Senior executives of EADS, the European aerospace and defence group, are to be questioned by French police this week in connection with a criminal inquiry into allegations of insider-trading. The executives are accused of selling stock last year in the knowledge that the share price of the parent company of Airbus would fall after the announcement of delays in delivering the A380 superjumbo.

The investigation, which was initiated after a small shareholder filed a lawsuit, began in December with police raids on the offices of Airbus and Lagardãre, a French publishing group that holds a 7.5 per cent stake in EADS.

Souces close to the inquiry said that several EADS executives — whom they declined to name — would be questioned this week by the financial brigade of the Paris Police. One source suggested that the interrogation had taken place, but a second said that it would happen later in the week.

The sources said that Noël Forgeard, the former EADS joint chief executive, was not on the list of those called in for questioning, even though he was named in the lawsuit. Mr Forgeard has been at the centre of controversy in France after making a €2.5 million profit from the sale of stock options in March last year. Three months later the announcement of the A380 production delays wiped 30 per cent off the share price of EADS.

Mr Forgeard — whose children made a total profit of €4.2 million at the same time — sparked heated debate last month when it emerged that he had been given a golden handshake of €6 million by EADS, along with €2.4 million not to work for a competitor. Nicolas Sarkozy and Ségolãne Royal, the remaining candidates in the French presidential election, have said that they would make such payoffs illegal.

The interview will go along these lines:
Q. Sir, did you have any knowledge of inside trading?
A. No.
Q. Thank you for your time,sir.

The interview will go along these lines:
Q. Sir, did you have any knowledge of inside trading?
A. No.
Q. Thank you for your time,sir.

I hear those were the EXACT questions levelled at Forgeard The Great (Insider Who Screwed The A380).

Noël Forgeard, the former EADS joint chief executive, was not on the list of those called in for questioning

EADS Insider-Trading Probe Expands as Call Reviewed
By Heather Smith

May 11 (Bloomberg) -- An investigation of insider trading at European Aeronautics, Defence & Space Co. has come across a taped call regarding discussions of production delays for the Airbus A380 that took place three months before the setbacks were disclosed and EADS shares tumbled 26 percent.

Jean Galli Douani said he met with French financial police at their headquarters May 2 at the request of investigating judge Xaviere Simeoni. Douani, who unsuccessfully tried to buy Airbus planes, said he taped a phone call with an Airbus executive about the A380 discussions at the March 2006 meeting.

``I told them (the police) that I had this conversation,'' Douani said outside the Paris financial police headquarters immediately after he said he had a two-hour interview with investigators. ``I gave them audio evidence.''

Simeoni is investigating whether executives at EADS or its Airbus unit who sold EADS shares knew the A380, the world's largest passenger plane, was running almost two years behind schedule. The probe began in November after EADS stockholders filed a lawsuit.

Douani said investigators listened to a 20-minute recording of an October call on his cell phone with Alain Garcia, then the executive vice president of engineering at Airbus.

Wow! If the facts as presented in this article are true, then this investigation is much more than mere unsubstantiated allegations. This could be very bad news for all the execs who sold their shares. All it takes is one to crack....

All it takes is one to crack....

...perhaps that could be Mr F?

Forgeard is Airbus "scapegoat" - Publicis chief
May 16, 2007
PARIS (Reuters) - A close ally of former EADS chief Noel Forgeard denied on Wednesday the French government had intervened to secure him a hefty pay-off and said Forgeard was a scapegoat for woes at planemaker Airbus.
Maurice Levy, chairman of French advertising major Publicis, hit back at the Airbus parent company's top German executive who has accused the French government of leaning on EADS to award Forgeard an 8.5 million euro ($11.5 million) severance fee.
Forgeard's pay-off caused an outcry during recent French presidential elections as the company prepares to cut 10,000 jobs to help pull planemaker Airbus back out of losses.
Levy acted as Forgeard's intermediary in last summer's negotiations and told daily Le Parisien in an interview on Wednesday that ministers had never intervened on his behalf.
He accused Thomas Enders, the German co-Chief executive of EADS, of "rewriting history" in his criticism of the French government and said German shareholders had backed the deal.
"In this affair, Forgeard is both a symbol and a scapegoat," Levy said.

I was under the impression that EADS stated that they performed their own investigation and determined there was no, nada, zero insider trading. Why would the government(s) believe further investigations necessary.

I knew it! Those Germans are exaggerating this whole thing!

Arnaud Lagardere is to be questioned May 29, Le Monde reported. Former EADS co-Chairman Manfred Bischoff is to be questioned Thursday. Deputy CEO Jean-Paul Gut was already questioned Tuesday, the report said.

The probe focuses on sales by top executives of millions of euros (dollars) worth of shares in European Aeronautic Defense & Space Co. NV in March and April 2006, weeks before the company announced major delays to the superjumbo A380 that sent the stock price tumbling 26 percent in one day. The share price has still not recovered.

The blame for this sorry state of affairs should be placed squarely at the feet of Forgeard, according to Doug McVitie, managing director of consultancy firm Arran Aerospace, based in Dinan, France. “Basically Forgeard put his own career first,” said McVitie. “He decided he wanted to be head of EADS and head of Airbus.”

In 2004, Airbus was flying high: orders for commercial aircraft were at record levels, the A380 super-jumbo was set for its maiden flight and long-standing rival Boeing was slipping behind. But instead of following these gains through and creating a more corporate mindset, Forgeard became giddy with success and set about pursuing the top job at EADS.

Airbus parent knew of delays when managers dumped stock: report
(AFP)

29 May 2007

PARIS - Top managers at Airbus parent company EADS knew about aircraft production delays likely to depress the company’s share price when they sold their stock options in March, a French daily claimed on Tuesday.

The French stock market watchdog is investigating the stock option sale for possible insider trading.

On March 6, an internal production plan revised down this year’s delivery target for A380 aircraft to 24 from an earlier 29.

The following day, there was an EADS board meeting in Amsterdam, the minutes of which do not mention the delay.

But French business daily La Tribune said it knew that, in a telephone conversation between businessman Jean Galli Douani and former Airbus technical director Alain Garcia, Garcia mentioned ”serious industrial problems at Airbus” and “major” delays.

A recording of the conversation has been handed to the authorities, La Tribune said.

On March 7, the day after the board meeting, executive co-president Noel Forgeard got finance director Hans-Peter Ring to sign an authorisation for him to sell his stock options.

Subsequently, 85 percent of EADS’s 800 top managers exercised their options.

Stock market authority AMF is to question the French co-president of EADS, Arnaud Lagardere, on Tuesday as part of its probe into possible insider trading in the affair.

I don't know how stock options work in France but in the US, top executives are given small time windows to exercise their options by the government that are tied to financial reporting periods. This assumes they have insider trading knowledge (good and bad) all the time but still allows them to exercise options or buy/sell stock.

On Wednesday, Noel Forgeard said he had not been informed of the extent of production problems and their potential financial impact on the EADS-Airbus group when he exercised stock options worth 2.5 million euros ($3.4 million) on March 7, 2006.

Forgeard, former joint chief executive at EADS which owns Airbus, told the magazine Le Point: "Airbus did not report any unrecoverable delay before the middle of April 2006, and at that time the financial consequences were very limited."

He repeated that he had "respected all of the rules (at EADS) which are among the most restrictive among companies quoted on the CAC 40 index."

Blames German managers
The use of such privileged information, which has not been communicated publicly to market authorities, is known as insider trading and is illegal because it privileges one investor over another, distorts the equitable availability of information and therefore undermines confidence in a stock market.
Stock market rules require managers to inform the market quickly if they become aware of a sudden and significant change in their company's prospects.
Forgeard also argued that during his period in various top positions at Airbus, the company had become "a world leader," and that despite the planned loss of 10,000 jobs, "the balance over eight years is positive to the extent of tens of thousands of jobs."
Delays have plagued the A380 superjumboBildunterschrift: Großansicht des Bildes mit der Bildunterschrift: Delays have plagued the A380 superjumbo
He also blamed a large part of the production problems on the attitude of top managers in Germany where much of the work on Airbus airliners is carried out, saying they wanted to continue doing things their way while he wanted to a single, overall method of working.
This was a reference to revelations that software used for installing cabling systems in Hamburg, Germany, was not compatible with design software at Airbus headquarters in Toulouse, France.
Problems in adapting complex cabling to the requirements of individual airlines were at the center of the delays to production.
Forgeard also launched a personal attack on his co-chair at the time, Germany's Thomas Enders.
"I ask myself whether he hadn't been commissioned by Daimler boss Jürgen Schrempp to neutralize or even get rid of me," the former manager said.

PARIS, Oct 3 (Reuters) - A probe into alleged insider trading by EADS (EAD.PA: Quote, Profile, Research) management and shareholders received fresh impetus on Wednesday after the prosecutor's office confirmed it had received a report by French watchdog AMF.

Le Figaro newspaper said it had seen AMF's preliminary report, which said former and current EADS executives and shareholders were involved in "massive insider dealing between November 2005 and March 2006".

The AMF confirmed it had given a preliminary report on EADS (EAD.PA: Quote, Profile, Research) to the prosecutor's office but declined to comment on its content. It said it expected the probe to end in early 2008.

