French energy minister’s links to discreet inheritance scheme raise ‘conflict of interest’ concerns

Credit: Alexia Barakou

From the street, the residential building looks like any other in the affluent 16th arrondissement of Paris. Its bay windows and wide balconies give no hint that a wealthy investment company is registered in this unassuming complex. Yet, it is here that a discreet business linked to Agnès Pannier-Runacher, the country’s energy transition minister, has been housed since 13 July 2016. Incorporated as ‘Arjunem’, it is named after the politician’s children.

The company was set up as an early-inheritance scheme, that Pannier-Runacher, one of President Emmanuel Macron’s closest allies, has never disclosed. Twice she had the opportunity to do so, when she joined the Ministry of the Economy in 2018, and the Ministry of Industry in 2020. But she chose to keep this information a secret from the High Authority for the Transparency of Public Life (HATVP), the French government watchdog. Pannier-Runacher told Investigate Europe and Disclose that she didn’t breach disclosure rules and denied any wrongdoing.

Still, Arjunem is interesting in many aspects. Its capital is tied to several tax havens and one transparency NGO claims its existence may form a conflict of interest between the minister and Perenco, one of Europe’s largest independent oil producers. The group has been mired in controversy for years and accused by multiple NGOs of environmental damage and human rights abuse around the world. Jean-Michel Runacher, the minister’s father and Arjunem’s shareholder, was until recently one of Perenco’s top executives. 

On paper, Pannier-Runacher didn’t have to mention Arjunem in her declaration to the high authority. French laws on the transparency of public life only demand she declare her direct positions in companies, as well as those of her spouse. Shares held by ministers’ minor children are not subject to disclosure, but the watchdog can investigate cases it considers interesting.

Credti: Jérémy Barande
Agnès Pannier-Runacher became France’s Energy Transition Minister earlier this year.

It is precisely the minister’s children who became the owners of Arjunem alongside their grandfather and one cousin. Agnès Pannier-Runacher’s daughter and two sons were aged 13, 10 and five when her father set up the company with more than one million euros of capital. As stated in registration documents, Jean-Michel Runacher’s goal was to gift some early-inheritance to his family. A classic scheme in France for someone who was 70 at the time, to avoid higher inheritance taxes that come with older age or death. 

In parallel, Runacher created a second similar company, ‘Antos’, with shares amounting to almost €600,000, that he passed on to two of his other grandchildren; nephews of the minister and adults at the time. Analysis by Investigate Europe and Disclose can reveal that both companies’ capital came from hedge funds that have also counted Perenco as an investor. Two of the funds at least operate from tax havens in Guernsey and Ireland. 

Hedge funds in tax havens

When her father created Arjunem on 13 July 2016, Agnès Pannier-Runacher was still working in the private sector and about to join Macron’s presidential campaign. In official deeds, she signed authorisations allowing her three children to become shareholders in the company. While they only contributed €10 each, Jean-Michel Runacher brought the majority of the capital: €1.2 million. 

According to Arjunem’s public documents, Runacher’s shares came from his investments in three specific hedge funds operated by some of the world’s largest money managers: Sciens Group, Marshall Wace and Millennium Management.

The incorporation document for Arjunem shows Agnès Pannier-Runacher’s role as a signatory for her children.

The first fund, called Blue Omega Cell, is incorporated in Guernsey, a tax haven that was on the European Union’s blacklist until 2019. The second, MW Global Opportunities, invests from Hong Kong and is registered in Ireland, a country that several NGOs regard as a tax haven. For the third, IE and Disclose were unable to locate the exact subfund, but could establish that its manager, Millennium Management, has offices in London and New York and its ultimate holding is in the tax-friendly US state of Delaware. 

All these financial products, which formed Arjunem’s initial capital, were deposited in Luxembourg at CBP Quilvest, a private bank also used in the past by Perenco’s owners.

Questioned by IE and Disclose, Agnès Pannier-Runacher confirmed that her children and one of their cousins are the “bare-owners” of Arjunem and its investments, while their grandfather  has full control of them and can keep dividends. In a nutshell, the minister allowed her father to gift financial products to her children and to keep managing them for his own benefit.

