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French empires

Profiles of France’s two wealthiest people: Bernard Arnault and Liliane Bettencourt

France’s two wealthiest people have both been in the public eye recently, with Bernard Arnault fiercely denying he is leaving the country because of a new 75% tax rate, while Liliane Bettencourt, who turns 90 this month, is still caught up in a family dispute with political consequences

ENGINEERING graduate Bernard Arnault was 27 when he persuaded his father to refocus his construction company on the more lucrative holiday home market. It proved to be the first successful step in a long career of risk-taking, shrewd decisions and aggressive expansion that has placed him today as France’s wealthiest man.

As chairman and chief executive of LVMH (Louis Vuitton Moët Hennessy), his empire spans everything from luxury bags and watches to champagne, earning him the nickname “the Lord of Luxe”, with an estimated wealth of €32 billion according to Forbes.

Described by one newspaper as “the world’s ultimate arbiter of good taste”, Arnault acknowledges that to do well in the luxury goods business, you need to be creative and have a sense of style, not just a head for management and numbers. “I like that combination between creativity and the creative process and the organisation necessary to make a business like this successful worldwide,” he said recently.

After becoming chairman of his father’s firm and expanding it in the US, Arnault’s first foray in luxury goods came when he bought the textile firm Boussac for a personal investment of about 10m, backed by private equity and state subsidies. Its biggest asset was ownership of the Christian Dior brand – and Arnault discarded much of the rest and concentrated on building up the luxury name. He then staged a hostile takeover of LVMH, benefiting from in-fighting among shareholders and a stock market crash to ramp up his stake, taking majority control and becoming chairman. He set about focusing the company on France’s latest emerging trends, snapping up a wide range of brands in the 1990s including Givenchy, Sephora, Tag Heur and several wine and spirit labels,and turning the company into the world’s largest luxury product conglomerate, with a portfolio of 60 high-end brands.

He said in an interview: “Luxury goods is the only area in business where it is possible to make luxury margins” – and the group has managed to weather the global economic downturn because of its diversity. As the Wall Street Journal notes: “The strategy he embarked upon – betting that diversification among products and regions would allow one brand to sparkle when another slumps – may turn out to be invaluable.” Anna Wintour, editor of Vogue, says of Arnault: “He’s remarkably patient. He’s prepared to take his time to make decisions.” Arnault was very quick to issue a denial after Libération newspaper claimed that his application for Belgian nationality meant he intended to go into tax exile. He said in a statement: “I am and will remain a tax resident in France and I will, like all French people, fulfil my fiscal obligations.” As well as presiding over a powerhouse of luxury brands, it is true that Arnault has become something of a brand himself – an ambassador for French style, entrepreneurship and savoir-faire. Businessman Bernard Tapie said: “France owes him a lot, but he also owes a lot to France.”

WHILE Bernard Arnault is a media-savvy and familiar face of French business, France’s richest woman Liliane Bettencourt, with an estimated net worth of about €16bn, has tried hard to keep out of the public eye during most of her time as the heiress of the L’Oréal empire – with varying degrees of success.

Bettencourt, who turns 90 this month, was said to be appalled to find herself in the media spotlight in recent years, after a very public dispute with her daughter Françoise. She has faced intense media scrutiny over her relationship with the artist and celebrity photographer François-Marie Banier, on whom she has bestowed 1bn in gifts, including numerous original works of art by Picasso and Matisse – and has also been at the centre of allegations of envelopes stuffed with cash given to top conservative French politicians.

On the Banier relationship, Bettencourt told Paris Match in a rare interview: “I do not want to devalue the irresistible friendship we have had. It’s in the past. François-Marie is madly talented, but he is such a muddler. I couldn’t live with him for more than five minutes, but that muddle in our friendship brought me intense pleasure and we did laugh like mad.”

Away from the family feuding and questions over political funding, Bettencourt is well regarded for setting up the Bettencourt Schueller Foundation in 1987, which has made sizeable donations to develop medical, cultural and humanitarian projects.

Like Arnault, it was a father’s influence that introduced the young Liliane Scheuller to the world of business. Her mother Louise died when she was just five, and she formed a very close bond with father Eugène, the founder of L’Oréal who had turned it into one of the world’s largest cosmetics and beauty companies. She started working there at the age of 15 as an apprentice, mixing cosmetics and labelling shampoo bottles.

L’Oréal had a history of giving support and refuge to fascist groups after the Second World War, including a far-right group called La Cagoule whose members included André Bettencourt. Liliane’s father had funded and supported the group in the 1930s, and it was through him that the young couple got to know each other. They married in 1950, settled in Neuilly-sur-Seine and had a daughter Françoise. André Bettencourt went on to become a cabinet minister in the French governments of the 1960s and 1970s.

Today, Bettencourt still owns about a third of the company, having held on to a majority stake following the company’s stock market flotation in 1963. Many of these shares are held in trust for her daughter. She also owns a small stake in Nestlé following an equity swap in the mid-1970s.

She suffers from dementia and her fortune has been placed under her daughter’s guardianship following a very public three year legal battle. She was forced to resign from the L’Oréal board last year, with her grandson Jean-Victor Meyers taking her seat.

Meanwhile, Bettencourt is also divesting some of her assets, recently selling off her €60m island in the Seychelles following a row over unpaid tax. According to research by investigative website Mediapart last November, the French tax authorities are seeking €77m from Bettencourt in unpaid wealth tax from 2004-2010. The billionaire has been one of the biggest beneficiaries of the bouclier fiscal tax cap, which has limited an individual’s personal taxation at 50% of their income.

Bernard Arnault

  • 1949 Born in Roubaix, March 5
  • 1971 Graduated from Ecole Polytechnique in Paris with engineering degree. Joined father’s construction company. Chairman five years later
  • 1981 Emigrated to US, moved back to France a few years later
  • 1983 Bought textile firm Boussac, owner of Christian Dior brand
  • 1987 Benefited from shareholder dispute at LVMH and stock market crash to gain a controlling stake in the company
  • 1990s Consolidated position at LVMH, buying up a range of luxury brands
  • 2005 Overtook Liliane Bettencourt as richest person in France

Liliane Bettencourt

  • 1922 Born Liliane Henriette Charlotte Scheuller, only child, in Paris, October 21
  • 1927 Mother, Louise, died
  • 1937 Joined her father Eugène’s cosmetics company L’Oréal as an apprentice
  • 1950 Married André Bettencourt
  • 1953 Only child, daughter Françoise, is born
  • 1957 Father dies. Liliane becomes principal shareholder in L’Oréal
  • 1987 Set up Bettencourt-Schueller Foundation to fund charitable projects
  • 2007 Husband André dies. Daughter Françoise begins legal action against François-Marie Banier
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