By Phil Wahba
HACKENSACK, New Jersey (Reuters) - A U.S. jury on Monday found PARMALAT (PLT.IT)SpA
The 6-1 verdict was handed down by a New Jersey state court jury after a trial lasting several months. The verdict did not have to be unanimous.
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 verdict was a resounding victory for Citigroup, with the jury awarding the bank the maximum amount of monetary damages it had sought.
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 people have dubbed the episode "Europe's Enron."
"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 was up 14 cents or 0.9 percent at $15.02 in afternoon trade on the New York Stock Exchange. Parmalat closed down 0.4 percent in Milan.
A Parmalat representative was not immediately available for comment.
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 where its U.S. operations had been based. The trial had run since May.
Parmalat's new management accused Citigroup of aiding and abetting a breach of fiduciary duties by those insiders. Parmalat lawyers contended that the bank ignored warning signs at the Italian company in a quest for high financial advisory fees and lucrative bonuses for its bankers, earned from structuring transactions involving the food company.
Parmalat lawyers argued that Citigroup lent money to help the food company in covering up its losses -- loans that did not show up as debt on Parmalat's balance sheet.
The Italian company originally had sought $10 billion from the bank, but Judge Jonathan Harris in April threw out several of its claims.
Citigroup contended that it believed Parmalat was a financially healthy company and that it was "suckered" by the dairy 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 bank has previously been able to retrieve $330 million through other proceedings, according to the bank's attorneys.
The food company emerged from bankruptcy in 2005. Chief Executive Enrico Bondi has filed dozens of lawsuits against former Parmalat bankers and auditors and recovered several hundred million dollars.
Parmalat also has sued Bank of America Corp
(Reporting by Phil Wahba; Writing by Martha Graybow, editing by Gerald E. McCormick)
