Scandal strikes at Paris clubland

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The Independent Online
ONE OF the best known night-spots in Paris, now fallen into bankruptcy and disrepair, has been sold at auction for pounds 750,000.

This was quite a bargain if you consider that the last owner of Le Palace paid pounds 4.4m - six times as much - six years ago. It was a steal, if you consider that Mick Hucknall, the British rock-star-entrepreneur, was prepared to pay pounds 4.3m for the club 15 months ago.

The question is: was the sale of the Le Palace literally a steal? The saga of the club, which is close to the Folies Bergeres just off the Grands Boulevards in central Paris, is at the centre of a deepening financial and legal scandal.

A parliamentary committee of inquiry will present a report next week stating that France's 400-year-old system of commercial courts - in effect bankruptcy courts - has become a snake-pit of corruption, cronyism and asset-stripping.

A best-selling book, The Mafia of the Commercial Courts, chronicles dozens of cases of sickly companies being broken up unnecessarily in recent years, for the profit of court members and officials and their favoured business contacts.

The courts, run by judges who are not lawyers but businessmen elected by other businessmen, are supposed to act in the best interests of the employees and the creditors of struggling companies. Their first duty is to keep businesses alive, if possible. In many cases, according to the parliamentary inquiry and the author Antoine Gaudino - a former fraud squad detective - these duties are wilfully ignored.

The parliamentary investigation, to be published on Thursday next week, will reveal evidence of bribes being paid to judges' secret Swiss bank accounts; of court-appointed liquidators, who have systematically made fortunes out of the misfortunes of others; and of threats of violence against other state officials who tried to uncover what was going on.

The former owner of Le Palace is another singer-turned-entrepreneur, called Regine. She told the parliamentary committee, under oath, that she believes that she - and Mick Hucknall - are the victims of a commercial court system which is out of control.

The judges and legal administrators of the Tribunal de Commerce de Paris indignantly deny all charges. They are threatening to take legal action against Regine for defamation.

Le Palace was bought at auction on Tuesday by Pierre and Jacques Blanc, two Parisian businessmen, who already own a dozen restaurants. There is no evidence that they were involved in any deal. However, Pierre Blanc was once himself a judge in the Parisian commercial courts.

The saga of Le Palace is bizarre, to say the least. Hucknall, who already owns a string of dance clubs in the United States, offered pounds 4.3m for the former theatre in March last year. He invested pounds 500,000, without any guarantees, just to keep the club's team of employees together and stop the building from falling further into disrepair. His offer was gratefully accepted by the club's creditors.

It was rejected, peremptorily, by the judge in charge of the case, Jean- Louis Chevalier, who described Hucknall as a "blow-in Englishman" who wanted to pay off the creditors in "monkey-money".

The embarrassing fact remains that Hucknall's plan would have given the club's creditors a large share of their money back. The route chosen by Mr Chevalier - a much-delayed auction for approved bidders - generated a selling price so low that creditors will probably receive nothing.

The Socialist MP in charge of the parliamentary investigation, Arnaud Montebourg, a respected young lawyer, called in Mr Chevalier to explain his actions last week.

The MP described the rejection of the Hucknall deal as "an irrational decision which can only be explained by considerations which defy economic logic." He has called for the opening of a criminal investigation into the affair.

The unravelling of similarly entrenched abuses in the commercial courts might suggest that corruption is gaining ground. The truth is probably the opposite.

France is emerging into a more accountable world in which cronyism and corruption are no longer regarded as inescapable.