Chapter IX - Reflections on this Judicial Disaster
There is in that power an extraordinary deviation which only Parliament can correct.
François Mitterrand (April 19, 1995)
In terminating these pages, I force myself to overcome the disgust in which I am submerged by so much waste and injustice. Compagnie Générale d’Electricité, of which I was in charge and over which I had the privilege to preside from 1986, after having spent 13 years in its subsidiaries, strong from its long history, once again became a private company in 1987. It was radically internationalized after the acquisition of the telecommunications subsidiaries of the American company ITT and its alliance with the English company GEC in electro mechanics. In the beginning of the 1990s, renamed Alcatel Alsthom, it imposed itself on the world markets as a leader, among the first in its specialties of telecommunications, cable, energy and transport. It manufactured the TGV, steamships, power stations (nuclear and classical—either vapor, gas or, hydraulic), communication satellites for civil and military use, electrical and telecommunications networks, fiber optics, transatlantic submarine cables, mobile telephones and all other telecom equipment—in short, all the infrastructure needed for the development of a country. Fifteen years later it had abandoned most of those businesses.
This fascinating industrial adventure was interrupted and broken up by miserable slanders uttered by mediocre managers in one of the group’s French subsidiaries, slanders that were seized on by an ambitious judge, perhaps either eager to make a name for himself or to make a contribution to the destruction of the capitalist system. To conduct his “investigation” he did not hesitate to resort to any means, often similar to those that had been denounced in the tragic Outreau affaire—concealment of evidence, lying witnesses, biased experts, and anonymous denunciations. Based on allegations that would be shown to be without foundation 12 years later, he decapitated the group by depriving it of a proven management team. He therefore caused the destruction of an industrial group of first rank and the disappearance of tens of thousands of employees. His endeavor, it is true, was facilitated by a lot of cowardly acts and pettiness.
Without wanting to play the role of a dispenser of justice, it is clear that this human and industrial disaster was the result of a series of despicable acts of which man is often capable, whatever his social status.
In first place I pity José Corral and Denis Gazeau when they meet, face to face, with their own consciences. I knew them at certain stages of their careers in the group. They had been given increasing levels of responsibility. By greed or rancor, they uttered the slanderous statements that were at the origin of the affair and which kept it alive by feeding the partisan investigation of the judge. Their conduct demonstrated the badge of ingratitude that they had towards the group which had confided important positions to them. I don’t know if they can measure their crushing responsibility in the misfortunes that struck their colleagues, in particular those who, by the tens of thousands, lost their jobs. And what can one think of the attitude of Denis Gazeau who, after having lodged several complaints without success, but probably in connivance with the judge, deigned not to appear at the hearing, even through a lawyer, when his complaint as civil plaintiff was tried? What do this procedural relentlessness and this final cowardly act signify if not the proof of a tortured and mediocre person?
But one must also regret the attitude adopted at the time by certain people in responsible positions at France Telecom—in the first instance, the decision of its CEO Marcel Roulet, who caused France Telecom to be constituted as a civil plaintiff, thus implicitly giving credibility to the denunciations of Denis Gazeau. Mr. Roulet had in his establishment all the information needed to demonstrate the futility of the accusations of “overbillings.” During the same period the CEO of EDF, François Ailleret, confronted by accusations of the same nature concerning the purchase of cables, publicly took a very courageous attitude in defending, during a press conference, both the regularity of the purchasing procedures that were followed by EDF and the integrity of the company’s suppliers. The slanderous denunciations in that case did not thrive and in the end it was the informer who was condemned. At France Telecom, as at EDF, the unions are equally powerful and capable of fostering strong campaigns against the management of the enterprise, but it is the strength of character of the senior management that makes the difference in such crises.
More reprehensible still was the lie that was deliberately kept alive by senior managers of France Telecom on the legal status of their enterprise in 1992, the time of the “price audit.” As we have seen, France Telecom had since January 1, 1991 lost the right to undertake price audits of its suppliers. But to recognize the new regime would ruin the thesis of the accusation because clearly “overbillings” cannot exist when France Telecom could no longer refer to the cost plus price regulations. The France Telecom representative denied the truth up to the end of the procedure. He withdrew evidence—a letter signed by himself stating the facts. He obtained from prestigious institutions like the Cour des Comptes statements in favor of his distorted vision of reality. One could have expected more conspicuousness from its magistrates. These systematic outright lies from high ranking civil servants is especially appalling.
