Home News US fraud charges for six French execs

US fraud charges for six French execs

Published on 18/12/2003

LOS ANGELES, Dec 18 (AFP) - US prosecutors have charged six French executives, including two former chairmen of Credit Lyonnais bank, with fraud stemming from the bank's purchase of US insurer Executive Life a decade ago.

The US Attorney’s office in Los Angeles on Wednesday unsealed an indictment against the six along with hundreds of pages of documents confirming a deal with other French parties involved in the allegedly fraudulent acquisition under which they must pay USD 770 million to avoid a criminal trial.

Those indicted are ex-bank chairman Jean Peyrelevade, his right-hand man Dominique Bazy, ex-chief executive Jean-Yves Haberer, former managing director Francois Gille, and Jean-Francois Henin, who ran the bank’s Altus Finance operation and external consultant Eric Berloty.

The 23-count indictment was handed down after Credit Lyonnais and other parties involved in the 1991 purchase of the failed insurer and subsequent efforts to cover it up on Monday signed the crucial plea deal.

The six executives indicted were however not covered by the far-reaching pact and could now face trial alone unless they are included in a settlement at a later date.

The six were indicted on charges including mail and wire fraud, conspiracy to commit fraud and making false statements to US financial regulators.

“Beginning in or about 1990, Credit Lyonnais and certain of its subsidiaries and affiliates, including Altus and Clinvest, used portage arrangements, made false and misleading statements, concealed material information and participated in other fraudulent and deceptive practices,” the indictment said.

The fraud and deception was aimed at realizing and receiving “profits that Credit Lyonnais and its subsidiaries and affiliates could not legally engage in,” the US prosecutors alleged.

Peyrelevade is accused of making false statements to regulators, while the five other former executives are charged with fraud, conspiracy to commit mail fraud, and violating banking rules between July 1991 and September 1999. He and Bazy have denied knowing the purchase of the insurer was illegal.

Prosecutors say the French parties flouted laws barring banks and foreign governments from owning more than 25 percent of a US insurer by using front companies to execute and later conceal the extremely lucrative deal.

The settlement includes a plea deal for Credit Lyonnais and the CDR, a state-owned body that manages the assets of the bank uncer which each admitted to three counts of felony fraud each.

The welter of documents released in Los Angeles included a final settlement agreement between prosecutors and five French parties, including billionaire retail magnate Francois Pinault, a friend of President Jacques Chirac, and his holding company Artemis.

The deal also included a “criminal information” accusing Credit Lyonnais of illegally acquiring Executive Life through a series of front companies and then covering up the operation.

A spokesman for the prosecutor, US Attorney Debra Yang, said that document formed part of the deal under which the bank and the CDR accepted limited criminal responsibility in return for averting a trial that could have cost the bank its precious US banking licence.

Under the deal, Credit Lyonnais, which was state-owned at the time of the Executive Life purchase, and the CDR must pay USD 375 million into a fund to compensate the 330,000 Executive Life policyholders.

In addition, Credit Lyonnais, now owned by Credit Agricole, must pay USD 200 million in fines.

A large part of the settlement is expected to go towards settling a multi-billion-dollar civil lawsuit filed by the state of California to compensate Executive Life policyholders for their losses.

Under the deal, Pinault’s firm Artemis – which bought Executive Life’s assets from Credit Lyonnais – agreed to pay USD 185 million into a special fund in return for receiving immunity from criminal prosecution.

Pinault’s son this week said his father made around USD 800 million in profits from buying Executive Life assets, mostly billions of dollars worth of junk bonds, from Credit Lyonnais in 1992 and later reselling them.

Under the deal, Pinault, Artemis, Pinault’s assistant, Patricia Barbizet, lawyer Marie-Christine de Percin and Pinault employee Emmanuel Cueff admitted no criminal liability.

The deal “settles and resolves all claims, criminal charges, and any other matters under investigation, criminal or civil” occurring before Monday.

A French insurer also involved, Maaf, must pay USD 10 million under the deal, which is expected to ease a thorny diplomatic problem between Paris and Washington at a tense time in their relations.

US Attorney Debra Yang is scheduled to hold a press conference at 8:30am (1630 GMT) Thursday to announce etails of the indictments and the settlment deal, details of which were first released in Paris on Monday.

 © AFP

                                                                Subject: France news