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

11.19.19

Understanding Thierry Breton: Insider-Trading Scandal at EADS

Posted in Europe, Finance at 5:52 am by Dr. Roy Schestowitz

Overview

Understanding Thierry Breton

Further parts pending review and research


EADS and breton
EADS insider-trading scandal – Thierry Breton appears before a Senate Committee (October 2007)

Summary: Although Breton was not directly implicated in the insider trading scandal itself he did come under fire in 2007 for the role he played in a side-show to the main story, namely the payment of a generous € 8.5m severance package to Noël Forgeard when the EADS co-CEO was compelled to resign in June 2006.

The European Aeronautic Defence and Space Company (EADS) NV (now Airbus SE) is a European industrial conglomerate created through the merger of Daimler Chrysler Aerospace AG, Aérospatiale Matra, and Construcciones Aeronáuticas SA (CASA).

The new Netherlands-registered company, EADS N.V., came into existence in July 2000. It had two sets of CEOs and chairmen to represent France and Germany, as well as head offices in Paris, Munich, and Madrid. The company’s official language was English.

EADS had about 90,000 employees at the time of the merger. EADS was the third largest aerospace company behind Boeing and Lockheed Martin. The company was a market leader in helicopters, missile systems, and space launchers and a showcase example of European industrial co-operation.

In June 2006, a major political scandal erupted over allegations of insider trading at EADS.

According to media reports, the French joint CEO Noël Forgeard sold 162,000 EADS shares in March 2006, shortly before the official announcement that delivery of the A 380 superjumbo aircraft manufactured by EADS subsidiary Airbus would be delayed causing the share price to nosedive by 26%. Forgeard was reported to have made a profit of some € 2.5 million on the sale. In addition, his children sold 128,000 EADS shares several days after he did, and made more than € 4.2 million profit.

An EADS spokesman said that the share trading by company executives was “fully in line with EADS regulations” and Forgeard insisted he had no “privileged information” before the sales, describing the timing as an “unfortunate coincidence”.

EADS insider-trading
Insider trading at EADS? According to Noël Forgeard:
“We only knew one thing … that there was money to be made!”

The scandal grew as it emerged that EADS’ main shareholders, Germany’s Daimler AG and France’s Lagardère SCA, had sold shares worth 7.5 % of the EADS total unexpectedly early in April 2006. It was alleged that Daimler and Lagardère executives had known about the A380 problems from the time of the decisive executive board meeting on 7 March 2006.

After the affair became public, the French financial markets regulator Autorité des Marchés Financiers (AMF) opened an investigation into 17 executives at EADS as well as EADS itself and the main shareholders Daimler AG and Lagardère.

Forgeard resigned as joint CEO of EADS on 2 July 2006 due to criticism over the alleged insider trading and after it had become apparent that delays in the Airbus A380 superjumbo program would have a severe financial impact on EADS.

In May 2008, it was reported that Forgeard, had been detained by French police on suspicion of insider trading.

Following a three-year AMF regulatory probe which had named 17 EADS and Airbus executives as suspects, in July 2009 the chief investigator narrowed the list down to seven people suspected of selling shares illegally in the period 8 to 21 March 2006:

  • Noël Forgeard, former joint CEO of EADS;
  • Jean-Paul Gut, a former Deputy CEO who oversaw strategy;
  • John Leahy, Chief Airbus salesman;
  • Andreas Sperl, Director of the EADS site in Dresden;
  • Olivier Andries, a former EADS Vice-President;
  • Erik Pillet, HR director; and
  • Alain Flourens, in charge of training centers.

Heavy fines were recommended against the seven executives and against EADS its corporate shareholders, Lagardère SCA and Daimler AG.

After a hearing in November 2009, the AMF formally cleared the accused executives as well as EADS, Daimler and Lagardère.

Colette Neuville, head of minority shareholder association ADAM, called the AMF decision a “veritable scandal”. She told the press: “This will have a catastrophic effect on public opinion. Keep moving, there is nothing to see here – that is what we are being told”.

In the meantime, the parallel criminal investigation continued and in December 2013 a Paris court ordered the opening of criminal proceedings against the seven executives suspected of insider trading, along with Daimler and Lagardère.

