The Mystery of the Missing $13 Billion Hermès Fortune

Writer: Julia Gillis
Editor: Maryam Khan

Stunning Claim:

In 2023, a member of the Hermès dynasty Nicolas Puech, made a stunning revelation: he no longer owned his shares in Hermès, amounting to $13 billion, and he was completely unaware of who did! How could one lose such an astronomical fortune without even noticing? While we may never know for sure, there are numerous speculations, including a few from Puech himself.

Could it be that his longtime trusted financial advisor and friend, as Puech claimed, was involved? Did he transfer the shares to his 51-year-old gardener, whom he recently adopted, for tax evasion purposes? And what about the foundation that he originally intended to donate to? These are all questions being raised, which I will be exploring. But first, who even is Nicolas Puech?

Who is Nicolas Puech?

Nicolas Puech is the great-grandson of Thierry Hermès who founded the iconic luxury house in 1837. Puech belongs to one of the three Hermès family lines, most of whom lived secluded, funded outside the business. Nicolas is no exception; he remains very private, staying almost completely out of the public eye.

At 81 years old, Puech lives in a small village in the Swiss Alps, containing only a dozen houses. He is unmarried and has no children. Further contributing to his isolation, in the winter, the village is inaccessible by road and many locals must snowshoe to get to their homes. Despite his wealth, few residents know anything  about their reclusive neighbor, one saying “I know he’s very rich, how or why, no idea.” 

Despite his seeming disinterest in the fashion house, he remains the largest individual stakeholder at 6% – approximately 6 million shares – much to the chagrin of the rest of his family. In order to manage his sizable inheritance, Puech hired Eric Freymond as his financial advisor in the 1980s, a decision that marked the beginning of his troubles.

The Suspicious Financial Advisor:

In 2023, a year after dismissing Freymond as his financial advisor, Puech filed three lawsuits against him in Geneva, accusing Freymond of “massive fraud.” Puech claimed that Freymond, who had been his trusted advisor and friend of 40 years, had set up a trust or another entity abroad to hold either the Hermès shares or the proceeds from their sale. The evidence Puech discovered included bank statements, including from Panama, revealing hidden financial activity which he only discovered recently.

Additionally, Freymond has a history of not making financial decisions in Puech’s best interest. Notably, in 2001, Freymond, somewhat dubious, helped facilitate the unsuccessful takeover of Hermès by Bernard Arnault, the CEO of LVMH and Hermès archrival, through Puech’s accounts. 

To complicate matters, Puech willingly gave Freymond control of his accounts, an agreement that he could revoke at any time, yet chose not to. Puech’s defense was to say, “I blindly signed all the documents that Eric Freymond asked me to sign, without any further explanation, given the complexity of managing such a large fortune.” Before dismissing the lawsuit, the court cited Puech's inattention to his financial affairs, suggesting his naivety in relinquishing control left them with no basis for intervention.

Regardless of whether or not Freymond took the shares, why can’t Puech just trace who is paying the dividends? Well, somewhat foolishly, his stocks are issued in so-called bearer shares in Hermès, meaning that the ultimate owner is unknown. The dividends are typically paid for through financial intermediaries that hold them on behalf of the owner, which makes it nearly impossible to trace ownership. All of the other members of the Hermès family’s shares are issued in their names.

Freymond himself has denied the allegations and continues to fight on multiple legal fronts. Moreover, multiple Bloomberg reports there is no evidence to support that Freymond hoodwinked his client.

Freymond, however, has his own suspicions of what happened to the money. He mentioned that right around the time he fired Freymond, Puech also had begun looking into his financial affairs more closely, something very unusual for him. He also, seemingly out of the blue, pulled his agreement to give his billions to his foundation called Isocrates. Could this imply potential evasion of inheritance tax?

The role of the Foundation:

In 2017, Puech set up the Isocrates Foundation and appointed Nicolas Borsinger to run it. Borsinger was promised to eventually possess billions of dollars to distribute to various causes including investigative journalism and other ways to combat misinformation and conspiracy theories. Puech had planned to leave his fortune to his private foundation, until last year when he suddenly tried to cancel that commitment by sending a mysterious letter.

“Annulation pacte successoral.” was all that was scrawled at the top of the letter. Translation: “Cancellation inheritance agreement.” Puech continued by writing, “I irrevocably declare the cancellation of this agreement in its entirety. Not only because I was mistaken in believing that this agreement, in favor of my…foundation, could protect me and my assets, but also because I intend to make other testamentary arrangements.” 

This raises suspicions about the nature of those testamentary arrangements, especially since he abruptly fired Freymond around the same time with a similar kind of cryptic letter. Freymond went even further to claim that Puech, or those around him were taking steps to transfer his fortune to his gardener, an extremely unconventional decision amongst the ultra-wealthy. However, Puech, as you may expect, is notorious for leading an untraditional lifestyle, and his relationship with his gardener is no exception.

Was it the Gardener?

As I mentioned, Puech has an unconventional relationship with his 51-year-old Moroccan gardener Butrak, and his partner Paz. Over the years, Puech has given them over 54 properties. It is alleged that Butrak and Paz have exerted more influence over Puech in the last few years, especially during COVID-19. However, the relationship reached an extraordinary kind of peculiarity, when Puech, Butrak, and Paz had submitted an adoption request so that Puech could legally become Butrak’s father.

