Pinault's Artemis goes solo in Executive Life trial

18th February 2005, Comments 0 comments

LOS ANGELES, Feb 17 (AFP) - A French firm accused of profiting from the murky acquisition of failed California insurer Executive Life 13 years ago, on Thursday became the sole target of a USD 3.7 billion (EUR 2.8 billion) fraud trial.

LOS ANGELES, Feb 17 (AFP) - A French firm accused of profiting from the murky acquisition of failed California insurer Executive Life 13 years ago, on Thursday became the sole target of a USD 3.7 billion (EUR 2.8 billion) fraud trial.

Artemis, the holding company of French tycoon Francois Pinault, a close friend of President Jacques Chirac, was the final defendant after French insurer MAAF walked out on the civil trial starting in Los Angeles.

"MAAF is out of the case," US federal Judge Howard Matz told the courtroom where the trial against a dwindling number of French parties began with jury selection on Wednesday.

On Wednesday, Matz approved a USD 600 million (EUR 461.5 million) settlement in the seven-year-old suit that released French bank Credit Lyonnais and the French government from the case that has further strained Franco-American ties.

MAAF told the court it no longer intends to participate in the lawsuit, invoking a "default judgment," meaning that California authorities will have to pursue MAAF in France if they want to recover any money from it.

The suit claims Credit Lyonnais used MAAF as a front to buy Executive Life in 1991, when California law barred foreign governments from controlling insurance companies and when a federal law banned banks from owning more than 25 percent of a non-banking business.

"That leaves Artemis as the only defendant of the case," Matz said a day after the Credit Lyonnais bank and the CDR, a French government body that manages the assets of the formerly state-owned bank, exited the trial.

Artemis is accused of acquiring and profiting from Executive Life's lucrative - and allegedly ill-gotten - junk bond portfolio in 1995 after Credit Lyonnais allegedly illegally acquired the California insurer and then sold off its assets.

Jury selection in the trial brought by the California Department of Insurance began Wednesday, with opening arguments scheduled for Friday, court officials said.

Sources close to the insurance department were however optimistic that Artemis would settle as the high-stakes case now focused solely on the firm.

"When you are the only defendant left, it becomes more attractive to settle," a source told AFP. In addition to the USD 3.7 billion (EUR 2.8 million) in alleged profits made from the sale of Executive Life's junk bond portfolio, the Los Angeles jury could also impose punitive damages worth billions more dollars if fraud is found.

But Artemis vowed it will not settle in the case at any price, saying it would defend itself at trial and expressing fury over its abandonment by the French government.

"Our position is, once more, totally defensible before the court. We will defend it," Artemis managing director Patricia Barbizet told the French newspaper Le Monde on Friday.

"It is extremely regrettable that the state acted alone and did not, as all the French players in this affair had decided, negotiate in a joint and simultaneous manner.

"The state fell into the trap, by considering it could sign alone. We think, for our part, that in remaining united we would have been stronger and that would have undoubtedly reduced the amount of the final bill," she said.

The insurance department sued the French parties in 1998 on behalf of more than 330,000 former Executive Life policy holders, claiming restitution of the cash the French allegedly made from buying the failed firm.

Policyholders of the company, who claim the lost a total of USD 4.5 billion (EUR 3.4 billion) are outraged at the settlement with Credit Lyonnais and the CDR, claiming is was derisory and demanding an official investigation.

© AFP

Subject: French News

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