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SEC Probe Into Vivendi Set To Grow Deeper

Nov 20, 2002 | FT.COM

The Securities and Exchange Commission has intensified its probe into Vivendi Universal, the French water and media group.

Vivendi said on Tuesday that the SEC's investigation was now "formal" meaning that the regulatory body is able to subpoena third parties such the company's accountants and law firms.

Vivendi is already the subject of separate investigations by the US attorney's office for the southern district of New York and by regulators in Paris.

The SEC inquiry is expected to range from Vivendi's method of disclosure of its financial statements to the accounts themselves. However, the SEC has given no clear indication as to the focus of its investigation.

The Commission des Operations de Bourse, France's stock market regulator, has also launched a wide-ranging inquiry into Vivendi's accounting.

Two French judges have been appointed to investigate whether Vivendi published "false" balance sheets for 2000 and 2001. The inquiry is also examining whether it had issued "false or misleading" information on its financial prospects at that time.

The inquiries are another legacy of Jean Marie Messier, who quit as chief executive in July. Mr Messier transformed Vivendi from a French utility to media giant through $70bn in acquisitions and left the group with a staggering debt.

The widening US probe - which the SEC had previously classified as "informal" is another complication for Mr Messier's successor, Jean-René Fourtou, who has laboured to sell off as sets to reduce the company's debt burden. Last week Vivendi raised €885m ($893m)through a convertible bond offering, a move aimed at raising its liquidity and cutting its €19bn net debt.

Mr Fourtou has also handed greater control of Universal's media properties to Barry Diller, who oversees the group's Universal Music group in addition to its TV and film businesses.

Vivendi said it intended to co-operate fully with the SEC but declined to comment further.

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