18/06/2003 12:02
A Paris court will on Wednesday decide the fate of Jean-Claude Trichet as future head of the European Central Bank when it pronounces judgment on his involvement in the alleged massaging of the accounts of Crιdit Lyonnais prior to the spectacular collapse of the large French bank in the early 1990s.
If Mr Trichet, governor of the Bank of France, is cleared, he is expected to be confirmed to succeed Wim Duisenberg as head of the ECB. Mr Trichet has been lined up as successor since 1998, when President Jacques Chirac secured agreement that Mr Duisenberg would step down midway through his eight-year term.
But if the verdict goes against Mr Trichet, his chances of obtaining this important job controlling the eurozone's monetary policy are slim. European Union leaders at their summit in Thessaloniki at the end of this week would have to discuss alternative candidates.
The Dutch head of the ECB has already postponed his retirement twice to accommodate the vagaries of the Crιdit Lyonnais affair since Mr Trichet was put under investigation three years ago.
The latest occasion was after the trial ended in February. Then the Paris court gave itself an exceptionally long four months to mull over the verdict, setting June 18 for the announcement.
As Mr Duisenberg was at that point expected to stand down on July 9, the short time separating the court verdict from this retirement date forced the Dutch central banker to postpone his departure, embarrassing Mr Chirac in light of his insistence on a French successor.
Mr Trichet's lawyers are expected to appeal against any guilty verdict - a process that could take at least eight months, according to French legal experts. Analysts say the prospect of uncertainty for another year would in effect rule Mr Trichet out of the succession.
The prosecution has sought sentences ranging from eight to 18 months suspended prison terms against nine defendants in the trial. Crιdit Lyonnais was the biggest bank failure in France.
A 10-month suspended sentence is being sought for Mr Trichet on charges of allegedly being party to presenting false accounts by minimising losses for the year 1992 and the first half of 1993, when he was director-general of the French Treasury.
Lawyers for those on trial, including Jacques de Larosiθre, then governor of the Bank of France, Pascal Beaufret, treasury representative on the bank board, and Yves Haberer, chief executive, argued the accounts were a reasonable assessment of hard to quantify liabilities and provisions.
If Mr Trichet is not completely exonerated or the prosecutor's office opts to appeal against a "not guilty" verdict, France's search for an alternative candidate would have to start in earnest. Mr Duisenberg's decision to delay his retirement as ECB president to ensure a smooth transition has provided a breathing space.
He again insisted this month that he had "no idea" how long he would remain at the ECB. Bank officials say he has agreed to stay for as long as it requires to find a successor. But ECB watchers doubt the leadership question can drag on much longer and point out that Mr Duisenberg himself said the bank's annual report, published in April, would be the last to bear his signature.
Given the deteriorating economic climate in the eurozone, pressure on France to name its alternative candidate if Mr Trichet stumbles on Wednesday would mount very quickly, say observers. It could even trigger opposition to the Franco-German deal under which Mr Duisenberg agreed to step aside before the end of his eight-year term to make way for a French successor.
Several diplomats from smaller EU states have voiced concern about France's ability to find an acceptable alternative candidate. The trouble is that the list of other candidates is very short. None boasts Mr Trichet's central bank credentials or is likely to command the same respect in the markets. Christian Noyer, former ECB vice-president, is suggested as an alternative even though the Maastricht Treaty rules out the reappointment of ECB board members.
"Noyer may be France's number two choice," says Rainer Guntermann, an economist at Dresdner Kleinwort Wasserstein. "But several countries - including Germany - are likely to stand by a strict interpretation of the treaty. Other names such as Jean Lemierre, head of the European Bank of Reconstruction, and Michel Pebereau, BNP Paribas chairman, lack Mr Trichet's central bank experience. Both have denied interest.
If Mr Trichet, governor of the Bank of France, is cleared, he is expected to be confirmed to succeed Wim Duisenberg as head of the ECB. Mr Trichet has been lined up as successor since 1998, when President Jacques Chirac secured agreement that Mr Duisenberg would step down midway through his eight-year term.
But if the verdict goes against Mr Trichet, his chances of obtaining this important job controlling the eurozone's monetary policy are slim. European Union leaders at their summit in Thessaloniki at the end of this week would have to discuss alternative candidates.
The Dutch head of the ECB has already postponed his retirement twice to accommodate the vagaries of the Crιdit Lyonnais affair since Mr Trichet was put under investigation three years ago.
The latest occasion was after the trial ended in February. Then the Paris court gave itself an exceptionally long four months to mull over the verdict, setting June 18 for the announcement.
As Mr Duisenberg was at that point expected to stand down on July 9, the short time separating the court verdict from this retirement date forced the Dutch central banker to postpone his departure, embarrassing Mr Chirac in light of his insistence on a French successor.
Mr Trichet's lawyers are expected to appeal against any guilty verdict - a process that could take at least eight months, according to French legal experts. Analysts say the prospect of uncertainty for another year would in effect rule Mr Trichet out of the succession.
The prosecution has sought sentences ranging from eight to 18 months suspended prison terms against nine defendants in the trial. Crιdit Lyonnais was the biggest bank failure in France.
A 10-month suspended sentence is being sought for Mr Trichet on charges of allegedly being party to presenting false accounts by minimising losses for the year 1992 and the first half of 1993, when he was director-general of the French Treasury.
Lawyers for those on trial, including Jacques de Larosiθre, then governor of the Bank of France, Pascal Beaufret, treasury representative on the bank board, and Yves Haberer, chief executive, argued the accounts were a reasonable assessment of hard to quantify liabilities and provisions.
If Mr Trichet is not completely exonerated or the prosecutor's office opts to appeal against a "not guilty" verdict, France's search for an alternative candidate would have to start in earnest. Mr Duisenberg's decision to delay his retirement as ECB president to ensure a smooth transition has provided a breathing space.
He again insisted this month that he had "no idea" how long he would remain at the ECB. Bank officials say he has agreed to stay for as long as it requires to find a successor. But ECB watchers doubt the leadership question can drag on much longer and point out that Mr Duisenberg himself said the bank's annual report, published in April, would be the last to bear his signature.
Given the deteriorating economic climate in the eurozone, pressure on France to name its alternative candidate if Mr Trichet stumbles on Wednesday would mount very quickly, say observers. It could even trigger opposition to the Franco-German deal under which Mr Duisenberg agreed to step aside before the end of his eight-year term to make way for a French successor.
Several diplomats from smaller EU states have voiced concern about France's ability to find an acceptable alternative candidate. The trouble is that the list of other candidates is very short. None boasts Mr Trichet's central bank credentials or is likely to command the same respect in the markets. Christian Noyer, former ECB vice-president, is suggested as an alternative even though the Maastricht Treaty rules out the reappointment of ECB board members.
"Noyer may be France's number two choice," says Rainer Guntermann, an economist at Dresdner Kleinwort Wasserstein. "But several countries - including Germany - are likely to stand by a strict interpretation of the treaty. Other names such as Jean Lemierre, head of the European Bank of Reconstruction, and Michel Pebereau, BNP Paribas chairman, lack Mr Trichet's central bank experience. Both have denied interest.
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