Action filed against Veolia Environnement

A suit has been filed in the United States against French waste and water company Veolia Environnement and several top executives alleging that its financial statements from 2007-2011 were overstated and misleading.

"Veolia considers that any allegation that its financial communications may have been misleading is without merit, and the company intends to seek the dismissal of the complaint," the company said in a statement today.

The suit has been filed in the United States District Court for the Southern District of New York. The company, which also provides transport and energy services, said it had not yet been formally notified of the suit.

The lawyers for the plaintiff, Barbara L McClay Trust, are seeking class-action status and have 60 days to gather participants who owned the US-listed shares between April 27th, 2007 and August 4th, 2011.

Under US law, a judge later determines whether the suit should be assigned class status and designates a lead plaintiff and law firm to represent them. Such class-action lawsuits for alleged securities law violations can go on for years; French transportation group Alstom and media and telecoms group Vivendi have faced similar cases in recent years.

The complaint names Veolia, its former CEO and current board member Henri Proglio, current CEO and chairman Antoine Frerot, current chief financial officer Pierre-Francois Riolacci, and former CFO Thomas Piquemal.

The complaint, filed on December 27th, alleges that Veolia violated US securities law by materially overstating its financial results via improper accounting practices and had poor internal controls. It also claims that the company failed to record writedowns in a timely manner for its transport business in Morocco, its environmental services business in Egypt, as well as its marine services unit in the US and Europe.

As a result, "the defendants lacked a reasonable basis for their positive statements about the Company and its prospects", wrote the plaintiff in the complaint.

Veolia was forced to issue two profit warnings last year as it undertook major restructuring of its business in the United States and launched a large asset sale programme to reduce debt and exit some countries.

Reuters