Ex-Vivendi Chief Messier Calls Fraud Claim Outrageous (Update2)

Nov. 20 (Bloomberg) -- Former Vivendi SA Chief Executive Officer Jean-Marie Messier called claims that he defrauded investors “outrageous” during his testimony today at a jury trial in Manhattan.

“It is just outrageous to say I engineered investor losses,” he said. Messier, 52, who also faces criminal charges in France, is accused by investors in the New York trial of failing to disclose a liquidity crisis and of manipulating the company’s share price.

He said today the 89 percent decline in the French telecommunications company’s share price from October 2000 through July 2002, when he was fired, was the result of his business strategy being “right, but too early.”

“The 9/11 attacks, the bursting of the Internet bubble and the Enron and WorldCom bankruptcies, we did not foresee that,” he said. He also admitted mistakes in implementing his vision to transform the water utility company into a global communications company. “I do regret those mistakes. But I never committed fraud. Never, never, never.”

Messier, during his 7 1/2-year tenure as Vivendi’s chief, transformed the 149-year-old company from a French water and waste-management utility into an international media giant rivaling Time Warner Inc. Under Messier, Vivendi spent $77 billion on acquisitions that included the world’s largest music company, Universal Music Group.

Vivendi reported a 13.6 billion euro ($20.3 billion) loss in 2001 and had accumulated $28.5 billion in debt.

1 Million Investors

About 1 million investors are covered by the class-action, or group, lawsuit, and about 60 percent of them are in France, according to plaintiffs’ lawyers. Shareholders are seeking damages “in the billions” from Messier, former Chief Financial Officer Guillaume Hannezo and the company, said plaintiffs attorney Arthur N. Abbey of Abbey Spanier Rodd & Abrams.

Abbey earlier portrayed Messier as an egomaniac who had referred to himself in an autobiography as “Master of the World.” Messier testified that it was a self-mocking reference to a nickname given him by a popular French satirical TV show.

Plaintiffs concluded their case just before Messier testified by reading to the jury excerpts from legal filings Vivendi made in an unrelated case concerning Messier’s severance agreement. Vivendi’s attorneys had blamed Messier for “a severe liquidity crisis that threatened the company’s very existence.”

Defense attorneys moved for a mistrial on the grounds that the statements from the prior action were unduly prejudicial and unrelated to the current case. U.S. District Judge Richard J. Holwell denied the motion.

Paris Lawsuit

Holwell also denied the plaintiffs’ motion for an order barring Vivendi from going forward with a suit in Paris that seeks to bar participation by two French shareholders who act as representatives for all the French shareholders in the New York case. While calling Vivendi’s filing of the Paris action “vexatious” and “troublesome,” Holwell removed the two French investors as class representatives and left the estimated 600,000 French claimants in the case.

Vivendi shares, according to Bloomberg data, fell from 84.70 euros on Oct. 31, 2000, to 9.30 euros on Aug. 16, 2002, the period covered by the allegations in the case. Vivendi fell 15 cents to 19.02 euros today in trading in Paris.

The case is In Re Vivendi Universal SA Securities Litigation, 02-cv-5571, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Ben Bedell in Manhattan federal court at bbedell1@bloomberg.net.

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.