Businessman Callisto Tanzi, who transformed a small family milk company into the multi-national food powerhouse Parmalat only to see it collapse in one of Italy's biggest fraudulent bankruptcies, died on Saturday, aged 83.

Tanzi died of pneumonia in a hospital in Parma, the city in central Italy where he had made his fortune, his family said.

Parmalat collapsed in 2003 when a 14 billion euro hole was uncovered in its balance sheet, wiping out the savings of thousands of small investors in a bankruptcy that also reverberated across the worlds of banking, sport, tourism and entertainment.

The company was found to have overstated its profits and sales for years and the collapse sparked litigation worldwide against dozens of banks.

Tanzi underwent a series of trials along with other company executives and prominent Italian bankers. He was convicted of market-rigging, fraudulent bankruptcy and other charges and sentenced to several jail terms.

Born in 1938 in the small town of Collecchio, when he was 22 he took over his grandfather's local milk company. More than four decades later the Parmalat group had about 130 factories around the world making milk, yogurt, and other food products.

His business galaxy also included a first division soccer club, a tourism company and a television network. It also sponsored ski and Formula One auto racing teams.

The Parmalat crisis erupted in 2003 when the company said a 4 billion euro bank account held by a Cayman Islands unit did not exist, forcing management to seek bankruptcy protection and triggering a criminal fraud probe.

Despite the company's investment-grade rating at the time, concerns had previously swirled over its failure to explain why it did not use cash shown on its balance sheet to cut debt.

Authorities later found that Tanzi had hidden art treasures by masters such as Pablo Picasso, Claude Monet and Vincent van Gogh in friends' homes. The art was auctioned off in 2019.