Europe's next bank president is accused of hiding huge loss

The brilliant career of the head of the Banque de France, Jean-Claude Trichet, will take an undignified turn today when he appears in court to answer charges of complicity in the country's biggest banking scandal.

If found guilty of helping to conceal the losses of the Crédit Lyonnais bank, M. Trichet's fall from grace will be spectacular: in July he is due to take over from Wim Duisenberg as president of the European Central Bank (ECB). The 60-year-old was director of the French Treasury when Crédit Lyonnais, at the time a state- controlled bank, yoyoed from a profit of FF3.2bn (£320m) in 1991 to a deficit of FF1.8bn (£180m) the following year.

The prosecution claims that M. Trichet and seven others who have also been charged were aware that the bank's deficit was far greater than had been declared. At the time, M. Trichet was responsible for deciding the Treasury's spending on state enterprises.

M. Trichet's lawyers claim he had neither the information nor the power to dictate what the Crédit Lyonnais reported in its financial results. The bank, which nearly collapsed, was put on state-sponsored life-support, which cost French taxpayers an estimated £10m. In 1999, after shedding ill-fated investments such as Hollywood's MGM film studios, the Crédit Lyonnais was finally privatised.

The banker, described variously as "the most brilliant civil servant of his generation" and "the most cultured man in France", is due to take over from Mr Duisenberg on 9 July.

The date for M. Trichet's entry into Frankfurt, home of the ECB, was set before the Dutchman took up the job in 1998. President Jacques Chirac had wanted him to get the job in the first place but had to settle for an agreement under which Mr Duisenberg would step down halfway through his eight-year term.

Yet M. Trichet is not seen as particularly close either to President Chirac or to the French Socialists. M. Trichet has had disagreements with both: with the President in 1995 when he called publicly for moderation in pay rises and in 1997 with the Socialist Prime Minister of the time, Lionel Jospin, who wanted lower interest rates.

M. Trichet is a graduate of the Ecole Nationale d'Administration, the most prestigious seat of learning in France, which trains the country's top civil servants.

He virtually wrote the text of the Maastricht Treaty and was an indefatigable proponent of keeping the French franc strong in the run-up to the passage to the euro.

Jean-Yves Haberer, a former chairman of Crédit Lyonnais, as well as two other former bank executives, Bernard Thiolon and François Gille, face charges of publishing misleading accounts and issuing fictitious dividends.

In common with M. Trichet, his former assistant at the Treasury, Jean-Pascal Beau-fret, now chief financial officer at the telecoms manufacturer Alcatel, faces charges of complicity. Three auditors are also charged with failing to reveal the deceit.

Barring an adjournment, today's hearings will run until mid-February with a verdict expected two months later.