(Bloomberg) -- The widow of a onetime Frenchman billionaire won a round of her fight against a criminal tax investigation linked to the Panama Papers leak that initially targeted her husband.
Two years ago, French financial prosecutors opened a probe into Pierre Papillaud after his name appeared in press reports based on the leak of lawyers’ files. Investigators soon found that Papillaud, who became rich selling bottled water, hadn’t declared some foreign accounts and life insurance policies. That prompted authorities in 2016 to freeze assets he and his wife, Yvette, held in French accounts worth about 1.2 million euros ($1.4 million).
The couple countered by suing before Pierre Papillaud’s death in June last year. Their first lawsuit was tossed in a non-public ruling by the Paris court of appeals. But last week France’s top court ruled that the lower judges had been hasty in dismissing the appeal lodged by Yvette Papillaud.
While the death of her husband doesn’t necessarily mean the proceedings should be stopped and the asset freeze lifted, the lower court was still obliged to examine whether there is evidence that she may have been involved, the Cour de Cassation said. Since they didn’t, the case should be re-examined by the lower court, according to the Nov. 21 ruling.
On Thursday, another investigation stemming from the Panama Papers took a dramatic turn as German authorities raided the offices of Deutsche Bank AG, including its downtown Frankfurt headquarters. The millions of documents leaked in 2016 revealed how lawyers from Panama’s Mossack Fonseca worked with some of Europe’s largest banks to create offshore shell companies for world leaders, athletes and other rich clients.
In France, Societe Generale SA quickly came under scrutiny for such offshore dealings. Police investigators conducted an evidence-gathering raid at SocGen’s private banking headquarters in Paris days after the leak came out in April two years ago.
SocGen’s chief executive officer also had to answer questions from senators because of the public uproar over the revelations. Frederic Oudea acknowledged that clients had set up offshore trusts with Mossack Fonseca and other Panama firms but said the activity was “totally marginal.” During the senate hearing, the CEO also highlighted the bank’s control mechanisms set up “to make sure it is totally legitimate from a tax point of view.”
The French bank declined to provide an update on the status of any investigation related to the Panama Papers. Societe Generale has previously said it has a “proactive policy” to fight against tax avoidance and “strictly respects all the regulations of the countries in which the bank is present.”
Eliane Houlette, who heads the Parquet National Financier in France, said last year that her financial prosecutors had identified 22 targets in their investigation into the Panama Papers leak but didn’t disclose any names.
A representative for the PNF declined to comment on the investigation of the Papillauds, and lawyers for Yvette Papillaud didn’t immediately respond to requests for comment. Forbes said Papillaud was worth $1.2 billion in early 2016 but he dropped off the billionaires’ list a few months before he died.
SocGen is mentioned in the Papillaud case, but it remains unclear whether the bank is suspected of any wrongdoing.
Investigators appear to have quickly shifted their gaze from Panama to Luxembourg in the Papillaud case and in particular a holding company where the wealthy Frenchman held shares worth 240 million euros in mineral water bottle group, Alma.
According to official filings, the Papillaud holding company was domiciled at SocGen’s Luxembourg unit, Societe Generale Bank & Trust, until October 2017. That very same month, Luxembourg authorities conducted a raid at the SocGen unit at the behest of French investigators as part of the Papillaud probe, French magazine L’Express reported earlier this year.
It’s precisely the vast amount of assets hidden away in Luxembourg that justified the freezing of assets in France, according to details in the Cour de Cassation ruling. Authorities say suspect Papillaud may have dodged wealth taxes worth a total of 7.6 million euros between 2009 and 2014.
The lower court must consider Yvette Papillaud’s level of involvement -- if she was involved at all -- in that alleged fraud. A hearing could take months to be scheduled and will be held in a non-public setting given that the investigation is ongoing.
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