This is a bungle, in anyone's language

In some cases, it does not take much to spot signs of terminal corporate illness. Take Parmalat, the absurd Italian conglomerate. On November 11, after the Italian press had been thrown into a frenzy by news of a mysterious Caribbean investment which the company's auditors were having difficulty valuing, Parmalat issued the following statement:

"With this press release Parmalat Finanziaria represents to have received last night [late evening American time] a formal communication from the open-ended fund Epicurum based in the Cayman island complaining with undertones of preoccupation and strong disappointment, the grave situation which was created in Italy and afterwards in other countries with regard and following some press articles and releases from various sources also of financial nature.

"The fund motivated its disappointment and its perplexity for the representation given for such investment by the Italian media, with the consequent negative reactions from the market.

"Moreover, the fund also complained that the circumstances created during the last few days and the circulation of news without foundation relative to the fund and the negative opinions formulated towards itself and its management, in the absence of specific information, from the Italian press, have created great prejudices and damage to the Epicurum fund. Be it in reference to the image and the operations of the fund in its complexity, be it with reference to some hypothesis of actual investments currently in study phase in Italy and overseas ..."

To paraphrase the rest, despite general crossness Paramalat agreed to get its money (£340m) back from the Cayman hedge fund within a fortnight. It failed to do so, the affair escalated and yesterday it transpired that €4bn (£2.8bn) which Parmalat said it had deposited with Bank of America may not have been deposited.

Can anyone be even remotely surprised? Do the professional money managers who routed the savings of ordinary people into what was so obviously a clown company, whose numbers were bound to be fictitious, possibly expect to retain their jobs?

Even allowing for the ropy Italian to English translation, that press release is what is generally known as a sell note. And Parmalat had been issuing them for years.

Black omens


On the other hand, perhaps the translation issue is the key, with the person translating the words inadvertently highlighting those telltale peculiarities which might point to corporate doom. There may be room to develop a useful investment analysis tool here once the concept has been thoroughly tested.

We could start by commissioning someone with rusty Italian to translate a few of paragraphs from statements by Hollinger Inc, Lord Black's Canadian newspaper holding company, to see whether the theory holds.

If we can find someone with the patience, that is.

Judgment of Paris


The blows to Lord Black's head continue to rain down on a daily basis. Yesterday there was news from Toronto that CanWest Global Communications, the media group which bought Canada's National Post from Hollinger two years ago, is suing Black's company for C$25m (£11m) over the acquisition.

For the lawyers it's open season on the owner of the Telegraph and Chicago Sun-Times newspaper groups as Lord Black struggles to find an outside investor willing to rescue him and buyers queue to make indicative offers for the group's core assets.

The most interesting developments, however, seem to be happening in New York, where dissident shareholder Tweedy Browne is busy turning the screw on Hollinger International, the Delaware-listed company controlled by Hollinger Inc but which also directly owns the newspapers.

Tweedy is the fund management concern that first raised questions about the size and nature of the huge fees enjoyed by Black and his associates.

Having got Black to relinquish his executive powers, it is reported to have written to Hollinger International's interim chief executive, Gordon Paris, questioning whether he is working solely in Black's interest rather than in the interests of all shareholders, equally.

This is important because to date, and following the appointment of investment bank Lazards to review whether the newspapers should be sold, all the "action" seems to have revolved around whether something can be done to bail out the Canadian parent vehicle, through which Black controls 72% of Hollinger International's votes with 30% of the equity, rather than improving the Delaware company's prospects.

From Black's point of view the simplest and most effective way to solve his problems would be to sell all or part of Inc's stake in International to a friendly co-investor. But this could well amount to a change of control at the newspaper group - and it is a core principle of all mature equity markets that in such circumstances all shareholders should be offered the same payment terms.

Paris will know that; so too will Lazards. With the SEC watching the matter like a hawk, they must be feeling a little crimped.