It was, as it transpired, a huge blunder. When Patrick Balkany, mayor of the well-heeled north-west Paris suburb of Levallois-Perret, opposed the political return of a man called Didier Schuller in a neighbouring town in the 2014 local elections, he had no idea at the time that he was turning his former friend into a formidable enemy.
Up to that point Balkany's former right-hand man Schuller had always remained discreet. But after being disavowed politically the latter's anger and bitterness was vented both in a book – called 'French Corruption' – and to two investigating judges.
It was while he was being questioned on October 24th 2013 in relation to the long-standing affair involving middleman Ziad Takieddine that Didier Schuller seized the chance to mention the Balkanys' hidden fortune and offshore companies, helpfully supplying the judges with some documents to back his claims. “I have paid my debt,” said Schuller, who had taken the fall over a financial scandal involving a municipal social housing organisation in the Hauts-de-Seines département or county west of Paris of which he was director. Schuller was given a jail sentence over the affair in 2005 while Balkany, who was the chairman of the housing organisation, walked free.
“I note that the chairman … at the time, Mr Balkany, was acquitted,” Schuller told the judges in the Takieddine case in 2013. “Mr Balkany, as the press relate and as these documents seem to confirm [editor's note, the documents he handed to the judges], apparently has at his disposal a palace in Marrakesh, a luxury residence on Saint-Martin [editor's note, part of the Leeward islands in the Caribbean] and the use of an old mill at Giverny in Normandy. I'm happy to see that what I thought to be political funding was used for other and no doubt personal ends.”
It was explosive testimony and soon prompted the setting up of a separate investigation. Five-and-a-half years later this investigation has led to Patrick and Isabelle Balkany – friends of former French president Nicolas Sarkozy – standing trial at the XXXII criminal court in Paris, a case which is set to last up to six weeks.
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Patrick Balkany, aged 70, who is still mayor of Levallois-Perret, is on trial for “tax fraud, regular laundering of proceeds from aggravated tax fraud, passive corruption by a person in public authority, laundering the proceeds of corruption, an illegal conflict of interests and an incomplete or false declaration to the Haute Autorité pour la Transparence de la Vie Publique (HATVP) [editor's note, the body that oversees the financial probity of elected representatives]”.
Isabelle, 71, who is deputy mayor of Levallois-Perret, faces charges of tax fraud, aggravated money laundering and an incomplete declaration to the HATVP. She is on bail of one million euros and all of the couple's properties have been seized, and could be sold off by the state if the pair are convicted.
However, Isabelle Balkany was not present in court for the first day of her trial on Monday because of the state of her health. On May 1st 2019 she took a large number of pills after leaving a message saying how weary she was, and her lawyer Pierre-Olivier Sur told Mediapart last Friday, May 10th, that she was still in hospital following this suicide attempt.
For a long period the couple shared the same lawyer, Grégoire Lafarge, who has himself had health problems. But they each now have their own lawyer with Patrick Balkany opting to be represented by the high-profile advocate Éric Dupond-Moretti after the latter's successful defence of former government minister Georges Tron, who was acquitted over rape allegations. However, Pierre-Olivier Sur told Mediapart that this splitting up of lawyers was not a sign of any differences between the couple but simply represented the provision of “additional forces” and that his client remained “in solidarity with, loyal to and in love with” her husband.
Nonetheless, neither high-profile lawyer was successful in their attempt to get Monday's proceedings postponed.
Four other people are also standing trial. Jean-Pierre Aubry, president of the Paris-Levallois basketball club and former directer general of SEMARELP, a municipal body in Levallois that oversees local planning, and Arnaud Claude, a long-standing friend and law firm partner of former president Nicolas Sarkozy, are accused of having set up schemes to hide the Balkany couple's property assets. Saudi businessman Mohamed Bin Issa Al Jaber is accused of paying Patrick Balkany money in return for building permits in Levallois. Finally, the couple's son, Alexandre Balkany, is accused of being involved in laundering the proceeds of tax fraud. All deny the charges.
