Sarkozy's summer of scandals: Is the French president in trouble?

A French prosecutor is now investigating whether Liliane Bettencourt, heiress of the L’Oréal fortune, gave some $190,000 in illegal campaign contributions to French President Nicolas Sarkozy.

By , Staff writer

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    French President Nicolas Sarkozy, center, welcomes his newly elected German counterpart Christian Wulff, left, at the Elysee Palace in Paris Wednesday.
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A court case scandal involving the world’s third-richest woman and her daughter now threatens to engulf France’s highest elected official, President Nicolas Sarkozy. Allegations of corruption – as the president's approval ratings slide to a low of 26 percent – come on top of a string of other problems for Sarkozy.

A French prosecutor today said he will probe whether Liliane Bettencourt, heiress of the L’Oréal fortune, gave some $190,000 in illegal contributions to Mr. Sarkozy’s 2007 presidential bid. A longtime accountant for Ms. Bettencourt told a French news website she participated in the cash transfer. She alleged Sarkozy took envelopes of cash as a dinner guest at the Bettencourt home two decades ago.

Just last week, Mr. Sarkozy’s trusted labor minister Eric Woerth received prominent attention after tapes made by a Bettencourt butler showed possible tax evasion crimes by Bettencourt at a time when Mr. Woerth’s wife was a key financial adviser to the 87-year old, whose worth is $20 billion, according to Forbes.

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Now suddenly and sharply, early July is proving a nadir for Sarkozy and his high-energy political machine.

So far, little hard evidence has come to light to topple the French president, despite a salivating French press. Even tough critics like Jean-Francois Kahn point to a lack of any smoking guns. Sarkozy is instead seen as beleaguered by a surfeit of small scandals brought on partly by his cultivating of glamour and jet-set friends. But the French media are saying the Bettencourt scandal is becoming the Sarkozy crisis.

And the litany of Sarkozy concerns seems to grow daily:

  • On July 4, two of Sarkozy's junior ministers resigned after scandals involving the purchase of $15,000 in cigars on the public tab, and the use of government jets to fly around on dubious federal business trips to the Caribbean.
  • The palace is studiously avoiding the word “austerity,” even while it plans to cut some $45 billion from the government budget over three years.
  • Sarkozy is not getting along well with German Chancellor Angela Merkel, his key European partner, over coordinating economic policy.
  • France’s proud World Cup team deconstructed in South Africa in three miserable games that shook Paris and brought wailing in the streets.
  • Other smaller corruption allegations include misuse of grand federal apartments, and various salary schemes, such as $12,000 monthly extra allowance for ministers to write reports on “globalization.”

Socialist Party leader Ségolène Royal, who ran against Sarkozy in 2007, used the word “corrupt” to describe the dealings of the French government for the first time. Senior French political analyst Jean Daniel describes an “irrepressible malaise,” about the palace team. Meanwhile, ruling party politicians say the Jacobin sentiments of the media and opposition politicians are creating a political “highway for the far-right” in France.

Not even the first day of shooting for a new Woody Allen film, "Midnight in Paris," that will include appearances by France's first lady Carla Bruni-Sarkozy, is providing much of a distraction.

Rumors of a Sarkozy cabinet reshuffle this autumn in order to highlight new talent and vigor – is now seen as a reshuffle merely to be rid of corrupt ministers. Prime Minster Francois Fillon was forced to say to journalists today that, "The priority at the moment is not a cabinet reshuffle, but reforming the pension system and cutting deficits.”

“I will not be surprised to see the left ask Sarkozy to step down in the next few days, but I think it is too early to know what the French really think,” says the Paris political blogger Frederic Saint Clair. “Actually, the French are used to hearing about this kind of story. Every president has had these issues.”

French police today confirmed that roughly $70,000 in cash was removed from a BNP Paribas bank in central Paris by the Bettencourt accountant, Claire Thibout, in the days prior to the 2007 Sarkozy election victory. Ms. Thibout told the Mediapart news site she was ordered by Bettencourt top adviser Patrice De Maistre to take out (150,000 euros) $190,000 in funds to go to Mr. Woerth, who has also served as treasurer of Sarkozy’s ruling UMP party. Since funds over $70,000 could be traced, she only took out that amount, Thibout said.

The Bettencourt scandal originated in a fight between heiress and daughter over some $1.1 billion the senior Bettencourt gave a close male photographer friend – prompting the daughter to allege manipulation. A trial set to open last week was put on hold after it became known that Bettencourt's butler had a year's worth of secret tapes of conversations held in Bettencourt’s parlor and dining area.

One dimension of the current scandals that bothers ordinary French is the ruling party’s immediate passing into law in 2007 a “tax shield” designed to keep French wealth in the country. Instead, it appears from the Bettencourt tapes and from the one day of court last week that many hundreds of millions in taxable accounts were sent offshore – at the same time Bettencourt received some $40 million in a tax rebate from the French treasury, which Woerth would have been aware of. Woerth said this week the rebate was “perfectly legal.”

Amid the controversy and coverage of Bettencourt and Sarkozy, a bipartisan statement by a senior ruling party member, Simone Veil, and a Socialist and former prime minister, Michel Rocard, counseled against a headlong and uninformed accusations. “Each one has the right, and even the democratic duty, to denounce or to defend such or such situation... But to attack ad hominem, to hassle without respite, to denounce without a proof, it is not serving the debate. It is not serving democracy, it weakens it.... It is harmful to human dignity...."

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