A senior French prosecutor is investigating Labour Minister Eric Woerth's role in the tax affairs of L'Oreal heiress Liliane Bettencourt and his alleged favouritism in a land deal, a source close to the prosecutor said on Sunday.
Jean-Louis Nadal has also written to Budget Minster Francois Baroin asking to see an official report that cleared Woerth in July of interference in the billionaire heiress's tax affairs, the source added.
If Nadal finds evidence of wrongdoing, he could refer the case to a special court that hears cases against ministers accused of crimes committed while in office.
Woerth's wife Florence worked for Bettencourt's wealth manager at a time when her husband was budget minister in charge of a crackdown on tax evasion.
The labour minister, who is trying to push an unpopular pension reform through parliament next month, denies any improper behaviour and has rejected Socialist accusations of a conflict of interest over his wife's job.
Woerth also denies any wrong-doing relating to the sale of a piece of the Compiegne forest in his Oise constituency, and his lawyer said the minister had no case to answer over any of the allegations.
To refer a case to the (court for ministers), you have to identify in a credible way a crime committed by a minister, Woerth's lawyer, Jean-Yves Leborgne, said on Sunday, dismissing the latest development as a non-event.
Woerth, a close ally of President Nicolas Sarkozy, has also denied separate allegations that he received illegal donations from Bettencourt during his time as treasurer of the ruling conservative UMP party.
Bettencourt's financial affairs burst into the public arena following a family feud over lavish gifts by the billionaire heiress to close friend and society photographer Francois-Marie Banier.
The Le Monde newspaper at the weekend quoted Liliane Bettencourt's lawyer Georges Kiejman as saying she had removed Banier as sole heir from her will.
Bettencourt, who owns 31 percent of luxury cosmetics group L'Oreal, has realised that enough is enough and that she had given Banier a lot, Kiejman told Le Monde.
(Reporting by Clement Guillou; Writing by James Regan; Editing by Jon Boyle)