House of Chaumet: How 80s Greed Brought Down a Legendary Paris Firm

On June 13, 1987, noted Parisian jewelers Pierre and Jacques Chaumet were taken into custody for bankruptcy, breach of trust, and fraud. The distinguished gentlemen would be convicted of all these crimes, losing control of the House of Chaumet, one of the most celebrated names in jewelry, as well as Breguet, which enjoyed a similar reputation in watchmaking. The story of the rise and fall of Chaumet is even more fascinating for what is not known about the case, however, and what it tells us about the modern aristocracy.

This is the story of a cascading crime that led to the downfall of the 200 year old jewelry House of Chaumet

Note: The Chaumet brothers appear to have been experts in keeping their photos out of the papers. Although the case is well-documented in period news coverage, there is not a single photo of the brothers in any newspaper I could locate! Instead, I am using a photo from the excellent French-language 2017 blog post by Richard Jean-Jacques, “L Affaire Chaumet, un scandale étouffé.”

Nitot, Fossin, Morel, and the First Wristwatch

Marie-Étienne Nitot

Before Chaumet, it was Nitot.

The House of Nitot designed Napoleon’s coronation sword and the wedding jewels used for his first marriage to Joséphine de Beauharnais and his second to Marie Louise. But the name is best remembered in horology for creating a match set of bracelet watches given to Princess Augusta-Amélie, bride of Joséphine’s son, Eugène. Said to have been created in 1811, this is often celebrated as the world’s first wristwatch!

Marie-Étienne Nitot was born in 1750 and became apprenticed to the Aubert, jeweler to Marie-Antoinette. Nitot established his own jewelry house in 1780, serving aristocrats and the wealthy of Paris before and after the French Revolution. A famous (though perhaps apocryphal) story tells that Napoleon Bonaparte’s carriage came out of control along the rue Saint Honoré and Nitot’s staff was able to assist and shelter the First Consul and future Emperor in his shop. Napoleon is said to have remembered the jeweler in 1804 and given him the task of producing his coronation jewels. This fantastical and unlikely story was no doubt re-told by Joseph Chaumet, inheritor of the Nitot legacy, and appears as far back as a 1933 issue of La Fédération Horlogère.

Marie-Étienne Nitot died in 1809, shortly before Napoleon annulled his marriage to Joséphine in search of an heir. François Regnault Nitot took over his father’s business and proved a capable jeweler and businessman. It is said that Regnault traveled across Europe with Joséphine and Marie Louise, influencing the tastes of the aristocracy and building a remarkable clientele in just a few years.

François Regnault Nitot created this early bracelet watch and calendar set for Joséphine de Beauharnais to give to her daughter in law, Princess Augusta of Bavaria

Notably, Nitot created a pair of bracelets around 1811 as a gift from Joséphine to her daughter in law, Princess Augusta of Bavaria. One featured a calendar while the other included a watch movement. These are widely said to be the forerunner of the wristwatch, and their appearance in the early 19th century was mentioned as an inspiration for the proliferation of bracelet-mounted watches among the ladies of court in the decades that followed. For a sense of the history of this tale, see the 1933 article from La Fédération Horlogère in the References section below.

Napoleon’s defeat and exile spelled the end of François Regnault Nitot’s career, however. He turned over the firm to his shop foreman, Jean Baptiste Fossin. Along with his son, Jules, Fossin adapted to the changing tastes of the French elite and remained a key producer of jewelry for Kings, Princes, and the emerging creative class.

But the establishment of the Second Republic in 1848 deeply impacted the jewelry business in France. Fossin contacted his former chef d’atelier, Jean-Valentin Morel, who had moved his business to London in 1850, seeking a new market for his work. Along with his son, Prosper, Morel gained the favor of Queen Victoria, as well as a royal warrant, but business there was slow. Jean-Valentin died in 1860 and Jules Fossin in 1869, leaving the struggling Anglo-French business to Prosper Morel.

Place Vendôme in the 19th century

The House of Chaumet

Joseph Chaumet continued Nitot’s legacy

Joseph Chaumet married Marie Morel in 1885, gaining control of the firm inherited by his wife. He re-dedicatd the firm with his own name and re-focused it in service to the Parisian elite. In 100 years of family control, the House of Chaumet reached the highest levels of society and success, becoming synonymous with wealth, taste, and class.

Chaumet specialized in tiaras worn by the aristocracy and incorporated new elements of Asian and Art Deco style. These were sold from a boutique at the Hôtel Ritz Paris at number 15 Place Vendôme, but in 1907 the firm would establish a presence across the square at 12 Place Vendôme. This remains the home of Chaumet today, and the address is perhaps as important to the firm as Joseph’s famous name.

Marcel Chaumet took over from his father in 1928 but the firm suffered greatly in the Depression. It was shut down in 1934 as the economy and mood in France turned sour.

After World War II, Marcel Chaumet re-established his business at Place Vendôme alongside “New Look” pioneers Christian Dior and Yves Saint Laurent. Soon the firm was the talk of the town among fashionable ladies in Paris, and it began to attract notice in America as well.

Marcel’s sons, Jacques and Pierre Chaumet, took over as executive directors in 1958 and they proved a dynamic and successful pair. Jacques directed the business and re-established the Chaumet name in social, government, and foreign circles while Pierre gained a name as one who could procure and present any jewel desired by a client.

Jacques Chaumet is said to have become close to Morocco’s Hassan II during a 1971 coup attempt
Image: New York Times, July 12, 1971

Throughout the 20th century, Chaumet acted as a de facto diplomatic arm of the French nation. Joseph had courted Abd al-Aziz of Morocco on behalf of the French government and his grandson Jacques became close to Hassan II 70 years later. Chaumet is said to have sheltered with the king in a pool house during a deadly 1971 coup attempt, and the pair were fast friends since then. Chaumet also played a role in diplomacy with Mobutu of Zaire, who built an extra-long runway so he could charter the Concorde for shopping trips in Paris. Although Mobutu eschewed European suits he loved Chaumet’s jewelry!

