Société Générale, the major French multinational banking and financial services company, has been raided by police as part of a high-profile alleged tax fraud and money laundering investigation.
On June 24 and 25, the firm’s offices in La Défense, near Paris, and in Luxembourg were searched.
Four people, including bank executives, were detained on June 24 and their homes were searched, newspaper Le Figaro reported on June 25. One was later released from custody but the other three had theirs extended, it was reported.
The searches were ordered as part of a preliminary investigation by the National Financial Prosecutor’s Office (PNF), opened in January 2024.
The operation targeted allegations of “tax fraud laundering,” “organised or aggravated tax fraud laundering,” and “criminal conspiracy”, according to the PNF.
Société Générale has declined to comment on the raids.
A judicial source quoted by Reuters said: “The [alleged] facts are likely to have been committed since 2009 in France and abroad, particularly in Luxembourg.”
The investigation aimed to verify whether “a department” of Société Générale was able to “propose and carry out arrangements for essentially tax purposes for the benefit of large French companies”, the source added.
A former Société Générale collaborator told French news agency AFP the police action seemed to point to the activities of the GLBA division.
It was suspected that an internal department at Société Générale developed complex offshore arrangements to facilitate tax avoidance for the companies.
According to daily newspaper Libération, one of these companies was milk industry giant Lactalis, the target of separate investigation by the PNF in 2018 for alleged aggravated tax fraud.
According to the paper, the dairy giant’s “schemes” “went through structures created by the directors of Société Générale in Luxembourg”.
At the close of 2023, Lactalis’ parent company allocated €300 million for potential tax disputes.
Up to 80 investigators in France and abroad reportedly were investigating the French multinational banking giant, as well as 11 magistrates and specialist PNF assistants.
Société Générale was also facing another investigation for a potential alleged tax evasion scheme, called “CumCum”, but these were separate proceedings.
The “Cum-Cum” tax investigation involved a complex alleged tax fraud scheme known as “dividend stripping” or “cum-cum trading.”
The practice entailed the alleged transfer of shares with (“cum”) and without (“ex”) dividend rights between different parties to obscure the true owner, allowing multiple parties to illicitly claim tax rebates on the dividends received.
In March 2023, the banking giant’s Paris offices were searched alongside those of four other lenders, including BNP Paribas and HSBC, in a European probe into alleged dividend-stripping schemes that may have cost governments over €100 billion.
These earlier raids were part of a co-ordinated effort with German authorities to investigate alleged tax fraud related to dividend tax payments.
Société Générale’s history included other financial scandals, notably the 2008 rogue trading case involving Jerome Kerviel, which cost the bank €4.9 billion, and in 2017 it was given a $50 million (€42.6 million) fine for pre-crisis mortgage-backed securities fraud.
