Former EADS Chief Faces Preliminary Charges

By CAROLINE BROTHERS and ALAN COWELL
Published: May 31, 2008

PARIS — French judges have filed preliminary charges of insider trading against Noël Forgeard, the former co-chief executive of European Aeronautic Defense and Space, the aerospace group, his lawyer said Friday.

The charges relate to delays in the program to build the A380 superjumbo.

Mr. Forgeard was detained by the French police on Wednesday but released early Friday after agreeing to post bail of an unspecified amount, his lawyer, Jean-Alain Michel, told reporters.

“He continued to maintain forcefully that he committed no insider trading crime,” Mr. Michel said.

Mr. Forgeard was released before the maximum 48 hours in e detention expired. Regulators and judicial officials are investigating the possibility that up to 17 executives of Airbus and EADS knew as early as June 2005 that development costs and production delays at Airbus, particularly regarding the A380, would lead to a decline in profit.

That information should have prevented them from selling EADS shares, according to a document from the French regulatory agency Autorité des Marchés Financiers, which was obtained in April by a French online news service.

Mr. Forgeard, who was ousted in July 2006 after delays in the A380 program, was listed in the document as having gained the most from his options, reaping more than 4.3 million euros, or $6.7 million. When the delays were announced in June, 2006, EADS shares fell by over a quarter of their value.

The charges against him do not signify “an element of guilt,” Mr. Michel said. .

Under French law, preliminary charges do not imply guilt and do not necessarily lead to a trial. What it does mean is that the investigating judges believe there is sufficient reason to open a formal investigation.

Separately, the Airbus unit of EADS said Wednesday that orders for the A380, a superjumbo jet, would be a third lower than it previously forecast, as airlines grapple with higher fuel costs and slowing demand for air travel.

John Leahy, Airbus’s chief operating officer, said at the Berlin Air Show that the company expected 20 orders for the plane this year, down from the 30 it estimated in February.