Paul from Paris

Here’s a rash generalization with a kernal of truth: English scandals involve sex; French scandals revolve around money.

All sorts of bizarre allegations are aired in France. Most of the time, the alleged schemes are too lurid and too ham-handed to make sense: a government minister took wads of cash from the L’Oréal heiress; a prime minister orchestrated campaign finance through occult, foreign accounts; a Chinese-born undergraduate pilfered top secrets from an auto part manufacturer during her summer internship. The truthfulness of the allegations generally fails to withstand the test of time, or careful investigation.

The latest bizarre allegation comes from French automaker Renault. It began the new year with a barrage of charges against three senior executives: Michel Balthazard, head of long-term product development; his right-hand man, Bertrand Rochette; and Mathieu Tenenbaum, who co-headed the company’s electric vehicle program. Renault is in the process of terminating the three men, all long-time Renault employees. Renault has also filed a criminal complaint, against persons unknown, alleging espionage, corruption, breach of trust, theft, and concealment.

The allegation is lurid but fails the credibility test. It suggests corporate infighting and turf battles more than industrial espionage. These are the clues that led me to reach this opinion:

• As reported by The Economist, Renault’s chief operating officer, Patrick Pélata, indicated that alleged leaked information concerned Renault’s “business model” and “vehicle architecture”, but not technical secrets, such as battery design. Don’t senior Renault executives talk about these subjects all the time, especially with JV partners, suppliers, and customers?
• Renault commissioned a five-month (!) investigation by a private firm but neglected to inform the French government, which is the also the automaker’s leading shareholder and which has powerful investigatory means at its disposal.
• Renault has backed off from initial reports made to the press. These were lurid and extremely prejudicial: an identified state-owned electric utility in China (!) reportedly made deposits to bank accounts in Liechtenstein and Switzerland (!). The origin and destination of the funds seem inspired by a made-for-television thriller, and there is massive incongruity between the suave secrets allegedly divulged and the crass payment allegedly tendered.
• Allegations reportedly were first made by unsigned letter.

Louis XIV by Hyacinthe Rigaud (1701)

Louis XIV never actually said, “L’Etat, c’est moi” (I’m the State), according to historians. But the saying fits with the image we have of the absolute monarch. The saying has staying power.

Some say that French president Sarkozy has a Napoleon complex. I beg to differ: doesn’t Sarkozy instead have a Louis XIV complex?

In today’s France, don’t all discussions turn, sooner or later, to politics? And, when they do, doesn’t Sarkozy quickly take center stage?

At this point in Sarkozy’s presidency, the catalog of projects is becoming long: save the planet, get the scum (la racaille) out of troubled neighborhoods, refound finance on a sound moral foundation, encourage business growth, earn more by working more, ….

But here’s the paradox: as much as Sarkozy would like to stake a claim on reclaiming safe streets, returning to secure jobs, and generally righting wrongs everywhere, his record on actual accomplishment is thin. The State isn’t up to Sarkozy’s oversized ambitions.

Isn’t this as it should be? Isn’t modest government or limited government –keenly aware of its limitations, whether by design or in practice– preferable to a state that thinks itself up to mastering any challenge?

This post is intended to reassure several readers who questioned whether Florence Woerth, the spouse of French labor minister Eric Woerth, had sacrificed her career in order to insulate her husband’s political career from potential scandal or harm.

Indeed, reported quid pro quo exchanges, where Woerth received a job and her boss received the Legion of Honor from her husband, led to Woerth’s resignation from Clymène. This company, where Woerth worked as a financial analyst, manages money for L’Oréal heiress Liliane Bettencourt and suffers heavy losses, year after year.

But Woerth’s departure from Clymène has not resulted in inactivity.

• On June 7, Woerth was elected to the board of Hermès, a French luxury brand that nurtures an equestrian heritage.
• Woerth is the founder and member of Dam’s, a stable whose shareholders are all women. Initially a quintent –Woerth was joined by Nathalie Bélinguier, Réjane Lacoste, Dominique Hazan, and Nicole Séroul (women involved in horse racing and textiles)– Dam’s has prospered and today counts about thirty members. Incidentally, under a law known by its French acronym, TEPA, investment in Dam’s yields significant tax benefits for its members. (The stable seems to have recently become publicity-shy, it’s web site having gone blank.)
• Woerth is widely reported to have longstanding ties with France Galop, another equestrian organization. She seems, at the least, to have served in the past on its horse owners’ committee.

Woerth’s equestrian interests are close to home, as her husband is mayor of Chantilly, a major equestrian center in France. This having been said, matters equestrian have dealt Eric Woerth the misfortune of an additional controversy: the press is asking why, just be changing ministerial portfolios, Woerth authorized the sale of a racetrack complex, estimated as worth €20 million, for €2.5 million in favor of its politically friendly tenant.

Long considered a great place to work and much admired in business, Arthur Andersen became a target for criticism in the wake of the implosion and scandal of Enron (also considered a great place to work and, in its heyday, much admired in business).

Arthur Andersen was criticized mostly for how its different parts worked as a whole. In addition to auditing, Arthur Andersen sold accounting services and consulted on many business questions. According to critics, an entity that sold advisory services could not be counted on to audit impartially the recipient of its own advice, especially as consulting was more profitable than auditing.

