Switzerland co-operating in L'Oreal probe

Switzerland is cooperating with a French investigation into whether financial assets of Europe's wealthiest woman, l'Oreal heiress Liliane Bettencourt, have been misused, a magistrate said on Tuesday.

What began as a family feud between Bettencourt and her estranged daughter Francoise has exploded into a series of investigations concerning political donations, suspected tax evasion and money laundering that has shaken the French government.

Geneva judge Jean-Bernard Schmid told Reuters he was acting at the request of French judicial authorities but the inquiry was not aimed at detecting tax evasion by Bettencourt.

"French authorities have requested searches and above all the seizing of documents, which is under way," Schmid said.

"They have to be examined to see what has been gathered and whether people will contest the judicial cooperation with France."

There had been no arrests or charges laid, but he would be questioning witnesses, he said. Geneva was the main canton (state) involved in the Swiss inquiry, but there were "little things to go after outside of Geneva", he added.

Schmid declined to confirm a report in the Lausanne daily Le Matin that three Geneva establishments were targeted in the raids - two law firms and a private bank.

"This type of seizure is usually carried out in banks, financial intermediaries and fiduciaries (trustees)," he said.

"This is not fiscal, it is not a fiscal problem which the French authorities are investigating," Schmid said. "The aim is to see whether Madame Bettencourt was cheated or abused in the management of her assets, whether people took advantage of her."

"She would be more of a victim than an accused person in this operation," he added.

Bettencourt has acknowledged the existence of undeclared Swiss bank accounts and says she will repatriate the 78 million euros ($NZ137.5 million) held in them and settle up with the French tax authorities.

Schmid declined to spell out the alleged charges on which the French request for judicial assistance was based, but said that if Bettencourt had been cheated or her confidence abused, this would amount to fraud. If the fruits of a crime were hidden in Switzerland, this would mean money-laundering, he added.

French Labour Minister Eric Woerth, a close ally of President Nicolas Sarkozy spearheading a controversial pension reform, has been dogged for months by allegations of illegal funding of Sarkozy's conservative UMP party and 2007 election campaign. He has denied wrongdoing.

Last week Woerth admitted having intervened in favour of Bettencourt's wealth manager receiving France's prestigious Legion d'Honneur medal. His wife Florence worked for the manager, Patrice de Maistre, at the firm Clymene, which manages Bettencourt's vast fortune.

It is the lawsuit launched by Bettencourt's daughter involving society photographer Francois-Marie Banier - to whom Bettencourt is alleged to have given gifts worth 1 billion euros - that turned into a political scandal as evidence emerged of undeclared Swiss bank accounts, an island in the Seychelles and large cash donations to conservative politicians. Banier denies any wrongdoing.

- Reuters