Messier, Bronfman Must Stand Trial in Vivendi Case (Update3)

By Heather Smith

Oct. 22 (Bloomberg) -- Former Vivendi SA executives Jean- Marie Messier and Edgar Bronfman Jr. are among seven people who must stand trial in Paris on charges involving share manipulation at the media company.
The investigating judge’s decision was delivered to prosecutors today, said Isabelle Montagne, a spokeswoman for the office. The more than five-year-old investigation centers on allegations of market manipulation, distributing false information, and misuse of corporate funds.
The decision by Judge Jean-Marie d’Huy to send former Vivendi Universal Chief Executive Officer Messier, 52, and Warner Music Group CEO Bronfman, 53, and the others to trial overrules a January recommendation by Paris prosecutors to drop the case. The company is a co-defendant with Messier in a related shareholder lawsuit in New York over statements about the company’s health between 2000 and 2002.
“It’s very surprising,” said Olivier Metzner, a lawyer for Messier, referring to the delay in sending the men to trial following the prosecution recommendation. “By chance, at the same time as the New York class action, the judge says he sees a crime. So I have to ask myself about the timing.”
‘No Crime’
Messier “is going to plead not guilty,” said Metzner. “There was no crime.”
Bronfman, the former vice chairman of Vivendi, is innocent of the insider trading charges he faces, Thierry Marembert, his lawyer, said today in a telephone interview. “The case against Mr. Bronfman is very weak,” he said.
Investors in the U.S. suit say they suffered billions of dollars in losses after the company lied about its revenue and earnings by falsely claiming it was generating enough cash and earnings to meet its obligations on $21 billion in debt. Vivendi has counter-sued in Paris to block French residents from participating in the New York case.
“This is a victory for investors,” said Frederik-Karel Canoy, a lawyer for shareholders in the New York and French cases. The decision to bring a criminal case in France “will help support the New York case.”
Civil Plaintiff
Vivendi, the owner of the world’s largest music company, has joined the French case as a civil plaintiff and “fully cooperated” in the investigation, the Paris-based company said in an e-mailed statement.
Messier now runs Messier Partners LLC, a mergers adviser based in New York. At Vivendi, he spent about $77 billion on acquisitions, including Universal Music Group and all of Canal Plus, to turn the former water utility into a media giant rivaling Time Warner Inc. The purchases almost bankrupted Vivendi, leading to a 13.6 billion-euro ($20.4 billion) loss in 2001 and Messier’s ouster a year later.
Vivendi bought Seagram Co. in 2000 for $34 billion in a stock deal that made the Bronfman family the French company’s largest shareholder. Bronfman resigned from the board of Vivendi in 2003 and led a group of private-equity firms in the $2.6 billion purchase of Warner Music from New York-based Time Warner Inc.
Messier and Vivendi were fined 1 million euros by France’s market regulator, the Autorite des Marches Financiers, for reporting “inaccurate and excessively optimistic” financial information in 2004.
Last Updated: October 22, 2009 13:17 EDT