March 4 (Bloomberg) -- Milan prosecutors probing the collapse of Parmalat Finanziaria are preparing indictments against the foodmaker's founder Calisto Tanzi, former company executives, auditors and bankers, people familiar with the investigation said.

Three Milan magistrates will accuse more than 20 suspects of securities-market manipulation and request an immediate trial under a fast-track procedure, said the people, who asked not to be named. The deadline for requesting the indictments using that route is March 18, three months after the probe began. They will be the first indictments in Italy's biggest bankruptcy.

``An immediate trial would be good because the longer the case lasts, the longer the Italian savings market will be drowned,'' said Fulvio Maccarone, who helps oversee $130 billion at Pictet Asset Management in Geneva. He doesn't hold Parmalat bonds and shares. ``There is a serious risk of a credit crunch, and the market for Italian unrated bonds has collapsed.''

More than 100,000 Italian bondholders and shareholders have seen part of their savings wiped out in Parmalat's collapse. Parmalat's bonds have plunged to as low as about 10 percent of face value and were trading today at 13 percent. The case has stymied new sales of Italian corporate bonds by companies including Autostrade SpA, Europe's biggest toll-highway manager.

Immediate Trial

In Italy, prosecutors can request an immediate trial when they maintain that they have substantial evidence that they can obtain a conviction. A magistrate then must rule on the prosecutors' request.

Fausto Tonna, 52, Parmalat's former chief financial officer, two auditors at Deloitte Touche SpA, two former auditors at Grant Thornton International's Italian arm, and at least two former employees of Bank of America Corp., are among those who will be charged, the people said. The maximum penalty if convicted of market manipulation is a three-year jail term.

Francesco Greco, the Milan prosecutor who is coordinating the Milan probe, declined to comment.

The maker of long-life milk and Mr.Day muffins declared bankruptcy in December after admitting a $4.9 billion bank account didn't exist. Investigators suspect Parmalat's former executives were hiding losses and creating false assets for more than a decade, while its auditors and some of its bankers allegedly knew the true state of the company's finances.

Tanzi, 65, who is being held in a Parma jail, has told investigators that he siphoned at least 500 million euros from Parmalat and diverted it into his family tourism businesses. Fabio Belloni, a lawyer for Tanzi, and Tonna's attorney, Oreste Dominioni, didn't return phone calls made to their Milan offices and cell phones yesterday and today.

Auditors

Adolfo Mamoli and Giuseppe Rovelli, auditors at the Italian member firm of Deloitte Touche Tohmatsu will be charged, in addition to Lorenzo Penca and Maurizio Bianchi, auditors at Grant Thornton International's former Italian arm, the people said. Deloitte served as Parmalat's primary auditor from 1999 until Jan. 8, when Parmalat revoked its mandate.

Francesca Marchesi, an outside spokeswoman for Deloitte, declined to comment today. The company said March 2 in a statement that Mamoli and Rovelli didn't commit any crimes. They made a court filing outlining their position on the same date.

Grant Thornton on Jan. 8 expelled its Italian member firm, which had audited about 20 Parmalat units including one in the Cayman Islands with the fictitious bank account on its books.

``We believe the investigation has been hurried and insufficient and that the magistrates haven't presented sufficient evidence against my clients to justify an indictment,'' said Salvatore Stivala, the lawyer who represents Penca and Bianchi.

``We have asked that all 18 of the Grant Thornton auditors who materially carried out the audits be interrogated by the magistrates, something that hasn't happened,'' he said. ``A matter of this complexity requires specialized assessments by experts, which have not been done.''

Foreign Banks

Milan magistrates also are investigating current and former employees at five foreign banks and two domestic lenders. At least two former executives of Bank of America Corp.'s Milan office will be indicted by March 18, the people said. Bank of America said Tuesday that four former and current employees were under investigation in the Parmalat case.

Bank of America spokeswoman Betsy Weinberger said late yesterday the company would not comment beyond a statement released Tuesday.

``Bank of America has provided information to, and continues to cooperate fully with, various governmental entities, including the SEC and Italian authorities,'' the bank said in the release. ``The company cannot determine at this time the eventual outcome, timing or impact of the investigation or matters related to Parmalat.''

Alleged Fraud

Bank of America, the third-largest U.S. bank by assets, helped Parmalat sell about $1.2 billion in bonds before the Milan- based company went bankrupt.

Bankers at Citigroup Inc., Deutsche Bank AG, Morgan Stanley, UBS AG, Banca Intesa SpA's fund unit Nextra and Banca Popolare di Lodi Scrl also are under investigation, people familiar with the probe have said.

Three Parma prosecutors are conducting a separate probe of alleged fraud at Parmalat. They probably won't seek indictments immediately and will continue their probe until June, the people said.

To contact the reporter on this story: Sonia Sirletti in Milan at ssierletti@bloomberg.net

Last Updated: March 4, 2004 07:39 EST