Businessweek Archives

The Real Scandal In France Is Over Jean Michel Turpin /Gamma Liaison


International Business: Commentary

THE REAL SCANDAL IN FRANCE IS OVER JEAN-MICHEL TURPIN /GAMMA-LIAISON

You would think France was a banana republic, thoroughly rotten with fraud and graft. A widening net of corruption probes is tainting the nation's elite: three corporate chairmen, two government ministers, a leading populist politician, a TV anchorman, and dozens of lesser lights. Moreover, some of the strong-arm tactics probers are using evoke Third World cops in sunglasses. In the most recent affaire, Alcatel Alsthom Chairman Pierre Suard was grilled for 13 hours until 1 a.m., mostly without a lawyer. He's suspected of misusing company funds for work on his home. Suard denies wrongdoing.

Despite appearances, France is not sinking into criminal anarchy. By most accounts, political corruption is much less prevalent than it is in Japan or Italy. As for French business scams, most of those under scrutiny are penny-ante affairs compared to the misdeeds of Britain's Robert Maxwell, Germany's Jurgen Schneider, and bribe-paying industrialists in Italy.

FRESH AIR. However, France's biggest slew of corruption cases in memory does carry deep significance. It will doubtless affect next spring's presidential election, possibly helping bring a fresh candidate forward if voters grow fed up with corruption. That could be a happy development in a country where voters face a perpetual stable of tired old pros. On a broader plane, the scandals may speed up a basic change already apparent in the French mind-set, leading toward a more open, accountable power structure.

One deserving victim of the current scandals is the Gallic old-boy network. Few people think French business crime is actually growing: Until now, tight personal relationships have simply swept it under the rug. The cover-ups worked because "the judicial system has never been completely independent" of government pressure, says Bernard du Granrut, ex-president of the Paris bar. A few years ago, the grilling of Alcatel's Suard, a buddy of Prime Minister Edouard Balladur, would have been inconceivable.

France's moral landscape is changing for several reasons. An economy that's being privatized and globalized has lured foreign investors, who have brought Anglo-Saxon ideas of corporate governance with them. Bourse regulators are demanding greater transparency and accountability and are going to court more. Current insider-trading charges against Pierre Berge, chairman of Yves Saint Laurent, would never have been filed a few years ago, says a bourse watchdog. All this is changing French psychology. "The boss is no longer a sacred image," says Claude Angeli, editor of Le Canard Enchaone, a weekly newspaper that regularly unearths French scandals.

Equally important for both corporate and political crime is a corps of newly zealous investigating judges. These relatively low-level officials have seldom used their vast power to launch probes without higher approval. But inspired by Italian judges who became heroes by jailing prominent figures, they have been responsible for most of France's current probes. Many suspect them of political ambition. One, Thierry Jean-Pierre, won a seat in the European Parliament in June.

THUGGISH TENDENCIES. Healthy as such independent investigations are, their tactics point up the need for judicial reform in France--and most other Continental countries. In a nation that claims to have invented the rights of man, it's a scandal in itself that suspects such as Suard can be held without counsel or formal charges. France--along with its neighbors--needs something resembling habeas corpus, as well as tougher search-warrant rules.

As for French politics, the big losers so far are the out-

of-power Socialists. They're accused of raising party funds in the 1980s through kickbacks on construction contracts. The Socialists have also probably lost a potential presidential candidate who might have led them back from limbo, populist entrepreneur Bernard Tapie. He's accused of tax fraud. Alleged political links to Credit Lyonnais loans could still hound the Socialists, although a parliamentary report on July 12 merely criticized management decisions at the bank.

But the ruling conservatives are also under scrutiny. One minister is charged with taking bribes, and a second may be indicted on influence-peddling charges in a few weeks. There are bound to be more allegations of wrongdoing on both sides as the elections approach. It's a catharsis France's future leaders should profit from. They'll likely find strong popular support to speed the country's move toward transparency.Stewart Toy


Steve Ballmer, Power Forward
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus