Under Suspicion: Le Tout Business Elite

The crackdown on corruption looks likely to widen in '96

For France's business Establishment, the new year is off to a disturbing start. Within recent weeks, three of France's most respected business leaders--the chief executives of Renault, Paribas, and Bouygues--have been placed under investigation by French magistrates for allegations ranging from bribery to accounting fraud. And sources say a fourth manager, the former CEO of oil giant Elf Aquitaine, is likely to face interrogators soon.

The surge of top-level probes is a sign that the magistrates' two-year-old crackdown on high-level business corruption is moving into high gear. Since last spring, investigators have been concentrating on political figures and even sent Alain Carignon, a Cabinet minister, to prison. Investigators "have broken the taboos for politicians," says Thierry Jean-Pierre, a former investigator who won a European Parliament seat last year. "Now we'll see taboos broken in business," he believes. That means the attack on France's cozy business practices is likely to widen in 1996.

"OUTRAGED." Under scrutiny is a veritable who's who of French business (table). Ironically, one investigation focuses on Andre Levy-Lang, the U.S.-educated boss of investment giant Compagnie Financiere de Paribas, who has promoted corporate governance in France. And sources say Loik Le Floch-Prigent, the former Elf Aquitaine CEO, will soon face interrogators. Investigating judge Eva Joly is "outraged" that he was recently named to run the French state railway, despite her year-long probe of his alleged misdeeds at Elf in the early 1990s. She is speeding up the case and will soon haul him in to justify his actions, the sources say.

Not just judges are chasing corporate wrongdoers. Colette Neuville, France's top shareholder rights advocate, has been exploring last summer's failure of a bank, Banque Pallas-Stern. She says she'll soon ask prosecutors to file fraudulent accounting charges against several elite outside executives who were involved with the bank.

Smaller prey are also being chased. Early in January, 30 chefs were hauled in from such top restaurants as Tour d'Argent. The chefs are suspected of taking kickbacks from food suppliers. Some 350 Paris apartment managers are being grilled for graft on heating and repairs.

To be sure, the new crop of probes could fizzle. In the past two years, investigators have begun working on two dozen big business cases. Only one has produced a noteworthy result so far: Pierre Suard lost his job as chairman of Alcatel Alsthom last April. He awaits trial on charges of fraudulent billing.

Moreover, no formal charges have been brought against the three latest CEOs under investigation. Judges have declared a mise en examen--a procedure requiring the executives to explain away suspicions. After listening, the investigators either file charges or drop the case.

IMAGE CRISIS. The inquiries hitting the big targets have been under way at lower levels for months. Renault CEO Louis Schweitzer is under investigation for possible misdeeds in a government job a decade ago. At Paribas, sources say Levy-Lang requested a mise en examen to help clear the bank's name. Neither they nor the other executives recently implicated in probes--Le Floch-Prigent and Martin Bouygues--would comment.

But whatever the circumstances, it's a blow for France's top companies to have CEOs implicated in corruption probes. "It's absolutely terrible for our image," says an executive of one company. Renault officials fret that the planned sale of the government's remaining 51% stake in the company could suffer, even though the Schweitzer probe has nothing to do with Renault.

As the magistrates dig up fresh dirt, the impact of their investigations could be felt across Corporate France. Jean-Marie d'Huy, the judge who investigated Suard and who specializes in business fraud, acknowledges that corruption in France "doesn't touch all companies by any means, nor all of society as it does in Italy." Yet, he argues, French companies are fraud-prone because power tends to be concentrated at the top. If the growing crop of investigations bears fruit, some of France's elite managers may not be exercising that power much longer.