‘Madame Non’ in fight to keep Areva post

Thursday, March 19, 2009

Anne Lauvergeon is used to fighting tough battles, but this time the chief executive of Areva, whose combative style has in the past earned her the soubriquet “Madame Non”, is in danger of facing her final round.

The French government is nearing a decision on the future of Areva, its state-owned nuclear champion, and with it the fate of one of France’s most internationally recognised business figures.

In recent weeks criticism has intensified over Ms Lauvergeon’s management of the group, which she has led since 1999. It has been fuelled by a series of mishaps that could jeopardise France’s proud boast to be the world’s leading player in the nuclear renaissance.

First there was the sudden decision in January by German partner Siemens to withdraw from a long-standing reactor venture, to set up a rival alliance with Russia’s Rosatom.
Then there was the revelation of a staggering €1.7bn ($2.2bn) loss on Areva’s first new generation EPR reactor in Finland, raising questions over the costs of the technology that will spearhead France’s nuclear ambitions.

The events have weakened her in the eyes of the very government officials who must decide how Areva should finance its hefty investment needs: through a capital increase, as Ms Lauvergeon wants; or with an unwanted and controversial alliance with French turbine group Alstom.

Worse, they have given fuel to Ms Lauvergeon’s enemies – many of whom are close to President Nicolas Sarkozy – to argue that it is time for a change at a company combining France’s sensitive uranium enrichment and waste treatment activities with its reactor technology, honed by 50 years of atomic research.

According to one presidential adviser: “Anne Lauvergeon has never been as weak as she is right now.”

Ms Lauvergeon is no stranger to backroom whispers about her imminent departure, having alienated important powerbrokers by resisting Mr Sarkozy’s attempt as finance minister to force her to rescue Alstom in 2004. Though she survived then, and it is far from certain she will go now, the climate has changed.

The setbacks come as the government reflects on how best to guarantee Areva’s future as a nuclear champion, while her relationship with Mr Sarkozy is strained. Insiders say he blames her for not warning of Siemens’ imminent withdrawal, though he himself may have contributed by publicly questioning its future with Areva.

While no one would be quoted by name for this article, the battle over Areva’s future has sparked criticism of its chief executive that now extends well beyond habitual foes and even into her own board.

The tension was particularly fraught ahead of the annual results, according to some directors, with the board questioning numbers as Areva unveiled for the first time losses on the Finnish project.

“It was all legal, but there were things in there that cast the numbers in the best possible light,” one said.

One senior government official notes disapprovingly that Ms Lauvergeon “is not as transparent as she should be with her shareholder”.

Areva fiercely rejects this suggestion saying few companies come under such scrutiny from shareholders, with four government representatives on the board.

But others accuse Ms Lauvergeon, dubbed by Fortune magazine as one of the world’s most powerful businesswomen, of focusing on her image rather than managing the company. “Her talent for creating the Anne Lauvergeon brand is now playing against her. She goes too far,” said another senior civil servant.

Personality aside, there is a fundamental question over Ms Lauvergeon’s ability to take Areva into its next phase. Few would quibble that she achieved a formidable task in merging France’s sensitive fuel cycle business Cogema with the reactor design operation, Framatome, nine years ago.

Ms Lauvergeon forced the highly political operation through by swapping Cogema and Framatome management and dampening public suspicion of the industry with strategically placed web cameras in once-secret waste facilities.

Most importantly she has travelled the globe to sell French technology – and been successful beyond anyone’s expectations. Today there are more EPRs being planned than any other new generation reactor.

But as Areva moves from adolescence to maturity, and nuclear orders pour in, it faces new financial and operational pressures.

The Finnish debacle has some questioning whether Ms Lauvergeon can manage the coming challenge. “The industrial side will ramp up quickly, but she has not proven herself,” says the senior government official. “And we cannot have another A380 on our hands,” he adds, citing the operational crisis at aerospace group EADS three years ago.

But Ms Lauvergeon still has her staunch defenders. One board member insists it would be “a big mistake” to oust her.

“She is doing a very good job. I would respect these people who criticise her more if they had ever run an industrial group. There is a lot of lobbying against her.”

Another director concedes that Ms Lauvergeon has made more enemies than usual in recent weeks. “It is true that Sarkozy was not happy and that the board is divided. But I do not think she will go.”

Even close presidential advisers admit that, in spite of Mr Sarkozy’s hostility toward Ms Lauvergeon, he may not yet be ready to cancel his best advertisement for French nuclear technology. After all, who would replace her?

Company and government insiders both suggest a happy compromise could be to impose a respected operational manager to watch the shop while Ms Lauvergeon does the marketing. “A very good deputy could be the answer,” says one government official.

But first Mr Sarkozy must decide just how he wants Areva to develop. If he opts for an unwelcome alliance, Ms Lauvergeon is likely to solve the question of her future all by herself.

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