It could just be that Puech is attempting to do a good deed for his longtime employee and friend, but Freymond shares even more skepticism. In the report, he states, “They have—to everyone’s surprise—managed to make themselves ‘emotionally’ indispensable to him,” implying potential coercion by the gardener. In addition, adopting Butrak would allow Puech to forgo inheritance tax and his agreement to donate his inheritance to the foundation. Puech has not spoken on what he plans to do with his inheritance since last fall in the letter he sent to Nicolas Borsinger.

With both Freymond and Puech’s accounts of what happened, you may believe that you have the full picture. Puech seems to think that there is still one more piece to the puzzle which lies with the owner of LVMH, Bernard Arnault.

Could Bernard Arnault have the key?

In 2001, after failing to capture Gucci, Arnault was on the hunt for more acquisitions and naturally, the esteemed French luxury house renowned for its iconic bags, Hermès was at the forefront of his mind. In June of that year, an LVMH employee reached out to Freymond to ask whether he would be “willing to assist and partner with LVMH in the goal of acquiring Hermès.” This deal was enticing to Freymond as he viewed entrepreneurs like Arnault as the answer to American powers such as Bill Gates.

Together they began building Arnault’s stake in Hermès, carefully keeping it just below the disclosure threshold of 5%. Then, Freymond leveraged his connections with many of the Hermès family members to develop a strategy for quietly increasing the stake without detection. They employed equity swaps and collateral-backed trades to mask the transfer of Hermès shares into LVMH's control. According to the lawsuit, 13 million shares were routed through Puech’s bank accounts before being transferred to LVMH. Freymond was able to orchestrate this maneuver because he had so-called “discretionary management mandates” on Puech’s accounts and later several LVMH-affiliated accounts.

By 2010, Arnault amassed almost 23% of Hermès shares, however, LVMH repeatedly insisted they had no intention of taking over Hermès. Nonetheless, considering Arnault’s track record, the Hermès family considered it an attack on family unity.

The Hermès family set up a holding company to pool its shares, effectively relinquishing rights to sell shares for decades, halting Arnault’s planned takeover. It is important to note that Puech was one of the family members who refused to participate. Why? No one will ever know. But this raised suspicions about Puech’s involvement in the LVMH takeover.

The lawsuit alleged that Puech agreed to the plan but, “was unaware of the finer details of the trades and did not wish to know them, as long as his portfolio was managed in his best interest.” Clearly, it was not, and Freymond’s sketchy maneuver led to much of the family shunning Puech.

The Family Shunning:

Some family members and Hermès executives suspected that Puech had betrayed them and sold to Arnault even though, in May of 2011 he was reported as the owner of 5 million shares with an additional 900k shares owned by his foundation.

Furthermore, Freymond consistently claimed the LVMH stake did not include Puech's personal shares. To confirm, in 2014, Hermès asked Puech for a bank statement confirming how many shares he owned. Puech refused. 

Later in October 2015, Hermès lodged a criminal complaint against an unnamed individual for “forgery and use of forged documents” stating the number of shares they held. The unnamed individual, according to people familiar with the matter, was Puech. Puech at the time denied the allegations, writing to a judge in 2018 that he had “personally, on several occasions” verified his Hermès holdings.

Recently, along with his lawsuits against Freymond, Puech requested that the court solicit testimony from Arnault to help determine what he knew about the shares. Unsurprisingly, Arnault and LVMH didn’t respond to requests for comment. After all, I assume that the French businessman has stayed very far away from the Hermès family since his failed takeover. However, the question remains: what happened to the Hermès shares?

Conclusion:

Some say that Puech failed to pay close enough attention to his wealth management and got taken in. Others say that he is a financial genius who managed to trick the masses into thinking that he was just naive, and inattentive. Regardless, the answer will likely come out at some point because someone must be paying the 35% withholding tax on dividends.

Regardless, the key takeaway here is how avoidable the situation is. Why would such a financially unsophisticated heir hold these bearer shares while all other family members had theirs registered? And why would someone who was bred for this inheritance have absolutely no idea how to manage it?

Although I highly doubt any of us is going to possess 13 billion dollars anytime soon (we can always manifest!), and therefore have the same issues as Puech, there are still many lessons we can extract. Puech’s story serves as a cautionary tale, highlighting the importance of financial literacy and the necessity of being diligent with your money, no matter how much you have. Ultimately, his predicament reminds us that even those born into great fortune are not immune to the consequences of misplaced trust and poor oversight—a lesson that resonates far beyond the world of luxury and wealth.

Works Cited

“Did billionaire Nicolas Puech lose his Hermes fortune to a hidden fraud? Swiss court rejects fraud claims.” The Economic Times, 31 July 2024, https://economictimes.indiatimes.com/news/international/us/did-nicolas-puech-lose-his-hermes-fortune-to-a-hidden-fraud-swiss-court-rejects-fraud-claims/articleshow/112175073.cms?from=mdr.

Kostov, Nick. “A Luxury Giant, a Reclusive Heir and the Case of the Missing $13 Billion.” The Wall Street Journal, 1 November 2024, https://docs.google.com/document/d/1v_JlZSaesiLUb27bVIH-dIxYXHvpRdHhla_8iTmlXL0/edit?tab=t.0.

Miller, Hugo. “81-year-old alleges his US$13-billion fortune has vanished.” Financial Post, 30 July 2024, https://financialpost.com/personal-finance/high-net-worth/81-year-old-alleges-us13-billion-fortune-vanished.

Pringle, Eleanor, et al. “Nicolas Puech, heir to $13 billion Hermès fortune, says money has vanished.” Fortune, 31 July 2024, https://fortune.com/europe/2024/07/31/hermes-heir-shares-vanished-gardener-inheritance/. Accessed 1 December 2024.