US judge OKs Executive Life plea deal

21st January 2004, Comments 0 comments

LOS ANGELES, Jan 20 (AFP) - A US judge Tuesday formally endorsed a massive plea deal settling the fraudulent purchase by French bank Credit Lyonnais of US insurer Executive Life more than a decade ago.

LOS ANGELES, Jan 20 (AFP) - A US judge Tuesday formally endorsed a massive plea deal settling the fraudulent purchase by French bank Credit Lyonnais of US insurer Executive Life more than a decade ago.

The green light for the settlement came as the bank and other French parties linked to the deal, which became a source of friction between the United States and France, pleaded guilty to fraud-related charges.

US Federal Judge Dickran Tevrizian, sitting in Los Angeles, gave final approval to the plea struck in December between prosecutors, the French banking giant and other French parties to the illegal 1991 acquisition.

The CDR, a government body that manages the assets of the once state-owned bank, French insurer Maaf and its ex-chairman Jean-Claude Seys also pleaded guilty under the terms of the USD 771.75 million accord.

"It's starting to wind up in criminal court, but this is only the beginning as far as we are concerned," said George Newhouse, a lawyer waging a civil case against the French parties to Executive Life deal.

The bank admitted to three counts of fraud linked to its acquisition of the failed insurer and to its bid to cover up the transaction that flouted both US and Californian laws.

Under the deal, part of the biggest criminal settlement in US history, Credit Lyonnais was sentenced to three years probation and paid a USD 100 million fine, the largest ever handed over to the Federal Reserve.

The deal allowed the bank to escape a potentially long and messy trial that could have resulted in it losing its precious US banking licence.

The court was told the money had already been transferred to the United States.

The CDR pleaded guilty to three counts of fraudulently concealing facts of the illegal acquisition of the failed insurer by the bank from the Federal Reserve between September of 1990 and August of 1995.

The CDR - which inherited assets of Credit Lyonnais unit Altus that acquired the insurer's "non-performing assets," in 1995 - escaped heavy criminal fines and probation under the deal.

But it was ordered to pay USD 375 million into a fund a settlement fund that could be used to compensate some 350,000 Executive Life policyholders who lost benefits pending the outcome of a civil suit.

After a lengthy warning by the judge on the consequences of pleading guilty, Seys, 65, admitted to two counts - one relating to the falsification of facts linked to the acquisition of the US insurer by a unit of the bank and another of helping the bank make false statements regarding the transaction.

Prosecutors claim Credit Lyonnais and Altus made secret "parking agreements" under which Altus bought the valuable assets of executive Life and then concealed them with the help of other entities, including Maaf.

Those assets included its junk bond portfolio that prosecutors say was worth USD 3.1 billion.

Maaf admitted to two counts of concealing material facts from US regulators linked to the purchase of Executive Life and to helping Altus conceal its involvement in the illegal acquisition.

The judge however postponed sentencing of both Seys and his former firm Maaf until Wednesday after the five-hour proceedings ran over time.

Under the deal, Seys is expected to be sentenced to five years probation during which he may not enter the United States as well as to a fine of USD 250,000.

Maaf was due to be sentenced to three years probation and a fine of USD 10 million.

The huge "package deal" that in December averted an embarrassing trial at a diplomatically sensitive time between the United States and France, the French parties agreed to pay a total of USD 771.75 million.

French retail billionaire Francois Pinault, a close friend of President Jacques Chirac, and his firm Artemis - which acquired Executive Life from Credit Lyonnais in 1992 - must hand over USD 185 million, USD 110 million of which would be handed over to policy holders.

Artemis will also pay USD 500,000 to compensate prosecutors for legal fees in the long and complex investigation, but both the company and Pinault received immunity from criminal action.

But prosecutors in December also unveiled criminal indictments against six senior French executives, including five ex-Credit Lyonnais chiefs who were not included in the package deal.


                                Subject: France news

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