Media mogul, whose holdings include Israel’s i24 broadcaster, aims to calm concerns after top lieutenant detained in Portugal on suspicion of embezzlement
PARIS — French-Israeli billionaire Patrick Drahi is set to make a rare appearance in front of investors this week with his multinational business empire Altice in the grip of a corruption scandal.
Swiss-based Drahi, whose empire spans telecommunications and media in Europe, North America and Israel — where his holdings include the i24 broadcaster — is expected to try to ease investor concerns weeks after one of his top lieutenants was detained in Portugal.
The authorities there have accused Portuguese billionaire Armando Pereira of 11 offenses of corruption and money laundering, with a central allegation that he set up a network of bogus suppliers to embezzle money through Altice’s procurement system.
Pereira denies the claims but the scandal has spread from Portugal to other parts of Drahi’s empire, with executives in the United States and France being dismissed, suspended or stepping back.
Drahi, who generally keeps a low profile, has amassed a fortune estimated at more than $10 billion, making him France’s 13th richest man, according to French magazine Challenge.
He pieced together a network of companies through leveraged acquisitions and is now a major player in telecom in France, Israel, Belgium, Luxembourg, Portugal and Switzerland.
Drahi, who also owns broadband firm Altice USA and part of Britain’s BT, is known as an art lover and bought the auction house Sotheby’s in 2019.
But his investment spree was made possible only by amassing a debt pile worth around $60 billion.
With interest rates rising and the corruption scandal making headlines, Drahi’s calls with investors on Monday and Tuesday will be closely monitored by investors.
Fundamental questions
The company has tried to play down the investigation, saying it is cooperating with the authorities and highlighting that several employees have been suspended.
Pereira, despite being widely seen as Drahi’s right-hand man, has no official post at the company.
Arthur Dreyfuss, CEO of Altice France, told a meeting with trade unions on Wednesday that only a handful of the companies named in the Portuguese inquiry had trading relations with Altice.
“At this stage, this represents less than four percent of our annual purchases in terms of volume,” he said.
But Olivier Lelong of the CFDT trade union, who was at Wednesday’s meeting, told AFP that the nature of the allegations suggested fundamental issues with the company.
“On a day-to-day basis, expenses are the most closely monitored thing in the group,” he said.
“It’s on such a scale… that there must have been a problem with the company’s control and governance.”
Altice is ‘victim’
Drahi, 59, was born in the Moroccan city of Casablanca and moved to France at 15, eventually studying at the country’s top engineering school, the Ecole Polytechnique.
After an early career spent working for fiber optics companies, he set out on his own and bought up several troubled cable and mobile operators, before hitting the big time in 2014 when he took control of SFR, France’s second-biggest mobile operator.
From there he built his vast empire, with unions dubbing him the “cost killer” for his habit of streamlining the firms he bought.
But with the corruption claims and rising interest rates forcing him to renegotiate the terms of his loans, Drahi is facing one of his biggest challenges to date.
“Patrick Drahi has built his success on access to low-cost debt,” Denis Lafarge, a partner at PMP Strategy, told AFP.
Drahi is known as a smart financial operator and has long relied on selling off infrastructure like telecoms masts and fiber networks to raise cash.
Lafarge said those options are getting thinner but he still has some sellable assets — the Meo operator in Portugal and some data centers could be sacrificed.
Sylvain Chevallier of the BearingPoint consultancy added that rising inflation meant businesses like Altice will be able to raise prices and raise cash that way.
But the immediate need is for Drahi to stem the damage from the corruption inquiry.
“It’s important for him to speak out,” said Dreyfuss.
“Until we have proof to the contrary, Altice is a victim of all this.”
Times of Israel staff contributed to this report.
