- The Washington Times - Tuesday, November 5, 2002

PARIS (AP) Vivendi Universal acknowledged yesterday it is under investigation by U.S. authorities, a disclosure that comes one week after prosecutors in France announced they were examining whether the company deliberately misled investors.
The U.S. Attorney's Office for the Southern District of New York has opened a preliminary criminal investigation, Vivendi said. The company also said the Securities and Exchange Commission's Miami office has been carrying out an informal inquiry and is coordinating its activities with the U.S. Attorney.
In a terse statement, Vivendi promised to cooperate fully with investigators, but a spokesman did not return several calls seeking details about the scope of the inquiries. Marvin Smilon, spokesman at the U.S. Attorney's Office, declined to comment on the case, and the SEC's Miami office did not return a call seeking more information.
However, Vivendi has faced complaints in France and the United States from shareholders who say the company, under former Chairman Jean-Marie Messier, deliberately misled investors into buying or holding Vivendi stock.
Prosecutors in Paris opened an investigation Oct. 29 into whether the company falsified financial reports to buttress shares and attract investors.
The company was already being scrutinized by France's market watchdog. This summer, the Commission of Stock Market Operations said it was studying financial information that Vivendi has released since January 2001.
Denying any wrongdoing, Vivendi said in September that PricewaterhouseCoopers had studied its accounts and found no misleading information.
One analyst, Patrice Lambert de Diesbach, said the new investigations in the United States would probably not have a major effect on the company.
"The complaints don't have anything to do with the current leadership," said the analyst, with CIC Securities in Paris. "Perhaps Messier can be held responsible for something, but it won't change anything about the current vision of the group."
In trading on the New York Stock Exchange, U.S. shares of Vivendi fell 43 cents, or 3.5 percent, to close yesterday at $12.05.
The investigations were the latest example of how Vivendi is finding it hard to move past the problems left behind by its former chairman, Mr. Messier.
The new chairman, Jean-Rene Fourtou, is working to chip away at the $16.9 billion debt racked up as his predecessor transformed the former French utilities company into a vast media and entertainment giant.
As part of its sell-off, Vivendi last week announced plans to sell U.S. publisher Houghton Mifflin to a group of financiers, including the Blackstone Group, a private U.S. investment group. Vivendi valued the deal at an estimated $1.73 billion, including debt.


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