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Oppenheim Pramerica Asset Management SARL et al Rhodia SA et

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Oppenheim Pramerica Asset Management SARL et al Rhodia SA et Powered By Docstoc
					                                                            0 5 Cpl                      5389
                            UNITED STATES DISTRICT COURT
                           SOUTHERN DISTRICT OF NEW YORK

                                                        X    Case No.

OPPENHEIM PRAMERICA ASSET                                   CLASS ACTION COMPLAINT FOR
MANAGEMENT S.A.R.L., Individually and On                :   VIOLATIONS OF THE FEDERAL
Behalf Of All Others Similarly Situated ,               :   SECURITIES LAWS

                               Plaintiff,
                                                            JURY TRIAL DEMANDED
       vs.

RHODIA S.A., JEAN-PIERRE TIROUFLET,                                                               ($1
GILLES AUFFRET, JEAN-PIERRE
CLAMADIEU and PIERRE PROT,

                               Defendants.                                                               in
                                                        X
                                                                                            c)      c)
       Plaintiff, by its attorneys, brings this action on behalf of itself and all others sir    arl)e

situated, and alleges the following based upon personal knowledge as to itself and its activities,

and based upon an investigation conducted by plaintiff' s counsel for all other matters. That

investigation has included a review and analysis of public documents, United States Securities

and Exchange Commission ("SEC") filings, court filings, press releases, and news articles

concerning Rhodia S.A. ("Rhodia" or "the Company") and the other facts as set forth herein.

                                   NATURE OF THE ACTION

       1.      This is a federal class action on behalf of purchasers of the publicly-traded

securities of Rhodia, including common stock and American Depository Shares ("ADSs"),

between April 26, 2001 and March 24, 2005, inclusive ("the Class Period"), seeking to pursue

remedies under the Securities Exchange Act of 1934 (the "Exchange Act").

       2.      Rhodia is a manufacturer of speciality chemicals whose clients include companies

in the consumer care, food, industrial care, pharmaceuticals agrochemicals, automotive and
electronics industries. The Company is incorported under the laws of the French Republic and is

headquartered in Boulougne -Billancourt , France. Rhodia ADSs trade on the New York Stock

Exchange and its ordinary shares trade on the Paris Bourse.

        3.      This action alleges that defendants perpetrated an accounting fraud that damaged

Rhodia investors in violation of the federal securities laws. As particularized below, defendants'

class period representations concerning Rhodia were materially false and misleading because

they failed to disclose the following:

                        a)      Rhodia's balance sheet included assets whose value was

         knowingly inflated and did not reflect the assets' impairment;

                        b)      Rhodia's debt was underreported; and

                        c)      Rhodia did not appropriately account for deferred tax assets.

        4.     On March 25, 2005, while the markets were closed in observance of Good Friday,

Bloomberg News reported that Rhodia was under criminal investigation by French prosecutors

for accounting irregularities and insider trading. On March 29, 2005, The Wall Street Journal

announced that France's stock market regulator had accused Rhodia of underreporting debt by

improperly valuing ChiRex, a company Rhodia had acquired in July 2000 for $510 million plus

assumption of debt; improperly accounting for deferred tax assets; and inaccurately reporting the

Company's liquidity.

        5.     In response, Rhodia stock price declined, falling from $2.34 per share on March

24, 2005 to $2.23 per share on March 28, 2005, the next trading day. The Company's share

price continued to slide as the market absorbed the news , and had fallen to $1.95 by April 4,

2005.




                                                 2
                                    JURISDICTION AND VENUE

            6.    This action arises under Sections 10(b) and 20(a) of the Exchange Act of 1934, as

amended , 15 U.S.C. §§ 78j(b), 78(n) and 78t (a), and Securities and Exchange Commission

("SEC") Rule lOb-5, 17 C.F.R. § 240.1 Ob-5, promulgated thereunder.

            7.    This Court has jurisdiction over this subject matter pursuant to 28 U.S.C. §§ 1331

and 1337, and Section 27 of the Exchange Act, 15 U.S.C. § 78aa.

            8.    Venue is proper in this District pursuant to Section 27 of the Exchange Act and 28

U.S.C. § 1391(b). Many of the acts charged herein , including the dissemination of materially

false and misleading information in connection with the sale of a security, occurred in this

district.

            9.    In connection with the acts alleged in this complaint, the defendants, directly or

indirectly, used means and instrumentalities of interstate commerce, including but not limited to

the mails, interstate telephone and Internet communications , and the facilities of the New York

Stock Exchange.

                                               PARTIES

            10.   Plaintiff Oppenheim Pramerica Asset Management S.A.R.L, as detailed in the

certification appended to this complaint, purchased Rhodia ADSs during the Class Period at

artificially inflated prices and was damaged by the subsequent decline in the Company's share

price, as particularized herein.

