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Lyonnais Deal Reportedly Axed

October 16, 2003|From Bloomberg News

A deal to settle charges against French bank Credit Lyonnais related to the purchase of a Los Angeles life insurer has fallen apart, according to reports Wednesday.

The $585-million agreement between the U.S. Justice Department and Credit Lyonnais and the French government was reached Sept. 2. The French government rejected the pact because it lacked a guarantee that charges against four French executives involved in the purchase would be dropped, Agence France-Presse reported, citing a French government official.

Prosecutors claim Credit Lyonnais, France's sixth-largest bank, broke laws barring foreign banks from owning insurers when it bought Los Angeles-based Executive Life's assets in the early 1990s. Credit Lyonnais and the French government, which then owned the bank, also face a $3-billion suit by the state of California.

In July, a federal grand jury in Los Angeles issued a sealed criminal indictment of Credit Lyonnais and others. Credit Lyonnais agreed to pay $100 million and Consortium de Realisation, a company owned by the French government, agreed to pay about $475 million under the Sept. 2 deal. Both would have admitted they deceived U.S. officials, though the admission wouldn't have jeopardized Credit Lyonnais' banking license.

"If the French government rejects the generous deal offered by the Justice Department, I urge U.S. Attorney Debra Yang to immediately open sealed indictments and bring this case to trial," Rep. Doug Ose (R-Sacramento) said in a statement.

Ose also urged the Federal Reserve to review Credit Lyonnais' ability to hold a U.S. banking license. Paris-based Credit Lyonnais was bought by bigger rival Credit Agricole in May.

Spokesmen for the U.S. attorney in Los Angeles and Credit Lyonnais declined to comment.

The French government's reassessment of the agreement followed U.S. requests last week for the extradition of four executives in the case, AFP reported. The four were former Credit Lyonnais Chairman Jean-Yves Haberer; Jean-Francois Henin, former head of Credit Lyonnais unit Altus Finance; Francois Gille, former managing director of the bank; and Emmanuel Cueff of Artemis, the holding company of billionaire Francois Pinault.

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