The Breguet brand was acquired by Chaumet in 1970 and reorganized in 1980
Image: Europa Star Trade Bulletin 926, 1980

The new Montres Breguet played a part of the resurgence of classic watchmaking in the 1980s
Image: Europa Star 145, 1984

Jacques and Pierre Chaumet were also instrumental in bringing the legendary Breguet watch brand back to Paris. Abraham-Louis Breguet‘s great grandson had turned his family’s watchmaking firm over to the Englishman Edward Brown in 1870, and it remained in the Brown family until the Chaumet brothers purchased it 100 years later. Throughout the 1970s Chaumet worked with a variety of Swiss watchmakers and manufacturers to re-establish the Breguet name in watchmaking. They faced many challenges, from the currency and oil crises of the 1970s to the rise of quartz, but the brand continued on and off through the 1970s.

Chaumet established a new Montres Breguet SA in Le Brassus in 1980. This iteration of Breguet was officially re-launched at the MIH in 1983 after a few initial products starting in 1981. Notable contributors to Breguet watches in the early 1980s included Daniel Roth and Michel Parmigiani, who produced complicated movements for the resurgent brand. The company would ultimately be successful, acquired by Investcorp after the Chaumet’s legal troubles in 1987 and later by Swatch Group in 1999.

The Diamond Bubble

The 1970s was a decade of economic booms and busts. After the Nixon shock and the end of Bretton Woods, the price of commodities like gold and oil began to fluctuate dramatically along with the relative value of various currencies. In nominal US dollars, gold swung from a low of $496 in 1974 to a high of over $3,000 per ounce in 1982! The price of oil, which had been relatively steady for 100 years, suddenly tripled in 1973 and doubled again in 1979.

It was in this environment that the world’s wealthy turned to diamonds as an alternative investment. The De Beers cartel’s control of both mining and advertising gave these sparkly stones an aura of permanence and stability that most other commodities lacked. Flush with cash and looking to invest, buyers turned to loose 1 karat diamonds as an alternative to gold ingots or real estate. The diamond industry embraced this newfound market, with the influential Rappaport Diamond Report launched in 1978 to cater to investors.

By 1981, jewelers like Chaumet and Cartier had transformed their business from ornamentation to investment. Place Vendôme had become as influential a world financial capital as New York, London, Frankfurt, and Tokyo! For a short time, loose 1 karat diamonds were actually more valuable than 1.25 karat stones or those set in gold jewelry.

Image: The Wall Street Journal

The Chaumet brothers had long enjoyed their international status and nurtured this new clientele. They grew close to royalty from the Middle East and Africa, and welcomed them as investors. Chaumet’s Geneva office became an essential option, accepting cash and Swiss account transfers for shares of diamonds held in the company’s Paris vaults. Wealthy French customers became involved as well, with some allegedly using Chaumet’s Geneva diamond connection as a way to avoid taxes.

Around 1980, Chaumet began overtly selling financialized diamonds as an investment, promising between 15% and 25% annual returns. The company removed jewelry and even the stones themselves from the equation, acting (as they would later be charged) as an unlicensed bank or investment company. This strategy looked brilliant as the price of a one-carat flawless diamond jumped from around $1,600 to over $62,000 that year in one of the most spectacular commodity bubbles in history.

Unsurprisingly, the diamond market collapsed in the 1980s. That $62,000 diamond dropped to $45,000 in 1981, $26,000 in 1982, and just $13,000 in 1983. While other jewelry firms were diversified with investment in other types of gems and precious metals, nearly all of Chaumet’s money was tied up in diamonds. And diamonds were suddenly worth much less than the company or their customers imagined.

Image: New York Times, January 1, 1985

According to the charges brought against the brothers in 1987, Chaumet scrambled to meet the expectations of their customers. They took on debt, which was easy to access for the historic and respectable firm, with banks extending over a billion French francs to the company despite the fact that their annual turnover was only 125 million francs by 1986. They began borrowing from their friends and customers as well, reportedly wiping out Mobutu’s 60 million franc debt and borrowing far more from him. And these were structured as interest-paying investments, digging the brothers even deeper in debt.

With the company’s finances already in tatters, the Chaumet brothers made one last massive bet: They purchased a new showroom in New York between Park and Lexington Ave. 48 East 57th St. was a showcase for the best the company could offer, with Pierre and Jacques Chaumet apparently hoping to sell their way out of debt. But it was financed on unfavorable terms and spelled the end of their available cash.

Once Chaumet ran out of assets to use as collateral for loans they began offering jewelry belonging to customers stored in their vaults. During the trial, The Washington Post describes a pearl necklace belonging to a French princess that was broken up and sold by the firm. Many such stories surfaced in later years, with Jacques Chaumet’s customary discretion and informal handling of assets used to hide desperate shuffling of jewelry to raise funds. And of course the company kept taking in more money and jewels from customers, a classic Ponzi scheme tactic.

In December 1984, Pierre Chaumet was taken into custody by the French customs agency (DNED) when he was caught transferring large amounts of cash between Paris and Geneva. The case involved hundreds of millions of French francs and likely related to the fraud described above as well as evasion of taxes for the company and its customers. But the case was mysteriously dropped (due to politics, according to a 1987 article) and the Chaumet scheme was allowed to continue.

The Fall of House Chaumet

Image: New York Times, June 15, 1987

By 1986 the Chaumet brothers realized that the game was up. Wholesale gem and precious metal dealers no longer allowed Chaumet to purchase on credit after the firm repeatedly missed payments. With their supply of raw materials drying up and their vaults and bank accounts rapidly emptying, the brothers sought a buyer for the historic family firm. They attempted to arrange a deal with their New York subsidiary and private equity firm Investcorp, which then owned Tiffany, and also proposed mergers with Vendôme rival Boucheron. News of these moves leaked to the press in May, 1987, with the brothers suggesting that the sale was on their initiative.

