When a young Bernard Arnault visited New York in 1971 he asked a taxi driver if he had heard of the French president Georges Pompidou. The driver replied, “no, but I know Christian Dior”.
This is supposedly the moment that set Arnault on the path to building Louis Vuitton Moet Hennessy (LVMH) – the internationally renowned luxury goods empire that has seen him go from being part of a family of small business owners, to becoming one of the world’s richest men. (He overtook Elon Musk in the Forbes and Bloomberg rankings in December 2022, though Musk regained the top spot in July of this year.)
50 years later, the distinction between the power of the president and a seemingly innocuous luxury goods firm is no longer as stark, with LVMH standing accused of operating a “state within the state”, in a scandal which is exposing the symbiotic relationship between France’s ultra-rich and its neoliberal political class.
An exposé by the newspaper Le Monde at the end of August accused Arnault of having regular direct access to the president and exercising pressure over government ministers, shedding new light on his proximity to power. It also shed light on the revolving door between the government and LVMH, with a consistent exchange of personnel between LVMH and president Macron’s ruling party, Renaissance.
According to Politico, Arnault even lobbied Macron to have prime minister Elisabeth Borne replaced with interior minister Gerald Darmanin, an economic liberal with whom Arnault has a personal relationship. Although he was unsuccessful, that Arnault can engage in such off the record lobbying of the president demonstrates his influence.
For their part, Macron and his allies see LVMH as a useful arm of French soft power. In a telling anecdote, Le Monde described how, at a state dinner, president Macron’s wife Brigitte introduced Bernard Arnault’s wife Delphine, to Chinese president Xi Jingping. Xi is said to have “rhapsodised” about LVMH.
The close relationship between Arnault and Macron’s government can partly account for a number of new laws that favour the ultra-wealthy.
In 2017, Macron ended the Solidarity Wealth Tax (ISF), an annual tax that targeted all wealth above €1.3 million including shares, investments and physical assets, of which Arnault had made clear his disapproval.
The Solidarity Wealth Tax was replaced by the Real Estate Wealth Tax – targeting property – and the flat tax of 30% on capital gains. The cut, brought in under Macron, a president he personally endorsed and supported through the newspapers that he owns, saves him several million euros each year, according to newspaper Liberation.
“The flat tax is a one-time tax on capital that means that the wealthiest effectively pay a considerably smaller percentage of their fortune in tax than before Macron”, Nicholas Framont, author of Parasites, a book on France’s ultra-rich, told Novara Media.
Arnault, “is someone that benefits from all the French laws and all the French public aid, and benefits from them constantly,” he said. “For me that is a specificity of French capitalism, that the French bourgeoisie… do everything to receive as much public money as possible, contrary to the image people often have of the bourgeoisie as entrepreneurial and independent of the state. In fact, they are served enormously by the state.”
Arnault’s close relationship with the state does not appear to have been damaged by repeated allegations against his conduct.
The story of how LVMH became one of the biggest luxury brands in the world – owning such household names as Veuve Clicquot Champagne, Tiffany and co. jewellers and the fashion brand Fendi – can be traced back to the acquisition of Christian Dior in 1984. This marked the beginning of the pivot of the family company away from civil engineering and manufacturing towards textiles and luxury goods. From then, Arnault began methodically building his empire, quietly acquiring shares in luxury brands until he was the majority shareholder, at which point the hostile takeover and merger into his company would begin.
In an interview with CNBC, Arnault said that the story of the LVMH behemoth is one of “creativity and organisation” as well as the vision to see the possibilities for a major luxury brand. What this leaves out is the ruthless attitude that earned him the nickname “the wolf in cashmere”.
This was evident in the way that he bought struggling companies like the textile manufacturer Boussac in 1984: He promised to turn the company around, then promptly fired the workforce and sold the company for parts.
This ruthlessness has even extended to alleged dirty tricks, like espionage and what his critics call “parasitism” on the French public purse.
