| PARIS, April 8
PARIS, April 8 Things are changing in France's
business world. One in 10 top listed firms has a foreign boss,
all report earnings in English, and a recent bid battle showed
that state influence doesn't always trump the business interest.
But if you think that signals the end of the Gallic sneer at
"Anglo-Saxon" ways - the free-market bent of the Americans and
British - last week's promotion to economy minister for the
interventionist Arnaud Montebourg is a reminder that
laissez-faire government remains, in France, a linguistic irony.
Anglo-Saxon trends to get government out of business and
implement shareholder-friendly governance reforms have largely
passed it by.
Over a third of the companies that make up the CAC-40 index
of top stocks has the government as a significant shareholder.
More than three-quarters of the men who run those same 40
blue chips have a combined chairman and chief executive role, in
contrast to the U.S.-UK ideal, which separates the two jobs to
ensure shareholder interests and profit come before personal
Marwan Lahoud, chief strategy and marketing officer at
aerospace group Airbus Group, says the caricature of a
French boss is "Bonapartist", after Napoleon Bonaparte, who made
himself French emperor and conquered much of early 19th-century
Europe, "(with) the boss at the top, forgetting he is not the
owner of the business and that there are shareholders. He
France's corporate culture has long felt different.
From the car-making Peugeots to the defence sector's
Dassaults, families play a prominent part in many of its
publicly listed companies.
At the same time, the "grandes écoles" - exclusive academies
where France's elite are educated - have blurred the lines
between business, civil service and politics.
All this is compounded by the fact that governments of right
and left have used company legislation and tax policy to pursue
social projects, often at odds with the pursuit of profit.
"France has an historic and cultural mistrust of
enterprise," said Lazard France chief Matthieu Pigasse, adding
that this dated back to the 19th-century view that the military
and the clergy were the best routes to social advancement.
For an investment banker, Pigasse's own résumé - a former
civil servant, who has been close to President Francois
Hollande's Socialist Party throughout his career - would look
unusual anywhere but in France.
France's penchant for state intervention has been in
evidence as Montebourg took sides in the takeover battle for
media group Vivendi's telecoms arm SFR, even though the
government had no stake in any of the companies involved.
Citing job preservation, industrial logic and national
interest, he backed an offer from French conglomerate Bouygues
, even though Vivendi preferred a rival bid from cable
group Numericable that raised fewer antitrust issues.
Underlining that he was not acting alone, the state CDC fund
then joined forces with Montebourg and Bouygues, helping to
bankroll the attempt to persuade Vivendi to change its mind.
Of course there is nothing uniquely French about government
holdings or state-backed rescues like the one taking place at
Peugeot PSA, formerly a family-controlled group. The
financial sector and auto-industry bailouts worldwide in recent
years worldwide are a testament to that.
But government-corporate links in France run far deeper than
mere stock holdings, and cut across party politics.
It is hard to find a CAC-40 chief who was not educated at
one of the elite institutions - the Ecole Polytechnique, Ecole
Nationale d'Administration (ENA), Ecole des Hautes Etudes
Commerciales (HEC), and the Ecole des Mines - where they will
have rubbed shoulders with future political leaders.
Many of the CEOs - 15 of the 40 according to a Reuters trawl
of Internet profiles - held civil service or political roles at
some point in their careers.
Ecole Polytechnique graduate and Pernod Ricard CEO
Pierre Pringuet was adviser to former Socialist prime minister
Michel Rocard in the 1980s, and Societe Generale's
chief Frederic Oudea counselled ex-president Nicolas Sarkozy
while he was budget minister for a government of the right in
Some top bosses have found themselves on tricky legal ground
as a result of the revolving career door between the state and
big corporations. Stephane Richard, CEO at telecoms group Orange
, is under formal investigation for his role in a large
state-backed payout to businessman Bernard Tapie while he worked
as a senior government aide in 2008.
Francois Perol played a key state role in the creation of
bank BPCE from the wreckage of the country's banking industry
after the financial crisis, and was then appointed to head the
bank in 2009. He faces an investigation into whether that move
Both men deny any impropriety.
The SFR saga is also characteristic of the strategic and
family holdings that pervade the French corporate world. Martin
Bouygues and his family own over 45 percent of the eponymous
company, while billionaire Patrick Drahi controls Numericable
through a 40 percent holding.
Vincent Bollore, a powerful shipping and transport magnate,
is one of Vivendi's top shareholders as well as a member of its
supervisory board. The Bettencourts, who control L'Oreal
, are another of France's top family dynasties.
Next to Vivendi alphabetically in the CAC-40 sits water and
waste group Veolia, whose CEO Antoine Frerot is grappling with
the competing interests and influences that drive French
Insiders say Frerot has upset institutional shareholders by
holding onto weak businesses, notably the lossmaking Corsican
ferry operator SNCM. But to address those concerns, he will have
to upset the government, also a shareholder, because ministers
fear that will cost jobs.
Serge Dassault, head of another French business dynasty, a
Sarkozy acolyte and the owner of Le Figaro national newspaper,
is Veolia's second-largest shareholder after the state.
He led a failed attempt to oust Frerot earlier this year and
replace him with David Azema - a top civil servant.
For all that, there are signs of change.
Montebourg's oar was, after all, firmly repelled by
Numericable's Drahi, who won the battle for SFR at the weekend.
And Montebourg's government has promised to cut by some 30
billion euros ($41 billion) the labour cost burden on French
companies, partly by bringing down corporate taxes.
Last week, a court knocked down a draft law aimed at forcing
a company that wants to close a factory to seek a buyer first.
And some companies are taking their lead from beyond
Last year, the biggest company in France, oil and gas group
Total, moved its treasury and investor relations
departments to London to reflect the importance of the
non-French investors who hold almost half the stock in the
CAC-40, according to 2012 Bank of France figures.
"It's evolving fast," said Airbus's Lahoud, with groups like
Total and Airbus examples of "world players with a corporate
culture where managers are given responsibilities and take the
"I know all the other CAC-40 bosses, and we've all become
pretty international," said Chris Viehbacher, the
German-Canadian chief executive of pharmaceuticals group Sanofi
, the country's second-largest listed company, and its
first ever non-French CEO.
The French corporate culture has become, he says, somewhat
diluted, but concedes that "those of us who are not French have
also gone some way to adapting".
"We wouldn't be here if we didn't like it."
(Additional reporting by Jean-Michel Belot, Cyril Altmeyer and
Tim Hepher; Editing by Mark John and Will Waterman)