Hermes Billionaire’s Charity Fights Plan to Cut Inheritance

This content was published on December 19, 2023 - 14:41

5 minutes

Battle lines are hardening in Switzerland’s Valais canton between an aging billionaire heir to Europe’s biggest family fortune and his own charitable foundation.

Nicolas Puech, a reclusive fifth-generation descendant of the founder of French luxury giant Hermes International SCA, wants to cancel his inheritance contract with his Isocrates Foundation, the charity’s press office said in a statement. The organization is publicly contesting the plan to sever ties.

The move comes after Puech, 80, was reported to have begun administrative procedures to adopt his middle-aged gardener to whom he would bequeath at least some of his fortune.

“From a legal standpoint, the abrupt and unilateral annulment of a succession agreement appears void and unfounded,” Isocrates said in the statement. “The foundation has opposed this move, while leaving the door open to discussion with its founder and president.”

Puech’s lawyer, Jörn-Albert Bostelmann, declined to comment on specifics regarding his client, but said he may hold a press conference “to separate the fact from the fiction and to dispel some of the nonsense that has been reported in the media.” Hermes, meanwhile, declined to comment on the report or Puech’s stake in the company.

The unusual dispute is shining a spotlight on one of the most secretive Hermes heirs who became a family outcast more than a decade ago over his role in a four-year corporate fight against rival LVMH Moët Hennessy Louis Vuitton SE, founded by tycoon Bernard Arnault. The stakes could potentially run into the billions of dollars because Puech, who isn’t known to have children, purportedly owns about 5.7% of Hermes.

A post-pandemic boom in demand for Hermes’ leather handbags and colorful silk scarves has propelled the company’s market value to €211 billion ($231 billion), which would make Puech’s stake worth about €12 billion. The clan emerged this month as the world’s third wealthiest in Bloomberg’s annual ranking of family fortunes.

Over the past decades, Puech has mostly remained under the radar, described in public documents as a French national with an education in the arts who resides in Orsieres in the Valais — an Alpine region bordering France and Italy known for chic ski resorts including Crans Montana and Verbier.

The split within his foundation became public this month when Swiss newspaper Tribune de Geneve reported Puech was trying to adopt his gardener and make him an heir to the fortune.

The Isocrates Foundation “isn’t in a position to judge the process or context” of Puech’s reported wish to adopt his household employee, the organization said in its statement, adding that it will leave “the relevant authorities to rule on the subject.”

The move by Puech would be a surprising twist in the long-running saga of the Hermes descendant, who was seen as betraying his family when he failed to join dozens of relatives led by his brother Bertrand Puech in pooling their Hermes shares to tighten control over the firm and repel LVMH, which had stealthily acquired a stake.

The size of Puech’s holding and his role in the four-year corporate battle were among the biggest mysteries to emerge. Puech quit the Hermes supervisory board in 2014 and didn’t add his shares to the two family holdings that have an iron-clad grip on the firm.

Read More: Hermes Accuses Heir of Lying About Shares During LVMH Battle

Hermes stopped breaking out Puech’s holding in its 2016 annual report. The previous three years, the firm cited signed declarations indicating he owned 5.8% of the capital or 6.08 million shares, of which 900,000 were held by his Fondation Nicolas Puech, the former name of Isocrates created in 2011. The latest Hermes report shows a 5.7% stake is owned by unidentified family members outside of the pooled holdings.

The scope of Puech’s foundation has also changed in recent years. Based in Sion with offices in Geneva, it initially backed a wide range of actions in “charitable, humanitarian, religious, medical or cultural areas, as well as in environmental science,” the Valais corporate registry shows.

Last year, Isocrates adopted new statutes and shifted its focus to supporting public interest and investigative journalism, responsible digitalization and a “healthy digital public space.” The foundation’s website, which has added details about its operations in recent months, lists more than a dozen grantees including organizations to defend media and democracy.

“Until further notice, the foundation does not accept new funding requests,” Isocrates said on its website.

Puech donated an initial 10 million Swiss francs ($11.5 million) in seed money to Isocrates and it will rely in the future on the “fruits and revenues of his fortune” as well as subsidies, donations and government aid, accoding to the statutes. It’s not clear how much Puech previously gave to the organization under its old name.

“In no case can the foundation’s assets be returned to the founder, his heirs or to donors,” the statutes read.

–With assistance from Angelina Rascouet and Gaspard Sebag.

(Updates with foundation’s plans to no longer accept new funding requests in 16th paragraph.)