Rampant corruption in Aryanization

I have revised interpretations on several points in the previous post on the Clerc aryanization report, mainly based on my reading last night of "Bad Faith," by Carmen Callil, an examination of the inglorious career of Louis Darquier de Pellapoix, the chief of the CGQJ and cabinet level minister of Jewish affairs in the Vichy government.

The book describes in detail how economic aryanization worked, which was primarily for the personal enrichment of Darquier and his cronies, provisional administrators, and ordinary French citizens who took advantage of the opportunity to purchase stolen Jewish assets for bargain prices.

Provisional administrators were authorized under Germany's second decree on the Jews of France, enacted October 18, 1940. These administrators were appointed to oversee the aryanization of businesses that had been determined to be Jewish-owned under criteria in the decree. The administrator's job was to account for the value and inventory of the firm and then to arrange for it either to be sold to new Aryan owners or to liquidate its assets.

The proceeds from such sales were theoretically paid into government accounts and held in escrow for the Jewish owners, less the fee charged by the administrator and a 10 percent cut to cover the costs of operating the CGQJ. These escrow amounts were later looted to cover a billion franc fine levied against the Jews of Paris, a reprisal for Jewish support of Resistance activities. The tax policy was devised and implemented by our technocrat Dr. Blanke, who we have met earlier and will come back to.

There was corruption at every level of the Aryanization system. Provisional administrators had the power to set the value of assets to be sold and to select the buyers. Buyers bribed administrators to win the bids.

Administrators were supposedly selected on the basis of business management skills and experience in the industry. In fact, Darquier and his staff awarded positions to friends and as political favors, usually pocketing bribes. Administrators didn't handle just one business. Many were appointed to as many as 20 or more administratorships.

We don't know yet how Armand Biney came to be appointed as the provisional administrator for the Clerc business, whether he was truly a jewelry business specialist or if he held multiple administratorships. But we know that he is on the case by early in 1941 and that he is considering the options for sale and/or liquidation.

Remember that Joe Liebman has taken most of the assets with him when he fled a year earlier. Some may be still in the country in an account in Perpignon, which we will come to later, but the point now is that the value of the business is not in its holdings of jewelry inventory, which could be liquidated at a handsome profit, but primarily in the lease and brand equity of the Clerc stores.

There was more value to be realized through a sale than a liquidation, so Biney went looking for buyers. We may learn more about how he settled on Andre Vigoureux and his partners, and what was Biney's official and unofficial compensation for the choice, but for now we know that Vigoureux and two others formed a new company called Jewelry of the Opera on September 17, 1941. They capitalized the business with 4,000,000 francs. They will need those funds to acquire new merchandise for the store.

Articles of association are notarized and published in the newspapers. On December 7, the legal gazettes ran another notice, that of the proposed sale of Maison C. Clerc & Bourguignon, Joseph Liebman's company, to the new entity.

Following that will be a period in which the sale is pending but not yet approved by the French and German authorities. We have already seen that Paul Clerc's brother raises a legal objection to the sale five months after the sale announcement, in May 1942. We expect to learn more about what happens next in the continuing flow of documents coming from Jean Jacques Richard.

One more point on M. Biney. He decided to sell the business intact, except for one piece that had substantial separate value, the house in Neuilly. In the aryanization file, he reports that it has been rented to Walter Kleinknecht. His wife Laure moves in to the house in May 1942, on her own it turns out as the Kleinknechts are separating, and she begins to host elegant soirees there.

That we learn from the Gilbert Joseph biography of Laure Dissard. Since it takes me a long time to slog through that book in French, I don't know how long she continues to live there. But M. Biney is not interested in collecting rent. He is in the liquidation business. So it is not surprising to find in JJR's files that the same month that Laure Kleinknecht moves in, the property is sold to another buyer. More on that in the next post.