Heiress Loses L'Oréal Family Fight

At Daughter's Request, Court Puts Liliane Bettencourt Under Guardianship, Citing Mental Frailty.

By CHRISTINA PASSARIELLO

PARIS — Françoise Bettencourt-Meyers seized control of the L'Oréal SA fortune Monday after her mother, Liliane Bettencourt, heiress to the cosmetics giant, was placed under guardianship, a victory for the daughter in an acrimonious family tug-of-war over an inheritance valued at €15 billion ($20.82 billion).

A judge in the Paris suburb of Courbevoie decided that the aging billionaire needed protection after reviewing a medical report stating that Ms. Bettencourt's mental health was failing, and that she was showing symptoms of dementia, lawyers involved in the case said.

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Associated Press

L'Oréal heiress Liliane Bettencourt, left, and her estranged daughter, Françoise Bettencourt-Meyers, in March.

Ms. Meyers had accused members of her mother's entourage of manipulating the frail widow, who will turn 89 on Friday. A separate legal investigation is under way to determine whether this was the case.

The assets of Ms. Bettencourt will be managed by her estranged daughter and her two grandsons. The eldest grandson, Jean-Victor Meyers, was appointed guardian.

Ms. Bettencourt will appeal the decision, her lawyer, Jean-René Farthouat, said. "She wants to be left in peace," he said.

One of Ms. Meyers's first duties will be to decide with her two sons whether the heiress can continue to serve on the L'Oréal board, a person familiar with the matter said. L'Oréal declined to comment.

Some L'Oréal shareholders have railed against Ms. Bettencourt's presence on the board, saying she's not mentally fit. "Ms. Bettencourt is unable to serve in her role on the board," said Frédérik-Karel Canoy, a lawyer representing minority holders.

The guardianship could also impede Ms. Bettencourt from traveling abroad without her grandson's permission, according to the heiress's lawyer, Mr. Farthouat.

Ms. Bettencourt often spends time at her villa in Spain and her private tropical island in the Seychelles. In addition to her mansion in the Paris suburb of Neilly-sur-Seine—across the street from her daughter's house—Ms. Bettencourt also owns a property in Brittany.

In a weekend interview with French newspaper Le Journal du Dimanche, Ms. Bettencourt threatened to leave France if she was placed under guardianship.

The Bettencourts jointly control the cosmetics company with Swiss food group Nestlé SA, each with around 30%. Ms. Bettencourt transferred ownership of most of her shares to her daughter several years ago, but kept the dividends.

According to a shareholder's pact, Nestlé is prohibited from increasing its stake in L'Oréal until six months after Ms. Bettencourt's death.

Ms. Meyers and her sons sought to quell fears that controlling the family stake in L'Oréal could lead to its sale. In a statement, they reiterated their "profound bond with L'Oréal and their unspoiled wish to continue support its future development."

The family conflict broke into the open four years ago when Ms. Meyers filed a lawsuit against a celebrity photographer friend of her mother's. In that complaint, Ms. Meyers alleged that the photographer, François-Marie Banier, profited from Ms. Bettencourt's frail mental state to extract €1 billion of paintings, life-insurance policies and cash from the heiress. Mr. Banier, who gave back a large part of the gift but kept about €200 million, has denied profiting from Ms. Bettencourt's weakness.

Within a year, the "Bettencourt affair," as it is known in France, became more than a family spat.

Ms. Meyers's initial complaint led to the revelation last year that Ms. Bettencourt's former butler has secretly taped conversations between her and her advisers. The more than 20 hours of taped conversations included discussions of political donations. Ms. Bettencourt has maintained that she made only legal campaign donations.

The mother-daughter fight escalated last year when Ms. Bettencourt sued her daughter for mental harassment. She also railed in the press against her daughter, whom she labeled lonely and boring. Ms. Meyers, in return, repeatedly requested that her mother be put under guardianship. Ms. Bettencourt refused to submit to several court-mandated medical tests.

In December, lawyers for both sides brokered a truce to preserve the family's control over L'Oréal. In addition to appointing the two grandsons to the board of Téthys, the family holding company, Ms. Bettencourt agreed to pay her daughter's €12 million in legal fees. In a public reconciliation, they attended the fashion show of Giorgio Armani—for which L'Oréal makes perfume—together last January.

Yet earlier this year, not long after Ms. Bettencourt had asked for her financial and legal adviser Pascal Wilhelm to become her trustee, Ms. Meyers said she was being denied access to her mother.

In June, Ms. Meyers filed a motion with the Courbevoie judge, asking that her mother be placed under guardianship and Mr. Wilhelm's mandate as trustee revoked. The motion effectively broke the six-month truce. Mr. Wilhelm has denied any wrongdoing.

Despite Monday's guardianship ruling, other probes stemming from the Bettencourt affair continue. A separate investigation into whether Ms. Bettencourt's entourage exploited her mental weakness to obtain gifts or favors continues in Bordeaux. The Bordeaux prosecutors are also looking into the alleged political donations.