            11.   Defendant Rhodia is a public company incorporated under the laws of the

Republic of France, with its principal executive offices located at 26, quai Alphonse Le Gallo

Boulogne-Billancourt , 92512. Rhodia common shares trade on the Paris Bourse and as

American Depository Shares ("ADSs") on the New York Stock Exchange, as well as on

exchanges in Germany.


                                                   3
        12.     Defendant Pierre Prot served as Rhodia's Chief Financial Officer throughout the

Class Period.

        13.     Defendant Jean-Pierre Tirouflet served as Rhodia's Chairman and. Chief

Executive Officer from 1998 until October 2003.

        14.     Defendant Jean-Pierre Clamadieu served as Rhodia ' s President from April 2003

to October 2003 and as Rhodia's Chief Executive Officer from October 2003 to the present.

        15.     Defendant Gilles Auffret served as Rhodia's Chief Operating Officer throughout

the Class Period.

        16.     Defendants Prot, Tirouflet and Auffret are referred to collectively herein as the

"Individual Defendants."

        17.     The Individual Defendants were aware of and approved the materially misleading

statements issued by or on behalf of Rhodia during the Class Period. The Individual Defendants

were controlling persons of Rhodia, as that term is defined by the federal securities laws, due to

their ownership interests, executive positions, and/or directorial position, and relationships with

other executives and employees of Rhodia, as well, as due to their direct authority over the

operations, accounting and public communications functions of the Company.

        18.     Rhodia and the Individual Defendants (collectively, "Defendants") are liable as

direct participants in a fraudulent scheme and course of conduct that operated as fraud and/or

deceit upon purchasers of Rhodia securities during the Class Period.

                               CLASS ACTION ALLEGATIONS

        19.     Plaintiff bring this class action under Rules 23(a) and 23(b)(3) of the Federal

Rules of Civil Procedure, on behalf of a class of persons who purchased or otherwise acquired

Rhodia securities during the Class Period (or their successors in interest) ("the Class"). Excluded

from the Class are the Defendants named herein, members of the immediate families of the


                                                  4
Defendants, any firm, trust, partnership, corporation, officer, director or other individual or entity

in which a Defendant has a controlling interest or which is related to or affiliated with any of the

Defendants, and the legal representatives, heirs, successors in interest or assigns of any such

excluded party.

          20.   The Class is so numerous that joinder of all members is impracticable. During the

Class Period Rhodia had more than 627,582,158 shares issued and outstanding, and such shares

were publicly traded on the Paris and German exchanges and on the NYSE as ADSs. The exact

number of members of the Class is not known at this time, but is believed to number in the

thousands.

          21.   Plaintiff will fairly and adequately protect the interests of the members of the

Class, and Plaintiff have no interests which are contrary to, or in conflict with, the interests of the

Class members that he seeks to represent. Plaintiff have retained competent counsel experienced

in class action litigation under the federal securities laws to ensure such protection, and intend to

prosecute this action vigorously.

          22.   Plaintiff claims are typical of the members of the Class, because Plaintiff and all

of the Class members sustained damages arising from the same wrongful conduct complained of

herein.

          23.   A class action is superior to all other available methods for the fair and efficient

adjudication of this controversy since joinder of all members is impracticable. Furthermore, as

the damages suffered by individual members of the Class may be relatively small, the expense

and burden of individual litigation make it impossible for the members of the Class to

individually seek redress for the wrongs done to them. There will be no difficulty in the

management of this action as a class action.
       24.     Questions of law and fact common to the members of the Class predominate over

any questions that may affect only individual members in that Defendants have acted on grounds

generally applicable to the entire Class. Among the questions of law and fact common to the

Class are:

                       a)         whether the federal securities laws were violated by Defendants'

        acts as alleged herein;

                       b)         whether Defendants' publicly disseminated releases and

        statements during the Class Period omitted and/or misrepresented material facts and

        whether Defendants breached any duty to convey material facts or to correct material

        facts previously disseminated;

                       c)         whether Defendants participated in and pursued the common

        course of conduct complained of herein;

                       d)         whether Defendants acted with scienter in omitting and/or

        misrepresenting material facts;

                       e)         whether the price of Rhodia securities was artificially inflated

        during the Class Period as a result of the material misrepresentations and omissions

        complained of herein;

                       f)         whether the Individual Defendants were controlling persons as

        alleged herein; and

                       g)         whether members of the Class have sustained damages and, if so,

        the proper measure of such damages.




                                                   6
                       MATERIALLY FALSE AND MISLEADING
                   STATEMENTS MADE DURING THE CLASS PERIOD

Rhodia's First Quarter 2001 and Year 2000 Financial Results

       25.     The Class Period commences on April 26, 2001. On that date, Rhodia issued a

press relase announcing its 2001 first quarter results, reporting as follows:

       For the first quarter of 2001, Rhodia (NYSE: RHA) announced net sales of 1,979 million
       euros ($ 1,747 million), an increase of 28 percent over the same period in 2000. On a
       comparable basis (constant structure and exchange rates), net sales increased by 4.3
       percent; the Group was able to increase its prices by 3 percent and volumes by 1.3
       percent.

