Probe into 'inexact' accounting at Rhodia

25th March 2005, Comments 0 comments

PARIS, March 25 (AFP) - The French speciality chemicals group Rhodia is under investigation for accounting irregularities that allegedly took place while French Finance Minister Thierry Breton was a member of the board, a judicial source said Friday.

PARIS, March 25 (AFP) - The French speciality chemicals group Rhodia is under investigation for accounting irregularities that allegedly took place while French Finance Minister Thierry Breton was a member of the board, a judicial source said Friday.

A separate source close to the affair told AFP that the French financial markets authority AMF, which has completed its own probe of Rhodia's accounts, found irregularities at the end of 2002, but stressed that they did not concern Breton, who had already left the board.

The French finance minister, speaking en route to Japan where he is to make an official visit with President Jacques Chirac, denied any knowledge of wrongdoing at Rhodia while he was a member of its board of directors.

Breton 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."

Breton was a member of Rhodia's board from April 16, 1998 to September 24, 2002.

He suggested that "those who want information" should contact former Rhodia directors or the AMF.

According to the second source, on Friday the AMF notified Rhodia - along with its former chief executive Jean-Pierre Tirouflet, and an unidentified director still working for the group - of problems with its financial communications that occurred at the end of 2002.

Tirouflet resigned in October 2003.

The French financial watchdog must transmit its findings to French judicial authorities, partly because a judicial investigation also has been opened, and partly because some of the alleged faults could lead to charges of insider trading.

Although the AMF reportedly found nothing against most members of the Rhodia board - including Breton - for the period between 2000-2002, judges could decide otherwise.

Breton told AFP 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."

The French financial daily Les Echos Friday identified the two as Edouard Stern, a high-profile French banker who was murdered at his home in Geneva on February 28 in a crime for which his mistress has been arrested, and a person named as Hughes de Lasteyrie.

The report added that the judicial investigation had been opened in October into accounting practices at Rhodia between 1999 and 2002.

Investigating judges Henri Pons and Jean-Marie d'Huy were charged with investigating "the presentation of inaccurate accounts, the spreading of false and untruthful information on the situation of an issuer quoted on a regulated market, insider trading, and benefiting from insider trading", Les Echos said.

Breton, also the former head of France Telecom, told AFP that when he was on Rhodia's board, he had insisted the group adopt "rules of governance appropriate for a modern company, such as the creation of an audit committee".

He noted that he was no longer on the board when the group presented its accounts for 2002 and 2003.

A spokeswoman for Rhodia who had initially confirmed the report in Les Echos later said the group "did not confirm the opening of a judicial investigation against X", the French term for a legal action against persons unknown.

Listed on the Paris stock exchange since 1998, Rhodia has faced severe financial problems, posting losses since 2002 and skirting bankruptcy last year.

In early October, however, the group, which employs around 23,000 people, said it had overcome its crisis and aimed to reach the same level of profitability as other companies in the sector by 2006.

© AFP

Subject: French News

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