Nov 5, 2002 By Angela Doland Associated Press Writer 3 min read

PARIS (AP) – Vivendi Universal acknowledged Monday that it is under investigation by U.S. authorities, a disclosure that comes one week after prosecutors in France announced they were examining whether the company deliberately misled investors. The U.S. Attorney’s Office for the Southern District of New York has opened a preliminary criminal investigation, Vivendi said. The company also said the U.S. Securities and Exchange Commission’s Miami office has been carrying out an informal inquiry and is coordinating its activities with the U.S. Attorney. In a terse statement, Vivendi promised to cooperate fully with investigators, but a spokesman did not return several calls seeking details about the scope of the inquiries. Marvin Smilon, spokesman at the U.S. Attorney’s Office, declined to comment on the case, and the SEC’s Miami office did not return a call seeking more information.

However, Vivendi has faced complaints in France and the United States from shareholders who allege that the company, under former chairman Jean-Marie Messier, deliberately misled investors into buying or holding Vivendi’s stock.

Prosecutors in Paris opened an investigation Oct. 29 into whether the company falsified financial reports to buttress shares and attract investors. The company was already being scrutinized by France’s market watchdog. This summer, the Commission of Stock Market Operations said it was studying financial information that Vivendi has released since January 2001.

Denying any wrongdoing, Vivendi said in September that PricewaterhouseCoopers had studied its accounts and hadn’t found any misleading information.

One analyst, Patrice Lambert de Diesbach, suggested the new investigations in the United States would probably not have a major effect on the company.

“The complaints don’t have anything to do with the current leadership,” said the analyst, with CIC Securities in Paris. “Perhaps Messier can be held responsible for something, but it won’t change anything about the current vision of the group.”

The investigations were the latest example of how Vivendi is finding it hard to move past the problems left behind by its former chairman, Messier.

The new chairman, Jean-Rene Fourtou, is working to chip away at the $16.9 billion debt racked up as his predecessor transformed the former French utilities company into a vast media and entertainment giant. As part of its selloff, Vivendi last week announced plans to sell U.S. publisher Houghton Mifflin to a group of financiers, including the Blackstone Group, a private U.S. investment group.

Vivendi valued the deal at an estimated $1.73 billion, including debt. Now Vivendi has turned its sights to taking control of Cegetel, the telecommunications group in which it already owns a 44 percent stake.

Some investors have frowned on Vivendi’s intentions, saying it needs to focus on paring down, not buying.

Vivendi has been locked in a battle against Britain’s Vodafone Group for control of Cegetel.

Earlier this month, Vodafone announced an agreement to buy out fellow shareholders BT Group PLC and SBC Communications Inc. for US$6.15 billion – giving it a controlling stake in Cegetel. It had also offered Vivendi US$6.6 billion for its Cegetel stake – which Vivendi rejected.

But under a Cegetel shareholders’ agreement, Vivendi has first priority in buying the shares. The media group has until Dec. 10 to issue a counterbid. The Vivendi chairman told union members last week that there is a strong possibility the company will buy BT Group’s stake in Cegetel.