The still-unfolding scandal surrounding the secret foreign account of former budget minister Jérôme Cahuzac, first revealed by Mediapart last December, has rocked the French political establishment to its core. But it may not be the last such explosive revelation. For the private Geneva-based financial institution that Cahuzac used to manage his funds hidden abroad, Reyl & Cie, is alleged by several sources contacted by Mediapart to have provided its discreet services to other French personalities - including senior political figures. Dan Israel pieces together a secret and complex financial puzzle, with the help of insiders from the world of finance and banking in Geneva and Paris, many of whom agreed to speak only on condition that their names were withheld.
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The countdown to the potentially explosive denouement of the Cahuzac affair began on March 22nd. Following a request, channelled via their colleagues in Switzerland, by French examining magistrates Renaud Van Ruymbeke and Roger Le Loire, who are heading the judicial investigating into the Cahuzac affair, the banks UBS and Reyl & Cie handed over to the Swiss judicial authorities documents in their possession concerning assets that had not been declared in France by Jérôme Cahuzac.
UBS had already been the object of a demand for information on Cahuzac's bank account by the Swiss authorities, following a request by the French finance ministry to their Swiss counterparts on January 24th. UBS replied that it had not found an account under the name of Cahuzac in its records. But the question asked by the French ministry only related to a period limited to between 2006 and 2010, an issue that has put finance minister Pierre Moscovici under pressure over a suspected cover-up in the affair. Most importantly, it did not mention Reyl. Yet it was in this discreet establishment that hid the details of the route taken by the former budget minister's Swiss assets. In an interview with Mediapart, finance minister Moscovici sought to justify the incomplete request, giving assurances that he had scoured Mediapart's own stories on the subject for leads to give to the Swiss authorities.
But contrary to what the finance minister asserted, information about Reyl's involvement in the case of Cahuzac was indeed publicly available before January 24th, the date when the request to the Swiss authorities was made.
On December 10th, Mediapart first mentioned the name of Dominique Reyl, the bank's founder, disclosing that he was involved in setting up a company belonging to Hervé Dreyfus, Cahuzac's wealth manager. His name was mentioned in an article two days later and again on 17th January, when Mediapart again identified him as Dreyfus's associate.
According to details published by Swiss daily Le Temps, and confirmed to Mediapart by a source close to the case, Cahuzac's Swiss bank account was first opened at the UBS branch in Geneva in 1992. Its contents were later transferred, in 1998, to Geneva-based Reyl & Cie. And it was in 2009 that the money was transferred to Singapore to a subsidiary of another major Swiss bank, Julius Baer. According to Cahuzac's lawyer, Jean Veil, about 600,000 euros remained in the account.
Despite these confusing financial transactions, the details tally with the contents of a recording revealed by Mediapart on December 5th last year in which Cahuzac, speaking in a conversation in late 2000 with his wealth manager, talks of his account with UBS in Geneva. “It pisses me off to have an account open there, UBS is not necessarily the most hidden of banks," says Cahuzac. For at the time, Reyl was not a bank. It received its banking licence in November 2010. Until then, it put the funds that it held into other establishments, and among the custodian banks regularly used by Reyl was UBS.
Reyl was not required to give its banking partners the identity of the clients for whom it was depositing the funds; in 1999 the company had obtained the status of securities trader, a half-way position between a simple fund manager and a bank. This status allowed it to open group or 'omnibus' accounts, placing altogether the funds of several clients, who all remain anonymous.
Reyl & Cie made extreme discretion the cornerstone of its business, one of the keys to its success - which in recent years has been dazzling. The Compagnie financière d'études et de gestion, as it was originally called, was founded in 1978, and adopted its current name a decade later. At its head was Dominique Reyl, who graduated from the top French business school HEC in 1963 and who went on to become a financial analyst in New York and Brussels. Originally from the Alsace region of north-east France, Reyl later moved to Geneva, eventually taking Swiss nationality. Reyl & Cie operated on a low profile for some 20 years, indistinguishable from dozens of other financial 'boutiques' based on the same model in Geneva.
