Panel Clears Vivendi of Fraud Under Messier

After a 14-month probe, France’s stock market regulator raised questions about Vivendi Universal’s financial disclosures but found no evidence that the company committed fraud under former Chairman Jean- Marie Messier.

La Commission des Operations de Bourse, France’s equivalent of the Securities and Exchange Commission, has turned over an 81-page report on Vivendi to the Paris public prosecutor, which is conducting its own investigation into the French conglomerate.

“No massive legal fraud ... was found,” according to the report, a summary of which was obtained by The Times.

The market watchdog had looked into allegations that Vivendi, which amassed more than $30 billion in debt under Messier’s leadership, hid its financial woes from shareholders.

The report, which analyzed a series of transactions between 2001 and 2002, said of Messier specifically: “It would be difficult to reproach a manager for not informing the public about a liquidity crisis that was overcome shortly after his resignation.”

The report did, however, cite irregularities in the company’s financial disclosures and questioned whether Messier and other former officers presented an overly rosy picture of its financial health in the first half of 2002.

Messier’s actions have been the subject of intense scrutiny by regulators on both sides of the Atlantic since his ouster from the board last summer amid the financial crisis at Vivendi.

In Paris, the stock market regulator’s investigation isn’t over. It has asked Vivendi, Messier and the company’s former chief financial officer, Guillaume Hannezo, to respond to its findings and to answer additional questions over the next three months. Vivendi said it would cooperate fully.

The U.S. attorney’s office for the Southern District of New York and the Securities and Exchange Commission also are investigating Vivendi and Messier. Investigators are examining, among other issues, whether Messier and Hannezo violated insider-trading trader rules by unloading Vivendi stock shortly before the company conducted a large sale of shares. An SEC spokesman declined to comment Monday night.

In an interview Monday, Messier said he was generally pleased with the French regulator’s findings.

“Basically, the report kills most of the rumors which have been heard on Vivendi and Vivendi management of fraud and wrongdoing,” he said.

Messier’s optimism was boosted Monday by another favorable development: a decision by a New York Supreme Court judge ordering Vivendi to pay him nearly $23 million in severance and bonuses.

Justice Marilyn Shafer upheld a June 27 ruling by a New York arbitration panel. That panel had rejected Vivendi’s claim that a severance deal worked out July 1, 2002 -- the day Messier was fired -- was invalid because it was not approved by all of the company’s directors.

“The court is loath to encourage a policy that would permit disappointed litigants to escape the results of an arbitration which they expressly agreed to enter and by which they sought to be bound,” Shafer said in a 19-page ruling.

Messier said that he felt vindicated by the court’s ruling and that his attorneys soon would seek a court order to force Vivendi to post a bond for the compensation.

“I think at the end of the day Vivendi Universal will have to realize that for a company of its size, honoring its financial commitments is important,” Messier said.

The ruling was a blow to the media giant and to a group of minority investors, who sought to block the payment until shareholders could vote on Messier’s termination agreement.

Vivendi’s attorneys argued that the arbitration panel’s ruling was invalid because it contained legal errors. They also contended that Messier didn’t deserve the compensation because he put the French company on the path to financial ruin as he attempted to transform the onetime water utility into a rival of AOL Time Warner Inc.

Shafer called Vivendi’s argument “simplistic” and “self-serving” and criticized the company’s efforts through French courts to block any payment to Messier.

The company, in a statement, vowed to “use all legal options in order to oppose a payment to Mr. Messier, including appeal and a request to stay enforcement of the judgment pending the appeal.”

The feud with Messier has been an embarrassment to Vivendi’s French stewards, who have spent the last year shedding assets to pay down the debt Messier amassed over three years. To that end, Vivendi recently signed a preliminary deal to merge its Universal movie studio, theme parks and TV businesses with General Electric Co.-owned NBC.

Messier’s pursuit of the $23 million has been a sore point with shareholders, who saw the value of their holdings decline more than 70% in the six months before his ouster. Shareholders also accused him of hypocrisy because in his autobiography he criticized a peer for accepting a “golden parachute.”