Translation of the article published on nov. 20, 2024.
The Squale
Since November 13, several individuals have stood trial for a range of offenses: influence peddling, breach of trust, forgery of public records, violation of professional and judicial secrecy, and compromising national defense secrets, among other charges. Among the accused are Bernard Squarcini, known as “the Squale,” former head of domestic intelligence (DGSI) under Nicolas Sarkozy; the deputy head of the National Intelligence Council; a judge who went on to become LVMH’s general counsel; and several former police officers and intelligence agents now working in the private sector. Their conduct amounts to a textbook case of criminal conspiracy under Article 450-1 of the French Criminal Code.
All defendants maintain their innocence, insisting their actions were undertaken in the interest of the French Republic as part of a mission to “protect national economic assets.” Bernard Squarcini went further still, telling investigators he drew no distinction between his private sector work and his former duties as head of France’s domestic intelligence service. Yet that distinction matters enormously. A sovereign state may legitimately conduct special operations to protect national security—but it is neither legal nor appropriate for a private company to deploy such methods in service of its own commercial interests.
The DGSI, like its predecessor the DST (Directorate of Territorial Surveillance), does maintain a division dedicated to protecting economic and scientific assets. But that mandate was never meant to cover illegally shielding a corporate chairman from a blackmail attempt by a former driver demanding €300,000 in exchange for suppressing photos allegedly showing him with his mistress—as was the case with Bernard Arnault.
Yet this is exactly what Bernard Squarcini did while heading the DCRI, the DGSI’s forerunner. In 2008, he unlawfully mobilized intelligence resources—bypassing due process and judicial oversight—to track down Arnault’s blackmailer. The matter was handled behind the scenes by former police divisional commissioner Charles Pellegrini and Pierre Godé, then LVMH’s deputy CEO.
Bernard Arnault is a citizen like any other. Faced with blackmail, he should have followed the legal process: filing a complaint and pressing criminal charges. Unlike Dassault, none of LVMH’s activities are strategic in nature. In fact, Hermès—another luxury group producing leather goods, clothing, and perfumes—carries greater economic weight than LVMH. Hermès manufactures in France, sustaining jobs in rural areas, while LVMH’s Christian Dior suits, despite their price tags, are made abroad.
Hermès was itself a target of Bernard Arnault’s now-notorious methods, having fallen victim to an LVMH hostile takeover attempt. In 2010, LVMH secretly built up a stake in Hermès in violation of financial regulations, prompting France’s financial markets authority to impose the largest fine in its history on the group. Hermès then filed a complaint, triggering a criminal investigation. Bernard Squarcini, breaching judicial secrecy, unlawfully passed confidential details of that investigation to LVMH—and by extension, to Bernard Arnault.
Another flagrant abuse of power came in the form of an operation Squarcini ran on LVMH’s behalf against the newspaper Fakir and its editor, François Ruffin, now a member of Parliament—an operation that likewise relied on the illegal use of state intelligence resources.
Squarcini may be at the center of this trial, but he is not its mastermind. Rather, he embodies a certain type of figure who flourishes in the murky overlap between state and private interests. A product of the “Pasqua system,” his career was forged within a network spanning real police officers, Corsican gangsters, casinos, private investigation firms, Françafrique dealings, and corners of the Interior Ministry. For all his shadowy reputation, Squarcini was no “master spy”—he was a police officer, bound, like every domestic intelligence agent, to operate within the law.
The Whale
The true central figure in the trial of Bernard Squarcini and his co-defendants—a case that amounts, unmistakably, to criminal conspiracy under Article 450-1 of the French Criminal Code—is Bernard Arnault himself. Yet Arnault is nowhere to be found on the defendants’ bench. The reason: LVMH, the company he leads, struck a deferred prosecution agreement (convention judiciaire d’intérêt public, or CJIP) with prosecutors, paying a €10 million fine. But CJIPs apply only to corporate entities, which cannot be imprisoned—they do not absolve individuals, including executives. By any logical measure, Arnault should have faced indictment for complicity in the offenses committed by the operatives he engaged.
In other countries, Italy among them, Arnault might well have faced harsher consequences. Consider Marco Tronchetti, head of Pirelli, sentenced to 20 months in prison for economic espionage tied to the Telecom Italia wiretapping scandal—a case that, notably, involved Kroll & Associates, the American investigative firm Arnault himself has relied on since the 1970s, as will be discussed further below.
Arnault has tried to shift blame onto Pierre Godé, his former deputy who died in 2018, claiming he had no knowledge of the rogue operatives’ activities. But this account does not hold up under scrutiny. LVMH paid €2.2 million to Squarcini’s consulting firm, and police wiretaps of Squarcini’s conversations from 2013—later published by Mediapart in 2020—contradict Arnault’s claims of ignorance. Taken together, the evidence strongly suggests Arnault was well aware of the illegal actions carried out on his behalf.
Below is a Mediapart podcast featuring the damning wiretap recordings.
Bernard Squarcini kept up regular contact with Bernard Arnault’s personal assistant, whose ostensible role, one might assume, was to keep her boss shielded from knowledge of the more questionable activities his company had commissioned. The intercepted communications tell a different story. In one exchange, Bernard Arnault personally congratulated the former intelligence chief for having kept François Ruffin and his fellow activists out of LVMH’s 2013 shareholders’ meeting. The wiretaps show that Squarcini met with Arnault directly, and often, to brief him. When he wasn’t dealing with Arnault himself, his main point of contact was Pierre Godé, who at one point even proposed infiltrating Fakir. Is it plausible that Godé would have floated such a plan without Arnault’s knowledge or approval?
