A singular case

The Americans have a word for it: justice.

In July a U.S. grand jury returned a 55-count indictment of Crédit Lyonnais and a passel of its current and former senior executives, charging them with multiple felonies and seeking forfeiture of $3.1 billion in ill-gotten gains. The indictment also named as defendants subsidiaries of Consortium de Realisation, the French government agency responsible for bailing out the once-imposing bank.

Relations between the U.S. and France, inflamed by quarrels over Iraq, have been bitter during the past year. Still, it was a rare, if not unprecedented, event for the U.S. government to seek to indict not only a sovereign government but a long-standing member of the Western alliance. Then again, the activities of the bank, which was owned by the French government until its 1999 privatization, were themselves highly unusual. According to the indictment, the bank and its senior executives engaged in acts of conspiracy, fraud and money laundering in connection with the purchase in 1992 of the junk bond portfolio of troubled California insurer Executive Life Insurance Co.

The full story of the bank’s entanglement with Executive Life and the U.S. legal system is told for the first time in this month’s cover story, “Inside the Crédit Lyonnais Scandal,” (page 44) by contributor David McClintick. A former investigative reporter for the Wall Street Journal, McClintick is the author of three books on business and government, including the bestselling Indecent Exposure: A True Story of Hollywood and Wall Street, which examined an embezzlement scandal and ensuing crisis of corporate governance in the entertainment industry. (A new edition of Indecent Exposure has been published by HarperCollins.)

The Kansas-born, Harvard-educated McClintick has been tracking the Crédit Lyonnais scandal in the U.S. and Europe for eight years. In this month’s story he lays out the alleged crimes, exposes the decadelong cover-up and describes in minute detail the tense negotiations to reach a settlement -- which stretched into late October -- between senior officials of the U.S. and French governments. In particular, McClintick traces the heroic efforts of one U.S. prosecutor, Assistant U.S. Attorney Jeffrey Isaacs, whose dogged pursuit of the French bank led to this summer’s stunning indictment.

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