Sir Alastair Morton, the former boss of Eurotunnel, and the present chairman, Patrick Ponsolle, have been placed under judicial investigation by a French judge for allegedly rigging the 1994 reflotation of the floundering Channel tunnel company.
Four other Eurotunnel officials or former officials, including another Briton, Graham Corbett, and AndrÃ© BÃ©rnard, another former chairman, have also been placed under formal investigation - one step short of a charge under French law.
Sir Alastair, who is currently the chairman of the Shadow Strategic Rail Authority, was co-chairman of Eurotunnel. He and the five others are accused of issuing false financial information, at the time of the £700m reflotation which rescued the company in June 1994. They are also accused of misuse of company funds by paying themselves inflated salaries.
Four bank officials, including one from Credit Lyonnais and one from Indosuez, have also been placed under investigation.
The legal action - revealed in today's edition off the investigative French newspaper, Le Canard EnchainÃ© and confirmed by Eurotunnel - follow a three-year investigation by an examining magistrate. The inquiry began in 1997 following a complaint by an association of small French Eurotunnel shareholders who protested that they were deliberately given an inaccurate picture of the company's prospects.
Having once stood at FFr130 (£1.30), Eurotunnel shares were re-issued at FFr22.50 in June 1994 before plunging below FFr5 in 1996. Tens of thousands of small shareholders - some of whom lost their life savings - claimed that they were tricked into investing, or re-investing, by the falsely positive picture given of the company.
Eurotunnel shares fell back slightly to FFr7.35 on the Paris bourse when news leaked of the legal action yesterday.
A Eurotunnel spokesman said Mr Ponsolle had "not yet received a letter informing him that he had been placed under investigation". The spokesman said that Mr Ponsolle was "serene" about the affair and had no intention of resigning.
Christian Cambier, of the small shareholders' association, saluted "a first victory against the banks". The legal action against the Eurotunnel and bank executives follows an investigation by two financial consultants, AndrÃ© Dana and Michel Levasseur, commissioned by investigating magistrates. In their report, Mr Dana and Mr Levasseur allege, among other things, that three banks, which were helping Eurotunnel with the flotation, CrÃ©dit Lyonnais, Indosuez, and the Swiss bank SBS, were guilty, in effect, of insider trading. Indosuez Asset Management sold 2.2 million shares and three million options just before the new issue was announced, sending the share price into free fall. Three other banks, including NatWest and Morgan Grenfell, were cleared of any wrong doing.Reuse content