France to publish finance ministry probe

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French government inspectors will this week publish the results of an investigation into the conduct of the finance ministry in advance of the vexed share dealings in EADS, the aerospace and defence group.

The probe follows the leak last week of a preliminary report by the Autorité des Marchés Financiers, France’s stock market regulator, which raised the alarm about possible insider dealing in EADS shares on a “massive scale”.

Shares in EADS, which owns the commercial aircraft maker Airbus, fell in June 2006 after it announced costly delays to deliveries of Airbus’s A380 superjumbo.

AMF has been investigating EADS share sales in the months preceding the announcement by 21 past and present senior executives at EADS and Airbus, and by the group’s two core shareholders, France’s Lagardère and Germany’s Daimler.

The French state owns 15 per cent of EADS. It did not sell any of its holding, but questions have been asked about the French government’s role in the affair, particularly since La Caisse des Dépôts et Consignations (CDC), a state-owned financial institution, had announced a large investment in EADS in April 2006, only weeks before the delivery delays were announced.

Christine Lagarde, French finance minister, announced late on Friday she had asked Bertrand Schneiter, France’s inspector general of finances, to investigate the ministry’s behaviour in relation to EADS between the end of 2005 and June 2006.

She said the report, which would cover the ministry’s interaction with CDC among other things, would be presented to her on Thursday. The results would be made public “immediately”.

The poor timing of CDC’s agreement to purchase EADS shares being sold by Lagardère forced it to take a €126m net provision in its 2006 accounts.

On Friday, CDC denied it had been obeying political rather than commercial considerations when it made
its ill-fated investment
in the group.

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