Paul from Paris

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.

Christine Boutin

Christine Boutin, a conservative politician best known for opposition to gay marriage and interest in prisons, lost her job as minister for housing and urban affairs; she had previously lost her seat in parliament.

Despite inactivity, Boutin suffered no hardship. Boutin remained a county representative (conseiller général), paid € 2,605 per month. A pension from the national assembly brought her an additional € 6,000 per month.

Boutin made the news last week when it was reported that president Sarkozy had entrusted her with a mission: to formulate proposals on the social consequences of globalization, in time for the G20 meeting later this year.

To carry out this mission, Boutin benefits from a chauffeured car; offices in Paris; secretarial assistance; the services of four staffers (all of whom, judging from salary, are quite senior, as they earn between € 4,740.67 and € 6,000 per month); and a monthly remuneration of € 9,500 (reportedly net of social security and related payroll taxes). This seems to be a very generous pay package for very easy work, so Boutin’s package made the news.

Unfortunately, Boutin seems not to have an advocate –a friend, an ally, a confederate– who could answer the media by rhetorically asking, “Since when do we debate the merits of what people earn?” or by stating impetuously, “Good work, if you can get it.”

Boutin instead spoke out on her own behalf. She made a few missteps:

• First, she clarified that her mission was real, as opposed to a no-show job.
• Second, she claimed that she had no say or choice in the remuneration, that the €9,500 monthly emolument resulted from a bureaucratic calculus that took account of seniority and what other highly qualified people would be paid.
• Third, she spoke down to the people she serves, claiming, “I’ve heard French people who have little wages who, today, cannot understand that there’d be a political leader who has a cash inflow of about 18,000 euros.” (emphasis added)
• Finally, Boutin declared that she would waive “my 9,500 euros”. (emphasis added)

France enjoys a long and honorable tradition of civil service. One would think that (semi-) retired elected officials would accept sine pecunia the leadership of a mission to advise the president.

Banishment and deportation were, for centuries, punishments under French law. They helped people (with French natives) French colonies in the Pacific, South America, and North Africa. A pair of some truly odd people might restore banishment and deportation to the French criminal code.

The story starts with a burka-wearing motorist in Nantes, pulled over for a routine traffic offense. Instead of apologizing to the police or paying a modest fine, the motorist chose to contest the limit on wearing a burka. This drew investigative curiosity from law enforcement.

Investigation led to the man in the motorist’s life, Lies Hebbadj, who has 4 wives and 15 children (two more are expected soon). Hebbadj is charged with “instigating” welfare fraud. According to prosecutors, over three years, Hebbadj and his large household received € 175,000 in welfare payments; had all family members lived under the same roof, the amount would have been € 88,000. (For clarity: some payments are based solely on parenthood, without regard to revenue.) For the prosecutors, Hebbadj’s conduct is particularly culpable because he “knowingly” decided not to acknowledge paternity of four children. (For clarity: “isolated”, single parents are entitled to more assistance than couples.)

For interior minister Brice Hortfeux, Hebbadj’s possible conviction is not enough. Hortefeux, one of the oddest characters in the conservative government and freshly convicted of racial insult (injure raciale, a conviction which Hortefeux reportedly will appeal), wants to mete out special punishment.

Hortfeux’s first line of attack was polygamy. Based on the facts of the case, this seemed simple enough. The law, however, prohibits bigamy: a married person who would contract a second marriage (like a homeowner with mortgage might contract a second mortgage). Polygamous cohabitation apparently is not prohibited under French law today.

Frustrated and mad as a hornet, this led Hortfeux to his second line of attack: banishment. For Hortefeux, “When a foreigner gains [French] citizenship thanks to marrying a French woman, and then, in the following years, lives in de facto polygamy, abusing the welfare system, is it normal that he keep French citizenship? My answer is no.” Hortefeux wants to strip Hebbadj of French citizenship, then deport him.

Since when has banishment been a punishment in France? Believe it or not, for hundreds of years. Banishment and deportation (and related concepts, like “civil death”) had a long history in French law, starting in the Renaissance and ending ultimately only with de Gaulle. They were especially serious forms of punishent, on par with execution. They were used, from the revolution of 1789 through the Paris commune in the 1870s, especially for political offenses. A special punishment was enacted for Dreyfus in 1895; one would hop this would give pause to Hortefeux.

A post-script. A big part of the Hebbadj controversy has not been reported or discussed. In addition to welfare fraud, Hebbadj is also charged with serious criminal offenses stemming from employment, from 2007 through 2010, of foreign students or undocumented workers. Apart from working conditions with prosecutors described as particularly deplorable, Hebbadj apparently paid his employees much less than the minimum wage. If the facts are as alleged, the case illustrates the plight of transient or undocumented workers who don’t report abuse, whether from ignorance or fear of attracting unwanted attention from authorities. I think it’s sad that the case has not received more attention.

