French rail boss in jail for corruption

The chairman of France's world-respected national railway company, SNCF, set a dubious precedent yesterday when he became the first head of any nationalised French company to be sent to jail. Loik Le Floch-Prigent was remanded in custody late on Thursday evening, after several hours of questioning by a Paris judge about possible misuse of funds and false accounting.

He spent the night - and could spend the weekend - in prison, waiting to know if he will be formally indicted. So far, he is only under investigation, but can be held in prison at the behest of the examining judge.

While the imprisonment of the railways head has shocked France's governing establishment, it raised wry smiles on the streets and prompted hackneyed headlines about "train chief derailed", the charges he could face have nothing to do with his present post at SNCF, or his previous post as head of the state gas company.

They relate to the period between 1989 and 1993, when he was chairman of the state-owned oil company, Elf Acquitaine, and administrator of its Bidermann textile subsidiary. Yesterday's questioning was said to concern the way in which 800m francs of Elf's money was apparently "swallowed up" without trace by Bidermann in the early Nineties.

The investigation into the so-called Elf-Bidermann affair accelerated last year with the arrival in power of the Gaullist president, Jacques Chirac. The posts of chairmen of nationalised industries, like those of university chancellors and many others are all in the gift of the President and Prime Minister of the day. Those appointed while President Mitterrand was in power characteristically had socialist sympathies, and now find their position precarious. Aside from Mr Le Floch-Prigent, three other business leaders, including the former head of the telecommunications group, Alcatel-Alsthom, are currently under judicial investigation.

Mr Le Floch-Prigent's socialist sympathies are strong enough to earn him the nickname "Pink Floch". But he also has a strong managerial track- record, a combination that brought him the top job at Elf at the age of 45. He is, however, one of the few "red barons" of French industry whose difficulties with the law threaten more embarrassment to the government than to the Socialist opposition.

For Mr Le Floch-Prigent's managerial gifts were so respected by Mr Chirac and Mr Juppe that they called on him last December to occupy one of the hottest seats in French management, at SNCF. His management record and left-wing sympathies seemed ideal for the task.

He inherited a company that had just spent two months paralysing the national rail network and spearheading a nationwide protest against the government's attempts to reform the public sector. Militant railwaymen had forced the abandonment of a carefully drawn-up restructuring plan, and drummed his predecessor out of office.

Six months later, Mr Le Floch-Prigent is well on the way to gaining staff approval for a completely rewritten restructuring plan. He appears to have winkled more money out of the government, and says the railways could be back in the black before too long.

Of all recent recruits, Loik Le Floch-Prigent is probably the one the government would least like to lose.