EditorsAbout the SiteComes vs. MicrosoftUsing This Web SiteSite ArchivesCredibility IndexOOXMLOpenDocumentPatentsNovellNews DigestSite NewsRSS

11.18.19

Understanding Thierry Breton: “Rhodiagate” and the Vivendi Universal Affair

Posted in Europe, Finance, Fraud at 4:51 am by Dr. Roy Schestowitz

Overview

Understanding Thierry Breton

Further parts pending review and research


Rhodia logo

Summary: When the “Rhodia affair” became the “Breton affair”

Rhodia was a French speciality-chemicals firm which floated on the stock exchanges in Paris and New York in June 1998 after being spun off from its parent Rhône-Poulenc.

“Stern was found in his apartment in Geneva in February 2005 dressed in a full-body latex suit with his hands tied behind his back and multiple gunshot wounds.”Five years after its debut the company ran into serious trouble. It reported a € 1.3 billion loss following write-downs worth €850m. At one stage its shares had lost 95% of their value since the IPO, reaching a low of € 0.95 in 2004.

The economic downturn was partly to blame but a string of risky and ill-judged acquisitions shortly after its IPO also dogged the company.

At its lowest ebb, Rhodia was confronted with a new phenomenon spreading across Europe – shareholder activism – which in the case of Rhodia was mainly aimed at its acquisitions, for example, the US company ChiRex, bought in 2000 for $ 510m in cash in a deal later described as “the most egregious of the many overpriced takeovers of the time”.

“Meanwhile, at Rhodia the French financial watchdog, Autorité des Marchés Financiers (AMF), opened an official investigation into “misrepresentation of accounts, dissemination of false and misleading stock market information, insider trading and concealment of insider trading” on the company’s accounts between 1999 and 2003.”In 2004, the “Rhodiagate” affair erupted in France when the company became the subject of a French judicial enquiry after two minority shareholders filed a complaint accusing it of false accounting and other malfeasance.

The aggrieved shareholders were Hughes de Lasteyrie du Saillant, a scion of one of France’s oldest noble families resident in Belgium, and Edouard Stern, a French investment banker resident in Switzerland.

Hughes de Lasteyrie and Edouard Stern
Aggrieved shareholders Hughes de Lasteyrie and Edouard Stern whose complaints led to the “Rhodiagate” scandal.

Stern was found in his apartment in Geneva in February 2005 dressed in a full-body latex suit with his hands tied behind his back and multiple gunshot wounds. In the days following the initial reports of murder, the French and Swiss press ran riot with rumors and speculation about possible links between Stern’s death and Rhodia, the Russian mafia, or both. It was reported that a French prosecutor had suggested to Stern that he purchase a gun in the course of the Rhodia affair.

“What caused the most shock waves in France was that the meltdown of Rhodia happened under the noses of some of the country’s most respected business and government leaders.”But the Geneva investigators quickly identified a prime suspect, one of Stern’s paramours, Cecile Broussard, who confessed to the murder which she claimed to have committed in “a moment of passion”.

Meanwhile, at Rhodia the French financial watchdog, Autorité des Marchés Financiers (AMF), opened an official investigation into “misrepresentation of accounts, dissemination of false and misleading stock market information, insider trading and concealment of insider trading” on the company’s accounts between 1999 and 2003.

“Although the two investigations concerned separate matters they were interconnected because the plaintiffs and those potentially implicated were the same in both cases.”The AMF settled the case in June 2007, fining Rhodia € 750,000 and ex-CEO Jean-Pierre Tirouflet € 500,000 for misleading investors about the group’s debt between 2001 and 2003 as well as financial details surrounding its acquisitions.

What caused the most shock waves in France was that the meltdown of Rhodia happened under the noses of some of the country’s most respected business and government leaders. The company’s board from 1998 to 2002 included Jean-René Fourtou, the former Rhône-Poulenc chief executive who was later brought in to restore financial health to media conglomerate Vivendi Universal after the disastrous reign of Jean-Marie Messier.

The affair was particularly embarrassing for Thierry Breton because he had only been in office as Minister for Economy for around four months when the investigating magistrates ordered a series of searches in connection with investigations relating to “Rhodiagate” and the sale of Canal+ Technologies to Thomson Multimedia by Vivendi Universal in 2002.

Although the two investigations concerned separate matters they were interconnected because the plaintiffs and those potentially implicated were the same in both cases.

“At Rhodia, Breton was a non-executive director and member of the audit committee during the period from 1998 to 2002 when the accounts were alleged to have been falsified.”Breton was implicated in both cases because they involved companies where he had been active at the time of the alleged irregularities. At Rhodia, Breton was a non-executive director and member of the audit committee during the period from 1998 to 2002 when the accounts were alleged to have been falsified. He was also chairman and CEO at Thomson Multimedia from 1997 to 2002 when the Canal+ deal was being brokered with Vivendi Universal.