On June 11, after a hearing of the commercial court, Jacques and Pierre Chaumet were taken into custody on criminal charges of “bankruptcy, breach of trust, and fraud.” The historic showroom at Place Vendôme was closed by French Police and the company’s account books taken for investigation. What they found would take years to unravel, and the complete story was likely never told.

Image: La Liberté October 14, 1987

Although the company owed over $1.8 billion French francs to creditors, it is widely reported that there was far more debt than this off-books. Jacques preferred to work based on handshake agreements and utmost discretion with clients. The Post’s princess, for example, apparently did want to sell her necklace but protected her reputation by sending a letter to Chaumet stating exactly the opposite. It is likely that most of their agreements were similar, with no paper trail or definitive chart of accounts. Given the company’s presence in Geneva, we can assume that many clients simply walked away from their investments, preferring to protect their name from police inquiry.

Despite the scope of the fraud committed, very few clients were pulled into the case. One notable exception was Albin Chalandon, then Minister of Justice and head of the office that prosecuted the case. Chalandon reportedly tried to hide the fact that he and his wife, Princess Salomé (Murat), had invested $6 million francs with Chaumet and was receiving interest payments from the firm. Once it came out in court, his dismissive answers became a minor scandal for the government of French President François Mitterrand. It has been suggested that the involvement of politicians like Chalandon and international figures like Mobutu is one reason for the lack of further investigation into Chaumet’s investment clients. Indeed, Princess Salomé’s niece was by then the wife of Jacques Chaumet’s son!

Jacques and Pierre Chaumet at their trial on September 30, 1991

The brothers were finally convicted and sentenced in 1991. Taking into account six months of detention prior to their trial, Jacques Chaumet received a term of 18 months in prison and Pierre Chaumet was sentenced for a year. They were also ordered to pay a fine of 500,000 French francs each. On sentencing, the judge summed up the case: “They have committed almost all the offenses that it is possible to commit in a company. They betrayed the trust of their employees and brought to ruin a jewelry store known not only throughout the world but also in history.“

And yet, apart from the short sentences for the Chaumet brothers, everyone else walked away.

Chaumet and Breguet Today

Despite the promises made by Jacques Chaumet, the firm was not able to arrange a merger with one of its Place Vendôme neighbors. The accounts were too convoluted and toxic for any other jeweler to touch, and one imagines they might have had their own legal or financial exposure after the diamond bubble burst.

Image: L’Impartial, July 16, 1987

Chaumet was instead purchased by Investcorp, an Arab/American private equity company. For the sum of 410 million French francs, Investcorp received the assets of Chaumet of Paris and Montres Breguet of Le Brassus free from any entanglement with the Chaumet brothers’ crime. Investcorp was widely respected for having “rescued” Tiffany from Avon Products in 1984, followed by a successful IPO in 1987 that likely provided some of the funding for the acquisition of Chaumet. And Investcorp then and now has a better reputation than many in the private equity world, preferring to invest in companies rather than sell them for parts.

Investcorp proved a better manager of Chaumet and Breguet than the brothers. The group purchased complicated movement specialist Nouvelle Lemania in 1992, combining this under Groupe Horloger Breguet. They invested in Breguet through the 1990s, building a new manufacture in L’Abbaye in 1996 and growing the company into a credible competitor for Blancpain, which had been purchased by Nicolas Hayek’s SMH in 1992. It is often said that Hayek would have preferred owning the Breguet name but could not reach an agreement with Investcorp and went for Jean-Claude Biver’s Blancpain instead.

1999 saw an incredible process of consolidation in the luxury goods industry. A complex deal saw Richemont purchase LMH (IWC and Jaeger-LeCoultre) on July 21, beating LVMH and PPR. The two had previously been buying shares of Gucci (which Investcorp purchased between 1988 and 1993 and sold to the public a few years later) and PPR reached a deal to acquire the Italian firm on September 10. Three days later LVMH purchased TAG Heuer and the very next day Swatch Group acquired Groupe Horloger Breguet from Investcorp. LVMH took Chaumet from Investcorp on October 20 along with Ebel. On November 15, Zenith went to LVMH as well.

Split up, Chaumet has returned to its roots (and renovated its famous showroom) to become the “crown jewel” of LVMH. Breguet similarly sits atop the Swatch Group pyramid, joining Blancpain and Jaquet Droz in a special “prestige and luxury” division under Marc Hayek.

The Chaumet villa on Place Vendôme today
Image: SJMeinhofer

The Grail Watch Perspective

The success of Chaumet and Breguet since the 1990s has wiped the Chaumet affair from the public consciousness, and their new corporate owners would never allow that type of fraud to reoccur. But the case illustrates the strange world of wealth in the 1980s, when the world’s rich and powerful mixed over gold and diamonds on Place Vendôme. The jewelry and watch business was much different then, though the tactics of the ultra-wealthy will never change.

It would be easy to vilify the Chaumet brothers, and they have been judged guilty of the crimes listed here. But they also lead their family firm to new heights, living up to the legacy of their grandfather, Joseph Chaumet, and the pioneering François Regnault Nitot. The fall of House Chaumet was all the more tragic given their success in the 1960s and their efforts to reclaim the French heritage of Montres Breguet in the 1970s. And we should not forget that there were many other guilty parties in this tower of greed, most of whom were never named. Jacques and Pierre Chaumet took the fall for it all.

References

Perhaps the best accessible account of the Chaumet Affair is this French-language blog post by Richard Jean-Jacques from 2017: “L Affaire Chaumet, un scandale étouffé” tells the tale of the Chaumet brothers and their fall, drawing heavily on Alain Barbanel’s 1988 book, “l’Affaire Chaumet” as well as news stories.

