UPDATE 3-Police question French heiress over scandal

* Bettencourt questioned as witness in tax, laundering probe

* 87-year-old asked about Swiss accounts, island, donations

* Lawyer says she doesn’t remember details

* Minister expected to be questioned this week

(Updates with lawyer comments after questioning)

By Thierry Leveque

PARIS, July 26 (BestGrowthStock) – Police questioned France’s
richest woman on Monday about suspected tax evasion, money
laundering and alleged illegal political donations in a scandal
that has shaken the government.

L’Oreal (OREP.PA: ) heiress Liliane Bettencourt, 87, was asked
to explain two undeclared Swiss bank accounts and her
involvement with an island in the Seychelles mentioned in secret
recordings made by a former butler and published in the media.

Her lawyer, Georges Kiejman, said she told investigators she
had no detailed knowledge of the matters because she employed
staff to manage her fortune and tax affairs and had followed
their advice.

“I wasn’t present at the questioning, but I understand from
my client that it was very courteous and as complete as possible
given that these were sometimes old memories and that my client
hasn’t necessarily kept the details in mind,” he told reporters.

Bettencourt has acknowledged the existence of the Swiss
accounts and said she will repatriate the 78 million euros ($100
million) held in them and settle up with the tax authorities.

She was questioned about allegations by a former bookkeeper
that she and her late husband made big illegal cash payments to
conservative politicians, including to Labour Minister Eric
Woerth for President Nicolas Sarkozy’s 2007 election campaign.

“On the financing of political parties, she confirmed that
this had never been her centre of interest and that it was more
her husband’s field when he was alive,” Kiejman said, without
giving details.

Bettencourt was questioned for two hours as a witness at her
villa in the wealthy Paris suburb of Neuilly. Police also
searched her secretary’s office for documents in the case.

By contrast, others protagonists in the affair have been
summoned to the headquarters of the Paris financial crimes
division and some held overnight in police custody.

Woerth has denied receiving any illegal money and rejected
accusations of a conflict of interest over his wife’s job with
Bettencourt’s wealth manager while Woerth was budget minister in
charge of tax affairs and treasurer of the ruling UMP party.

Bettencourt told police she vaguely remembered having had
dinner with Woerth once but did not recall his wife, who was not
one of her close staff, according to her lawyer.

The minister is expected to be questioned by police later
this week after the cabinet gave the green light last Wednesday.
Woerth has refused to resign and says he will continue to lead a
major pension reform due to be adopted by parliament in October.

FAMILY FEUD

What began as a family feud over lavish gifts by Bettencourt
to a close friend, society photographer Francois-Marie Banier,
has turned into a political scandal.

Francoise Meyers-Bettencourt, the billionairess’s daughter,
has filed two lawsuits seeking to have her mother declared
mentally unfit and made a ward of the court.

Public prosecutor Philippe Courroye wrote to
Meyers-Bettencourt last week saying her application had no
chance of acceptance without a medical certificate attesting to
her mother’s mental state.

The heiress has refused to undergo an independent medical
examination but said in the statement on Friday she had already
given 92 percent of her fortune to her daughter and grandsons
and was fully capable of looking after her remaining fortune.

She said she had given them her 30.98 percent stake in
L’Oreal, with a market value of 14.5 billion euros ($18.72
billion), but receives the dividend income and has about 1
billion euros in other assets.

The secret recordings suggest Bettencourt’s wealth manager
received advice from President Nicolas Sarkozy’s legal
counsellor at the Elysee presidential palace on how to deal with
the lawsuits.

In another twist to the scandal, Kiejman said in a statement
that Bettencourt had changed her will and hinted that Banier was
no longer her sole heir and executor.

In a 2007 document impounded by police at her notary’s
office last week, according to newspaper Le Monde, Bettencourt
had named Banier as her sole heir with a provision that if he
died before her, her estate would go to his companion Martin
d’Orgeval.

Her lawyer said the documents seized “do not take account of
the latest probate arrangements made by Mrs Bettencourt, which
she is perfectly entitled to keep secret”.

In a statement released last week, Bettencourt said she had
given more than 92 percent of her fortune to her daughter and
two grandsons, leaving less than 8 percent to be disposed of in
her will.

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(Writing by Paul Taylor; editing by Andrew Roche)

UPDATE 3-Police question French heiress over scandal