Hollande sacks budget minister under investigation for tax fraud

Jérôme Cahuzac placed under investigation for money laundering and tax fraud

Former French  junior minister for budget Jérôme Cahuzac (centre), flanked by successor Bernard Cazeneuve (right) and finance minister Pierre Moscovici, at the finance ministry in Paris yesterday. Photograph: Reuters

Former French junior minister for budget Jérôme Cahuzac (centre), flanked by successor Bernard Cazeneuve (right) and finance minister Pierre Moscovici, at the finance ministry in Paris yesterday. Photograph: Reuters

Wed, Mar 20, 2013, 21:08

The French junior minister for the budget, Jérôme Cahuzac, who was responsible for pursuing tax cheats, has been sacked by President François Hollande after the Paris prosecutor placed Dr Cahuzac under investigation for money laundering and tax fraud.

Before his political career, and during lulls in his political life, Dr Cahuzac was a cardiologist. He opened a lucrative plastic surgery clinic that specialised in hair transplants. He was considered one of the hardest-working and most competent ministers, responsible for making the French swallow the bitter pill of austerity.

With his elegant bearing, Dr Cahuzac, who collected watches, seemed to embody the caviar left. He was known for his mastery of budgetary questions and for his sharp tongue on the floor of the National Assembly. International Monetary Fund director Christine Lagarde described him as “a difficult, narcissistic character”.

The suspicion of tax fraud is all the more ironic because Dr Cahuzac raised €20 billion in new taxes this year, half from businesses, half from households. He was about to begin negotiations with fellow cabinet ministers in the quest for €5 billion in cuts in government spending, discussions that are expected to be tense. He explained France’s failure to reach Eu ropean Union deficit targets to the European Commission. And although he had opposed Mr Hollande ’s 75 per cent tax on millionaires, Dr Cahuzac was expected to enforce the law.

The announcement could scarcely have come at a worse time for Mr Hollande, who promised an “exemplary republic” during his campaign. In free-fall in opinion polls, the president will address the nation on television next week. With a solid majority in the National Assembly, socialist prime minister Jean-Marc Ayrault was certain to survive a no-confidence motion last night. But Mr Ayrault’s speech, on which he had laboured for days, was overshadowed by Dr Cahuzac’s departure.


Detailed statement
Mr Hollande sacked Dr Cahuzac on Tuesday evening, three hours after the Paris prosecutor issued an unusually long and detailed statement explaining why he was now under formal investigation.

Last December 4th, the investigative website Mediapart, run by former Le Monde journalist Edwy Plenel, reported that Dr Cahuzac had held an undeclared account in Swiss bank UBS until 2010, when he allegedly moved the account to Singapore. Mediapart released a recording of a telephone call made in late 2000 in which Dr Cahuzac, by then a deputy in the National Assembly, said it worried him that the Swiss account was still open. “UBS isn’t really the best-hidden bank,” he remarked.

Dr Cahuzac insisted he had never held a Swiss bank account. When the Paris prosecutor opened a preliminary inquiry in January, he said he welcomed the chance to clear his name. His departure from office “does not change my innocence nor the defamatory nature of the accusations against me”, he said in a statement.

The inquiry concluded that the recording provided by Mediapart had not been doctored. Three witnesses recognised Dr Cahuzac’s voice. The police scientific laboratory said its analysis “strengthens the hypothesis” that the voice was his.

One witness told investigators the funds in Dr Cahuzac’s Swiss account came from pharmaceutical laboratories. He had established a consulting firm in 1993, after serving as an adviser to the health minister. The prosecutor said that as a member of the medical profession Dr Cahuzac was also under investigation for “procuring advantages through an enterprise whose services or products are financed by social security”.


Investigating magistrates
Two investigating magistrates were yesterday assigned to the Cahuzac case. French authorities have solicited the co-operation of authorities in Switzerland and Singapore.

Dr Cahuzac has not been charged, and the possibility of skulduggery cannot be excluded. The seemingly incriminating tape was provided by a lawyer and former political rival who claimed he had obtained the recording when Dr Cahuzac left a message on his answering machine and then continued talking in the mistaken belief that he had hung up the phone. Dr Cahuzac is also embroiled in a messy divorce from a wife who hired detectives to watch him.

European affairs minister Bernard Cazeneuve was appointed to replace Dr Cahuzac. Mr Cazeneuve is close to foreign minister Laurent Fabius, and attended a dinner in honour of President Michael D Higgins on February 18th. The new European affairs minister is Thierry Repentin, who previously held the portfolio for professional training and apprenticeship.