L'Oréal heiress Liliane Bettencourt has been ordered to pay almost 78 million euros in tax penalties and back payments after hiding part of her estimated 16-billion euro fortune from the French tax authorities, Mediapart can reveal. Fabrice Arfi and Michel Deléan present the details of this record claim by tax inspectors, which followed Mediapart's public exposure of conversations between the billionaire and her senior advisors involving a complex web of secret accounts and property abroad.
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Liliane Bettencourt, 89, heiress and majority shareholder of L'Oréal, the world's largest cosmetics company, had for years hidden more than 100 million euros of her wealth in secret foreign bank accounts, other amounts in undeclared property, and under-declared the true value of other assets, a French tax authority investigation has found.
The extent of the fraud is detailed in reports prepared by the French national fiscal verification office, the Direction nationale des vérifications de situations fiscales, the DNVSF, to which Mediapart has gained access. She has been summoned to pay a total of 77,752,139 euros, which include penalties of 40% of the value of the lost fiscal revenue - the highest penalty rate in France and which is applied in cases deemed to be the result of ‘bad will', as opposed to a mistaken declaration.
Bettencourt is, according to Forbes, the second-wealthiest individual in France and the richest woman in Europe. Her lawyers are currently attempting to negotiate a reduction in the claim.
Earlier this year, Liliane Bettencourt was one of 16 of France's wealthiest individuals who launched a public appeal for the super-rich to pay more in taxes, a move that followed a similar call by US billionaire Warren Buffett.
The DNVSF investigation centred on her personal declarations, between 2004 and 2010, concerning the French wealth tax, the ISF, (l'impôt sur la fortune), and her revenue returns for the period between 2006 and 2009.
The probe was launched after a series of revelations last year, led by Mediapart, that exposed the dissimulation of part of Bettencourt's fortune and the shady links between politicians and the world of business and finance, including suspected illegal political party funding and grave ministerial conflicts of interest. Evidence of this was provided in secret tape recordings, published by Mediapart, of conversations between the billionaire and her senior advisors, including her wealth manager, Patrice de Maistre, and fiscal advisor, lawyer Fabrice Goguel. (A list of links to a selection of Mediapart articles about the scandal can be found at the end of this report).
• 1. The secret accounts in Switzerland and Singapore
As Mediapart exclusively revealed earlier this week, the French tax authorities identified 12 secret bank accounts belonging to the Bettencourt family and to which Liliane was the beneficiary. Ten of these accounts were opened in Switzerland; one at the Julius Bär bank, another with the Hyposwiss bank, three with the Banque cantonale vaudoise (BCV), and four with l'Union des banques suisses (UBS). Two other accounts were opened in Singapore, with branches of the Swisslife bank and the (Lichtenstein-based) LGT Bank.
At the end of 2010, when the fraud was discovered and the secret sums returned to France, the 12 accounts hid a total of 99,846,498 euros. However, bank records show that during the previous years the accounts held considerably more, and were notably drained of more than 20 milion euros in the period 2008-2009.
The French tax authorities have now re-calculated her ISF wealth tax returns with the sums hidden in the 12 discovered accounts, as well as the amounts in interest returns missing from her revenue declarations.
• 2. D'Arros island
On October 7th, 1997, Liliane Bettencourt and her late husband André, who died in November 2007, bought the Seychelles island D'Arros from Prince Shahram Pahlavi-nia, nephew of the late Shah of Iran, for a reported 18 million US dollars. This isolated Indian Ocean holiday property includes a mansion built by the late French architect Jacques Couëlle, along with bungalows, a swimming pool and a tennis court.
The ownership of the property was formally in the name of a Lichtenstein-based company called Anstalt - the D'Arros Land Etablishment - and its acquisition by the couple was never declared to the French tax authorities. However, between 2000 and 2004, the Bettencourts invested around 30 million dollars in developing the island, notably the building of a chapel and the lengthening of an airstrip.
Enlargement : Illustration 2
In 2008, following the death of André Bettencourt, ownership of the island was transferred to a ‘Fondation pour l'équilibre écologique, esthétique et humain' (the Foundation for ecological, esthetic and human equilibrium), presided by Liliane Bettencourt's then tax affairs advisor and lawyer, Fabrice Goguel. Liliane, who rarely visited D'Arros, generously handed the foundation with 20 million euros in funding, along with a yearly payment of 2 million euros for the island's upkeep.
Despite the complicated ownership structures and transfers, the French tax authorities have decided that D'Arros is indeed the property of Liliane Bettencourt, and its worth has been included as missing from her wealth tax declarations as of the year 2004. The island's value was estimated by the DNVSF inspectors at 39.2 million euros.
• 3. The other properties
While the tax authorities were satisfied with the declared value concerning Liliane Bettencourt's sprawling family mansion in Neuilly, just west of Paris, that of other properties belonging to her were, they found, underestimated. These include Arcouest, a holiday property situated on the north coast of Brittany and built by Liliane's father and founder of L'Oréal, Eugène Schueller.
Dominating a bay, the hilltop property includes a mansion, guest houses, a swimming pool and a caretaker's home. In her 2010 tax returns, Liliane Bettencourt declared its value as being 1.07 million euros. The tax authorities have decided the true worth is 3.2 million euros.
The billionaire also owns a large property in Formentor, in the Spanish Balearic Island archipelago in the Mediterranean, where she has two houses and several acres of land. She declared its value in 2010 as being 310, 500 euros. The tax inspectors found it to be worth 30 times as much, at 9.9 million euros.
Other adjustments made by the DNVSF include lost employer's contributions on salaries and annual bonuses of several staff officially paid by her holding and investment companies Téthys and Clymène.
In all, the tax authorities have summoned Bettencourt to pay the following back payments and penalties: concerning the wealth tax, 4.5 million euros for 2004, 4.1 million euros for 2005, 4.3 million euros for 2006, 4.7 million euros for 2007, 17 million euros for 2008, 12 million euros for 2009 and 13 million euros for 2010. Concerning her revenue declarations, the sums demanded in back payments and penalties are 5.6 million euros for 2006, 1.9 million euros for 2007, 4.9 million euros for 2008 and 4.6 million euros for 2009.
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For more on the Bettencourt affair, click on the links below:
Behind the bettencourt affair: the battle for L'Oréal
A scandal too far: Bettencourt magistrate is disowned
Dinners, cash and Sarkozy: what Bettencourt's accountant told Mediapart
Bettencourt butler bites back: 'I saw L'Oréal family destroyed'
Bettencourt battle back after L'Oréal heiress signs away 143 million euros
The political guard watching over L'Oréal
The eerie plot penned by L'Oréal family scandal dandy in 1971
Bettencourt chauffeur adds to Sarkozy campaign fund allegations
Bettencourt tapes stolen in mystery break-ins targetting Mediapart, Le Point and Le Monde
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English version: Graham Tearse