LVMH CEO Bernard Arnault investigated over financial transactions with Russian oligarch Nikolai Sarkisov

Arnault is currently facing a fresh investigation related to his alleged financial dealings with Russian oligarch Nikolai Sarkisov.

LVMH CEO Bernard Arnault investigated over financial transactions with Russian oligarch Nikolai Sarkisov
Bernard Arnault, Chairman and Chief Executive Officer of LVMH Moet Hennessy Louis Vuitton, speaks during a press conference to announce a LVMH sponsorship deal for the Paris 2024 Olympic Games at the Grand Palais Ephemere in Paris, France, July 24, 2023. REUTERS/Pascal Rossignol/File Photo

The backstory: Bernard Arnault is a French billionaire well-known for running LVMH, a major player in the luxury goods industry. LVMH has a portfolio of high-end fashion and luxury brands, including household names like Louis Vuitton, Dior, Givenchy, Moët & Chandon and others.

Arnault's journey with LVMH began in 1989 when he acquired a big stake in the company. Since then, he’s held the top positions as the chairman and CEO. According to Bloomberg’s Billionaires Index (as of the end of September), Arnault's net worth stands at US$167 billion, making him the world's second-richest person, just behind Tesla CEO Elon Musk.

More recently: In February, Arnault found himself in a legal predicament when he faced off against French tax investigators in court and ended up on the losing side. It all traced back to a 2019 raid that took place at LVMH's headquarters, which was connected to potential tax fraud in Belgium.

The development: Arnault is currently facing a fresh investigation, and this time, it's related to his alleged financial dealings with Russian oligarch Nikolai Sarkisov. Sarkisov is an exec at his brother Sergey's Russian insurance firm, RESO-Garantia. According to reports from the French newspaper Le Monde, citing France's Tracfin financial intelligence unit, Sarkisov bought prime real estate in an Alpine resort, and it's alleged that Arnault helped him out with a loan.

This caught the attention of the Paris prosecutor’s office, which launched a preliminary investigation in 2022. Tracfin initially flagged the dealings, all made through different shell companies, for potential money laundering. But it's important to note that a preliminary investigation doesn't imply guilt.

An exec from RESO-Garantia told CNBC the whole thing was managed by an investment unit and was just a regular real estate deal handled above water and following all the rules. In fact, he said Arnault and Sarkisov hadn’t ever met. Arnault's side of the story? According to Le Monde, a close associate said they followed French law in all their dealings, and, in a comment sent to CNBC, Arnault’s lawyer Jacqueline Laffont said the allegations of money laundering were “as absurd as they are unfounded.”

Key comments:

“The operation that was conducted to allow the expansion of the White Horse Hotel in Courchevel is well known and was conducted in compliance with the laws and with the support of councils. The investigation, apparently in progress, will not fail to recognize this,” said Arnault’s lawyer, Jacqueline Laffont, to CNBC.  “Moreover, who can seriously imagine that Mr. Bernard Arnault, who for the past 40 years has built France and Europe’s top company, would engage in money laundering to expand a hotel? I think that the senseless nature of these allegations cannot escape anyone.”

“The transaction was managed by a small investment unit which invests professionally in European real estate. It consisted of acquiring flats in an old building in Courchevel from various private owners, with the view to sell them later to a developer once the entire building was bought out,” said RESO-Garantia Deputy CEO Igor Ivanov to CNBC.

"These activities carried out in Belgium are well known to the French tax authorities and have already been audited on numerous occasions since their creation in 2009," said LVMH in February in response to the top court ruling against the company.