Chapter IV - A Tenacious Minority Shareholder
Bossuet, Sermon on the Guardian Angel
Throughout my judicial journey I also had to confront vicious attacks from an individual minority shareholder, attorney by profession. In order to enter into the case involving the security works, he declared to the Tribunal d’Evry that he possessed 74 shares of Alcatel Alsthom and even (and one can read this in the judgment rendered by the tribunal) that he was also a shareholder of Alcatel CIT, which was manifestly false since Alcatel CIT was wholly owned by the group and had no shares in the public. That did not prevent the Tribunal d’Evry from agreeing to constitute him as a civil plaintiff and to follow him in his “ut singui” suit. An “ut singui” suit is a specific procedure of French law introduced by the Law of July 24, 1966. It permits a shareholder, regardless of the number of shares that he owns, to substitute himself for the executives he believes are at fault, to defend the interests of the company against its agents. This ability, accorded without condition as to the number of shares held, opens to professional plaintiffs an unlimited field for suits of this kind.
This minority shareholder therefore inserted himself into the procedure concerning the works, which ended by my being acquitted for the personal work done in my apartment but condemned for the security work. His intervention caused me to have to pay Alcatel Alsthom for the security work even though it was recognized as justified by the court and even though at the time of my departure from the company I had, as previously stated, either returned the security equipment or reimbursed the company for the part that could not be removed.
But this small and tenacious shareholder was not content to stop with this first action. He initiated another one, constituting himself as civil plaintiff on June 16, 1999 against X for presenting inaccurate financial statements and for forgery and misuse of corporate funds. He claimed that Alcatel Alsthom had presented incorrect financial statements at its June 1996 Shareholders Meeting and also criticized the conditions, as approved by the Board of Directors, on which I resigned in June 1995, as well as the awarding of stock options that I had received in 1988. I was, in effect, one of the 80 executives of the group in France or abroad who participated in the stock option plan established after the acquisition of the telecommunication subsidiaries of the American company ITT.
Received at the mail service of the Tribunal de Grande instance de Parison June 18, 1999, his complaint was registered at the offices of the Vice doyen des juges d’instruction on June 23, 1999. On January 27, 2000, the investigating judge rendered an order refusing to investigate the requests for indictment from the Office of the Public Prosecutor, determining that the time limitation had run for the offense of forgery and for the presentation of inaccurate financial statements, and that there was no offence involved concerning the conditions of my departure and the attribution of the stock options.
The small shareholder appealed that decision. On November 29, 2000, the Chamber de l’instruction annulled the prior order, primarily on the basis that the period of delay must be counted from the date of reception of the complaint (June 18, 1999) and not from the date the complaint was registered (June 23, 1999). Consequently, the 3 year delay period from the date the Shareholders’ Meeting approved the 1995 financial statements (June 20, 1996) had not run. The court did not take into account that the 1995 financial statements had been publicly available since May 23, 1996, when the COB8 registered the documents presented by Alcatel—that is more than three years before the complaint was lodged.
A judicial investigation, confided to Mr. Philippe Courroye, First Investigating Judge at the Tribunal de grande instance de Paris, was therefore opened against persons not named for the presentation of inaccurate financial statements and for forgery and misuse of corporate funds. The judge’s authority was extended, on November 25, 2004, to include misuse of corporate funds and benefiting from stolen property and was aimed particularly at the conditions of my departure from the company, the material benefits that I received (having an office at my disposal) and the payment that had been made to me.
On December 11, 2003, the financial police of Paris therefore interrogated me on those charges. Also interrogated were my successor at the head of the group, the general counsel and several of the company’s directors. On December 13, 2004 I was brought in by judge Philippe Courroye. He indicated in his first request for an appearance that “I inform you that I am considering indicting you.” After having frequented the building of the financial police on the rue du Chàteau des Rentiers in the 13th arrondissement of Paris, I entered now into the superb quarters of the “finance pole,” located two steps from the Garnier Opera, following in the footsteps of many other executives of CAC 40 companies and famous politicians. The courtesy at the reception and the quality of the building and the décor takes you miles from the premises of the Tribunal d’Evry. And nevertheless, in proceeding down the corridor leading to the office of Philippe Courroye, I noticed among the investigating judges installed on the same floor the name of Jean-Marie d’Huy. It was the relentlessness of this magistrate that summoned me for the first time to Evry 10 years before that provided the material for this book, and even was responsible for my visit at this place that day!
Judge Philippe Courroye had made a name for himself by the celebrated cases that he had handled. My attorneys had warned me about his legendary severity, but also of his great professionalism. Thus it was with apprehension, in spite of the clear conscience that I had regarding the facts that brought about my interrogation, that I appeared, accompanied by my lawyer, that day at 2:30 pm.
