French billionaire financier, François Pinault, has always played hardball. So it isn’t too surprising to find him and his holding company, Artemis S.A., as the sole remaining defendants in the civil lawsuit seeking to recover some $4 billion on behalf of policyholders of the failed Executive Life (See previous articles).
In a statement, widely disseminated in the French press, he deplored that last minute settlement concluded between the French government’s CDR, Credit Lyonnais and other defendants and the California Insurance Department. He vowed to fight on and prevail.
Although Artemis had earlier settled criminal charges brought by the U.S. Attorney’s Office in L.A. for $110 million (after protracted negotiations), Pinault has steadfastly refused to settle the civil case. The other defendants agreed to a settlement just before the civil trial was scheduled to start last week. Originally reported to be in the $525 million range, the amount is slightly higher at $600 million.
News reports (AFP, Reuters) have indicated that Pinault has offered as much as $260 million, but the CID is asking for $445 million. His attorneys have pointed out that Artemis wasn’t even formed when the Executive Life sale was concluded between the Commissioner John Garamendi and Altus Finance, the vehicle, which, it is now admitted, was controlled by Credit Lyonnais to avoid federal and California restrictions on bank’s owning insurance companies.
Artemis subsequently bought both Executive Life – since renamed Aurora Life – and the junk bonds, which turned out to be not so junky. The CID claims Pinault made $2 billion on the deal at the expense of policyholders. He has also argued that former and present Insurance Commissioner John Garamendi, who is scheduled to testify at the trial, was fully informed concerning all the parties to the transaction, and that it was an arm’s length deal with no illegal implications.
The Executive Life case got underway last week, and is expected to last around 10 weeks.
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