Trichet court move shocks Europe

Claude Trichet is slated to take over from Wim Duisenburg as president of the ECB

PARIS, France -- The future of Jean-Claude Trichet, the man widely expected to become the new head of the European Central Bank, has been plunged into disarray following a magistrate's decision to send him for trial.

The decision to summon the governor of the Bank of France to court was taken by Philippe Courroye, a magistrate probing the 1990s Credit Lyonnais banking scandal, Paris deputy public prosecutor Francois Foulon told Reuters news agency.

Courroye, who is investigating suspected account-rigging at Credit Lyonnais a decade ago, decided there were enough grounds for 59-year-old Trichet to appear in court along with others involved in a far-reaching inquiry.

Trichet was head of France's Treasury at the time of the government rescue of Credit Lyonnais, believed to have cost taxpayers more than 100 billion francs ($14 billion), The Associated Press reported.

He was placed under investigation -- a step short of being charged -- in April 2000 for allegedly diffusing false information to markets and publishing inexact accounting records of the bank for 1992 and the first three months of 1993.

As head of the French Treasury in the early 90s, he was responsible for monitoring state-owned companies, which Credit Lyonnais was at the time.

He has consistently denied the charges.

In taking the decision, Courroye has brushed aside a May 31 recommendation by the prosecutor's office to drop the case against Trichet, who can appeal the judge's decision within five days.

The Frankfurt-based ECB, the Bank of France and France's finance ministry all declined comment in the wake of the news, Reuters reported.

A trial could jeopardise Trichet's prospects of succeeding Dutchman Wim Duisenberg as president of the ECB in July next year.

State prosecutors can now set a date for the trial or appeal against the magistrate's decision.

Trichet has been slated to replace Duisenberg, whose official mandate was for eight years, under a deal struck in 1998 to give the job to a Frenchman following Duisenberg's time as first head of the new bank.

Trichet gets backing

But Trichet is continuing to receive support.

"There is a kind of gentleman's agreement that the next ECB President will be French," Marc Marechal, deputy chief of staff to Belgian Finance Minister Didier Reynders, told Reuters.

German opposition leader Edmund Stoiber also said he expected Trichet to be appointed next ECB head.

"To my eyes, (it will be) Trichet," Stoiber told journalists after a meeting with French President Jacques Chirac, when asked who would succeed ECB President Wim Duisenberg next year.

In Athens, Greek Finance Minister and Eurogroup chairman Nikos Christodoulakis said a trial of Trichet did not affect the ECB succession process.

Christodoulakis told reporters: "From what I know it doesn't change anything."

Credit Lyonnais got into trouble by overborrowing to finance rapid expansion and lending money to some of the worst business failures of the 1990s, piling up billions of dollars in bad debt, AP said.

The bank was privatised in July 1999 and has returned to profit.

Trichet is widely respected in Europe, but the legal tangles have raised doubts over him becoming the world's second most powerful central banker after U.S. central bank chief Alan Greenspan.

European capitals, whose only say over the independent ECB is the naming of its top officials, recently replaced the only Frenchman on the ECB board, Christian Noyer, with Greece's Lucas Papademos.

Several European governments, most notably Germany, have said in recent months they recognised the top job should go to France.