Hollande fights back in tax evasion scandal

French president Francois Hollande pictured at the Elysee palace in Paris on April 11, 2013.

Story highlights

  • France's ex-budget minister reveals hidden Swiss bank account, sparking outrage
  • French President Francois Hollande vows to take action on tax evasion scandal
  • Agnes Poirier: Public mood is very much in favor of a moralization of public life
  • Poirier: Questions as to whether Hollande may reshuffle cabinet, bring in new PM

In politics, a week may feel like an eternity. Exactly a week ago, French President Francois Hollande suffered a momentous blow, the first real shock of his presidency. His recently dismissed Budget Minister, Jerome Cahuzac, a former hair implant surgeon-turned-socialist, confessed on his blog that he had been lying for the last four months and that he had, in fact, a hidden Swiss bank account which the French inland revenue services never knew about.

In other words, the man in charge of tackling tax evasion was admitting to being a fraudster. Not only this, but he had lied outright in parliament, in front of the nation's representatives. To utter lies in Parliament may not constitute a crime (unlike in the USA, there is no such thing as perjury in France), however, the French were shocked to discover that a minister had had the nerve to deny the truth in the Republic's most symbolic and sacred of places.

A few hours later, Hollande pre-recorded a message to his fellow countrymen. He would take immediate measures, he said, to restore the country's confidence in its political class and, no, he knew nothing of his Budget minister's wrongdoings.

From left to right, everyone in France was reeling from the news. Polls suggested that 65% of the French wanted Parliament to be dissolved and new elections to take place, others that 60% of the French people wanted, at the very least, a cabinet reshuffle or change of government.

While Hollande had to leave for an official two-day visit to Morocco, his Prime Minister Jean-Marc Ayrault announced that anyone found guilty of tax-dodging would be banned from holding public office.

The opposition immediately accused Pierre Moscovici, the economy minister to whom Cahuzac reported, of acting too slowly, and too late. Mediapart, the news website which broke the story over Cahuzac's Swiss account last November, asserted that Moscovici had effectively tried to shield his colleague.

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The atmosphere became toxic; rumours started circulating about other potential tax fraudsters serving in government. Daily newspaper Liberation was this week heavily criticised for making allegations without giving any evidence. Today, its editor apologised and recognized his mistake.

In another televised message -- the second within a week -- Hollande gave his ministers until Monday April 15 to reveal their personal assets; parliament is to consider a bill making such disclosures compulsory for the entire political class. Until now, France and Slovenia were the only two countries to have opted out from this measure of financial transparency, already implemented at a European level.

President Hollande also announced that he was creating a new agency to fight financial fraud, and appointing a special prosecutor to deal with financial crime. He said banks would now be forced to detail all their activities in tax havens, with the publication of all their international affiliates and subsidiaries, country by country.

A few discordant voices from Nicolas Sarkozy's right-wing UMP party complained that revealing private assets amounted to "voyeurism" and "hypocrisy". Resorting to irony, Jean-Marie le Pen of the far-right Front National declared on national radio: "My Swiss bank account was always known to the French tax revenue and I wear pants made in France".

However, the mood of the public in France is very much in favor of a moralization of public life and Hollande's measures have been received with guarded optimism. It is indeed not the first time a French president has promised to crush immorality in politics.

"L'Affaire Cahuzac" has struck French consciences as deeply as Dominique Strauss-Kahn's sex scandal in 2011.

Tax evasion, a national sport in France till the 1980s and a massive crackdown by then Prime Minister Raymond Barre, was thought, in the main, to be a thing of the past. But suddenly it has made a come-back at the most sensitive of times. France has 3 million unemployed people and faces deep economic problems, including a loss of competitiveness.

Could Hollande's government fall over this sleaze scandal? It could if more tax evasion revelations affecting members of the government were to come out but it probably won't if it acts swiftly and Cahuzac remains the only black sheep on the horizon.

The question now is, will Hollande take advantage of "L'affaire" to form a new government with a new prime minister? Significantly, centrist François Bayrou, whose last-minute decision to back François Hollande was a crucial factor in Hollande's presidential election victory, and who has campaigned for years to clean up French political life, made a public statement and declared himself ready to serve.

Having reached a new low in the popularity polls, with only 27% of the French supporting him, President Hollande may be tempted to look for a new Prime Minister with a strong image of integrity.