Safran chief executive Jean-Paul Béchat and the chairman of its supervisory board have quit after months of bitter rows. It comes as the French aerospace and electronics group - formed from the merger of Snecma and Sagem in 2005 - reported a €100 million ($135 million) hole in its accounts.
Béchat, formerly the chief executive of Snecma, and Mario Colaiacovo, formerly of Sagem, were set to clash over the matter tomorrow at a board meeting. Béchat had gained the support of the French government (a 31% shareholder) and had been expected to use this backing to oust his rival. However, both men have now announced their resignations, with Colaiacovo to leave his post officially in early January and Béchat staying in control until September.
Safran says it has discovered the accounting irregularities after an audit of the Sagem Defense Security division, caused by the rapid restructuring of business units after the merger. "Correction (of these flaws) may affect the accounts of Sagem Defense Security for previous financial years, as well as 2006," Safran said in a statement. The company estimates the cost of the financial hole may run to €100 million.
The revelation of the irregularities has already claimed a senior scalp in Jacques Paccard, the former boss of Sagem Defense Security, who was forced to quit on 20 November. Safran reported first half losses of €44 million. Paccard's departure allowed a new team to analyse the figures and discover the shortcoming. Paccard had previously dismissed three top members of the unit's finance team including its chief financial officer (CFO) and Safran says vital files pertaining to the period have been deleted by an as-yet unnamed finance officer.
The company says: "Following reconstitution of these files, investigations were initiated. Initial results of analyses performed in conjunction with the company’s statutory auditors and with the assistance of an outside audit firm, revealed several unexplained accounting irregularities approved by the former CFO."
The merger of Snecma and Sagem caused many raised eyebrows. Although there were many synergies between the two groups - Snecma was strong in aeroengines and equipment such as landing gear and brakes; Sagem was a firm with interests in defence electronics - Sagem's major consumer electronics business was struggling. Béchat is one of the longest-serving chief executives in the business.
Source: FlightGlobal.com
