A Bank of America official testified Thursday at the stock-market rigging trial of former Parmalat executives that his team trusted the dairy company’s financial reports and had no reason to suspect false information.
Prosecutor Francesco Greco questioned Gregory Johnson, the former head of international private placement, about Bank of America’s activities selling Parmalat securities in the months before the company’s spectacular collapse in December 2003, when it became clear Parmalat had lied about how much cash it had on hand.
The company declared bankruptcy, revealing a net debt of more than €14 billion (US$18 billion) — eight times higher than previously claimed.
“I think it is worth pointing out how reliant we are on the financial statements. Fraud of this type is very rare,” Johnson testified. “I’ve never seen this kind of fraud with a company of this stature. … We ask questions, but if the answers make sense, we accept them.”