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 in other sites/networks: These icons link to social bookmarking sites where readers can share and discover new web pages.
  • Reddit
  • email

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. 'Ethical Source' is Not Ethical and Not a Movement But a Misguided Self-Serving PR Stunt

    Something which is neither enforceable nor ethical is being promoted by profoundly unethical media in the pockets of large corporations



  2. InteLeaks – Part XXI: Intel Seeking Advice From a Bunch of Clowns (Harbor 'Research')

    A firm called Harbor 'Research' is making dubious recommendations to Intel; as shown in the above video, there's also an obsession with buzzwords (typically suggestive of a lack of technical grasp/understanding)



  3. IRC Proceedings: Monday, January 18, 2021

    IRC logs for Monday, January 18, 2021



  4. The US Election Was Not Rigged, But the Nomination Process Was (Undermined to Maintain Control by Oligarchy)

    Cheating/driving the left out of the Democratic Party seems like a longstanding tradition and we know who stands to gain from it; moreover, problems remain in the voting process because it's controlled by secret code of companies like Microsoft (in spite of the openwashing)



  5. InteLeaks – Part XX: Redacted (for Names Only) Release of Intel File About Developer eXperience (DX) Meddling in GNU/Linux

    Today (or tonight) we release the first 'phase' of InteLeaks in a sensibly redacted form; coming up next is a surprise from Team Microsoft



  6. Sites in Bed With the EPO and UPC 'Covering' the 'News' Without Mentioning Any of the Overt Abuses

    It is rather sad that blogs like IP Kat have turned into proponents of abusive EPO management and Team UPC increasingly resorts to lying using pseudonyms (to avert criticism and accountability); much of the rebuttal or response that’s hinged on reality/facts can only be found in comments, which are still subjected to a face-saving moderation process (conducted by Team UPC)



  7. Suppressed Facts of the Free Software Movement and Its Community of Volunteers – Part IV: Stories From the Depths of the Free Software Foundation (FSF)

    To reduce or alleviate suspicions and a potential of mistrust the FSF needs to become more transparent and liberate information (such as the real reason Bradley Kuhn left, as noted in the previous part)



  8. Links 18/1/2021: GNU Radio 3.9, Wikipedia at 20

    Links for the day



  9. InteLeaks – Part XIX: Intel's Web 'Experts' Seen as Microsoft Champions Dealing With the Platform Microsoft is Looking to Destroy

    Things aren't rosy at Intel because the hires aren't suitable for the job of documenting and/or presenting GNU/Linux-centric products (whose target audience is Free software developers)



  10. Adding Images as Characters to the Daily Bulletins of Techrights

    Our daily bulletins now have inside them coarse graphics, depicted using characters alone, and the tool used to generate them announced a new release earlier today; we showcase some of its features (in a new video)



  11. Links 18/1/2021: Weekly Summaries and Linux 5.11 RC4

    Links for the day



  12. IRC Proceedings: Sunday, January 17, 2021

    IRC logs for Sunday, January 17, 2021



  13. The Oligarchs' Parties Will Never Choose the Side of Software Freedom Because Free Software Cannot Bribe Officials

    The tough reality is that next week's (or this coming week's, depending on what Sunday counts as) inauguration ceremony is partly symbolic as all the same and important issues remain largely untouched, for corporations control almost everything of significance



  14. COVID-19 Has Actually Helped Software Freedom Due to Financial and 'Spare Time' Factors

    Developers and users are increasingly exploring what the Free software world has to offer; this is actually measurable and it contradicts claims to the contrary



  15. Future Plans and Using Videos to Complement Text

    Remarks on recent and impending site changes; We are not replacing text with video, we're just trying to enhance the presentation a bit, especially where visuals help make a point or where browsing through Web sites (or leaks) is more suitable than static, linear presentation



  16. InteLeaks – Part XVIII: Intel Does Not Know How to Properly Do Research and It Seems Apparent Unscientific Methods Are Used to Justify Poor Documentation

    There appears to be a severe crisis at Intel; they cannot recruit scientists (or those whom they recruited are walking away) and as a result the company produces bad products with poor documentation (or highly defective chipsets that top-notch marketing cannot compensate for); in this video we walk through some examples of how studies are being conducted (as already noted in Part XVII)



  17. Suppressed Facts of the Free Software Movement and Its Community of Volunteers – Part III: The Free Software Foundation (FSF) Seems More Like a Victim of Destabilisation Campaigns

    The Free Software Foundation (FSF), which turns 36 later this year, is looking to raise money that helps support the GNU Project, soon 38 years old and likely the most important Free software project to exist (ever)



  18. Links 17/1/2021: EasyOS on Raspberry Pi and GNU libsigsegv 2.13

    Links for the day



  19. InteLeaks – Part XVII: The High Cost of Microsoft Windows Users in GNU/Linux Development Teams

    A look inside Intel explains what holds back the technical team, which bemoans the lesser technical people getting in the way and not even using the product that they are writing about



  20. IRC Proceedings: Saturday, January 16, 2021

    IRC logs for Saturday, January 16, 2021



  21. Suppressed Facts of the Free Software Movement and Its Community of Volunteers – Part II: Why Bradley Kuhn Left the Free Software Foundation (FSF)

    The founder of the FSF is still at the FSF (albeit not publicly) and the person who lobbied to oust him has basically been 'banished' by the founder



  22. Links 16/1/2021: LibreOffice 7.1 Release Candidate, Zeroshell 3.9.5, FreeBSD Report, and GhostBSD 21.01.15

    Links for the day



  23. Free Speech on the Web Not Respected by Companies That Used to Support Software Freedom

    Mozilla does not have to make its Web browser about politics; it can just make an excellent piece of software that is neutral about the Web pages that it renders, based on the user's personal preferences



  24. Suppressed Facts of the Free Software Movement and Its Community of Volunteers – Part I: We Are Under Attack by Corporations and Their Salaried Facilitators

    The corporate takeover (taking over the Commons, produced by volunteers who are motivated by altruism) is a subject we must speak about and somehow tackle; this series will highlight uncomfortable or difficult truths



  25. InteLeaks – Part XVI: Intel Cannot Do Command Line, Even When It's Vastly Simpler and More Suitable for Development

    The Developer eXperience (DX) team at Intel seems to be full of Microsoft drones instead of developers and/or mildly technical people; this has not only harmed the quality of documentation but also upset staff, alienating people who actually understand what developers need (more than buzzwords like "DX")



  26. IRC Proceedings: Friday, January 15, 2021

    IRC logs for Friday, January 15, 2021



  27. Links 15/1/2021: KaOS 2021.01, Whisker Menu 2.5.2, Istio 1.8.2

    Links for the day



  28. InteLeaks – Part XV: Intel is Blind to Blind and Colour-Blind People

    Intel does not seem to grasp very basic concepts associated with accessibility; nevertheless, Intel shamelessly tries painting itself as "woke" and a "justice warrior" (policing speech while overlooking much-needed practical work)



  29. Links 15/1/2021: GStreamer 1.18.3 and Proton 5.13-5

    Links for the day



  30. IRC Proceedings: Thursday, January 14, 2021

    IRC logs for Thursday, January 14, 2021


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