Pannier-Runacher added that donation taxes were paid in France but declined to comment on where the funds are based or whether they invest in fossil fuels. She said only her father could answer, but Jean-Michel Runacher did not reply to any questions sent by email, despite the minister’s and Perenco’s confirmations that he was aware of this article.

It remains unclear if Arjunem’s investments include stakes in oil and gas. However, all three hedge fund firms have fossil fuel-linked investments in their portfolios. Sciens Group and Millennium Management did not respond to requests for comment. Marshall Wace declined to comment on its specific investment funds.

Arjunem and Perenco owned shares in same hedge funds

The personal wealth of the minister’s father is so closely linked to Perenco that both Jean-Michel Runacher and the group have had investments in the same three hedge funds.

When incorporating Arjunem in 2016, Runacher attached a series of emails between himself, Perenco executives, and representatives of Millennium, Marshall Wace and Sciens Group. In these exchanges, Perenco requested performance updates of its own investments in the three subfunds. The same subfunds which were also used to launch Arjunem.

On 5 July 2016, a Perenco director emailed Millennium asking for “an early estimate for our portfolio return”. Jean-Michel Runacher, copied in the reply, immediately forwarded it to his Parisian notary to “finalise” the registration of Arjunem. He repeated the same process for the Blue Omega and MW Global Opportunities funds. Also copied in this correspondence was Finvest, one of Perrodo’s wealth management firms. Operated between the Bahamas and Guernsey, Runacher was its director for years.

Now aged 77 and living in London, Runacher held most top jobs at Perenco. Alongside the group’s founder, Hubert Perrodo, he helped launch the group in the 1980s and contributed to its constant growth. He was successively appointed chief financial officer and chief executive officer. Even after stepping down from his executive duties, he remained an administrator and a shareholder in the French holding until 2020.

Credit: Alexis Huguet/AFP
Perenco is one of Europe’s largest independent oil producers.

When contacted by IE and Disclose, Perenco declined to say if the group still has investments in the same hedge funds as Arjunem. A company spokesperson also said that “Mr Runacher is not a shareholder in any Perenco company”,  and only “provides advice from time to time”. 

Yet latest corporate registries indicate that the minister’s father is still the executive director of BNF Capital, a UK wealth manager whose beneficial owners are the Perrodo family. He also remains president of the board of Global Financial Investment SA, a Luxembourg financial company affiliated to Perenco .

“Conflict of interest

In a statement, Agnès Pannier-Runacher told IE and Disclose that her involvement in Arjunem does not put her in a situation of conflict of interest. “I have neither a vocation, nor any legal obligation to be associated with my father’s professional activities,” she said, adding that she has never dealt with Perenco while in government. For Pannier-Runacher, there is “no ambiguity” that she did not have to declare Arjunem to the high authority, as the investments belong to her children and are managed by her father.

However, this should not have prevented the minister from making a voluntary disclosure, according to Béatrice Guillemont, head of French anti-corruption NGO Anticor. “The aim of the [watchdog] is to prevent and avoid potential conflicts of interest,” she said. “And in this particular case, there is no doubt that the minister is in a conflict of interest. The minister should have declared the company under the ‘observations’ section of [her declaration] as soon as she was appointed in 2018.”

Questioned by IE and Disclose, HATVP, the high authority, said: “The absence of disclosure obligation does not exempt a public official from taking care to prevent and put an end to situations of conflict of interest arising from other indirect interests held, such as the activities of children or other family members.” The watchdog also stressed that it “pays particular attention to breaches of probity and may, if necessary, refer a case to the courts.”

In the past, Pannier-Runacher was barred from dealing with several companies as part of her ministerial activities to avoid potential conflict of interests. Some of them included Bourbon, a shipowner where she used to be an administrator, and Engie, France’s largest electricity provider where her ex-husband is an executive. Perenco, however, has never been the subject of any restrictions.

Full responses received from Agnès Pannier-Runacher can be read here.

 #PerencoFiles is an ongoing investigation supported by the IJ4EU Investigative Support Scheme.