-128-
b. Banks’ Regulatory Environment
In 1996, the regulatory environment was not conducive to the
banks’ investing in a partnership for film distribution. A
number of witnesses, including Mr. Geary and Bahman Naraghi (an
employee of Credit Lyonnais), testified that under U.S. banking
laws, the Credit Lyonnais group faced a 5-year deadline to divest
itself of its nonbanking, MGM entertainment assets. An October
4, 1994, memorandum prepared by Deloitte & Touche for Credit
Lyonnais regarding MGM states that Credit Lyonnais’s business
strategy with respect to MGM “must take into account CL’s
obligation to have sold its stake in MGM no later than May 7,
1997, due to the American regulations concerning investments in
non-financial enterprises by banks.”90 Presumably, this same
deadline (May 7, 1997) or a similar 5-year deadline would apply
to any supposed film venture with the Ackerman group.
c. Why the Ackerman Group?
We further question what would motivate the banks to enter
into a film distribution business with Messrs. Lerner and
Ackerman. Neither of those individuals had any experience in
running a film distribution business. Mr. Lerner was a tax
lawyer; nothing in his background reveals any special credentials
in film distribution. Mr. Ackerman was involved in a number of
90 On the basis of this evidence, it would appear that the
5-year period commenced May 7, 1992, when Credit Lyonnais
acquired MGM-Pathe as part of a foreclosure on outstanding debts.
Page: Previous 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 NextLast modified: May 25, 2011