The Board of Directors of Alcatel Alsthom showed neither a great moral rectitude nor very much courage when the judge forbid me from working for the group. The Board allowed itself to be manipulated by Ambroise Roux, who had, during the previous several months, prepared for my replacement, and who seized the opportunity that the judge offered him. He did not hesitate, as I have previously said, to have an unofficial request be made to the Chancellerie to facilitate his maneuvers. I leave to the reader the freedom to qualify the attitude of the former CEO of Compagnie Générale d’Electricité at that time. I continue to wonder what were the real motives for his actions—frustration, vengeance, or a desire to prevent an extension of the investigation to the period during which he presided over Alcatel CIT. Certain of his colleagues from that period made some statements during the course of the investigation that could have worried him. In having organized my eviction from the company and choosing my successor, he carries a double and very heavy responsibility for the disappearance of the group to which he nonetheless said he was very attached. Only three Board members, nimbly replaced, resigned following my departure. In the years that followed, the Board watched over, with an inexplicable passivity, the decline of the group and constantly renewed its confidence in my successor in spite of the poor results that he obtained. The Board approved without any reaction the diverse acquisitions that would prove to be so costly. In a word, the Board watched, without reaction, as the group was destroyed. It therefore failed to fulfill its basic mission. What strange governance!
But, in my eyes, the person the most responsible for this diabolical series of events was the judge to whom the investigation of this affair had been confided. From the beginning, he directed his investigation towards implicating the senior management of Alcatel CIT and the CEO of the group. He steered the declarations of José Corral and Antonio Léal in that direction. While Antonio Léal later retracted, José Corral faithfully followed the accusatory line of the judge, who tried to thank Corral by granting him an astonishing dismissal.
In the conduct of the investigation there was no hesitation to conceal documents that would contradict the judge’s thesis. The report of the experts of the accused was not transmitted to the Tribunal. That report proved that I had not caused the company to pay for work done at my residence, yet that was the grounds for referring me to the tribunal. Another example: The famous sealed document 11, which had been seized by the police at France Telecom on July 7, 1994 and given to the judge the following July 15, was not placed in the file of the investigation until after several years and even then under an erroneous labeling that made it impossible to consult the document. In particular, this was the letter of the Minister of telecom that authorized the administration to grant to its suppliers margins on the order of 30-60%. The judge pretended that the margin must not exceed 8%, an arbitrary number, without any regulatory foundation, whispered by Corral, and confirmed by the judicial experts, who moreover said that any “sensible manager” should be able to see, on a simple consultation of the worksheets prepared by Corral, that the margin exceeded that ceiling. It was during the period when the sealed document 11 was being concealed from the defense that the judge caused me to confront José Corral for a long time in the judge’s office, specifically on this matter and the need to respect the 8% ceiling. He wanted to make me admit that I had to have known that the margin exceeded that threshold, and therefore that I was an accomplice to the alleged overbillings, which would justify my incrimination as an accomplice to fraud. Clearly his attempt to compromise me could not have been made if, as the Code requires, this essential document had been entered into the record of the investigation as soon as it was seized. The concealment of this document proves the lack of objectivity in the conduct of the investigation by the judge, whose obligation was to establish the facts and seek the truth and not to deform the facts in order to attain the objectives that he desired. He seems in this affair to have forgotten the obligation that he assumed when he took the oath to become a judge: “I swear to fulfill well and honestly my duties, to keep scrupulously the confidentiality of court deliberations and to behave as a dignified and loyal magistrate.” Such were the words prescribed by the decree of December 1958 signed by General de Gaulle and Michel Debré
Worse still, the successor of the judge refused to ask France Telecom for the letter which proved that France Telecom knew that it could not use the administrative regime for the audit of the cost plus price and therefore that there could not be any “overbillings” in the switching area. In spite of Alcatel’s repeated denials, the judge accepted the false arguments of France Telecom and refused to undertake the necessary verifications.
