BUSINESS

Vivendi to appoint new CEO

PARIS JULY 3. With asset sales and a break up of the company looming large, the shares of Vivendi Universal, the world's second-largest media and communications company, plunged even further on Wednesday, to trade at 15.38 euros, a loss of over 70 per cent in less than a year.

The company's controversial and flamboyant CEO, 45-year-old Frenchman, Jean-Marie Messier, resigned under pressure on Tuesday when the board turned against him. He is allegedly negotiating a severance package estimated at 12 million euros, the equivalent of two year's salary, impunity from prosecution and help with a $25 million loan contracted directly with the company that allowed him to buy over half a million Vivendi shares. That stock is now practically worthless.

The shares took a nosedive amid revelations that Vivendi Universal might have cooked its books in order to hide losses from nervous shareholders. The company's board began a meeting in Paris to appoint a new CEO, tipped to be Jean-Ren Fourtou, the number two of pharmaceuticals giant Aventis, and to chalk out a strategy to reduce the conglomerate's staggering debt of over $33 billion.

Central to the board's consideration will be whether the company can and should be broken up and which segments should then be retained in French hands. The French government is worried that Vivendi Universal's core business, Vivendi Environment dealing essentially with water supply, purification and waste disposal, might fall into foreign, mainly American and Canadian hands.

French media for the second day running alleged that Vivendi's directors had cooked the company's books to disguise losses and overall debt. "Mr. Jean-Marie Messier's resignation is accompanied by the smell of financial scandal,'' wrote the daily Liberation on Wednesday, saying doubtful accounting practices had been adopted in the purchase of U.S. Networks in 2001 and the sale of stock in the construction company Vinci, a week ago, the company's last major financial operation.

Bankers and financial experts say that Mr. Jean Marie Messier is himself a ruined man. Trade unions have said they will file lawsuits challenging Mr. Messier's right to a golden handshake. They say the man whose miscalculation brought a once prosperous company to the verge of financial ruin should be held accountable for his actions, misjudgement and mismanagement.

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