The Monaco Royal Family payments scandal: Why the loyalty of private staff is paramount

From the bitter Safra family inheritance row to the dispute over French film star Alain Delon’s alleged loss of capacity, having one’s 'dirty laundry' aired in public is never a good thing. But, while many private family disputes hitting the headlines are often down to irked descendants feeling they have no other recourse than to blow the whistle, the dire implications of such a move are made manifold when the informer is a private member of staff. 

For more than two decades, Claude Palmero was in charge of managing the assets of the House of Grimaldi - the hereditary rulers of Monaco - first for Prince Rainier III, the husband of American actress Grace Kelly, and then their son Prince Albert II when he became ruler of the sovereign city-state in 2005.

Palmero, who took over the role of principal asset manager from his father in 2001, was unexpectedly forced to step down last year and has since tried to sue Prince Albert (who has a personal fortune estimated at €2 billion) for €1 million over his dismissal. Now, he has spilled the beans in a controversial expose in French newspaper Le Monde. 

Delving into five books of notes Palmero took with him when he left the palace, the report says that some royal funds have been placed offshore over the years in the tax havens of Panama and the British Virgin Islands.

Also under the spotlight are the spending habits of Prince Albert’s 46-year-old former swimming champion wife, Princess Charlene, who reportedly has an annual allowance of about €1.5 million and was claimed by Palmero in December 2019 to have spent “about €15 million in the past eight years”. Payments to Prince Albert’s relatives (including his twin children with Charlene, Princess Gabriella and Jacques, the Hereditary Prince of Monaco), covering real estate, luxuries and allowances “to manage their day-to-day” have also come under scrutiny in the report. 

The Sovereign Family needs to restore the underlying narrative about their duty and the values that they seek to uphold, and to present their purpose in a more proactive way.

Speaking to AFP, Jean-Michel Darrois, a lawyer for Prince Albert, confirmed that “offshore companies were indeed created in Panama in 1984 in the time of Rainier III”. However, Albert II had “several times” asked his money manager to resolve the situation, “which he did not do - since Palmero’s replacement, all this is being liquidated.”

“At this point, the expectation of further impropriety has become a perpetual and popular narrative,” says Michael Macfarlane, Senior Partner at Michael Macfarlane Associates, a private office advising ultra-high-net-worth individuals and family offices on matters or reputation and legacy. “The Grimaldi dynasty has been a constant for many generations, and that continuity has the power to transcend all else.”

“The Sovereign Family needs to restore the underlying narrative about their duty and the values that they seek to uphold, and to present their purpose in a more proactive way. For a centuries-old dynasty, a single moment in time means nothing and will get lost in history.  So, they need to refocus on their purpose providing stability and continuity for Monaco across the centuries and into the future.”

Palmero’s dismissal, which has also seen him file a complaint with the European Court of Human Rights in Strasbourg after trying and failing to sue the royal family through the Monaco legal system, brings to the forefront conversations about loyalty and discretion from private staff - especially as their numbers are on the rise.

According to Campden Wealth’s European Family Office Report 2023, despite the challenging investment landscape, European family offices continued to expand in 2022. Nearly a third of respondents indicated their family offices had increased staff numbers through the recruitment of professional, non-family members. 

The same report also found that the ability to recruit staff with the appropriate skillset is critical for family offices with the pool of potential talent found to be too small. 39 percent of respondents saw this as a significant constraint on their ability to hire professional staff. Additionally, 32 percent feel that the limited talent pool is also a constraint on their ability to hire staff with appropriate interpersonal skills. With access to private family and business matters, getting the right people for the job is clearly of vital importance.

“I see the royal family as the victim here,” says Giles Graves, a solicitor and advisor with more than 20 years’ experience working with some of the world’s most prominent family offices. “For the accountant to release private financial details to Le Monde is unforgivable. He should have exited professionally. By breaching confidentiality and sharing secrets of the royal family accounts with Le Monde, the accountant is showing he is not trustworthy.”

Indeed, in a retort to Palmero’s wrongful dismissal claims (in which his lawyers Canu-Bernard and Christophe Llorca say he has also filed a complaint in Monaco against the royal family for “attempted extortion and theft”), the royal family has in turn officially accused their former wealth manager of “breach of trust” and “stealing documents”.

A family employee can sign the finest worded confidentiality agreement but it is practically worthless in some situations. 

“In family offices and family businesses, the scales are tipped against the family members, who have everything to lose,” says Giles Graves. “A family employee can sign the finest worded confidentiality agreement but it is practically worthless in some situations. 

“For example, if the employee has little or no sense of duty to protect the family privacy, if the employee is sufficiently aggrieved and, most importantly, if the employee has little or nothing to lose. That is a very powerful chip, and if an unscrupulous family employee or any person they might come into contact with, realises this, things can get expensive and, worse still, reputations, businesses and lives can be ruined.”

In Le Monde’s report, Palmero was described as “overseeing allowances for members of the royal household, including Prince Albert’s sisters Caroline and Stephanie and his wife, and commenting on their expenses.” The Monaco-Matin newspaper, meanwhile, has accused “Palmero of airing private matters in public”.

However, as reported by Agence France-Presse, “Palmero’s lawyers defended him, saying he had told Le Monde that his notes – handed over to Monaco authorities as part of another investigation – were ‘confidential and not supposed to be shown’.”

The reported revelations also include allegations of lavish expenditure on Albert’s two children from relationships before he was married (Jazmin Grace Grimaldi and Alexandre Grimaldi-Coste), a private BNP bank account labelled AG (for Albert Grimaldi) allowing him to transfer money without his wife’s knowledge, and “special funds” that were allocated up to €600,000 a year for “secret missions” and “parallel activities”. 

“I never took a centime,” Palmero told Le Monde, referring to alleged ‘slush funds’. “This is a 100% denial. I am neither corrupt nor a thief, all the improbable things of which the royal family, to whom I devoted myself for two decades, unjustly accuses me today.”

In his own statement to Le Monde, Prince Albert said Palmero’s has “shown his true nature and the little respect … he has for the family and the principality… His duties imposed on him in absolute discretion, which he has violated. 

“I exercised my right to choose the asset manager of my choice. Events have shown how much this decision was the right one.”