France's Plutocracy - the Bettencourt Scandal shakes the Republic

A scandal is shaking France, with all the ingredients of a mystery thriller: an aging heiress, her alleged gifts of manilla envelopes stuffed with money for illicit campaign contributions, an island in the Seychelles owned through secret accounts in Luxembourg, a butler who surreptitiously records his employer’s conversations, other offshore accounts and tax-avoiding schemes centered on Switzerland, and sordid political implications that reach high into the national leadership, including the president of the republic, Nicolas Sarkozy.

Known as L’Affaire Bettencourt, after the heiress, Lilliane Bettencourt, the scandal has been grabbing headlines in Europe for weeks, as police carry out searches and the internet hums with newly-disclosed treasures of information on the case. Bettencourt, worth $20 billion, is heiress to the L'Oreal cosmetics fortune.

Such a scandal reveals, in all its sordid detail, the inner workings of France's plutocratic system. Thanks to the butler’s recordings, comments by accountants, and other evidence dug up by the judicial police, we see how the super-rich pour money into political campaigns through secret contributions in defiance of strict limits in the law. The facts of the case are not yet proven and perhaps never will be, but there is strong evidence in the form of a cash withdrawal of fifty thousand euros just prior to an alleged meeting at which money was said to have been funneled secretively into Sarkozy’s campaign war chest.

Then there are the offshore bank accounts and properties that Madame Bettencourt owns, in spite of French laws banning such tax-evasion arrangements. Ironically, Eric Woerth, then Budget Minister, made public gestures to close down offshore abuses, while his wife was working at the time for the money managers of Mme. Bettencourt, who were actively maintaining large offshore holdings. As treasurer of Sarkozy’s party, Woerth was almost certainly involved in the illicit contribution scheme and he has now resigned from that post. But he continues as Minister of Labor, in charge of a major rollback of French public pensions. To curry favor with Woerth, Mme. Bettencourt’s key financial advisor gave a cushy job to Woerth’s wife, according to his own report in one of the tape recorded conversations.

Recently the scandal has taken another nasty turn. When Le Monde newspaper published leaked police documents revealing further evidence of Eric Woerth’s complicity, France’s domestic intelligence service opened a secret investigation to track down the leaker – in direct violation of national laws protecting journalists’ sources. Le Monde has accused President Sarkozy of himself ordering the investigation, in defiance of a press law he introduced into the National Assembly in January. Sarkozy is fighting for his political future, and no holds are barred to protect the plutocracy and their dear friends in government.