Axa president arrested after investigation into tax evasion

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The Independent Online

Claude Bébéar, one of France's leading businessmen and founder and president of the Axa insurance company, was last night facing accusations of conspiring to allow wealthy French citizens to evade taxes.

Claude Bébéar, one of France's leading businessmen and founder and president of the Axa insurance company, was last night facing accusations of conspiring to allow wealthy French citizens to evade taxes.

Mr Bébéar, 65, spent Tuesday night in custody after being arrested for questioning in connection with alleged money laundering by a Luxembourg-based insurance company, PanEurolife, which was acquired by Axa in 1996. Under French law 'money laundering' ( blanchissement d'argent) includes moving money out of the range of the tax authorities.

Axa is Europe's largest insurance company and the sponsor of the FA Cup in England. Mr Bébéar is president of the committee seeking to bring the Olympic games to Paris in 2008. In the UK, Axa was catapulted into the ranks of the insurance heavyweights in 1999 through its acquisition of Guardian Royal Exchange, which made it the country's third largest general insurer.

Mr Bébéar was arrested on Tuesday and kept in custody until last night when he was expected to be " mis en examen" ­ placed under formal, criminal investigation ­ by Judge Dominique de Talancé for "fraud and aggravated money laundering".

Henri de Castries, the number two at Axa, was also arrested on Tuesday and was also expected to be placed under formal investigation by the judge ­ one step short of a charge in the French judicial system. Judge de Talancé is an investigating magistrate, specialising in fraud cases, who has been leading inquiries into the affair since last year. The case arises from the alleged illegal activities of PanEurolife, in the period after it was acquired by Axa (as part of the UAP group) in 1996 and before it was sold to the American group, Nationwide Global Holdings, in 1998.

The French postal service, La Poste, reported to the authorities in 1997 that large sums were being sent through its own banking service to Luxembourg by French individuals who refused to give their names. Investigations showed that these people, including leading businessmen and wealthy individuals, had been sold life insurance policies by PanEurolife. It is alleged that they were then able to reclaim the funds, in cash, in Luxembourg, without the knowledge of the French tax authorities.

The system is alleged to have been created in 1994, when the insurance market in the European Union was liberalised. Jean Peyrelevade, President of Crédit Lyonnais, but previously head of UAP when it owned PanEurolife, was also questioned by fraud squad detectives on Tuesday but released without being " mis en examen".

Several senior officers of PanEurolife have been placed under formal investigation in recent months but the company has always declared its "total incomprehension" of the allegations against it. Sources at Axa said yesterday that it had always intended to re-sell PanEurolife. It was never regarded as a key part of the acquisition of UAP in 1996. They said it was absurd to suggest that Mr Bébéar, as head of the group, or other leading Axa executives, such as Mr de Castries would have been aware of all activities at a minor and temporary subsidiary company.

If Mr Bébéar is placed under criminal investigation, it is likely to be the beginning of a tortuous legal process, which could last for several years. Under the French system, an examining magistrate has a duty to investigate all the possible evidence - both incriminating and exonerating ­ and then recommend whether or not charges should be brought.

These days, the Axa group receives 16 per cent of its insurance premium income in the UK.

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