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This French elite on a merry-go-round of fat-cat jobs

January 30, 2013 | By martine orange

The nominations last weekend of Anne Lauvergeon and Jean-Claude Trichet as France’s representatives on the re-vamped board of European aerospace and defence group EADS was anything but a surprise, argues Mediapart’s finance and economy specialist Martine Orange. Both are from an elite composed of graduates of France’s grandes écoles and former senior civil servants who are on a life-long merry-go-round of top jobs and fat salaries, and whose purportedly immeasurable talents have overseen the break-up and bankruptcy of the French economy.

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For the past 30 years, and whatever the government in power, a small elite in France have played musical chairs at the pinnacle of state-run industries and financial institutions, appointed from upon high and moving from post to post whatever their track record, argues here Mediapart’s finance and economy specialist Martine Orange, who outlines some recent examples of the gravy train that just keeps rolling on.   

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The nominations last Sunday of Anne Lauvergeon and Jean-Claude Trichet as France’s representatives on the re-vamped board of European aerospace and defence group EADS was anything but a surprise. Both are from an elite composed of graduates of France’s grandes écoles and former senior civil servants who are on a life-long merry-go-round of top jobs.

The restructuring of the EADS board had only just been announced when Lauvergeon, 53, was also being championed by the French government as its ideal candidate to become the future head of the board.  

One of the most striking things about these announcements is that they no longer provoke any kind of reaction. It’s as if they were part of a normal way of managing a state. President François Hollande promised during his election campaign an exemplary style of government, one that would be a “change” and “a break” with past closed practices. Yet he has apparently decided not to upset the boat in a system that has seen, over the past 30 years, the same figures move around, come and go, leave by the door and return through the window, exchanging posts and responsibilities between themselves whatever their track record and whichever the government.

While always criticizing the extent of the powers of the state, often dreaming only of privatizations, this new ‘nobility of the gown’ are the first of any to seek power and privilege from the state. Perhaps while waiting for such things to become hereditary.

This capture of a part of the economic power of the nation is yet one more illustration of the wayward drift of our institutions. The warning given by historian Marc Bloch (1886-1944), when writing about the ills of French society that led to the country’s defeat by Germany in 1940, serve to sound an alarm today.  “Whatever the nature of the government, the country suffers if the instruments of power are hostile to the very spirit of public institutions,” he observed. “A monarchy needs monarchic personnel. A democracy becomes weak, to the great detriment of common interests, if its high-ranking civil servants, who are trained to despise it and who, by the force of things, are born to the same social classes whose rule it is supposed to have abolished, only serve it against their will.”

The nomination of Anne Lauvergeon to the board of EADS, and perhaps subsequently, as the French presidency would like, to the post of non-executive head of the board, is part of this process. It is indeed by “the force of things” that the former head of French civil nuclear technology giant Areva, a post which led to her nickname of 'Atomic Anne', has now joined the pan-European aerospace group. Despite her skills, which are of course as exceptional as one might expect, she found no new high-profile job after the non-renewal of her term at Areva in 2011. She was unable to concretize her plan to begin a new professional life in the US, where talents are perceived as being paid at their just value. But while languishing on the supervisory board of French daily Libération, and within Efficiency Capital, an investment fund for innovating companies, and also president of an employment re-insertion fund, A2i, financed by the French metallurgic industry federation, the UIMM, Lauvergeon made sure she would not go forgotten.

Since the coming to power of the socialist government last May, speculation has been rife that she would become, variously, a member of government, head France’s public investment bank, lead French utility giant EDF or even, as was rumoured just last week, take top spot at France Télécom. All of the last three are publicly-owned companies. For while she spent years campaigning for the privatization of Areva and its clear separation from the state, Lauvergeon still expects a lot from the public purse. She appears to believe the state owes her compensation, she who was ousted from Areva by the joint attacks of then-president Nicolas Sarkozy and EDF chairman and CEO Henri Proglio. The two were, Lauvergeon wrote in a recently-published book, the architects of a “system of clans, gangs and prebends”.    

An irreplaceable group with ‘great qualities’

Anne Lauvergeon has no particular competence in the field of aeronautics, and her record at Areva is disastrous one. When she left the state-owned company, it had chalked up losses of 5 billion euros, of which 3 billion are now recognised as being caused by the troubles that dogged the construction of the Finnish EPR nuclear plant at Olkiluoto. The other 2 billion euros of losses are down to the scandal of the UraMin uranium mining project in Africa, when Areva paid well over the value of the mines and, above all, found itself unable to extract any uranium, leading to the acquisition being entirely written off in the company’s accounts.

But none of this appears to have any importance. The French state is a generous one, and Lauvergeon can lose 5 billion euros without consequence for her professional future. French finance minister Pierre Moscovici, commenting upon Lauvergeon’s nomination to the EADS board in an interview on Monday with radio station France Info, was simply full of praise for her. “She is a woman who has great qualities which must be fully employed, and we are favourable that they be so,” he said. “It seems to me that she has indeed every quality to play a major role – her energy, her industrial skills – at EADS,” he continued, adding that her eventual nomination as head of the group's board would be justified “in the name of a rebalancing between France and Germany”. Only the future can tell what will be the effect of Lauvergeon’s involvement at EADS, she who has created hostility wherever she went, including, before Areva, the Lazard Bank and Alcatel.

