Finance ministry, Rhodiaraided in accounts probe

27th June 2005, Comments 0 comments

PARIS, June 27 (AFP) - An investigating magistrate accompanied by police raided the French finance ministry on Monday, and a source told AFP that the probe concerned chemical company Rhodia when the minister was a board member.

PARIS, June 27 (AFP) - An investigating magistrate accompanied by police raided the French finance ministry on Monday, and a source told AFP that the probe concerned chemical company Rhodia when the minister was a board member.

Rhodia said later that its headquarters in Paris had also been raided, with the operating continuing early in the afternoon. "It is in the logical pursuit of complaints about Rhodia in the past," the company said.

The press service at the ministry said: "An investigating magistrate with police officials is in the premises at Bercy (the building housing the ministry). They are being given the reception they merit."

Since Breton was travelling, they had been met by the head of his private office, the press service said.

The ministry did not specify the reason for the visit and declined to comment on whether or not it might be linked to investigations into the accounts of Rhodia, opened in October following a complaint to the prosecutor.

Economy and Finance Minister Thierry Breton, who took office at the end of February, was a member of the board of the company from 1999 to 2002, the period covered by the probe.

However, Breton has strongly denied any knowledge of wrongdoing, asserting that he had been responsible for upgrading audit procedures in the company.

At the time the probe into Rhodia came to light, in March, one source close to the matter told AFP that the French financial markets authority AMF had completed its own investigation into Rhodia's accounts at the end of 2002, but stressed that it did not concern Breton.

Breton said then that the separate judicial investigation followed "a complaint about a year or a year and a half ago against Rhodia by two shareholders who felt they had gotten a bad deal".

One of the two was French banker Edouard Stern who was murdered in his home in Geneva on February 28 in a crime apparently arising from circumstances in his private life.

In another twist in April, the other plaintiff, a French businessman Hughes de Lasteyrie was investigated for alleged blackmail under a complaint laid by treasury and economic policy director at the ministry, Xavier Musca.

Lasteyrie objected that the investigation was an attempt to smear him and discourage him from seeking damages over losses he had made on investing in Rhodia.

The company is recovering from near bankruptcy in 2004.

Breton forewent a severance package of EUR 2.35 million to leave his previous post as head of France Telecom at the request of the government to replace the previous finance minister who had been forced out of office after only three months amid controversy over lavish rent arrangements for his family.

Breton is the fourth economy and finance minister to head the pivotal finance ministry since the centre-right came to power in 2002.

He was appointed amid an extremely difficult period for France regarding budget deficits, debt, weak growth and a need for economic reforms.

Publicity about the probe at the ministry also falls particularly badly for the government, caught up in a crisis over its economic and social policies in a European context and, separately, because of two high-profile court cases over alleged corruption involving former party personalities.

The office of the Paris prosecutor opened an inquiry into Rhodia's accounts following a complaint alleging inexact accounting between 1999 and 2002.

The prosecutor opened the investigation on alleged evidence of "the presentation of inexact accounts, diffusion of false and deceptive information on the situation of an issuer quoted on a regulated market, insider trading and benefiting from insider trading".

Questioned about the probe last March, Breton denied any knowledge of wrongdoing at Rhodia while he was a member of its board of directors.

He told AFP: "During this period, nothing that would have shocked my rigor, my ethics or my deontology was brought to my attention, and if some things happened after, I had no knowledge of them."

Copyright AFP

Subject: French news

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