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."
Bebel and other legal experts note that it remains to be seen what evidence the authorities ultimately may bring against Messier and any other Vivendi executives, and whether his claims will hold up to their scrutiny.
Messier's position may be undermined by, among other things, internal documents showing that he repeatedly clashed with Guillaume Hannezo, Vivendi's former chief financial officer. Hannezo expressed concern as early as last winter over the breakneck pace of Vivendi's acquisitions and debt, according to records seized by French authorities.
Some investors remain convinced that Messier bears prime responsibility for Vivendi's woes.
"He took too many risks with the money of others," said Colette Neuville, who heads a group of minority Vivendi shareholders. "He didn't give enough information ... about the risks he was taking."
During his tenure, Messier went on a buying spree that included snapping up Universal's movie studio, theme parks and record labels. That left Vivendi with a crippling $19-billion media debt load, which helped send the company's stock price tumbling more than 75%.
The vice chairman of Vivendi's board, Edgar Bronfman Jr., whose family is the largest single investor in the company and who led the boardroom coup against Messier, declined to comment. In the past, though, Bronfman has made it clear that he too feels betrayed by the 45-year-old former executive.
But Messier's European attorney, Olivier Metzner, said he is confident that Messier will be vindicated.
"They don't really know what they're looking for. It's kind of looking like a fishing expedition," Metzner said of the probes. "We're expecting the investigations in France to establish that all of the accusations made against Messier were ill-founded."
Messier, who is said to be close to hiring a U.S. criminal defense lawyer, declined to comment. At a recent news conference to promote his new book, however, he was defiant.
"Vivendi is no Enron," he said, referring to the fallen U.S. energy trader, "so I am not afraid to go to jail. Let the judges do their job."
A Vivendi Universal spokeswoman would say only that the company is cooperating fully with the investigations.
