Hackensack, New Jersey, Oct 20 - A U.S. jury found Parmalat SpA defrauded Citigroup Inc in a case stemming from the Italian dairy company's 2003 collapse, and awarded the bank $364.2 million in damages on Monday.
The New Jersey state court jury voted six-to-one that Parmalat committed fraud, negligent misrepresentation and conversion, also known as theft. in favor of Citigroup on the claim of fraud by Parmalat.
The jury, which has been hearing evidence since May, awarded Citi $364.2 million for each of the fraud and misrepresentation charges and $210.2 million for the conversion charge, though total damages were capped at $364.2 million.
Parmalat's new management had sought up to $2.2 billion in damages from the biggest U.S. bank. Citigroup called itself a victim of Parmalat's fraud and countersued. The jury awarded the bank the maximum amount of monetary damages it had sought.
Parmalat said it planned to seek to have the verdict set aside. If that effort fails, the Italian food company said it would appeal both the verdict and earlier court ruling that had narrowed the scope of its claims against Citigroup.
"Parmalat continues to believe that Citigroup played an important role in contributing to the financial collapse of the Parmalat Group," the food company said in a statement released in Milan. It vowed to "continue to pursue all legal remedies at its disposal to hold Citigroup accountable for its role, including through ongoing Italian criminal proceedings."
Parmalat said the damages award must be presented to the Bankruptcy Court in Parma, Italy for review and any payment should be paid in Parmalat stock.
The payment would likely total about 18.8 million Parmalat shares based on prior agreements in the bankruptcy court on how to treat Parmalat's creditors, a spokeswoman said.
Known for its long-life milk, Parmalat collapsed in December 2003 under 14 billion euros ($18.6 billion) of debt, after uncovering a 4 billion euro ($5.3 billion) hole in its accounts. Some have dubbed the episode "Europe's Enron."
New York-based Citigroup was the first defendant to go to trial in the United States over accusations of helping cover up corrupt activity by former Parmalat officials. Parmalat sued Citigroup in Bergen County Superior Court in Hackensack, near the base of its former U.S. operations.
"Citi is pleased with today's verdict," the bank said in a statement. "We have said from the beginning of this case that we have done nothing wrong. 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."
Citigroup stock closed up 21 cents at $15.09 on the New York Stock Exchange. Parmalat shares closed down 0.4 percent in Milan before the verdict was rendered.
During the trial, Parmalat lawyers argued that the bank ignored warning signs at the Italian company in a quest for high financial advisory fees and bonuses for its bankers as it structured financial transactions.
Parmalat argued Citigroup lent money to help the food company hide its losses -- loans that did not appear as debt on Parmalat's balance sheet. The dairy originally had sought $10 billion from the bank, but Judge Jonathan Harris in April threw out several of its claims before the trial began.
Citigroup argued that it believed Parmalat was financially healthy and that it was deceived by the food company.
Citigroup said it lost $699 million at the time of Parmalat's bankruptcy filing, while earning $131 million in fees from its work with the company over nine years.
"The jury did what juries are supposed to do. Citi probably believes they (jury) reached the right verdict, but Parmalat doesn't believe they did," Parmalat's lawyer Kenneth Chiate said after the verdict.
The food company emerged from bankruptcy in 2005. Chief Executive Enrico Bondi has filed dozens of lawsuits against former Parmalat bankers and auditors and has so far recovered 2 billion euros, or $2.66 billion, according to the company's public relations firm.
Parmalat also has sued Bank of America Corp and auditor Grant Thornton International in the United States. Those cases have not yet gone to trial. Another former auditor, Deloitte Touche Tohmatsu, settled in January 2007 for $149 million.