Through two different translators, French mogul Francois Pinault sought to make one point universally clear to the federal jury hearing the civil suit over failed insurer Executive Life: He did nothing wrong.
Testifying in U.S. District Court on April 5 in a lawsuit brought by the California Department of Insurance, Pinault said he had nothing to do with the acquisition of Executive Life from state regulators or with the purchase of the insurer’s junk bonds by a group of investors backed by French bank Credit Lyonnais.
Asked during questioning by defense attorney James Clark whether he conspired with Credit Lyonnais or its subsidiary Altus Finance to mislead California regulators, the mogul responded through a court translator, “No. Never.”
Pinault also said he never relinquished any control of his firm to Credit Lyonnais, even though the bank or its subsidiaries owned up to 20 percent of Pinault’s holding company in the early 1990s and he, at one point, served on Credit Lyonnais’ board of directors.
Pinault was scheduled to take the stand again Wednesday to resume being cross-examined by attorney Gary Fontana.
The state alleges that Pinault’s purchase of the bonds was part of a scheme to help Credit Lyonnais cover up that it had acquired the failed insurer in violation of federal law preventing foreign governments from controlling U.S. insurers.
Credit Lyonnais is owned by the French government.
Most of the original parties named as defendants in the state lawsuit, including Credit Lyonnais, have settled out of court. Artemis SA and Pinault, its founder, remain in the case.
On Tuesday, Pinault said he was first approached about a business opportunity involving the junk bonds in August or September of 1992 by an executive of Altus Finance.
The official told him Altus needed to make sure it was in compliance with the U.S. regulations when it acquired the junk bonds about nine months earlier, Pinault testified.
“It was the first time I learned a bank could not own more than 25 percent” of an American insurance company, Pinault testified. “Therefore, Altus had to make sure it was in compliance with that rule.”
Pinault testified that he moved to buy the junk bonds from Altus because it would diversify his holdings and provide an investment foothold in the United States.
The deal nearly turned sour during negotiations because Altus wanted him to pay a $105 million (now euro82 million) fee to the company managing the portfolio, Pinault testified.
In exchange, he said, Altus offered him the chance to acquire other Altus assets, including Aurora National Life Insurance Co., the insurer that emerged from the ashes of Executive Life.
During cross-examination by Fontana, Pinault said he did not know that Altus’ top executive, Jean-Francois Henin, had testified earlier the Aurora acquisition was always intended to be part of the overall deal with Pinault.
Pinault also testified he had no reason to believe that so-called portage agreements struck among the investors group that bought Executive Life assets were improper or being kept a secret.
The state contends the agreements were concealed from U.S. regulators and effectively placed control of Executive Life in the hands of the French government through Credit Lyonnais.
Copyright 2005 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Topics USA
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