After the usual questions on identity, the judge went through all aspects of my judicial journey since 1994. Progressively I felt that, for the first time, I was appearing before a magistrate who listened to the responses and integrated them into his thinking. All the facts—even, and especially, those already judged—interested him. On the personal works, for which I had been acquitted, he was surprised that the amount I had paid from my personal funds in attorney’s fees was equal to the cost of the work, the payment for which had been contested. He had in his hands the judgments and decisions that had already been made. While fully respecting what had been established, he seemed to stay aloof from the motivations of these actions. The necessity for the security equipment and its being paid for by Alcatel Alsthom seemed to him to be natural, and the “ut singuli” case brought by the small shareholder, ridiculous.
As for the conditions of my departure from the company, after a series of very precise and insistent questions, he admitted that they clearly resulted from a decision of the Board of Directors, taken on the recommendation of Ambroise Roux, with whom I could not communicate, having been prevented by the judicial control. The judge sought to understand why Ambroise Roux had taken on a rather kindly attitude towards me on this occasion, in contrast to the very critical position that he had manifested for several months. I responded by saying that I had given my interpretation of this very painful period in my look L’envol saboté d’Alcatel Alsthom and that I did not wish to revisit those somber days any more.
I thus implicitly made reference to the steps that Ambroise Roux initiated, in April 1995, before the Chancellerie to let it be known that the maintenance by the Cour d’appel of the interdiction to work for Alcatel Alsthom would suit the Board of Directors. This was obviously false but it would aid him in a decisive way in his maneuvers to remove me from the leadership of the group, an objective that he had nurtured for a number of months.
Judge Courroye then made some sharp comments on the role and attitude of the heads of the large French companies who act like pontiffs, such as Ambroise Roux and certain of his stooges at the time who pretended to rule over French capitalism from the shadows.
He was particularly attentive to the Gazeau affair and to the alleged subordination of a witness. It did not escape him that the acquittal, which was finally accorded several months earlier on this part of the case, destroyed the foundation of my indictment of March 10, 1995 and the judicial control that accompanied it and that forced me to leave my job as CEO of the group—the work of Jean-Marie d’Huy, “my neighbor” he said with a touch of irony.
As for the accusation of the presentation of inaccurate financial statements, I repeated my well-known position on the relevance of the 1995 financial statements presented by my successor. I described them in detail in Chapter 9 of my book published in 2002. There had not been any formal accounting irregularities, but an abusive use of the weaknesses of the regulations to lay blame on the financial statements of the predecessor—an attitude denounced at the time by Didier Kling, president of the Association des Commissaires aux comptes. There was no offence involved, even if the presentation could harm the shareholders.
I also described to the judge the numerous tax audits, extending over seven years, the resulting back tax payments and the procession of disputes generated by the judicial denunciations. I spoke also of the inquiry opened by the Order of the Legion of Honor and of the position taken by the Council of the Order which determined that the facts for which I had been condemned (security installations) “did not constitute acts contrary to honor and integrity,” taking into account the circumstances, and I indicated that no sanction was therefore imposed on me by the Order after the penal condemnation.
After more than three hours of questions fed to me and my complete responses, including on my private life, the magistrate suddenly stood up behind his desk. From the height of his tall figure, his face, at the same time solemn and a little embarrassed, after several seconds of silence, in a strong voice he said: “Mr. Suard, know that this does not happen often in this office, but I am changing my mind and will not indict you.” I was stunned and remained without any reaction. He repeated his decision as if I had not understood it. Perhaps he was expecting me to express some appreciation? But I was paralyzed and remained silent. I unconscientiously imagined, out of fear, that he thought that if I expressed relief he could deduce from that that I had something to hide. But that he will know, if someday he reads these lines, that at that instant he atoned for me all the injustices that a number of his colleagues had inflicted on me. And especially he reestablished for me the dignity of the judge who alone can impose its authority over its citizens—an authority which many others use to destroy. Also I can convey to him, with some delay, my great esteem.
After that the interrogation continued in an ambiance clearly lighter for me. It remained to finalize and sign the minutes. The judge asked my lawyer to submit to him at the beginning of January a complete memorandum on the discussions, but also on any other factors that he judged useful for my defense.
In leaving the office of Philippe Courroye, which must have been around 7 pm, I admit that my opinion, up until then very negative on the great majority of the magistrates that I had encountered in these affairs, was shaken, as I had been surprised so much by the ability to listen and the capacity to synthesize of the judge who had just interrogated me without indulgence all afternoon. I told it to my lawyer, who himself was very satisfied with the appearance, and who said to me that we were heading for a dismissal. I could hardly imagine it, having been deceived so many times by a justice that ignored the reality of the facts.
And yet my lawyer saw it correctly. On January 18, 2005 he submitted the document requested by the investigating judge. It was an important document that perfectly summarized all the affairs and the arguments to counter the complaint of the small shareholder. It was accompanied by a dozen annexes, including a copy of L’envol saboté d’Alcatel Alsthom. On April 21, 2005 the investigating judge informed the parties of his intention to close the investigation. The persistent small shareholder tried a maneuver to slow down the process by requesting a hearing of new persons and new confrontations. The judge gave him partial satisfaction and informed us again, on June 23, 2005, of his intention to close the case.
