Ex-CEO of Vivendi Faces Formal Inquiry

French investigators moved toward prosecuting former Vivendi Universal Chairman Jean-Marie Messier, placing him under formal investigation today for suspected financial wrongdoing, his lawyer said.

Magistrates notified Messier that he was being investigated -- a step short of formal charges -- at a hearing that lasted into the early hours of this morning, lawyer Olivier Metzner said. Messier was then released from custody.

Messier had been held in custody since Monday. Police questioned him as part of a probe into allegations of insider trading, share price manipulation, publication of misleading information and misusing company funds when he was head of the French media and telecom group.

Messier was put under investigation on all those allegations, except for insider trading. Officials also ordered him to pay a $1.62-million judicial guarantee and required him not to talk to several others involved in the case, the lawyer said.

Financial investigators are examining a series of share buybacks conducted during Messier’s time as Vivendi’s chairman and chief executive. Messier left Vivendi in July 2002.

The company allegedly spent more than $1.2 billion to prop up its share price in the weeks after the Sept. 11, 2001, terror attacks, and did so even while Messier was presenting financial results -- a practice strictly forbidden by French stock market rules.

The small investors’ group that filed the original complaint against Messier said the buybacks exceeded authorized volumes and amounted to share price manipulation.

Messier and other former executives have said they carried out the operations with the full knowledge of France’s Financial Markets Authority, which is also under investigation. Two Vivendi executives and a Deutsche Bank director were placed under investigation in March for their alleged roles in the buybacks, followed this month by former Vivendi Chief Financial Officer Guillaume Hannezo.