France in turmoil over tax-dodging minister

04.04.13 @ 09:20

  1. By Honor Mahony
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BRUSSELS - France's ongoing scandal over its tax-evading budget minister is threatening to engulf Francois Hollande's government, raising questions about who knew what and what it means for a President who came to power promising an "irreproachable republic."

  • Francois Hollande is struggling to put a lid on the scandal (Photo: Francois Hollande)

Jerome Cahuzac, now resigned, dealt a body blow to the Socialist administration after admitting he lied to the president, to parliament and to the public about having an offshore account.

It eventually turned out that Cahuzac, who had conducted a public campaign against tax dodgers, had foreign bank accounts for over 20 years.

A Singapore bank account of his still has €600,000 in it.

His revelation came after Hollande and several other ministers vouched for him when the investigative website Mediapart back in December revealed he had a secret bank account in Switzerland.

Cahuzac, a former plastic surgeon, spent months denying the accusations before admitting its existence on Tuesday in a blog.

Hollande, currently among the most unpopular presidents in recent French history after less than a year in office, made a taped TV appearance on Wednesday in which he condemned Cahuzac's conduct as "unforgiveable."

Trying to deflate the scandal, Hollande said that in future all government ministers and MP will have to declare their personal finances, and tax-evaders will not be able to hold public office.

But the turmoil is eroding the perception differential Hollande had hoped to build up in comparison with his predecessor Nicolas Sarkozy, known as the "bling bling" president and accused of unduly influencing billionaireness Liliane Bettencourt.

The Cahuzac affair is the culmination of an unhappy few months for Hollande.

His much-heralded tax on the super rich had to be temporarily shelved after being ruled unconstitutional.

He recently admitted that he will not be able to reduce the country's budget deficit as much as had been promised to his EU partners.

Meanwhile, the tax hikes and reforms to bring down the deficit sit uncomfortably with Cahuzac's revelations.

More broadly, France's economy is in a poor shape (it contracted by 0.3 percent at the end of 2012) and unemployment is at a 16-year high.

For its part, the French centre-right UMP opposition has been revelling in the government's difficulties. Its politicians have been asking when exactly Hollande's government new about Cahuzac.

"I find it hard to believe that they only learned the truth 48 hours ago, or else I guess we are being led by a big simpleton," UMP vice president Thierry Mariani said.

French newspapers, which have called the affair one of the "most spectacular scandals" of the fifth republic, are already wondering whether Hollande will have to reshuffle his government to give himself some breathing space.

But for Hollande, it appears that the difficult headlines are not yet over.

Le Monde newspaper on Thursday revealed that Jean-Jacques Augier, Hollande's ex-treasurer during his presidential campaign, is a shareholder in two off-shore companies in the Cayman Islands.

Augier told the newspaper that this is not "illegal," but the revelations and the general mistrust of mainstream French parties among the public have led analysts to wonder if extremist parties on the left and the right will be the ultimate beneficiaries of the current turmoil.