Former EADS co-chief placed under investigation

May 30th, 2008 - 6:53 pm ICT by admin  

Paris, May 30 (DPA) Former co-Chief Executive Officer of European aerospace group EADS Noel Forgeard has been placed under investigation on suspicion of insider trading, French media reported Friday. After being held in Paris for questioning by investigators for 35 hours, the 61-year-old Forgeard appeared overnight before two magistrates, who formally initiated judicial proceedings against him and then released him on bail.

The web site of the weekly Le Point reported that bail was set at one million euros ($1.55 million).

Under French law, being placed under investigation is a stage preliminary to formal charges being brought. If he is charged and convicted, Forgeard could face a maximum sentence of two years in prison and a massive fine.

Forgeard is suspected of being aware of problems with the production of the A380 superjumbo built by EADS subsidiary Airbus when he sold a large block of EADS shares in March 2006, three months before it was announced that delivery of the plane to its customers would be delayed.

The announcement caused EADS shares to lose more than 26 percent of their value in a single day. Forgeard made a profit of about 2.5 million euros on those stock sales. He had earned 1.8 million euros from the sale of other EADS shares in November 2005.

In November 2006, the French securities watchdog AMF opened an investigation into the sales of EADS shares by Forgeard and 16 other former and current EADS and Airbus executives, including current Airbus head Thomas Enders.

In the seven months before the A380 announcement, the 17 executives exercised stock options on some 1.7 million EADS shares, for a gross profit of about 20 million euros.

In addition to the information regarding the A380, investigators believe that some of the stock sales were made on the basis of privileged information regarding a setback to Airbus’s A350 programme.

Forgeard was head of Airbus from April 1998 until June 2005, and EADS co-chief from June 2005 until July 2006. He was forced to step down in the company shake-up provoked by the A380 problems.

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