Woerth/Bettencourt: efforts to cap the well fail, storm approaches

This week’s Canard Enchainé has a cartoon likening the Woerth/Bettencourt scandal to the Deepwater Horizon oil spill. This annoys me, as I’ve been making the same joke to anyone who will listen for weeks. So what happened? Well, just to run up to speed…

So there’s the heiress to L’Oreal, Liliane Bettencourt, the richest woman in France. (Among other things, she is the second biggest taxpayer and receives a reputed €34m in dividends a month.) She’s in her eighties, and she has a daughter. She also has a faintly boho circle of friends and a crack team of accountants. Now, she fell out with her daughter about the amounts of money she spends on her mates. The daughter sued, trying to get rid of her mother’s accountant and have mamma placed under a power of attorney. Mamma doesn’t agree, and the fact that she manages to pay the same marginal tax rate as someone on a salary of €3,000 monthly would tend to support the notion that she can well look after herself.

Then it turned out that her servants had been secretly taping conversations between her, her accountants, and various others. Sensation; one of the people involved is Eric Woerth, the former Budget Minister and now Minister of Labour. Eric Woerth’s wife, Florence, is an accountant employed by the Bettencourt family office. Further sensation.

But what were they talking about? One of the plaintiffs in the original lawsuit now gets her own back, by telling the newspapers, specifically the former Le Monde editor Edwy Plenel’s subscription-only website Mediapart. She says that Mme Bettencourt was in the habit of inviting key right-wing politicians for dinner and distributing yer actual brown envelopes stuffed with raw cash. Names include Woerth, Prime Minister Francois Fillon, and…Nicolas Sarkozy. El presidente himself.

Suddenly, no-one was talking about the family dispute any more, and a certain Macondo quality took hold. A string of efforts to cap the leaking well began.

Activating the giant shears

First of all, the UMP’s underwater robots tried to cut off the information source, encouraging legal efforts to suppress the documents of the case. That didn’t work; they were clearly “d’intéret génerale” and anyway, bits were washing up everywhere. Including in Switzerland, where it was alleged that €100,000 of the campaign money had come from. This would be highly illegal.

Top Hat

Then they tried to place a steel cap over the leak. The ex-accountant was quizzed by the police, and suddenly decided that Sarkozy hadn’t received the money and that the dates were wrong. What was wrong about them wasn’t clear, but it was certain who was at fault. Le Figaro somehow got what purported to be an extract from the transcript of the police interview, which said that Mediapart had “romanced”, perhaps a careful choice of words. (Remember that bit – it’ll come up later.)

There was only one problem; the police had already seized the bank statements, and large sums of cash had been withdrawn on each of the dates in Mediapart’s original report. Bubbles of hot air were building up beneath the cap, rendering it dangerously unstable.

A string of new leaks began to appear; a rather well connected racing stable, which had turned up just in time for its owners to benefit from a special tax break, for example. The tax break allowed those subject to France’s wealth tax to shield some of their assets by investing in small businesses. It had probably not been foreseen that such a small business might include buying horseflesh. Who changed the rules? M. Woerth, while his wife was one of the shareholders.

Actually, the affair has a curious horsey scent. Woerth is also accused of having sold a publicly owned racecourse, at mates’ rates, in his capacity as mayor of Compiégne…

There was more serious stuff, too. Bettencourt’s tax file, as one of the biggest in France, should have been audited every 3 years at least. Somehow, this had not happened since 1995 (significantly, since the end of the Mitterand presidency). The internal inquiry denied that Woerth had anything to do with it, but not many people believed this.

In the light of all this, containment efforts broke down. The accountant changed her mind again. The new line of defence was that the large cash withdrawals represented the Bettencourts’ pocket money. Even Le Figaro noted the curious coincidence that this requirement spiked by a factor of eight immediately before elections.

Top Kill

Clearly something more powerful than the underwater robot was required, and it was decided that a shot of Presidential authority might do it. Nicolas Sarkozy appeared on national television, in an awkward cross between an interview and a formal address, during which he talked a great deal about pensions. Afterwards, the semi-interviewer was accused by the France 2 journalists’ union of having done the government a favour.

