August 28, 2003

France's Prime Min Jean-Pierre Raffarin defends his country's continued violation of Europe's budget rules, saying his primary job is to restore growth and increase employment in France; urges that rules underpinning euro be interpreted in more flexible way to allow countries with faltering economies to stimulate growth; European Commission president Romano Prodi suggrests that fundamental rift inside European Union over budget spending will once again dominate group's agenda this fall (M)

Federal grand jury in Los Angeles has issued sealed indictment charging Credit Lyonnais with fraud in connection with its acquisition of assets of failed California insurance company Executive Life in 1991; indictment comes as federal authorities are trying to get bank and some related parties to plead guilty to criminal charges and pay fines of up to several hundred million dollars; indictment could be unsealed as early as next week if bank does not agree; indictment or guilty plea would be embarrassment not only for bank but for French government, which owned Credit Lyonnais at time; case relates to collapse of Executive Life after value of its extensive junk bond portfolio dropped sharply; Credit Lyonnais bough junk bonds for about $3 billion, and other French investors acquired insurance company; information later came to light suggesting that other investors were front for Credit Lyonnais, which was trying to circumvent federal law that prevented banks from owning insurance companies and state law that barred entities of foreign governments from such holdings (M)

Jennifer Welch-Babidge will be six months pregnant when she sings Lucia in New York City Opera production of Lucia di Lammermoor on Sept 13; Lucia will be performed as written; pregnancy is alluded to only visually; director James Robinson decides to highlight his leading lady's condition rather than try to hide it; Paul Kellogg, City Opera general and artistic director, says he supports innovation, howver risky; Welch-Babidge, who is making her City Opera debut, says she welcomes additional challenge; photo (M)

World Business Briefing: Germany: Adidas Sells

Education officials say Bloomberg administration's efforts to overhaul New York City's public schools are being undermined by lack of communications strategy and failure to build broad support for plan; cite absense of ad campaign and Chancellor Joel I Klein's reluctance to seize spotlight and market strategy, perhaps in deference to or at behest of Mayor Michael R Bloomberg; Klein acknowledges problem; says there have been talks with BBDO for ad campaign to begin this fall at no cost to city (M)