Fall of parmalat is a saga of baroque proportions

If you truly want to understand the collapse of Italian dairy and foods leviathan Parmalat, there are two books that provide a cultural explanation. More of those in a moment.

First of all, one has to ask why this most earthy of accounting scandals, which is calculated to have blown a hole of almost £9bn in Parmalat’s balance sheet, should have been a peculiarly Italian phenomenon. It is already said to be “Europe’s Enron”, occupying the minds of bankers and pension-fund managers across Europe over the holiday period and threatening the employment prospects of some 36,000 throughout the world – not to mention the investment prospects of countless more. Why should Europe’s Enron have occurred in Italy? And why, in all honesty, are those of us that expected an Enron-style financial collapse in Europe sooner or later unsurprised that it should have happened to an Italian multinational?

The easy answer is that this is just typical of the wild and feckless Italians, with their relaxed approach to all aspects of life and their industries run by latter-day members of The Mob. That’s a view I have heard emanating from London and Frankfurt.

But it is as childish and thoughtless as the image of Italians as war-time cowards, pizza-tossers and bottom-pinchers. I have to say, as a member of a family that is now significantly Italian, that we are obliged to search for more complex reasons.

The first clues in the search are to be found in the details of the Parmalat debacle. It is a failure seized from the jaws of success – a highly sophisticated financial fraud executed under the noses of the most respectable and highly regulated.

The city of Parma, a bourgeois jewel and proud home to Parmalat, had only recently been chosen as the permanent headquarters for the new super-regulator, the European Food Safety Authority – a rare diplomatic triumph for Italian prime minister, Silvio Berlusconi, during his six-month presidency of the European Union.

Meanwhile, Parmalat’s founding chairman, Calisto Tanzi, was widely whispered to have cut and run to Spain before Christmas to avoid the investigators. But Tanzi is no spiv. A model of discretion, as well as a monumental patron of the arts, Tanzi was known throughout Emilia-Romagna and the Italian world as Il Cavaliere – The Knight – long before the more colourful Berlusconi usurped that title.

This is not to absolve Tanzi, just because he’s a toff. The investigation, with which he’s said to be co-operating, will ascertain his culpability or otherwise. But let’s be clear that this is a fraud conducted under the noses of the highest international, political, industrial and regulatory authorities – so please, dispense with the pencil-moustached caricatures.

The financial practices that led Parmalat to its current fate date from the late-Eighties. What is being uncovered now is the most intricate system of concealment of losses through international networks of offshore banks and trading companies. One manager is said to have told investigators that, if all the milk powder had been delivered to Cuba that had been claimed in the accounts, the entire island would be covered in white powder (of a different kind to that which Cubans are accustomed, presumably).

So, what we have is the juxtaposition of immense respectability and regulation with long-standing and sophisticated fraud. This is a Baroque scandal – the great commercial (and, in Tanzi’s case, artistic) order subverted by the greatest of mischiefs. This is the history of Italy.

The two books, to which I referred at the outset, that illuminate this history are Luigi Barzini’s classic, The Italians, published in 1964, and Matt Frei’s Italy – The Unfinished Revolution, of 1996. Though neither have cause to mention the Tanzi family, far less Parmalat, I commend them to anyone struggling to understand the culture in which this crisis developed.

Of particular relevance is Barzini’s development of the view that the Baroque age of the 17th and 18th centuries imposed a grand order on Italy, under which a cauldron of dissent and subversion seethed – a situation compounded by the artificial unification of the diverse Italian kingdoms under Garibaldi.

Barzini offers a wonderful image of the legacy of this Italian Baroque mentality. It’s of an olive tree’s leaves that look green and lush from above – the patronising, touristic view of Italy as a romantic, food-loving nation – but from below, looking up, the colour is powdery grey.

Frei, while addressing 20th-century developments, argues that there was an opportunity for the institutionalised and hard-core corruption of Barzini’s Baroque to be overthrown, along with Communism.

Developing sexual metaphors appropriate for a country that has produced porn-star politicians, Frei noted the dangers of Italy’s belated revolution turning out to be all foreplay and no consummation. How prescient Parmalat proves him to be – Italy’s Baroque psychology is as embedded today as in the past.

There is one further, rather chilling, thought. If Parmalat represents a crisis of a Baroque inheritance – an apparently grand and authoritative order, to which its subordinate constituents don’t subscribe – then is it possible that we are living in a new Baroque age?

More specifically, is the US, whence emerged the colossal financial scandals of Enron and WorldCom, a Baroque civilisation? Perhaps we should ask the Italians.

George Pitcher is a partner at communications management consultancy Luther Pendragon