, PARIS, Nov 24 – The French markets watchdog heard claims Monday that 17 current and former EADS aerospace executives saved themselves millions by exploiting insider knowledge of problems with the A380 superjumbo project.
The executives and three firms — EADS and shareholders Daimler and Lagardere — are accused of selling stock options in March 2006 because they knew the share price would slump when A380 production delays went public.
They sold their stock options when the shares were around 30 euros, near their historic high. The price plummeted by 26 percent in a single day when the delay was officially announced in June that year.
The executives face fines of up to five million euros (7.5 million dollars) if convicted by the Financial Market Authority (AMF) after the hearings, which follow a 30-month probe and which are not open to the press or public.
The case is also being seen as a test of the AMF itself, with the watchdog under pressure to show it is able and willing to hold big business to account.
Former EADS co-chief executive Noel Forgeard said he was "serene" as he arrived at the hearing on Monday.
"I am fully confident in the jurisdiction of the AMF to whom my lawyers here have provided all the elements that show my innocence," he told reporters.
Thomas Enders, current chief executive of EADS\’ Airbus unit, said he too was sure he would be cleared by the week-long hearing held in the Palais Brogniart, the former home of the Paris stock exchange.
Forgeard faces the biggest fine of 5.45 million euros.
He earned 3.5 million euros when he sold his European Aeronautics Defence and Space (EADS) options, but his lawyers argue they they can show that he began selling the stocks before managers became aware of the A380 problems.
Lagardere, a French media group, and Daimler, a German carmaker, between them sold 7.5 percent of the shares in EADS — in which the French state is also a shareholder — and are being heard as corporate entities.
A confidential AMF report leaked in July said that an inquiry had found that seven current and former EADS executives made millions of euros by exercising their company stock options in March 2006.
But the report found that Enders, as well as shareholders Lagardere and Daimler, had not engaged in insider trading.
Apart from Forgeard, the executives named in the report are Airbus commercial director John Leahy, former Airbus finance director Andreas Sperl, and former EADS managing director Jean-Paul Gut.
Former Airbus vice president Olivier Andries, former Airbus human resources director Erik Pillet and Airbus Centres of Excellence chief Alain Flourens were also named.
The report will likely influence this week\’s hearings but its findings are not binding.
The EADS executives turned up at the Palais Brogniart Monday with a bevy of lawyers and interpreters in tow for the high-profile hearings.
The first morning was largely taken up with procedural problems, Daimler\’s lawyer said as proceedings broke up for lunch.
The hearings come three days after an Air France A380 made its inaugural flight from Paris to New York. The mammoth double-decker plane made its first commercial flight in 2007 from Singapore to Sydney with Singapore Airlines.
EADS last week reported a quarterly loss, its first in two years, and warned it might cut production because of persistent problems with the A380 and its planned military transporter A400M.
The firm, which controls several other leading aerospace companies in addition to Airbus, is pulling through a deep crisis and restructuring.
EADS chief executive Louis Gallois, in an interview on Monday, pledged support for his executives, adding that "everyone is in a hurry to move on from an affair that is more than three years old."