Mitterrand’s Friend Charged in Scandal

A close friend of President Francois Mitterrand was charged Thursday with using inside information about a state-owned company to make several hundred thousand dollars profit on the New York Stock Exchange.

Roger-Patrice Pelat, 70, a friend of the French president since their days together in a German World War II prisoner of war camp, is one of five persons charged in the “Pechiney Affair” stock scandal that has shaken the Socialist government in recent months, French judicial sources said Thursday.

SEC Alerted French

Under French laws similar to U.S. Securities and Exchange Commission “insider trading” statutes, the five are charged with benefiting from advance knowledge of plans by the French state-owned aluminum manufacturer, Pechiney, to buy the large American packaging firm, Triangle Industries Inc., last November. In fact, it was the SEC that first alerted French authorities to the possible irregularities in the stock-tender transaction that quadrupled Triangle stock prices overnight.

In a television interview Sunday, Mitterrand denied any personal knowledge of Pechiney-Triangle stock transaction. He made an emotional statement detailing his long relationship with Pelat, his favorite companion on daily afternoon walks, but said he would “not be able to maintain the same kind of friendship” if Pelat were convicted of a crime.

Mitterrand also used the television appearance, his first in more than seven months, to condemn “easy money” and “gangsterism” on the stock exchange. Some political observers saw it as an attempt by the French leader to repair some of the moral damage suffered by his Socialist Party before the important municipal elections across France next month.

Ironically, until it turned sour with the insider-trading accusations, the Pechiney purchase of Triangle Industries had been heralded by Premier Michel Rocard and others as a shining example of new creative use of the free market by the Socialist government. The purchase of Triangle, parent of American National Can Corp., made Pechiney one of the largest packaging companies in world.

Backlash Feared

Now some French business leaders have expressed fears that the daily revelations in the French press about the Pechiney Affair will lead to a backlash by the Socialist government and cause it to return to a policy of nationalization and traditional left-oriented economic policy that marked the first phase of the Socialist rule in the early 1980s.

In his television appearance, Mitterrand took a status quo position, saying that there would be no more nationalizations of private companies nor privatizations of nationalized companies under his government.

Specifically, Pelat and a friend, Isabelle Pierco, are charged with “receiving” inside information on the Pechiney deal. Three other men, stockbrokers Pierre-Alain Marsan, Ricardo Zavala and investment adviser Robert Reiplinger, are charged with insider trading.

2 Years in Prison

The maximum charges for “receiving” and trading are the same: two years in prison and fines equal to four times the amount of money gained.

Pelat had earlier admitted buying 10,000 shares of Triangle stock for himself and several of his family members for $10 a share but said he did it on a tip from another friend, businessman and Socialist Party fund raiser Max Theret. The Pechiney tender offer catapulted Triangle’s share price up to $56 overnight.

After being told of the charges against him by investigating magistrate Edith Boizette, the stocky Pelat, renowned for his bravery as a French Resistance commander during the German occupation, said he was “astonished.”

“The last time I was arrested it was by the Gestapo,” he told reporters.