House Panel to Examine Executive Life Delay
The House Government Reform Committee has scheduled a hearing for Oct. 10 to examine why the Justice Department has failed to conclude an investigation into alleged fraud surrounding the $3.2-billion sale of Executive Life Insurance Co. in 1993, two years after it was declared insolvent and seized by the California Insurance commissioner.
A few years after the deal was closed, a whistle-blower produced documents that allegedly showed that French bank Credit Lyonnais was the true purchaser of the Los Angeles-based insurer. At the time of the sale, state and federal laws prohibited foreign banks from owning insurance companies.
The revelation sparked several lawsuits that accuse Credit Lyonnais of hiding behind phony investors to conceal its acquisition. The suits are seeking to recoup policyholder losses by recovering the profit allegedly made by selling the insurer’s junk bonds. State authorities have estimated that profit was at least $2 billion.
The whistle-blower also prompted the U.S. attorney’s office in Los Angeles to investigate and recommend charges against the bank. That recommendation has been awaiting a Justice Department decision for more than a year.
A spokesman for the Justice Department said he had no comment, as did a lawyer for Credit Lyonnais.
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Lisa Girion
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