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Vivendi stock slumps as regulators quiz deal

Vivendi Universal stock plummeted 40 percent in Paris trading today after a French newspaper reported that regulators scolded the conglomerate’s bookkeeping on a deal last year. Vivendi’s shares have cratered over 60 percent this year.

Shares in the utilities-to-pay-TV entertainment company slumped on the Paris bourse and were suspended four times just days after it lost its chief executive Jean-Marie Messier.

The furore about Vivendi’s accountancy methods arose following an article in Le Monde newspaper that claimed Vivendi tried to evade reporting a $1.35 billion loan transaction reaped from the divestment of BskyB shares.

Much like WorldCom - recently impugned for calculating operating expenses as capital costs to spread the financial burden - Vivendi is said to have altered the category of its BSkyB transaction to avoid posting its first negative results.

Messier spent $100 billion to buy Universal movies and music, the Canal Plus pay-TV unit and other brands to catapult Vivendi from an old-style French utility into a world-beating entertainment titan.

Viviendi’s American depository receipts cratered $6.95 to $15.50 before Wall Stree opened. Jean-Rene Fourtou, the vice chairman of Aventis, the pharmaceutical company, is widely tipped as Messier’s successor.

Le Monde reported that regulators demanded Vivendi record the transaction, but that the firm's auditor, Arthur Andersen, was told to devise a method that let the group remain in profit. Vivendi remains saddled with debts of euro 19 billion (US$18.7BN). Analysts expect the company will be broken up to liquidate its assets to pay down debt.

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