       During the first three months of the year, Earnings Before Interest, Tax, Depreciation and
       Amortization (EBITDA) increased slightly (+ 1.3 percent) compared to last year, to 240
       million euros ($212 million).

       26.     On or about June 27, 2001, Rhodia filed its year 2000 annual report on Form 20-F

with the SEC, and reported the following financial results for the year 2000:

                Date:                                     FY12000        FY11999
                Amounts in Millions (except per share)
                Euros
                Sales/Revenue/Turnover                       7,419.00     5525.9954
                Cost of Goods Sold/F.E.& P.P.&G.             5,053.00           3594
                SG&A / Oth Op / Dep O p & Maint              1,870.00     1522.9987
                O peratin g Income (Losses )                   496.00      408.9997
                Interest Expense                               195.00      142.9999
                Net Non-Oper Losses ( Gains )                   -10.00      -82.9999
                Income Tax Ex penses ( Credits )               104.00        95.9999
                Inc(Loss ) bef Extraord Items                  225.00      221.9998
                Extraord L(G ) before Tax Effects           #N/A N.A.     #N/A N.A.
                Minority Interests (Credits )                     9.00             -5
                Net Income/Net Profit (Losses )                216.00      226.9998
                EBIT( Earn Bef Int & Tax)                      496.00      408.9997
                Pretax Income                                  329.00      317.9997
                Total Cash Preferred Dividends                    0.00              0
                Total Cash Common Dividends                      71.72       69.8959
                Reinvested Earnings                            144.28      157.1039
                Depreciation Expenses                         450.00       373.9997
                R & D Expenditures                             194.00      176.9999


                Date :                                       2000          1999
                Total Assets                                    9,514         6,974



                                                  7
                 Total Liabilities                               6,834         4,515
                 Total Liabilities and E q uity                  9,514         6,974


       27.      Defendants' representations in the April 26, 2001 press release and the year 2000

annual report were materially false and misleading when made because they failed to disclose the

following:

                         a)      Rhodia's balance sheet included assets whose value were

        knowingly inflated and did not reflect the assets' impairment;

                         b)      Rhodia's debt was underreported; and

                         c)      Rhodia did not appropriately account for deferred tax assets.

Rhodia 's Full Year 2001 Financial Results

       28.      On or about June 26, 2002, Rhodia filed its 2001 annual report on Form 20-F with

the SEC, which was signed by defendant Prot. In relevant part defendants reported the following

2001 results:

                Date :                                      FY12001        FY12000     FY11999
                Amounts in Millions (except per share)
                of Euros
                Sales/Revenue/Turnover                       7,279.00      7,419.00      5525.9954
                Cost of Goods Sold/F.E.& P.P.&G.             5,541.00      5,053.00            3594
                SG&A / Oth O p / Dep Op & Maint              1,722.00      1,870.00      1522.9987
                Operatin g Income ( Losses )                     16.00       496.00       408.9997
                Interest Exp ense                              179.00        195.00       142.9999
                Net Non-O per Losses (Gains )                  132.00         -10.00       -82.9999
                Income Tax Expenses (Credits )                  -94.00       104.00         95.9999
                Inc( Loss ) bef Extraord Items                -208.00        225.00       221.9998
                Extraord L( G ) befor Tax Effects           #N/A N.A.     #N/A N.A.    #N/A N.A.
                Minorit y Interests (Credits)                     5.00          9.00             -5
                Net Income/Net Profit (Losses )               -213.00        216.00       226.9998
                EBIT(Earn Bef Int & Tax)                         16.00      496.00        408.9997
                Pretax Income                                 -302.00        329.00       317.9997
                Total Cash Preferred Dividends                    0.00          0.00              0
                Total Cash Common Dividends                      21.52         71.72       69.8959
                Reinvested Earnin gs                          -234.52        144.28       157.1039
                Depreciation Ex penses                         500.00       450.00        373.9997
                R & D Expenditures                             197.00        194.00       176.9999
                 Date:                                         2001
                 Total Assets                                     8,960
                 Total Liabilities                                6,609
                 Total Liabilities and Equity                     8,960


        29.     Defendants' reported 2001 financial results were materially false and misleading

when made because they failed to disclose the following:

                         a)       Rhodia's balance sheet included assets whose value were

         knowingly inflated and did not reflect the assets' impairment;

                        b)        Rhodia's debt was underreported;

                        c)        Rhodia did not appropriately account for deferred tax assets; and

                        d)        Contrary to defendants' express representations, the financials

        presented were not made in accordance with GAAP, for the reasons stated above.

