Vivendi Universal's ousted chairman, Jean-Marie Messier, is marshaling an elaborate response to allegations that he built the company into a global media behemoth by bamboozling investors and even his own board members.
At the center of criminal and civil probes in the U.S. and France are allegations that Messier misled investors by issuing upbeat statements earlier this year that hid Vivendi's cash crisis, and acted without board approval when he spent billions of dollars to buy back company shares.
With his reputation in the balance, Messier is preparing a detailed rebuttal that focuses on three points, sources close to the former investment banker say:
* In the brief window between Messier's June 26 assurances that Vivendi faced no liquidity crisis and his successor's disclosure indicating otherwise, one lender terminated a nearly $1-billion backup credit line and another refused to extend new financing after a $740-million loan matured.
* Vivendi board minutes show that directors approved a plan to buy back up to 10% of the company's shares and had given Messier authorization to carry out the transactions.
* Vivendi's new chief financial officer, Jacques Espinasse, told board members at a Sept. 25 meeting that he discovered no evidence of accounting fraud or misleading financial disclosures by the company or its representatives. Messier, sources say, has seized on Espinasse's findings to bolster his claim that he did nothing wrong.
Although he has not been identified as a suspect or target of the probes, Messier's actions and financial disclosures during his 18-month reign at Vivendi Universal are at the center of four separate investigations by the U.S. attorney's office for the Southern District of New York, the Securities and Exchange Commission, French stock market regulators and the Paris prosecutor's office.
Messier and Vivendi are also named in 16 shareholder lawsuits filed in California, New York and Paris.
Interviews with sources both inside and outside Vivendi, as well as board meeting records obtained by The Times, suggest that U.S. and French prosecutors could face a complex task in building a case against Messier or the company under his leadership.
"This is anything but a clear-cut case," said securities law specialist Christopher Bebel, a former attorney for the SEC who has consulted for the Justice Department, when told of the response that Messier is apparently preparing to lay out. "It looks like a defense lawyer's dream."
