Belgian police search property of KPN's new CEO over Proximus share sale

AMSTERDAM/BRUSSELS (Reuters) - Belgian police searched the home and office of Dominique Leroy, the incoming chief executive of Dutch telecom firm KPN KPN.AS, to investigate her sale of shares in Proximus PROX.BR, the company she is leaving.

FILE PHOTO: Dominique Leroy, chief executive officer of Belgian telecoms group Proximus, presents the company's 2015 results during a news conference in Brussels, Belgium February 26, 2016. REUTERS/Yves Herman/File Photo

Brussels prosecutors said they conducted raids on Thursday evening, without giving details. Leroy told Belga news agency police searched her home and office over the August share sale, completed about a month before her new job was announced.

The Sept. 5 announcement that KPN had hired her from Proximus, which she led since 2014, was cheered by investors and pushed up the Dutch firm’s share price. But the shares slipped a day later when the probe was announced.

Belgium’s stock market watchdog FSMA said on Sept. 6 it was looking into Leroy’s share transaction as part of a “standard procedure.” The watchdog’s investigation, which could lead to a fine, is separate to the police probe.

Leroy, who leaves Proximus on Friday and is due to start work at KPN on Dec. 1, denies any wrongdoing.

KPN spokeswoman Victorina de Boer said KPN was aware of the Belgian investigation but had no further comment. Reuters could not immediately reach Leroy.

Proximus, Belgium’s largest telecoms company in which the state has a 53.3% stake, had no immediate comment.

Leroy sold shares in Proximus, where she has been CEO, worth 285,000 euros ( £251,564 )at 26.26 euros on Aug. 1, her first transaction in three years. When Leroy’s departure was announced on Sept. 5, Proximus shares fell by 2.5%.

Leroy said it was a routine sale after Proximus reported second quarter earnings on July 31 for the quarter ended June 30. She said she had not decided at the time to leave Proximus, although she said she was in confidential talks with KPN and other potential employers.

Paul Koster, director and spokesman for Dutch shareholders’ rights association VEB, said the VEB believed Leroy should not begin her new appointment until the situation has been resolved, though it was impossible to say whether she did anything wrong.

He described the incident as “unnecessary” and said it reflected poorly on Leroy’s judgment and KPN’s vetting process.

“She should have taken into account (selling shares) might have been too sensitive” given that the talks were not publicly known, he said. For KPN “it brings home the point that you need to do due diligence,” even if they were eager to hire Leroy quickly. KPN’s supervisory chairman had been unaware of the share sale until it emerged in the Belgian media.

KPN had trumpeted Leroy’s appointment, as she had been seen as a leading candidate for top jobs at bigger firms. Leroy, 54, rose through the ranks at Unilever for two decades before moving to Proximus in 2011 and becoming CEO there in 2014.

When her new appointment was announced, KPN Chairman Duco Sickinghe said Leroy was “dynamic, client-focused, and with a wealth of experience in the telecom sector”.

KPN has been striving to recover from years of weak sales and profit growth. In July, it said its core earnings would grow “slightly” for the first time in more than five years.

KPN’s previous CEO, Maximo Ibarra, announced his departure in June to lead Sky Italia, after just over a year on the job.

Belgian labour unions had complained about Leroy’s abrupt departure, saying she could take company secrets to a competitor. They also questioned the legitimacy of her August share transaction.

Leroy had initially been scheduled to leave Proximus on Nov. 30. Her departure was moved to Friday after the union complaints.

Reporting by Toby Sterling and Phil Blenkinsop; editing by Edmund Blair and Jason Neely