“With these small fund managers there was traditionally an enormous portion of foreign taxpayers who were hiding money from their national tax authorities,” commented one expert familiar with wealth expatriation systems, whose name is withheld. “And it was always rumoured that Reyl had a French client base.”
That view was confirmed by a Geneva-based banker, also speaking to Mediapart on condition of anonymity, who witnessed the increase in the number of Reyl's staff and customers: “If there's been one outfit which had as French clients showbiz personalities, leading captains of industry and politicians, it's Reyl,” he said.
While there are rumours and recurring accounts of who these clients might be, the only established names - other than Jérôme Cahuzac - are those of Paul Dubrule, co-founder of the Accor hotel group and who is a tax exile, and the veteran French advertising executive Jacques Séguéla , a client of the bank's Paris branch. His name was revealed as one of Reyl’s clients by French daily Le Monde on April 6th. Séguéla claimed that his money was deposited in France. The bank itself did not respond to Mediapart's questions.
It was with the arrival as the head of the company of François Reyl, the son of the founder, that it began a considerable growth. Dominique Reyl remained involved with the firm on a daily basis but it was François, a lawyer by training who had worked in commercial banking, who oversaw the firm's emergence from obscurity over the course of just a few years.
In 2006, Reyl & Cie managed assets worth a billion Swiss francs, according to Swiss daily Le Temps. By 2010 this had grown to 4 billion Swiss francs, reaching 7 billion Swiss francs today. According to one former employee, the firm had around 15 staff in the middle of the 2000s. There are around 150 employees today, working in a modern headquarters in the rue du Rhône, a fashionable street in the centre of Geneva which is also home to UBS's Geneva operation.
Offices have now been set up across the world, in Zurich, Hong Kong, London, Paris (in 2004) and Singapore (in 2010). Reyl has developed fund management for institutional clients – companies – and has moved into the field of acting as 'family office', an activity that involves wealth management but also the almost daily management of large personal fortunes. But some finance professionals in Geneva doubt that this alone explains the explosion in the company’s turnover. “A bank that grows so much, it often signifies that it is taking on clients [with assets] undeclared [to their national tax offices],” said one private banker. “Especially as during the period of Reyl's expansion, many large banks started to refuse accounts that were a bit doubtful.”
An agreement between Switzerland and the European Union on the taxation of savings came into effect on July 1st 2005, and since then interest payments on anonymous bank accounts have been subject to a withholding tax (which has risen from 15% in 2005 to 35% now). But this rule initially only applied to individuals and not to companies' bank accounts. In the months following the tax agreement, Geneva fund managers put all their efforts into transferring accounts to offshore companies which were set up specifically for the purpose. Another technique, as mentioned earlier, was to establish grouped or omnibus accounts, by definition anonymous, which were opened at various banks by asset managers such as Reyl.
But matters became even more difficult for the fund managers when, on March 13th 2009, Switzerland adopted standards on tax cooperation set out by the Organisation for Economic Cooperation and Development (OECD), paving the way for the exchange of information with other tax authorities from January 1st 2010. A key change was that it became a crime to help an individual to evade tax in their country of residence. Reyl's managers, like almost all of their counterparts in Geneva, then began turning to offshore tax havens to hide their clients' identities.
Based partly on information provided by the International Consortium of Investigative Journalists' 'Offshore Leaks' report, Le Monde reported on April 6th that Reyl "organized the swift migration of 'problematic' accounts to Singapore, including that of Cazuhac, which was transferred to a subsidiary there of Swiss private bank Julius Baer". The French daily also mentioned "six companies in the Seychelles" owned through bearer shares, a system that prevents any identification of the beneficial owners. Other such vehicles were said to have been set up in the British Virgin Islands, Panama and Costa Rica.
