PARIS — A former French budget minister went on trial Monday accused of hiding his wealth in tax havens around the world — while at the same time leading the government’s fight against tax evasion.
Jerome Cahuzac appeared in a Paris court on charges of tax fraud and money laundering that saw him resign in 2013 in one of the biggest political scandals under President Francois Hollande.
The 64-year-old former cosmetic surgeon is accused of concealing at least 687,000 euros ($766,000) in income from tax authorities in 2009-2012. He’s also accused of laundering money in 2003-2013 through foreign bank accounts in Switzerland and Singapore and dummy companies in Panama and the Seychelles.
Cahuzac, who acknowledged evading taxes for two decades, faces up to seven years in prison and a 1 million-euro ($1.1 million) fine if convicted.
The fraud helped him finance a lavish lifestyle, such as expensive vacations, court documents show. Investigators discovered that Cahuzac paid bills to one luxury hotel for a total of 127,000 euros ($142,000) for several stays with his ex-wife and their three children.
With the French presidential election eight months away, the trial is sure to revive voters’ memories of the scandal that tarnished Hollande’s mandate just a few months after the socialist president was elected in 2012, promising higher taxes on the rich. Hollande is widely expected to seek a second term next spring.
On trial Monday alongside Cahuzac are his former wife Patricia Menard; a banker; a legal adviser; and bank Reyl, a respectable but little-known Swiss establishment, all accused of money laundering.
Cahuzac and Menard entered the court Monday without speaking to reporters and sat separately as the judge summarized the case. The trial is expected to last two weeks.
Menard is accused of hiding 2.5 million euros ($2.8 million) from French tax authorities and laundering money in the British tax haven of the Isle of Man and in Switzerland, allowing her to buy two London apartments estimated at around 3 million euros overall.
The two have already paid 2.3 million euros ($2.6 million) in back taxes to French authorities.
The scandal was magnified by the fact that it involved France’s top tax-enforcement official and that as a minister Cahuzac publicly lied to Parliament and to the French people. French law does not sanction perjury.
When press reports first revealed the scandal in 2012, Cahuzac was sponsoring a bill to reinforce the fight against tax evasion and fraud.
For months, Cahuzac strongly denied any wrongdoing, even to Hollande and government colleagues. He eventually admitted to the fraud in April 2013, saying he had been “trapped in a lying spiral.”
Cahuzac said Monday in court that he knew that if his Swiss account were revealed, it would ruin 10 years of work, so he chose to lie.
For the first time, Cahuzac said Monday his Swiss account had initially been opened in 1992 to collect funds from drug companies that were to be used for illegal financing of a branch of the Socialist Party led by Michel Rocard, France’s former prime minister who died in July.
The Cahuzac scandal damaged Hollande’s approval rating, which took a 13-point dive in the first quarter of 2013. It also had the effect of increasing public mistrust of politicians and fueled demands for more transparency. The issues are often mentioned by the far-right National Front party.
On Monday, the Paris prosecutor’s office said it requested a criminal trial for former President Nicolas Sarkozy over suspected illegal overspending on his failed 2012 re-election campaign. It’s now up to the judges to decide whether Sarkozy must stand trial.