Arnault has often faced accusations of foul play. In 2021, Forbes revealed that Arnault had over $1.6 billion stashed in Luxembourg, a tax haven. Arnault did not comment on the investigation.
His name also appeared several times in the Paradise papers, which revealed that several of Arnault’s assets, including a London property and a yacht, were owned via tax havens. When Le Monde reported on the contents of the Paradise Papers leaks, Arnault responded by threatening to pull ads from the newspaper and calling the article a “journalistic operation designed to create a sensation” and called into question the methods of the authors, saying that he had not broken any laws and that the article had neglected to mention this.
In 2022 the Guardian revealed that Uber had asked Arnault to assist in lobbying efforts to ease their entry into the French market. Arnault invested $5 million personally in Uber, though it is unclear if he lobbied on its behalf. Arnault did not respond to the revelations.
In March this year the New Yorker reported that Arnault’s name featured among a hacked list of clients of the Swiss private intelligence firm Alp that was also responsible for running smear campaigns on behalf of the UAE. Once again Arnault declined to comment.
In September, Le Monde alleged that Arnault may have been involved in laundering money through real estate transactions to Russian businessman, Nikolai Sarkisov. Arnault is the subject of an inquiry by the Paris prosecutor’s office over the transactions, though he called the allegations of money laundering “absurd and groundless”.
Perhaps most controversial of all, Arnault has a long history of alleged spying on his rivals. In 1988 as he manoeuvred to acquire LVMH, he hired private investigations firm Kroll Associates to spy on Henry Racamier, then head of the business, believing that Racamier was embezzling (he was later cleared). Fashion designer Tom Ford alleged that Arnault had private investigators sit in cars outside his apartment watching his movements. Kroll would reappear in Arnault’s story ten years later when Arnault fought bitterly (and failed) to acquire Gucci into the LVMH stable.
LVMH were not the first company to use these tactics, Airy Routier wrote in his book Exterminating Angel: The True Life of Bernard Arnault, but it did it with, “a systematic spirit and precision, which was the mark of true professionalism”.
This professionalism would be ramped up even further as the entanglement of LVMH with the French state grew under President Nicholas Sarkozy.
In 2013, Francois Ruffin, then a filmmaker, now MP for left populist party La France Insoumise, was making a film called “Merci Patron!” (Thanks Boss!). The film centres on Arnault and how he had allegedly mistreated workers who were left unemployed when he moved their factory to Poland. It was later revealed by investigative news outlet Mediapart that Arnault, outraged by the news of this film, had enlisted the services of former spy chief Bernard Squarcini to spy on Ruffin and his satirical journal/activist group Fakir between 2013 and 2016. Squarcini enlisted judges and policemen to spy on Ruffin and Fakir.
Cyril Porcréaux, an employee of Fakir, told Novara Media, “Over three years they spied on Fakir. Someone who was volunteering turned out to be a mole who was paid by Squarcini. They also brought in a private surveillance firm.”
When Fakir volunteers turned up to the general assembly of investors at LVMH to interrogate Arnault, they were kettled by riot police.
“When Francois and members of Fakir were going to be at the meeting for shareholders of LVMH, the mole… told Squarcini directly that it would happen”, said Porcréaux.
“It’s a complete reversal of the role of the state to serve private power,” he said.
Although Squarcini is currently being interrogated by the French justice system over his role in the affair, Arnault has escaped relatively unscathed. In December 2021, he was ordered to pay a fine of €10 million, after a Paris Judge ordered them to settle. The money “is nothing to him”, Porcréaux told Novara Media. At the time of the settlement Ruffin addressed the judge asking “can justice be bought so cheaply?”
Arnault’s brief period holding the title of world’s richest man has garnered him more attention. Equally, as his alarming proximity to the Macron government has become apparent, his activities are being subjected to public scrutiny like never before and yet his power remains broadly unchanged.
“In France Bernard Arnault is untouchable,” said Porcréaux.
LVMH did not respond to a request for comment.