Although the story was widely covered in international news at the time, these stories notably lack photos of the Chaumet brothers and any sense of closure. A careful reading can reveal part of the story, however.

“Les ancêtres de la montre bracelet” – La Fédération Horlogère, September 13, 1933
“Have You Ever Tried to Sell a Diamond?” – The Atlantic, February 1982
“Chaumet joailliers Paris nouvelle tête” – FAN L’Express, May 23, 1987
“Enquête douanière classée” – L’Impartial, June 22, 1987
“A Scandal in French Jewelry” – New York Times, June 15, 1987
“Montres Breguet S.A. au Brassus l’avenir dans les mains d’Investcorp” – L’Impartial, July 16, 1987
“Nouveau PDG pour Chaumet” – FAN L’Express, November 5, 1987
“Enchères fabuleuses” – L’Express, November 15, 1988
“Les joaillers jugés” – L’Impartial, October 1, 1991
“The Unpolished Tale of the Princess and the Pearls” – The Washington Post, October 16, 1991
“Ex-Owners of Renowned Paris Jewelry Firm Sentenced to Prison” – AP, December 17, 1991
“Diamonds Aren’t an Investor’s Best Friend” – The Wall Street Journal, February 12, 2012

On the sidelines of the Swiss Watch Fair The ancestors of the wristwatch. We will learn with interest how the adjoining retrospective exhibition ais Premier Swiss Watchmaking Show, contains two clips that can be considered unique given that these are the two oldest watch straps in history. of watchmaking know. One does not have to be a great scholar to guess that the fashion so developed today for the wristwatch is the fruit of a long evolution, made possible by the progress of mechanics and by mass production. Museums and private collections contain a few old watch bracelets, all of which were made around 1830 or 1940. These are isolated examples, the conditions necessary for the dissemination of this early and original novelty not yet being fulfilled. However, the first watchmaker-jeweler who had the idea of the bracelet-watch and who realized it in two pieces that have remained famous is the Parisian jeweler Nitot. A study carried out by Mr. Henri Ditisheim, of Li Chaux-de-Fonds, provided interesting details on these pieces now exhibited at the Salon and which are the first witnesses of a new fashion. This Nitot had entered in a completely fortuitous way in relation with Napoleon then First Consul. The general’s horses, having become frightened, came crashing down on the rue Saint Honoré near the watchmaker’s shop, who overpowered the crew and brought Bonaparte into his shop. The First Consul promised to remember Nitot. In 1804, the opportunity arose to fulfill the promise. Nitot offers to provide the Coronation Jewels. After having hesitated, the Emperor who had some doubt about the artistic qualification of his modest rescuer gave his acquiescence and at the same time signed the opening of a credit of two and a half million from the Treasury. It was a first advance on the global sum which was to amount to fifteen or sixteen millions. Two years later, in 1806, Nicot created precisely the two watch bracelets today exhibited at La Chaux-de-Fonds. They were ordered by the Empress Joséphine who offered them to Princess Augwsta-Amélie, wife of Prince Eugene, Viceroy of Italy. One of the bracelets indicates the time, while the other marks the date and the month. The first has an engraved and enamelled gold dial. The second is about the same. As for the bracelets themselves, they are a great credit to Nitot. They are adorned with very beautiful pearls and emeralds from Colombia. Their design is very graceful and the frame, despite the richness of the Empire style, is not too busy. Why had Nitot started this fashion for two bracelets? Perhaps he envisioned, like Bovet, one of the pioneers of the watchmaking industry in China, that watches should only be sold in pairs! … Indeed, we know that in China Bovet had succeeded in persuading the mandarins, scholars and wealthy bourgeois of the Celestial Empire, that it was always necessary to have two watches: one in order to be able to replace the other if the latter went haywire. Bovet went even further, it seems, and tried to bury the dead with their watches on the pretext that it was necessary to know the time in the great journey of Eternity. But the heirs of the mandarins did not work … Nitot, a curious thing and worthy of mention, had hired as collaborators several watchmakers from the Neuchâtel Mountains and particularly from La Chaux-de-Fonds. It was he who made all the famous pieces of the Crown, the coronation sword among others, designed by Isabey, and on whose hilt sparkled the famous diamond the Regent. How did these two wristwatches come to the La Chaux-de-Fonds Exhibition? The presence of these famous jewels is explained by the fact that the Vevey jeweler, Mr. Auguste Seiler, was entrusted by the direct descendants of the family of Napoleon ter, as well as by various Courts, with the official sale of some rare jewels among which featured the wristwatch and the date bracelet. The latter two became his property and it was to enhance the attractiveness of the Premier Salon that Mr. Seiler agreed to exhibit them at La Chaux-de-Fonds. They appear there, in their frame, well lit, very close to the wonderful Loup collection and many visitors admire them. At a time when the wristwatch characteristically dominates in watchmaking production and when it certainly occupies the foreground in all the showcases of the Salon, it was interesting to pay particular homage to Nitot and his creations. Let us hope that these two pieces will remain in the country, because they are certainly essential documents for the history of our watchmaking.