An alumnus of Arthur Andersen has been in the news in France.

Eric Woerth is mayor of Chantilly (a town north of France famous for its stables and horse racing), MP from the 4th district of the Oise, French conservative party treasurer, former budget minister, and current labor minister.

Eric Woerth is also the husband of Florence Woerth, a financial analyst. The details are contested, but according to press reports Eric Woerth orchestrated a meeting between Florence Woerth and money manager Patrice de Maistre. In any case, Florence Woerth soon got a job and Patrice de Maistre soon got a decoration.

Florence Woerth joined Clymène, a money management firm run by Patrice de Maistre that has two unusual features: its sole shareholder and sole client is Liliane Bettencourt, an heiress to the L’Oréal fortune; and it consistently loses money, having suffered losses of more than €100 million from 2000 through 2008.

Patrice de Maistre was inducted into the French Legion of Honor, and received a decoration directly from Eric Woerth. According to press reports, the ceremony to present the decoration had been scheduled originally for November 2007, when Florence Woerth joined Clymène, then was moved to January 2008.

Earlier this summer, there was much talk about conflict of interest.

For former finance minister and free-market conservative Alain Madelin, “This is a situation of conflict of interest, incompatible with the office”.

Eric Woerth contested the point. But he also started talking about a “Chinese Wall”, borrowing a term that investment banks use to describe how they practice underwriting and trading under the same roof. And as this metaphor makes plain, even if the Woerths never talk about their work, they do share a household, supporting one another financially.

Florence Woerth resigned from Clymène, which seemed to undercut her husband’s denial of any problem.

In French, vénal refers to someone who’s overly fond of money.

If used to describe a woman (une femme vénale), it’s probably the most severe form of insult: sleeping around is one thing; doing so for money is something else entirely.

In English, someone who’s venal is receptive to bribery. A venal person isn’t necessarily corrupt, but might be open to an offer of a bribe.

Whether in French or in English, both words –fighting words that invite a blow or a slap in reply– are derived from Latin: venum, meaning “for sale”.

And both words are easily confused with another: venial (in French, vénial). Venial describes a kind of sin; Christian doctrine distinguishes venial sin from mortal sin. Spelling, pronunciation, and even use suggest a kinship between venality and veniality. But etymologically the expressions are quite different: venial is derived from the Latin venia, meaning “forgiveness”; the error is named by its reparation.

What brought these confusing words to my mind was some recent news in France about two colorful fellows.

photo by David Monniaux

Christian Blanc is city councilman from Chesnay and MP from the third district of the Yvelines; until recently, he was junior minister for developing the greater Paris area.

Politics is a second career for Blanc. His first career was as a civil servant. It took an interesting turn when he was appointed head of the RATP, the publicly owned Paris area transit authority. He later took charge of Air France, then a state-owned company; he resigned when left-wing politics threatened to derail plans for privatization. For a few years, Blanc headed up the French operations of Merrill Lynch. He was in New York City, staying at a hotel at the World Trade Center, on September 11, 2001; but was saved because, around 9:00 am, he stepped out to smoke a cigar, his first of the day.

Blanc kept up his cigar habit. While junior minister, he ordered a thousand Cuban cigars (€ 12.00 each) and had the French taxpayer pay the bill. The press got word of this and reported the story. Blanc had some harsh words about some on his staff. He wrote out a check to the French Treasury for €3,500 to pay for cigars he smoked, then supplemented this sum with a second check, for €1,000. Prime Minister François Fillon suggested that he pay the entire cigar bill, and leave his government.

Alain Joyandet is mayor of Vesoul (familiar to readers of Stendahl’s Le rouge et le noir), a regional council-member for the Franche-Comté region, and MP from the 1st district of the Haute-Saône; until recently, he was junior minister for developing French overseas territories.

As for Christian Blanc, politics was a second career for Alain Joyandet. He started out running various companies in what became a regional media group. Today, he owns most of a company (that other family members run) that deals in yachts.

Joyandet attracted some unflattering attention when it became known that he chartered a Falcon business jet from Masterjet in order to attend to some business. No one doubts that Joyandet was on-the-job, and no one has suggested that he derived a personal gain from the private jetting, but the charter looked bad:

• Air France offers frequent, scheduled service;
• the French state has private planes that government ministers can use, so long as they reserve them in advance;
• French taxpayers paid €116,500 for Joyandet’s private jet (roughly 100 times what it would cost to fly Air France);
• Joyandet traveled in mid-winter to Martinique, in the Caribbean;
• Joyandet’s trip was motivated by an international conference to seek donations that would help Haiti recover from catastrophic earthquake damage.

After the profligacy was reported in the press, Joyandet had some harsh words about some on his staff.

A subsequent report offered news that seemed more damaging to Joyandet personally. Joyandet owns a home in Grimaud, in the Var, for which he received a building permit to make an addition. The underlying facts are math-heavy, but the gist of the problem is that the permitted addition is larger than it should have been. Joyandet probably didn’t want to story to linger in the press, because he announced, “I have decided to leave the government”; however, the press widely reported that prime minister Fillon had asked for his resignation.

Messrs. Blanc and Joyandet continue to serve the French public and constituents in their several elected offices. Neither man has been recorded as saying “mea culpa“, meaning “it’s my fault”.