French rail chief resigns over fraud case

MARY DEJEVSKY

Paris

The head of the French national railway company, Loik Le Floch-Prigent, resigned yesterday, two weeks after being remanded in custody in connection with a corruption case.

Mr Le Floch-Prigent's resignation came less than 24 hours after a Paris judge had turned down his lawyer's latest application for his release, saying that it could prejudice the inquiry.

The French government had earlier made known that Mr Le Floch-Prigent's continued detention would make it impossible for him to keep his job as chairman of the railway company, SNCF, although it also stressed that "everyone is innocent until proved guilty". The railway chief's replacement at SNCF is expected to be named after next Wednesday's cabinet meeting.

While Mr Le Floch-Prigent's decision to resign means the government no longer has to agonise over whether to dismiss him, it leaves two major problems. The first is the tangle of practice and principle in which ministers have been caught up since Mr Le Floch-Prigent was first called in for questioning. The second is the problem of finding a replacement.

According to reports circulating in Paris, the government of Alain Juppe, the Prime Minister, was well aware that Mr Le Floch-Prigent might face legal difficulties when it appointed him last December, but decided that his managerial skills and known left-wing leanings made him the ideal candidate to restore SNCF's ailing finances and ease reform past disgruntled railway staff.

The earlier arrest of a close business associate and personal friend of his, however - the former head of the Bidermann textile company - made it likely that Mr Le Floch-Prigent, too, could face charges. He was head of the French state oil company, Elf Aquitaine, in the late 1980s, when large sums of Elf money were used in a vain attempt to shore up Bidermann. The case against Mr Le Floch-Prigent, which was formally opened on 4 July, relates to charges of false accounting, misrepresentation, and misuse of public funds.

Mr Juppe's response to the opening of the investigation was to express full confidence in Mr Le Floch-Prigent and insist on the principle of "innocent until proved guilty". Now, though, Mr Juppe is caught on a hook: although Mr Le Floch-Prigent has to be considered innocent until proven guilty, his detention means he cannot do his job, so the government has to find someone else anyway. Which is the second problem.

Mr Le Floch-Prigent's success in obtaining more government money for the railways and persuading the trade unions to accept - albeit with reluctance - his restructuring plan, endeared him to the government, which wanted him to see the plan through.

Now, someone else - according to the transport minister, Bernard Pons, "with a profile similar to that of Mr Le Floch-Prigent" - must be found, and fast.