New Lawsuit Against Crédit Lyonnais – French Gov’t. Responds

California Attorney General Bill Lockyer’s lawsuit against Crédit Lyonnais (CL) and a number of other defendants, filed Tuesday in San Francisco, is the latest legal action involving the French bank and its business partners, who took over California’s failed Executive Life Insurance Co. in 1991.

Already pending are various civil actions, and possible criminal charges against the bank. The U.S. Attorney’s office in Los Angeles has been conducting an investigation to determine if it violated the Glass-Steagall Act, which at the time prohibited banks from owning insurance companies. Reports indicate that several indictments will be brought.

Although Lockyer’s action is for civil damages, his office has by implication stated that CL also violated California statutes which prohibit companies owned by foreign governments from having interests in the state’s insurers. Although now in the process of full privatization, CL was wholly-owned by the French government when the Executive Life transaction occurred.

The civil suits, Lockyer’s and the one filed in LA by the Insurance Commissioner, both seek to recover billions of dollars in damages arising from allegations that CL and its affiliates failed to disclose the bank’s control over the deal. Another suit from a failed bidder seeks similar relief.

The controversy recently provoked a diplomatic response from the French government when foreign Minister Hubert Vedrine expressed his country’s concern over the investigations and lawsuits to Secretary-of State Colin Powell. In France Vedrine’s remarks might well have had some effect, but it’s doubtful, given the independent status of the U.S. judicial system, that they’ll be of any use in the actions.

Topics Lawsuits California Legislation