New York Times, January 1, 1985

Chaumet jewelers Paris New head Jacques and Pierre Chaumet, heirs to a glorious past of more than 200 years, are looking for a buyer: the imminent solution we were talking about on May 2 was certainly not this one. We were talking about indiscretions orchestrated to force certain decisions. These came into force with the appointment of an administrator on Tuesday, at the request of the Chaumet brothers at the Commercial Court. 79 million Prize of the “external competition” intended to ensure the sustainability of the house, which has managed to survive two centuries of military, political and economic events without wavering: 79 million francs, it was estimated yesterday in circles close to Banque Worms , whose interests are linked to Lambert Brussels, and which is not named anywhere, unlike other candidates close to King Fahd of Saudi Arabia, the American holding company Invest Corp., which controls the famous house Tiffany’s – the equal of Chaumet in the United States – or Boucheron, French candidate directly competing with the Chaumet brothers. linked to Hermès. In addition to the purchase price, it will be necessary to pay the creditors well while avoiding any scratch on the reputation of the house, because there are beautiful people among them, members of the French elite. We quote the name of the Minister of Justice Albin Chalandon, husband of Princess Salomé Murat. A first estimate puts the debts to the banks at 165 million Swiss francs for an annual turnover of 125 million (1986). Several creditor banks had suspended their credit lines at the end of April. The cash hole would be around 400 million Swiss francs. R. Ca. Chaumet dixit The Chaumet house communicates: “Our company is currently in a situation which makes it necessary to obtain external assistance. However, the Chaumet house retains all its potential guaranteed both by its 200 years of experience and by the very high quality of its products and its international presence. This is moreover why several groups have made concrete proposals to us which are studied in all objectivity. Also, in order to be able to choose the best solution in the coming days, we decided to ask. by the President of the Paris Commercial Court, the appointment of a provisional administrator, who was appointed by order of today in the person of Mr. Lafont who will assist our company in such a way that the sustainability of the Chaumet house is ensured ” The general managers, Jacques Chaumet and Pierre Chaumet FAN L’Express May 23, 1987

Chaumet case Jewelers in prison French jewelers Jacques and Pierre Chaumet were indicted and imprisoned on Saturday afternoon for “bankruptcy.” breach of trust and fraud ”by François Chanut, examining magistrate at the Paris Court. This decision of the examining magistrate comes after the opening of a judicial investigation by the Public Prosecutor’s Office. Jacques and Pierre Chaumet, aged 60 and 58 respectively, were arrested Thursday at the beginning of the afternoon at the end of a hearing in council of the Commercial Court of Paris and immediately placed in police custody at the headquarters of the financial brigade of the Paris judicial police. The prosecution decided to open this preliminary investigation after the company filed for bankruptcy on Wednesday. During police custody. the investigators carried out searches at the head office of the jewelery as well as at the homes of the two brothers, in Neuilly-sur-Seine (Paris suburb). The global liability of the famous jewelry of Place Vendôme. in the heart of Paris. two hundred years old. is estimated in specialist circles at around 1.8 billion FF (around 450 million francs). / afp

Parisian jewelry case Chaumet Customs investigation closed The Parisian jewelry store Chaumet, whose directors, the brothers Jacques and Pierre Chaumet, have been imprisoned since June 14, was the subject of verifications by the National Directorate of Customs Investigations (DNED) from December 1984 to the end of 1986. we say from a well-informed source. This investigation was triggered following a customs check carried out against Pierre Chaumet in December 1984 at the Franco-Swiss border and which had made it possible to discover documents corresponding to transfers of funds under apparently illegal conditions. The DNED checks mainly focused on fund transfers between Chaumet-Paris and its Geneva subsidiary – one of the central points of the case investigated by judge François Chanut who indicted and has the Chaumet brothers imprisoned for bankruptcy, abuse of trust and fraud ”. The DNED investigators thus found significant irregularities relating to transfers amounting to several hundreds of millions of French francs, according to a well-informed source. On the basis of this investigation, the Ministry of the Budget should in principle have taken legal action. But, reveals the weekly “Le Point” in its issue to appear on Monday, “at the end of 1986 (…) the budget ministry decides to definitively clacsPr the affair”. “The burial of the customs file” was “probably decided at the political level”, writes • iLé Point. At the Ministry of the Budget, it was confirmed to the AFP that the Chaumet jewelry was the subject of a customs investigation, but, underlined a spokesperson for the ministry, for operations prior to 1984. However, it is reliably indicated that the Ministry is reviewing this investigation in the light of the ongoing judicial investigation. (ats, afp) L’Impartial, June 22, 1987

The New York Times, June 15, 1987

Cascading problems for Chaumet Bankruptcy in Belgium The Belgian subsidiary of French jewelers Chaumet, imprisoned in France after the discovery of a gigantic liability in the accounts of their group, has been declared bankrupt by the Commercial Court of Brussels, we learned from a judicial source. The liabilities of this limited liability company under Belgian law, founded in 1935 and in which more than 99% of the shares are held by the brothers Jacques and Pierre Chaumet, are estimated at 450 million Belgian francs (18 million Swiss francs), of which 400 million are indebted to two of the main Belgian banks. Prohibition The French curatorship prohibited this transfer to the group’s Brussels headquarters a sum of BF7 million, which would have enabled the Belgian subsidiary to meet its most urgent commitments (salaries of 33 employees and workers, supply of energy, etc. .). According to the sources, it does not appear that the Belgian subsidiary has engaged in fraudulent transactions on behalf of its customers. But the large French-language daily Le Soir estimates that the 450 million BF would have been used to finance the purchase of diamonds and the manufacture of jewels, which would then have been delivered, on the instructions of Jacques Chaumet, to non-existent foreign customers. Once the diamonds have left Belgium. the Chaumet brothers would have reallocated them to their profit, thus depriving their Belgian subsidiary of the income from a seemingly normal transaction, continues Le Soir. If this mechanism were proven, the term “fraudulent” could be attached to bankruptcy by a possible judgment of the criminal court. / ats

