Annual report 2009 - Dexia.com

Notes to the consolidated fi nancial statementsManagement reportConsolidatedfinancial statementsAnnual financial statementsAdditional informationfiled by Deminor on behalf of 4,941 investors. The claimantsseek damages for their losses, which have not yet beenassessed. Moreover, 151 investors affiliated to Spaarverliesalso commenced civil actions. These claims, to a large extentduplicative of the claims introduced in the criminal proceedings,are not likely to have any development until after theend of the criminal proceedings because of the principle lecriminel tient le civil en état.6.2.5. CIVIL PROCEEDINGS AGAINST DEXIABANK IN THE UNITED STATESAll the cases brought against Dexia Bank in the United Stateshave been finally terminated in full in 2008.6.2.6. L&H HOLDINGOn 27 April 2004, the bankruptcy receiver of L&H Holdingsummoned Messrs Lernout, Hauspie and Willaert, along withBanque Artesia Nederland (BAN) and Dexia Bank, to pay theprincipal amount of USD 25 million.This is connected with a USD 25 million loan granted to MrBastiaens by BAN in July 2000 for the purposes of the acquisitionby Mr Bastiaens of LHSP shares owned by L&H Holding.The selling price of USD 25 million was credited not tothe account of L&H Holding but to three separate accountsopened by Messrs Lernout, Hauspie and Willaert. Taking theview that this money was due to L&H Holding, the L&H Holdingbankruptcy receiver is claiming its repayment.This claim is not likely to have any development until afterthe end of the criminal proceedings because of the principlele criminel tient le civil en état.Dexia Bank vigorously contests the grounds for theseapplications.6.2.7. BANQUE ARTESIA NEDERLANDIn October 2006, Dexia Bank sold its affiliated company BANto General Electric (GE). In the context of this operation, itwas agreed, in essence, that Dexia Bank would bear thefinancial consequences of the LHSP matter for BAN, cappedat an amount equal to the price paid by the purchaser.Most of the pending proceedings relate to the loan grantedby BAN to Mr Bastiaens. They include the claim introduced bythe receiver of L&H Holding before the civil court (see paragraph6.2.6. above).They also include the actions which BAN, as creditor, enteredagainst Mr Bastiaens and against Messrs Lernout, Hauspieand Willaert, who had stood surety for Mr Bastiaens.The action against Mr Bastiaens is still outstanding. The solvencyof Mr Bastiaens is uncertain.Messrs Lernout, Hauspie and Willaert were ordered to repayBAN USD 24,999,999. That decision is now final. The solvencyof Messrs Lernout, Hauspie and Willaert is uncertain.The only genuine possibility of recovery is to be able to sellthe Parvest shares on behalf of BAN.Several parties have asserted rights over these Parvest shares,which were acquired by Messrs Lernout, Hauspie et Willaertwith the proceeds of the sale of LHSP shares to Mr Bastiaens(cf. paragraph 6.2.6. above): the investigating magistrate onbehalf of the Belgian state in the criminal case concerningLHSP with a view to confiscating them (on the grounds thatthose shares are the proceeds of a crime); the receiver inthe insolvency of L&H Holding (because those shares wereacquired by Messrs Lernout, Hauspie and Willaert throughthe sale of LHSP shares that belonged to L&H Holding) andKBC Bank (in its capacity as a creditor of L&H Holding).BAN has also taken possession of those shares and claims aright of distraint. Who finally ends up with these shares willdepend among other things on the outcome of the criminalproceedings (see paragraph 6.2.3. above).In addition, the Luxembourg Court of Appeal issued a decisionon 12 July 2006 at the request of Crédit Agricole IndosuezLuxembourg (CAIL) by which BNP Paribas Luxembourg wasordered to deliver the Parvest shares to CAIL by 30 June 2007or to pay to CAIL the counter-value of these Parvest shares on30 June 2007 if the latter were not delivered to CAIL prior to1 July 2007. The Luxembourg Court of Appeal condemnedBAN to indemnify and hold BNP Paribas Luxembourg harmlessagainst any damage deriving from its condemnation.As the lifting of the different seizures of Parvest shareshas not been obtained, BAN paid the counter-value toBNP Paribas Luxembourg. Dexia Bank repaid that sum(USD 30,039,336.54) to BAN on 9 July 2007 in execution ofthe said guarantee in favour of GE (cf. line 1 of the presentparagraph).Both BNP Paribas Luxembourg and BAN appealed against thedecision of the Luxembourg Court of Appeal to the SupremeCourt of Appeal. In the meantime these appeals have beenrejected.On 20 November 2009 the Parvest shares were valued atUSD 31,457,469.42.6.2.8. PROVISIONS AND IMPAIRMENTSOn 31 December 2009, the exposure of Dexia Bank to theoutstanding claims relating to credit facilities granted in theLernout & Hauspie file amounted to some EUR 42,284,075.60,of which EUR 8,746,160.54 reserved interests (see paragraphs6.2.1., 6.2.2. and 6.2.7.). On the same date, value reductionswithin the context of the Lernout & Hauspie file amounted tosome EUR 29,052,745.21. Dexia Bank expects to recover thedifference in view of the available securities.Dexia Bank has not constituted any provisions for the claimsmade against it in Belgium for the following reasons.• As things stand at the moment, the bank assesses the likelihoodof a court ruling ordering it to pay damages at lessthan 50%. The bank’s lawyers are of the opinion that it hasstrong arguments to contest the charges brought against it.• Dexia Bank observes that some of the civil actions (Deminor…),claim provisional amounts or do not justify theamount claimed.• Dexia Bank has made extensive submissions and has arguedthat most of the actions brought by the civil parties are inadmissibleand at least unfounded.Dexia strongly challenges the validity and the merits of allthese claims.6.3. Financial Security AssuranceFinancial Security Assurance Holdings Ltd and its subsidiary,Financial Security Assurance Inc. (now known as AssuredGuaranty Municipal Corp.), former subsidiaries of the DexiaGroup (collectively, “FSA”), along with numerous other banks,insurance companies and brokers, are subject to ongoinginvestigations in the United States by the Antitrust Division of134Dexia Annual report 2009