Rhodia 's Full Year 2002 Results

       30.     On February 5, 2003, Rhodia issued a press release announcing results for its

fiscal 2002, reporting "a gradual return to profitability, the completion of a significant asset

divestiture program and the generation of positive cash flow." In relevant part, defendants

reported the following results:

       IMPROVED OPERATING PROFITABILITY

       -- Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) up 26.1 %,
       reaching a total of 798 million euros against 633 million euros reported in 2001. --
       Improvement in Operating Income to 351 million euros in 2002 against 91(a) million
       euros in 2001 on an historic basis. -- EBITDA/Sales ratio of 12.1 %, representing a 3.4
       point increase over 2001.

       500 MILLION EUROS TARGET FROM ASSET DIVESTMENTS EXCEEDED
       -- Financial debt reduced by 516 million euros through divestments . -- Average valuation
       of divestitures 5.5 times greater than EBITDA. -- Overall capital loss of 37 million euros.

       GENERATION OF 132 MILLION EUROS IN POSITIVE FREE CASH FLOW




                                                   9
           -- Positive operating cash flow of 277 million euros, despite 152 million euros in outlays
           related to the restructuring program financed in 2002. -- Free cash flow of 132 million
           euros impacted by the exceptional payment of 145 million euros into British and
           American pension funds. -- Capital expenditures reduced almost 110 million euros (374
           million euros in 2002 compared with 483 million euros in 2001).

           31.    On or about June 26, 2003, Rhodia filed its 2002 annual report of Form 20-F with

the SEC. The report was signed by defendant Prot and , in addition , contained certifications from

defendants Tirouflet and Prot representing that the annual report was free from any misleading

statements:

           Based on my knowledge, this annual report does not contain any untrue statement of a
           material fact or omit to state a material fact necessary to make the statements made, in
           light of the circumstances under which such statements were made, not misleading with
           respect to the period covered by this annual report.

           32.    In the report, defendants reported the following results for Rhodia's fiscal 2002

results:



                   Date :                                     FY12002       FY12001        FY12000
                   Amounts in Millions (except per share)
                   of Euros
                   Sales/Revenue/Turnover                     6,617.00       7,279.00      7,419.00
                   Cost of Goods Sold/F.E.& P.P.&G.           4,844.00       5,541.00      5,053.00
                   SG&A / Oth O p / De p O p & Maint          1,469.00       1,722.00      1,870.00
                   Operatin g Income ( Losses )                 304.00           16.00       496.00
                   Interest Expense                             139.00         179.00        195.00
                   Net Non-O per Losses (Gains)                 108.00         132.00         -10.00
                   Income Tax Expenses ( Credits )               66.00          -94.00       104.00
                   Inc( Loss ) bef Extraord Items                  5.00       -208.00        225.00
                   Extraord L(G ) befor Tax Effects          #N/A N.A.      #NIA N.A.     #N/A N.A.
                   Minority Interests (Credits )                   9.00           5.00          9.00
                   Net Income/Net Profit ( Losses )               -4.00       -213.00        216.00
                   EBIT( Earn Bef Int & Tax )                   304.00           16.00      496.00
                   Pretax Income                                 71.00        -302.00       329.00
                   Total Cash Preferred Dividends                  0.00           0.00          0.00
                   Total Cash Common Dividends                   21.52           21.52         71.72
                   Reinvested Earnin gs                         -25.52        -234.52        144.28
                   Depreciation Expenses                       409.00          500.00       450.00
                   R & D Expenditures                          201.00          197.00        194.00

                   Date :                                     2002           2001



                                                    10
                 Total Assets                                    7,687          8,960
                 Total Liabilities                               5,829          6,609
                 Total Liabilities and E q uity                  7 ,687         8,960


        33.    Defendants' reported 2002 results were materially false and misleading when

made because they failed to disclose the following:

                         a)      Rhodia' s balance sheet included assets whose value were

        knowingly inflated and did not reflect the assets' impairment;

                        b)       Rhodia's debt was underreported; and

                        c)       Rhodia did not appropriately account for deferred tax assets.

Rhodia's Year 2003 Results

       34.     On July 25, 2003, Rhodia issued a press release announcing results for its second

quarter of 2003. In relevant part, defendants reported the following results:

       Rhodia reported net sales of 1,407 million euros for the second quarter of 2003, slightly
       lower than the first quarter, in what remains a particularly depressed economic
       environment affected by extremely low volumes and persistently high raw material
       prices. Compared with the second quarter of 2002, on the same basis (constant structure
       and exchange rates), net sales declined by 0.9%, with a price effect of 2.4% and a volume
       effect of -3.3%. Net sales declined by 20.6% compared with the reported second quarter
       2002 results.

       All Divisions followed the same general trend to a greater or lesser extent, while all end
       markets served by Rhodia remained weak during the period. Despite reduced demand and
       the sluggishness of end markets, the Group still was able to pass on higher prices to its
       customers.

       The Group also continued to reduce its fixed costs, generating savings of 38 million euros
       during the quarter due, in particular, to programs to reduce operating expenses of
       Enterprises and Support Functions and to the restructuring program launched at the end
       of 2001.

