Jean-Marie Messier, the flamboyant former chief executive of French media conglomerate Vivendi Universal SA, was taken into custody this morning by a special police unit investigating whether the company broke French stock trading rules by repurchasing of some of its own shares after the Sept. 11, 2001, terrorist attacks in the United States.
Messier's attorney, Olivier Metzner, said the detention was a normal questioning procedure that Messier requested in order to present his side of the story and defend former Vivendi co-workers. Messier went to the interrogation with "a certain number of documents" to allow him to give "precise and detailed" answers to the investigators, the statement said. Normally, a person being questioned in a financial probe is held 24 hours, but that can be extended another 24.
The detention brought back to the French public eye the man known as "J2M," whose penchant for risk-taking and American-style business culture transformed a small water-and-refuse company into a global media and telecommunications giant that had revenue of close to $50 billion in 2001 and included prestigious holdings such as Hollywood's Universal Studios.
Messier's unreserved ambition and professed love of things American -- including a move from Paris to a $20 million New York apartment -- rankled France's traditionally staid business class. His blunt statement that "the French cultural exception is dead," a reference to subsidies to the French film and music industries, made him the bete noire of the cultured classes.
Two years ago, Messier's rivals managed to engineer his ouster as Vivendi's chief executive after his acquisition spree ran up against the bursting of the dot-com bubble and the world economic downturn that followed the terrorist attacks of 2001. Vivendi later reported a loss of nearly $12 billion for that year, then the largest single-year corporate loss in French history.
Messier has been the subject of a civil fraud action by the U.S. Securities and Exchange Commission, which resulted in Vivendi agreeing last December to pay $50 million in penalties. Messier agreed to pay $1 million and relinquish his claim to a severance package worth about $25 million.
The SEC alleged that during 2001 and 2002, Messier issued misleading press releases portraying Vivendi's cash flow as "excellent" or "strong," and made improper budget adjustments that showed an improved financial position at a subsidiary.
The two-year French investigation deals specifically with Vivendi's actions immediately after the Sept. 11 attacks in the United States, when financial markets began tumbling and Vivendi began an aggressive buyback of its shares.
Vivendi purchased about 21 million of its shares in late September and October 2001, and the French financial brigade -- the police unit dealing with white-collar crimes -- is investigating whether the repurchase was carried out in ways that violated France's trading rules.
Among other rules, French regulations prohibit such buy-backs in the 15 days before the release of a company's financial results. Other rules sharply limit the number of its own shares that a company can repurchase.
Messier has been quoted in the French media as saying he acted within the law and in the interests of the shareholders because of the exceptional nature of the period after the attacks in the United States.
The French daily newspaper Le Monde has reported that e-mails exchanged between Vivendi and Deutsche Bank appeared to show that the German bank openly questioned whether Vivendi's repurchase orders violated French law, and that it decided to stop acting as the purchaser because of those doubts.
Here in Paris, the media treated Messier as a folk hero in the years leading up to the company's financial crisis. He was portrayed as a young and unabashedly ambitious man whose colorful style and taste for publicity defied the stereotype of the French business world as gray-haired, elderly and unassuming.
To his supporters, Messier became the modern face of French industry, able to compete with the Americans -- and win -- in global markets and on a piece of their most hallowed turf, Hollywood.
On his watch, Vivendi grew to include Universal Studios, the Universal Music record label and the French pay TV channel Canal Plus, as well as mobile telecommunications services, theme parks and educational publishing houses. The resulting conglomerate bore little resemblance to the business he used as his launch pad, Compagnie Generale des Eaux, which specialized in collecting refuse and running sewage plants.
Messier may have also fallen victim to France's shifting political climate. In his heyday, he was widely seen as an ally of Prime Minister Lionel Jospin, a Socialist who in 2002 was expected to duel for the presidency with incumbent Jacques Chirac. However, Jospin got knocked out in the first round of presidential voting in a startling upset and Chirac went on to win reelection handily, leaving Messier without a powerful protector.