Vivendi Sees Signs of Voting Fraud

In a stunning development, Vivendi Universal disclosed Friday night that it had discovered what appeared to be sabotage to the electronic voting system used at its tumultuous annual meeting Wednesday--a development that could reverse some controversial shareholder votes.

Among the resolutions that could be reversed: a motion to authorize the dismissal of former Canal Plus Group Chairman Pierre Lescure, whose supporters staged protests and booed and heckled Chairman Jean-Marie Messier throughout the four-hour meeting.

The strange turn of events is forcing the company to call another annual meeting and potentially face another angry crowd of shareholders and more vocal protests from workers.

Vivendi said it suspected someone had hacked into the computerized voting system.

“Checks of the votes made electronically during the April 24 [meeting] indicate a systematic malfunction of the voting machines of the main shareholders,” Vivendi said. “This malfunction very likely stems from a hacking into the system.”

The company said it did not have a suspect yet, but it had contacted law enforcement agencies. Vivendi said it planned to file a legal complaint with the French state court, a move necessary before calling a new meeting, possibly as early as June.

The irregularities affect all 18 of the shareholder resolutions.

The resolution on Lescure’s ouster won support in a 55%-to-45% vote, which was unusually close for such a management proposal.

Shareholders, steamed over the 40% slide in Vivendi’s share price this year, protested by voting down the management stock option plan, as well as a second proposal that would have allowed the company to raise new capital without giving shareholders first rights to purchase new shares.

Messier, having just emerged from a two-week period that brought management upheaval to Canal Plus, almost certainly isn’t eager to face another crowd of hostile shareholders.

The recounts, though, could work in his favor if large investors support the stock option plan, which would let the board grant options on as much as 5% of Vivendi shares to management.

Employees grew suspicious of the vote tallies because the percentage of people voting to abstain on most of the resolutions was high, 19% to 20%, compared with the 3%-to-4% range that was typical in previous meetings, a source familiar with the matter said.

Vivendi identified the problem after contacting leading shareholders--including Saint-Gobain, which owns 1% of the shares--which said their votes had been incorrectly counted as abstaining, according to the source.

A Vivendi spokesman reached Friday night said he could not recall a similar incident at previous shareholder meetings and declined to discuss further details.