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Four under investigation in Italian Parmalat probe Add to ...

Italian authorities have put four people under investigation in a market-rigging and insider-trading probe concerning French dairy group Lactalis's bid for Parmalat SpA, police sources said on Wednesday.

Tax police also raided the Italian offices of banks, public relations firms and investment funds as part of the inquiry into Lactalis's stake-building in Parmalat, Italy's biggest listed food company, the sources said.

The searches included the local offices of French banks Credit Agricole and Societe Generale, U.S. investment bank Lazard, Italian bank Intesa Sanpaolo and public relations companies Brunswick and Image Building, the sources said.

Lazard Italy Chairman Carlo Salvatori and Massimo Rossi, a former chief executive at Swedish Match who was picked by three foreign investment funds to be interim chief executive at Parmalat, are among the four, the sources said.

The other two are Fabio Cane, head of special projects and private equity at Intesa Sanpaolo's investment bank, and his wife Patrizia Micucci, the head of Societe Generale investment banking in Italy.

Mr. Cane is under investigation for alleged insider trading and the others for alleged market-rigging, the sources said.

Mr. Cane, Ms. Micucci and Mr. Rossi could not immediately be reached for comment. Lazard declined to comment on Mr. Salvatori.

The offices raided were those of "several Italian players who have taken part in the takeover in various ways and who have headquarters in Milan", one of the sources said. Lactalis's offices were not searched.

Spokesmen for Societe Generale and Credit Agricole were not immediately available to comment. Intesa Sanpaolo declined to comment as did Image Building, in charge of Lactalis's public relations in Italy.

A spokesman for Brunswick, which represented the foreign funds who sold their stakes to Lactalis in March, confirmed police had been at its office seeking information.

Lactalis, Europe's biggest dairy company, said it was not the object of a legal inquiry and had acted correctly in buying Parmalat shares.

Lactalis acquired 11 per cent of Parmalat in mid-March. It raised its stake to 29 per cent later in the month.

It then offered €3.4-billion ($4.9-billion), or 2.6 euros a share, for the rest of Parmalat in late April in a move to create the world's biggest dairy company.

Italy's centre-right government has sought to stop one of its best-known companies falling into foreign hands and the authorities announced the Parmalat inquiry when Lactalis's stake reached 29 per cent. The company said at the time it had always acted correctly.

Lactalis used equity swaps with Societe Generale and Credit Agricole to build its stake in Parmalat. Intesa Sanpaolo had led attempts to mount an all-Italian counter-bid to the Lactalis offer.

Shares in Parmalat closed flat at 2.63 euros, when the STOXX 600 Europe food and beverage index was up 0.64 per cent.

The probe development came on the same day as Galleon Group hedge fund founder Raj Rajaratnam was found guilty of 14 securities fraud and conspiracy charges.

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