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French government reeling from ex-minister tax scandal

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(Globalpost/GlobalPost)

France's Socialist government was reeling from an explosive tax fraud scandal Wednesday as critics questioned how much President Francois Hollande knew about an former budget minister's secret foreign bank account.

Jerome Cahuzac -- the minister once responsible for cracking down on tax evasion -- was charged Tuesday with "laundering the proceeds of tax fraud" after he admitted to having a foreign bank account containing some 600,000 euros ($770,000), following weeks of denials.

Hollande appeared on national television Wednesday to address the scandal, vowing a new law on the "publication and control" of ministers' wealth and insisting that Cahuzac "did not benefit from any protection" within the government.

Hollande had been quick to condemn Cahuzac's actions as an "unforgivable moral error", but critics have pounced on the scandal, saying top officials must have been either lying to protect the ex-minister or naive enough to believe him.

The head of the main opposition right-wing UMP party, Jean-Francois Cope, has demanded Hollande explain the scandal to the French public.

Cope said the president either "knew nothing, and that's extremely serious because it means he showed a certain amount of naivety" or "he knew and that means to the lied to the French people".

"Who can believe that Francois Hollande and (Prime Minister) Jean-Marc Ayrault were aware of nothing?" Cope asked on Europe 1 radio. "They must explain themselves more deeply before the French people."

UMP lawmakers have called for a parliamentary probe into the scandal and for the resignation of Cahuzac's former boss, Finance Minister Pierre Moscovici.

Government spokeswoman Najat Vallaud-Belkacem insisted that top officials had nothing to apologise for, saying Hollande and Ayrault were "of course unaware" of the account.

"What happened was obviously very serious and we are all crushed by sadness and a feeling of personal betrayal," she told Europe 1.

The former budget minister's lawyer admitted Tuesday that his bank account, originally opened in Switzerland, had been transferred to Singapore in 2009 and that the amount laundered was equivalent to about 30,000 euros ($38,400).

Hollande had promised a government of unimpeachable morals, and the scandal if likely to further damage the standing of the president, who is languishing in opinion polls less than a year into his five-year term.

Moscovici said the government had responded correctly to the scandal.

"I think that the president and myself did what was needed," he said on radio station RTL.

"There was no complacency, no desire to obstruct justice," he said. "The president immediately asked Jerome Cahuzac for explanations when a preliminary investigation was opened."

Cahuzac announced his resignation on March 19 after prosecutors opened a probe into the account, first revealed by the investigative Mediapart news website. He met with investigators on Tuesday and admitted to having had the foreign account for around 20 years.

His lawyer said the account, originally opened in Switzerland, had been transferred to Singapore in 2009 and that the amount laundered was equivalent to about 30,000 euros.

In a contrite statement on his website, Cahuzac said: "I was caught in a spiral of lies and lost my way. I am devastated by guilt."

Little-known before being named a minister, Cahuzac, 60, began his career as a cardiologist before switching to the more lucrative world of plastic surgery, in particular hair transplants.

Elected to the National Assembly in 1997, he headed its commission on public finances and was named budget minister when Hollande formed his first government following his victory over ex-president Nicolas Sarkozy last May.

If convicted, Cahuzac faces up to five years in prison.

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http://www.globalpost.com/dispatch/news/afp/130403/french-government-reeling-ex-minister-tax-scandal