On 19 March 2013 Jérôme Cahuzac resigned as a minister in charge of fighting against tax fraud due to
tax fraud
Tax evasion or tax fraud is an illegal attempt to defeat the imposition of taxes by individuals, corporations, trust (property), trusts, and others. Tax evasion often entails the deliberate misrepresentation of the taxpayer's affairs to the tax au ...
allegations. He later admitted that he had held a secret foreign bank account for about 20 years. As a consequence, he was officially excluded as a member of the
Socialist Party
Socialist Party is the name of many different political parties around the world. All of these parties claim to uphold some form of socialism, though they may have very different interpretations of what "socialism" means. Statistically, most of th ...
. The release of the
Panama Papers
The Panama Papers () are 11.5 million leaked documents (or 2.6 terabytes of data) published beginning April 3, 2016. The papers detail financial and attorney–client information for more than 214,488 offshore entities. These document ...
confirmed that Cahuzac owned a Seychelles company named Cerman Group Limited, incorporated in 2009, whose director and shareholder were from other offshore companies. Jérôme Cahuzac was sentenced to three years in prison and five years of ineligibility on 8 December 2016.
Background
The
2008 financial crisis
The 2008 financial crisis, also known as the global financial crisis (GFC), was a major worldwide financial crisis centered in the United States. The causes of the 2008 crisis included excessive speculation on housing values by both homeowners ...
is considered by many to be the worst
financial crisis
A financial crisis is any of a broad variety of situations in which some financial assets suddenly lose a large part of their nominal value. In the 19th and early 20th centuries, many financial crises were associated with Bank run#Systemic banki ...
Nicolas Sarkozy
Nicolas Paul Stéphane Sarközy de Nagy-Bocsa ( ; ; born 28 January 1955) is a French politician who served as President of France from 2007 to 2012. In 2021, he was found guilty of having tried to bribe a judge in 2014 to obtain information ...
was then President of France, from 2007 to 2012. Following his five-year tenure, he lost the second round of the 2012 presidential election against Francois Hollande.
In 2010, Jérôme Cahuzac was elected President of the Finance, General Economy and Budgetary Control Committees of the National Assembly. Two years later, in 2012, he joined
François Hollande
François Gérard Georges Nicolas Hollande (; born 12 August 1954) is a French politician who served as President of France from 2012 to 2017. Before his presidency, he was First Secretary of the Socialist Party (France), First Secretary of th ...
's presidential campaign team. He was given the task to handle the budgetary, financial and fiscal aspects of the campaign. After Mr. Hollande's success and election as France's president, Cahuzac was appointed Delegated Minister of Budget on 16 May 2012.
Cahuzac is a physician whose political career began in 1997 when he was elected to be a deputy of the
National Assembly
In politics, a national assembly is either a unicameral legislature, the lower house of a bicameral legislature, or both houses of a bicameral legislature together. In the English language it generally means "an assembly composed of the repr ...
. The National Assembly is one of the two major political bodies in France. Currently 577 deputies make up the National Assembly. Along with the Senate, it forms the parliament of the
Fifth French Republic
The Fifth Republic () is France's current republican system of government. It was established on 4 October 1958 by Charles de Gaulle under the Constitution of the Fifth Republic..
The Fifth Republic emerged from the collapse of the Fourth Re ...
. Going from general counsel of the Department of "
Lot-et-Garonne
Lot-et-Garonne (, ) is a department in the Nouvelle-Aquitaine region of Southwestern France. Named after the rivers Lot and Garonne, it had a population of 331,271 in 2019.leaked, voters had grown distrustful of politicians.
Key events
The Cahuzac affair's main aspects are the genesis and evolution of the financial crimes, the downfall of participants, and the reason for the scandal's unveiling.
This scandal was originally revealed with the publishing of a "secret recording" by
Mediapart
''Mediapart'' () is an
independent nonprofit French Investigative journalism, investigative online newspaper created in 2008 by Edwy Plenel, former editor-in-chief of . It is published in French language, French, English language, English, and ...
