Former Wendel group boss Ernest-Antoine Seilliere arrives at the Paris court to be tried for tax evasion on January 17, 2022 (AFP / Bertrand GUAY)
One way to motivate a “star team” of executives, at a time of “economic euphoria”: the former president of Medef Ernest-Antoine Seillière traced the origins of a profit-sharing program called Solfur on Wednesday, in the heart of the trial for tax evasion of former managers of the investment company Wendel.
Thirteen former executives of Wendel and a former tax lawyer have been on trial since Monday in Paris, suspected of having knowingly participated in 2007 in a skilfully elaborate financial arrangement aimed at deceiving the tax authorities on more than 300 million euros in capital gains.
After thorny procedural debates, the court began the examination of the merits on Wednesday, with the questioning of the then chairman of Wendel’s supervisory board, Ernest-Antoine Seillière.
Tall, gray hair and rimless glasses, Baron Seillière, 84, returns to the helm on his journey: the ENA, the diplomatic corps, the ministerial cabinet of Jacques Chaban-Delmas and his unfortunate campaign for the presidential election of 1974 .
In 1976, he joined Wendel, then almost three hundred years old metallurgical group, controlled by his family for “10 generations”. The French steel industry had just been nationalized, so he organized a “rebirth” of the company as an investment company.
“In 2001, I felt that Wendel’s strategy had become more wait-and-see and I thought it was my responsibility to seek to initiate a new strategy,” he says in a strong voice.
He recruited Jean-Bernard Lafonta, then 40 years old, to whom he gave “carte blanche” to initiate a “positive start of the group” and chose, with him, “a team of young and dynamic collaborators”.
Composed of a total of “sixty people”, Wendel was “considered by the market and by the international world as a star team, not to say champion, of industrial investment in industrial and service companies” , assures the defendant.
Ernest-Antoine Seillière during a general meeting of Wendel shareholders on June 9, 2008 in Paris (AFP/Archives/ERIC PIERMONT)
The leaders decide to abandon the traditional stock options to offer “managers” a new incentive: a “co-investment”. After a first program in the equipment manufacturer Legrand, they offered, in 2004, fifteen executives to acquire a call option on approximately 4.6% of the capital of Wendel.
This is the “outcome” of this operation called Solfur which, in 2007, will generate 315 million euros and this “totally tax-free”, according to the National Financial Prosecutor’s Office (PNF), which represents the prosecution at this trial.
– “Rabbits in the meadow” –
“We must stop at the figures because they may appear considerable, moreover they are”, declares at the bar Mr. Seillière.
“But you have to understand that at that time we were in the same mentality as start-ups, + unicorns +”, he continues. “There is very strong competition” to recruit executives, “that’s why we have been ambitious in the remuneration of managers”.
Jean-Bernard Lafonta, during a press conference on the results of the Wendel group, on March 27, 2007 in Paris (AFP/Archives/ERIC PIERMONT)
At the time, the financial crisis of 2008 had not yet arrived. “We were in a period of economic euphoria,” said Mr. Seillière. “Between 2004 and 2007, the value of Wendel shares will increase from 40 to 140, that is to say more than a tripling!”
“Who are these +talents+?” then hired by Wendel, questions the president.
“Well Madam, you have them in front of you!”, Says the defendant, causing laughter in the courtroom where his co-defendants are seated.
The magistrate asks him about the date of entry of all the executives, one after the other, at Wendel: Baron Seillière turns towards the room, launches jokes, challenges his former collaborators, a hand sometimes slipped into the pocket of his gray suit.
“Concretely, what does their job consist of?” continues the president.
“It’s a job in which you have to combine an excessively precise analytical capacity, with a certain form of sense of risk and intuition” which “make, I believe, the entrepreneur”, replies the defendant, finding boss accents of bosses. “It’s a bit like rabbits passing in the meadow and you have to shoot,” he also says.
In 2006, at the age of 67, he “retired from operations” to devote himself to the presidency of the European employers’ union, recalls the magistrate. It is, however, one of the main beneficiaries of the Solfur program (at 25%). “As far as you’re concerned, does it almost look like a starter package from the Wendel company?” asks the president.
The defendant affirms that he had not completely left at the time, but acquiesces however: “I think that one has, in fact, recognized my participation in the group, which was worth 50 million on my arrival in 1976, and 5 billion when I left him”.
His questioning continues Thursday.
© 2022 AFP
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