Citigroup Inc will be facing trial in the United States over accusations of helping corrupt insiders at Italian dairy Parmalat SpA to siphon off funds from the company before its collapse in 2003.

Citigroup, the largest US bank by assets, aided and abetted rogue Parmalat employees, a lawyer for Parmalat's chief executive told a jury at the start of a civil trial. 

Parmalat chief executive Enrico Bondi, who has run the company since 2003, is seeking more than $2 billion in damages from Citigroup for hiding Parmalat's financial condition, his lawyer said.

Bondi's attorney, Kenneth Chiate accused Citigroup of greed, cover-up, concealing of loans, and hiding corruption in order to support an exit strategy. "This case is about Citibank and how they contributed to this bankruptcy," he told the jury in the state court in Hackensack, New Jersey.

Citigroup has been accused of designing a series of off-balance sheet transactions that helped Parmalat raise cash while making it appear that the company was not taking loans.

Those transactions created opaque financial disclosures that disguised the looting at Parmalat, Chiate said, adding, "They helped them doctor the financials by concealing the loans."

 New York-based Citigroup claims to be the victim of Parmalat's fraud and is seeking $699 million in damages for itself.

Citigroup had no knowledge of looting by Parmalat employees and was the biggest victim of one of the biggest financial frauds in history, losing $699 million, Theodore Wells, a lawyer for Citigroup said, adding the bank is claiming another $369 million from Parmalat after recovering $330 million in other legal proceedings.
 
He said former Parmalat,CEO Calisto Tanzi and former CFO Fausto Tonna were ''crooks in suits'' who duped banks, auditors and investors for years and falsified financial statements without Citigroup's knowledge.

Parmalat emerged from bankruptcy after a two-year reorganisation under Bondi. He sued Citigroup in 2004, initially seeking $10 billion in damages. The judge hearing the trial last month dismissed Parmalat's claims of fraud, conspiracy, racketeering, unjust enrichment and deepening insolvency.

Citigroup is pressing its own claims against Parmalat for fraud and theft. Parmalat cannot prove any connection between the accounting fraud and Citigroup's knowledge of looting because none exists, Wells said.