Former EADS exec detained in insider trading probe

Published 9:47 am Tuesday, June 17, 2008

PARIS — Former EADS executive Jean-Paul Gut has been detained as part of a probe into allegations of insider trading, judicial officials said Tuesday.

Gut was detained on Monday and the detention was extended Tuesday for another 24 hours, according to the officials, who are not authorized to speak publicly about the case and asked to remain anonymous.

Gut’s attorneys denied he had engaged in insider trading.

EADS executives and shareholders sold millions worth of EADS shares before a June 2006 announcement of delays for the Airbus A380 superjumbo. The announcement made EADS shares crash 26 percent in one day.

The Paris prosecutor opened an inquiry in November 2006, and the AMF, the Financial Markets Authority, is also conducting its own investigation.

Gut, a former deputy chief executive who oversaw strategy for Airbus’ parent, left the company last year after what EADS called “a divergence in views.”

EADS spokeswoman Gaelle Pellerin declined to comment.

Gut was questioned by AMF investigators last year as part of their probe focussing on the sale of shares by 17 current and former EADS executives and shareholders DaimlerChrysler AG and Lagardere SCA.

According to the AMF report, which was published on French news web site Mediapart, Gut made 1.77 million euros ($2.74 million) on the sale of 175,000 shares.

In a statement, Gut’s lawyers said the “sale, which was part of the constant practice of exercising stock options, took place in strict respect of internal EADS rules and regulations and during authorized periods.”

The lawyers, Yves Repiquet, Diane Pasturel and Eric Dezeuze, denied their client had engaged in insider trading and called for him to be heard “as soon as possible” by investigating judges.

At the center of the probe is former co-CEO Noel Forgeard, who was charged preliminarily with insider trading last month.

Forgeard was freed on 1 million euros bail ($1.56 million). He denies wrongdoing.

The investigations are embarrassing for EADS as the company seeks to emerge from a rocky couple of years plagued by trouble with the A380 and management turmoil.

The company in the midst of a massive restructuring program and is struggling to cope with the ever more expensive euro, which eats into profits. Unlike Boeing Co., many of Airbus’ costs are in euros, while it sells its planes in dollars.

Both Gut and Forgeard left EADS with handsome severance packages. Gut stepped down with 2.8 million euros ($4.33 million), representing two years of salary. Forgeard was ousted with an 8.5 million euros ($13.14 million) package.

EADS shares rose 1.2 percent to 14.04 euros ($21.64).