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November 23, 2009

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Ex-CEO admits mistakes but not fraud

FORMER Vivendi CEO Jean-Marie Messier told a jury on Friday he made mistakes in his troubled bid to turn the French water company into a global media giant, but he never misled shareholders about the risks.

Messier said he strove in good faith to build the company, but he didn't foresee technological limitations and worldwide financial problems that contributed to its near-bankruptcy in 2002.

"Some of my management decisions turned wrong, but fraud? No. Never. Never. Never," he said, testifying in a federal lawsuit filed for thousands of investors who say Vivendi hid its worsening finances.

Vivendi was mainly a water company when Messier became its chief executive in 1996. An investment banker who had specialized in media and communications interests, he embarked on a buyout binge that included the Universal film studios and music label in the United States, European pay-TV station Canal Plus, a French publishing arm and a major French cell-phone operator.

Messier became a star of the French business world. But the acquisition spree saddled the company with billions of dollars in debt, and its shares lost more than 80 percent of their value between 2000 and 2002, when Messier was forced out. Vivendi nearly went bankrupt before selling many of its businesses to survive.

The investors say executives knew the company was in trouble but kept shareholders in the dark. Their lawyers have contrasted internal documents warning about the company's problems with public assurances that it was in good shape.

The company's lawyers have said it always had enough cash and credit to pay its bills and always followed accounting rules.


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