Alstom Slapped With Class Action Governance Suit

September 29, 2003 ( - The United Brotherhood of Electrical Workers Local 269 has filed a class action suit against French company Alstom S.A. for alleged violations of securities laws.

In the suit, the union alleges the company was involved in a scheme to conceal problems Alstom was having in expanding its business unit.   This was done to prevent the decline in the price of the company’s stock for reasons that included protecting executive positions, raising money via a share offering in June 2001 and enhancing the value of the company director’s personal Alstom securities holdings, according to a news release from Scott + Scott, LLC, a representative of the Union.

Further, the complaint contends the company had a favorable perception to maintain in order to minimize the risks associated with its liquidity.   This enabled the company to raise the necessary financing to fund its business, that included increased bank borrowings and culminated in Alstom concealing the off-balance-sheet risk associated with guarantees on debt incurred by customers.

The suit says such actions led to:

  • the gross overstatement of the company’s first half financial results for fiscal year 2000
  • an understatement of Alstom’s pension underfunding
  • concealing the company’s exposure to 60 separate asbestos lawsuits involving 6,500 plaintiffs that were responsible for financial overstatements worth €60 million.