       Contrary to predictions made in March, the continued firmness of raw material prices
       driven by the persistently high price of oil during the second quarter, following the war in
       Iraq, had a negative impact on the Group's overall performance. However, in spite of
       largely unfavorable foreign exchange effects, the savings achieved on fixed costs and the
       Group's ability to pass on higher prices to its customers enabled Rhodia to deliver



                                                  11
       EBITDA of 123 million euros, equal to growth of 9.8% compared with the first quarter.
       Compared with the reported second quarter 2002 results, EBITDA declined by 45.8%.

       For the same reasons , the EBITDA/Sales ratio of 8.7% improved by 0.9 points over the
       first quarter figure while decreasing 4.1 points compared to reported second quarter 2002
       results and 3 points on the same basis ( constant structure and exchange rates).

       Equity in earnings of affiliated companies stood at -29 million euros in the second quarter
       of 2003 compared with -9 million euros in the first quarter owing to the industrial
       restructuring measures taken by Nylstar in response to persistent difficulties in the textile
       market.

       Net result stood at a loss of 87 million euros, down 38% compared with the first quarter
       of the year. Excluding amortization of goodwill, in particular, related to the divestiture of
       the Group's polyurethane flame-retardants business (finalized July 24, 2003), net result
       stood at -57 million euros compared to -52 million euros for the first quarter of 2003 and
       24 million euros for the reported second quarter 2002 results.

       35.     On February 13, 2004, Rhodia issued a press release announcing its 2003 results,

which deteriorated, although the Company reported that its net debt had stabilized:

       -- A year marked by a combination of negative factors strongly impacting Group
       operating performance.

       Rhodia reported Net Sales of 5,453 million euros in 2003, down 17.6% compared with
       2002. The decline is due primarily to changes in the Group's structure (-8.8%) following
       divestitures in 2002 and 2003 and foreign exchange rate effects (-7.8%) caused by the
       persistent weakness of the US dollar.

       On the same basis (constant structure and exchange rates), net sales declined 1.2%
       compared with 2002 due to decreased volumes, particularly in the pharmaceuticals,
       agrochemicals and textiles markets. In an adverse business environment, price levels
       remained stable.

       Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) stood at 364
       million euros compared to 798 million euros in 2002. On a comparable basis (constant
       structure and exchange rates), EBITDA declined to 260 million euros. Eighty percent of
       this result was from the impact of higher raw material prices with the remainder due to
       lower volumes and additional restructuring charges.

       The EBITDA/Sales ratio was 6 . 7% in 2003, compared to 11.3% in 2002, on a
       comparable basis (constant structure and exchange rates).

       The combination of these negative factors reduced the Group's Operating Income to a
       loss of 159 million euros compared to a positive 351 million euros in 2002.



                                                12
           For the year as a whole, the Group's Net Income, after minority interests, stood at a loss
           of 1,351 million euros compared to a loss of 4 million euros in 2002, due primarily to a
           write-down of assets of 875 million euros announced at the end of the year.

           -- Stability of Group's Total Net Debt

           In line with its objectives, Rhodia limited capital expenditures to 233 million euros in
           2003, compared with 374 million euros in 2002. At the same time, the Group maintained
           strict control over working capital needs which stood at 14.1 % of sales as of December
           31, 2003. These efforts partially offset the effect of the strong decline in results on free
           cash flow which declined to -51 million euros at the end of 2003.
           The Group also re-capitalized a portion of its leasing contracts, amounting to 275 million
           euros. At the same time, outstanding securitization programs were reduced by 208
           million euros.

           As a result, the Group's Net Financial Debt stood at 2,567 million euros at the end of
           2003 compared with 2,133 euros at the end of 2002. Total Net Debt, including off-
           balance sheet items, remains relatively stable at 3,240 million euros at the end of 2003 (+
           31 million euros compared to the end of 2002).

           36.    On or about March 23, 2004, Rhodia filed its 2003 annual report on Form 20-F

with the SEC. The report was signed by defendant Prot and contained certifications signed by

defendants Clamadieu and Prot, respectively, representing that the annual report was free from

any misleading statements:

           Based on my knowledge, this annual report does not contain any untrue statement of a
           material fact or omit to state a material fact necessary to make the statements made, in
           light of the circumstances under which such statements were made, not misleading with
           respect to the period covered by this annual report.

