French court convicts Warner head Edgar Bronfman Jr.
Published Friday, January 21, 2011 11:33AM EST
Montreal-born billionaire Edgar Bronfman Jr. was convicted by a French court on Friday, for misleading investors during his time as top executive at the Vivendi media group.
In its decision, a French court said Bronfman was guilty of "conveying false or misleading information" about Vivendi Universal in 2000-2002, and "manipulating stock prices" in 2001.
He was fined euro5 million ($6.7 million) and handed a 15-month suspended sentence.
Former Vivendi CEO Jean-Marie Messier was also convicted for misusing company funds and handed a three-year suspended sentence as well as a euro150000 ($200,000) fine.
Two other former Vivendi executives were also given suspended sentences, while three others were acquitted.
Vivendi began as the water utility Generale des Eaux, but under Messier's leadership beginning in 1996, the company expanded by means of more than $70 billion in acquisitions into a major media conglomerate.
By the time Messier was dismissed by the company's board in 2002, Vivendi shares had lost more than 80 per cent of their value and the company was swamped in billions of dollars worth of debt.
A class-action case brought before a U.S. court in 2010 ruled that the Vivendi group had lied to investors, but Messier could not be held personally accountable.
The Paris prosecutor had recommended charges against the former Vivendi executives be dropped, but the investigating judge decided the criminal trial should proceed anyway.
Both Bronfman and Messier are expected to appeal the court's decision.
Considering that other executives, from Enron and Tyco for example, were sent to jail for their part in various stock frauds, BNN's Michael Kane says the sentences meted out in France may raise some eyebrows.
"That was an era when a lot of this kind of thing was going on. It was really hard to nail down if a company was getting into difficulty, or if insider information was being traded on," Kane said, recalling the business climate at the turn of the century.
"The fact that the judge suspended the jail time could be looked at as getting off lightly, perhaps," Kane told CTV News Channel.
Bronfman became the largest shareholder in Vivendi when it acquired his family's longtime business Seagram in 2000. He remained as Vivendi vice-chairman until his resignation in 2003.
Bronfman is now the Warner Music Group chairman and CEO, while Messier heads the mergers advisory firm Messier Maris et Associés.
With files from The Associated Press