Lagardère grilled over EADS insider trading allegations

The French tycoon, Arnaud Lagardère, has been questioned for nine hours by financial investigators looking into alleged insider trading in EADS, the parent company of Airbus, last year.

M. Largardère, 46, is co-chairman of EADS, and a close personal friend of the French president, Nicolas Sarkozy. He told the French market watchdog on Tuesday that he had no inside knowledge of the crippling delays in deliveries of the new giant Airbus, the A380, when his family group sold off 7.5 per cent of the Franco-German planemaker's shares on 4 April, 2006.

When the delays in the "super-jumbo" were announced on 13 June, EADS shares fell by 26 per cent.

Reports in France this week suggested that technical officials at EADS had given board members clear warnings of the problems in early March.

EADS executives, including the then executive co-president, Noel Forgeard, began selling their shares later that month. On 4 April, the Groupe Largardère announced the advance sale over three years of half of its 15 per cent holdings in EADS. DaimlerChrysler, the other large shareholder in EADS, sold 7.5 per cent of the aeronautical company's stock on the same day. All have denied acting with inside knowledge that the travails of the A380 would undermine the EADS share price.

In a nine-hour meeting with officials of the Autorité des Marchés Financiers (AMF) on Tuesday, M. Lagardère, rejected suggestions that he had received a personal warning from a friend in EADS. He pointed out that his family holding company - built by his late father, Jean-Luc Lagardère - had made it clear months earlier that it intended to reduce its stake in the Airbus parent company.

According to Le Monde the investigators asked M. Lagardère to explain documents seized in a raid on his group's offices in Paris earlier this year. These included notes of a meeting between two senior Airbus officials in which the A380 delays were discussed. Yesterday, the investigative newspaper Le Canard Enchainé, said this meeting took place before March last year. M. Lagardère said the meeting took place on 26 April - before the official announcement of the severe delays but after his company sold part of its EADS stake.

Since taking over the family empire after his father died in March 2003, M. Lagardère has cultivated a chatty and approachable style. He has, however, been plunged into controversies. His group is one of France's biggest media players, owning a controlling stake in Hachette-Filipacci Media, the company that owns Paris-Match. He also has smaller stakes in Le Monde, Le Parisien and L'Equipe.

M. Lagardère has been accused of interfering in editorial decisions to protect his friend M. Sarkozy and especially to prevent discussion of alleged problems in the President's marriage.

Le Monde quoted a "close adviser" of M. Lagardère yesterday as saying that "whatever happens" he will be protected by M. Sarkozy.

Wall Street Allegations

Wall Street regulators yesterday charged a banker in Pakistan with making more than $7.5m by trading on insider information provided by a banker at Credit Suisse in New York.

US federal prosecutors said Ajaz Rahim, 44, the head of investment banking at Faysal Bank, earned $5.1m alone from trades based on tips about the proposed sale of the utility TXU to private equity firms, which CS was advising on.

Hafiz Muhammad Zubair Naseem, the Credit Suisse banker accused of giving Rahim tips, was charged in early May. Separately yesterday, Barclays Bank agreed to pay $10.9m and a former trader for the bank agreed to pay $750,000 to settle charges that they engaged in insider trading.