PARIS (Reuters) - French judges on Friday effectively suspended a trial involving allegations of insider trading in the shares of Airbus Group to allow a higher court to rule on whether the long-awaited procedure was constitutional.
The latest abrupt twist in one of the most high-profile corporate cases of recent years came after defense teams urged the French court system to take note of a recent European judgment upholding the right not to be tried twice.
Seven current or former managers and two former industrial shareholders are accused of illegally selling shares in what was then known as EADS, in March 2006, in the knowledge that things were about to go wrong at Europe’s largest aerospace firm.
All deny the charges and argue the trial is unwarranted because they were cleared by the French stock market regulator AMF in 2009, breaching the ‘double jeopardy’ rule upheld in March by the European Court of Human Rights.
“When you have been found innocent once and then you have to go through the whole thing again, this is complete torture,” Olivier Gutkes, a lawyer for former EADS co-chief executive Noel Forgeard, told Reuters.
Forgeard, 67, is one of four former executives charged with abusing privileged knowledge that deliveries of the world’s largest jetliner, the A380, would be delayed and that costs of that plane as well as the newer A350 were rocketing higher.
Current managers facing similar charges include John Leahy, the sales chief of planemaking unit Airbus who was not in court; Alain Flourens, who heads the A380 program; and Andreas Sperl, former Airbus finance director and now head of a freighter unit.
Also on trial are two former industrial shareholders, French media group Lagardere and German car firm Daimler, which reduced their stakes in April 2006.
The charges carry the risk of substantial fines and up to two years in jail, though prison sentences are rare.
On June 13, 2006, the announcement of new delays on the A380 and a staggered profit warning wiped 26 percent from the EADS stock price, erasing 5.5 billion euros of market value.
The revelations triggered a crisis in industrial relations between France and Germany, where the largest Airbus factories are based, and a rapid swirl of management changes.
They also led to a lawsuit from a single investor hit by the share slide, which mushroomed into an eight-year investigation culminating in the trial scheduled to last for three weeks.
“We want financial damages,” his lawyer Frederik-Karel Canoy said.
Since that debacle, EADS has reshaped itself by reducing the role of the French and German governments and is enjoying record demand for its jetliners under a new name, Airbus Group.
Its chief executive, Tom Enders, wrote to staff on Friday saying he was confident the charges would be “fully dismissed”.
But the prospect of fresh disclosures about the inner workings of once of Europe’s most strategic companies had also turned it into one of the most anticipated trials for some time.
Instead, the aerospace bosses sat silently throughout a day of courtroom drama as some of the country’s most renowned lawyers pressed a panel of judges to seek a ruling on the principle of double trials, which could take several months.
Their decision to accept the request was a surprise, coming a week after the same presiding judge handed out stiff penalties in a case involving the shares of aluminum firm Pechiney.
There were angry courtroom scenes when prosecutors suggested defendants were playing for time by focusing on procedure.
“I am not afraid to be judged on the merits of the case; I am innocent,” Forgeard told Reuters afterwards.
Technically, the trial could keep going by hearing evidence on the insider trading allegations without attempting a verdict.
But lawyers said this was unlikely while the deeper constitutional issue was being settled, first by the Appeal Court then the nine-member Constitutional Council.
At issue is whether a definitive decision by a financial regulator with the power to impose severe penalties, like the AMF, is equivalent to a court decision when deciding whether someone can be put on trial again for the same set of facts.
The outcome could have wider implications for a tug of war between other regulators and the courts over who should have the last say on financial crimes, as well as influencing the sensitive balance between national and European justice.
The hearing will resume on Tuesday when a formal decision is expected on whether to halt the trial for several months.
(story refiled to correct spelling of lawyer’s name in para 13)
Editing by Geert De Clercq and Elaine Hardcastle