Business Notes Scandal L'Oreal's

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The French call it "L'Oreal's greatest moral scandal." A corporate feud has focused attention on the pro-Nazi leanings of the beauty giant's founders. As a result, the U.S. Justice Department is weighing banishment from American soil for Jacques Correze, the honorary head of L'Oreal's U.S. affiliate, Cosmair. The turmoil began after Jean Frydman, a Jewish film mogul, decided to sell his share in Paravision, a L'Oreal-backed movie firm. Unhappy with L'Oreal's offer, he sued, making some provocative charges. He says the company forged his resignation from Paravision in order to placate Arab boycotters, a plot engineered by ex-Nazi collaborators like Correze. Fiercely fighting the claims, L'Oreal does concede that its founder, Eugene Schueller, was an anti- Semitic fascist who hired Correze and other ultra-rightists. But that generation no longer runs L'Oreal. Correze, 80 and ailing, is unlikely to visit the U.S. even if he is never placed on the same watch list that bars Austria's Kurt Waldheim.