A Perfect Frenchman, Part 4

The Man Who Tried to Buy the World: Jean-Marie Messier and Vivendi Universal
by Martine Orange

(Page 6 of 6)

However, Messier knew he would never reach the top of the merchant bank. One man stood in his way: Edouard Stern. "Would I have been able to tempt him away without Edouard?" Ambroise Roux, the man who eventually lured Messier to run Générale des Eaux, would later ask. Stern was young, a talented financier and, most importantly, son-in-law of Michel David-Weill. Messier was under no illusions as to what this meant. In this type of organization, family ties always took precedence. At thirty-seven, he recoiled at the idea that his career could be blocked, and decided to leave Lazard. Didier Pineau-Valencienne, who professed to love him almost as a son, was the first to think of him as a possible successor at Schneider Electric. In his eyes Messier had the ideal qualifications: he was young, knew the group, and would accept his legacy. Messier indicated that he would accept. He met him more and more often to talk about the group and even appropriated Pineau-Valencienne's motto, a few lines from the poet René Char, as his own: "Create your luck, seize your good fortune and embrace risk: they'll get used to you."* In May 1994, when the chairman of Schneider was arrested by the Belgian authorities for fraud, Messier was there to support the executive's family and mount the defense. The business world assumed the succession was in the bag.

But Messier had plans, and they did not include Schneider. His eye was on the big prize: Générale des Eaux. The company was like a state within a state. Surprisingly, in view of the scale of state ownership in France, water management had long been considered a private-sector activity. Générale des Eaux had won its first municipal contract in 1853, under the reign of Napoleon III. From its origins in water supply and sewage, the group had gradually expanded into other local utility services. A move toward greater decentralization in 1982 encouraged local mayors to contract many other public services to private companies. Used to negotiating with local authorities, Générale des Eaux had the political contacts to ensure that it was the prime beneficiary. Its influence became tentacular. In some towns, it controlled almost everything: water, sewage, heating, transport, cable television, cinemas, school and hospital catering, hospital and clinic management, contracts to maintain public spaces and public housing, and even dry cleaning and pest control. As the owner of France's second-largest construction company, it was also one of the biggest land and property owners in the country. It owned more than a third of La Défense, the modern high-life business district to the west of Paris, and prestigious commercial centers such as the Carrousel du Louvre in the heart of Paris.

The unofficial power and influence of Générale des Eaux seemed even greater. Guy Dejouany, its long-standing chairman, was a connoisseur of France's electoral map. Its primary rival in the public utilities market was Lyonnaise des Eaux, run by Jérôme Monod, former boss of Jacques Chirac's political machine. Both groups used all the means at their disposal to win municipal contracts. Taking advantage of the deliberately opaque party funding laws, they became important sources of financing for the major political parties. Both companies had "their" mayors and "their" deputies and made the influencing of local officials their core competence. However, by the mid-1990s, Générale des Eaux was in a bad way, and beneath its solid appearance, was collapsing under its debts. The income from its various business lines was insufficient to cover losses from speculative property developments. Worse still, the justice system had just embarked on what would become an epic investigation into political party funding and corruption. Générale des Eaux and Lyonnaise des Eaux were among the judges' primary targets. The business establishment, frustrated at the stench of scandal that had hung over the place de Paris since the collapse of Crédit Lyonnais under Haberer, demanded that Dejouany take action to put his house in order.

At the age of seventy-three "and a half," as he liked to add, Dejouany was still without a successor. Several brilliant young men had been enthroned as his heir apparent in the past, but none had survived the wily old chameleon. He could dither no longer. He needed to put forward a name and do so quickly. Four years earlier he had used Messier's services for the acquisition of a small U.S. company called Air and Water Technologies, and he held a favorable impression of the young banker. "Why not Messier?" Dejouany asked Ambroise Rouxone, one of the most influential behind-the-scenes operators in France, and deputy chairman of Générale des Eaux, at the end of 1993. A friend since their days at the Ecole Polytechnique, Roux supported the idea. They agreed to put Messier to the test by asking him to find a formula that would allow Générale des Eaux to take control of Canal Plus. A large minority shareholder in the pay-television channel since its creation in 1984, Dejouany wished to increase his 20-percent stake in the company that at that time represented Générale des Eaux's principal source of profit. Canal Plus's founding chairman, André Rousselet, a close friend and adviser of the Socialist President François Mitterrand, cultivated a tetchy independence from both his shareholders and the right-wing government.

