Fund Manager Carmignac Settles Tax-Fraud Case for $34 Million

(Bloomberg) -- French fund manager Carmignac Gestion agreed to pay 30 million euros ($34 million) to settle a criminal probe with financial prosecutors, becoming the first firm to reach such an accord in a tax-fraud case.

Eliane Houlette, who heads the Parquet National Financier, said at a Friday court hearing that the case related to the way profits flowed from different entities in France and Luxembourg and how dividends were booked to significantly decrease corporation tax. In addition, Carmignac paid about 21 million euros in back taxes, penalties and interest linked to a claim from civil tax authorities.

The case is an example of how France’s PNF is trying to hammer more U.S.-style settlements after it was given expanded powers to fight financial misbehavior. Previously, in non-tax fraud cases, Societe Generale SA agreed to pay 250 million euros to end a bribery case and HSBC Holdings Plc settled a money-laundering probe in 2017 for 300 million euros.

Christophe Peronin, deputy general manager at Carmignac, said the company wants to “move on.” Carmignac said in an emailed statement that the settlement puts an end to the proceedings, which were initiated in 2017 following a complaint from civil tax authorities, and added that the matter had no affect on clients or business partners.

Under the terms of the deal, Carmignac acknowledged the underlying facts, but didn’t plead guilty.

Carmignac’s settlement was approved by Paris Judge Jean-Michel Hayat. Unless the company withdraws within the next 10 days, the agreement will become final.

Houlette, whose term at the PNF’s head is set to end Friday, said the penalty is much larger that any amount that might have been obtained in court without a settlement. She said financial prosecutors took into account the fact that Carmignac wasn’t a repeat offender when deciding to negotiate an agreement.

To contact the reporter on this story: Gaspard Sebag in Paris at gsebag@bloomberg.net

To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Geraldine Amiel

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