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French Trial With Ripples for Europe January 7, 2003 By JOHN TAGLIABUE PARIS, Jan. 6 - Nine defendants, including the president of the Bank of France, Jean-Claude Trichet, went on trial here today in connection with a decade-old banking scandal that could jeopardize Mr. Trichet's chances to become the next president of the European Central Bank. The session today, before a three-judge criminal court on �le de la Cit� in the heart of Paris, opened with the rejection of a plea to postpone the trial to allow fresh evidence. The trial will examine whether Mr. Trichet, who was then the director of the French Treasury, and the other defendants covered up problems at Cr�dit Lyonnais, one of France's biggest banks, in the early 1990's when it was state-controlled. Prosecutors have accused Mr. Trichet of helping in a fraudulent concealment of the extent of the bank's losses and the provisions it had to make to cover them. The case is particularly intriguing because President Jacques Chirac of France wants Mr. Trichet to become president of the European Central Bank after Wim Duisenberg of the Netherlands steps down. Mr. Duisenberg said last February that he would resign in July when he turns 68. But the case is also drawing attention because Mr. Trichet has been among French officials proposing that France, which will be the host of this year's meeting of the Group of 7 leading industrial countries, focus debate on regulatory changes in the financial markets after scandals that led to the collapse of big corporations like Enron. Mr. Trichet, 60, who entered the court through a side entrance and avoided answering questions from reporters, made his only comment on the charges two years ago, when he announced that he was under investigation and said that he had confidence in the French justice system. He has refused to say anything about the case since. The charges he faces carry a maximum jail sentence of five years and a maximum fine of 375,00 euros ($390,000). After a recess today, the chief judge, Olivier Perusset, rejected a plea by Alain G�niteau, the lawyer who filed the first suit over the collapse of Cr�dit Lyonnais, asking the court to allow time for additional evidence to be presented against the defendants. Acceptance of the plea would have been a setback for Mr. Trichet, whose lawyers hope for an early acquittal that would clear the way for him to succeed Mr. Duisenberg. The trial is the latest in France to feature investigating magistrates' subjecting leading business executives and politicians to almost ritual embarrassment. Other principal defendants in the case include the former chairman of Cr�dit Lyonnais, Jean-Yves Haberer, 70; Mr. Trichet's predecessor as president of the Bank of France, Jacques de Larosiere, 73; and former accountants of the firms Ernst & Young and Coopers & Lybrand, now PricewaterhouseCoopers. Cr�dit Lyonnais collapsed under the weight of billions of dollars in soured financial dealings, including a misguided investment in the American film studio Metro-Goldwyn-Mayer, and was bailed out by the French state at enormous expense. While it was state-controlled, it also got in legal trouble in the United States, where California officials have brought two civil suits against it related to its acquisition of a bond portfolio from Executive Life, a failed insurer. The Federal Reserve is also investigating whether Cr�dit Lyonnais violated American reporting requirements. The French government has been trying to reach settlements in those cases, not least to spare Mr. Trichet any more negative publicity . In the years leading to the introduction of the euro in 1999, Mr. Chirac pressed other European nations hard to choose Mr. Trichet as the first president of the European Central Bank. A long and raucous meeting of European leaders in the spring of 1998 ended with Mr. Chirac's agreeing to accept Germany's preferred candidate, Mr. Duisenberg, with the tacit understanding that he would make way for Mr. Trichet before the end of his eight-year term. Felix G. Rohatyn, the investment banker who served as American ambassador in Paris in the 1990's, said he had grown to admire Mr. Trichet and described him as very much a modern central banker. "He strongly believes in the market system," Mr. Rohatyn said. "At the same time, he believes in intelligent regulation." He credited Mr. Trichet with supporting a strong franc when French political parties of both left and right favored a weak currency and with playing an important role in fostering French acceptance of the euro as the national currency. "I think he would be a superb central bank president," Mr. Rohatyn said. He declined to discuss the criminal trial. The investigation that led to the trial began in 1996 and proceeded even after a French parliamentary inquiry had cleared Mr. Trichet and other government officials of wrongdoing in the matter. In July, the magistrate who conducted the investigation, Philippe Courroye, rejected a recommendation by the public prosecutor's office that the case be dropped. The trial is to continue on Tuesday, with the court expected to hand down a verdict in mid-February. http://www.nytimes.com/2003/01/07/business/worldbusiness/07TRIC.html?ex=1042904513&ei=1&en=ff4082e4cdb11332 HOW TO ADVERTISE --------------------------------- For information on advertising in e-mail newsletters or other creative advertising opportunities with The New York Times on the Web, please contact [EMAIL PROTECTED] or visit our online media kit at http://www.nytimes.com/adinfo For general information about NYTimes.com, write to [EMAIL PROTECTED] Copyright 2002 The New York Times Company <A HREF="http://www.ctrl.org/";>www.ctrl.org</A> DECLARATION & DISCLAIMER ========== CTRL is a discussion & informational exchange list. Proselytizing propagandic screeds are unwelcomed. Substance�not soap-boxing�please! 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