US gives France until Monday for CL deal

26th November 2003, Comments 0 comments

PARIS, Nov 26 (AFP) - France now has until Monday to come to terms with US prosecutors on a politically delicate legal battle over the contested acquisition by French bank Credit Lyonnais of a failed California insurer.

PARIS, Nov 26 (AFP) - France now has until Monday to come to terms with US prosecutors on a politically delicate legal battle over the contested acquisition by French bank Credit Lyonnais of a failed California insurer.

While French officials have said a deal is taking shape, a final accord is hung up on a demand by Paris that an agreement include prominent French billionaire -- and friend of President Jacques Chirac -- Francois Pinault, a source close to the case said here Wednesday.

Marathon talks in Los Angeles between French officials and US legal authorities were suspended on Tuesday night, with US prosecutors giving France until the close of the business day there on the following Monday to reach agreement, he added.

Credit Lyonnais, then a state-owned bank, is alleged by US prosecutors to have illegally acquired California insurance company Executive Life in 1993 by concealing its involvement in the deal.

US law at the time barred banks from holding more than 25 percent of an insurer.

Pinault's holding company Artemis later acquired Executive Life, which it re-named Aurora.

"The negotiations are blocked exclusively on the inclusion of Artemis in an overall agreement and more specifically on the fate of Aurora," the source said.

He said legal authorities in California want Pinault, who controls 67 percent of Aurora, to use his shares in the company as a security deposit ahead of civil proceedings against him in the United States.

But Pinault, the source added, is insisting on putting up the equivalent amount in cash, about 250 million dollars.

Representatives from Artemis are also taking part in the Los Angeles talks.

An initial agreement, rejected by the French government in September, called for France and Credit Lyonnais to pay a multi-million dollar fine in exchange for protection from criminal proceedings and the preservation of the bank's right to operate in the United States.

That accord was turned down by Paris because it offered protection neither to Pinault 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.

Peyrelevade has consistently denied any wrongdoing, insisting he discovered problems with the deal well after its completion.

"The inclusion of Peyrelevade in the deal has not even been discussed yet, since it is first necessary to settle with Artemis," the source said.

"But it's hard to see how Paris, which is calling for an overall deal, could support Pinault, a friend of President Chirac, while leaving out Peyrelevade, who was named to head Credit Lyonnais in 1993 by the public authority."

French Finance Minister Francis Mer earlier Wednesday said the discussions in Los Angeles were headed "very probably toward an agreement."

"There are a certain number of issues still on the table, but there is reason to hope that all these little problems will be overcome," Mer said, in an allusion to the legal status of Pinault and Peyrelevade.


© AFP

                                                                       Subject: French news

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