Annual report 2009 - Dexia.com

General informationManagement reportConsolidatedfinancial statementsAnnual financial statementsAdditional informationdepend among other things on the outcome of the criminalproceedings (see paragraph 4.2.3. 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 shares hasnot been obtained, BAN paid the counter-value to BNPParibas Luxembourg. Dexia Bank repaid that sum (USD30,039,336.54) to BAN on 9 July 2007 in execution of thesaid 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 31,457,469.42.4.2.8. 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 paragraphs4.2.1., 4.2.2. and 4.2.7.). 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.4.3. 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 Divisionof the Department of Justice, the Internal Revenue Serviceand the Securities and Exchange Commission for allegednon-compliance with various US Federal antitrust, securitiesand other laws and regulations relating to their conduct, inthe provision of Guaranteed Investment Contracts (“GICs”) (1)to issuers of municipal bonds. A number of US States are alsoconducting parallel and similar investigations.In connection with the foregoing, a number of private lawsuits,both putative class actions and otherwise, have beenfiled against a large number of banks, insurance companiesand brokers, including FSA, Dexia and/or Assured Guaranty,alleging non-compliance with various US Federal and Stateantitrust, and securities regulations and seeking, among otherthings, damages in respect thereof. Such lawsuits, certain ofwhich continue to name FSA, Dexia and/or Assured Guarantyas defendants, have been transferred to US Federal DistrictCourt in New York City for case management purposes. FSA,Dexia and Assured Guaranty are seeking the dismissal of allsuch lawsuits that continue to name them as defendants.As part of its sale of FSA to Assured Guaranty, Dexia retainedthe Financial Products activity and, generally, agreed to indemnifyFSA and Assured Guaranty for any losses they may sufferin relation to that activity and as a result of the foregoing investigationsand lawsuits.Dexia is not currently able to predict the timing or outcome,including potential financial consequences, of any of theforegoing investigations or lawsuits.4.4. Investigations about allegedshortcomings in financialcommunicationA shareholder, Mr Robert Casanovas, lodged a complaintwith the Public Prosecutors in Brussels and Paris on 11 March2009. These complaints gave rise to the opening of two preliminaryinvestigations.Mr Casanovas also served direct summonses on the companyDexia SA and several former and current executives of theGroup to appear on 29 October 2009 before the CriminalCourt in Paris. A summary of these complaints as well asDexia’s position is included in the Financial Report in respectof the third quarter of 2009.At the hearing on 29 October 2009, Mr Robert Casanovasand his wife Mrs Marie Christine Guil, who did not attend,withdrew their action against the company Dexia SA whichacknowledged it. This withdrawal occurred after the PublicProsecutor in Paris, by decision dated 14 October 2009, dismissedthe complaint filed by Mr Robert Casanovas and hiswife Mrs Marie Christine Guil.As to the complaint lodged in Brussels, by decision dated 15December 2009, the Public Prosecutor dismissed the chargesagainst Dexia.(1) Guaranteed investment contracts (GICs) were issued by subsidiaries ofFSA Holdings in exchange for funds submitted by US local authorities or bysecuritization issuers. With varying terms and repayment conditions, GICs giverights to their holders to receive interest at a guaranteed (fixed or variable)rate. The principal and interest of the contracts were guaranteed by FSA Inc.,and remain so after the purchase of that company by Assured Guaranty.90Dexia Annual report 2009