The people involved allegedly sold shares before EADS revealed significant delays with the Airbus A380 superjumbo which sent the stock plummeting and prompted a substantial restructuring of the group.

The paper said the AMF had narrowed its investigation to 21 individuals. . . .

3-October-2007

PARIS (Thomson Financial) - The French state did not authorise key shareholders to sell shares in EADS ahead of a profit warning that prompted the group's shares to sink, according to Thierry Breton, who was finance minister at the time.

Speaking to Le Monde in reaction to a report in today's Le Figaro, which claimed he was tipped off six months before Airbus announced problems with the A380 programme that a crisis was brewing, Breton said "it is false to say the state authorised this operation".

Le Figaro cited a document it had seen which it said was filed by French market regulator AMF with the Paris public prosecutor detailing claims of widespread insider trading by shareholders and executives of EADS ahead of the June 2006 profit warning.

Finance minister Christine Lagarde confirmed to Agence France-Presse that "results" of an inquiry had been lodged with the prosecutor, but declined to comment further.

It said the AMF has decided to narrow its investigation to 21 people, at EADS, Airbus and major shareholders DaimlerChrysler and Lagardere, both of which disposed of large stakes just before the profit warning.

Le Monde cited Lagardere as saying it was "surprised" by the publication of the document which it claims does not in any way reflect the "conclusions" of the AMF's investigation.

It reiterated that the procedure for the disposal of its shares took place in "transparent" conditions and that on the part of Lagardere, "there was no insider trading".

A projected $12 billion in development costs for the A380 has ballooned to over $18 billion, and the plane is now two years behind schedule.

Among executives named by Le Figaro for having allegedly sold shares between November 2005 and March 2006 are Tom Enders, Fabrice Bregier, Noel Forgeard, Arnaud Lagardere and Manfred Bischoff, Ralph Crosby, Tom Williams and John Leahy.

`Extreme Firmness'

Enders is now chief executive of Airbus and Fabrice Bregier is chief operating officer. Forgeard, formerly chief executive of EADS, has left the company. Crosby is head of EADS North America. Bischoff, formerly co-chairman of EADS, is no longer on the board. He's supervisory board chairman of DaimlerChrysler. Arnaud Lagardere is chief executive of Lagardere, former co- chairman of EADS, and a board member at EADS. Williams is head of aircraft programs at Airbus and Leahy is in charge of sales.

Airbus spokeswoman Barbara Kracht said none of the company's executives named had comments.

``If this information is confirmed, it's extremely serious,'' said France's European Affairs Minister Jean-Pierre Jouyet on i-Tele TV station today. ``It shows the need to introduce ethics into financial life, shows the need to be extremely rigorous in all that concerns corporate governance.'' He said the alleged deeds should be punished with ``extreme firmness,'' if confirmed.

In France, you are considered guilty until proven innocent.
How long do Leahy, et al, have on the Airbus payroll?

Among executives named by Le Figaro for having allegedly sold shares between November 2005 and March 2006 are Tom Enders, Fabrice Bregier, Noel Forgeard, Arnaud Lagardere and Manfred Bischoff, Ralph Crosby, Tom Williams and John Leahy.

The quotes below not only describe some details of who did what, but also seems to confirm that the 380 development costs are close to reaching $20 billion.

How does this mistake rate on the list?

- Corporate Governance/Power8
- A380
- A350
- A400M
- Insider Trading/Failure to disclose problems to stock market

President Sarkozy came under attack for alleged links with high-level corporate sleaze yesterday after one of his closest friends and the chief of the Airbus airliner company were implicated in multimillion-pound insider trading.

The Socialist opposition called for Mr Sarkozy to explain his past actions in government after news that the French stock market watchdog, AMF, had found that senior executives had profited from “massive” illicit share deals at EADS, the Franco-German parent company of Airbus. “We have here a mafia system at the highest level of state,” said a Socialist spokesman.

Among 21 EADS executives at the heart of the affair are Thomas Enders, the German chief of Airbus, and Arnaud Lagardère, Mr Sarkozy’s friend, who is head of the Lagardère aerospace and media conglomerate. At the time of the alleged insider trading, in late 2005 and early 2006, the two businessmen were joint chief executives and co-chairmen of EADS. Mr Lagardère says that he is “like a brother” to the President.

The affair is embarrassing for Mr Sarkozy as he has been trying to persuade workers to accept 10,000 job cuts as part of Airbus’ rescue plan. Unions reacted with fury to the suggestion that the top management had been lining their pockets while keeping the company’s troubles secret.

EADS condemned the leaking of the information to Le Figaro, while one of the shareholders, publishing group Lagardere, said that it would sue the newspaper over "unfounded accusations" that caused a 6pc fall in its share price.