The French public prosecution services on Friday announced they have opened an investigation into suspected “influence peddling” in relation to a 3-million-euro contract handed to former president Nicolas Sarkozy by Russian insurance services group RESO-Garantia in 2019.
RESO-Garantia, one of Russia’s largest insurance companies, is owned and managed by two billionaire brothers of joint Russian and Armenian nationality, Sergei and Nikolai Sarkisov, who in 2008 sold a 36.7 % stake in their group to French insurance giant AXA. Meanwhile, Nikolai Sarkisov has extensive property business interests in France, estimated to be worth around 200 million euros.
The financial crime branch of the prosecution services, the PNF, publicly confirmed the nature of its probe just hours after Mediapart first revealed its existence in a report published earlier on Friday.
The PNF added that the remit of the preliminary investigation also includes suspicion of “money laundering” the proceeds of a crime.
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The PNF is seeking to establish whether Sarkozy’s remuneration is for his services as a consultant – which would be perfectly legal – or for potentially criminal activities as a lobbyist for the two Russian oligarchs.
Mediapart has learnt that the probe was prompted after Sarkozy received a payment in early 2020 of 500,000 euros as part of his contract with RESO-Garantia. The bank transfer was sent from Russia into his account with the Edmond de Rothschild private bank. Contacted by Mediapart, the bank declined to comment on the case.
The French finance ministry’s anti-money laundering agency, Tracfin, alerted the PNF to the money transfer and the preliminary investigation was launched in the summer of last year. Investigators recently visited the Paris headquarters of Edmond de Rothschild France – the French arm of the Swiss-based Edmond de Rothschild group – in search of internal documents relative to the case.
First questioned by Mediapart last November, the “family” office representing the Sarkisov brothers sent a written reply by email (see the full response in the 'More' section here) in which it said: “We are honored to confirm that M. Sarkozy agreed to accept a nomination as the Special Advisor and the Chair of the Strategic Advisory Council to the Board of RESO Garantia. RESO is an insurance joint venture between AXA and the Sarkisovs founding family.”
The reply was the first public statement about the appointment of Sarkozy, who has no known professional experience or expertise in the insurance business.
The office said it had been “honored to be introduced to M. Sarkozy at the beginning of 2019” and that his appointment was made in July of that year. “This appointment was disclosed to public authorities in France and elsewhere consistent with any applicable requirement,” it added, without further detail on what form that disclosure took.
“In his capacity as the Chair of the Strategic Advisory Council, M. Sarkozy is involved in ongoing major multinational projects, all of which are commercial ventures entirely outside France, which do not involve any government or governmental agencies,” the statement continued.
“We would like to stress that the work of M. Sarkozy and his team is limited strictly to RESO,” the family office underlined. “He has no involvement whatsoever in any private matter of our family.” It insisted that Sarkozy was not hired personally by the Sarkisov brothers.
Since losing office as French president in elections in 2012, Sarkozy has, among other activities, returned to working as a lawyer in a legal firm he jointly founded in 1987. The practice, Claude & Sarkozy, was recently renamed Realyze after co-founder Arnaud Claude retired shortly before a Paris court, in October 2019, found him guilty of helping a longstanding political ally of Sarkozy’s, veteran conservative MP and mayor Patrick Balkany, in a vast tax evasion scam. Claude was handed a three-year prison sentence, a 50,000-euro fine and a lifetime ban from exercising as a lawyer.
“In our experience at RESO, Mr Sarkozy is a superb negotiator and fine lawyer, and uses these qualities to assist in commercial discussions,” wrote RESO-Garantia’s head of public and media relations in a January 14th email reply to Mediapart’s questions (see the reply in full in the 'More' section here). “We at RESO are very pleased with the progress that has been made on commercial matters where Mr Sarkozy has been involved.”
RESO-Garantia refused to detail the projects for which it had hired Sarkozy’s services, nor would it say if he was engaged in his capacity as a lawyer. It also refused to confirm the sum of the former president’s remunerations.
