Caesar's Significant Other
from
November/December 2003
by Don Morrison
Say what you want about their foreign policy, cultural exceptionalism, agricultural subsidies, and personal hygiene, you must admire the French for their sense of romance. How else to explain this summer’s $9.9 million payment by Fimalac SA, an impressively indebted French holding company, to its chief operating officer, Véronique Morali? The grant was not authorized by the company’s board or its compensation committee, and it surfaced just as Fimalac was announcing lower first-half earnings.
Some directors were reportedly worried about the largesse and its timing. As a London analyst said, “It doesn’t look good.” But it’s not simply the payment that has eyebrows raised and lips pursed: Morali, 45, happens to be the live-in companion of Fimalac chairman Marc Ladreit de Lacharrière, 62.
Don’t get me wrong. Morali is one of France’s leading businesswomen, a graduate of the prestigious École Nationale d’Administration and a director of companies and charities across Europe. The payment, Fimalac insists, was her due for arranging several timely acquisitions, and it broke no company or government rules. Morali declined my offer to explain her good fortune (the chairman isn’t talking, either), but earlier she had observed in Britain’s Financial Times: “Corporate governance is not as advanced in France as it is in the U.K.” Or in the U.S., for that matter.
More raised eyebrows. Fimalac has two subsidiaries that evaluate creditworthiness and risk profiles, Fitch Ratings and CoreRatings, and Morali sits on both boards. Inconveniently, CoreRatings also grades companies on how well they do in corporate governance. “I was surprised she said that about France,” says Tauni Brooker, a managing director at CoreRatings in London. “Corporate governance is about creating trust with the shareholders, whether they’re French or American or Sri Lankan.”
Several Fimalac directors have expressed concern that l’affaire Morali might damage the rating agencies’ credibility. Commentators in India have questioned the unenthusiastic credit rating Fitch gave that country when the agency’s own parent is creaking with debt and is hardly a model of decorum. Clients of CoreRatings have been asking similar questions, concedes Brooker: “It doesn’t exactly make it easy for me in my role as managing director of business development.”
A Fimalac insider says Morali’s presence on the Fitch and CoreRatings boards is under review, though her COO job appears secure. What hasn’t been publicly suggested, certainly not in France, is that she should have declined the token of appreciation she received from the company her housemate controls. Don’t tell my wife.
