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Pinault Testifies in Executive Life Suit

LOS ANGELES — French tycoon François Pinault, whose company, PPR (formerly known as Pinault-Printemps-Redoute), owns Gucci Group and the retailer Printemps, completed two days of testimony here on Wednesday during the fifth week of the...

LOS ANGELES — French tycoon François Pinault, whose company, PPR (formerly known as Pinault-Printemps-Redoute), owns Gucci Group and the retailer Printemps, completed two days of testimony here on Wednesday during the fifth week of the drawn-out trial involving the failed Executive Life Insurance Co.

The lawsuit, filed by California state officials in federal court, alleges Pinault broke the law by covering up for Credit Lyonnais and used his family holding company, Artemis, as a front to buy Executive Life’s junk bond portfolio, from which he profited handsomely. The Gucci Group was not among the firms discussed during his testimony.

Dressed in a conservative slate gray suit, blue shirt and tie, the 68-year-old executive denied Credit Lyonnais wielded control of Artemis, testifying in French through an interpreter that he — not Credit Lyonnais — was the sole person in charge of Artemis.

He did not, however, deny that his subsidiary companies were involved in the deal, saying he has not tried to cover up anything and that “in France such agreements are quite common and not at all improper.”  

The executive remained calm throughout most of his testimony and occasionally joked as he shrugged off his appointment to Credit Lyonnais’ board of directors in 1994, saying that “board meeting[s] were quite boring and I didn’t contribute much, so I didn’t stay on long.”

Pinault also stressed that his appointment to the board was widely reported in the press and therefore not secret, and that LVMH Moët Hennessy Louis Vuitton chief executive officer Bernard Arnault was also among those invited by Credit Lyonnais at the time to sit on the board.

At the time of the Executive Life sale in 1991, federal law banned banks from controlling insurance companies, and state law prohibits foreign governments from owning California-licensed insurers.

“The primary goal of Artemis was to diversify its lines of business in the portfolio,” Pinault testified.

During cross-examination, however, Pinault repeated such phrases as “I vaguely recall,” “I have no recollection of that” and “That’s what I paid the lawyers to do” to questions ranging from his alleged misstatements of shareholder involvement to the accuracy of forms given to the insurance commissioner. And he raised his voice slightly in exasperation on more than one occasion after being asked the same questions numerous times — a theme throughout the trial.

This story first appeared in the April 8, 2005 issue of WWD.  Subscribe Today.

The trial, which was often bogged down by minutia, repetitive questioning and references to countless documents, appeared to confound not only the jurors of six men and three women (a couple of whom nodded off during the proceedings), but also U.S. District Judge A. Howard Matz.

Pinault, who was himself surrounded on the witness stand by several white binders bursting with evidence for him to reference, took a keen interest in the seemingly distracted jurors who would decide the outcome, and spent several minutes during a brief recess intently observing them.

“This is so stupid,” said Pinault, referring to the trial during a recess and shrugging his shoulders as if to say, “What can you do?” Pinault said he would head to New York after his testimony before returning home to Paris.

James Clark, a lawyer for Pinault, expects the jury to reach a decision by the end of next week. “We think our case has gone well and Mr. Pinault has answered completely and truthfully,” said Clark.

However, if the state is successful in proving its case, damages could exceed $2 billion, said the state’s lawyer, Gary Fontana.