Given the acquittals of the Wildenstein family handed down in
Paris on Thursday, and yet to be published, it appears from
inter-avocat gossip that the Court found that the prosecutor and
the tax administration had both totally missread the law by
assuming that it meant something that, at the time, it did
not, and therefore missunderstood it, whether French legislation or
for that matter those governing the foreign trust "arrangements"
I can only cite the news coverage and Dumon Beghi's reaction to
being "caught out":
"The case grew out of legal battles waged by women in the family
who have complained of having been excluded from the business and
cheated out of inheritances. Sylvia Wildenstein, Daniel's widow,
sued her stepsons over his estate, contending that assets had been
hidden from her in the trusts.Those tensions were still apparent on
Thursday. Outside the courtroom, a lawyer for Mr. Wildenstein
trailed Mrs. Wildenstein's former lawyer, Claude Dumont-Beghi, and
loudly called the lawyer a "crook" while she spoke with reporters.
Ms. Dumont-Beghi ignored him, insisting that the nation's laws need
to be changed to apply to trusts created before the new legislation
was enacted to combat tax evasion." As those laws did not suit her
prior pleadings and position in the civil law case with which she
was entrusted, that is hardly surprising.
Retrospective tax legislation? Does this lady have any
legal training at all, or is she seeking to increase her copyright
royalties as a writer of fiction? The whole French tax and economic
system is based upon a clean slate after a period of
"prescription", otherwise the very property rights and assets
against which the money is issued and the economy runs is
Perhaps if Dumont-Beghi had concentrated on what the law
actually said, rather than attempting to reinvent the trust as a
"contrat" "à la Marini" - I am tempted to coin a phrase marinated-
she would not have had to seek the usual refuge behind a
retroactive rewrite of the civil, criminal, fiscal and
administrative law to save face in front of the press. Whilst
defending the case of her deceased client to the hilt, she
overstepped the mark. Given French politics, it is unlikely
that her misleading sworn testimony before the Parliamentary
Committee at which she attempted to paint the offshore world black,
will be sanctioned, in either sense of the term. However,
given their misleading contractual projection; Sénateur Marini, and
incidentally the French administration through their representative
voice at the OECD, Pascal Saint Amand may need to lower their tone
as to a revisionist recasting of the English trust as the villain,
and the trusts of states whose trusts laws are derived from it.
It is not by retrospective refashioning of the "interpretation"
of laws of property that any serious solution can be found. It just
will not function, dare I say equitably?
The next issue will be whether, and to what extent, any wealth
tax or succession duty is actually due. That issue is
due to be heard later, but without the threat of penal
Now that the judgment ahs been circulated, it is clear that
whilst the Tribunal correctionnel de Paris might have found what we
anglo-saxons might call "mens rea" in the use of offshore trust and
corporate arrangements, yet found that there was no law against it
at the time of the alleged actions. No "élément juridique" not
quite "actus reus" of a criminalised nature was found by the
Tribunal. It even noted in passing that it found it strange that
despite the French legal system having cognizance of the trust
concept for over a century, and had more or less given it a degree
of status and recognition at the private international law level,
it was only in 2011 that Parliament took action to attempt to
apprehend the concept.
Having practiced in France since the 1980s, I can confirm that
the French will only be able to approximate, not to understand.
However the notice of appeal by Mme Houlette, on the mere basis
that the Tribunal had found what we might descibe as "mens rea",
may mean that the Cour d'appel may be called upon to invent a new
criminalisation of economic behaviour by mere intention to employ a
foreign concept of property law. Phrasing that nonsense in a
judgment is probably beyond the vocabulary of any current
The problem for the Procurateur is that the Tribunal found that
there had been no "fait juridique" to enable taxation to take place
at the time of the allegations. Put simply, no tax had been
triggered as there was no legal or for that matter ordinary fact or
event which fell within the scope of the gift or succesion
legislation as it was at the time. The administration has
stated as a general princple that a "fait juridique" if taxable is
only taxable if it is consigned to writing.
In short, actions taken since 2011 by other individuals or
families with trust arrangements will need to be reviewed in
relation to article 792-0 bis CGI et seq.