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L’Oreal heiress Liliane Bettencourt has sold a Seychelles island at the centre of a tax evasion case, says the government of the island chain.

Mrs Bettencourt sold D’Arros island for $60m (£39m), having bought it in 1998 for $18m, said Seychelles Habitat Minister Christian Lionnet.

He said she had also agreed to settle $8m in unpaid taxes from its purchase.

The island purchase came to light in 2010 when Mrs Bettencourt was being investigated by French tax authorities.

The 89-year-old heiress is now back in the spotlight amid allegations that she made illicit donations to the election campaign of former French President Nicolas Sarkozy.

Mr Sarkozy’s house was raided a month ago as part of the police investigation.

'Tax haven'

Mr Lionnet said Mrs Bettencourt had now sold D’Arros and surrounding islands to a firm affiliated to the Swiss-based Save Our Seas Foundation - a marine conservation group.

In a statement on its website, Save Our Seas said it had agreed to manage the islands, which are turtle breeding grounds, on behalf of the Seychelles government.

It said it would “undertake all what is necessary to protect this unique piece of land in the world and to preserve the environmental legacy of this exceptional group of islands in the Seychelles”.

Mrs Bettencourt’s ownership of D’Arros was revealed in 2010, when media reports claimed she had not declared the purchase to French authorities and was using the island as a tax haven.

She has since admitted evading tax on money held in foreign bank accounts.

With the sale of the islands, Mrs Bettencourt has agreed to pay the Seychelles government $8m in taxes outstanding from her purchase of the island, Mr Linnet said.

He said she would pay a further $10.5m in stamp duty and other taxes on the current sale

Victoria Clock Tower, erected in 1903, in Mahé, the largest of all 115 archipelago  islands that compromise the Republic of Seychelles.