Europe’s richest man and a Russian oligarch are being investigated for alleged money laundering at an Alpine resort known as a playground for the super-rich.
Bernard Arnault is suspected of lending Nickolai Sarkisov, a Russian insurance billionaire of Armenian origin, nearly £16 million for an elaborate real estate fraud that is alleged to have made Mr Sarkisov more than £1.7 million.
The figures may seem paltry for the two tycoons, in particular for Mr Arnault, 74, the “Pope of luxury” whose personal fortune is $189bn, according to Forbes, making him currently the world’s second richest man behind Elon Musk.
Mr Sarkisov, 55, who with his brother Sergei has a controlling stake in insurance company RESO-Garantiya, had a personal wealth of $1.1bn in 2014, according to Forbes, before dropping off the billionaires list.
Yet the revelations are a source of embarrassment at the very least for Mr Arnault, who is at the helm of the largest luxury goods company in the world, with a market capitalisation of €407bn. LVMH’s portfolio of 75 fashion and cosmetic brands encompasses iconic handbag makers Louis Vuitton, jewellery brand Tiffany’s, suitcase line Rimowa and champagne maker Moet & Chandon.
Both men share a love for Courchevel, or “Courchevelovo” as the Russians call the resort housing the largest ski area in the world and where a bottle of Petrus wine or Rémy Martin cognac is on the menu for around €10,000.
Mr Arnault learned to ski there as a child and owns two hotels there, Cheval Blanc and White 1921. Mr Sarkisov is a major investor in the resort - he has pumped €50m into properties including four hotels - and his partner, celebrity influencer Ilona Kotelynkh has often been among the Moscow social set gracing its slopes.
According to Le Monde, Mr Sarkisov bought 14 apartments in Courchevel from a single seller in 2018 for £13.8 million, in a complex deal involving companies based in France, Luxembourg and Cyprus.
Although he is believed to be the buyer, the Russian billionaire’s name does not appear on the books of the company carrying out the purchase.
The company, called La Fleche, is believed to have bought three more real estate units from a second company which, it turns out, also belonged to Mr Sarkisov.
The sale of the real estate to himself allowed the Russian to pocket a capital gain of just over £1 million, according to Le Monde.
Mr Arnault is suspected to have lent €18.3 million (£15.8m) to Mr Sarkisov for the deal before acquiring La Fleche and effectively becoming the owner of the real estate portfolio.
The ownership change could have been designed “to hide the exact origin of the funds”, Le Monde quoted a Tracfin document as saying, as well as the identity of the “ultimate beneficiary”.
Investigators believe Sarkisov made €2m from the operation, but they were still in the dark as to how much he had paid for the loan.
Preliminary investigations in France do not necessarily imply wrongdoing by those concerned. Tracfin, the French economy ministry’s financial intelligence unit, is leading the probe, but has not determined if a crime has been committed, said a source close to the investigation.
A LVMH spokesman told Le Monde that the deal had been “carried out with the strictest observance of the law” and was part of an operation to buy a building as an extension to Mr Arnault’s Cheval blanc hotel
Mr Sarkisov’s entourage told the paper that the capital gain was “just a few hundred of thousands of euros”, that the Russian had not been involved personally, and that he had “never met Mr Arnault”.
He made money because he had taken a “risk” in buying out individual owners of the building. Once completed, its overall value increased and thus he recouped a cut of the added value, they told Le Monde.
Long a hangout for Russian oligarchs - Vladimir Putin was said to be on its slopes in 1999 when he got the call from Boris Yeltsin to come and run the country - Courchevel has seen the usual Moscow crowd largely vanish since the invasion of Ukraine and European sanctions that ensued.
This is not the first time Mr Sarkisov - who owns an estimated €200m in property in France, including villas in Paris and Saint Tropez - has been hit by controversy in the country.
French prosecutors are currently investigating the Sarkisov brothers’ role in an alleged influence-peddling probe against former president Nicolas Sarkozy.
Judges are seeking to clarify why the brothers’ insurance firm chose to pay Mr Sarkozy €3 million in 2019 as an advisor.
They want to verify whether the former head of state - who has already been convicted of corruption - only acted as a consultant, which would be perfectly legal, “or if he engaged in potentially criminal lobbying activities on behalf of the Russian oligarchs”, according to Mediapart.