Sarkozy flatly denies taking illegal funds

President Nicolas Sarkozy last night flatly denied that he, or his party, had accepted illegal campaign funds in cash from France's richest woman.

In his first public comments on the tangled L'OrEal family feud and political funding affair, President Sarkozy accused political opponents, and parts of the media, of exaggerating the scandal to try to derail his economic reform programme.

In a live, prime-time interview on France 2 - his first TV appearance for six months - President Sarkozy tried to appear, by turns, calm, determined and unmoved by the storm of political controversy which has engulfed the L'Oreal affair over the last few days.

Sitting on the terrace of the Elysee Palace, he said: "What a waste of our time... What a disgrace. We have had three weeks of calumnies. I was elected to put right those things which have been troubling France for years but any attempt at reform upsets some people and this is how they respond."

"There have been completely unfounded allegations that I, for years, received envelopes of cash," he said. "There have been rumours about my private life and that of my wife. All are completely false."

The former accountant of Liliane Bettencourt, 87, the largest shareholder in cosmetics giant L'Oreal, said last week that the billionairess had given $150,000 (NZ$264,000) in cash to Mr Sarkozy's 2007 presidential campaign.

This is 20 times the legal limit for a personal contribution. The accountant, Claire Thibaut, was also quoted by an investigative website as saying that Ms Bettencourt, and her late husband, had often given envelopes stuffed with cash to President Sarkozy when he was the mayor of Neuilly-sur-Seine, just west of Paris.

Ms Thibaut has since disowned these remarks but stands by the allegation that the Sarkozy campaign was given $150,000. The allegations, which are under official investigation, are explosive for several reasons.

Tapes of Ms Bettencourt's conversations with advisers, secretly recorded by her former butler, suggest that France's richest woman hid parts of her wealth from the French taxman.

They also suggest that President Sarkozy tried to intervene, on Ms Bettencourt's side, in a lengthy legal battle with her only child, Francoise.

Political opponents have suggested the Sarkozy government - and especially his party treasurer and employment minister, Eric Woerth, who was alleged to have received the cash - ignored the alleged Bettencourt tax evasion because of her past generosity.

The affair arises from a three-year-old family feud. Ms Bettencourt's daughter alleges that her mother is "mentally weak" and has been bamboozled, over many years, into handing almost A1bn in cash, paintings, property and financial assets to a gay, celebrity photographer, FranAois-Marie Banier.

A trial of Mr Banier for "abuse of weakness" began ten days ago. It was adjourned sine die to allow the presiding judge to investigate the contents of the 100 hours of conversations taped by Ms Bettencourt's former butler.

It was these tapes which first promoted the affair into a political controversy last month. They were handed to the police and leaked to a magazine and an investigative website, Mediapart.

The conversations revealed that the ElysEe Palace had intervened to try to block the legal action by the billionairess's daughter, and that Mr Woerth - then budget minister dealing with tax evasion but also Mr Sarkozy's party treasurer - had asked for a job for his wife, Florence, in the company which manages the Bettencourt fortune.

The tapes also revealed that he had solicited modest and legal campaign contributions from Ms Bettencourt.

An investigation by an official financial watchdog yesterday cleared Mr Woerth of covering up alleged tax evasion by the billionairess. Mr Woerth, now employment minister, said he was "extremely relieved" after suffering an "avalanche of insults".

He hinted, however, that he intends to resign as treasurer of Mr Sarkozy's centre-right party to avoid further suspicion of conflict of interest.

- THE INDEPENDENT