Conveniently for Dejouany, the new right-wing government of Edouard Balladur had just relaxed the law that limited any one shareholder from owning more than 25 percent of a national broadcaster, taking the threshold up to 49 percent. Dejouany informed Messier that he wished to control 49 percent of Canal Plus without spending a single centime. The Lazard banker quickly found a solution, arranging a shareholder pact between Générale des Eaux and two other shareholders: the Havas publishing, advertising, and media conglomerate, which owned 24 percent, and Société Générale, with 5 percent. The three together would reach the magic figure. With the agreement of the others, Générale des Eaux could exercise control in the name of all three. When Rousselet heard of the pact, he resigned from the company he had founded, claiming to be the victim of a political coup. "Edouard [Balladur] has killed me," he wrote in a tirade that was published on the front page of Le Monde. Dejouany was doing the dirty work for the new Balladur administration, which cared little for the independent-minded television station that had long been protected by Mitterrand and the Left, he claimed. Observers commented that Rousselet had blamed the wrong man: "It wasn't Edouard that killed him; it was Jean-Marie."

The episode marked the beginning of Messier's relationship with Pierre Lescure, then Rousselet's number two at the pay-television company. For a time, there would be a sense that Lescure's role in the coup against his boss had been ambiguous, which, in some people's minds, initially diminished his legitimacy as a successor. In any event, Lescure was the prime beneficiary of the coup d'état against Rousselet, and he owed his premature promotion to Jean-Marie Messier. The success of the operation convinced Dejouany to name Messier as his successor. He gave Ambroise Roux the job of negotiating his arrival. At the time it was said that Edouard Balladur had strongly supported the nomination of his protégé to the head of Générale des Eaux. Dejouany later disputed this: "Edouard Balladur was hostile to the recruitment. When he was presented as the favorite to win the [1995] presidential election, he feared being criticized for placing his men in positions of influence. He telephoned Ambroise Roux during the summer of 1994 to try and stop the operation. 'Too late,' Roux replied. 'The patient is already on the operating table.' Afterward, Balladur continued to hold it against me and would hardly speak to me."

At the beginning of November 1994, Messier, at the age of thirty-seven, was named chief executive of Générale des Eaux and designated successor to Guy Dejouany. Only one board member, Jacques Calvet, chairman of the car manufacturer Peugeot, opposed the appointment: "How can anyone even think of entrusting a group with two hundred thousand employees to someone who has never managed more than his own secretary?" The likable young banker stood in sharp contrast to his predecessor. Messier brought a breath of fresh air into the oppressive world of Générale des Eaux, a group that deliberately refused to draw up an organization chart and lacked clear lines of responsibility. Dejouany did not even permit meetings. "Three is a demonstration," he would say when more than two people entered his office. Its headquarters on the rue d'Anjou, a small Paris backstreet, was a labyrinth whose lights would be extinguished at half past eight every evening, the moment Dejouany left the premises. Barely installed as chief executive, Messier created a committee of senior managers and started collegial discussions about the most important issues facing the company - notably the crisis in the group's property arm and the numerous legal threats. Information started to circulate. Messier also announced the end of all clandestine party financing. "Between the loss of a market and illegal financing, the choice is clear: it is better to lose the market," he decreed.

A lump in his throat, Guy Dejouany could not hide his emotion in front of the shareholder meeting at La Défense. On June 10, 1996, at the end of a long speech, Dejouany turned the page after forty-three years at Générale des Eaux. To the end, to Messier's intense annoyance, Dejouany tried to play for extra time, to obtain a year or two more as chairman. But even those closest to him said it was time to go. Everyone wanted to draw a line under an era of scandal. Barely a day passed without investigating judges launching fresh corruption probes into Générale des Eaux. Dejouany himself had been questioned about alleged corruption by a judge from Réunion in May 1995 in a case concerning the water-supply concession on the island. The affair, it seemed, was serious. A court case was in the offing that could even threaten him with prison. The pressure on him to leave with honor while there was still time was acute. In the end, the state prosecutor announced that the case against Dejouany was to be dismissed only on June 11, the day after he had handed over the chairmanship to his chief executive. "You will be the ninth chairman in 143 years," he told Jean-Marie Messier. "Try not to bring down the average."

Copyright © 2003 Martine Orange. All rights reserved. This excerpt, or any parts thereof, may not be reproduced without permission.