Former Vivendi Execs To Stand Trial

Jean-Marie Messier and Edgar Bronfman Jr., former execs of French media company Vivendi, have reportedly been ordered to stand trial over share price manipulation dating back eight years.

The decision by investigating judge Jean-Marie d’Huy overrules an earlier finding by the Paris prosecutor that there was no case to answer, according to Financial Times.

Messier, who spent six years reforming Vivendi, was ousted July 2002, leaving Vivendi euro 19 billion ($28.3 billion) in debt and in need of some sort of fire sale to reduce that burden and retain the support of the banks that supplied the credit.

Suspicions about Vivendi Universal’s accounting practices were fueled at the time of Messier’s departure. French stock market watchdog Commission des Operations de Bourse followed media reports that Vivendi tried to inflate its 2001 accounts related to the sale of U.K. pay-TV company British Sky Broadcasting by euro 1.5 billion.

The case is expected to focus on seven executives working with Vivendi in December 2001. That’s when Messier – along with former finance director Guillaume Hannezo and former chief exec Eric Lecoys – dropped euro 3.3 billion worth of shares onto the market in front of unfavourable financial reports. Hannezo is also to stand trial.

At the time of the share sale, Messier rejected the French stock market watchdog’s claim that Vivendi’s forecasts failed to give an accurate picture of the company’s true financial position.

He also denied that his sale of euro 15.4 million of company shares only days before the stock went into freefall constituted insider trading.

Part of his bid to turn Vivendi from a French water utility into a global media power included the acquisition of Seagram, the drinks and media group.

It made the Bronfman family that owned it the French company’s largest shareholder. Edgar Bronfman, now head of Warner Music, was vice-chairman of Vivendi until his resignation in 2003.

French papers are reporting the most serious charges against the former Vivendi execs could lead to five years’ imprisonment and hefty fines. The trial would be next year at the earliest.

Vivendi is currently the target of a contested class action lawsuit in New York, with investors alleging they were given misleading financial information by the French entertainment group about its liquidity position and overall performance between 2000 and 2002, according to the FT.

In 2003, Vivendi reached a settlement with the U.S. Securities and Exchange Commission in which the company paid $50 million to 12,000 investors.

Vivendi settled without any admission of guilt.