EADS Noël
Noël Forgeard, at the Palace of Justice in Paris (December 2013)

In May 2015, the case was dismissed following a decision by France’s Constitutional Court which found that because the defendants had been cleared by the AMF in 2009 they could not be tried again as this would breach the double jeopardy rule.

The dismissal of the criminal prosecution drew a line under a turbulent period at EADS/Airbus which had been marred by acrimonious management disputes, multi-billion-euro cost overruns and political tensions between the French and German governments, both of which held stakes in the aerospace group.

Not only did the disgraced former co-CEO Forgeard fail get to grips with the company’s production problems in a timely fashion, his aggressive attempts to wrest control from German management exacerbated national tensions.

Much later, in March 2011, an analysis of the Wikileaks cables revealed that Forgeard was regarded by his German colleagues as an “over-ambitious maniac”.

Questioned by an investigative Committee of the French Senate in October 2007, Thierry Breton – who had been Minister for the Economy at the time – declared that the government was “beyond reproach” in the affair. He claimed to be “shocked” by insinuations that the government could come under suspicion of having a hand in the alleged irregularities.

Breton stated that in January 2006, he read a note by the public Agency for State Shareholdings, recommending that the French state reduce its own stake in EADS as the company would soon enter “a zone of turbulence”. However, for “strategic reasons”, he decided not to follow its advice. He also insisted that this note contained no new information about the delays to the A380, but was based on an independent evaluation of the situation. The government, he added, played no part in subsequently getting the state-owned CDC to buy part of the Lagardère shareholding in early April 2006. The state itself, Breton recalled, never sold any of its own shares in EADS.

Philippe Marini, the Senate finance committee rapporteur, said that he found Breton “transparent” and “honest” but “not convincing” about the role of the state. François Chérèque, Secretary-General of the French Democratic Confederation of Labour (CFDT), was less charitable: “either he’s lying, or he’s incompetent”.

Noël's parachute
Noël Forgeard’s “golden parachute” caused public outrage.

Although Breton was not directly implicated in the insider trading scandal itself he did come under fire in 2007 for the role he played in a side-show to the main story, namely the payment of a generous € 8.5m severance package to Noël Forgeard when the EADS co-CEO was compelled to resign in June 2006.

We will look at the “golden parachute” affair in the next part.

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. China Bashing is Grounded in Fear (That They Can Simply Do Better Than the West)

    The atmosphere of hate towards China — fuelled partly by a white supremacist in the White House — is unhelpful and insulting; dignity and understanding is the way to go



  2. IRC Proceedings: Tuesday, February 18, 2020

    IRC logs for Tuesday, February 18, 2020



  3. FFII Press Release: Germany Can No Longer Ratify the Unitary Patent Due to Brexit and the Established AETR Case-law, says FFII

    Germany cannot ratify the current Unitary Patent due to Brexit and the established AETR case-law. The ratification of the UPC (Unified Patent Court) by Germany would constitute a violation of the AETR case-law, which was used during the EPLA negotiations in 2006 to consider a deal with non-EU countries, such as Switzerland.



  4. DRM (Proprietary Software) Already Makes Mozilla Firefox Broken, Unreliable, Undependable (Dependent on Binary Blobs)

    More people are beginning to realise that Mozilla resorted to self-harming DRM and self-inflicted damage that impacts Firefox; can Mozilla (re)join the anti-DRM coalitions?



  5. EPO and Other Patent Updates Over RSS

    Site syndication (over RSS feeds or XML/Atom) is vastly better than what became popular in recent years (censored, centralised, discriminatory "Social Control Media"); here are some feeds of interest



  6. When It Comes to a Unitary Patent System, Bad (or Intentionally Dishonest) Legal Advice Has Become the Norm

    The Unified Patent Court and Unitary Patent (UPC and UP, respectively) reinforce the old saying about lawyers being liars, doing anything to attract clients (to take their money); the UPC is basically dead, but fiction, falsehoods and outrageous fantasies still find their way into Web sites of law firms



  7. Links 19/2/2020: KDE Plasma 5.18.1, GNOME 3.36 Beta 2 and WordPress 5.4 Beta 2

    Links for the day



  8. Is Linux Foundation a Microsoft Branch Now?

    The so-called ‘Linux’ Foundation (LF) nowadays helps Microsoft cement its monopoly — the very opposite of what ages ago it said the LF would do