Alcatel CIT had to obtain a copy of this letter by petitioning the Commission for Access to Administrative Documents after a favorable decision from the Minister of Finance. Exasperated by so much bad faith, Alcatel CIT finally formally demanded, by an Article 81 petition, that the letter be seized either at France Telecom or at the National Commission for Public Procurement. The judge had the bad faith to refuse to place the letter in the file of the investigation, pretending that the document was not related to the procedure and that Alcatel CIT’s demand was nothing more than a delaying tactic.
Never would I have imagined that there could be so little neutrality on the part of a judge of the Republic! It is nonetheless to such men that the Republic, and even the French people (since the judges render justice in their name), gives the right to ruin the life and honor of a man on the basis of the judge’s sole and sovereign assessment of allegations determined years later to be without foundation.
In the large majority of cases, the press, regularly misinformed by a “source close to the investigation,” faithfully relayed the accusations of the judge, and constantly in violation of the presumption of innocence. Interrogated a Tuesday until late into the evening on my assets, the television would diffuse the next day, as an introduction to my interview, a program where I heard my statements made the day before to the investigating judge in his office and cosigned in the minutes of the interview. In a famous case, the same judge recently interrogated a former Prime Minister. The next day the press18 printed entire pages from the minutes of the hearing. The written and audiovisual press widely covered my affair, from the accusations to the indictments, but naturally passed in silence the acquittals and dismissals that would close the case. It is the modern conception of objectivity and transparency! Certain journalists were not content to inform, but also didn’t hesitate to attack, like the journalist (who later became the head of editing at a large daily newspaper) who, at the height of the crisis, ended his editorial by the categorical statement “Suard must go.” What does he think now of his perspicacity at that time, when he takes note of the acquittals and disappearance of Alcatel Alsthom, both occurring together?
This brief reminder of the appalling failures that I observed during these years on the part of men invested with responsibilities and formerly reputable institutions must be completed. Happily, the pain that those breaches of rectitude and fairness provided for those who had to suffer them was eased by some exemplary behavior that I wish to praise, all the more so since it was rare. I have said how certain judges, in their discretion and even in their anonymity, dared to stop the judicial machine in spite of the active, corporative and media pressure. Certain colleagues at the head of large corporations manifested to me, sincerely and concretely, their friendship and their solidarity after I was evicted from Alcatel Alsthom. I am all the more grateful to them considering that the ambiance that prevailed at the rime would cause one to be cautious with respect to an affair that was expressed as sulfurous. The people who were targeted became untouchable, according the old adage that there is no smoke without fire. Well, now I know that in Evry at least they knew how to blow smoke without fire!
The large majority of the members of the Parisian business community kept their distance. But this would not restrain them, ten or so years later, when the acquittal had been ordered, to write me to express their joy over the issuance of the favorable decision, of which “they never had any doubt.” “Everyone who knew you expected this conclusion, but it is terrible that it had to take 12 years.” This was said to me by the CEO of another company who was the first to make me leave the Board of Directors after 1995. This is what brings to light, if it were still necessary, the reality of relations, behind the appearance of warmth and closeness, in the microcosm of the Parisian business world.
But the real comfort that helped me through these nightmarish years was the unfailing support of my close family, which bore in silence the hypocritical questions with which they were regularly attacked. And I must add that the sincere affection of some true friends, fewer than the number of fingers on my hand, who never had the least doubt about my honesty, was determinative for me. It is in times of hardship that one measures the sincerity of bonds between people. “A sure friend is revealed in adversity,” said Cicero.19 These few people, by their heartfelt generosity, their listening and their friendly availability atone in my eyes for all the cowardly acts that I observed in what had been my entourage during the time of my notoriety and power. My lawyers, each with his strong personality, throughout this ordeal patiently accompanied me with their eminent talents, but also with their friendly and solid closeness that I particularly appreciated in the times of greatest tension. I must convey to them here my very profound appreciation.
