All of this means that the histories of various French businesses might have to be revised. One of the best-known stories involved the company Gemplus. This French firm had developed chip encryption, which is used in phones and credit cards in particular. This technology had escaped the clutches of the intelligence world and of American firms. Out of naivety and a willingness to comply with the “good practices” of company “governance”, its then boss Marc Lassus allowed a Texan investment fund, Texas Pacific, to buy a stake in the firm.
But though it only had a 26% share of the capital the Texan outfit soon imposed its way: it nominated a new boss and transferred the registered office to Luxembourg. At last the encrypted chip technology was in the hands of the Americans. The employees suspected that the management wanted to transfer all activity to the United States and to sell it to an American group. The battle lasted several years, threatening to sink the firm altogether.
By 2009 the American intelligence services were no longer interested in the encrypted chip: they now knew all its secrets. The Texan investment fund agreed to sell its share in the firm – which had been re-named Gemalto and was now based in Holland – and withdraw from the scene. Today Texas Pacific still has a 42% stake in TDF, a French company that provides radio and television transmission services, services for telecoms operators, and other services including digitization of content and encoding.
When reading the NSA reports it is also impossible not to think of the battle between the CEO of pharmaceuticals firm Sanofi-Aventis, Chris Viehbacher and his board of directors, which ended with his departure in October 2014. Viehbacher was suspected by some of wanting to move the research centre and company headquarters of this renowned French firm, a world leader in vaccines in its venture with the Institut Pasteur, to the United States where he was based, after getting rid of thousands of jobs. This was despite the fact the firm had received state aid. His removal marked an end to the plans – for now, at any rate.
The NSA reports also bring to mind the story of Alcatel-Alstom, American firm General Electric's direct competitor. Its business is at the very heart of the kind of activities targeted in the NSA document on French firms; it has a stake in telecommunications, energy infrastructures and transport. Once one of the most powerful groups in France, it is now in shreds.
Its former president, Serge Tchuruk, impressed by financial capitalism and the power of shareholders and the dream of an industry without factories, bears a heavy responsibility for this decline. It was he who organised the split between Alcatel and Alstom, which completely destabilised both. It was he who wanted the fusion between Alcatel and American firm Lucent, which was then in a weak position. But in the aftermath it was Lucent that gained the upper hand. As a result a number of technologies crossed the Atlantic, for example on the laying and monitoring of submarine cables. Alcatel gained little from the merger and, today, has lost many of its essential technologies. It is going to be merged with Nokia.
Meanwhile Alstom's fate was not much better. It April 2014 General Electric made it an “offer it couldn't refuse”, and Alston's energy division was bought for 13 billion dollars. It heralded the dismantling of the group. It later emerged that Alstom was targeted by a corruption charge from the American Department of Justice over the sale of power stations in Indonesia, and the group had to pay a 790 million dollar fine. And in Britain the transport division of Alstom is being probed for allegedly using bribes to get contracts in Hungary, Poland and Tunisia.
In the past the French authorities and justice system have shown considerable tolerance towards allegations of corruption on the part of French groups. Today that lenience is working against those companies. For it is foreign justice systems who are now taking action rather than French prosecutors. However, the amount of information that these investigations have access to, based on phone conversations and meetings, raises questions. Above all, how is it that firms such as Alstom and Siemens are regularly caught up in allegations of corruption in markets where such practices seem the norm, when General Electric never is? There are no inquiries into the American group, its subsidiaries in Bermuda and the Bahamas, its contracts won with the support of the entire apparatus of the American state.
The absence of US firms from corruption scandals also seems to have struck Jean-David Levitte, former diplomatic advisor to Nicolas Sarkozy who became French ambassador in Washington. In 2004 a top secret NSA cable (see above) referred to Levitte's conversations following a report on the alleged misuse of the UN Oil-for-Food (OFF) programme in Iraq. “The ambassador termed the report scandalous, since it named no U.S. companies and he claimed that many French companies with contracts under the OFF program were actually subsidiaries of U.S. firms that also profited from the business dealings. He therefore planned, with foreign ministry backing, to present a list of these U.S. companies to both the U.S. Congress and the media,” says the NSA report. In the end the report was quickly forgotten and there were few judicial repercussions as a result of it.
- The French version of this article can be found here.
English version by Michael Streeter
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