France's Cahuzac Admits To Untaxed Offshore Account

by Ulrika Lomas, Tax-News.com, Brussels

05 April 2013

Dealing a severe blow to the Socialist Government as it seeks to redress the public finances by clamping down on tax evasion and by demanding a greater contribution from the country's wealthiest, former Budget Minister Jérôme Cahuzac has finally admitted to having an undeclared offshore bank account, having resigned two weeks ago.

Until now, Cahuzac has steadfastly denied claims made by information website Mediapart that he held an undisclosed and un-taxed account in the Swiss banking giant UBS. Since French President François Hollande's inauguration, Cahuzac has, rather ironically, spearheaded Government efforts to combat tax fraud both at national and international level. Caught up in a "spiral of lies," Cahuzac eventually conceded that he has assets to the tune of around EUR600,000 (USD770,909) deposited in a foreign account.

Following the admission, French President Hollande highlighted the fact that Cahuzac had deceived the highest authorities in France: the Head of State, the Government, parliament and therefore all French citizens. Alluding to "an unpardonable mistake" and to "a grave moral error," Hollande stressed that it is simply "intolerable" to have an undeclared account abroad.

Hollande explained that the judiciary will now continue its work in complete independence. The President also announced details of a series of measures to be introduced, drawn up in the light of recent events. The Government plans to strengthen the future independence of the French justice system, to combat conflicts of private and public interest, and to ensure full publication and verification of all ministerial and parliamentarian assets. Any officials convicted of tax evasion will be banned from public office, Hollande warned.

Mediapart's allegations were based on a recorded conversation in which Cahuzac is alleged to have directly alluded to the hidden account. Mediapart claims that the Budget Minister finally closed the account in 2010, transferring the undeclared assets to Singapore. Cahuzac vehemently denied the claims from the outset.

According to his lawyer, Cahuzac has now been placed under formal investigation for laundering the proceeds of tax fraud.