Bonum Certa Men Certa

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

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.

Recent Techrights' Posts

Links 28/08/2025: Chatbots Distorting/Fabricating History and Also Driving Suicide
Links for the day
Open Source Initiative (OSI) Resists Software Freedom, Even by Attacking Its Own
The OSI is compromised
 
Richard Stallman (RMS) Talk in Ethereum Cypherpunk Congress Will be Remote
This past week RMS received lots of accolades online
The Register MS (Run by Microsoft Operatives): Free Software is Putin, Hence Evil and Dangerous
The current editor in chief is an American Microsofter, the previous one went to work for Google (US)
Gemini Links 28/08/2025: Back in Japan and Why "Hacker News" Sucks
Links for the day
A Much-Needed Wake-up Call to Users of Wordpress.com, Blogspot, Substack and All Those Other Outsourced (and Centralised) Platforms
There are several lessons in there
The UEFI 9/11 - Part II - Campaign of Censorship and Defamation Against Critics
In dictatorships, humour serves an important role. It's tragic.
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Wednesday, August 27, 2025
IRC logs for Wednesday, August 27, 2025
Slopwatch: linuxsecurity.com, Slopfarms in Google News, and More
Some readers of ours end up sending us links that are from slopfarms, not realising those are slopfarms
Gemini Links 27/08/2025: Katrina Memories and Google Versus Software Freedom
Links for the day
Links 27/08/2025: Police Against Media Freedom in the UK, Energy-Hungry Countries Targeted by China
Links for the day
Microsoft Windows Fell to All-Time Lows in Egypt This Summer, Vista 11 Adoption Decreases While GNU/Linux Increases
Vista 11 is going down rather than up
Links 27/08/2025: Microsoft Demoralises Staff With Slop Demands, Leaving Mastodon Explained
Links for the day
12 Hours Ago The Register MS Published a Fake (Paid-for) Article, But This One for a Change Did Not Promote a Ponzi Scheme
There are also Free software alternatives, but they don't pay The Register MS for "synthetic" so-called 'journalism'
More People Need to Call Out and Put a Stop to Serial Sloppers
Unless slopfarms are stopped, people will read and share Microsoft propaganda made by chatbots
Gemini Links 27/08/2025: Headphones and Tartarus
Links for the day
Morale at Microsoft is Terrible (Proprietary Plagiarism Machines Have No Future, LLM Slop is a Bubble)
The slop sceptics/critics are going to have lots of "told you so" moments
GNOME "governance issues, staff reduction, etc." amidst Albanian whistleblowing and women trafficking
Notice the connection to Software Freedom Conservancy (SFC) and GNOME
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Tuesday, August 26, 2025
IRC logs for Tuesday, August 26, 2025
Richard Stallman (RMS) Was Right About "Sideloading" in 1996
We now have computers that treat booting GNU/Linux like an act of "Sideloading"
Panama: Windows Down From 97% "Market Share" to Less Than 30%
In 2009, Windows was measured at 97.24% (compared to 62.32% right now or less than 30% if one also counts Android)
The UEFI 9/11 - Part I - Introduction to Impending Catastrophe (Microsoft Preventing People From Booting Non-Windows Systems)
eight-part series
Why Techrights is Slow Today (Bot Floods)
We don't know if those bots are connected to LLMs (we have not checked), but that is a possibility
Slopwatch: DDoS Slop, LinuxBSDos.com Spam, and Slopfarms in Google News, Including webpronews.com
Among the news we also found fakes, albeit not so much today
Links 26/08/2025: "Ballooning Debt" in France and "Transnational Repression in the UK"
Links for the day
Gemini Links 26/08/2025: Listening to Alcest and Google Doing Evil (Users Installing Software is "Sideloading" and Prohibited)
Links for the day
Links 26/08/2025: DNS Tampering and TikTok Layoffs
Links for the day
Microsoft's Windows "Market Share" Overestimated
Microsoft's income sources are shrinking
We Shall See...
My wife and I are hardly the first victims of Brett Wilson LLP
This New Determination on a Case Echoes the Modus Operandi of Microsoft's Serial Strangler vs Techrights (Its Online Decision/Judgment Says Truth and Public Interest Defend the Publisher)
Noel Anthony Clarke hopefully has enough money left to pay his victims, which include the publishers
Going Offline
There was life before the Net
The Register MS Has Apparently Shut Down Its Office
It is basically a fake address on the face of it
There Are Also Expectations of IBM Layoffs Very Soon With "Narrative Control."
Some of them mention Red Hat and how IBM failed to achieve anything substantial with that acquisition
After at Least Two Rounds of Mass Layoffs in August Microsoft Said to Have "September Layoff Confirmed - Performance Based"
Those "M5 level meetings" sound plausible
Over at Tux Machines...
GNU/Linux news for the past day
IRC Proceedings: Monday, August 25, 2025
IRC logs for Monday, August 25, 2025