Allegations of insider trading in the shares of Airbus Group will be probed as a long-awaited trial gets underway in Paris.
Seven current and former managers at Europe's largest aerospace group, and two former industrial shareholders, are accused of trying to profit from inside knowledge of problems with two jet development programs and a deteriorating financial outlook when they sold shares in what was then EADS in 2006.
The trial is the climax of an eight-year investigation by prosecutors, who say executives knew the full extent of industrial problems on the A380 and the likelihood of a costly redesign of the A350 when they sold shares up to March 2006. Similar accusations apply to the two industrial shareholders, which sold shares in April 2006.
All deny the charges and claim the case should be thrown out because they have already been cleared by the French stock market regulator, however, the French court was expected to reject an attempt to have the trial halted on the grounds that it went against a recent ruling by the European Court of Human Rights.
Current managers facing trial include John Leahy, the sales chief of planemaking subsidiary Airbus, who was not present on the opening day but is expected to give evidence next week.
Alain Flourens, who heads the planemaker's A380 programme, and Andreas Sperl, formerly the Airbus finance director and now chief executive officer of a subsidiary that turns jetliners into cargo planes, are also facing trial.
Former managers on trial include Noel Forgeard, the former co-chief executive of EADS and once an adviser to former President Jacques Chirac. "Not virtually cleared, totally cleared," Forgeard, 67, said on his way into the court, correcting a journalist who asked about the 2009 ruling by the AMF stock market regulator.
French media group Lagardere and German car firm Daimler, which reduced their stakes in EADS shortly after the individual transactions, were also represented.
The announcement of worsening delays on the A380 and a large profit warning wiped 26 per cent from the EADS stock price on June 13, 2006, erasing €5.5bn of market value and triggering a crisis in industrial relations between France and Germany, where the largest Airbus factories are based, as well as a rapid swirl of management changes.
The defendants will argue that the full extent of delays and cost overruns on the A380, the world's largest passenger jet, was unknown at the time shares were sold, and that a breakdown in the installation of wiring only became apparent in May.
They will also argue that a full overhaul of the design of the A350, adopted in late 2006, was not the most likely scenario when they sold their stock earlier that year, as prosecutors claim. The completed A350 won safety approval this week.
The three-week trial will take place without a jury. Legal experts say a verdict is likely to be given weeks or months after the trial closes and that the appeals process, in the case of convictions, can take years.
If convicted, individual defendants face a fine up to 10 times the amount gained from the share deals and up to two years in prison, though jail terms are rare. The two companies standing on trial face a maximum fine of 50 times the profit they received from the share sales if they are found guilty.
As the trial got under way, Airbus Group Chief Executive Tom Enders wrote to its 100,000 employees, saying "I am confident, that once again, it will be demonstrated that these accusations are groundless and should be fully dismissed".
Fabrice Bregier, the current head of Airbus, and Louis Gallois, a former boss of the planemaker as well as its parent group, will both appear as witnesses in coming weeks.