It was also presumably for his “great qualities” that Jean-Claude Trichet, a member of the board of directors at EADS since stepping down as president of the European Central Bank (ECB) in 2011, has had his mandate renewed at the age of 70. Does he have any particular skills in aeronautics? Does he know how to run a company? He was a senior civil servant, a treasury director during the crash of the Crédit Lyonnais bank, before becoming governor of the bank of France, and then head of the ECB. Still now, the government appears unable to without the endless skills of this great servant of the state, who, to his immense merit, also pleases the German camp. While on the board, he may well yet discover a few industrial and social realities, and the consequences for an industry open to world competition of the policies he has led since the 1990s, first for a strong franc, and afterwards for a strong euro.    

Another in this category of those who are apparently irreplaceable is Louis Gallois. For almost 40 years he has inhabited all the rarefied corridors of power. A former chief-of-staff in 1988 to defence minister Jean-Pierre Chevènement, he was in 1989 appointed Chairman and CEO of French aircraft engine builder SNECMA, after which, in 1992, he became CEO of aircraft manufacturer Aérospatial. He left Aérospatial in 1996 to become head of the French railway service, the SNCF, then CEO of Airbus and EADS. At every stage, he adopted an immobile, low profile that ensured no feathers were rustled.

The state just couldn’t do without this boss with the reputation of a ‘warrior monk’, one who drew an annual salary at EADS of more than 3 million euros and who, when his term with the group ended,  only at the last minute waved away a non-compete clause payment of 400,000 euros. The government was grateful for his sacrifice, and shortly after leaving the aeronautical group last year, aged 68, he was appointed as the state’s ‘commissioner-general for investment’. Socialist Prime Minister Jean-Marc Ayrault also gave him the task of preparing a report on how to improve the competitiveness of the French economy, delivered last November, presumably because he thought that Gallois, after spending some 40 years in seats of power, would have fresh and new ideas.

Jean-Cyril Spinetta is another member of the ‘irreplaceable club’. After 15 years as Chairman and CEO of Air France, he handed over the reins to Pierre-Henri Gourgeron in January 2009, only to take them back again in October 2011 after the company’s catastrophic performance. In November 2011, the French presidency stepped in to appoint Alexandre de Juniac, formerly chief-of-staff to finance minister François Baroin, as the company’s new Chairman and CEO. The job of chief-of-staff to a French finance minister comes complete with the unofficial perk of being able to choose your future post, just like Stéphane Richard became head of France Télécom – all in the public interest, of course.

Capable of going anywhere and everywhere

Last December, the government announced the appointment of Jean-Bernard Lévy as Chairman and CEO of aerospace and defence group Thales. The group’s two major shareholders are the French state and aeronautic and defence group Dassault, and Levy’s appointment came after a protracted battle between the two over their favoured candidates. For once, both early choices were internal company figures, namely Pascale Sourisse, who had the government’s backing and Reynald Seznec. The discord was finally settled with agreement for an outsider - and one of the most unlikely candidates for the job -, Jean-Bernard Lévy.

Lévy, 57, was, for ten years until last June, CEO of media and telecommunications group Vivendi, where he enriched himself alongside supervisory board chairman Jean-René Fourtou while showing a total absence of decision and vision. He was finally forced to resign, leaving the company in poor shape. So why did the state go looking for him to lead one of France’s largest defence corporations? His supporters cite his experience, before Vivendi, at Matra, but the fact is that Lévy never worked for Matra’s defence branch but for its telecommunications unit. However, Lévy is also a former senior civil servant, and he needed a job.   

That was also the case with Augustin de Romanet, after he was replaced as CEO of the state investment fund, the Caisse des depots, by Jean-Pierre Jouyet. In compensation, Romanet, a former banker who has never led a company in the services industry, was subsequently appointed head of airports operator, ADP. Our senior civil servants are like 4x4 vehicles, capable of going anywhere and everywhere.

But these examples are not limited to the state-run sector. Once they have passed into the private sector, the corps that is made up of former senior civil servants place a point of honour on maintaining the same practices, whereby the same group of people are employed at the top whatever their mission. Thus it is that whenever a large private corporation runs into economic difficulties, or a boardroom crisis, those who are called in to sort out the problem are all on a short and well-known list and which includes; Louis Schweitzer, former Renault Chairman; Serge Weinberg, former chief-of-staff to Laurent Fabius when he was budget minister in 1982, and Philippe Camus, former managing director of the Lagardère group. They refuse nothing, always ready to help. Indeed, Camus even recently put forward his own candidature for the presidency of EADS.

This permanent merry-go-round, this employment in key posts of a small and same group of elite, might be justifiable if they could each demonstrate how they have succeeded with brilliant achievements. But, unfortunately, after several decades of activity, that is not the case. Their far-from-glorious results are the break-up and bankruptcy of the French economy.

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English version: Graham Tearse