US attempt to bar Executive Life fraud settlement

17th December 2004, Comments 0 comments

Executive Life policy holders move to block settlement of lawsuit

Executive Life policy holders move to block settlement of lawsuit

LOS ANGELES, Dec 16 (AFP) - Former policy-holders of failed insurer Executive Life moved Thursday to block California officials from agreeing to an "inadequate" settlement of a huge fraud lawsuit against French bank Credit Lyonnais.

The policy-holders fear that California Insurance Commissioner John Garamendi may settle the suit, stemming from the bank's fraudulent early 1990s acquisition of Executive Life, for less than the USD 4 billion (EUR 3 billion) that they say they lost through the transaction.

The newly-formed Executive Life Action Network used a law requiring state agencies to release documents to the public in a bid secure access to papers that the group believes shows that policy-holders lost more than USD 4 billion (EUR 3 billion).

"We want to prevent an inadequate settlement by ascertaining, and then showing publicly, what the policy-holders' losses actually are," the group's spokeswoman, Maureen Marr, told AFP.

"We are afraid that, without the release of this information, this case will be settled quietly with policyholder losses swept under the rug.

"We are deeply alarmed by reports in the French press that Garamendi has reduced his initial settlement demand considerably," she said.

The complex fraud civil trial is scheduled to start ion Los Angeles on February 15, unless an out-of-court settlement is struck beforehand.

The trial judge last month warned both the US and French sides to the risky suit that it was in both their interests to settle the case before trial.

The judge also refused a request by the French parties targeted by the suit, including Credit Lyonnais, to toss out the multibillion-dollar lawsuit.

The case, brought by Garamendi on behalf of the policy-holders, stems from the illegal 1991 acquisition by Credit Lyonnais of the collapsed insurance firm and follows the settlement of criminal charges against the French parties one year ago.

The suit claims that the then-state-owned Credit Lyonnais illegally bought Executive Life's assets, in the form of lucrative junk bonds, and then transferred ownership of Executive Life's assets, in the form of lucrative junk bonds, and then proceeded to cover up the operation.

The US side is demanding damages of at least USD 2 billion (EUR 1.6 billion) allegedly made by the French parties in the transaction, but policyholders are now organising in a bid to settle for more.

The French parties include Credit Lyonnais, Artemis, its owner, tycoon Francois Pinault, and the CDR, the French government body that now manages the assets of the formerly state-owned Credit Lyonnais, and French insurer Maaf.


Subject: French News

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