Auditor had early Parmalat concerns

A Deloitte Touche Tohmatsu auditor in Brazil raised concerns in 2001 and 2002 about a Cayman Islands unit of Parmalat later found to be at the core of the dairy giant's accounting scandal, the Wall Street Journal reported on Monday.

Citing Deloitte e-mails and memos, the Journal said Wanderley Olivetti, an auditor in Brazil, sent an message to Adolfo Mamoli, a partner at Deloitte Italy, in March 2001 with concerns about Bonlat Financing Corp's ability to repay debts of about $225 million, owed to Parmalat in Brazil.

Parmalat triggered a criminal fraud investigation and forced management to seek bankruptcy last year after it said a four billion-euro bank account held by Bonlat did not exist. Deloitte Italy became part of the Parmalat investigation as it was the company's primary auditor from 1999 to 2003.

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Deloitte Brazil audited two Parmalat subsidiaries in Brazil but it did not not audit Bonlat, the story said.

The story said it was not clear what if any response Olivetti received to his 2001 questions but it said the auditor repeated his concerns about transactions with Bonlat in 2002.

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One Deloitte Italy partner warned that questions raised in 2002 by the Brazilian auditor might prompt Parmalat to sever its "multimillion-dollar world-wide engagement" with Deloitte, the story said, citing a memo to a U.S. official at the firm.

Deloitte spokeswoman Oriana Pound in London said she would not comment on rumors based on "inappropriate leaks" from the prosecutor's record.