HACKENSACK, N.J. — Parmalat SpA is now seeking more than $2 billion in damages from Citigroup Inc. in a New Jersey case alleging the banking giant contributed to its bankruptcy in 2003.
At a hearing Monday in Bergen County Superior Court in New Jersey, Kenneth Chiate, who is representing new Parmalat Chief Executive Dr. Enrico Bondi, said the Italian dairy company is seeking $2.2 billion in damages.
Parmalat had been seeking as much as $10 billion from Citigroup before Superior Court Judge Jonathan Harris threw out its allegations of fraud, racketeering and unjust enrichment, and a claim for punitive damages last month.
The state judge is allowing Parmalat to pursue a claim that Citigroup aided and abetted a breach of fiduciary duties by corrupt Parmalat insiders who stole from the company.
At Monday's hearing, John F. Baughman, a lawyer for Citigroup, said the bank is seeking $699 million from Parmalat in counterclaims in the New Jersey case.
Jury selection is expected to begin in the closely watched case later this week. The case is expected to last eight to 10 weeks.
On Monday, the judge denied a motion by Citigroup to preclude the jury from seeing more than 500 documents related to Italy's investigation into the company's collapse, including police reports and statements by Parmalat insiders.
The judge also said he plans to preclude two of Parmalat's expert witnesses from testifying - Stefania Chiaruttini, a technical consultant for the Milan court, and Franco Lagro, a PriceWaterhouseCoopers auditor hired to examine Parmalat's finances after its collapse.
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.
Bondi is seeking to recover damages from Parmalat Finanziaria SpA's auditors and bankers, whom he claims were complicit in the accounting fraud.
"Citi is a victim of Parmalat's fraud and we are confident that the merits of our position will be demonstrated at trial," said Andrea Hurst, a Citigroup spokeswoman, in a statement.
Parmalat's suits against Bank of America Corp. and Grant Thornton in U.S. District Court in Manhattan are expected to go to trial in the first quarter of 2009.
On Friday, Parmalat itself agreed to settle a shareholder lawsuit against it in the U.S., agreeing to issue class members 10.5 million existing shares "in full satisfaction of any and all claims asserted against it in the class action, worldwide."
Parmalat will also pay up to EUR1 million of the cost of notifying the class members of the settlement. Class members were former Parmalat shareholders and other investors, who claimed they had been damaged by Parmalat's bankruptcy.