Nicolas Sarkozy failed to respond to questions submitted to him by Mediapart on two occasions via his press attaché Véronique Waché.
Meanwhile, Nikolai Sarkisov, 52, and his brother Sergei, 61, have important business links with France; AXA has the second-largest stake in RESO-Garantia, while Nikolai Sarkisov owns a large number of luxurious properties in the country.
- A complex offshore structure for the deal with AXA
The two brothers currently hold a 58% stake in RESO-Garantia. The company was founded in 1991 by Sergei, who had previously worked in the Soviet Union’s state-run insurance sector. In 2008, French group AXA bought a 36.7% stake in RESO-Garantia for 810 million euros.
According to information obtained by Mediapart, the Sarkisov brothers set up a complex financial structure for the deal with AXA. In 2006, they created a company registered in Cyprus called Stanpeak, which was placed under the control of an offshore shell company registered in the British Virgin Islands, a notorious tax haven.
Stanpeak subsequently created another company, RGI Holdings SARL, registered in Luxembourg, which in turn controlled a Dutch-registered company, RGI Holdings BV. The Sarkisov brothers placed their stake in RESO-Garantia into RGI Holdings BV, via another complex system involving a Dutch foundation.
Thus, French insurance giant AXA, became the second-largest shareholder in RESO-Garantia by buying a stake in RGI Holdings BV for 810 million euros.
In March 2008, shortly before that deal was finalised, AXA agreed to lend Stanpeak 1 billion dollars (see document below) , which was paid back in 2012.
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Contacted by Mediapart, both AXA and the Sarkisov brothers declined to comment on their business dealings together.
Three months after Nicolas Sarkozy was hired by RESO-Garantia in July 2019, the ownership structure of the Russian group was simplified, when the Dutch company was wound down and the group’s capital was transferred to Luxembourg-registered RGI Holdings SARL, in which AXA became a shareholder.
Asked whether Sarkozy was hired to help RESO-Garantia in its dealings with AXA, both AXA and the Sarkisov brothers declined to comment.
What is clear is that AXA has been a major client for Sarkozy’s law firm Claude & Sarkozy (now renamed Realyze) for more than 25 years. According to an internal document from the practice obtained by Mediapart, between 1994 and 2015 Claude & Sarkozy was handed almost 800 assignments by AXA’s banking arm, AXA Banque, principally involving debt collection. The cases were directly handled by Sarkozy’s now-disgraced associate, Arnaud Claude.
- Luxury property in France
Nikolai Sarkisov, a fluent French speaker, bought his first property France around 15 years ago, in the fashionable Alps ski resort of Courchevel. That was soon followed by the purchase of a villa standing above the beach of Mala at the chic Riviera resort of Cap-d’Ail, close to Monaco. A businessman who had dealings with Sarkisov at the time, whose name is withheld, recalled: “He was very courteous, very agreeable. He went very often to Monaco.”
Since then, Nikolai Sarkisov has purchased a vast number of properties in France which Mediapart estimates are worth a total of around 200 million euros.
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Mediapart has identified 26 French companies controlled by the oligarch and which are registered as the owners of at least 17 luxurious properties around the country. Most of these French-registered companies are officially owned by Luxembourg shell companies, which are in turn owned by Nikolai Sarkisov’s Cyprus-registered holding companies, Arrowband Ltd, Milesfield Ltd and Worldcorp Ltd.
One of Sarkisov’s properties is a luxury split-level apartment of 600 square metres in the upmarket 16th arrondissement of Paris (it was the scene of a burglary last October when, according to French daily Le Parisien, thieves got away with valuables including watches, jewellery and furs worth a total of more than 500,000 euros). But he has mostly invested in property in the upmarket resorts favoured by Russians; he has five villas in Saint-Tropez, including a property made up of two villas bought for 30 million euros. He also owns a vineyard in the neighbouring commune of Ramatuelle. He owns another five properties in the surrounding Alpes-Maritimes département (equivalent to a county), including a villa on the Cap d'Antibes peninsula, a playground for the super-rich.
