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Court Suspends Airbus Insider Trading Trial

The corporate trial involving allegations of insider trading in the shares of Airbus Group was suspended on its first day to allow a higher court to rule on whether the procedure is constitutional.

Seven current and former Airbus managers as well as two former industrial shareholders are accused of trying to profit from inside knowledge of problems with aircraft development and a deteriorating financial outlook when they sold shares in what was then EADS in 2006.

All deny the charges and argue that the trial should not be taking place because they have already been cleared by French stock market regulator AMF in 2009.

"I am confident, that once again, it will be demonstrated that these accusations are groundless and should be fully dismissed," Airbus Group chief executive Tom Enders wrote to the firm's 100,000 employees ahead of the trial.

The Paris criminal court on Friday referred the matter to the court of appeal which itself may pass the decision on to France's highest constitutional court in a process that lawyers say typically takes several months.

The suspension came as a surprise, as the court had been expected to reject an attempt to have the trial halted on the grounds that it went against a recent ruling by the European Court of Human Rights.

Current managers facing trial include sales chief John Leahy, A380 programme head Alain Flourens, and Andreas Sperl, former Airbus finance director and now chief executive of a subsidiary.

Former managers on trial include Noel Forgeard, the former co-chief executive of EADS and once an adviser to former President Jacques Chirac.

"Not virtually cleared, totally cleared," Forgeard, 67, said on his way into the court, correcting a journalist who asked about the 2009 AMF ruling.

Prosecutors argue the executives knew the full extent of industrial problems on the A380 and the likelihood of a redesign of the A350 when they sold shares up to March 2006.

Similar accusations apply to two industrial shareholders, French media group Lagardere and German car firm Daimler, which sold shares in April 2006. They were also represented in court.

The defendants argue that the full extent of delays and cost overruns on the A380 was unknown at the time shares were sold, and that a breakdown in the installation of wiring only became apparent in May.

They also argue that a full overhaul of the design of the A350, adopted in late 2006, was not the most likely scenario when they sold their stock earlier that year, as prosecutors claim. The completed A350 won safety approval this week.

If convicted, individual defendants face a fine up to 10 times the amount gained from the share deals and up to two years in prison, though jail terms are rare. The two companies standing on trial face a maximum fine of 50 times the profit they received from the share sales if they are found guilty.

(Reuters)