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Pressure builds on Hollande over tax fraud scandal

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(Globalpost/GlobalPost)

French President Francois Hollande faced rising pressure on Thursday over a disgraced ex-minister's secret foreign bank account, as it emerged that his one-time campaign treasurer was a partner in companies registered in the Cayman Islands.

With Hollande away in Morocco on a state visit, calls grew at home for top officials in his embattled Socialist government to resign over the scandal that saw former budget minister Jerome Cahuzac charged in a tax fraud probe.

Cahuzac -- the minister responsible for cracking down on tax evasion until he resigned two weeks ago -- was charged on Tuesday with "laundering the proceeds of tax fraud" after he admitted to having an undeclared foreign bank account containing some 600,000 euros ($770,000).

Cahuzac had for weeks repeatedly denied -- to the president, in parliament and in media interviews -- ever having had a foreign account.

Critics have accused Hollande and his government of either trying to cover up the scandal or of mismanagement for having believed Cahuzac's denials.

The head of the main opposition right-wing UMP party, Jean-Francois Cope, said the government no longer had the credibility to rule.

"The only solution possible, the only one, is a major government reshuffle, including the prime minister," Cope said.

French newspapers said Hollande was facing his biggest political crisis since taking office, with popular daily Le Parisien saying the situation had become "untenable" for the government.

Adding to Hollande's woes, Le Monde newspaper reported that his campaign treasurer for last year's presidential vote, 59-year-old businessman Jean-Jacques Augier, had joint ownership of two firms registered in the Cayman Islands, a well-known tax haven.

Augier confirmed the existence of the firms and said they had been set up to form partnerships with foreign entrepreneurs.

"There is nothing illegal," Augier told Le Monde, which carried out the probe with the Washington-based International Consortium of Investigative Journalists and other international media.

In a statement, Augier's Eurane holding company said the Caymans-based firms had in no way been used to avoid paying taxes.

"These two shareholdings resulted in no tax advantage either in France or elsewhere," the statement said, adding that Augier had "no assets, accounts or personal equity outside of French territory."

Hollande meanwhile insisted he knew "nothing" about Augier's activities during a press conference in Morocco. "If they do not conform to French tax law, I will ask the administration" to make the "necessary corrections," he added.

He has already said he knew nothing about Cahuzac's bank account and vowed a new law on the "publication and control" of the wealth of ministers and parliamentarians.

Opposition lawmakers have called for a parliamentary probe into the scandal and an opinion poll showed nearly two-thirds of respondents saying the government had handled the situation badly.

Hollande had promised a government of unimpeachable morals after his predecessor Nicolas Sarkozy was embroiled in a series of corruption and influence peddling investigations.

The tax scandal is further damaging the standing of Hollande, who is languishing in opinion polls less than a year into his five-year term.

A TNS Sofres poll released Thursday but conducted before the scandal erupted showed Hollande's approval rating at only 27 percent.

During the press conference in Morocco, Hollande vowed he would go "all the way" to clean up French politics, adding France was a great nation that would "not accept being humiliated."

Cahuzac, 60, announced his resignation on March 19 after prosecutors opened a probe into the account, first revealed by the investigative Mediapart news website in December.

He met with investigators on Tuesday, admitted to having had the foreign account for around 20 years and said in a statement that he was "devastated by guilt".

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http://www.globalpost.com/dispatch/news/afp/130404/pressure-builds-hollande-over-tax-fraud-scandal-2