Among Sarkisov’s most prized properties are the Saint-Amé chateau in Ramatuelle, which has 14 hectares (34.5 acres) of grounds, a manor-like residence in Cannes with grounds of 16 hectares, which he bought for 21 million euros, and the 19th-century Malet chateau in Cap d’Ail. The latter, with a surface area of 1,000 square metres, including an imposing ballroom with a 15-metre-tall ceiling, boasts a stunning view of the Mediterranean coastline from its grounds of 6 hectares.
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According to one account, the news of Sarkozy’s recruitment by Nikolai Sarkisov and his brother was no secret locally. “I was told that he was going to eat me up alive because he’d become accompanied in his business dealings with Nicolas Sarkozy’s law firm,” commented a Riviera businessman involved in a dispute with Nikolai Sarkisov, speaking on condition his name was withheld. Questioned by Mediapart about the allegation, Sarkisov replied that the former French president is not involved in his private affairs, which include his property ownership.
Nikolai Sarkisov has invested more than 50 million euros in the Courchevel ski resort, where he has nine companies – two of which are hotel management firms – and four luxury chalets. In two property projects there, the Russian entered into a 50-50 partnership with François-Xavier Susini, a Corsican property developer based in Switzerland whose business is well established in the resort. Relations between Sarkisov and Susini subsequently soured and since mid-2019 they have been fighting each other in court in a dispute over the troubled 26-million-euro construction of a luxury chalet, Apopka.
As first reported in July 2014 by news agency AFP (in French here), a French judicial investigation was launched that year into suspected money laundering by Russians in property development schemes in Courchevel. One of the business operations cited in the AFP report appears to correspond with the first joint project by Sarkisov and Susini.
In 2010, the pair bought a chalet, which they then demolished and replaced with another, for a total of 17 million euros. According to the AFP report, the judicial investigation was interested in what it called “atypical” routes for the financing of what appears to be the same project, which included the use of companies registered in Luxembourg and Cyprus. The public prosecution services in Lyon, where the investigation is based, told Mediapart that the wider probe into “breach of trust, misuse of company assets, forgery and use of forgery, money laundering by an organised group” in property dealings in Courchevel was ongoing. The prosecution services did not say whether the joint project by Sarkisov and Susini was subject to their investigations.
In its written response to Mediapart’s questions, the family office representing Nikolai and Sergei Sarkisov said it had not previously seen the AFP report, but that after being provided with a translation of it “we do not see Mr Sarkisov being mentioned there”, adding: “The article refers to the Corsican entrepreneur who is a real estate developer in Courchevel (presumably, Mr Susini) and a response by his lawyer which rejects the allegations. The investigation (if one actually exists) has nothing to do with the Sarkisovs.”
François-Xavier Susini’s lawyer, Maurice Lantourne, questioned about the investigation, told Mediapart: “It’s a mystery, because you refer to an investigation in 2014, and it has to this day not been notified to Mr Susini, who has not been subject to any questioning.” On the subject of the joint project between Susini and Sarkisov, the lawyer added: “Concerning the operation itself, the funding was checked and traced, there is no problem.”
- When Armenia's consul owned the consulate offices
Nikolai and Sergei Sarkisov’s father Eduard was of Armenian origin and a senior civil servant under the Soviet regime. He was involved in creating the Soviet Union’s foreign trade ministry, and in the early 1960s was posted to Cuba, where he brought his family.
Nikolai and Sergei inherited through their father joint Russian and Armenian nationality. The brothers are active in supporting Armenian causes, including financially. Sergei produced a documentary about the 1915 Armenian Genocide by the Ottomans (and another, titled Hate Among Us, on the subject of anti-Semitism which last year won an Emmy award).
