From Master of the World to a prison cell: Jean-Marie Messier arrested in Paris

Former head of Vivendi chief faces allegations of share price manipulation
Click to follow
The Independent Online

Jean-Marie Messier, once briefly the self-styled "master of the world", spent last night in a prison cell.

Jean-Marie Messier, once briefly the self-styled "master of the world", spent last night in a prison cell.

The disgraced French tycoon, who tried to build a global media empire "à la Murdoch" from a French water utility company, was arrested in Paris yesterday morning and faces accusations of embezzlement and the manipulation of share prices.

He is likely to spend at least one more night in custody, answering questions on the meteoric rise - and calamitous fall - of Vivendi Universal, the Franco-American communications conglomerate which almost foundered two years ago.

M. Messier, 47, who stoutly denies all wrongdoing, claims to be the dual victim of French back-stabbing and the xenophobic distaste of American institutions and markets for a foreign empire-builder. His critics retort that he was the victim of his own delusions of grandeur but also of the ill-considered fixation of barons of French capitalism with breaking into the American market (which has caused similar disasters in the past).

M. Messier, ousted as chief executive of VU in July 2002 after the hastily built transatlantic company lost 80 per cent of its share value, faces three main accusations. He is likely to be placed under formal investigation (a step short of a charge) by the Paris "brigade financière, or fraud squad, in the next couple of days.

First, it is alleged that M. Messier broke French stock market rules by making excessive purchases of VU's own shares to prop up its stock exchange price in the months following the 11 September 2001 terrorist attacks on the US. Secondly, it is alleged that he knowingly issued false or misleading information on the economic strength of the company.

Finally, it is alleged that generous payments made to large shareholders and directors of the company - including members of the Bronfman Canadian business dynasty, from whom VU bought Universal Studios in 2000 - may have amounted to "abuse of company funds" or embezzlement.

M. Messier was a classic French technocrat by training, who tried to re-invent himself as a global entrepreneur - a kind of Gallic Ted Turner or Rupert Murdoch. Rather than start his own business, he set out to transform the one he was given to manage through his political and business influence.

Messier became a media star, dominating the front of magazines from Paris Match to Time. He took less care, however, to communicate his strategy - if he had one - to the real players in the business world, from analysts and fund holders to senior business journalists, or even his own shareholders.

After initially being sanctified as a new kind of French business hero, who could help France come to terms with the challenges of globalisation, M. Messier's demise two years ago was greeted in France with delight rather than alarm. M. Messier, who liked to be known as "J2M", after his initials, committed two " faux pas" in the eyes of his countrymen, even before business calamity overcame him.

He announced that he was setting up office and home in New York in an article in Paris Match, which he had himself solicited. He was shown skating in Central Park and dining with US businessmen in the $17m penthouse in Manhattan which Vivendi bought for him. The overall message was "things go quicker and smoother in the US".

His backers among the giants of French finance, like Claude Bébéar of Axa Insurance, began to have their doubts about the outstanding young man who had taken over as boss of the water treatment and supply company, Générale des Eaux, in 1996.

His reputation among the French political classes suffered a similarly devastating blow when he declared - or seemed to declare - at a press conference in the US in December 2001 that the French struggle to protect its cinematic and musical traditions from American oppression was "dead".

In truth, Mr Messier did not quite say that. He said the defence of the "French exception", alone, was pointless. Global media conglomerates, like his, should seek to promote and market the best in the cultural traditions of all countries. The damage was done, all the same.

In part, the Vivendi - and Messier - story is one of profound and as yet unresolved conflicts in French and American styles of business. Vivendi was an attempt to create a new kind of French company, but its culture - and Messier's - remains rooted in the autocratic, opaque traditions of the semi-public companies and complex family holdings which have traditionally dominated the French corporate world.

The Compagnie Générale des Eaux was a French institution and a typically French hybrid, a private utility company, created by edict of the Emperor Napoleon III in the mid-19th century. When Messier took over in 1996, the company had already diversified into waste treatment, energy and transport (such as the Connex company, which bought British railway franchises).

M. Messier plunged into a rapid transformation of the company into a media and communications giant, which he re-baptised Vivendi in 1998. With the expensive capture of Universal in 2000 it became, by some estimates, the second largest media company in the world.

Born in Grenoble in 1956, the young Messier took the traditional route of a brilliant, young French provincial into the Paris élite. He went to the Ecole Polytechnique (nominally an engineering school; actually a springboard into business or politics) and then the celebrated (or notorious) civil service college, the Ecole Nationale d'Adminstration (ENA). He graduated among the top ten in his year and was propelled into the high ranks of the civil service. His ENA dissertation was a laudatory examination of Margaret Thatcher's early privatisations.

After a couple of years as the youngest head of a ministerial private office in French history, he went into business - first with Lazard, the investment bank, and then Générale des Eaux.

Critics say this was the problem with M. Messier. He was a politician or a functionary rather than a businessman: he talked too much and acted too little. By talking about his intentions he drove up the price of potential targets and drove down the price of assets he planned to dispose of.

In a self-justificatory book published last year, M. Messier suggested he was the victim of the global downturn after 11 September and that the US-dominated markets took pleasure in destroying a French incomer. But he also accuses his one time French backers of failing to understand his grand strategy and taking fright when times became difficult.

All the accusations against him - which may or may not lead to formal charges - concern alleged manoeuvres to build, or rescue, his instant empire. There is no suggestion he was fraudulent for personal profit.

Following raids last year on his two homes in the Paris area, and the seizure of bundles of documents, two investigating judges are expected to place him under judicial investigation for manipulating share prices by exceeding the 10 per cent legal limit on the amount of its own shares which a French company is allowed to own. Sources close to the investigation also said he was likely to be accused of issuing false information and of making undisclosed payments which amounted to an abuse of company funds.