           37.    In the 2003 Form 20-F, defendants reported that Rhodia achieved the following

results:




 Date :                                                           FY12003            FYI 2002             FY12001
 Amounts in millions (exce pt per share) of Euros
 Sales/Revenue/Turnover                                            5,452.93           6,617.00            7,279.00
 Cost of Goods Sold/F.E.& P.P.&G.                                  4,218.00           4,844.00            5,541.00
 SG&A / Oth Op / Dep O p & Maint                                   1,995.97           1,469.00            1,722.00



                                                    13
 O p eratin g Income ( Losses)                                      -760.99              304.00              16.00
 Interest Expense                                                    187.00              139.00            179.00
 Net Non-O p er Losses ( Gains )                                     269.00              108.00            132.00
 Income Tax Exp enses (Credits)                                      142.00               66.00             -94.00
 Inc ( Loss ) bef Extraord Items                                  -1,345.98                 5.00          -208.00
 Extraord L(G ) befor Tax Effects                                 #N/A N.A.           #N/A N.A.         #N/A N.A.
 Minority Interests (Credits )                                         5.00                 9.00              5.00
 Net Income/Net Profit ( Losses )                                 -1,350.98                -4.00          -213.00
 EBIT( Earn Bef Int & Tax)                                          -760.99              304.00              16.00
 Pretax Income                                                    -1,203.98               71.00           -302.00
 Total Cash Preferred Dividends                                        0.00                 0.00              0.00
 Total Cash Common Dividends                                           0.00               21.52             21.52
 Reinvested Earnin gs                                             -1,350.98              -25.52           -234.52
 Depreciation Ex penses                                              455.99             409.00             500.00
 R & D Expenditures                                                  187.00             201.00             197.00

 Date:                                         FYI 2003        FYI 2002           FY12001            FYI 1995

 Total Assets                                      6,529              7,687               8,960             7,941
 Total Liabilities                                 6,254              5,829               6,609             6,516
 Total Liabilities and Equity                      6,529              7,687               8,960             7,941

           38.   Defendants' reported 2003 financial results were materially false and misleading

when made because they failed to disclose the following:

                          a)        Rhodia's balance sheet included assets whose value were

           knowingly inflated and did not reflect the assets' impairment;

                          b)        Rhodia's debt was underreported; and

                          c)        Rhodia did not approproately account for deferred tax assets.

                                THE TRUTH BEGINS TO EMERGE

           39.   On March 24, 2004, Rhodia announced that French securities regulators were

conducting an inquiry into its financial reporting, that the inquiry had been initiated in October

2003 and that it was not accompanied by a formal complaint. Defendants revealed no further

details.




                                                    14
        40.     In reaction to this announcement, the price of Rhodia shares declined, falling from

$2.95 per share on March 23, 2004, to $2.74 on March 24, 2004, a one-day decline of 7.1 % on

unusually heavy trading volume.

        41.     Unable to prop up its performance with accounting manipulations, Rhodia

continued to report deteriorating conditions.

        42.     On March 25, 2005, while the markets were closed in observance of Good Friday,

Bloomberg News reported that Rhodia was under criminal investigation by French prosecutors

for accounting irregularities and insider trading. On March 28, 2005, the price of Rhodia shares

slipped to $2.23. On March 29, 2005, The Wall Street Journal announced that France ' s stock

market regulator accused Rhodia of underreporting debt by improperly valuing ChiRex, a

company Rhodia acquired in 2000, and improperly accounting for deferred tax assets and

inaccurately reporting the Company's liquidity. On this news, Rhodia shares continued their

slide as the market absorbed the news and had fallen to $1.95 by April 4, 2005.

                                      LOSS CAUSATION

        43.    Defendants' wrongful conduct, as alleged herein, directly and proximately caused

the damages suffered by plaintiff and the Class.

        44.    During the Class Period, plaintiff and the Class purchased securities of the

Company at artificially inflated prices and were damaged thereby. The price of the Company's

common stock declined when the misrepresentations made to the market, and/or the information

alleged herein to have been concealed from the market, and/or the effects thereof, were revealed,

causing investors' losses.

                             DEFENDANTS ACTED WITH SCIENTER

       45.     Each misrepresentation and/or omission of material fact alleged herein was made

with reckless disregard for, or knowledge of its false and misleading nature. At all relevant


                                                   15
times, each defendant knew or recklessly disregarded the material undisclosed adverse facts

about Rhodia. Thus, the misrepresentations and omissions complained of herein were made with

the Defendants' knowledge, or with deliberate recklessness.

        46.      The Individual Defendants had the opportunity to commit and participate in the

fraud described herein. The Individual Defendants were executive officers of Rhodia, and thus

controlled the Company's press releases, corporate reports, SEC filings and communications

with analysts.

                          FRAUD ON THE MARKET ALLEGATIONS

       47.       At all relevant times, the market for Rhodia common stock was an efficient

market for the following reasons, among others:

                         a)      At all relevant times during the Class Period, Rhodia's common

         stock was listed and actively traded on the NYSE, a highly efficient National Market,

        with approximately 627,582 ,158 shares of common stock issued and outstanding.

                         b)      As a registered and regulated issuer of securities, Rhodia filed

        periodic reports with the SEC, in addition to the frequent voluntary dissemination of

        information described in this Complaint.