. The recording originally took place towards the end of the year 2000, but was only revealed at the beginning of March 2013. It contained the voices of two individuals, Cahuzac and his wealth manager . Both were discussing a variety of financial and private matters. Among these matters, was that of his bank account with
UBS
UBS Group AG (stylized simply as UBS) is a multinational investment bank and financial services firm founded and based in Switzerland, with headquarters in both Zurich and Basel. It holds a strong foothold in all major financial centres as the ...
. Mr. Cahuzac explained to his associate that his account with that bank was bothering him because he had no more use for it. It was later found that he had transferred all the funds present in that bank account to another one overseas. Here is a short part of the (French) scripted recording that accurately depicts the previously referred to situation:
''"Ca me fait chier d’avoir un compte ouvert là-bas, l’UBS c’est quand même pas forcément la plus planquée des banques."''
In English, this translates to:
''"The fact of having a bank account open there truly bothers me, UBS isn’t necessarily the most hidden of banks."''
Cahuzac never categorically denied the authenticity of the recording. He is known to have said that out of all these minutes of conversation, there may have been a few seconds where it was indeed him speaking. Following the amount of press coverage, proof and criticism stemming from the recording's leakage, President Hollande had no other choice but to release him from his duties as Minister of Budget on 19 March 2013. Mr. Cahuzac was accused of
money laundering
Money laundering is the process of illegally concealing the origin of money obtained from illicit activities (often known as dirty money) such as drug trafficking, sex work, terrorism, corruption, and embezzlement, and converting the funds i ...
and fiscal fraud. He later admitted to having transferred 600,000 euros to a bank account in
Singapore
Singapore, officially the Republic of Singapore, is an island country and city-state in Southeast Asia. The country's territory comprises one main island, 63 satellite islands and islets, and one outlying islet. It is about one degree ...
. Subsequently, he was condemned to three years in prison along with a 375,000 euro fine. The judges on the case deemed this sentence necessary because of the "traitorous" nature of his acts and words – "especially when put in contrast with his job responsibilities and requirements" said one of the judges. He can however decide to appeal the decision reached by the Justice officials. Conjointly, his ex-wife Patricia Cahuzac is standing trial next to him for "family fiscal fraud." Having, in addition to the things previously stated, participated in the creation of various
shell companies
A shell corporation is a company or corporation with no significant assets or operations often formed to obtain financing before beginning business. Shell companies were primarily vehicles for lawfully hiding the identity of their beneficial ...
, she was consequently condemned to two years of prison.
The reasons for the unraveling of this affair are numerous. The main reason stems from reporters, who saw huge potential in possible findings resulting from the thorough investigation of the bank accounts of France's newly appointed Minister of Budget – who just so happened to previously be a plastic surgeon. Mr. Cahuzac was at the centre of the stage for quite some time.
Two other players that had a crucial role in the development of this affair were the
French military
The French Armed Forces (, ) are the military forces of France. They consist of four military branches – the Army, the Navy, the Air and Space Force, and the National Gendarmerie. The National Guard serves as the French Armed Forces' military ...
along with the armament industry. Mr. Cahuzac was planning on implementing huge budget cuts for the country's Defense budget. Reports indicate that he was planning on bringing it down from 32 to 20 billion euros annually. By doing so, he would encourage the removal of dozens of ground military-units, the cancellation of on-going military contracts for aircraft and helicopters, as well as the rumored removal of France's one and only aircraft carrier, the "
Charles de Gaulle
Charles André Joseph Marie de Gaulle (22 November 18909 November 1970) was a French general and statesman who led the Free France, Free French Forces against Nazi Germany in World War II and chaired the Provisional Government of the French Re ...
