NEW YORK — A jury in New Jersey found in favor of Citigroup Inc. in Parmalat SpA's $2.2 billion lawsuit alleging the banking giant contributed to Parmalat's bankruptcy in 2003.
The jury granted damages of $364 million on Citigroup's counterclaims in the case in Bergen County Superior Court in New Jersey. Citigroup claimed it was a victim of a fraud by corrupt Parmalat insiders.
The damage award must be presented to the bankruptcy court in Parma, Italy, for review and would be paid out as shares in the relisted Parmalat if it stands, Parmalat said. A Parmalat spokeswoman said the company would likely have to pay out about 18.8 million shares, based on the current share price, if the damages award is upheld.
The jury rejected allegations by Enrico Bondi, Parmalat's chief executive, that Citigroup aided and abetted a breach of fiduciary duties by corrupt Parmalat insiders who stole from the Italian dairy company and helped conceal its off-balance-sheet debt. He had claimed Citigroup was guilty because it ignored the red flags raised by the activity of those insiders.
Parmalat Finanziaria SpA collapsed in 2003 under billions of dollars in debt following an accounting scandal. The company was relisted as Parmalat SpA in 2005.
In a statement, Parmalat said it plans to appeal the jury's verdict, as well as an earlier decision by Superior Court Judge Jonathan Harris, who in April had thrown out allegations of fraud, racketeering and unjust enrichment and a claim for punitive damages. The trial began in May.
"Parmalat continues to believe that Citigroup played an important role in contributing to the financial collapse of the Parmalat Group in December 2003, and it will continue to pursue all legal remedies at its disposal to hold Citigroup accountable for its role, including through ongoing Italian criminal proceedings," the company said.
A Citigroup spokeswoman said Monday the banking giant was "pleased" with the verdict.
"We have said from the beginning of this case that we have done nothing wrong," the spokeswoman said. "Citi was the largest victim of the Parmalat fraud and not part of it. Parmalat chose to file this action in New Jersey, insisting this matter be tried there, so we are delighted the jury has vindicated our position."
Bondi has been seeking to recover damages from Parmalat Finanziaria SpA's auditors and bankers, whom he claims were complicit in the accounting fraud.
He is separately pursuing claims against Bank of America Corp. and Grant Thornton LLP in U.S. District Court in Manhattan. The case is expected to go to trial sometime next year. The companies also have denied any wrongdoing.
On Sunday, Jaap Dutry, a Bank of America senior vice president, told Il Sole 24-Ore that the bank has no plans to settle with Parmalat and that the U.S. trial could be delayed to 2010.