Tentative Settlement In Lawsuit Charging Soybean Manipulation By Ferruzzi
CHICAGO (AP) _ A company at the heart of Italy’s biggest corruption scandal has reached a settlement in a class-action lawsuit accusing it of manipulating the soybean futures market in 1989 on the Chicago Board of Trade.
Neither side would comment Thursday on the settlement figure, which must be submitted to a federal judge in Chicago for approval. But the Chicago Tribune, citing sources close to the case, said the former Ferruzzi Finanziaria SpA will pay $21.5 million.
The lawsuit stemmed from the Board of Trade’s unusual July 11, 1989, order requiring traders to sharply reduce their holdings in contracts for July delivery of soybeans. The result was a steep drop in soybean prices on the cash and futures markets.
The Board of Trade, the world’s largest futures market, became concerned about Ferruzzi’s large positions and pleaded with the Italian conglomerate to reduce its holdings on at least six occasions. After the company refused time and again, the exchange issued the order to force it to do so, contending such positions threatened to cause a sharp, artificial increase in prices.
Ferruzzi denied it was attempting to corner the soybean market. The company held contracts to take delivery of 23 million bushels of soybeans, which it said it needed for its overseas processing operations after a major drought and short crop.
The Commodity Futures Trading Commission, which regulates the futures industry, later upheld the exchange’s order. But family farmers, traders and farm industry groups said they suffered severe financial losses from the order and sued, seeking unspecified damages.
Several lawsuits filed against the Board of Trade for breach of fiduciary duty were dismissed years ago, a spokeswoman for the exchange said.
Constantine L. Trela Jr., a Chicago lawyer representing the company, said the settlement reached in late August avoided a trial that was to begin in mid-September.
``Trial dates tend to focus everyone’s attention a little more,″ he said in explaining why it took six years to settle. ``This was a big case with a lot of issues. I think everyone is glad it’s over.″
Lawyers were preparing papers to be sent to the parties in the class-action lawsuit. Final action before U.S. District Judge Charles Norgle likely will come in mid-December.
The former Ferruzzi is Italy’s second-largest privately-owned industrial group, with interests in agriculture, energy and chemicals. Earlier this year, it changed its name to Compagnia di Partecipazioni Assicurative ed Industriali, or Compart. The company’s headquarters also were shifted to Milan from Ravenna, Italy.
Ferruzzi lost at least $350 million on the soybean debacle, Italian investigators have said. The settlement closes a sad chapter in the company’s history, said a spokesman for one of its subsidiaries.
``This is an old, old case based on actions of former management. It is consuming far too much time,″ said Carlo Tarsia, a spokesman for Eridana Beghin-Say SA, a Paris-based commodity and food company owned by a Compart subsidiary.
Ferruzzi flourished in the system in which contracts or business deals were expedited by bribes and kickbacks to politicians.
Before the company’s collapse, its flamboyant president, Raul Gardini, entertained Italy’s most powerful figures at places such as his canal-side suites in Venice or the company’s hunting lodge in Tuscany. He committed suicide in 1993, shortly before Italian officials were set to arrest him.