Cleanup needed

11 Oct 2007 By Pierre Briancon

The alleged insider trading scheme stems from the company s twisted governance. It has lousy shareholders in incompetent Lagardere and the evermeddling French state. And its top managers allegedly rushed to cash in when the company s troubles became apparent. Radical cleanup and reforms are becoming urgent.

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The French government was to publish on Thursday a report from the finance ministry's general inspection service about the state's role in the controversial sale last year of a 7.5% stake in Eads, the FrenchGerman aerospace group, by Lagardere, the media company. Caisse des Depots, the French state's investment arm, eventually bought about a third of the stake.

Lagardere and Daimler are suspected by French watchdog AMF to have sold their shares knowing about troubles in the assembly line of Eads' Airbus A380 new jumbo plane, which sent shares of the company sinking when they became publicly known in June 2006. According to French media leaks, the AMF also alleges in a preliminary note sent to a Paris investigative judge that most of the company's top managers sold company shares as early as November 2005, at a time when Airbus problems became known internally.

Along with the AMF and an investigative judge, the French Senate has launched an inquiry into the French state's actions regarding the sale of the Lagardere stake. French economy minister Christine Lagarde was to be questioned by the Senate special committee on Thursday night.

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