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Vivendi: Telecom Italia auditors’ report justifies claims

Vivendi has claimed that a statutory auditors’ report on Telecom Italia (TIM), released at the end of last week, confirms that the Italian telco’s chairman violated corporate laws and fundamental governance principles.

Vivendi said that the report confirmed the existence of serious irregularities related to governance of the company and to its board, dominated by members nominated by hedge fund Elliott, Vivendi’s arch-enemy in an ongoing struggle for control of the telco. It accused chairman Fulvio Conti of violating corporate laws and basic governance principles.

The French media company, which remains TIM’s largest shareholder, said that the reported confirmed the existence of a ‘shadow’ board of directors, comprised only of those board members nominated by Elliott, which was assisted on occasion by legal advisers that had previously advised Elliott independently.

Vivendi said that the auditors’ report justified its argument that TIM shareholders must now replace the current board with one that is “truly independent” to “re-establish the necessary governance conditions and safeguards to allow for proper stewardship of the company for the benefit of all shareholders, employees and other stakeholders”.

Vivendi triggered a request for a meeting of the telco’s shareholders in December, following the dismissal of CEO Amos Genish, calling for the the removal of Conti and four other board members nominated by Elliott.

The Elliott-backed board subsequently resisted the call for an immediate meeting in favour of one on March 29, leading Vivendi to accuse it of “time-wasting tactics”.

Vivendi published a paper at the end of last month outlining its proposals to “restore value for Telecom Italia,” which include replacing five of the company’s 10 board directors.

Vivendi and Elliott have been engaged in a bitter struggle for control of the telco for over a year. Elliott wrested control of the board from Vivendi in May after running a campaign accusing the French media of acting only in its own commercial interests. Elliott’s own proposals for releasing value in the company includes considering a sale of its infrastructure arm, something resisted by Genish and Vivendi’s representatives.