Pierre Godé was no ordinary subordinate. A trained lawyer, he was brought on in the early 1970s by Jean Arnault, Bernard’s father, to work at Ferret-Savinel, the family’s construction and real estate firm. Notably, Bernard Arnault would later sell this company to the Rothschild-owned Société Nationale de Construction without telling his father. In the 1980s, Arnault put Godé in charge of scouting acquisition targets, a search that led to the purchase of Boussac, the ailing conglomerate that owned Christian Dior. Godé structured the deal with heavy state backing: a 745-million-franc subsidy from then-Prime Minister Laurent Fabius, even though Arnault fell well short of the required 400 million francs in personal capital—his family fortune at the time amounted to just 90 million francs.
That shortfall proved no obstacle. Antoine Bernheim, a central figure in France’s crony capitalism, quickly arranged financing through Lazard, Banque Worms (infamous for its conduct during the Nazi Occupation), and the state oil companies Total and Elf Aquitaine, which together covered more than three-quarters of the total. Nationalized banks pitched in further still, writing off 1.2 billion francs in debt. Once the deal closed, Arnault dismantled Boussac, laying off more than 8,000 workers and selling off its assets piecemeal, keeping only the luxury brands that now anchor his empire. Within five years he had pocketed nearly 4 billion francs—over 500 million euros—effectively building his fortune on the back of French state and taxpayer money.
By the time of the Fakir operation, Pierre Godé had spent 43 years as Arnault’s strategist and confidant. Given the depth of that relationship, it strains credulity to think Arnault was in the dark about Squarcini’s methods. Arnault’s trust in Godé went well beyond business, too: in 1991, Godé hosted Arnault’s wedding to Canadian pianist Hélène Mercier at his home in Saint-Paul-de-Vence. Such a long, intimate partnership makes clear that Arnault was far more involved in—or at the very least far more aware of—the dubious tactics deployed on his behalf than he now claims.
Bernard and The Spooks
Underhanded tactics have been a cornerstone of Bernard Arnault’s empire-building from the start. He was among the first clients of the American investigative firm Kroll & Associates, which he hired to help engineer the removal of Henry Racamier, one of LVMH’s founders. Racamier was hit with baseless embezzlement accusations that courts later dismissed, all while becoming the target of a press smear campaign. Articles falsely claimed he had excluded Jews from his businesses during the Occupation, that his grandchildren goose-stepped around the family estate, and that he backed far-right politician Jean-Marie Le Pen. None of it was true.
Arnault seized control of LVMH through the same kind of covert share accumulation he would later deploy against Hermès, exploiting tensions between the company’s two founders, Racamier and Alain Chevalier, with help from Lazard Bank. Chevalier, who ran Moët-Hennessy, wanted to shield the company from hostile takeovers by having its distributor, Guinness, buy up 20% of LVMH. Racamier, who ran Louis Vuitton, worried this would upset the shareholder balance and went looking for his own counterweight investor—landing on Bernard Arnault. In an ironic twist, Arnault instead struck a deal with Guinness, brokered by Lazard, and both founders ended up ousted.
In 1999, Arnault ran a similar playbook against fellow French tycoon François Pinault in the fight for control of Gucci, attempting to quietly amass enough shares to dominate the board without ever launching a formal takeover bid—a maneuver built to sidestep shareholder protections that is illegal today. Kroll was brought in once again. Tom Ford, then Gucci’s creative director, accused Arnault of having him placed under surveillance. Arnault also tried to buy off Gucci’s CEO, Domenico De Sole, dangling a substantial pay raise during a meeting at Morgan Stanley Dean Witter’s Paris office, while simultaneously threatening legal warfare: “LVMH is a powerful company in France, with significant resources to litigate,” he reportedly warned, according to legal documents from a Dutch lawsuit he later lost to De Sole.
Rather than give in, De Sole turned to Pinault, who bought 42% of Gucci with an eye toward merging it with other brands in his portfolio, including Yves Saint Laurent and Fendi. That move laid the foundation for Kering, now the world’s second-largest luxury group after LVMH—and a humiliating defeat for Arnault, one he would go on to seek revenge for through further underhanded means.
Arnault’s taste for murky schemes also surfaces in the Crédit Lyonnais affair, one of France’s biggest financial scandals. In the early 1990s, the state-owned bank got around U.S. laws barring banks from owning insurance companies by orchestrating the purchase of Executive Life, California’s largest life insurer, through a “portage” arrangement—a scheme in which other investors hold shares on the bank’s behalf, to be bought back later at an agreed price. François Pinault’s holding company, Artémis, took no part in the portage itself, but it did legally profit from reselling Executive Life’s risky bonds and assets. Even so, Artémis found itself facing legal challenges in the U.S., fueled in part by intelligence Kroll had gathered on Pinault’s dealings at Arnault’s request. Artémis was eventually cleared, but the fight cost the company €170 million in non-refundable penalties.
Arnault’s methods have never been gentlemanly. They span illegal financial raids, covert smear campaigns against rivals, and relentless litigation aimed less at vindicating his rights than at intimidating and wearing down his opponents—tactics reinforced by a media empire that has steadily expanded his influence over the past three decades. What emerges is a legacy built on thuggish strategy.