Even though Jeffrey Isaacs, the assistant U.S. Attorney in the Los Angeles office, has been urging that the French Bank Credit Lyonnais (CL) be indicted for several allegedly illegal acts involving its takeover of Executive Life (See IJ Feb. 25, 2002 issue), there’s been no decision and no comment from the head office in Washington.
Fearing that the delay presages a long rumored settlement of the whole matter on terms favorable to CL, California Attorney General Bill Lockyer and Insurance Commissioner Harry Low contacted U.S. Attorney General John Ashcroft by letter late last month to urge him not to agree to any such deal. They also apparently requested that he allow any evidence collected by the Justice Department to be used in pending civil actions in California, seeking to recover some $2.5 billion in damages.
They see it as a potential miscarriage of justice, which could possibly jeopardize the ongoing lawsuits their departments have brought against CL and several other companies and persons involved in the Executive Life affair.
The two officials stressed that they were acting to protect the interests of some 300,000 policyholders, whom allegedly were cheated out of substantial potential profits when Altus Finance, a company allegedly controlled at the time by CL, purchased Executive’s junk bonds for what turned out to be a fraction of their present value.
Settlement talks have in fact been going on for some time. The French newspaper Le Monde carried an article in December describing the two sides as close to agreement on a deal providing for CL to pay a fine of between $50 and $100 million, but would otherwise allow it to keep its U.S. banking license, and wouldn’t require an admission of wrongdoing.
As part of its agreement to cooperate in the Justice Department’s investigation, officials at CL have refused to comment on the case. However, George Terwillinger, one of the bank’s attorneys, was quoted in the L.A. Times as stating that “California sees an opportunity to enrich itself at the expense of the taxpayers of France.”
Credit Lyonnais, formerly controlled by the French government,
is now 90 percent privately owned.
Topics California USA
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