Sarkozy Denies Secret Donations From Heiress A family feud, a disgruntled butler and a former bookkeeper are the ingredients for an unfolding political scandal in France. President Sarkozy's government has been shaken by allegations of political cash handouts by France's richest woman. According to accusations, the 87-year-old heiress to the L'Oreal fortune, secretly funded Sarkozy's election campaign.
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Sarkozy Denies Secret Donations From Heiress

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Sarkozy Denies Secret Donations From Heiress

Sarkozy Denies Secret Donations From Heiress

Sarkozy Denies Secret Donations From Heiress

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A family feud, a disgruntled butler and a former bookkeeper are the ingredients for an unfolding political scandal in France. President Sarkozy's government has been shaken by allegations of political cash handouts by France's richest woman. According to accusations, the 87-year-old heiress to the L'Oreal fortune, secretly funded Sarkozy's election campaign.

MARY LOUISE KELLY, host:

We got now to France, where a family feud, a disgruntled butler and a former bookkeeper are the ingredients for a scandal that's gripping the country. Oh, and don't forget the billionaire heiress at the heart of the story.

But this is serious stuff. The allegations reach all the way up to French President Nikolas Sarkozy. He's accused of illegally financing his last presidential campaign. Well, to help us untangle all these threads, we've reached our reporter, Eleanor Beardsley, in Paris.

Good morning.

ELEANOR BEARDSLEY: Good morning.

KELLY: Eleanor, start by telling us about the key player, here. This is the billionaire heiress, 87-year-old Liliane Bettencourt.

BEARDSLEY: That's right. Liliane Bettencourt is, quite simply, the richest woman in France. She's the heiress to the L'Oreal cosmetics fortune. Her father founded the company, so she's very rich. And it simply started with - between her and her daughter. Liliane Bettencourt had a confidante for years. He's a society photographer. And for years, she's been bestowing paintings, artwork, and cash on him - you know, giving him gifts.

And the daughter finally said, stop. You know, she filed a criminal complaint. She said: This man is taking advantage of my mother's mental frailty, and I want it to stop. And I want a court order. I want her finances under my protection. So, that's how it started. There was a criminal trial going on in June. So it all started there.

KELLY: And then how did it escalate, then, from family feud into this huge political scandal that's shaking the government of France?

BEARDSLEY: Well, you could sort of sum it up in two words: disgruntled employees, or former employees. The first one to come forward was Liliane Bettencourt's former butler. He came forward to the police when the daughter gave them 21 hours of secretly recorded tapes of the goings-on in the household. They were also given to a media website, who published them. Now, in these tapes, you did hear sort of a doddering old woman, but you also heard that Liliane Bettencourt had Swiss bank accounts, a private island in the Seychelles. So people were thinking, hmm. Is there tax evasion, here? And then you heard that she liked to help certain politicians. And if you listen to this tape, she's talking with her advisor, and he's telling her who she has to help.

(Soundbite of recorded conversation)

Unidentified Man: (French spoken) Nicolas Sarkozy.

Ms. LILIANE BETTENCOURT (L'Oreal Heiress): (French spoken)

BEARDSLEY: And he's telling her that she needs to take care of Sarkozy, and also the budget minister, because he says he handles the taxes. And it turns out that Liliane Bettencourt is employing the wife of the budget minister in her wealth management firm. So people are screaming: Hold on. Maybe the budget minister is turning a blind eye to tax evasion because his wife is being employed by the millionaire.

KELLY: Okay. So, we've got this very tangled web, this great cast of characters. How does President Sarkozy actually get dragged into this whole affair?

BEARDSLEY: Okay. He comes in at the next stage. Just this week, another disgruntled employee, a former accountant, goes to the police and the website and gives the same statement. And she says, for years, Liliane Bettencourt has had lavish dinner parties for conservative politicians, and then at the end, handed them envelopes of cash.

And she says Sarkozy, when he was mayor of a suburb outside of Paris, was a frequent visitor to the house, and he would come to dinner and then get his envelope of cash. And she says we knew what was going on because Bettencourt was so deaf, everyone had to speak very loudly. And then it turns out that in 2007, there was a dinner party, and Sarkozy's fundraiser, who was none other than the budget minister, came to the house and collected an envelope with $200,000 in cash in it.

Now, in France, that's illegal. The maximum you can give is $10,000, and only 200 in cash. So now there are accusations that Sarkozy had illegal funding of his campaign by France's richest woman.

KELLY: Okay. And we should stress, all these are allegations at this point. What is President Sarkozy saying?

BEARDSLEY: Well, Sarkozy completely denies it, and he says he never did anything illegal. But you can tell the whole affair is having a real - taking a real toll on him. He looks beaten down. The press keeps talking about how beaten down he is. And he's totally lost control of his image. I mean, people now are having the feeling that he's corrupt.

KELLY: Eleanor, just briefly, is Sarkozy likely to survive this scandal?

BEARDSLEY: Well, it looks bad, because this former budget minister is now labor minister, in charge of his most important reform: retirement. And now it looks like Sarkozy is telling the common man, the small man: You need to work two more years, but I'm hobnobbing with millionaires and getting envelopes of cash. So it really doesn't look good for either his reform, or him.

KELLY: All right. Sounds like you're going to have a very interesting summer in Paris. Thank you, Eleanor.

BEARDSLEY: Thank you.

KELLY: That's Eleanor Beardsley, reporting for us from Paris.

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