Thread: French Frauds

Eternal Fraud
By Bruce Gain
Published 4/30/2004 12:06:58 AM


FRANCE -- It is common knowledge in France that the U.S. is a society in which the rich get richer and the poor get stomped into the ground. The French government routinely prides itself on its social cohesion largely glued together by a lack of polarization between the very rich and very poor, where there is a very large middle class that pulls together for the common good. Those Anglo-Saxon countries -- read: the U.S. as well as England -- serve as examples of what happens when laissez-faire economics and liberal capitalism run amuck. Big-money interests dictate social policy and control legal machinations in the U.S., the rhetoric goes.

France's self-described egalitarian society also prides itself on a fair-handed criminal justice system that applies its letter of the law equally, regardless of money interests or social class. But in France, this is where Renault, one of Europe's largest carmakers that once tried and failed to make and sell cars in the U.S., will elect this week a board member whom U.S. federal prosecutors have sought in connection to high-level fraudulent financing and other criminal charges. This is the country where the fraud perpetrator in question, leading French business tycoon François Pinault, who is worth an estimated $5 billion, is promoted and granted even more wealth and political favors after risking substantial prison sentences in the U.S for criminal fraud. This is where the French government did not indict Pinault on fraud and other charges, and where the French government even funded several hundreds of millions of dollars in legal remedies stemming from Pinault's illegal activities under a plea bargain agreement with U.S. federal prosecutors.

The final verdict: France is less left-leaning and panders more to big-money politics than is generally recognized.

Pinault's holding company, Artémis, owns a controlling interest in Pinault-Printemps-Redoute, a retail chain and luxury goods conglomerate that has ownership stakes in retail chain Printemps and the Gucci luxury goods maker. The conglomerate's more glamorous holdings include the Yves Saint Laurent perfume line, the Chateau Latour vineyard, and the famous Christie's auction house.

Pinault owes much of his success -- or money -- to the state-owned, French taxpayer-funded bank Crédit Lyonnais that has funded Pinault's ventures for many years. The bank also funded Pinault's illegal deals when Artémis, owned by Pinault, fraudulently bought Executive Life, a leading Californian insurance company and junk bond asset holder, in the early 1990s. The fraudulent activity involved a convoluted trail of illegal holdings involving Crédit Lyonnais and Pinault's Artémis, as well as French companies CDR-E and MAAF, which were finally ordered to pay a criminal plea-agreement settlement of close to $1 billion this year. Although he was originally a target for criminal indictment, the FBI reported earlier this year that Pinault was not criminally charged as he had cooperated in exchange for immunity from prosecution. The final plea agreement also followed negotiations between Pinault's political ally and friend, French president Jacques Chirac, and Federal prosecutors. In civil courts, authorities still seek an additional estimated $1 billion from Pinault for damages.


SO WHY WOULD ONE of France's largest companies want someone on its board of directors who is, if not a criminal, at best fiscally irresponsible? Where is the outrage? Won't Renault shareholders react negatively to Renault's electing a board member once wanted in the U.S. on fraud charges? What about Renault's public statements that it plans to one day enter the U.S. market while electing Pinault as a board member who was once wanted on criminal charges in the world's largest single car market? The reasons journalists from some of France's largest business and political print media gave when asked these questions and why the French media has largely downplayed Renault's move varied. French journalists made allusions to Pinault's influences through his financial connections while some just shrugged their shoulders saying that is just the way the French political system operates: by pandering to an elite and tight-knit group of business and political leaders.

Another journalist from one of France's leading daily regional papers said that Pinault's public relations team had the power and influence to block access to Pinault and other high level industry and political leaders for negative press coverage. According to the journalist, he was denied access to interview Pinault for more than 10 years after writing an only slightly negative commentary about Pinault.

So life continues in France, and the media and government rhetoric continue to harbor on about the unfairness and corruption of the U.S.'s social policies and legal system. Meanwhile, Renault unabashedly will name multi-billionaire Pinault to its board of directors, as French taxpayers continue to make him richer by footing a large part of the bill for his malfeasance in the U.S. In a country where the average salary is not much over $12,000 a year and the cost of living is one of the highest in the world, outraged citizens have not taken to the streets over paying out of their pockets so Pinault can keep his billions. The French government, meanwhile, continues to apply its legal penal system fairly and equitably, it says, while Pinault goes on to bigger and better things.


Bruce Gain is a technology and legal writer based in France.

http://www.spectator.org/dsp_article.asp?art_id=6503