The investigation was officially completed on July 6th 2018 when investigating judges Renaud Van Ruymbeke and Patricia Simon delivered their 92-page report on the case – a copy of which has been seen by Mediapart - sending the defendants to face trial. Formal requests for assistance or 'letters rogatory' were sent to various foreign jurisdictions (Egypt, Switzerland and Lichtenstein) and the judges were in the end able to untangle a jumble of shell companies and offshore firms set up to conceal the Balkanys' immense property holdings - which were bought in suspect circumstances - from the tax authorities. The couple's wealth has been estimated at 16.5 million euros. Yet between 2008 and 2013 they paid no wealth tax.
The judges believe that the Balkanys are the true owners of the luxurious and expensive Moulin de Cossy at Giverny, Pamplemoussse Villa on Saint-Martin and the riad in Marrakesh. Patrick and Isabelle Balkany at first denied ownership, claiming they had ceded formal property rights to the mill in Normandy to their children and that they were merely renting the other two properties, though they later acknowledged some of the facts. They also claimed that their wealth came from significant sums they had inherited.
Didier Schuller, however, claims that it was building firms who provided the Balkanys with their cash, both in relation to building projects carried out in Levallois-Perret – where Patrick Balkany was mayor from 1983 to 1995 and from 2001 to the current day - and big contracts awarded by the Hauts-de-Seine municipal housing association of which he was chairman from 1983 to 1998. In particular the mayor is said to have bought a triplex apartment at 'mate's rates' from the Cogedim building company for whom he had provided work in the town.
Schuller said that for a long period he used to carry briefcases of cash to Switzerland for his boss, “particularly at election times”. He estimates that between 1987 and 1994 he carried around seven and ten million French francs – between just over 1 million and 1.5 million euros - in all, citing donors such as the building firm SAE and “Mr Hariri's company”. SAE was a leading French building company which became entangled in political funding affairs. Rafiq Hariri, meanwhile, was a businessman and “benefactor” of former president Jacques Chirac and the Right in general.
According to the judges' report, Patrick Balkany received a bogus loan in 1998 which allowed him to repatriate ten million francs from Switzerland. Over the following years he pocketed 31 million francs by purportedly selling shares in the Balkany family company Laine et Soie Réty which was, however, in major difficulties at the time.
Didier Schuller also detailed the major works that were carried out for free at the Giverny mill by building companies belonging to Rémi Muzeau, Patrick Palkany's stand-in as mayor while Balkany was a Member of Parliament. Meanwhile SAE supplied a pool and the pool house and the building firm Fayolle also carried out work on the site. The arrangements used to hide the true owners of the villa on Saint-Martin and the riad in Marrakesh via bogus set-ups in Switzerland and Liechtenstein were harder to unravel, but the judges finally succeeded in doing so.
On top of evidence given by caretakers and other staff and workers, the investigators also made several finds. They discovered, for example, that it was apparently the businessman Al Jaber who funded the purchase of the riad in 2010 in return for a contract to build the Les Tours construction project in Levallois-Perret (which never got off the ground in the end). In 2013 the Balkanys received a large number of items of expensive furniture for their Moroccan property from a company with which they had close links, Bertrand Prestige. In 2009 Patrick Balkany also received a 5 million dollar commission in Switzerland for having landed an African business transaction for the Belgian entrepreneur Georges Forrest. It also emerged that between 2010 and 2013 Patrick Balkany paid more than 87,000 euros in cash to a branch of travel agency Thomas Cook in Levallois.
Indeed, cash seems to have played a big role in the life of the Balkanys. Staff at Giverny received a part of their pay in cash. Patrick Balkany went there with brown paper envelopes and bundles of notes, and would leave 500 euro notes in his dressing gown or his suits. His wife Isabelle, meanwhile, used to change large denomination banknotes at the main till in the local Intermarché supermarket. Detectives helpfully pointed out to the judges in their report that cash machines do not dispense 500 euro notes.
The property on Saint-Martin was eventually sold for 1.35 million euros and the proceeds formally sequestered by the authorities. The mill at Giverny (which has an estimated value of 3.35 million euros) and the riad in Marrakesh (valued at 2.75 million euros) plus another property west of Paris have been seized. As the couple stand trial, the Balkanys are, officially, financially ruined.
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- The French version of this article can be found here.
English version and additional reporting by Michael Streeter