Aero Engine Maker General Electric Subject to a Money Laundering Probe in France

Following allegations of multimillion-euro tax avoidance through profit transfers abroad, the General Electric site in Belfort, eastern France, has undergone a new raid eight months after the initial investigation.

The investigation was initiated by the National Financial Prosecutor's Office (PNF) based on a report filed by Fabien Roussel, the national secretary of the French Communist Party (PCF), in July 2019. The report raised concerns about potential tax fraud and optimization practices by General Electric in Switzerland. This led to prior searches at the Belfort site in December.

In 2019, General Electric announced a cost-cutting initiative involving about 1,000 job reductions in France, primarily at its Belfort location. The works' council and unions at the site lodged a complaint in May 2021, asserting that GE had moved €555 million in profits from the Belfort site to Switzerland or the United States. The unions also alleged that the company aimed to present the site as financially challenged to support the proposed job cuts.

The PNF’s current investigation centers on the movement of financial resources within the company, particularly from France to other subsidiaries. The company is suspected to have shifted hundreds of millions of euros in profits to Switzerland and the United States, where taxes are lower compared to France.

The company confirmed the latest search and expressed cooperation with authorities, emphasizing adherence to all relevant laws.

An internal communication within GE's management informed employees that two of its sites are being targeted in the searches: the TE05 building in Belfort and the Bourogne facility located about 15km away. The management informed the employees that law enforcement officers will be conducting their investigation at the company's offices and requested cooperation from the employees in this matter.

In July, it was also noted that the residence of the financial and tax director of General Electric Energy Products France subsidiary had been searched in connection with this matter.