French bank Credit Lyonnais and French government banking agency CDR have pleaded guilty to fraud charges in the bank’s purchase of US insurer Executive Life more than a decade ago. The plea deal agreed in the Los Angeles federal court also confirmed a settlement in which the defendants would pay $772m in penalties. In the long-running financial fraud case, which extends back to the bank’s massive involvement in California in the early 1990s, Credit Lyonnais, now a subsidiary of France’s largest bank Credit Agricole, admitted to three counts of fraud linked to its acquisition of the failed insurer and its bid to cover up the transaction that flouted both US and Californian laws. Under the deal, part of the biggest criminal settlement in US history, Credit Lyonnais was sentenced to three years probation and was ordered to pay a $100m fine, the largest ever made to the US Federal Reserve. Observers suggest that the deal allows the bank to escape a potentially long and embarrassing trial that could have resulted in it losing its US banking licence. CDR, which inherited assets of Credit Lyonnais unit Altus that acquired the insurer’s ‘non-performing assets’ in 1995, escaped fines but was ordered to pay $375m into a settlement fund.