  9. Are Songs Property? And Maths Also Property? Artificial Monopolies Are Not Property...

    Patent maximalists continue to face stronger arguments from their sceptics, who rightly allege that words are being intentionally misused and numbers fabricated so as to distort underlying facts



  10. Battistelli Blocked Techrights at EPO (Banned for More Than 5 Years), So CEIPI Won't Respect Access to Information Either

    The use of censorship to confront people who talk about (not even expose) corruption isn't novel; but the adoption of this approach in Europe (not just places like Russia and China) is definitely noteworthy



  11. IRC Proceedings: Monday, February 17, 2020

    IRC logs for Monday, February 17, 2020



  12. Links 18/2/2020: Linux 5.6 RC2, Wine 5.2, GNU Social Contract and Sparky 2020.02 Special Editions

    Links for the day



  13. IRC Proceedings: Sunday, February 16, 2020

    IRC logs for Sunday, February 16, 2020



  14. Links 16/2/2020: MX Linux 19.1 and MyPaint 2.0

    Links for the day



  15. IRC Proceedings: Saturday, February 15, 2020

    IRC logs for Saturday, February 15, 2020



  16. Guest Article: Au Revoir, GNU/Linux

    "Funny how OSI just ended up being another vehicle for their takeover of the computing world..."



  17. Former Microsoft Employee: ZDNet is Owned by Microsoft (and Others) in Some Senses

    A noteworthy message we've received from someone who knows Microsoft from the inside



  18. Links 15/2/2020: Blender 2.82, Qt 5.15 Alpha and NetBSD 9.0 Released

    Links for the day



  19. Microsoft Views 'Open Source' as a Zero-Cost Heist Opportunity (Making Proprietary Software/Spyware Using Other People's Free Labour)

    Making GPL-licensed (copyleft) software and hosting it outside Microsoft’s jaws is the best way to counter the abusive monopolist, which still says it “loves” what it is actually attacking



  20. Did Microsoft 'Buy' ZDNet?

    A look at what ZDNet tells its readers (screenshot from this morning) and a rare look at how its writers are censored/suppressed



  21. Anatomy of a Crime and Protection From Prosecution

    It’s hard to forget what António Campinos hides for his friend



  22. Today's EPO is a Fraud Managed by Frauds

    Beneath the scandals associated with systematic abuse against staff, union-busting (silencing whistleblowers) and en masse granting of invalid patents — the hallmark of grotesque maladministration — lie a bunch of even greater crimes



  23. IRC Proceedings: Friday, February 14, 2020

    IRC logs for Friday, February 14, 2020



  24. One Need Only Look at ZDNet's 'Linux' Section to Understand It's a Microsoft Propaganda Operation

    A timely new snapshot (or screenshot) that demonstrates what ZDNet became after hiring Microsoft employees as ‘journalists’ and censoring on behalf of Microsoft, defaming Free software figures and so on



  25. Links 14/2/2020: New Release of KStars, OpenSSH 8.2, Rhythmbox 3.4.4, Flatpak 1.6.2

    Links for the day



  26. The Uselessness of Social Control Media and Why We Need RSS Feeds' Resurgence More Than Ever

    Social control media became pure noise or misinformation, usually in pursuit of financial expansion alone, and it is also a censorship machine which discourages not falsehoods but unconventional thinking



  27. Another New 'Clown' for the UPC 'Circus'

    A former writer of IPPro Magazine (which seems to be defunct now) reports another shuffle -- perhaps the fifth in a few years -- of "IP" [sic] Minister for the UK; it doesn't bode well for the Unified Patent Court (UPC)



  28. IRC Proceedings: Thursday, February 13, 2020

    IRC logs for Thursday, February 13, 2020



  29. Links 13/2/2020: Ubuntu 18.04.4 LTS, Septor 2020, Endless OS 3.7.7, Wayland 1.18.0, KDE Plasma 5.18 and GTK 3.98 Released

    Links for the day



  30. The Microsoft Propaganda Model

    Classic new examples (real screenshots) of how Microsoft-funded media entraps people looking for information about "Linux" to actually push Microsoft talking points and marketing, cover-up, face-saving lies etc.


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