Four under investigation in Italy Parmalat probe

MILAN (Reuters) - Authorities are probing four people, including Lazard's (LAZ.N) Italy chairman, in a market-rigging and insider-trading inquiry into French dairy group Lactalis's bid for Parmalat SpA (PLT.MI), police said on Wednesday.

Tax police 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, according to a search warrant seen by Reuters.

The searches included the local offices of French banks Credit Agricole (CAGR.PA) and Societe Generale (SOGN.PA), U.S. investment bank Lazard, Italian bank Intesa Sanpaolo (ISP.MI), public relations companies Brunswick and Image Building, and the home of one of the suspects, the warrant said.

Lactalis, Europe's biggest dairy company, took 29 percent of Parmalat in March. It offered 3.4 billion euros ($4.9 billion), or 2.60 euros a share, for the rest last month in its bid to create the world's largest dairy group.

The French offer for one of Italy's best-known companies sparked alarm in the center-right government, which sought to block it. Intesa Sanpaolo's attempt to put together an all-Italian bid counter-bid failed.

The search warrant said Lazard Italy Chairman Carlo Salvatori and Massimo Rossi, a former chief executive at Swedish Match SWAMA.ST who was picked by three foreign investment funds to be interim chief executive at Parmalat, are among the four being investigated, according to the warrant.

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

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

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

An Intesa Sanpaolo's spokesman said the bank had no evidence that Cane had ever acted to damage the bank's interests.

PRIVILEGED INFORMATION

Prosecutors say in the warrant Cane had privileged information about the price Intesa Sanpaolo had offered to pay the three foreign funds for their overall 15.3 percent stake in Parmalat. Cane then allegedly passed the information to his wife "outside the normal exercise of his job," the warrant said.

He thus allowed "the Lactalis group to offer a price slightly above that of Intesa Sanpaolo, enough to let the French buy" the funds' holdings, it said. Lactalis bought the funds' stake on March 22.

Micucci, Rossi and Salvatori also allegedly released "false news" that had altered the Parmalat share price, the warrant said. It cited statements on January 25, March 8 and March 22.

The Parmalat case developments came on the same day that hedge fund founder Raj Rajaratnam was found guilty in New York in the broadest Wall Street insider trading in decades.

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

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 used equity swaps with Societe Generale and Credit Agricole to build its stake in Parmalat.

Shares in Parmalat closed flat at 2.63 euros. The STOXX Europe 600 Europe food and beverage index .SX3P was up 0.6 percent.

(Additional reporting by Elisa Anzolin, Sara Rossi, Stephen Jewkes, Sabina Suzzi and Manuela D'Alessandro in Milan and Lionel Laurent in Paris; Writing by Ian Simpson; Editing by Greg Mahlich and David Holmes)

($1=.6948 euros)