French Financial Prosecutor Challenges Bank Chief's Acquittal

  • Paris Court Cleared Francois Perol on Conflict Charges
  • Natixis Shares Rose After Paris Judge Dismissed Charges

French prosecutors promptly challenged a court verdict clearing Groupe BPCE Chairman Francois Perol of charges that he abused his role as adviser to former President Nicolas Sarkozy to get the top job at one of the country’s biggest banks.

Hours after Perol’s acquittal Thursday, prosecutors appealed the decision, a spokesman for the Paris-based authority said by phone. That sets the stage for a new trial in the six-year-old case.

Earlier Perol, 51, burst into tears when the judge said no evidence was found to support allegations that he violated France’s conflict-of-interest laws. He had faced up to two years in prison and a maximum fine of 30,000 euros ($34,000).

Shares in Natixis SA, the bank’s investment-banking division, jumped as high as 2.8 percent on the news. The stock closed up 1.3 percent at 5.05 euros at in Paris. Perol is the non-executive chairman of Natixis, as well as BPCE’s top executive.

The case was the first brought to court by France’s national financial prosecutor, an office set up last year by President Francois Hollande to reinforce the fight against financial crime. Sarkozy, who is preparing to challenge Hollande in 2017 elections, refused to testify during the trial in June, invoking his presidential immunity.

“You can’t say this was a precipitous ruling,” said Pierre Cornut-Gentille, Perol’s lawyer. The verdict is based on a “very complete and in-depth” analysis, he said, adding that he isn’t worried it will be overturned on appeal.

Confused Ties

The trial provided a rare glimpse of government decision-making at the highest level at a time when France was struggling to save banks reeling from the 2008 financial crisis. Sarkozy’s chief of staff, Claude Gueant, and Bank of France Governor Christian Noyer were among the witnesses.

Perol was Sarkozy’s top economic adviser and deputy chief of staff from 2007 to early 2009, when the government spent billions of euros to prop up banks including customer-owned lenders Banques Populaires and Caisses d’Epargne. The government encouraged the combination of these two lenders to create BPCE and stem losses at Natixis.

Perol was accused of violating a law restricting government officials from taking private-sector jobs in areas they oversaw. During his trial, Perol denied any conflict of interest, telling judges that he had only an advisory role in the merger discussions between Caisses d’Epargne and Banques Populaires.

While the trial revealed a “kind of confusion” in ties between top government and business officials, “no document, no testimony, no letter” established conflict-of-interest violations on the part of Perol, Judge Peiman Ghaleh-Marzban said.

The case called into question the practice of “pantouflage,” where high-level French servants obtain top jobs in private enterprise and vice versa. Hollande this month came under attack for nominating Francois Villeroy de Galhau, the former chief operating officer of BNP Paribas SA, the country’s biggest bank, to head the French central bank. His critics -- dozens of French academics including economist Thomas Piketty -- say the appointment would raise serious conflicts of interest.

Under Perol’s leadership, Natixis has been profitable every quarter since mid-2009 and BPCE posted a 3.1 billion-euro annual profit in 2014, up 6 percent from the previous year.

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