Vivendi slumps on accounts fear

Investors lose confidence as report says Vivendi tried to alter accounts

PARIS, France (CNN) -- Vivendi Universal saw billions of euros wiped off its market value after the French newspaper Le Monde said the media conglomerate attempted to massage its 2001 accounts.

The company's stock, which has dived more than 70 percent this year, slumped more than 40 percent at one point on Tuesday, erasing about 10 billion euros of the company's value. Vivendi (PEX) shares closed at 17.80 euros, down 25.5 percent from the previous session.

Vivendi Universal, in the midst of ousting Chief Executive Jean-Marie Messier, tried to alter its 2002 account to the tune of 1.5 billion euros as part of a complex sale of shares in Rupert Murdoch's British Sky Broadcasting, Le Monde said.

French regulators objected to Vivendi's accounting of the transaction and was forced to back down, but only after one of Vivendi's auditors quit, the newspaper said, citing auditors' notes and confidential information from French regulators.

VIDEO Jim Boulden looks at the vision that drove Messier    MORE STORIES • Messier: Threat to French cutlure?  • Vivendi posts $11.8B loss  • Vivendi sells more utility shares  • Vivendi sells TV stake to Telenor  • Murdoch in $1bn Vivendi deal  • $5 million bonus for Vivendi chief    RESOURCES • Vivendi Universal: Business breakdown

Vivendi issued a statement on Tuesday denying any wrondoing, saying it "applied strictly" to accounting rules of the COB, the French regulator.

Vivendi's stock had been under pressure before the latest's revelations, after credit rating agency Moody's cut the company's debt rating to junk bond status, triggering millions of euros in interest payments.

Accounting scandals have plagued stock markets across the globe after the collapse of Enron and WorldCom's admission it inflated its balance sheet.

Troubled accounting firm Andersen, which audited the books of Enron and WorldCom, told CNN that it was Vivendi's auditor, although it could not say if it was the auditor during the year in question.

Vivendi made strong gains on Monday, up more than 9 percent, as Messier was expected to relinquish his job. But a company spokesman Alain Delrieu told CNN that Messier had not resigned and could be fired at a board meeting on Wednesday. (Full Story)

In an earlier interview published on Tuesday, Messier said he had agreed to resign to save the media conglomerate and on condition that he be replaced by a Frenchman.

"My successor, whether as chairman or operational managers, can only be French. I have agreed to resign because I have acquired the conviction that they will be," Messier was quoted as saying in Tuesday's Le Figaro.

Messier, 45, will confront his one-time allies on the board on Wednesday, when directors meet to decide his future. He appealed to the board not to break up the Franco-American conglomerate.

Messier has faced calls to resign after racking up a huge debt following a $100 billion spending spree. The stock has sunk to a 13-year low amid concerns the company will struggle to cut debt and generate profits.

The board is expected to install Jean-Rene Fourtou, the vice chairman of drugmaker Aventis (PAVE), as chief executive. If Fourtou's nomination is agreed, he is likely to embark on a restructuring plan to sell assets and reduce the company's debt.