Election-funds inquiry edges nearer Sarkozy

French prosecutors have opened a preliminary investigation into allegations that the country's richest woman secretly funded President Nicolas Sarkozy's election campaign, a judicial official said yesterday.

The probe is a new blow to Mr Sarkozy, who is rapidly losing support among French voters stung by the global economic crisis.

Mr Sarkozy denies claims that his 2007 campaign received €150,000 (£125,000) in secret cash from the 87-year-old L'Oreal heiress, Liliane Bettencourt, and calls the allegations an effort to smear him.

But Mr Sarkozy and his prime minister strained yesterday to keep their government and conservative party from unravelling amid a mushrooming scandal surrounding Ms Bettencourt's fortune.

The scandal, including suggestions of large-scale tax evasion, first ensnared his labour minister and is now inching closer to the president himself. Yesterday, the prosecutor's office in the Paris suburb of Nanterre opened a preliminary investigation into statements by a former accountant for Ms Bettencourt, Claire Thibout, the judicial official said. The official was not authorised to be publicly named because the investigation is ongoing.

Ms Thibout told investigators that Ms Bettencourt's chief financial adviser gave €150,000 in cash to Eric Woerth, the treasurer of Mr Sarkozy's conservative party, UMP, in March 2007, the official said. Mr Sarkozy was elected two months later. Mr Woerth's wife until recently worked as an investment adviser to the L'Oreal heiress, and Mr Woerth himself is Mr Sarkozy's labour minister and in charge of an unpopular pension reform set to raise the retirement age from 60 to 62.

Opposition politicians are demanding that Mr Woerth resign amid the Bettencourt scandal, but Mr Sarkozy has vigorously defended him.

At a cabinet meeting yesterday, the president urged his ministers to show their "sangfroid" and concentrate on work, government spokesman Luc Chatel said afterward.

The prime minister, François Fillon, tried to rally the troops of his UMP party yesterday, calling for collective courage and saying they should not fall "hostage to rumours".

Mr Woerth, who has been treasurer for Mr Sarkozy's conservative party for eight years, said on Tuesday that he was "outraged" by the claim and said he has "never received the slightest euro that wasn't legal".

An intergovernmental financial inspection agency is also investigating Ms Bettencourt's tax file, and Budget Minister François Baroin said its report would be "on my desk [on] Friday". Ms Bettencourt is number 17 on Forbes magazine's list of the world's richest people.

Campaign finance scandals have dogged past French administrations. Former president Jacques Chirac must face trial over what investigators say was a fake jobs scheme while he was mayor of Paris that was meant to help finance his conservative party. Mr Chirac has denied wrongdoing. And a former prime minister, Alain Juppé, was convicted of party financing irregularities in 2004.