1. About Vivendi Universal 2. Causes Of Downfall 3. Government Flaws 4. Impact On Different Stakeholders

1. Vivendi Universal
Group 6
170301009
170301008
170301023
170301031
170301044
Ankit Bharadwaj
Ankit Kumar
Harsh Vardhan Bardia
Nitin Saxena
Tathagata Banerjee

2. About Sustainability
Sustainability is most often defined
as meeting the need of the present
without compromising the ability of
the future to meet theirs.
For a pillar of sustainability to be
strong it must answer these questions
with a yes:
1. Can it be sustainable?
2. Does it well support the goal of the
system?

3. About Vivendi Universal
In 2000, Vivendi
Universal
Entertainment was
created with the
merger of Canal
TV+ & Universal
Studios from
Seagrames
In 1996, CGE
created Cegetel
take advantage of
the 1998
deregulation of
the French
telecommunicatio
ns market.
Jean-Marie
Messeir becomes
the CEO in 1994
with a vision to
Simplify CGE and
return the
company to core
businesses
By 1986, CGE
Diversified in WM,
Energy, Transport,
Construction, Real
Estate,
Automotives,
Media (Canal
Guy Dejouany
Joined In 1976.
CGE (Water
Company)
Created in 1853
Emperial Degree
of Napoleon III to
supply water to
Lyon
Support Provided
From The Cash
Flows Of The Core
Businesses
Utility, Communication,
Construction & Property

4. Causes of downfall
Heavy Debts
•Messier spent Euro 60 billion in
2000-01
•Numerous acquisition results
into a huge accumulation of
debts
Misleading Information
•Messier tried to cover up huge
losses by issuing press releases
portraying cash flows as
‘excellent’, EBITDA better than
the projections and ahead of
the targets
•. In May 2002, Vivendi was
talking about comfortable cash
situation and manageable
debts. In July 2002 Vivendi
admitted loss of Euro 13.6
billion for 2001 and
accumulated debts of Euro 37
billion.
Aggressive Accounting
•The top management of the
company improperly adjusted
certain reserve accounts of
subsidiaries, made accounting
entries without supporting
documents, excluded certain
obligation and deviated from
the French an US accounting
standards.
•In July 2002, a minority
shareholder’s association filed a
suit against Vivendi accusing it
of concealing financial
information and presenting
fraudulent information
Dubious Role Of Credit
Companies
•Moody’s Investors Services and
S&P did not downgrade the
credit rating of Vivendi in
December 2001 despite of huge
losses and mountainous debts.
•They ostensibly believed the
assurance from the Vivendi
management that it would
reduce debts in the year 2002.
Governance Issues
•Lack of Proper Leadership
•Ineffective Board of Directors
•High Severance Compensation
•Insider Trading

5. Governance Flaws
Lack of Proper
Leadership
•Lack of proper leadership was evident in Vivendi with Messier on a spree of expansion through acquisitions.
Messier guided the company by his only dream of dream of turning Vivendi into a leading global media
company. Some of the acquisitions and a pile of huge debts ultimately led the company to a near bankruptcy.
Ineffective Board of
Directors
•The board was largely ineffective composed of ‘CEO friendly’ directors and dominated by Messier.. The
financial management and control system in Vivendi was weak.
High Severance
Compensation-
• Messier, the CEO of the company who plunged the company near to bankruptcy was
paid severance package of US$ 25million.
Insider Trading
• Certain executives of Vivendi appeared to have indulged in insider trading of selling
the shares ahead of the declaration of financial results of the company

6. Aftermath
 Its chairman and CEO. Jean-Marie messier was forced to resign and was subsequently replaced
by jean-Rene Fourtou.
 Messier was found guilty of embezzlement in 2011.
 The company paid over US$20 million to Messier as part of his severance package.
 The company began to reorganize to stave off bankruptcy. It announced a strategy to sell
nonstrategic assets and reduced its stake in Vivendi Environment to 40% and sold its stake in
Vinci Construction

7. Different stakeholders
Different
StakeHolders
Employees
Shareholders
Customers
Vendors
Government
Banks

8. Impact On Different Stakeholders
Employees
> Retrenchment / Lay Offs
> Damage the confidence
Shareholder
> Undermine investors’
trust
> No one wants to do any
more investments
Banks
> NPA
Government
> Undermine market
mechanisms
> Suffered economic losses-
unemployment
Customer
> lose their source of
> Face inflation- supply
demand imbalance.
Vendor
> Closing down of
businesses