EDF chief gives up Veolia board seat

Henri Proglio, chief executive of France’s EDF, has resigned from the board of Veolia, bringing a definitive end to his attempt to orchestrate a boardroom coup at the struggling water group and severing his 40-year ties to the company.

Mr Proglio is one of France’s most powerful industrialists from his position running EDF, the nuclear power group that supplies 75 per cent of France’s electricity.

But his attempt to oust Antoine Frérot as chief executive of Veolia in February this year caused a political storm ahead of May’s French presidential elections after reports that he was trying to replace him with a former minister in the government of Nicolas Sarkozy, the then right-of-centre president.

The incident threw a spotlight on the political links that often operate at the centre of French business.

Veolia, the world’s biggest listed water utility by sales, confirmed on Thursday that it had received a letter presenting Mr Proglio’s resignation from the board of Veolia.

Mr Proglio had been chairman and chief executive of Veolia until he took the helm of EDF in 2009, but kept a board seat because EDF owns 4 per cent of the water and waste group. He had initially stayed on as chairman of Veolia until December 2010, a move that was heavily criticised by politicians and corporate governance activists because of potential conflicts of interests.

While the Veolia chief executive was a one-time protégé of Mr Proglio after serving as his deputy, relations between the two men broke down after Mr Frérot took over the reins and declared his intention to tear up Mr Proglio’s industrial legacy.

Mr Proglio had embarked on a rapid global expansion during his time in charge of Veolia, spending about €4bn on acquisitions in 2007 and 2008, pushing the utility into 77 countries from Argentina to South Korea.

However, Veolia issued two profit warnings last year and €800m of writedowns because of problems in its Italian, US and north African divisions.

As a result, Mr Frérot decided to halve the number of countries in which the company does business and launched a €5bn fire sale of assets to cut €14.7bn of net debt.

Mr Frérot has already overseen the sale of the utility’s UK-regulated water, US waste management and Baltic waste businesses and has cut the dividend.

The utility also plans to cut investment by €500m this year and next. Veolia’s shares have fallen 87 per cent in the past five years, highlighting the scale of the challenge ahead for Mr Frérot as he tries to turn round the fortunes of France’s biggest private employer.

Mr Frérot shored up his position over the summer by replacing several board members loyal to Mr Proglio, but people close to the company say he is still under pressure to produce results quickly.

Mr Proglio’s own position at EDF was called into question after the election of a Socialist government in May because of his ties to Mr Sarkozy and vocal championing of nuclear power.