       48.       As a result of the above, the market for Rhodia securities promptly digested

current information with respect to the Company from all publicly available sources and

reflected such information in the securities' prices. Under these circumstances, all purchasers of

Rhodia securities during the Class Period suffered similar injury through their purchase of

securities at prices which were artificially inflated by the Defendants' misrepresentations and

omissions . Thus, a presumption of reliance applies.




                                                  16
                    INAPPLICABILITY OF STATUTORY SAFE HARBOR

        49.      The statutory safe harbor for certain forward-looking statements does not apply to

the misrepresentations and omissions alleged in this complaint. Many of the statements were not

specifically identified as "forward-looking statements" when made. To the extent that there were

any properly identified forward-looking statements, there were no meaningful cautionary

statements identifying the important then-present factors that could and did cause actual results

to differ materially from those in the purportedly forward-looking statements. Alternatively, to

the extent that the statutory safe harbor does apply to any forward-looking statement pleaded

herein, Defendants are liable nonetheless because at the time each of the misrepresentations was

made, the particular speaker(s) knew that the statement was false or misleading at that time.

        50.     Any warnings or other cautionary language contained in the press releases and

other public statements described herein were generic, "boilerplate" statements of risk that would

affect any similar company, and misleadingly contained no factual disclosure of any of the

problems with the Company which placed the ability of the Company to accurately depict its

own financial situation into serious question . As such, any forward- looking statements

complained of herein were not accompanied by meaningful cautionary language.

        51.     Any relevant purported risk disclosures were, in fact, false and misleading in and

of themselves, by virtue of the fact that the events which the risk disclosures purported to warn

against as contingencies had frequently already become a reality or a certainty.

                                             COUNT I

                         (Violations of § 10(b) of the Exchange Act and
                   Rule 10b-5 Promulgated thereunder against all Defendants)

        52.     Plaintiff incorporate by reference and realleges all preceding paragraphs as though

fully set forth herein.



                                                 17
        53.     During the Class Period, Defendants engaged in a plan, scheme and course of

business which operated as a fraud upon Plaintiff and Class Members, and made various untrue

statements of material fact and omitted to state material facts necessary to make the statements

made, in light of the circumstances under which they were made, not misleading to Plaintiff and

other Class Members as set forth above. The purpose and effect of this scheme was to induce

Plaintiff and the members of the Class to purchase the Company's securities during the Class

Period at artificially inflated prices.

        54.     By reason of the foregoing, Defendants knowingly or recklessly violated § 10(b)

of the Exchange Act and Rule lOb-5 promulgated thereunder in that they themselves or a person

whom they controlled: (a) employed devices, schemes and artifices to defraud; (b) made untrue

statements of material facts or omitted to state material facts necessary in order to make the

statements made, in light of the circumstances under which they were made, not misleading; or

(c) engaged in acts, practices and a course of business that operated as a fraud or deceit upon

Plaintiff and other members of the Class in connection with their purchases of the Company's

common stock during the Class Period.

        55.     As a result of the foregoing, the market price of the Company's securities was

artificially inflated during the Class Period. In ignorance of the false and misleading nature of the

representations described above, Plaintiff and other members of the Class relied, to their

detriment, directly on the misstatements or the integrity of the market both as to price and as to

whether to purchase these securities. Plaintiff and the other members of the Class would not have

purchased Rhodia stock at the prices they paid, or at all, if they had been aware that the market

prices had been artificially and falsely inflated by Defendants' false and misleading statements

and omissions. At the time of the purchase of Rhodia securities by Plaintiff and the other




                                                 18
members of the Class, the fair market value of said securities was substantially less than the

prices paid. Plaintiff and the other members of the Class have suffered substantial damages as a

result.

                                              COUNT II

                            (Violations of § 20(a) of The Exchange Act
                               Against The Individual Defendants)

          56.   Plaintiff incorporate by reference and realleges all preceding paragraphs as though

fully set forth herein.

          57.   The Individual Defendants acted as controlling persons of Rhodia within the

meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their high-level

positions, and their ownership and contractual rights, participation in and/or awareness of the

Company' s operations and/or intimate knowledge of the false financial statements filed by the

Company with the SEC and disseminated to the investing public, the Individual Defendants had

the power to influence and control and did influence and control, directly or indirectly, the

decision-making of the Company, including the content and dissemination of the various

statements which Plaintiff contend are false and misleading. The Individual Defendants were

provided with or had unlimited access to copies of the Company's reports, press releases, public

filings and other statements alleged by Plaintiff to be misleading prior to and/or shortly after

these statements were issued and had the ability to prevent the issuance of the statements or

cause the statements to be corrected.

          58.   In particular, each of these Defendants had direct and supervisory involvement in

the day-to-day operations of the Company and, therefore, is presumed to have had the power to

control or influence the particular transactions giving rise to the securities violations as alleged

herein, and exercised the same.



