French Tax Scandal: Hollande Seeks Role as Apostle of Virtue

By Stefan Simons

French President Francois Hollande hopes a new set of "morality laws" will legitimize his government. Zoom
REUTERS

French President Francois Hollande hopes a new set of "morality laws" will legitimize his government.

French President François Hollande is doing some moral spring cleaning. His recent demands that government ministers make public all their financial assets are part of an effort to rebuild the reputation of the political caste -- and to legitimize his government so he can finally start governing again.

Marie-Arlette Carlotti was the first. The vice minister for people with disabilities published a comprehensive breakdown of all her assets on her website. Her move even pre-empted by a few hours the announcement by Prime Minister Jean-Marc Ayrault that all his cabinet members should do likewise.

The financial striptease went down to the finest details: a 130-square-meter apartment in Marseille, estimated value of €270,000; a house in the Mediterranean department of Herault, bought in 2005 for €220,000; an apartment in Corsica, bought in 2004 for €75,000. On top of that were shares in the European defense conglomerate EADS worth €917.80, a savings account at the credit union Credit Cooperatif worth €1,655 and a life insurance policy worth about €40,000. The deposits in various bank accounts total about €36,000.

Was that all? No, the politician also included her cars -- a Smart and a Toyota, together estimated to be worth €8,000. All that was left out were jewelry or family heirlooms.

All cabinet ministers are soon expected to make public the value of their assets in as much detail as Carlotti, who has her eyes set on the 2014 mayoral race in Marseille. After the hidden money scandal that forced the resignation of former Budget Minister Jerome Cahuzac, President Francois Hollande has prescribed complete transparency. The exemplariness of public officials would be without exception, Hollande promised. The private assets of the Republic's top statesmen and women, until now reviewed only internally, would soon be displayed in detail before the public.

Hollande Sees Chance to Win Back Popularity

The push for transparency belongs to a larger package of "shock measures" with which the embattled Socialist -- elected on promises of an "exemplary Republic" -- hopes to finally legitimize himself politically and morally. Besides clearing the government of politicians who don't have impeccable records of their assets, the measures include ratcheting up the fight against tax havens. Together with his EU partners, Hollande aims to dry out the opaque operations of banks and financial service providers. Companies have hidden their flows of capital in offshore subsidiaries to stay out of reach of the taxman, all completely within the confines of the law.

The "counter-offensive by the Elysée," as the daily newspaper Le Monde called it, is also an effort by an unpopular president to restore his damaged authority. His calls for banning anyone convicted of corruption or tax fraud from running for office are supported by some 90 percent of voters, both on the left and right.

The government's reputation is damaged and the president's maneuvrability diminished -- particularly after further reports circulated of various lapses by Hollande's party colleagues and members of government. Most recently, Foreign Minister Laurent Fabius denied speculation reported by the newspaper Liberation that he had a Swiss bank account. Also under pressure is Economy Minister Pierre Moscovici, a cabinet heavyweight whom the opposition accuses of having tried to protect his colleague Cahuzac by only half-heartedly investigating the tax evasion charges.

Scandals Distract from Pension Reform

The circulating rumors of scandal have unleashed panic in the various government ministries and at the Elysée, at the same time preventing the government from tackling the unpopular but necessary pension reform. The leftists in the government as well as the opposition have voiced opposition to the draconian cuts and drastic tax hikes which Hollande hopes will put France's finances back on track. He plans on presenting his re-worked plans for debt reduction in Brussels by April 17. All this while calls are growing within his own party for a cabinet reshuffle.

Hollande is not yet ready to dismiss Prime Minister Ayrault, nor to reshuffle his cabinet -- at least not yet. For the time being, the "morality law," which could come into effect before the summer recess, is meant to placate public sentiment. The law not only tightens restrictions and increases penalties for financial crime, it also establishes an independent prosecutor's office specifically dedicated to financial matters.

Time is ticking. "We have to hurry," Agriculture Minister Stephane Le Foll told Le Monde. "We need proposals that correspond to the size of the crisis."

The leftist opposition meanwhile is mounting a protest against the Socialists. The more radical Parti de Gauche, led by Jean-Luc Melenchon, has called for a mass demonstration in Paris on May 5. One year after Hollande's election, he and the Communist want to mount a protest against corruption in the Fifth Republic, calling it a "grand clearout."

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