Another post-script. I can’t help but wonder whether politics fuels Hortefeux’s peculiar interest in Hebbadj’s fate. Does Hortefeux harbor revenge fantasies against François Mitterrand, the twice-elected French president who for decades lived with two women, one his wife, the other his concubine?

L’Etat, c’est moi. Rail lines that converge on Paris. Anyone who studies France encounters, early on, evidence that points to a strong central state. This is often presented as one of the features that make France, France.

A corollary of this proposition would be mistrust of civil society in general, and of citizen initiatives not involving the state, in particular.

Why is this so?

As the days grow longer and the evenings warmer, people in France like to gather for Spring festivals, whether formal or informal.

The informal gatherings have, in the eyes of the press, given Facebook a bad reputation. Informal weekend gatherings have occurred all over France, mostly in cities with universities and big student populations: Lyon, Nantes, Montpellier. The gatherings are promoted via a Facebook group and held in public. They are open to all but orchestrated by no one in particular.

Facebook groups had announced a similar gathering this weekend, in the Champs de Mars (by the Eiffel Tower). The reaction by the public authorities grew steadily over the week: ban the event; ban all such gatherings; arrest and interrogate the organizers (they turned out to be teenage girls; no charges were brought); alcohol having already been forbidden in the park, new ordinances were enacted to prohibit –for the weekend– glass containers and the transport of alcohol around the Champs de Mars; busloads of riot police were called in; and passersby were frisked.

Plenty of people did enjoy the park on a warm summer evening. Malfeasance rivaling Sodom and Gomorrah did not occur. The authorities declared victory.

For this observer, what really troubled the authorities was the lack of state supervision.

I’ve seen other events in Paris, such as the Technoparade or Gay Pride marches, that do have official organizers and state sanction. I wouldn’t dream of banning them, even though I’ve witnessed, in my quiet neighborhood:

• mountains of detritus, including broken glass, after municipal sanitation workers have cleaned up, presenting a risk, especially to dogs and small children;
• participants who are inebriated or drugged to the point where they cannot walk or speak;
• misbehavior best described as riotous: damaging bus shelters, removing review mirrors from cars, vandalism (leading the Vélib rental bike service to encase cycles and equipment near my apartment in a plastic protection).

State-sponsored initiatives are common this time of the year in the south of France. Examples include the Gruissan Festéjades or the Nîmes Féria. These events take place over a long weekend, and call upon significant state resources. There’s even bullfighting, which many consider to be animal torture.

For a few brief months in 2004, Nicolas Sarkozy served as French finance minister. His tenure was as unremarkable as it was brief. Its highlight was probably the 30 August visit, to Sarkozy and his spouse Cécila, by actor Tom Cruise, in Paris to promote “Collateral”, the Michael Mann picture in which he starred.

No one seems to have briefed Sarkozy on “Collateral”. It’s a movie about a hit man (the role played by Cruise), on an all-night murderous rampage through Los Angeles.

Likewise, no one seems to have briefed Sarkozy today on how public opinion is likely to react when the French president talks of increasing taxes.

Sarkozy has been talking a lot about taxes lately. He wants to “find” 100 billion euros in the next three years. He wants to close loopholes (which, in France, are adorably named “niches fiscales“). He wants to increase the duration of retirement contributions, pushing back the retirement age. (This led to a call to strike tomorrow.)

Public opinion got the message, loud and clear. Most French people –a recent poll pegged the percentage at over 70%– think taxes will increase. Most French people –the same poll points to an ever greater share, above 80%– would prefer that any new taxes target “the rich” or banks.

What ever happened to economic growth?

Early in presidency, Sarkozy was known for inciting people “to work more to earn more” (travailler plus pour gagner plus). His slogan may have been demagogic and ambiguous, but it pointed towards growth at the possibility of growth.

Today, the main economic issue seems to be confidence, particularly a perceived lack of confidence. Financial markets, investors, consumers: all are said to lack confidence. Sarkozy and his finance minister multiply trips and talks, but markets and opinion don’t budge: confidence is still lacking.

Memo to Sarkozy: Show some constancy. When you abandon one policy (work more to earn more), you erode credibility on any policy. Talk of increasing taxes –big jumps, all sorts of taxes– only reinforces impressions of disorder in public finances and dark days ahead for the economy generally.

(photo uncredited, probably by French finance ministry staff)