                                                  19
       59.     As set forth above, Rhodia and the Individual Defendants each violated Section

10(b) and Rule lOb-5 by their acts and omissions as alleged in this Complaint. By virtue of their

positions as controlling persons, the Individual Defendants are liable pursuant to Section 20(a) of

the Exchange Act. As a direct and proximate result of Defendants' wrongful conduct, Plaintiff

and other members of the Class suffered damages in connection with their purchases of the

Company's common stock during the Class Period.

       WHEREFORE, Plaintiff prays for relief and judgment, as follows:

                       a)      Determining that this action is a proper class action, designating

        Plaintiff as Lead Plaintiff and certifying Plaintiff as class representatives under Rule 23

        of the Federal Rules of Civil Procedure and Plaintiff counsel as Lead Counsel;

                       b)      Awarding compensatory damages in favor of Plaintiff and the

        other Class members against all Defendants, jointly and severally, for all damages

        sustained as a result of Defendants' wrongdoing, in an amount to be proven at trial,

        including interest thereon;

                       c)      Awarding Plaintiff and the Class their reasonable costs and

        expenses incurred in this action, including counsel fees and expert fees; and

                       d)      Such other and further relief as the Court may deem just and

        proper.




                                                20
                                       JURY DEMAND

      Plaintiff hereby demands a trial by jury.

June 6, 2005                                            G          ISS BE    AD &
New York, New York                                 M=HULM          LLP

                                                   By:
                                                   Steven G. Schulman (SS-2561)
                                                   Peter E. Seidman (PS-8769)
                                                   Deborah M. Sturman (DS-4752)
                                                   Andrei V. Rado (AR-3724)
                                                   One Pennsylvania Plaza
                                                   New York, NY 10119-0165
                                                   Telephone: (212) 594-5300
                                                   Facsimile: (212) 868-1229

                                                   Attorneys for Plaintiff




                                              21
                        CERTIFICATION OF PROPOSED LEAD PLAINTIFF
                          PURSUANT TO FEDERAL SECURITIES LAWS

    The undersigned , Max von Frantzius and Johann Will, on behalf of the OPPENHEIM
    PRAMERICA ASSET MANAGEMENT S.A.R.L. ("OPAM"), on behalf of the Weisenhorn Europa
    fund declare the following as to the claims asserted, or to be asserted, under the federal securities
    laws:

    1.     We have reviewed a complaint in this matter and designate Milberg Weiss Bershad &
    Schulman LLP as counsel for OPAM in this action for all purposes.

    2.      As Authorized Signatory and Chief Legal Counsel of OPAM, we have been duly
    authorized by OPAM to pursue litigation against Rhodia S.A. and the other defendants.

    3.       OPAM did not acquire Rhodia S.A. securities at the direction of plaintiffs counsel or in
    order to participate in any private action under the federal securities laws.

    4.       OPAM is willing to serve as a lead plaintiff either individually or as part of a group. A
    lead plaintiff is a representative party who acts on behalf of other class members in directing the
    action, and whose duties may include testifying at deposition and trial.

    5.       OPAM will not accept any payment for serving as a representative party beyond its pro
    rata share of any recovery, except reasonable costs and expenses, such as lost wages and travel
    expenses, directly related to the class representation, as ordered or approved by the court pursuant
    to law.

_   6.      OPAM has not sought to serve or served as a representative party for a class in an action
    under the federal securities laws within the past three years.

    7.      OPAM understands that this is not a claim form, and that its ability to share in any
    recovery as a member ofthe class is unaffected by its decision to serve as a representative party.

    8.        Since the beginning of the Class Period, OPAM has made transactions in Rhodia S.A.
    listed in Schedule A attached hereto and will provide records of those transactions upon request.

    We declare under penalty of perjury that the foregoing is true and correct


    Executed this r day of June, 2005




    Max vb Fhaxitzius                             Johann/will
    Chief Legal Counsel                           Authorized Signatory
                               Schedule A
               Oppenheim Pramerica Asset Management S.a.r.l.
                        Weisenhorn Europa Fund
                             Rhodia (RHA)


                             DATE           SHARES             COST
Purchase(s):
                            8-Jan-02           14,000           9.0200
                           6-Feb-02            14, 000         10.2050
                           5-May- 03           10 , 000         5.4163
                          30-Dec-03            60,000           3.5334
                          22-Jan-04            30 ,000          3.4716
                           9-Feb-04            10,000           3.5790
                          12-Feb-04            10,000           3.9100
                          13-Feb -04           10,000           3.8100
                          18-Feb-04            10,000           3.6590
                          11-Mar-04            20 ,000          3.2188
                          15-Mar-04            20, 000          2.8660

Sale(s):
                          27-Dec-01             20 ,000        8.9870
                          28-Aug-02              4,000         9.1270
                          12-Sep-02              6,000         8.2000
                           4-Mar-03              6,706         5.1211
                          24-Mar-03             11,294         5.9550
                          14-May- 03            10 , 000       5.7860