Vivendi Universal S.A. is the subject of a criminal probe by the Paris public prosecutors office, launched in connection with possible misleading information released during the tenure of embattled former chairman Jean Marie Messier.
The probe is tied to complaints from a French shareholders association, which alleged that Vivendi and Messier gave investors misleading data about the French conglomerate's financial health, according to several published reports last week.
A Vivendi spokeswoman said the company would cooperate fully with the inquiry, but would have no further comment.
According to reports, the Paris prosecutor's office said in a statement that the investigation would seek to establish whether Vivendi published "false accounts for the fiscal years that ended on Dec. 31, 2000, and Dec. 31, 2001." Prosecutors will also examine whether Vivendi "emitted false or misleading information about its prospects for 2001 and 2002."
This is the second such probe of Vivendi by a French government agency, albeit the first criminal inquiry. In July, the Commission des Operations de Bourse — France's equivalent to the U.S. Securities and Exchange Commission — began looking into Vivendi's financial communications under Messier.
The COB was also examining a complicated transaction between Vivendi and British Sky Broadcasting plc in October of last year, which involved the exchange of BSkyB shares.
Unlike the SEC, the COB has no power to impose sanctions on companies. Instead, when it finds evidence of wrongdoing, it forwards its findings to the public prosecutor's office.
Several published reports, which cited unnamed sources, said the COB has not found any accounting discrepancies at Vivendi, but is concerned that Messier may have painted an overly optimistic picture of the media conglomerate's financial health.
Vivendi owns 93 percent of Vivendi Universal Entertainment, a joint venture with USA Interactive Inc. that includes Universal Studios and cable channels USA Network and Sci Fi Channel.
Messier was ousted from Vivendi in July. He was replaced by Jean-Rene Fourtou, a well-respected French executive and vice chairman of the supervisory board of Franco-German drug giant Aventis Group. Since July, Fourtou has initiated a plan to sell off $10 billion in assets to help pare down Vivendi's $19 billion in debt.
Vivendi is said to be close to selling its publishing unit, Houghton-Mifflin Co., which should net about $1.7 billion. But last week Vivendi rejected a 6.77 billion euro ($6.65 billion) offer from British wireless company Vodafone Group for its 44 percent interest in Cegetel, France's largest private telecommunications company. The offer does not reflect Cegetel's true value, Vivendi said in a statement.