Rhodia to undergo twin accounting probes
irregularities as well as insider trading, just as the financial
difficulties afflicting the French chemicals group have started to
abate.
The first action, undertaken by France's stock market regulator the Autorité des Marchés Financiers, concerns financial disclosures starting from 31 December, 2000, and has emerged just as Rhodia has suggested it may return to profit next year after four years of posting losses.
The AMF alleges that Rhodia breached disclosure relating to its valuation of ChiRex, a pharmaceutical ingredient manufacturer it bought in 2000, in 2003. Two other claimed violations include Rhodia's valuations of deferred tax assets and debt, liquidity and the environment, Rhodia said in a statement.
The action is the result of a financial investigation into Rhodia that stated in 2000, and could result in financial penalties, although the company said it did not expect these to be severe even if they are imposed. The AMF will deliver its verdict in a few months, during which time it will hear testimony from Rhodia.
Separately, France's public prosecutor also said late last week that the company is being investigated for accounting irregularities and insider trading. This action stems from complaints filed in 2003 by Edouard Stern, the banker and former Rhodia board member who was found dead in his Geneva apartment earlier this month.
Stern was among board members seeking to oust former Rhodia chief executive Jean-Pierre Tirouflet in 2003, before Tirouflet was replaced by current CEO Jean-Pierre Clamadieu, who has been the architect of Rhodia's recovery with swingeing job cuts and the disposal of assets.
The alleged accounting improprieties predate Clamadieu's accession to the CEO post.