That is what he effectively did on November 18, 2005, in ordering a dismissal, which was meticulously documented. For the stock options, the order indicated, for example, that “the inquiry ordered by the financial police revealed no particular anomalies, neither with respect to the granting of the options nor with respect to their exercise,” and the judge indicated that the small shareholder “recognized, during his hearing before the Vice doyen des juges d’instruction that he did not possess any facts that would permit him to say that the valuation of the exercise price of the stock was abnormal.” For all the accusations, analyzed successively, the order concluded: “The investigation did not permit one to characterize the facts found as an offense of misuse of corporate funds and, as a consequence, the related offense of benefiting from stolen goods cannot be shown. And since as a result there are not sufficient charges against anyone of having committed the abovementioned offences, it is declared that there is no basis for further pursuit of the matter.”
Of course, on November 25, 2005, the small shareholder appealed, and, as was his practice, he did it just before the expiration of the delay period. The affair was heard on February 21, 2006 by the Chambre de l’instruction. As was customary, my lawyer asked the complainant to send him a copy of the memorandum they had prepared for the court so that my lawyer could, in return, give the complainant a copy of my lawyer’s memorandum. My lawyer only received the memorandum at 3 pm, just before the hearing.
The small shareholder did not appear at the hearing, in the same way that Denis Gazeau did not appear when his complaint was judged by the Tribunal d’Evry! The Office of the Public Prosecutor, through the voice of the Public Prosecutor, and in conformity with its written requests for indictment, asked that the dismissal be confirmed. My lawyer replied to the complainant’s memorandum, the arguments of which were erroneous and for some, absolutely intolerable. Considering, for example, the tradition of the group to make an office available for its former CEOs, the small shareholder made the comparison with “excision and polygamy that a penal judge forbids even if the accused invokes a tradition in his community.” Worse still, he declared: “The investigating judge did not undertake a personal analysis of the facts that were submitted to him. Proceeding in such a way, particularly regrettable, throws a real suspicion on his impartiality and on his independence in regard to one of the parties.” My lawyer told me that the court smiled when it was indicated that this was the first time it had seen judge Philippe Courroye being accused of granting a discharge and not issuing an indictment!
The court rendered its decision the following April 4. It confirmed the order of dismissal. Its decision was 15 pages long and was carefully substantiated. The small shareholder criticized the investigating judge for not having requested the opinion of the COB or of AMF on the facts surrounding the information that was false or deceitful. The court responded by saying that “the judge cannot investigate these facts since the complainant himself only made accusations in his complaint without any detail and that he had admitted before the Doyen des juges d’instructionthat the reference in his initial complaint to the accusation was only for a tactical end—to obtain the consolidated financial statements.” The order dryly repeated that the judge “can only investigate facts expressly indicated in the act for which he is charged.”
The court’s decision, after having analyzed each of the points covered in the dismissal order, concluded that “contrary to the position of the complainant, the investigation was complete; no fact susceptible of constituting a penal infraction was put in evidence; and the deferred order is therefore confirmed.”
Moreover the court rendered a judgment, capital in my eyes, on the conditions of my departure from Alcatel Alsthom. “The total amount received by Pierre Suard and the material benefits that he received do not appear to be too high considering the 22 years that Pierre Suard spent in the enterprise.” This appreciation went straight to my heart and sounded like I was nearing the end of this ordeal.
The small shareholder appealed to the Cour de Cassation, but in vain. The Cour de Cassation in effect rejected his appeal in June 2007. This final maneuver only had the effect of delaying the final decision for one year.
Thus ended this action based on erroneous affirmations and ending with slanderous allegations. It developed in the shadow of the principal affair and was made possible by the abusive utilization of the “ut singui” action in the hands of a wretched person. It occupied the services of the justice system for 8 years, tormented me greatly and increased my weariness in having always to justify myself, while knowing the correctness of my behavior. More grave, one can only be shocked by the disproportion between the interests of this small shareholder who held less than one millionth of the capital of Alcatel Alsthom and the cost to the system occasioned by his “ut singuli” action—an action placed in motion without any argument that was serious, but uniquely motivated by the desire to make a name for himself in the self-proclaimed role as dispenser of justice, or to gain publicity to enlarge his client base. The perverse effects of the “ut singuli” action had been demonstrated by the steps taken by this small shareholder. It can become an arm for the destabilization of companies in the hands of malicious persons. It opens the way for shareholders to reach for more since they will see offered to them the possibility of initiating actions totally without foundation, especially since the law and the tribunals impose few restrictions on their acceptance of an “ut singuli” action.
Finally I must point out another element of real originality in this affair investigated by Philippe Courroye: No leaks to the press; not the least “source close to the investigation” to arouse and feed the rumor mill, and yet the subject occupied the news—it was the period when the media erupted over the indemnity that the CEO of Carrefour, Daniel Bernard, had received when he left the company.
The secrecy of the investigation in my case was perfectly respected. While “neighbors,” judges Philippe Courroye and Jean-Marie d’Huy differed also on this point!
8 The Commission des Opérations de Bourse (or COB) is the commission regulating the French stock market. It is roughly equivalent to the Securities & Exchange Commission in the United States and the Financial Services Authority in the U.K. (Translator’s Note)