600-million-dollar Executive Life settlement blocked by French
A proposed 600-million-dollar deal to settle the fraud case over the 1991 French purchase of California insurer Executive Life was being blocked by the French government, lawyers said.
The deal was brokered Tuesday and had been due to be approved by US District Judge Howard Matz on Wednesday, averting the imminent start of a messy civil trial that could cost the French parties billions of dollars.
But American lawyers told AFP the settlement between the California Department of Insurance and US insurer Sierra, on one side of the case, and Credit Lyonnais and the CDR, a French government entity that manages the assets of the formerly state-owned bank, had run into trouble.
"The French have made an offer to settle, but now the (finance) ministry is blocking the deal. I don't know for what reason," a lawyer said. No French confirmation of the US claim was immediately available.
As the process of selecting jurors for the trial began, Judge Matz held a last-minute meeting with lawyers for all the parties involved in the tentative settlement in a bid to break the deadlock.
"There are additional discussions in France and they (the parties) said they need more time," one of the lawyers told AFP. "They asked to postpone the trial, but Judge Matz refused because he expected to approve the settlement today."
Opening arguments in the trial, in which California's insurance commissioner John Garamendi, is seeking 3.7 billion dollars in restitution and interest from the French parties involved in the allegedly illegal acquisition of Executive Life 13 years ago, are due as early as Friday.
One source close the talks aimed at averting a trial that could further inflame already strained Franco-American relations, said the settlement was blocked by Paris because one of the major French parties targeted by the suit, a firm called Artemis, was not included in the deal.
Artemis is a holding company of French billionaire Francois Pinault, a close friend of French President Jacques Chirac. Artemis bought Executive Life's lucrative junk bond portfolio in 1995 after Credit Lyonnais indirectly acquired the US insurer in an allegedly fraudulent transaction.
"Mr Pinault is a friend of President Chirac," the source said. "He (Pinault) blocked the first proposed settlement in the criminal case because he was not in it and he is doing so the case."
The civil trial comes after French parties struck a 771.75 million-dollar deal with US prosecutors, approved in December 2003, that averted a diplomatically thorny criminal trial.
The civil suit claims Credit Lyonnais used MAAF as a front to buy Executive Life, as California law at the time barred foreign governments from controlling insurance companies and federal law banned banks from owning more than a 25 percent stake in a non-banking business.
Those targeted by the civil suit include Credit Lyonnais and the CDR; Artemis, French insurer MAAF and Altus, a Credit Lyonnais subsidiary that bought Executive Life.
If a settlement is finalised in the case either ahead of the trial or during it, MAAF will likely quickly join in the deal, California Department of Insurance sources predicted.
The department has offered Artemis a deal under which the company would stump up 260 million dollars -- the value of Executive Life, now rechristened Aurora -- as well as the 185 million dollars which it has already put into escrow in the United States under the criminal settlement.
US sources said that if Artemis were to agree to such a settlement, "the deal would be signed tonight."
But Artemis lawyers said Tuesday they were ready to go to go to trial, rather than agree to cough up more cash.
Call 1.888.973.8377 to speak with one our life settlement brokers about our life settlement services and free appraisal.
Get your free life settlement quote and appraisal
Source: Google News
