Police question Axa bosses

Axa: Biggest insurer in the world, by sales

The two most senior figures in one of the world's largest insurance companies, Axa, have been questioned by French police investigating allegations of money-laundering.

The company said its founder and former chairman, Claude Bebear, and chief executive, Henri de Castriers, were heard as witnesses in the case of PanEurolife, a company owned by Axa until 1998.

The two were held overnight, police said.

"This typical procedure is aimed at shedding light on suspicions of money laundering by (PanEuroLife)," Axa said in a statement.

PanEurolife is suspected of involvement in a large-scale money laundering operation between France and Luxembourg.

Reports say the two men were questioned on Tuesday and are expected to face further questioning on Wednesday.

So far, eighteen people have been charged with fraud, theft and money laundering in the affair.

Tax-free income

About a dozen people, including PanEurolife's managing director Jacques Drossaert, have already been placed under investigation in the PanEurolife case for "fraud, theft and laundering".

According to judicial sources, it is alleged that money was deposited at French post office branches, transferred to Luxembourg and then converted into life assurance contracts so owners could receive investment income tax free.

Created in 1990, PanEurolife was acquired by the French insurer when it bought French rival UAP in 1997.

Axa then sold its holding in PanEurolife to US company Nationwide Holdings in November 1998.

Olympic bid

PanEurolife's chairman is Gaston Thorn, a former president of the European Commission.

Claude Bebear - who turned a small mutual insurer in the north of France into the biggest in the world measured by sales - is also head of the committee promoting the Paris bid to host the 2008 Olympics.

Axa said that Banque Worms, another UAP subsidiary acquired in 1997 and sold to Deutsche Bank last October, was also the subject of the police investigation.

Mr Bebear was Axa chairman until last year when he stepped down.