Towards the end of June 2005, a total of 15 raids ordered by the magistrates were carried out by investigators and financial police within the space of 48 hours. The searches covered Breton’s ministerial office, his home, the offices of Rhodia, Vivendi Universal, the home of Vivendi’s supervisory board chairman, the offices of Canal+ television and of the Thomson group. The searches took place while Breton was out of the country on official business en route to a UN conference in New York.

This was the first in the history of the Fifth Republic, that the office of a serving minister had been raided. Breton admitted that he had been “flabbergasted” when he had heard about the raids but he rejected suggestions that his position had been in any way compromised by the operation.

Thierry Breton raid
After a raid on his office by investigators, the Minister for Finance (Thierry Breton) contemplates where he should start cutting public service posts.

Referring to Rhodia, he claimed that he had done nothing wrong. He insisted that none of the information presented by the management or by auditors had “offended my sense of ethics, my rigour and my principles”. He told the French media that he was “just one small administrator among others” and that attempts to implicate him in corporate malfeasance were “a nauseating manipulation”.

“Although Breton tried hard to play down the effect of the raids on his ministerial authority, members of the Socialist opposition insisted that he had been weakened. They called on him to explain himself and argued that, as Finance Minister, he was in a conflict of interest.”Asked about the raid on the offices of Canal+, he said that was “an entirely different matter” and claimed that he had no longer been at the head of Thomson when the deal was concluded.

Although Breton tried hard to play down the effect of the raids on his ministerial authority, members of the Socialist opposition insisted that he had been weakened. They called on him to explain himself and argued that, as Finance Minister, he was in a conflict of interest.

Chirac was particularly vulnerable after French voters’ rejection of the EU’s proposed constitution and, according to the WSJ, the criminal investigation spawned by de Lasteyrie had the “already scandal-scarred government on edge”.

On 30 June 2005, the Wall Street Journal reported that Breton was “on the ropes” recalling that his predecessor Hervé Gaymard had “only lasted four months before he was forced to leave over a property scandal”.

“It was starting to look as if the end was nigh for Breton’s political career.”In July 2005, Les Echos was informing its readers that the “Rhodia affair” had now become the “Breton affair”.

It was starting to look as if the end was nigh for Breton’s political career.

However, as things turned out, reports of his impending political demise were greatly exaggerated and somewhat premature.

At the beginning of 2016, the satirical French weekly Le Canard Enchaîné published allegations that officials at the regulatory authority AMF had toned down criticism of the way officials at Rhodia had managed the accounts in order to protect the Minister for Economy. AMF for its part strenuously denied that it had had “cut passages” that could have been embarrassing for Breton.

Whatever the truth of the matter may be, Breton succeeded in weathering the “Rhodiagate” and Vivendi Universal storms and he remained in office until the end of Chirac’s Presidency.

However, the remainder of his term was overshadowed by turbulences at EADS, including the insider trading scandal and the “golden parachute” affair, which we will look at next.

Share this post: These icons link to social bookmarking sites where readers can share and discover new web pages.
  • Digg
  • del.icio.us
  • Reddit
  • co.mments
  • DZone
  • email
  • Google Bookmarks
  • LinkedIn
  • NewsVine
  • Print
  • Technorati
  • TwitThis
  • Facebook

If you liked this post, consider subscribing to the RSS feed or join us now at the IRC channels.

Pages that cross-reference this one

What Else is New


  1. Links 6/12/2019: DRM in GNU/Linux and Sparky Bonsai

    Links for the day



  2. The EPO Rejects Innovation

    The EPO ceased caring about the needs of scientists whose work involves invention; instead, EPO management crafts increasingly lenient guidelines that yield illegal European Patents (not compatible with the EPC) that heavily-besieged EPO judges are unable to stop



  3. Startpage CEO Robert Beens in 'Damage Control' Mode, Trying to Get Startpage Relisted After Selling to a Massive Surveillance Company

    PrivacytoolsIO is being lobbied by the CEO of Startpage to relist Startpage, based on no actual refutations at all



  4. IRC Proceedings: Thursday, December 05, 2019

    IRC logs for Thursday, December 05, 2019



  5. Links 5/12/2019: qBittorrent 4.2.0, Expensive Librem 5 and OpenBSD Bugs

    Links for the day



  6. Microsoft Staff Repeatedly Refuses to Tell How Many People Use WSL, Defends Patent Extortion and Blackmail of Linux Instead

    The people who develop WSL (mostly Microsoft employees) get easily irritated when asked how many people actually use this thing; but more interestingly, however, they reveal their disdain for GNU/Linux and support for Microsoft blackmail (for 'Linux patent tax')



  7. IRC Proceedings: Wednesday, December 04, 2019

    IRC logs for Wednesday, December 04, 2019



  8. Links 4/12/2019: Tails 4.1, UCS 4.4-3 and Proxmox VE 6.1

    Links for the day



  9. Google Tightens Its Noose

    Now it’s official! Google is just a bunch of shareholders looking to appease the Pentagon at all costs



