Everywhere Thierry Breton goes the little guys lose their shirts and his already rich friends get richer. The latest scandal concerns a massive insider trading conspiracy at the European Aeronautics and Defense giant EADS.
By November 2005 top management at EADS knew the delivery of the Airbus A-380 Jumbo jet would be delayed by at least six months. This would mean losses for Airbus and a fall in the price of EADS stock. So, twenty-one high ranking directors at EADS, including the two co-CEOs, did what any crook would do: they sold their stock options before the news was made public.
That is to say, without investing a penny, these guys took their options which were supposed to encourage them to manage EADS correctly, and sold them for millions of euros in profits. Even better, according to Financial Markets Authority (ATF) the French stock-market watchdog, at least a thousand of their buddies got the news ahead of time too and cashed in their stocks at a profit.
ATF says some “1200 insiders sold more than ten million shares and made 90 million euros in profits.” ATF underlined the fact that 14 of the 21 EADS executives involved “had never sold shares before November 2005 … proof there was an absence of confidence in the continuation of the stock price to progress.”
Among the profiteers is media tycoon Arnaud Lagardère, a co-Chairman at EADS and a close friend of President Sarkozy, who held a 15% share in EADS and sold off half in time. Worse still, the shares sold, worth 126 million euros, were bought by the Caisse des depots, the French government bank which manages spending!
So how does Thierry Breton fit into this? He was Minister of Finance at the time. Given that the French government owns 15% of EADS, it was his job to manage the interests of the French tax-payers.
Breton says he did not know and only learned about the problems at Airbus in the press in mid April 2006. This is contradicted by some of his former collaborators who say he was informed in January 2006 or even December 2, 2005 according to Le Figaro newspaper. It is hard to imagine that as Minister of Finance he would not have been informed of large sales of stock and stock options in one of the most important industries in the country not to mention that delays would lead to a reduction of earnings of $6 billion from 2006 to 2010.
Needless-to-say, by the time the bad news was issued in June 2006 and EADS stock fell 26%, the fat cats had cashed in their chips and the small guys and the tax-payers had to foot the bill. To demonstrate that these white-collar thieves have no shame, most of those executives who exercised their stock options are still sitting at the top of EADS and Airbus.
It might be interesting to note that in Sarkozy-land where “hard work and getting up early” are promoted and the motto is “work more to earn more”, Airbus is in the process of cutting 10 000 jobs across Europe and selling up to seven factories in a restructuring effort.
But Thierry Breton says he knew nothing.
This is what Breton said about France-telecom’s price fixing on mobile phones with two other actors in the market between 1997 and 2003 when he was head of the then majority French government owned giant. The three companies involved were fined 630 million euros, the biggest fine ever levied in France for business fraud, after a consumer group pressed charges.
One of the companies involved is Bouygues télécom which is owned by the media giant and close friend of Nicolas Sarkozy, Martin Bouygues. The price fixing of course ripped off the little guy. This is what Breton is good at.
But that was not Breton’s first dis-service to the honest guy. Between January 1998 and September 2000, Thierry Breton was Administrator at Rhodia and President of its auditing committee. Rhodia was cooking the books and hiding substantial costs. From 21 euros the price of Rhodia stock turned belly up and was as low as one euro before the stock was finally restructured this year. Major Rhodia share holders have filed suit and we are still waiting for the trial.
What about the little guys? I lost the money I invested in Rhodia to pay for my son’s school tuitions. Thierry Breton made three million euros for his work. Today Mr. I-didn’t-know-anything-didn’t-do-anything-wrong is teaching economics at Harvard!