Parretti Loans Unauthorized, Bank Chief Says
The chairman of France’s big state-owned Credit Lyonnais bank accused underlings Thursday of acting against his orders in making $460 million in loans to Italian financier Giancarlo Parretti in the controversial $1.4-billion deal to buy MGM/UA Communications Co.
Under increasing pressure to resign for his role in the unraveling MGM-Parretti saga, Credit Lyonnais Chairman Jean-Yves Haberer said that, beginning in early 1990, he had asked the bank’s Dutch subsidiary, Credit Lyonnais Bank Nederland, to reduce and to put a ceiling on loans to companies controlled by Parretti.
“At the beginning of 1990,” Haberer said, “I had asked that the credit line be capped and then reduced for the Parretti group, at the time in the neighborhood of $400 million. Then, more explicitly, several months later, we asked Credit Lyonnais Bank Nederland not to contribute to the financing of the MGM acquisition.”
Haberer said the directors of Credit Lyonnais Bank Nederland and Credit Lyonnais European Director Georges Vigon “took it upon themselves” to lend Parretti $460 million, with a direct risk to the bank of $260 million. “What happened afterwards,” he said, “is that not one of Parretti’s promises was fulfilled. Facing the consequences for this situation, our European director (Vigon) left us.”
Last week, Credit Lyonnais announced that Vigon, a former chairman of the Dutch bank and one of 15 directors of the parent bank, was taking early retirement. The bank also announced that Jean-Jacques Brutschi, chairman of the movie-infatuated Dutch subsidiary bank, was being transferred to an unspecified position in Southeast Asia.
Credit Lyonnais Bank Nederland was the main subsidiary involved in a series of loans and loan guaranties to Hollywood studios. The Dutch bank become so well known for its links to the American film industry that it annually rented suites at the Cannes Film Festival to meet with potential borrowers.
In a statement last week, the Dutch bank claimed it had a total of $888 million in outstanding loans to companies controlled by Parretti. But some industry analysts estimate that the bank’s actual loan portfolio with Parretti and his associates is closer to $1.5 billion, more than the MGM purchase price. The $888-million total, for example, does not include some $299 million from factoring MGM distribution contracts with Turner Broadcasting and certain overseas film companies. Nor does it include substantial loans to Sasea, a Geneva company controlled by a longtime Parretti associate, Italian financier Florio Fiorini.
Haberer’s statement Thursday came the day after Parretti filed a lawsuit in Los Angeles against the French bank for allegedly sabotaging his efforts to salvage the foundering Hollywood movie giant. On June 18, the French bank filed a lawsuit against Parretti in Delaware, challenging his right to control MGM and throwing its support behind Alan Ladd Jr. to run the company.