Watches Breguet S.A. in Le Brassus The future in the hands of Investcorp What will happen to the Vaudois factory Montres Breguet S.A. in Le Brassus, a subsidiary of the watchmaking branch of the Chaumet house? After the acquisition of the prestigious Parisian jewelry, in bankruptcy since June 11, its fate now depends on the American-Saudi group Investcorp, the buyer of Chaumet, has learned the ATS. Montres Breguet employs 14 people in Le Brassus. The factory was bought in 1970 by the brothers Jacques and Pierre Chaumet, its administrators until the group’s collapse. According to the director of Breguet-France, Mr. François Bodet, there is currently no evidence that the Vaud workshop will be taken over by a third party. Specializing in high-end products following a tradition that dates back to the 18th century, Montres Breguet S.A. has a “very good team of watchmakers, lovers of fine mechanics,” added Mr. Bodet. Without wishing to give any figures, he declares that the company is not experiencing any difficulties. (ats) L’Impartial, July 16, 1987

the continuation of the Chaumet soap opera Perplexed judge Part given for the approval of the concordat that we hoped at Chaumet Geneva, take yesterday afternoon to the Commercial Court. Perplexity of this court in the face of the application for homologation of the composition by abandonment of Chaumet’s assets, given the complexity of the case, and the need to place the interest of the creditors in their proper place, although they had pronounced themselves. with a large majority for the concordat. The penal aspects will also be considered by the judge who reserves time for reflection. Tangle The court’s examination highlighted the entanglement caused by the brothers Jacques and Pierre Chaumet. Some key data of the file: • The share capital of Chaumet Genève: 50,000 francs increased to 4 million, artificially released by incorporation of non-real reserves. • Commercial and parallel transactions unrelated to the social purpose and carried out by the Chaumet brothers without the knowledge of the accountant and the auditor. This is the call to creditors. in debt restructuring proceedings, which revealed these activities. • Within the framework of these commitments-1ä, nearly 100 million francs of claims against Geneva will be contested. • In the assets, there are 6.9 million francs and dust of goods put on consignment outside the head office and pledged in French banks by the Parisians: they cannot be attributed a value in inventory as long as they are not recovered: hard work already in progress which makes the judge say: I wish you good luck … The penal aspect I focused my examination on the penal aspect of the question .- the judge will say. Yes! there is a composition by abandonment of assets. everyone comes out whitewashed. It is a question of knowing what is the interest of the creditors not to homologate to allow a hypothetical penal action … A debt restructuring solution would undoubtedly lead to a higher rate than the 3 or 41 calculated, without taking into account the elements to be recovered. . However, we have ignored one: Investcorp, whose interest we know (see FAN-L’Express »of October 8) and which has taken over the worldwide rights of the Chaumet name with Paris, does not intend to pay this fee in Geneva. after having already given ”. Creditors who in Geneva would be in a position to negotiate this point in the event of a composition and an lnvescorp offer still have a difficult part to play. Roland carrera CHAUMET – Complex files.

France: Chalandon after Nucci Large unpackings Election campaigns are times conducive to major unpacking. We look at the straw in the garlic of the neighbor who himself will hasten to dig into your past. The 1988 presidential election will not fail in tradition. The crazy deputies (except the Socialists) referred the former Socialist Minister Christian Nucci to the High Court of Justice last week on charges of embezzlement of public funds. This week, it is the turn of the current Minister of Justice, Albin Chalandon, to find himself in the hot seat about the Chaumet affair. As of the announcement of the bankruptcy of the Chaumet brothers last spring, the name of Albin Chalandon appears. The Minister of Justice is indeed one of the victims of the famous jewelers. He admits having deposited in 1982 with the Chaumets a lot of jewels and precious stones which they had to resell in part in 1985. The summer passes. The case is going on, but it seems quite difficult. Monday, the accusation falls: Mr. Chalandon would have owned, says “Le Monde” a current account with jewelers who, we learn, also exercise the profession of bankers (in a difficult situation, they borrowed money from their clients at interest rates of 11% to 14% according to “Le Monde”). No tax evasion Immediate reaction from the minister who decided to file a defamation complaint against the daily. In three selected newspapers (“Liberation”, “Le Figaro” and “France-Soir”), Mr. Chalandon however admits having a current account with the Chaumets, but he specifies that he only carried out commercial transactions: ” It was only a matter of buying and selling jewelry. Interest, moreover minimal, has always paid the tax ”, he declared to“ Figaro ”. The minister has just underlined that he is in order with the tax authorities, to stand out from those who have undoubtedly used the current account at Chaumet to escape the tax authorities. “It is not a crime to have a fortune,” apologizes the minister who has known the Chaumets for over 30 years and one of whose nieces married Jacques Chaumet’s son. Political maneuver The minister considers himself the victim of a “political maneuver” of an “offensive orchestrated by the Socialist Party”. The journalists of the “World”, he affirms, “made a montage which is based only on the wind”. Nevertheless, the Keeper of the Seals finds himself in an uncomfortable position of the judge and of the party: hierarchical chief of the Public Prosecutor’s Office, he is brought to petition against the Chaumets and, at the present time, he is one of the their unpaid creditors. In these conditions, can justice do its work calmly? One can doubt it all the more so as Mr. Chalandon seems to drop bit by bit of information: has the Minister said everything? The diamonds had brought down Giscard. Will Mr. Chalandon’s jewelry and precious stones trip the Chirac government? Doubtless not, but the Socialists have a good thread in this affair which they will not let go. As for the Keeper of the Seals, he cannot resign. It would be an admission unless the Prime Minister deems his sacrifice necessary. B.S. Albin Chalandon. ASL

