FINANCE: French bank and executives convicted of banking fraud in California

Randy Black writes: While it seems fashionable to think that US firms engage in different types of fraud, it appears that French banks have similar problems. Credit Lyonnais and the head of the House of Gucci will pay three quarters of a billion US dollars in fines for bank fraud in the USA.
PARIS ˆ France and the French bank Crédit Lyonnais <;template=company-research&amp;ambiguous-purchase-template=company-research-symbol-ambiguity&amp;profile-name=Portfolio1&amp;profile-version=3.0&amp;profile-type=Portfolio&amp;profile-forma>  SA reached a tentative $600 million settlement with the California Department of Insurance and other plaintiffs in the long-running Executive Life insurance-fraud case, people familiar with the situation said. The tentative deal was reached last night following the opening of a civil trial in federal district court in Los Angeles yesterday, and came as the insurance commissioner and one plaintiff, Sierra National Insurance Holding Co., agreed to terms, removing a possible roadblock. The deal doesn't include French tycoon François Pinault, the majority owner of fashion house Gucci, who could go to trial on his own.

After much foot-dragging, France, Crédit Lyonnais and Mr. Pinault settled a related criminal case with the U.S. Justice Department for a record $760 million last year. But, until a few days ago, all three were continuing to fight the civil lawsuit brought by the California insurance-industry regulator. The suit alleges that Crédit Lyonnais violated California law when it secretly acquired Executive Life in 1993 and that the French government and Mr. Pinault later helped cover up the fraud. For France and Crédit Lyonnais, a settlement would eliminate the risk of a huge-jury verdict. The California insurance department was seeking $3.7 billion in damages. After the criminal case snowballed into a diplomatic spat in late 2003, the possibility of a big verdict in the civil case again has been straining relations between Paris and Washington.

Source:The Wall Street Journal.  
RH: This was big news on French TV today. Human nature being the same everywhere. there is fraud everywhere. A long time ago I lost money when a Spanish investment company turned out to be a Ponzi racket. The question is: which countries do the best job of tracking down such fraud.  The US seems to be doing well, although there is no law against executives paying themselves outrageous salaries provided they observe the letter of the law.

Ronald Hilton 2004


last updated: February 27, 2005