How did a telephonist get to head Parmalat empire?

He claims he knew nothing. Well, you would, wouldn't you? But, in his case at least, it is possible that he did not know much. Angelo Ugolotti was the switchboard operator at the headquarters of Parmalat in Collecchio, near Parma in northern Italy. A baby-faced, young man, with short back-and-sides and large, wire-framed spectacles, he looked as if butter would not melt in his mouth.

"He has the air of a high-class porter," one Italian newspaper put it unkindly yesterday. "A fine fellow, ready to help his son through his first Communion."

But this week Angelo Ugolotti, in name alone, was said to be the managing director of more than 25 subsidiaries of Parmalat, the Italian food giant that has gone spectacularly bust, owing creditors up to €13bn (£9m).

Mr Ugolotti, questioned for more than four hours in Parma this week, said he was "not very clear what the role I had been assigned in the company was supposed to be" - according to leaks from the interrogation - besides answering the telephone, that is. Calisto Tanzi, the founder and former chairman of the group, thrust stacks of papers under his nose and asked him to sign them, he said, and he signed. In this way, he became titular head of companies such as Nyte, a firm based in Delaware, and Camfield, a Singapore-registered company that, in order to furnish Parmalat with imaginary cash, invented a deal to sell enough powdered milk to Cuba to cover the island to a depth of several metres.

Mr Ugolotti told prosecutors that his ignorance of the true state of affairs in the company was such that he continued to hold Parmalat shares until last month. He was given a free holiday to the Maldives courtesy of the Tanzi family travel company, Parmatour. He took this largesse to be his reward for efficiently fielding Mr Tanzi's phone calls. When he arrived at the holiday club, he was pleased, but also bemused, to be treated like a celebrity. He was the club's managing director.

Dummies -prestanomi in Italian - like Mr Ugolotti are not uncommon in Italian business scandals, and prosecutors are now hunting for bank accounts in unlikely names that can be traced back to Mr Tanzi or his business empire because Mr Tanzi, who has been in San Vittore jail in Milan since 28 December last year and whose second appeal to be released to house arrest was rejected this week, has been economical with the truth since returning from a trip to South America that, he insists, was just a holiday.

At his first interrogation in jail on 28 December, Mr Tanzi claimed, according to transcripts published this week, that he "did not know of the existence" of two of Parmalat's key offshore subsidiaries, Bonlat and Epicurum.

Of the more than 200 offshore subsidiaries which the group has admitted, those two were among the key ones used by Parmalat for the inventing and holding of imaginary assets. It was the revelation on 19 December that a claimed Bonlat account at Bank of America containing €3.95bn was fictitious that brought the group's house of cards tumbling down.

Yet, even after his arrest, Mr Tanzi or his associates continued to move millions of euros around the world, according to the public prosecutors of Milan. The most recent transaction so far traced was on 31 December, when persons unknown transferred large sums into secret accounts, contributing to the "treasure trove" of which Mr Tanzi has denied the existence. And the hunt for hidden funds goes on. Fausto Tonna, Mr Tanzi's former right-hand man, was interviewed for 32 hours earlier in the week, and said there were hidden accounts in the name of dummies, such as Angelo Ugolotti, in Italian banks as well as overseas.

Parmalat's propensity for inflating its assets and masking its losses became infectious within the family's operations. Parmatour, the family-owned travel company, was said by Mr Tanzi to have amassed debts amounting to more than €2bn. And the situation was barely less desperate at Parma football club, more than 95 per cent owned by Parmalat, from which earlier this week Stefano Tanzi, Calisto Tanzi's son, declined to resign as president.

The club, one of Calisto Tanzi's many extravagances during the glory years, is now up for sale, the only obvious drawback being debts amounting to €77m. But according to the latest detailed financial records, its total debt is said to be €448.6m. Part of the club's problem, according to football accounting specialists quoted by the Wall Street Journal, is that the club has fallen victim to the same practice of inflating or inventing value as other parts of the Parmalat group.

The club has been steadily inflating the value of its players over the years. The book value increased 12-fold between 1993 and 2002, even though many of the best players had, by the later date, been sold. Expensive foreign players were sold, replaced by Italian youngsters whom the club acquired for next to nothing, and who were then given values far beyond their true worth.

The result at the peak in 2002 was that the stated value of Parma's players was €305m. The football giant Juventus, meanwhile, only claimed that its players were worth €116m, while the equivalent figure for Manchester United was a mere £55m.

Despite such practices, which were common throughout the group's businesses, the world's top auditors, rating agencies and banks continued to sign off Parmalat's accounts, declare it a worthy source for investors' money and issue its bonds until the last minute, while its accounts grew more opaque and unsatisfactory year by year.

Among the banks which unwittingly enabled Parmalat to construct its castle of lies were Citigroup, Bank of America, JP Morgan Chase, Merrill Lynch and Deutsche Bank. The Milan offices of Bank of America were yesterday raided by investigators looking for evidence for what role the bank may have played in the group's collapse.

The last of the nine Parmalat executives who are sought by prosecutors surrendered yesterday. Giovanni Bonici, the former head of Parmalat's operation in Venezuela, flew home to Parma and was promptly jailed. Mr Bonici, who was once the chairman of Bonlat, will be interrogated today.