“You are mistaken, dear angel, if you think that King Louis-Philippe rules–a mistake the King himself does not make. He knows; as we all do, that above the Charter stands the holy, the venerated, the solid, the lovable, the beautiful, the noble, the young, the all-powerful five-franc piece,” Balzac wrote in La Cousine Bette. Since 142 years have elapsed, one has to allow for inflation and for the internationalization of the phenomenon–the idol is now made of paper and colored green–but the idea he tried to convey is more valid than ever. Indeed, it provides the link between a series of happenings, political, financial and cultural, that focused Western Europe’s attention in recent weeks on Paris, London and the Catalan town of Figueras.
The Franco-American Can-Can. The French, having just discovered insider trading, seem fascinated by it. At the turn of the year the headlines were almost daily full of the scandal surrounding the takeover of Triangle Industries Inc. by the state-owned conglomerate Pechiney for more than $1.25 billion. Admittedly, the story was quite exciting. In addition to the indictment of five people, including a friend of President François Mitterrand, it had all the ingredients of a classic thriller: a Caribbean connection, a Lebanese trail, the presence of financiers mixed up in Middle East arms and hostage deals, parties on Mediterranean yachts with lovely ladies and all. Only the money at stake was relatively modest. If the quick profits sounded shocking to the French, who were discovering this kind of speculation for the first time, they were penny-ante stuff to readers brought up on Ivan Boesky, Michael Milken and company.
Still, it’s a worthy tale. Last summer Samir Traboulsi, a Lebanese financier and lavish entertainer, informed his party companion Alain Boublil, chief of staff of the Minister of Finance, a Socialist, that American National Can (A.N.C.) might be for, sale. Pechiney- the world’s third largest producer of aluminum, now trying to diversify into packaging was interested. The trouble was that to get A.N.C. one had to buy Triangle, the parent company, in which Nelson Peltz and Peter May, two American “junk bond” specialists, controlled two-thirds of the voting rights. After much bargaining and one breakdown in the talks, the deal was finally signed on November 20, with Pechiney paying $56 for shares that had been quoted at around $10 in the preceding days.
The snag was that in the three days leading up to the transaction the shares had sold quite briskly, with some 323,000 changing hands. The Securities and Exchange Commission’s New York City office started inquiries at once and asked foreign institutions for assistance. The Parisian Commission of Stock Exchange Operations (C.O.B.), a rather toothless French equivalent of the American S.E.C., acted promptly on this occasion. By the end of January it had produced a report favoring criminal proceedings. Otherwise, the report did not reveal much more than the press already had. It had little to say about purchases made through Switzerland or Luxembourg. It did not indicate who stood behind the mysterious International Discount Bank and Trust, registered in the Caribbean island of Anguilla, or about the identity of who had bought more than 70,000 shares in three days through Drexel Burnham Lambert in New York City. But it did provide details of the 56,350 shares bought openly in Paris in the few crucial days, and it confirmed the purchasers’ names: Monsieur Max Théret and his associates, with 32,000 shares, made a profit of $1.48 million, minus fees; Monsieur Roger-Patrice Pelat and his family, with 10,000 shares, pocketed $390,000. A handsome pay packet for a week’s work, but not enough, in purely financial terms, to justify the hullabaloo. The real reasons for the scandal were political.