The role of the French state fell under the spotlight in the EADS share trading scandal on Friday as politicians questioned why a state bank had been ordered to buy shares shortly before their value fell.
President Nicolas Sarkozy's official spokesman demanded explanations on the involvement of state bank Caisse des Depots in share trades in 2006 which have become the focus of an insider dealing investigation by French regulators and a judge.
A French Senate panel began emergency hearings on the issue. A mounting political furore this week has focused on decisions by private shareholders and executives to sell shares before EADS's planemaker Airbus admitted production problems in June 2006, which caused a massive sell-off in EADS stock.
The people involved made capital gains on paper but all have denied insider dealing or knowing in advance of the A380 upset. On Friday, attention swung towards the other side of the deal and losses sustained by CDC after it agreed to buy part of the shares at peak prices amid suggestions it faced pressure.
"We need as much clarity as possible on the role played by the CDC," Sarkozy's spokesman David Martinon told reporters. Controversy over the sale of stakes in EADS by major shareholders and executives dates back to 2006 under a previous conservative government of which Sarkozy was a part, but the new government sought maximum distance from the affair on Friday.
A preliminary report to prosecutors was leaked in the press this week and is dominating the French political agenda. "The role of CDC at that time remains surprising to me and I don't see why they had to take up shares in this context. It was a very bad deal for the CDC," European Affairs minister Jean-Pierre Jouyet told RTL radio.
CDC agreed to buy part of a 7.5 percent stake being sold by media firm Lagardere and paid 32.6 euros for a stake of 2.25 poercent which is now worth 22 euros a share. In May this year, CDC announced provisions of 126 million euros related to losses on the EADS transactions.
Stock market regulator AMF has informed prosecutors of "concurrent and massive" dealing in EADS shares before its planemaker subsidiary Airbus announced worsening delays to its A380 superjumbo in June 2006, a judicial source said this week. The regulator's interim report, whose existence was first disclosed in Le Figaro, does not make any formal accusations.
Airbus Chief Executive Tom Enders became the latest senior EADS figure to issue a denial of any wrongful trades on Friday. Lagardere and the other core industrial shareholder in EADS, German car firm Daimler, announced they were reducing their stakes in April 2006, 10 weeks before the share slide.
Both firms have denied any wrongdoing or advance knowledge of A380 problems when they decided to sell. They are part of a shareholder pact with the French government, which says the treasury was unaware of problems on the A380 superjumbo.
Asked whether Sarkozy knew of Airbus problems as far back as December 2005, either through his role as interior minister or personal ties to Arnaud Lagardere, Martinon said: "No."
Friday's comments illustrated the widening gulf between Sarkozy's government and the previous government of the same party led by his rival Dominique de Villepin, already accused by his successor of leaving France virtually bankrupt.
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