Sarkozy spared more scandal as L'Oreal feud is resolved

France's incendiary political and society soap opera, the Bettencourt affair, came to a shuddering halt after three years yesterday without its much-awaited denouement in the courtroom.

The feud between Europe's richest woman, the L'Oreal heiress Liliane Bettencourt, and her only child Francoise - a saga which had shaken President Nicolas Sarkozy and threatened the future of the world's biggest cosmetics company - has been settled out of court.

Ms Bettencourt, 88, has agreed to banish her photographer friend, Francois-Marie Banier, who has been accused of "abusing" the old lady's fading mental powers to relieve her of €1bn in cash and artworks.

She has also agreed to fire her controversial financial manager, Patrice de Maistre.

In return, her daughter, Francoise Bettencourt-Meyers, 57, has agreed to drop a legal case against Mr Banier for "abuse of weakness" and to abandon her efforts to make her mother a ward of court.

Mr Banier, 63, will drop his counter-suits against Ms Bettencourt-Meyers. He is expected, however, to keep his €1bn in gifts and life insurance policies.

Most startlingly of all, it was announced, in a formal statement, that mother and daughter were now talking to each other again after three years in which they lived 100 metres apart in a millionaire's ghetto west of Paris but spoke only through personal attacks in the press and legal threats and counter-threats.

The settlement of the feud follows weeks of pressure from friends, family members, business associates and the Elysee Palace.

The Bettencourt affair exploded in July into an affaire d'Etat, or state scandal, when tapes of Ms Bettencourt's private conversations suggested that Mr Sarkozy had personally interfered in the case and that his campaign treasurer, Eric Woerth, had sought campaign contributions from her financial advisers.

A former Bettencourt family accountant also alleged that campaign contributions far above the legal limit had been paid to Mr Woerth before the 2007 presidential election by the old lady's financial manager, Mr de Maistre.

Investigations into the affair, recently transferred to Bordeaux because of allegations of judicial bias, will now mostly be dropped.

However, the investigations into the accusations of financial wrong-doing by President Sarkozy's former party treasurer, Mr Woerth, will continue.

All the same, the out-of-court settlement of the original family feud will come as a great relief to President Sarkozy.

Both sides, and especially Mr Banier, had hinted at further embarrassing revelations if the case came to court next year.

There were also fears that a continuing rift between Ms Bettencourt and her daughter could de-stabilise L'Oreal, one of France's most successful companies and the dominant player in the world cosmetics and hair-care industry.

A joint statement by lawyers for the two sides yesterday said: "Liliane and Francoise Bettencourt have settled their differences and put an end to the conflicts which have disturbed their family life and all legal actions which they have started... They reaffirm their commitment to L'Oreal and would like to state that, in this affair, there have neither been winners nor losers."

Despite this final declaration, the small print of the confidential "joint agreement" suggests that the principal victor was Ms Bettencourt's daughter, Francoise.

Lawyers said that it had been formally agreed that Mr Banier, and her financial adviser Mr de Maistre, would "no longer be part of" the old lady's "entourage".

The openly gay society photographer will keep the large amounts of artworks, cash and insurance policies given to him by Ms Bettencourt in the last decade.

Francoise Bettencourt-Meyers had never asked for the return of this money. She had mostly been concerned by the growing influence of Mr Banier and the rift which she accused him of engineering between herself and her mother.

Francoise's lawyer, Olivier Metzner, said yesterday that his client and her mother "rejoiced at having come back together, which is all that they ever wanted, even if it took three years of legal battles to reach this happy ending".

The affair began in 2007 a few days after the death of Ms Bettencourt's husband, Andre. The photographer Mr Banier was originally an intimate friend of Mr Bettencourt rather than his wife.

Soon after her father's death, Francoise brought a legal complaint alleging that Mr Banier was "abusing" her mother's mental weakness.

According to the taped conversations divulged in July, President Sarkozy intervened to try to stop the case from progressing and attempted unsuccessfully to broker a deal.

- INDEPENDENT