Former EADS Chief Targeted in Share Probe
Former EADS co-chief executive Noel Forgeard has been placed under formal investigation on suspicion of insider trading while at Europe's largest aerospace group, his lawyer said on Friday.
After 36 hours of police questioning, the "shocked" 61-year-old was freed in the early hours of Friday on bail that was later set at one million euros ($1.55 million).
Judges are investigating the selling of stock in 2006 by people inside EADS, weeks before the Franco-German-Spanish company's Airbus unit unveiled delays to its A380 superjumbo.
The announcement of worsening delays in building the world's largest airliner wiped a quarter off the value of EADS shares in June 2006 and triggered Forgeard's resignation.
EADS shares closed 3.4 percent higher at 15.02 euros on Friday, boosted by an easing in high oil prices which had raised concerns over the capacity of airlines to renew fleets.
Forgeard and other current and former executives have denied knowing about the A380 delays when exercising their right to trade stock in March 2006.
EADS also has denied wrongdoing.
Forgeard's lawyer said he had been cleared on a second count requested by prosecutors, of misleading financial markets.
Being targeted for formal investigation in France is a step short of charges and does not imply guilt or necessarily lead to trial.
Insider trading carries a maximum of two years in jail and a fine of up to 10 times the share trading profits.
Forgeard is the first person to appear before judges in an investigation that could embrace executives still at EADS.
Last month, French regulator AMF wrapped up the exploratory phase of its own 18-month trading investigation and said it had found enough evidence to report 17 current and former executives to prosecutors and its own sanctions service.
Core EADS shareholders Lagardere and Daimler, which sold shares in April 2006, were also named in the AMF enquiry which looked at how much everyone knew of delays to the A380 and design problems on the A350 as far back as 2005.
Both companies have denied breaking any rules.
The criminal investigation led by two judges can draw on the AMF findings but is legally separate and may result in more or fewer people being called in as witnesses or suspects.
Analysts expect the resulting uncertainty to last for months.
Forgeard was placed in police detention on Wednesday but spent that night in hospital due to slight respiratory problems.
His lawyer said he had found the experience of being held in a sparse police cell "overwhelming."
"When you are someone like Mr Forgeard, who has had an exceptional industrial career, it's very difficult to find yourself in detention ... but he has courage and he survived the shock. He has good morale," lawyer Jean-Alain Michel said.
"I am convinced we will succeed in demonstrating that he didn't commit insider trading. We have very good evidence to prove that," the lawyer added.
EADS declined comment.
Forgeard ran Airbus from 1998 to 2005 and rose to become co-chief executive of EADS following a public power battle in which former president Jacques Chirac, whom Forgeard had once served as an industrial adviser, intervened on his behalf.
He shared power at EADS with a German co-CEO, Tom Enders, under a system agreed between France and Germany when EADS was created through a merger of sensitive assets in 2000.
Now head of Airbus, Enders is also on the AMF target list and has also denied doing anything wrong.
Forgeard's time at the top was marked by in-fighting with the German camp, echoing national rivalries that many blamed for the A380 delays and ultimately speeded his departure.
Hinting at possible recriminations, Forgeard has said he is determined not to be made into a scapegoat for the A380 affair, which he blames on problems in Airbus factories in Germany.
Le Monde reported on Friday that Forgeard already had taken a swipe at former EADS co-chairman Manfred Bischoff, now supervisory chairman of Daimler, in questioning by police.
In a bid to end chronic squabbling inside one of Europe's biggest industrial groups, France and Germany agreed last year to scrap the dual management system at EADS and appointed Frenchman Louis Gallois as the company's sole chief executive.
Visiting the French aviation capital of Toulouse on Tuesday, Gallois declined to comment on his predecessor's plight.
"It is not my place to comment. Noel Forgeard is no longer employed by EADS. Being detained for police questioning does not mean someone is guilty," Gallois said.
Gallois said he had "full confidence" in EADS management.