Vivendi ex-boss faces charges in French trial

By : |May 31, 2010 0

PARIS, FRANCE: Jean-Marie Messier, the flamboyant former Vivendi boss who became a symbol of corporate hubris when he nearly bankrupted the entertainment group with a massive acquisition spree, goes on criminal trial in Paris on Wednesday.

The fallen business mogul who transformed a sleepy water utility, Compagnie Generale des Eaux, into a $51 billion global media empire by buying Universal Studios, USA Networks, and other telecom assets was ousted from Vivendi in 2002.

For the man once ironically branded himself "J6M," for "Jean-Marie Messier me myself master of the world" in French, the case is the latest in a decade of legal travails and could set back his efforts to rehabilitate his reputation.

                                 

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Messier now runs boutique investment bank Messier Partners where he has done deals for old allies like Publicis CEO Maurice Levy.

Last year he created a stir with a book blaming rapacious bankers and speculators for the financial crisis.

In the French criminal case, Messier is accused of divulging misleading information, stock price manipulation, and misappropriation of company funds from 2000 to 2002.

Six others are also charged with various counts of financial wrongdoing, including Vivendi’s former Chief Financial Officer Guillaume Hannezo. Edgar Bronfman, Canadian billionaire and CEO of Warner Music Group who was the vice-chairman of Vivendi’s board at the time, is accused of insider trading.

All are pleading they are not guilty of the charges.

If found guilty, they are unlikely to face prison but could get suspended sentences, a kind of probation under French law.

The court can also order them to compensate shareholders hurt by any fraud.

Class action

The French criminal case is separate and very different from a U.S. class-action lawsuit also under way.

In that case, a U.S. jury in January found Vivendi – but not former executives Messier and Hannezo – liable for misleading investors about its financial condition from October 2000 to August 2002. Although the company is appealing against the ruling, the U.S. case opens it up to potentially billions in damages.

In France’s criminal case, Vivendi is not accused of wrongdoing and is a civil plaintiff, allowing it to take part in the trial and even to seek damages as a victim.

The damages in the French case are also likely to pale in comparison to the U.S. proceedings.

APPAC, a French shareholders’ association and civil plaintiff, is seeking damages of 10 million euros ($12.3 million) on behalf of 200 individual shareholders, its director Didier Cornardeau told Reuters in an interview.

"It’s taken us eight years to get Messier into a courtroom, and just the fact that he is here to face individual shareholders is a small victory for us," he said.

"We want to send a message to executives that they will be held responsible if they lie to shareholders."

Herve Pisani, a lawyer for Vivendi, said that the company had not decided whether to seek damages. "We will decide based on how the trial goes," he said. "We want the truth about this very painful period to be definitively established and for the company to be able to move on."

The trial is expected to last roughly three weeks and then the three-judge panel could take up to six months to announce a verdict and any penalties.

The court will examine evidence on how the executives communicated to the media and markets on the state of Vivendi’s finances, its debt and cash position from 2000 to 2002.

Also to be examined is the legality of a massive share buyback Vivendi undertook on the New York stock market in the aftermath of the Sept. 11, 2001 attacks to stem a steep share price drop.

Market regulators in the United States and France have already sanctioned Messier, Hannezo and Vivendi for misleading financial communication during the period in question. Messier got more than $1.5 million in fines and Vivendi more than $50 million, although they did not admit to wrongdoing.

Messier’s lawyer did not return several calls for comment.

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