Following a report by Les Echos yesterday, French financial regulator AMF

announced that it was launching sanction proceedings against EADS over allegations of insider trading and misleading financial information. 17 of the group’sexecutives will be notified with charges. In a statement, Louis Gallois acknowledged that theopening of this long procedure could tarnish EADS’s “image and reputation” for a long time,but promised that the group would defend itself “vigorously” and support its executivesimplicated in the case. EADS “intends to demonstrate that it has applied standards ofexcellence when communicating to the market and has acted with full transparency”, he said.Mr Gallois also sent a letter to the group’s 116,000 staff around the world to urge them to “bepatient and support each other” in the face of this difficult period. As the second phase of theAMF investigation begins, “we will now be able to defend ourselves”, he wrote.Aujourd’hui en France cites several names, including former co-CEO Noel Forgeard. In aninterview with the newspaper, Mr Forgeard says he is “innocent”, and “so are the 16 others”.The AMF reportedly cleared Arnaud Lagardere, Manfred Bischoff, Chairman of Daimler,Rudiger Grube, current Chairman of EADS, and Hans-Peter Ring, the group’s CFO, of anywrongdoing. A French Senate Commission added that the French government, which owns a15 % stake in the company, had no privileged information about production difficulties withthe A380 and did not interfere with investment decisions by state-owned bank CDC thatbought EADS shares. In a report, however, the Senate Commission pleads in favour of arenegotiation of the group’s shareholders pact, saying the government only had a role of“observer” during the 2005/2006 period. In Germany, Frankfurter Allgemeine Zeitung focuseson the presumed involvement of Thomas Enders, “Major Tom”, in the affair.La Tribune and Les Echos comment that, should some of the top managers be found guiltyindeed, the newly-reformed management and the French-German balance at EADS wouldbe shattered. Financial Times echoes that the AMF accusations dealt a “devastating blow tothe hard-won management stability” at EADS. In addition, these allegations are set to fuelthe conflict over air tankers in the US, says the British newspaper. Its columnist Paul Betts,for his part, sees the case as a “golden opportunity to rethink EADS”. Last week, Mr Galloisissued a public warning to the AMF that its investigation could threaten the group’s fragilerecovery, but the independent body did not yield to this “last-minute lobbying”. The AMFdecision may be a good thing for EADS, in fact. The columnist argues that “it could be asalutary catalyst for what this company has long needed: a complete rethink of its structures,management and the presence of poisonous French and German national interests”.

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