Luxemburgse advokaten in problemen door Madoff

[Cees Binkhorst]

REPLY TO: D66 at nic.surfnet.nl

- Commerciële rechtzaken in Luxemburg mogen alleen bepleit worden door
Luxemburgse advokaten
- De officiele taal in de rechtbank is Frans, maar rechters en advokaten
praten vaak in Luxemburgs nationale taal (die slechts door 2/3 van de
bevolking wordt gesproken).

Een aardig recept voor een kartel ;)

Groet / Cees

http://www.bloomberg.com/apps/news?pid=20601170&sid=aq6OEn4IkxM4
Madoff Caseload Places Travel Restrictions on Lawyers
 May 14 (Bloomberg) -- Francois Kremer, a lawyer at Luxembourg’s largest
law firm, returned from an Easter trip to find an in-box filled with
e-mails with a common name: Bernard Madoff. Thirty minutes later he was
at a hearing involving UBS AG and a fund that went bust after investing
with Madoff.

Luxembourg, the second-largest mutual fund market after the U.S., has been
flooded with dozens of lawsuits against banks and funds since Madoff’s
Dec. 11 arrest. Kremer’s firm, which represents UBS and HSBC Holdings Plc,
is one of the busiest.

“I haven’t pleaded in court this frequently in a very long time, I
basically live at the court,” Kremer, who turns 46 today and is a
specialist in white-collar crime, said in an interview at his office at
Arendt & Medernach. “We’re handling about 80 cases for UBS and some 12
involving HSBC.”

With hundreds more cases expected to be filed, the country’s 1,600 lawyers
realize the spotlight is on them. Madoff’s Ponzi scheme, which forced the
closure of as many as 17 mutual funds, has the potential to deal a black
eye to the legal system as investors struggle to hire the remaining
financial specialists that don’t already have conflicts of interest.

“The whole world is watching,” said Karine Vilret-Huot, whose three-lawyer
firm represents at least 10 investors in Madoff cases. “We’re very exposed
in cases where so much is at stake and we’re not used to having our names
spread all over the newspapers.”

Luxembourg is Europe’s largest fund market with 3,396 registered funds
holding 1.53 trillion euros ($2 trillion) in assets. Europe’s funds hold
about 4.5 trillion euros.

Found Dead

Thierry Magon de La Villehuchet, chief executive officer of Access
International LLC, which managed the LuxAlpha Sicav- American Selection
fund, was found dead in his New York office in December after news about
Madoff emerged. LuxAlpha, which once had assets of $1.4 billion, invested
95 percent of its money with Madoff.

LuxAlpha, which was dissolved on April 2, was among 17 Luxembourg funds
and sub-funds forced to suspend customer redemptions after disclosing
losses through Madoff. UBS faces months in court over the role of its
local unit as custodian bank for LuxAlpha.

UBS spokeswoman Tatiana Togni in Zurich declined to comment when reached
by telephone today.

“There have been so many of these lawsuits that the courts are getting
blocked,” said Jean Kauffman, president of the Luxembourg Bar Association.
“I’ve already received complaints that it delays other cases.”

Budget Minister Luc Frieden has urged banks and investors to settle
disputes, saying they could “damage the industry.”

‘High’ Stakes

“The stakes are extremely high because there hasn’t been much financial
litigation over these types of funds in Luxembourg,” said Pierre Reuter,
whose team at 11-lawyer Thewes & Reuter is managing about 70 claims
against funds, banks and auditors.

Madoff, 71, pleaded guilty March 12 to defrauding investors by using money
from new ones to pay off old ones. Before his arrest, he told clients that
they had about $65 billion in accounts with him, U.S. prosecutors said.
Madoff’s sentencing was today postponed to June 29.

The work from the 1991 collapse of the Luxembourg- registered Bank of
Credit and Commerce International SA, which was operated largely out of
the U.K. and the U.S., with as much as $16 billion in debt, may have been
comparable, lawyers said.

‘Outside’ Fraud

“It’s not often that a bank goes bankrupt in Luxembourg, so it was huge,”
said Thibaut Partsch, a lawyer in the 125- lawyer Luxembourg office of
Loyens & Loeff, which represented LuxAlpha. Like Madoff, that case was “a
fraud from the outside that affected operations in Luxembourg.”

As many as 1,000 Madoff cases may reach Luxembourg courts, said Paul
Mousel, 55, a partner of Kremer’s at Arendt & Medernach. The 230-lawyer
firm has been forced “to reorganize everything.”

Kremer can’t travel outside Luxembourg anymore to meet clients because of
the cases. “The warning time for me as defending counsel equals zero. I
never know whether the next day someone new will take us to court,” Kremer
said.

The workload at smaller firms is increasing as foreign law firms seek
local counsel. Under national law, only lawyers from the Luxembourg bar
can defend clients in commercial cases.

“The most difficult thing was to find lawyers in Luxembourg that weren’t
already conflicted,” said Marc Pierre Stehlin, a founding partner of Paris
firm Stehlin & Associes, which hired three firms to represent French
investors. “The important law firms specializing in financial matters had
conflicts of interests because they acted for banks like UBS and couldn’t
take on clients bringing claims against those banks.”

Luxembourgish

While the official language of the courts is French, discussions between
judges and lawyers often switch to Luxembourgish, which is spoken by
two-thirds of the country’s 480,000 residents.

“It’s absolutely indispensable to have” a Luxembourg lawyer “who knows the
ropes,” said Bruno Quentin, a partner at Paris’s Gide Loyrette Nouel. Gide
works with two smaller Luxembourg firms for clients including BNP Paribas
SA.

Grappling with the workload brought one more challenge that lawyers will
have to face for some time to come: more working hours and sleepless
nights.

“I have been working as a lawyer for more than 25 years and in my life I
haven’t worked as much as in the past year,” Mousel said.

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