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Europe

France's budget minister quits over tax probe

Resignation is a major embarrassment for President Hollande's government, which is trying to crack down on tax evasion.
Last Modified: 19 Mar 2013 20:22
The budget minister has led the Socialist government's efforts to crack down on tax evasion [EPA]

France's budget minister Jerome Cahuzac has resigned after being targeted in a tax fraud inquiry, the president's office said.

The announcement on Tuesday came hours after French prosecutors opened a formal investigation into allegations that the junior minister held a secret bank account in Switzerland.

The statement said the move came at Cahuzac's own request. It named Europe Minister Bernard Cazeneuve as his successor.

In a separate statement, Cahuzac, 60, said he had resigned to ensure that his case did not interfere with or overshadow the functioning of the government. He said he was "innocent of the slanderous allegations made against me."

Cahuzac has repeatedly denied a report in December by French investigative news website Mediapart that he held an undisclosed account at the Swiss bank UBS until the start of 2010.

Cahuzac's resignation is a major embarrassment for President Francois Hollande's government, which is trying to crack down on tax evasion also led by the minister.

Earlier, the public prosecutor said police laboratory tests showed a correlation between the voice of Cahuzac and that in a recording of a telephone call published by Mediapart, in which a male voice acknowledges holding an account at UBS.

"In other words, the result of our analysis reinforces the hypothesis that Jerome Cahuzac is the unidentified speaker," the office of the Paris prosecutor said in a statement.

Budget-watcher

French prosecutors opened a preliminary investigation into the affair in January, but this step takes the inquiry to a new level and will involve deploying greater resources to the case and cooperation with other judiciaries, notably in Switzerland.

Cahuzac, a former plastic surgeon who rose to prominence as the Socialist Party's toughest budget-watcher, has led efforts to crack down on tax evasion and fraud by French citizens seeking to avoid high levies at home.

But according to Mediapart, Cahuzac has breached the French law himself, when he failed to declare the Swiss account to the national tax authorities.

According to the website, in the recorded conversation with one of his aides, Cahuzac voices concern about the UBS account coming to light but claims he has "dealt with the matter."

Mediapart alleges that the contents of the Swiss account were transferred to Singapore.

Cahuzac's resignation could hardly come at a more sensitive time as Hollande's government is in the process of redrafting deficit reduction plans vital to maintaining fiscal credibility with France's euro zone partners.

Weaker-than-expected growth forced the government to abandon Hollande's pledge to cut the public deficit to an EU-imposed ceiling of three percent of economic output this year.

His replacement, Cazeneuve, is familiar with the inner workings of Brussels as Europe Minister.

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