That Sinking Feeling at Suez

Ever since he brokered one of the largest industrial mergers in French corporate history six years ago by combining Compagnie Financière de Suez -- the builder of the Suez Canal -- with the giant utility Lyonnaise des Eaux, Gérard Mestrallet has been considered one of the most reliable and steady managers in his country, if not all Europe. The congenial, 53-year-old CEO of mighty Paris utility group Suez (SZE ) seemed to be emblematic of everything going right in the Continent's boardrooms as he churned out profits from water, gas, and electricity -- real businesses you could put your hands on.

Mestrallet aggressively expanded those businesses on a global scale, from Manila and Jakarta to Buenos Aires and Atlanta. But his methods were worlds apart from those of brash corporate chieftains such as Vivendi Universal's (V ) Jean-Marie Messier, a fellow French utility executive whose multibillion-dollar shopping forays into media ended in disaster. In the late 1990s, when investment bankers pressed Mestrallet to sell off hard assets to concentrate on Enron-style trading operations, which were highly valued back then, they were politely shown the door. And he resisted the feeding frenzy that prompted many French managers, including Messier, to bid on France's expensive licenses for third-generation mobile phones, which will take years to pay off.