitalization of 1.8 billion before the crisis broke. But since then the value of its shares has been almost completely wiped out and its bonds are worth just a quarter of their face value. Investigators say the total missing could exceed 10 billion euros. They say they do not know yet where the money went or even if it ever existed, making it hard to put a value on the firm. Parmalat buys eight percent of Italy’s milk output and milk producers have not been paid by Parmalat since August.
– source: NYT 23/12/03

 

“Parmalat engaged in a tangled scheme involving dozens of offshore front companies to invent assets to offset perhaps as much as $11 billion in liabilities over more than a decade, Italian investigators said. The seeds of Parmalat’s downfall appear to have been sown at the end of the 1980’s, when the company was preparing to sell shares to the public for the first time. . . . Calisto Tanzi had taken his family business in hams and preserves, and over several decades turned it into a global milk and food powerhouse. . . The Tanzi family [which still holds 51 percent of Parmalat] was looking to cash in some of this remarkable growth.


“Parmalat started creating finance companies in the Netherlands Antilles, essentially to get rid of liabilities it then offset, at least on paper, with assets it simply invented. . . The Parmalat group, including the offshore finance companies, was audited at the time by the accounting firm Grant Thornton. In the mid-1990’s, Italy began a sweeping overhaul of its financial system that required Italian companies to rotate their auditors every nine years. So in 1999, Parmalat brought in Deloitte & Touche to replace Grant Thornton. Before doing so, however, Parmalat effectively closed the Antilles-based companies, replacing them with Bonlat Financing, which was registered in the Cayman Islands. And while Deloitte assumed responsibility for the Parmalat group, the auditing of Bonlat remained in the hands of Grant Thornton. Parmalat, in information for investors, described Bonlat as a “treasury center.” But people close to the investigation called it a “garbage can,” where Parmalat parked all kinds of liabilities accrued at subsidiaries around the world.”
– NYT/Agence France-Press, 24/12/03

UC Berkeley officials confirmed in December that tenure had been denied to assistant professor Ignacio Chapela, who teaches microbial ecology in the Department of Environmental Science, Policy, and Management. Chapela and grad student David Quist were the whistle-blowers over their finding that native maize landraces in Oaxaca, Mexico, were contaminated with g.e. transgenes. It is now widely accepted that this is indeed true. (Just ask Monsanto about their contamination campaign!)

Chapela and Quist were also leading critics of the 1998 deal that gave Novartis (now Syngenta) privileged access to UC plant research in exchange for $25 million. The five-year agreement gave Novartis first rights to a certain percentage of patents from the Department of Plant and Microbial Biology and two seats on the five member committee that awarded research projects.

The prestigious journal Nature, which had first published Quist and Chapela’s findings in 2001 and then recanted (repented of its sins) in an editorial, published a surprisingly detailed report by Rex Dalton on Chapela’s tenure denial in its December 11th issue:

“Chapela’s tenure at Berkeley has been under review since November, 2000. As part of the process, in his department, 32 faculty members voted for tenure and one against, with three abstentions. And in summer, 2002, an ad hoc committee of five colleagues familiar with Chapela’s field voted unanimously in favour of tenure.

“But the review then took an unusual course. The chair of the ad hoc committee was quizzed by the university hierarchy about his committee’s report and its membership; questions were raised about whether two members were biased. The chair, whose identity has not been released, then resigned in the autumn of 2002, disavowing his committee ’s report. But committee members weren’t told this had occurred. . . [One] tenured professor in Chapela’s department [who was on the ad hoc committee] only learned of what happened to the report of the committee he had served on in June [of 2003].

“Documents from the chancellor’s office [state that] ‘The overall assessment of reviewers was that Chapela’s good record of teaching and excellent service stood in sharp contrast to a disappointingly modest publications record’ says the document rejecting tenure.”

According to documents obtained through access to information by Bradford Duplisea of the Canadian Health Coalition, Agriculture Canada invested nearly $2.5 million in genetically modified wheat and stands to make money if it approves the product for sale. The government department:

  • committed $850,000 to Monsanto to develop GM seeds;
  • provided unfettered access to test the crops in the
    department’s fields;
  • assigned thee key scientists to work with Monsanto on
    the wheat.

If the Canadian Food Inspection Agency approves the grain for sale, Agriculture Canada will get nearly five per cent of the money. But John Cully, the department’s director of intellectual property, said there is no conflict of interest, that it’s common for governments to have research partnerships. – source: CBC online, 29/11/03


The University of California at Davis Plant Science Facilities recently celebrated the completion of a complex of new buildings that includes state-of-the-art greenhouses, a plant-science teaching facility, the High Throughput Genomics Facility and the Ralph M. Parsons Foundation Plant Transformation Facility, new laboratories that contain state-of-the-art equipment for DNA sequencing and genetically modifying plants, and the Plant Reproduction Biology building that houses the Seed Biotechnology Center. The UC Davis press release (11/11/03) refers to “the partners involved with the projects” and acknowledged “seed industry leaders who supported the early vision of completing such a facility.”

 

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