French ex-budget minister goes on trial for tax fraud

Former French budget minister Jerome Cahuzac, who resigned in disgrace in 2013 after admitting to having a secret Swiss bank account, goes on trial Monday for tax fraud.

French ex-budget minister goes on trial for tax fraud
Jérôme Cahuzac. Photo: AFP

The 63-year-old faces up to seven years in jail and €2million ($2.2 million) in fines if found guilty of stashing offshore his earnings from a lucrative hair-transplant business he ran with his now ex-wife.

The Cahuzac scandal was the first of a series that have tarnished the presidency of Francois Hollande, who had promised a squeaky clean government after succeeding Nicolas Sarkozy, the subject of several graft investigations, in May 2012.

A media scrum is expected to descend on the court for the start of the trial, even if an opening defence gambit may prompt a delay of several months.

The spectacular scandal saw Hollande initially backing Cahuzac's vehement denials after the Mediapart news website first broke the story in December 2012, posting a compromising audio recording.

Cahuzac – whose remit had included cracking down on tax fraud – promptly lodged a defamation suit against Mediapart.

But the trained surgeon, still protesting his innocence, resigned his post after a formal investigation was launched in March 2013.

Two weeks later, he dramatically confessed to having held the account with Swiss banking giant UBS and said he was “consumed by remorse”.

Cahuzac was immediately hounded by the media, telling a newspaper he had to move “every two days” to escape the glare.

The scandal prompted Hollande to order his ministers to disclose their personal wealth, a first in France, where personal finances are rarely discussed and the wealth of public officials had long been considered a private matter.

A 'family affair'

Prosecutors described the tax fraud as “determined”  and “sophisticated” as well as a “family affair” including Cazuhac's now ex-wife Patricia Menard, a dermatologist who is a co-defendant in the case.

Also in the dock are their advisers, Swiss banker Francois Reyl and Dubai-based lawyer Philippe Houman.

The Reyl bank of Geneva, which in 2009 allegedly helped Cahuzac transfer funds to Singapore to avoid detection by French tax authorities, is also being tried.

The story of the fraud, carried out between 1992 and 2013, reads like a cross between a cheap airport novel and an international financial crime manual.

In one episode, Cahuzac, using the codename “Birdie”, allegedly received two cash payments of €10,000 each in the streets of Paris.

A “friend” first opened an account with UBS in 1992, then Cahuzac himself opened one in his own name in 1993. In 1998, all the funds were allegedly transferred to Reyl, totalling some €600,000 by 2009.

That was when Switzerland's hallowed tradition of banking secrecy began to fall apart.

Cahuzac then allegedly channelled the funds to Singapore, taking a labyrinthine route through a shell company registered in the Seychelles set up by Houman of Dubai.

Menard is alleged to have deposited cheques from British clients in a secret account with an Isle of Man bank, which press reports said held some €2.5 million. She then opened her own separate account in Switzerland, reportedly containing one million euros, as her marriage with Cahuzac began falling apart.

Even Cahuzac's mother played a role.

While she has not been charged, her bank accounts were allegedly used to launder some 200,000 euros worth of cheques written by the hair clinic's clients between 2003 and 2010.

The defence on Monday is expected to challenge the constitutionality of the case, arguing that Cahuzac has already settled his debts with the tax authorities and should not be tried twice over the same matter.

If France's highest court of appeals decides to refer the question to the constitutional court, the trial could be delayed. If not, it is scheduled to wrap up on February 18th.

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Meet the scourge of France’s political crooks

For 30 years he's been France's muck-raking journalist par excellence, and this week his investigative news site caused one of the most spectacular political downfalls in recent French history. Edwy Plenel is our French Face of the Week.

Meet the scourge of France's political crooks
Edwy Plenel, pictured in Paris in 2012. Photo: Martin Bureau/AFP

Who is Edwy Plenel?

Edwy Plenel is a 60-year-old political journalist, former editor-in-chief of French daily Le Monde, and a co-founder of the investigative news website Mediapart.

Why is he in the news?

Earlier this week, his website Mediapart played the key role in one of the most spectacular falls from grace of any French politician in recent French history, and bear in mind there have been a few.

Tell me more

Former French Budget Minister Jérôme Cahuzac was charged on Tuesday with “laundering the proceeds of tax evasion,” after admitting he had held a foreign bank account for 20 years, until 2010.

The court based the charges on secret audio recordings procured by Mediapart, and partly published by them in December, which appear to feature Cahuzac speaking with his financial advisor about moving money from a secret Swiss bank account to one based in Singapore.

Until his mea culpa this week, Cahuzac strenuously denied the allegations, which over the last few months he described as everything from "slanderous" to "delirious" to "crazy". He said at one point that the scandal would end in either his downfall or that of Plenel and his website. He proved himself right. Plenel and his journalists held firm and Cahuzac fell.

Where did he come from?

Well, Plenel has been around the block in terms of French politics and journalism. After a decade as a communist activist and journalist, he started writing with France’s main left-leaning daily Le Monde in 1980.

He had a real knack for getting under the skin of the state in his investigative work, and was directly involved in two of the biggest scandals of the 1980s. Firstly, there was the framing of three Irish nationals by a covert anti-terrorism cell in 1982, for a shocking anti-Semitic grenade and gun attack on a restaurant in Paris.

While investigating corruption and evidence-planting by the secret cell (which reported directly to then President François Mitterand), Plenel had his phone tapped for an extended period of time.

Then, in 1985, French secret service agents were exposed for deliberately sinking Greenpeace's flagship boat the Rainbow Warrior, which had been planning to oppose French nuclear tests off the coast of New Zealand.

Due in large part to Plenel’s muck-raking, it was revealed that orders for the shocking sabotage – which killed a Dutch-Portuguese photographer – came from the very highest echelons of the French government.

The scandal resulted in the resignation of France’s Defence Minister Charles Hernu.

After that Plenel rose through the ranks at Le Monde, serving as editor-in-chief from 2000 to 2004, when he left the paper after a falling out with new owner Jean-Marie Colombani.

Has he helped unearth any other big scandals?

Indeed. In June 2010, the website – which has a leftist orientation – got hold of secretly taped conversations between L'Oreal heiress Liliane Bettencourt’s former accountant, Claire Thibout, where she alleged former Budget Minister Eric Woerth had illegally received funding from France’s richest woman for Nicolas Sarkozy’s successful 2007 presidential campaign.

Mediapart, an online-only web start-up that users must pay to access, gained worldwide renown almost overnight, and its subscriptions exploded in the wake of the Bettencourt revelations.

Almost a dozen people have since been charged in relation to the scandal which went stratospheric last month, when former president Sarkozy himself was charged with taking financial advantage of the ailing Bettencourt, who suffers from dementia.

What do others say about him?

“Edwy is the Robin Hood of information,” said Mediapart journalist Henry Moreigne in 2012.

What does he have to say for himself?

“Either we overthrow the machine, or the machine will swallow us,” Plenel told French magazine l’Impossible in 2012.

See also: All our previous French Faces of the Week