When legislation lets you down

For a couple of years I have been tracking the fortunes of “Les W”.  The Wildensteins are one of the highest-profile families in France; Wildenstein & Co was one of the most successful and influential art dealerships of the last century.  It was founded in the 1870s by Nathan Wildenstein, and then passed to his son Georges, and then to Georges’s son Daniel.  Daniel Wildenstein died in 2001, passing the “head of the family” baton to his son Guy.  And then it started to go wrong.

Several women who had at one time or another been married to Wildenstein men contacted the French tax authorities, saying that their ex- or late husbands had diddled them out of money by hiding it “offshore”, usually in the form of valuable artworks.  The French taxman had a look, and claimed that Guy owes him €550 million – and put Guy on trial to get the money back.  Appearing alongside Guy in the dock on 4 January 2016 were his nephew Alec, his brother’s widow Liouba Stoupakova, a notary, two lawyers, and two trust managers.  Two days later, the trial was halted when judges accepted arguments by the defence that an appeals court should first consider a constitutional issue relating to whether two cases – a fiscal one and a criminal one – can take place at the same time, but a few months later the criminal trial went ahead and was concluded on 20 October 2016, with the judge saying that the verdict would be announced on 12 January 2017.  And so it was.

I was not there, of course, but according to various sources, this is the outcome:

  • “The heirs to of one of the world’s biggest art dynasties were acquitted of hiding masterpieces from Caravaggio to Picasso in offshore havens to avoid the French taxman despite what the judge called their ‘clear intention’ to do so.” – Telegraph newspaper
  • “The presiding judge of a Paris court said there had been a ‘clear attempt’ at concealment. But he acquitted them because of shortcomings in both the investigation and French tax fraud legislation.” – BBC website
  • “The French court ruled that even though Mr Wildenstein and other members of his family dissimulated family assets through trust funds set up in tax havens, they hadn’t broken French law. No French law detailed how the transmission of trust funds had to be taxed until 2011, the court said.  ‘It is not the role of the court to take the place of the legislator,’ Judge Olivier Geron, the court president, said in his ruling.  Mr Geron said he understood the French people would probably struggle to accept the ruling given the wealth of the defendant, but justice has to treat everybody equally, ‘be they rich or destitute’, he said.” – Wall Street Journal website

So although it seems that they did do what we think they did, a shoddy investigation and grey areas in French tax law have saved Guy from a criminal conviction.  However, the prosecutor can appeal this decision, and Guy still has to face the taxman in a fiscal court.

This entry was posted in Legislation, Money laundering, Tax, Uncategorized and tagged , , , , , . Bookmark the permalink.

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