I have also always been pleasantly surprised by the number of expressions of support and confidence expressed by simple people, far from the Parisian “microcosm,” by letter or in spoken word, sometimes anonymous, meeting fortuitously on the sidewalk, in a restaurant or waiting in a line. Even after these years, people who recognize me in the street still say such nice things to me and sometimes add some severe comments about what has become of Alcatel. Many are surprised that a single judge could, by his errors and his relentlessness, cause such damage to people and companies, ruin professional lives and cause so many jobs to be lost. I don’t really know how to respond to them. But their astonishment is increased even more when I tell them how such an affair, with such catastrophic consequences, ended with a decision which, in a few lines, said: “…considering that the facts charged cannot have the said penal qualification. We therefore say there is nothing more to pursue.” Not a word of excuse; of course no compensation; just a note of a few pages received in the mail.
To conclude my story of this painful ordeal, I can do no better than to cite a former manager and eminent lawyer of STR, the Swiss subsidiary that Alcatel had acquired from the American company ITT. A long time executive colleague, he had known the epoch when his company was a subsidiary of ITT under the direction of Harold Geneen. When he learned of my final dismissal, he sent me a long and very friendly letter that he ended by citing Shakespeare:
Having joined STR in 1969, I remember the time of Harold Geneen who was also a builder of a respected empire…. [That empire was eventually broken up,] just like Mr. Tchuruk systematically demolished the exceptional empire of Mr. Suard. I have never been able, and still today cannot, understand the French judicial system. How can a judge by his actions, based on such flimsy statements, undertake an investigation and discredit a group and its CEO, except, as Polonius said in Hamlet: ‘Though this be madness, yet there is method in it.’
The relentlessness of this judge, followed by the strategic errors of a new management, the passivity, the esprit de corps of the controlling institutions—the Cour d’Appel and Board of Directors—thus managed to cause Alcatel Alsthom to disappear. Alcatel-Lucent, pale heir of a world leader born in France, then becoming European, now drifts in a strong sea and is going to melt away into the North American culture. Paradoxically the only survivors of the shipwreck, and it is a small comfort, are the business sectors that Alcatel disposed of as it converted to a solely telecom company. Each one, despite having a difficult start outside of a group that protected it, today represents a solid success. I think of ETS SRA, the first stormy divestiture in 1996, but also of Sogreah, acquired by its CEO thanks to an LBO when Alcatel sold its engineering activities to Thomson. Sogreah, specializing in hydraulics, has had an exceptional worldwide reputation for decades and remains prosperous today.
More important still, Alstom, which was listed on the stock exchange with a very weak balance sheet, and Nexans, amputated by the removal of the most profitable cable activities, have both become world leaders in their specialties. In each of these cases, it is the talents of their management that explains their success. Alstom and Nexans, now listed on the stock exchange, are valued by the stock market, in the first months of 2008, at nearly three times the value of their old parent company, Alcatel. Irrespective of the change of the capital structure of each of them, this bitter observation alone condemns the management methods and strategy of Alcatel during this decade!
I especially rejoice in the success of Nexans, heir to Les Câbles de Lyon. Appointed, thirty years ago, as its President to revive this agonizing subsidiary that CGE was nearly to the point of selling, I was able to prevent that from happening, thanks to the competence and devotion of a dozen colleagues, who even today I have the pleasure of meeting occasionally. Sadly, certain of them are no longer of this world. The company rapidly returned to profitability and expanded. In ten years it had become a world leader, a position that Nexans has maintained in spite of the vicissitudes of its beginnings.
In the drama that ruined Alcatel Alsthom, as in the epic that saw the construction of its greatness, one thing is clear: A few people can, by their qualities or their faults, the force or failings of their character, the pertinence or sectarianism of their judgment, decide the destinies of many and lead them towards prosperity or ruin. In the face of the failures that this brief and measured story has exposed, or in the face of certain others that similar crises have revealed, one can only hope that ethics and professionalism will once again become the cardinal virtues of those in positions of responsibility.
18 L’Est Républicain, also in my case, was very often the first to be informed of what took place in the office of judge Jean-Marie d’Huy.
19Amicus certus in re incerta cerniturCicero, Of Friendship.