Reyl & Cie officially opened a subsidiary in Singapore in 2010, and was awarded a fund management licence from the Monetary Authority of Singapore. But its involvement in the city-state goes back further than that. According to information obtained by Mediapart, and also by Le Monde, it began opening accounts there in 2009, with the help of the services of Swiss-Asia Limited, which provides addresses and offices that enable companies to continue managing money without showing up on the official radar.
The vast majority of Swiss financial institutions made a dash for Singapore and other tax havens in the stormy period before January 1st 2010, but not all behaved in the same manner. Some started to pay more attention to the origins of the money entrusted to them. According to Swiss newspaper Tages Anzeiger, Julius Baer asked Cazuhac to provide an assurance that his money had been declared for taxes in France before accepting it in Singapore. It added that Cahuzac, then an opposition Member of Parliament, lied to the bank by providing a simple letter in his own name, a document that the newspaper described as a "falsified tax certificate".
The attitude shown towards ‘politically exposed persons’, or PEPs, is not the same everywhere. In all big financial institutions their accounts are carefully examined by a special committee several times a year. "At Reyl it is often the founder and his son who are on this committee, which can help things go smoothly," said one person familiar with such activities.
Mediapart understands that the Swiss financial markets supervisor, FINMA, is discreetly monitoring Reyl's activities. Questioned about this, FINMA said it does not comment on individual cases.
"When a bank shows up in an unusual way, there will be a routine inquiry," a legal source noted. But this poses no great danger for Reyl, said another source close to the affair: "From a Swiss point of view, Reyl has so far not committed any offence and there is nothing very unusual in its activities.”
In a statement issued on April 3rd, the Swiss public prosecutor's office announced that "on March 22nd 2013 the banks Reyl & Cie and UBS provided the public prosecutor with the documentation requested" and "no criminal procedure has been launched in Geneva because no punishable offence has been committed in Switzerland".
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Geneva public prosecutor Yves Bertossa told Mediapart: "Our investigation is finished [...] unless the French legal authorities make any further requests." Bertossa was elected for a six-year term to a role that makes him totally independent. His father, former prosecutor Bernard Bertossa, was one of the signatories of the 1996 Geneva Appeal by a group of anti-corruption magistrates calling for tougher action by the European judicial authorities against money laundering and tax havens.
Yves Bertossa is likely to have further contact with French examining magistrate Renaud Van Ruymbeke, who specialises in financial crimes and who is leading the judicial investigation into Cahuzac. Mediapart understands that Van Ruymbeke is interested in furthering investigations into Reyl & Cie and one witness in particular has caught the attention of investigators. This Geneva banker, who has intimate knowledge of Reyl’s practices, was questioned in mid-February by police from the French police's financial investigation division, the Division Nationale des Investigations Financières (DNIF).
But before then, he had been interviewed by French journalist Antoine Peillon, author of a book on tax evasion published in 2012 called Ces 600 milliards qui manquent à la France, ‘These 600 billion that France is missing out on’. Peillon provided details of their conversation on a blog he publishes on Mediapart, and also in article published by Le Monde.
Contacted by Mediapart, the banker described in unambiguous terms the alleged illicit activities of Reyl and its French intermediary Hervé Dreyfus, Jérôme Cahuzac's wealth manager. Dreyfus, who maintains a low profile, has never responded to repeated requests by Mediapart for an interview.
In mid-December Le Temps described Dreyfus as the half-brother of Dominique Reyl and also as a close confidant of Cécilia Ciganer, the second and divorced wife of former French President Nicolas Sarkozy. In all probability, Dreyfus met Antoine Cahuzac, the brother of the disgraced politician, at Crédit Commercial de France when they both worked there in the early 1990s.
The banker witness also says that Dreyfus acted as a tax advisor to Sarkozy, describing him as masterful in maintaining "a network of political connections, both on the Right and the Left, as well as relationships with business leaders and showbusiness people". Dreyfus introduced dozens of clients to Reyl, the banker said, adding: "It was an ideal company for him to deal with. Its small size means he always has access to the management, who are also the company's founders. That guarantees great efficiency, total discretion and the ability to come up with custom-made solutions for clients. And all this was perfect for building up a reputation by word of mouth.”
