French finance ministry raided in Rhodia probe
investigations into alleged accounting irregularities by specialty
chemicals maker Rhodia, with a raid on the country's Ministry of
Finance.
The raid adds to the pressure on France's current Finance Minister, Thierry Breton, who was a director and chairman of the firm's audit committee during 1999-2004, the period covered by the probe. Breton has insisted that no financial improprieties occurred while he was at Rhodia, between April 1998 and September 2002.
In March, France's stock market regulator - the Autorité des Marchés Financiers (AMF) - started an investigation into Rhodia's financial disclosures relating to its valuation of ChiRex, a pharmaceutical ingredient manufacturer it bought in 2000, in 2003. Two other alleged violations include Rhodia's valuations of deferred tax assets and debt, liquidity and the environment.
The news also had an impact on leading drugmaker Sanofi-Aventis, the share price of which dipped slightly on the news. Rhodia was spun off as a separate chemicals entity by France's Rhone-Poulenc when it merged with German company Hoechst to form Aventis. Last year, Aventis hooked up with Sanofi-Synthelabo to form the new company, which still owns around 15 per cent of Rhodia.
Rhodia is currently seeking €570m or more in compensation from Sanofi-Aventis in the courts, alleging that it had not received sufficient guarantees from Rhone-Poulenc to cover the true liabilities. The firm has filed a claim with the US Securities & Exchange Commission asking for €125m to cover environmental liabilities and another €445 million for retirement costs.