Then came a new shocker – the discovery of the “microparties”. In France, it is illegal for a party to accept more than €7,500 a year from any one person or organisation. There is, however, no restriction on how many parties one candidate may be a member of. Also, someone who is a member of a party may give it as much as they like, and an association (as opposed to a party) can do as it likes and can also turn into a party at any moment. As a result, France has over 300 active political parties, many of which have no members. Inevitably, Woerth turns out to have such a personal party. The President himself has two. Valérie Pecresse has three. Laurent Wauquiez took the opportunity of an official trip to London to solicit money for his pocket party from French businessmen here.

Thick, sticky cash kept spilling from the damaged well. It turned out that Bettencourt had received €100 million in refunds over four years under a Sarkozy-initiated tax cut. Woerth was discovered to have pulled strings with the Bettencourts for his wife. The ex-accountant had been paid by both Bettencourt and her daughter. And there was that thing with the island in the Seychelles of unknown ownership.

This week’s Canard has an informative article on the Bettencourts’ tax affairs; thanks to a neat structure, the dividends from L’Oreal (a sort of feudal tribute imposed on every artificial blonde) flow into a shell company and sit there. Having been taxed as income at source, they are not then subject to further taxation. The lady draws on this company’s funds as required, and therefore manages to pay income tax only on what she spends.

Junk Shot

The situation, therefore, is grim. Sarkozy has been quoted as complaining that Woerth is “un poids, pas un atout” (a burden, not an asset) that it was “impossible de se délester” (impossible to jettison). Which begs the question, why is it impossible to get rid of him? It probably has something to do with the time he spent as the UMP’s treasurer. The president has some experience of these things – as Edouard Balladur’s campaign director in 1995, he was responsible for banking 10 million francs of campaign contributions. Ostensibly collected at campaign rallies, the only unusual feature of this transaction was that it consisted entirely of 500 franc notes. As Arthur Goldhammer says, one way of looking at Sarkozy is in terms of a swap of elites – the electorate turning to the private-sector rich rather than the civil service/industrial technocracy. “I call you…my base!”, indeed, but surely that took it a little too far.

So, what to do? Fortunately, there’s always the option of abasing yourself in a binge on racist demagoguery. So the police shot a gypsy, which started a riot.

Ce matin, au cours du Conseil des ministres, Sarkozy a donc annoncé qu’il organiserait une réunion, le 28 juillet, à l’Elysée sur « les problèmes que posent les comportements de certains parmi les Gens du voyage et les Roms » et qu’on y déciderait « l’expulsion de tous les campements en situation irrégulière ».

One of his own senators wouldn’t agree, but we’re in “don’t confuse me with the facts!” territory. After all, they also want to pass a flag-burning law, despite the fact there already is one. But sometimes, the best solution is a million gallons of old rope, balls, and toxic mud.

I mentioned that the Figaro story would come up again. Look at it closely; you’ll notice that there is no byline attached. This week’s Canard has a news-in-brief item mentioning a protest by the paper’s journalists about a story that was dubious and “part of the presidency’s communications strategy”, in connection with an unsigned article.

6 thoughts on “Woerth/Bettencourt: efforts to cap the well fail, storm approaches

  1. Excellent overview of a spectacular clusterfuckfest!

    Oh course, the other metaphor, of the Sarkozie as the French football team, with El Presidente himself as Domenech.

    Shame its so long till the elections. The opposition smells blood but it’s not as though they can really go in for a kill..

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  4. The opposition smells blood but it’s not as though they can really go in for a kill..

    This is a case of Nap’s remark about not interrupting the enemy while he’s making a mistake, though. I think Aubry is playing the long game and letting the contradictions work themselves out – if Sarko decides to throw Fillon and Woerth under the bus, he’s got an excellent chance of ending up with one of his classic-Gaullist rivals as PM and potential challenger. Alain Juppé, J-P Raffarin, and de Villepin are all warming up.

    There are even those who suggest he might call for a dissolution of parliament, and throw the whole cabinet under the bus. Obviously the left would win, but in the past, both Mitterand and Chirac were re-elected president during the cohabitations. It’s unlikely, but generally speaking, Sarko seems to believe that he benefits from throwing all the cards in the air and being the first to respond, which plays into his own theatrical nature.

    It’s also important to remember that we’re in the era of short but renewable presidencies. If he plans to stay at the chateau in the long term (he’s occasionally suggested he might not), having to put up with a term of cohabitation might be worth it to get re-elected, hoping that the right could retake the government at a later date.

    In the old 2×7 year system, there was a good reason to avoid cohabitation – a lost legislative term could never be retrieved, much as losing the US Senate is irretrievable for a president.

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