New CEO for Chaumet And 410 million! A Chairman and Chief Executive Officer was appointed Tuesday evening for Chaumet Jewelry, Société Vendôme in Paris and Montres Breguet S.A. Le Brassus. It is the French Jean Bergeron, president-delegate of the Colbert Committee. CHAUMET – The prestige of Place Vendôme. Immediately after his appointment, Jean Bergeron confirmed what we announced exclusively in the “FAN-L’Express” on Thursday 8 October, namely that the investors who took over Chaumet as well as “the part cleaned of its slag”, and the Manufacture de Montres Breguet SA in Le Brassus, are those of the Invescorp Company, with Anglo-Arab capital, he said, adding that she had made known her talents in other adventures such as Tiffany New- York, which we also pointed out. The Comité Colbert is an organization in which most of the French luxury industries are grouped. Its CEO, formerly of HEC, former manager of companies such as Esilor or Codec, is particularly well placed to restore the Chaumet image and put the company back on the brilliant path that it had always been its own. R Ca Remark Roland carrera Paris panache Invescorp was not afraid to get wet with consolidated support, in the order of 410 million, which even converted into our currency – over one hundred million Swiss francs – is still quite substantial. Jean Bergeron inherits problems which, despite being in a difficult economic environment, are not insurmountable. For Chaumet, they are primarily located elsewhere, even if the economic context will not fail to have a affecting. The challenge that the CEO of the Colbert group has agreed to take up is first and foremost that of panache. Choumet is Place Vendôme. The very image of French taste that the Colbert Committee illustrates and defends on the five continents. However, in spite of an affair which has rather heckled its name in the “jet society”, Chaumet has retained a certain panache, thanks to a staff (Vendôme Company), of immense artisanal value and whose creativity in jewelry is deemed the best in the world. Let’s not go back to Breguet. We have already recalled how far the global reputation of the brand and its “golden hands” went, which also fall into the basket of the “heir”. The Chaumet brothers remain. As Jean Bergeron pointed out on the French airwaves, the Chaumet brothers’ affair is also continuing. It is to be totally dissociated from what the new business is. CEO and strong capital. Place Vendôme has already washed away the stain of the scandal that had splashed it. As for Geneva? We still have to wait until the fateful date when the Court will rule on the appeal against the decision not to approve the composition. In any case, Jean Bergeron will still have to negotiate the assets of Chaumet Geneva, and those which are at the same point, in London and New York, which are not part of the basket. It is obviously too early to know his intentions in this regard. A. It FAN L’Express, November 5, 1987

Dangerous counterparts Place Vendôme, the offices of Albin Chalandon are opposite Joaillerie Chaumet. A hundred yards bring them together. It would have been better if they had separated them. Big world, small circle. The family adds their bond. The niece of Princess Salomé (Murat) wife of the Keeper of the Seals, married the son of Jacques Chaumet, now in prison with his brother Pierre. But it is above all the roles that are confused. Albin Chalandon as Minister of Justice heads the Public Prosecutor’s Office in a bankruptcy case in which he is involved as a client. It is to be judge and party. Political backwater, judicial salad. In the middle of the famous Parisian square, the Vendôme column is straight and steep. If it were to symbolize French affairs in the fall of 1987, it would be curved and soft like Dali’s watch. The fall of the Chaumet house. destabilizing the minister, blows over the Republic a breath that cuts off that of the people. There was nothing more posh than the Chaumet brothers, not only for fortune, but for morals. Jacques Chaumet was a member of the Colbert committee and of the advisory board of the Banque de France. And here they are on the ground, confused with breach of trust, false writing and fraud. But the most distressing thing is to see the Keeper of the Seals wet in the affair and defending himself with the clumsiness of a doodle. “Why didn’t you admit that you had a current account at Chaumet?” – “Because no one asked me!” Poor answer. She says a lot about the embarrassment of Chalandon, yesterday mediocre hero of “sniffer planes”, today in delicacy with his own justice: paid current accounts are illegal with individuals. Interview with the Keeper of the Seals continued: “How many assets do you have at Chaumet, jewelry and cash?” “Six million”. How much do you earn from your current account at Chaumet, Minister? – “Crumbs, ten or twelve thousand francs, once, I think forty thousand” It was Wednesday on the airwaves of France-Inter. That same week, Father Wresinski, the creator of the association “Aide à tout distress”, relaunched his campaign to help the Fourth World. In France, there are three million destitute people, below the subsistence minimum. The Vendôme column in the heart of the turmoil

After two centuries of success The famous Chaumet jewelry on the straw PARIS (ATS / AFP). – Victim of a financial crash, one of the oldest and most famous French jewelry, the mason Chaumet, whose five arcaded windows have adorned a facade of the prestigious Place Vendôme in Paris for two hundred years, is looking for a buyer . A provisional administrator, appointed Tuesday, studies the proposals of the candidates attracted by the great notoriety and the solid international network of this mason which has five subsidiaries abroad – one in Brussels, two in Switzerland, one in London and the last one in New York – but whose debts to banks were first estimated at 670 million FF (over 165 million francs) for a turnover of 500 million FF (around 125 million francs) in 1986. Several creditor banks have suspended their lines of credit and proceedings are underway to assess the exact extent of the cash flow hole. We are already talking about 1.6 to 1.8 billion FF (more than 400 million francs). “To ensure the longevity of the house” the two presidents of jewelry, Jacques and Pierre Chaumet, seek “an external competition” Among the declared candidates for the takeover of jewelry – estimated at 300 million FF – we mention a group of ‘Saudi investors close to King Fahd, the American holding company Invest Corp., which notably controls Tiffany’s, specializing in luxury items, and finally a French competitor, Chaumet’s only rival on the Place Vendôme, the Mason Boucheron allied with the house of Hermès. It remains to compensate without scandal the many individuals, creditors of the jeweler, who are located, notes one of the negotiators, “in the well-meaning society of the upper bourgeoisie and the French nobility”. This is how the Minister of Justice Albin Chalandon, husband of Princess Salomé Murat, acknowledged being among the creditors of the Chaumet house, whom he can contemplate every day from the windows of his ministry located just opposite. On the reasons for this crash, specialists cite in particular “the blindness” of Jacques Chaumet who bought a store in New York in 1983, with foreign loans at the price of one dollar at 10 FF, while the prices of Precious stones have undergone sudden variations in the last ten years. The recent drop in the dollar, that in tourist frequentation linked to the Paris attacks of September 1986 and to the drop in oil revenues which affected the wealthy Middle Eastern clientele, worsened this poor anticipation. Those familiar with the market finally speak of curious, although common, practices in jewelry: the bijoute signs a “contract of trust” with some of his clients to whom he sells a lot of diamonds with a commitment to buy them back at a higher price later. . This “diamond investment” is matched with tax evasion with hand-to-hand exchanges, without a written record, hence the difficulty today for these anonymous creditors to be reimbursed.

