Executive Life talks break down

2nd December 2003, Comments 0 comments

PARIS, Dec 2 (AFP) - Talks between French businessman Francois Pinault and US prosecutors to settle a legal row over the contested takeover of a California insurer by French bank Credit Lyonnais have broken down, a source close to the negotiations told AFP Tuesday.

PARIS, Dec 2 (AFP) - Talks between French businessman Francois Pinault and US prosecutors to settle a legal row over the contested takeover of a California insurer by French bank Credit Lyonnais have broken down, a source close to the negotiations told AFP Tuesday.

"The negotiations to include Artemis (Pinault's holding group) into a global accord between the French and US legal authorities failed at around 0000 GMT Tuesday," said the source.

But he added that informal contacts were continuing in Los Angeles between French government officials and US prosecutors in a bid to break the deadlock by 1600 GMT.

Pinault and US prosecutors had been trying to reach a deal by a 0100 GMT Tuesday deadline over allegations that Credit Lyonnais, then state-owned, illegally concealed its 1993 acquisition of the failed California insurance company Executive Life.

At the time US law barred a bank from holding more than 25 percent of an insurance company. Pinault's holding company Artemis later acquired Executive Life, which it re-named Aurora.

A US Justice Department spokesman in Los Angeles declined to comment on the status of the talks.

With no agreement, certain French parties to the case could face further legal problems in the United States and Credit Lyonnais could lose its license to operate there.

Talks on reaching a settlement have dragged on for months and have missed repeated deadlines, with several versions of a deal having failed to satisfy all parties.

An initial agreement, rejected by France in September, called for a fine of USD 585 million (EUR 486 million), of which the French government would be responsible for USD 475 million, Credit Lyonnais USD 100 million and another French party in the case, the French insurer MAAF, USD 10 million.

That accord was turned down by Paris because it offered protection neither to Pinault and Artemis nor to former Credit Lyonnais chairman Jean Peyrelevade, suspected by US authorities of having been aware of the illegal nature of the bank's takeover of Executive Life.

The impasse between Artemis and US legal authorities is centered on the amount that Pinault is prepared to pay as well as the fate of Aurora, according to a source close to the case.

Prosecutors want him to put up USD 185 million and to freeze his stake in Aurora, worth USD 250 million, ahead of future civil procedures. The source said Pinault had agreed to the freezing of his shares but is refusing to pay any more than USD 130 million.

"For an extra USD 50 million a global accord would seem to be in reach," the source commented.

Peyrelevade meanwhile told the French radio station BFM on Monday he was "not ready to recognize personal culpability" in the matter because of his "total innocence."

Peyrelevade, named to head Credit Lyonnais after the acquisition of Executive Life, insists he was unaware of problems with the purchase until well after its completion.

He added that he did not see how the French government could sign on to a settlement that did not cover all parties implicated in the case.

But the settlement talks broke down over Pinault and not Peyrelevade, according to the source.

The case of Mr Peyrelevade wasn't even examined Monday, the negotiations got stuck on the inclusion of Artemis" into the settlement, he said.

© AFP

                                                                Subject: French news

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