Since 1994, Hervé Dreyfus has also been one of the directors and partners of the financial group Raymond James Asset Management International (RJAMI), which is approved by the French financial regulatory body, the Autorité des Marchés Financiers. Dreyfus is a private client manager at RJAMI but the company says it does not have any connection with his other activities, including his personal holding company Hervé Dreyfus Finance, which was also set up in 1994 and which counts Dominique Reyl as a shareholder.
According to one expert, there is little probability of finding evidence of illegal activity by the firm. "With the Swiss there is never any trace of dealings,” he commented. “Anything going through a French billing structure will of necessity be totally clean and therefore not relevant in this case." In the murky world of covert Franco-Swiss relationships, it is not unusual to find rich individuals referring to their wealth manager only by a pseudonym, to better cover the tracks.
Mediapart questioned several employees within the Reyl company as to whether Hervé Dreyfus is known at Reyl's Paris office. Some said they "have sometimes heard the name" while others insisted they have never heard of him. As for any illegal activity within the firm's business in Paris, one well-informed source commented: "Something has definitely been going on, but it is very discreet, and no more or less prevalent than anywhere else.” Another well-placed source believed some clients may have met in Paris with a representative from Switzerland, which would be illegal, while there were allegedly “some transfers of money, but they have never been huge”.
However, the above-mentioned key banking witness, already interviewed by investigators, offered a different version of events to Mediapart, although his allegations are unverifiable. "All the asset managers at Reyl Paris have already introduced one or more clients to the parent company in Geneva," he said. "This low-profile activity was overseen directly by François [Reyl] and clients would meet the bankers in Switzerland or elsewhere, in London for example." He goes as far as to describe Dreyfus as the key player in a system of money transfers designed to "make cash available to clients who want to have access to [their] money" even if it is deposited in Switzerland.
This serious allegation implies that the wealth manager carried ready cash around on either side of the border. Le Monde reported that suspicion of this has aroused the keen interest of the French customs police, which recently contacted the Geneva banker to seek more information.
A mystery that investigators have yet to explain is that Cahuzac's Singapore account is believed to contain a balance of 600,000 euros. According to French investigative and satirical weekly Le Canard Enchaîné, 1 million euros at most had been paid into it. That is an insignificant sum by the standards of Swiss private banks, which are reluctant to open a new account for anyone with less than several million euros. "At the time, Reyl was a small fish and it was doubtless delighted to accept this sort of client," a former magistrate told Mediapart.
But recent media reports suggest a different scenario. On Sunday April 7th, Swiss public broadcaster RTS posted an article on its website, citing banking sources, alleging that Jérôme Cahuzac "attempted to deposit 15 million euros in a bank in Geneva in 2009", at a time when his Reyl account was transferred to Singapore. RTS said the institution, one of Reyl & Cie's custodian banks, refused the deposit.
The allegation that Cahuzac had sought to place 15 million euros in a Geneva account was first raised by RTS star presenter Darius Rochebin who, on a programme called TV5Monde broadcast on Friday April 5th, said the attempt had been confirmed by "many sources" (see video above).
In parallel to his political career, Cahuzac exercised as a hair-transplant surgeon for some 15 years, beginning in the mid 1990s. His lawyer, Jean Veil, said the bulk of the undeclared earnings deposited in Switzerland came from this activity. But if the 15 million-euro figure is true – and Veil has dismissed the report - it prompts the question of where that money is now, and what was its origin, which could not be explained only by Cahuzac’s activities as a surgeon. Swiss investigators say they found only one account in Singapore.
Between 1988 and 1991, Cahuzac served as an advisor to the then socialist health minister Claude Evin, during which time he developed close relations with the pharmaceutical industry. In 1993, he created a consultancy firm specialised in advising pharmaceutical companies, an activity now at the centre of the judicial investigation led by Judge Van Ruymbeke.
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English version by Steve Whitehouse and Michael Streeter
(Editing by Graham Tearse)