Noel Forgeard, once the most powerful man in Europe’s aerospace industry, was detained by police yesterday over insider trading allegations that have rocked EADS, the aerospace and defence giant that owns Airbus.
Mr Forgeard was summoned for questioning by the financial division of Paris police, who said he would be placed in custody over claims that he used privileged information to earn millions of euros from his stock options in 2006.
The police move, a stinging humiliation for Mr Forgeard, increased fears that other executives at EADS could receive similar treatment.
Mr Forgeard, 61, could be put under formal investigation by a magistrate at the end of his detention – which could last 48 hours – on suspicion of insider dealing.
The offence carries a maximum fine of €1.5 million ($2.44 million), or 10 times the profits made from the operation.
Mr Forgeard, formerly the joint chief executive of EADS, was questioned after a report by the French Financial Markets Authority pointed to “massive” insider dealing by 17 executives at EADS and Airbus.
They are accused of selling stock in 2005 and 2006, before production delays to Airbus’s flagship A380 became public knowledge, wiping 26 per cent off the EADS share price and €5.5 billion off its market value.
Mr Forgeard is alleged to have known about the looming crisis when he sold 360,000 shares in November 2005 and March 2006 for a total of €4.3 million.
According to official documents, he exercised an option to buy the shares at between €15 and €17, and sold them at €32.01. Mr Forgeard was forced to stand down in July 2006 with an €8.5 million payoff.
The Times
By: steve rowell - 5th June 2008 at 01:01
The head of European planemaker Airbus, Tom Enders, said on Wednesday he expected to be interviewed by French police as part of a widening probe into suspected insider trading at parent EADS.
It would be the first time the probe into accusations, already denied by Enders and others, had embraced a serving executive at Europe’s largest aerospace group — which was shaken by the targeting of a former chief executive last week.
Speaking to reporters in Rome, Enders said he had not yet been contacted by French police investigating executive share trades ahead of the announcement of delays to the A380 superjumbo in June 2006.
The announcement triggered a profit warning and caused a dramatic slump in EADS shares.
But asked whether he expected to be interviewed by French police, Enders said: “I have to expect it. Absolutely.”
Enders was speaking on the sidelines of a press conference held by Italian carrier Air One after it ordered 24 planes from Airbus worth USD$4.8 billion.
Enders has consistently denied wrongdoing and has protested over press leaks concerning investigations by French regulators.
His comments came less than a week after a predecessor, former Airbus chief and EADS co-chief executive Noel Forgeard, was held by police for 36 hours and then placed under formal judicial investigation on suspicion of insider trading.
Being placed under investigation in France is a step short of charges but can lead to trial. Insider trading carries a maximum penalty of 2 years in jail and a large fine.
French police have asked another former Airbus chief, Gustav Humbert, to give evidence on Thursday, Les Echos newspaper reported on Wednesday. EADS declined comment.
Both Forgeard and Humbert quit over the A380 delays but deny they knew about the problems when they earlier sold EADS shares.
Although it remains aloof from the Forgeard investigation, EADS has been waiting to find out whether any of its serving executives will be called in for questioning.
The company could regard such a move as an unwelcome distraction as it tries to tackle production problems on three major programs — the A380 and two military projects: the A400M airlifter and the NH90 helicopter — as well as complete a big restructuring plan in the face of a weak dollar.
Seventeen current and former executives were recommended for further investigation by French regulator AMF in a list which it passed to prosecutors last month.
(Reuters)
By: willy.henderick - 1st June 2008 at 14:15
Forgeard
He was not arrested but kept under custody for 24 hours (Garde à vue under French Law).
He paid a caution of 1.000.000 prior to be released and will not be authorized to contact other persons from EADS.
As a matter of fact, the current CEO, a German citizen was also in charge then.
Let’s see what will happen.
Regards
Willy
By: Hand87_5 - 30th May 2008 at 08:56
Actually the law in this country is “up to 2 years in Jail and the fine can be up to 10 times the profit made in the transaction”.
That’s the theory. My money that he will be cleared or get a suspended sentence and a light fine.
By: steve rowell - 30th May 2008 at 05:37
Well don’t worry nothing too bad is gonna happen.
A french saying : ” Wolves don’t eat each other”.He will certainly get a slight fine, after years of justice procedures.
It’s a two hundred thousand dollar fine.. or five years jail.. or both in this country
By: Hand87_5 - 29th May 2008 at 10:36
Well don’t worry nothing too bad is gonna happen.
A french saying : ” Wolves don’t eat each other”.
He will certainly get a slight fine, after years of justice procedures.
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May 29, 2008 at 4:37 am