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Lefevre says he protested what he regarded as improper accounting and left the company in early 1993. The remainder of his contract was paid off in full via a wire transfer from a bank in the Cayman Islands. Curiously, Lefevre notes, the money was wired not by Chaumet or even Investcorp but by Lausanne Investments.
Investcorp denies it ever misinformed Chaumet's shareholders about the company's performance and says they knew Chaumet lost money in 1992. The bank acknowledges that clients do not receive complete financial statements (unless they ask for them) but only "investment reports" showing operating income (before interest and taxes) rather than net income. Since clients agree to receive information in this form, says Investcorp, there is no problem. That ignores a critical factor: Chaumet's sales of inventory to Lausanne at inflated prices. If it had not been for those sales, Chaumet would have reported much higher losses in 1993 and 1994.
And who owns Lausanne Investments? "Investcorp does not own Lausanne Investments," a bank spokesman declared. When TIME pursued the issue, the spokesman changed his answer. Lausanne, he said, was owned by the same investors who own Chaumet--a group led by Investcorp. This means Investcorp controlled the seller and the buyer and used that control to slash Chaumet's losses. While there is nothing odd about a jeweler's disposing of excess stock this way, Lausanne's ownership is not disclosed in Chaumet's publicly filed financial statements, which means anyone who read them would get a distorted impression of the company's performance. Investcorp insists its own clients were informed, but declines to provide documentation. "We give our clients what they need," says Kirdar. "We do not mislead them."
Moreover, if you believe the plaintiffs in two civil suits against Investcorp, the company doesn't always play straight. When Investcorp took over the Circle K convenience-store chain in 1993, it did so through a vehicle called CK Acquisitions. That shell company has now been sued by rival bidders for allegedly making false statements to a bankruptcy-court judge who had to approve the bid. The complaint alleges that CK Acquisitions failed to disclose that Circle K management would own stock in the retailer after the takeover. (That was an important point because it could help explain why management endorsed the offer.) The plaintiffs are seeking $30 million in actual damages and $200 million in punitive damages. Investcorp's law firm managed to get the action dismissed, but last spring a judge reinstated it, saying the issues were too complex and important to be decided without a trial. Investcorp partner Savio Tung denies the allegations in the complaint. Says he: "We did not do anything wrong."