Prosecutors investigate Vivendi's share case

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French authorities have opened a formal investigation into alleged share price manipulation at French media group Vivendi Universal during the reign of controversial former Chairman and CEO Jean-Marie Messier. Prosecutors have placed Vivendi's treasurer Hubert Dupont-Lhotelian, his assistant Francois Blondet, and the head of Deutsche Bank's French equities business, Philippe Guez, under investigation. These are the first formal investigations since prosecutors opened the probe into Vivendi in October 2002, four months after the resignation of Messier as CEO. The three are accused of executing a massive share buyback that may have broken French stock market law, and manipulated Vivendi's share price in September 2001, in the aftermath of the September 11 attacks. Ousted CEO Jean-Marie Messier also demanded to be placed under investigation, which precedes formal charges. Messier was reported as saying: "I request to be placed immediately under investigation to take responsibility for this legitimate decision by the company, to explain myself and to defend my former colleagues."

According to a report in Le Monde, Messier ordered company officials to buy back its shares despite warnings from bankers that the purchases were likely to be illegal. The newspaper published what it claimed were e-mails from Deutsche Bank warning Vivendi that it believed the share purchases it had been asked to conduct were illegal under French market rules.

Three months ago, Vivendi agreed to pay the US Securities and Exchange Commission $50 million to settle fraud claims. The SEC also stripped Messier of a E20 million golden parachute, fined him $1 million and barred him from holding US directorships for 10 years.