Bankruptcy The Chaumets freed Jacques and Pierre Chaumet, the jewelers of Place Vendôme, were released yesterday afternoon from Fleury-Mérogis prison, where they had been imprisoned since June 13. The jewelers Jacques and Pierre Chaumet were imprisoned for bankruptcy, breach of trust and fraud, following the discovery of a liability of around two billion francs of the famous jewelry. François Chanut, first examining magistrate at the Paris court, in charge of the Chaumet jewelry case, had issued shortly before an order of release for the two defendants. In addition, in Geneva, the examining magistrate Paul Perraudin announced the launch of international arrest warrants against the Chaumet brothers, which the Geneva courts wish to hear in the context of the bankruptcy of the Geneva branch of the jewelry store. / afp

Fubrious auctions 1,000 Chaumet jewels and 200 Breguet watches liquidated in Geneva Exceptional commercial event, unique opportunity in French-speaking Switzerland: during a spectacular sale which will begin this morning at 10:30 am at the Noga Hilton hotel in Geneva, the stock of watches and jewelry in the Chaumet Geneva store will be dispersed. It consists of more than 1000 jewels, a very wide range ranging from the simple gold chain at 150 francs to the set of a quarter of a million and 200 Breguet watches. The operation takes place in two parts: 515 lots including 60 Breguet watches, offered during the main sale, are illustrated in a luxury catalog available on site. In addition, nearly 500 lots are being offered for silent sale, that is to say for which the auctions are left in writing during the entire exhibition period. This component includes jewelry, Breguet, Ebcl, Girard-Perregaux, Vacheron-Constantin, Sarcar and Eterna watches. Some 600 to 800 private buyers, Swiss and foreign merchants are expected. • Tomorrow, Habsburg, Feldman offer a wide range of lots including: • A portfolio of drawings (1912-1938) by Strauss, Allard, Meyer (Paris), a manufacture which worked for the main jewelers of its time. Six volumes containing thousands of color drawings of cigarette boxes, compacts, cases etc. No need to make an additional drawing to understand the value of the documents for a specialized company. • Objects signed Fabergé, Cartier, Janesisch Lacloche, “art nouveau” jewelry by Lalique and Fouquet etc., including a very rare minute repeater watch by Lalique (starting price 120/160000 francs), as well as a large choice of Geneva gold boxes from the early 19th century (starting price 3000 to 25000). • November 18: another sale of precious jewels and stones, 250 lots on quick sale and 300 lots in special catalog.

Chaumet trial: firm sentences Pierre and Jacques Chaumet, charged with bankruptcy, fraud and illegal exercise of the banking profession were respectively sentenced yesterday to four years’ imprisonment, including a 30-month suspension, and five years, three of which were suspended by the 11th chamber of the Paris Criminal Court. Taking into account the six months of imprisonment that the two brothers have already served in pre-trial detention, Jacques Chaumet is in fact sentenced to 18 months in prison and his brother Pierre to one year. The former jewelers of Place Vendôme were also fined 500,000 FF (125,000 francs) each. The expectations of the judgment pronounced by President Peyrat were implacable for bankrupt jewelers: – They have committed almost all the offenses that it is possible to commit in a company. They betrayed the trust of their employees and brought to ruin a jewelry store known not only throughout the world but also in history. Obviously very affected by these sentences, the Chaumet brothers did not make any declaration when they left court. They have 10 days to appeal against this judgment. / ap

France: the Chaumet case before justice Jewelers on trial I. The brothers Jacques and Pierre Chaumet, 64 and 63 years old, did not try to minimize their responsibilities in the resounding bankruptcy in 1987 of their jewelry house, one of the oldest and most famous on the Place de Paris, in first day of their trial for bankruptcy, fraud, breach of trust and illegal exercise of the activity of banker. The trial is expected to last three weeks. At the time of the bankruptcy filing in May 1987, the famous jewelry store in Place Vendôme had a liability of 1.8 billion French francs (approximately 450 million francs). One of the brothers. Rock. the gem specialist. declared to the president of the Paris Court that he had “been kept abreast of everything”: the gradual deterioration of the financial situation of the company from the beginning of the 1980s. bank or hidden loans for a total amount of 824 million French francs (more than 200 million francs) … Jacques was him. the specialist in financial affairs and he assured that until the last mold the banks had been kept abreast of the catastrophic situation of the company. “The banks knew all of our commitments. including abroad ”. The bankruptcy of their company completely ruined them: in 1984, the status of the Chaumet house had been changed. becoming a limited partnership. Co-managers. the two brothers, who will incur a 5-year prison sentence, are jointly responsible. FRAUDULENT PRACTICES Jacques Chaumet explains the choice of this status by the desire of the two brothers “to be honest with their customers”. “The sale of a piece of jewelry is a symbol. which relates to the intimate life. We were very close to our customers ”. he explains. The famous house. two hundred years old. and who counted among his clients Napoleon I and Queen Victoria. had been taken over by the Chaumet family in 1885. The court investigation opened after the company filed for bankruptcy brought to light a series of fraudulent practices. The scams relate in particular to a fictitious international trading circuit for precious stones. which enabled them to obtain advances in “export credit” from the banks and to inflate the annual turnover of each subsidiary. Under cover of sale. stones passed from one Chaumet branch to another. transiting through two Geneva companies. Tramarsa and Borgognon. The establishment was also acting as an illegal bank. The then Minister of Justice Albin Chalandon (right). who had a current account with the Chaumets between 1972 and 1983. reduced to 5.8 million 1 = t = the loss he suffered as a result of the bankruptcy. (years. afp) L’Impartial, October 1, 1991