image: Louis Vuitton

image: Louis Vuitton

Two LVMH Moët Hennessy Louis Vuitton executives were taken into custody in September by French police for questioning in connection with a pending criminal investigation into influence-peddling, a type of corruption in which people use their connections with governments to gain favors or preferential treatment for a third party, usually in return for money. One of the two unnamed executives is a former magistrate in charge of the Paris-based luxury conglomerate’s security. The other is said to be considered as “the most influential adviser” of LVMH owner Bernard Arnault. 

In addition to the LVMH execs, two former police chiefs – Bernard Squarcini, who ran the Direction centrale des renseignements généraux domestic intelligence service under former President Nicolas Sarkozy, and Christian Flaesch, who headed the Paris Judicial Police force – were taken into custody for questioning on Monday in connection with the investigation. According to Le Monde, prosecutors are investigating whether Squarcini handed over confidential information supplied by his contacts in law enforcement to paying clients of Krynos, the consulting firm he founded in 2013 after he left the intelligence service. 

LVMH’s alleged involvement stems from its status as one of the “main clients” of Squarcini’s Kyros. According to reports, in 2013, Flaesch supplied confidential information to Squarcini in connection with a then-pending judicial police financial investigation involving LVMH and Hermès, which was being carried out under Flaesch’s jurisdiction as the former head of the Parisian Judicial Police force. Squarcini proceeded to share that information with the two executives of LVMH, which was embroiled in a dispute with rival luxury group Hermès International. You may recall that in 2013, after a series of federal investigations and lawsuits and countersuits, a French stock market authority held that LVMH had secretly bought shares in Hermès to build a stake in the iconic Paris-based design house.

The case at issue centers on the criminal complaint that Hermès filed against LVMH in July 2012 in a Paris court, accusing the luxury conglomerate of insider trading, collusion and manipulating stock prices.

UPDATE (11/28/16):  Hermès has become a civil claimant in a criminal case against Bernard Squarcini, a spokeswoman for the French luxury firm has confirmed. Hermès decided to become a civil claimant in the criminal case against Squarcini and Laurent Marcadier, who was a magistrate at the time of the events but has since become LVMH’s head of security, after the judge in charge of the case recently brought to the luxury group’s attention that Squarcini had potentially initiated surveillance of it. This allows Hermès access to the details of the case, which does not yet have a confirmed date.