Among its replies to questions submitted by Mediapart, the private office of the two brothers said that the two brothers stepped down from their executive roles at RESO-Garantia in 2013 in order to take up posts as consuls for Armenia.
In November 2012, the Armenian government wanted to establish a new consulate in the French city of Lyon. Mediapart understands that in 2013, Nikolai Sarkisov bought a building in the city, on the passage Feuillat, for 1.8 million euros. In July2014, he was appointed as Armenian consul for Lyon, and led the inauguration ceremony for the new consulate which was installed in the building he had bought.
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Neither Nikolai Sarkisov nor Armenia’s ambassador to France, Hasmik Tolmajyan, responded to questions submitted by Mediapart as to whether his appointment as consul was in exchange for providing the offices for the new consulate free of charge. (Mrs Tolmajyan was first approached in November last year, when her assistant said she was too busy to comment because of the conflict in Nagorno-Karabakh. A second request for comment sent by Mediapart on January 13th met with no response).
In 2019, Armenian Prime Minister Nikol Pashinyan moved to end the system whereby a number of consuls, who could be appointed from outside the diplomatic corps, were unpaid and themselves funded the consulate premises.
While that was the case of Nikolai Sarkisov in Lyon, it was also that of his brother Sergei who was Armenian consul in Los Angeles from 2013 to 2018. Online Armenian news website FIP reported in April 2019 that Sergei Sarkisov “also paid the mandatory insurance costs of the staff of the Consulate General”.
In its written statement emailed to Mediapart, the Sarkisov brothers’ private office underlined: “Upon his retirement Sergey Sarkisov received the highest personal commendation from the Minister of Foreign Affairs of Armenia in the Government led by His Excellency Prime Minister Pashinian for his service to the nation and, in particular, for his efforts in global recognition of Armenian Genocide. Mr Sarkisov has also been decorated by the Order of Honour of Armenia by the President of Armenia for his extraordinary achievements in public service […] Any suggestion that Mr Sarkisov did anything improper, or was in breach of any regulation, or received any criticism from the Government, is therefore entirely false and fictitious”.
Concerning Nikolai Sarkisov, it said that he continued to work as consul in Lyon “well after” April 2019, and that the consulate continued to be housed in the property he acquired. “As you are no doubt aware, Armenia is not the world's wealthiest nation and accepts support from the global Armenian diaspora,” it added. “As you appreciate, if the Armenian authorities were to have an issue with the use of the consulate building they would have long discontinued it and returned it to Mr Sarkisov.”
- A trail of tax havens
While the Sarkisov brothers have frequently used tax havens in their company dealings, Mediapart understands that Sergei Sarkisov also personally obtained, in 2010, the status of tax residence in Monaco. His representative office told Mediapart that he has been resident in the tiny principality since 2018, when his mission as Armenian consul in Los Angeles came to an end.
The case of Nikolai Sarkisov is less clear. In documents from his companies filed with registry offices and consulted by Mediapart, he indicated, until 2016, that he was a resident of Moscow. Between January 2018 and March 2019, his residence was given as that of the Armenian consulate in Lyon.
In December 2019, he registered his residence as being in a building situated on a marina in Dubai, a United Arab Emirates tax haven. When Mediapart went to the address, the security guard claimed he had no knowledge of the oligarch, while no name figured on the door of the apartment Sarkisov had detailed as his home.
In July 2020, the billionaire reported his residence was in Cyprus, in the island’s southern coastal town of Limassol.
In July 2019, the vice-CEO of RESO-Garantia declared that the Sarkisov brothers lived in “Western Europe”, without giving further details. Questioned on the subject by Mediapart, Nikolai Sarkisov’s representative said that since he had retired from his role as consul in Lyon, he “shares his time between various countries, whist continuing to support Armenia”, but where the billionaire is a tax resident was not detailed.
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- The original French version of this report can be found here.
English version with updating by Graham Tearse