." In an article published by
Atlantico
''Atlantico'' is a French news website. Founded on 28 February 2011 amid much media attention, it quickly attracted notice for scoops related to scandals involving the Socialist politician and International Monetary Fund head, Dominique Strau ...
, it is explained that the French secret services, along with multiple members of the Defense Committee, were in fact the key players in this story. It was revealed that they had worked together to gather information on his Swiss UBS bank account and tracked the money-trail that led to Singapore. Once it was done, they leaked their discoveries to the press and just waited for the whole affair to "blow-up."
Political impacts and reforms
The Cahuzac affair was impactful, and reforms ensued. The scandal weakened President Hollande's stature, as he was blamed for appointing Cahuzac at the start of his tenure. As a consequence of the movement that followed the Minister's resignation, a huge amount of skepticism and distrust settled in the country. Citizens and reporters started questioning and interrogating various politicians – thinking that some of them were also undoubtedly involved in the same sort of activities. Political figures such as
Pierre Moscovici
Pierre Moscovici (, ; born 16 September 1957) is a French politician who served as the European Commissioner for Economic and Financial Affairs, Taxation and Customs from 2014 to 2019. He previously served as Minister of Finance from 2012 to ...
(Minister of Finance and Economy from 2012 to 2014) and
Jean-Jacques Augier
Jean-Jacques Augier (born 23 October 1953) is a French publisher and businessman. He previously worked as an inspector of finances, and was treasurer for the 2012 presidential election campaign of previous French president Francois Hollande. Hol ...
(active politician and inspector of finances) were put under investigation as a result.
France's president and government subsequently decided to implement new reforms. There were two main reforms announced by President Hollande following this incident. The first one encompasses the idea that elected politicians who have been condemned for fiscal fraud or corruption would be forbidden from any type of
public office
Public administration, or public policy and administration refers to "the management of public programs", or the "translation of politics into the reality that citizens see every day",Kettl, Donald and James Fessler. 2009. ''The Politics of the ...
or mandate. And the second one states that the financial details of each and every single minister and Member of Parliament have to be examined and published. French laws do not sanction the lie of an elected politician in front of the National Assembly. However, to fight
perjury
Perjury (also known as forswearing) is the intentional act of swearing a false oath or falsifying an affirmation to tell the truth, whether spoken or in writing, concerning matters material to an official proceeding."Perjury The act or an insta ...
as much as possible, a specific law is trying to be put forth and passed by the National Assembly. This law states that a 75,000 euro fine and up to five years of prison was required for any elected politician or Member of Parliament who lies in front of Parliament about a fiscal or criminal matter. These laws and new regulations were put in place after French politicians realized how dissatisfied the French population was. French news outlets ''
LeMonde
(; ) is a French daily afternoon newspaper. It is the main publication of Le Monde Group and reported an average circulation of 480,000 copies per issue in 2022, including 40,000 sold abroad. It has been available online since 1995, and it ...
'', '' LeFigaro'' and ''LCI'' conducted a study that indeed confirmed the preceding statement: 33% of France's citizens wanted President Hollande to dissolve the National Assembly – one of the Fifth French Republic's most important and emblematic pillars.
Aftermath
As a consequence of such scandals, new laws were introduced to fight fiscal fraud, money laundering and perjury in France's parliamentary systems. In 2013, the year following the divulging of Cahuzac's foreign bank accounts, ''
Le Monde
(; ) is a mass media in France, French daily afternoon list of newspapers in France, newspaper. It is the main publication of Le Monde Group and reported an average print circulation, circulation of 480,000 copies per issue in 2022, including ...
'' and ''
Le Figaro
() is a French daily morning newspaper founded in 1826. It was named after Figaro, a character in several plays by polymath Pierre Beaumarchais, Beaumarchais (1732–1799): ''Le Barbier de Séville'', ''The Guilty Mother, La Mère coupable'', ...
'' published a study that accurately depicted public opinion as indicating that 77% of French citizens deemed their country's politicians corrupt.
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