Labour minister Eric Woerth denies agreeing to a 30-million-euro tax refund for Bettencourt, after the French website Mediapart reported he had approved a cheque for the billionaire in 2008 when he was budget minister.
"Contrary to what is being said, Eric Woerth, then budget minister, did not 'give his approval' for the payment of Mrs Bettencourt's tax refund," said the Labour ministry statement.
Woerth is facing a barrage of criticism and calls for his resignation over his alleged links to France’s richest woman, who employed Woerth’s wife to manage her fortune.
A high-profile minister in French president’s Nicolas Sarkozy’s government, Woerth is also in charge of ushering in an unpopular pensions’ reform.
The 87-year-old Bettencourt is caught up in a storm since last month when secret tapes revealed she had allegedly conspired to hide money in Swiss bank accounts while making donations to friends in the ruling UMP party.
As if dealing with a political scandal wasn’t enough for Bettencourt, she also faces an unpleasant trial opposing a close friend, celebrity photographer Francois-Marie Banier, and her estranged daughter Françoise Bettencourt-Meyers.
Françoise accuses Banier of cheating her aging mother out of one billion euros, in cash, insurance policies and masterpiece works by Matisse and Mondrian.
On Thursday, the court adjourned the case indefinitely so that judges could examine the new evidence contained on the secret tapes. Neither of the Bettencourts were present at the trial, but their lawyers traded insults and almost came to blows during the hearing.
Between May 2009 and May 2010, Bettencourt's butler secretly recorded conversations between the billionaire and her financial adviser in her villa in the posh Paris suburb of Neuilly-sur-Seine.
Transcripts of tapes published on Mediapart suggest Bettencourt funnelled 80 million euros into Swiss bank accounts and planned to move the funds to Singapore after France signed a tax cooperation deal with Switzerland.