  10. Europeans Still Need to Save the European Patent Office From Those Who Attack Its Patent Quality

    Patent quality is of utmost interest; without it, as we're seeing at the EPO and have already seen at the USPTO for a number of years, legal disputes will arise where neither side wins (only the lawyers win) and small, impoverished inventors or businesses will be forced to settle outside the courts over baseless allegations, often made by parasitic patent trolls (possessing low-quality patents they don't want scrutinised by courts)



  11. We Never Accepted and Will Never Accept Corporate Money

    Corporate money is a unique problem because of its magnitude and the fact that it's impersonal; shareholders can only ever accept its supposed justifications if they're receiving something in return (of proportional worth to the payment/transaction)



  12. IRC Proceedings: Tuesday, December 03, 2019

    IRC logs for Tuesday, December 03, 2019



  13. Links 3/12/2019: elementary OS 5.1 Hera, Plasma 5.17.4, Firefox 71

    Links for the day



  14. Laundering the Reputation of Criminals: That's an Actual Job

    An important reminder that the manufactured, paid-for (media is being bribed) image of Bill Gates is the product of the PR industry he enlisted to distract from his endless crimes



  15. 'Priceless' Tickets to the EPO's Back End and Team UPC

    CIPA's and the EPO's event (later this week) is more of the same; the EPO exists not to serve European businesses but a bunch of law firms and their biggest clients (which usually aren't even European)



  16. IRC Proceedings: Monday, December 02, 2019

    IRC logs for Monday, December 02, 2019



  17. New EPO Leak Shows That the Rumours and Jokes Are Partly True and We Know Who 'Runs the Show'

    Europe’s second-largest institution is so profoundly dysfunctional, a reprehensible kakistocracy of tribalism, money-grabbing career-climbing autocrats and possibly major fraud; today’s leak looks at what motivated and enabled the formation and latest incarnation of “Team Campinos”



  18. Links 2/12/2019: Linux Mint 19.3 Beta, DPL Sam Hartman Talks About SystemD

    Links for the day



  19. What Former Debian Project Leader (Second to the Late Ian Murdock) Thinks About SystemD in Debian GNU/Linux

    Now that Debian is debating and voting on diversity in the technical sense the thoughts of Bruce Perens merit broader audience/reach



  20. Free/Libre Software Will Eventually Become the Norm, 'Open Source' is Just Proprietary Software Trying to 'Buy Time'

    More people are starting to ask questions about Free software while “Open Source” languishes (people can see it’s just a mask for proprietary software); it was a two-decade delaying tactic that’s wearing off (people see GitHub and the OSI/Linux Foundation for what they really are)



  21. IRC Proceedings: Sunday, December 01, 2019

    IRC logs for Sunday, December 01, 2019



  22. Richard Stallman is Active and Doing Well

    The rumour mill may still be humming along; but against all odds — as Chief GNUisance of the GNU Project — Stallman keeps fighting the good fight (in the face of growing resistance)



  23. Banning Former Microsoft Employees Who Complain About Microsoft Lies, Abuses and Crimes

    The official account of Windows Insider is banning people whom it never even spoke to; this seems like a way of 'punishing' people who are not 'true believers' in Microsoft



  24. Wikileaks: Thierry Breton May Have Misused Regulatory/Government Positions to Attack His Competition (in the Market)

    Thierry 'revolving doors' Breton as seen by the United States government



  25. 13 Years of UPC Promises

    The anatomy of UPC 'fake news' or lobbying tactics along the lines of self-fulfilling prophecies and false predictions



  26. Is Water Wet?

    The criteria for patent eligibility reduced only to this question: will allowing these patents increase ‘production’ (number of patent grants)?



  27. The EPO's President Admits He's Illegally Granting Software Patents (CII, 4IR, IoT, AI and Blockchain Mean Software Patents at the EPO)

    The EPO's chief liar is openly and proudly promoting software patents using buzzwords and hype waves (and mysterious acronyms that are rather meaningless but spread by the media in exchange for money received from the EPO)



  28. Tone Policing and the Linux Foundation

    A timely example of situations where the Linux Foundation can seemingly 'cancel' people (using the Code of Conduct) for political opinions



  29. It EEEsn't Just a Microsoft Thing Anymore

    The EEErosion of Python's independence is a known problem and Microsoft is not the sole culprit



  30. Links 1/12/2019: KDE's GTK CSD Support, Skrooge 2.21.0

    Links for the day


RSS 64x64RSS Feed: subscribe to the RSS feed for regular updates

Home iconSite Wiki: You can improve this site by helping the extension of the site's content

Home iconSite Home: Background about the site and some key features in the front page

Chat iconIRC Channel: Come and chat with us in real time

Recent Posts