Ex-managers get suspended jail in French Vivendi trial
21st January 2011, 0 comments
A French court on Friday handed media giant Vivendi's ex-boss Jean-Marie Messier a three-year suspended jail term over a fraud scandal that nearly brought down the group in 2002.
It also sentenced Warner Music boss Edgar Bronfman Jr to a 15-month suspended prison term and a five-million euro ($6.8 million) fine for insider trading linked to Vivendi's purchase of his Seagram group's entertainment division.
Messier received the suspended term and a fine of 150,000 euros on charges including embezzlement after he awarded himself a 20-million-euro pay-off, without board approval, when he left the group in 2002.
The judges also convicted him of misleading investors about the group's financial health but cleared him of manipulating its share prices. His lawyer Pascal Wilhelm promptly said he would appeal the conviction.
The flamboyant 53-year-old Messier was once a star of the French business world, taking Vivendi, previously a sleepy French water utility, on a massive takeover spree.
But he was forced out as chief executive and chairman in July 2002 after he gave upbeat reports of the firm's finances when it was actually 35 billion euros in debt, having bought companies such as Universal film studios.
In his trial in June, he insisted he had acted in the interests of the company and blamed a "perfect storm" of the dotcom crash, September 11 attacks and the Enron scandal for pushing the global media firm close to collapse.
In 2004, the French stock market regulator fined him one million euros -- later halved by an appeal court -- for giving inaccurate financial information about Vivendi.
In January 2010, a New York jury ruled that Vivendi recklessly misled investors about the company's finances but Messier himself was cleared in that case.
In Friday's sentencing, Vivendi Universal's former finance head Guillaume Hannezo received a 15-month suspended jail term for insider trading and a fine of 850,000 euros. Another ex-top manager Eric Licoys got six-months suspended.
Messier was also ordered to compensate various minority shareholders. He had already given up the 20-million euro "golden parachute" that he had himself awarded on leaving.
"The courts now understand very well everything that goes on inside companies in terms of insider trading and golden parachutes," said Didier Cornardeau, head of an association representing the small shareholders.
The convictions "send a strong message to business leaders," he said outside the court. "A precedent is being set. Directors who themselves benefits without going via the board are convicted."
Vivendi controls video game giant Activision Blizzard, Universal Music Group, French telecom giant SFR and entertainment firm Canal Plus along with other operations around the world.
© 2011 AFP