Ex-Mitterrand Aide : French Official Resigns as Stock Inquiry Widens

A senior French official in the Ministry of Finance resigned Friday amid an expanding investigation of illegal stock market transactions that has shaken the Socialist government in recent days.

Alain Boublil, cabinet director for Finance Minister Pierre Beregovoy and former aide to President Francois Mitterrand, is the central figure in a case of alleged insider trading involving the $1.3-billion purchase last November of a U.S. packaging firm, Triangle Industries, by a French state-owned metals firm, Pechiney.

An investigation by the U.S. Securities and Exchange Commission found that at least 220,000 shares of stock Triangle, parent of American National Can Co., were traded in a “suspicious manner” around the time of the purchase, resulting in a potential profit of more than $10 million.

Close to Mitterand

Two of the investors, who have acknowledged that they benefited when stock prices for the parent company soared overnight from $10 to $56 a share, are close associates and important financial backers of Mitterrand and his ruling Socialist Party.

Other large blocks of shares were traced by the SEC to several investment firms based in Switzerland. One, Soco Finance, a Lebanese-owned investment firm specializing in precious metals speculation, allegedly made suspect stock buys through a small offshore bank in the British West Indies.

Boublil, 41, a Tunisian-born expert on French industrial policy, has been drawn into the scandal because of media reports on his close friendship with Samir Traboulsi, a Paris-based Lebanese businessman.

Traboulsi, a recent recipient of the French Legion d’Honneur for his efforts to free French hostages in Lebanon, acted as an agent for Triangle Industries during negotiations with Pechiney. He also has acknowledged a business relationship with Soco Finance and another French company with a minority holding in Soco.

In news accounts confirmed by Traboulsi, Boublil is alleged to have been a guest on a yacht owned by Traboulsi while negotiations for the purchase by Pechiney were taking place on deck.

Boublil was Beregovoy’s main adviser when the French government approved terms of the sale. As such, he was one of three senior French officials aware of the timing of the tender offer.

In a statement Friday on French television, Boublil said: “I have resigned in order to reply to my accusers and to sue those who have defamed me.”

So far, the size of the French scandal is small compared to similar insider-trading cases in the United States--but the political implications are large. Financial writers already are beginning to compare it to the two largest such cases in French history.

The latest disclosures are set out in a 19-page SEC document leaked this week to a French radio reporter. The document, together with a Dec. 16 cover letter from Michael D. Mann, the SEC’s associate director for international affairs, was addressed to officials in the Swiss capital of Bern.

It asked that Swiss authorities freeze the accounts of several firms that made timely and profitable stock purchases in Triangle Industries before the Nov. 21 tender offer of $56 a share.

“Prior to the announcement of the tender offer,” the SEC document says, “trading volume in the common stock increased dramatically. . . . The timing, size and nature of the transactions in Triangle indicate that the purchasers were in possession of material, non-public information regarding the tender offer.”

In one instance, according to the SEC report, the Swiss-based investment firm of Experta Treuhand purchased 20,000 shares of Triangle stock three days before the tender offer was made public, then sold the shares a day after the announcement and reaped a profit of $759,000.

In another case, the report said, Soco Finance sold shares of Triangle through the International Discount Bank & Trust in the West Indies island of Anguilla after early negotiations to buy the American company broke down. Later, after negotiations were resumed, Soco bought new shares.

“The IDB (International Discount Bank) purchases are particularly noteworthy both for their size and close correlation to the progression of negotiations between Pechiney and Triangle,” the SEC report remarked.

The SEC estimated that Soco made more than $3 million from the stock purchases. But the most important implication for the company may be its earlier dealings with Traboulsi.

On Thursday, Traboulsi defended his actions after the newspaper Le Monde placed him at the center of the “Lebanese trail,” and he said he was being attacked unfairly because of his nationality.

“If another Lebanese has done something wrong, I am not responsible,” he said. “It is really sad that a beautiful deal like this--beautiful for the Americans and beautiful for France--has been dirtied.”

One of the investors who is most closely tied to Mitterrand is Max Theret, who purchased 32,300 shares of Triangle on Nov. 15, four trading days before the tender offer. The second investor, Roger-Patrice Pelat, considered one of Mitterrand’s closest friends, bought 10,000 shares on the same date.

In a telephone interview this week, Theret defended his purchase as a coincidence based on a hunch and said his lengthy study of the world packaging industry had shown him that something like the Triangle-Pechiney deal was likely.

“American Can had been vulnerable, but honestly, I did not know anything was up,” Theret said. Regarding his ties to the Mitterrand government, he added: “I am not a political man, but I do have opinions. I like the Socialists.”

But as further details of the case have emerged, it is Boublil’s role that has been increasingly questioned. Beregovoy had remained firm in support of his aide.

Traboulsi acknowledges that Boublil, who was on vacation, was aboard his yacht while it was anchored off Corsica in Figuari Bay last August. In the remote bay at the same time, according to Le Monde, was a yacht belonging to Nelson Peltz, Triangle’s chairman and chief executive officer.

‘Campaign of Rumors’

Peltz and two representatives of Pechiney held discussions on the yacht about the purchase, Traboulsi said. But he said Boublil stayed below deck and did not take part.

“He never attended the meetings,” the Lebanese broker declared.

Traboulsi described Boublil as a personal friend with whom he attends the opera and other events. Boublil “was my friend before this,” he said, “and he will be my friend after this.”

Similarly, Finance Minister Beregovoy said in a recent interview: “The current campaign of rumors which has involved my cabinet secretary, Alain Boublil, is not a healthy campaign. I am surrounded by honest people.” After his senior aide’s resignation Friday, Beregovoy issued a statement expressing confidence in Boublil’s ability to “defend his honor.”

Although insider trading has been going on here for decades, it is regarded in some circles as an unofficial method of political fund-raising, and French officials have had very little success in obtaining convictions. Of eight cases recommended for prosecution in the past three years, none has resulted in a guilty verdict.