French leaders support minister on UBS charges

France's political elite lined up Thursday to defend the Socialist minister in charge of cracking down on tax evasion after he was accused of hiding money in a secret UBS bank account in Switzerland.

French leaders support minister on UBS charges
French Budget MInister Jérôme Cahuzac (Photo: Cyclotron}

Budget Minister Jérôme Cahuzac said he will sue investigative news website Mediapart over the allegation that he held the account with UBS until 2010.

Prime Minister Jean-Marc Ayrault stood behind Cahuzac, saying there was no question of him leaving the government.

"I have every confidence in Jerome Cahuzac and I can imagine what he is feeling right now," Ayrault told RTL radio.

"He has started to fight back, it's difficult, but he will fight for his honour."

President François Hollande, other ministers and the Socialist Party have all given their support to Cahuzac, who described the allegations against him as "crazy".

Even the right-wing opposition UMP has backed him, with party chief Jean-Francois Copé expressing his "personal esteem" for Cahuzac.

"There is no tangible evidence," former UMP minister Bruno Le Maire said.

"We should not, on the right or the left, take part in a witch-hunt against the budget minister,"

The allegations are bound to be troubling, however, for the government of Hollande, who made ministers sign an ethics code and vowed to rule with integrity when he took office in May.

A wealthy former plastic surgeon, Cahuzac has been leading efforts to fight tax evasion as the Socialists seek to eliminate France's budget deficit and revive the country's struggling economy.

Last month he launched an anti-evasion campaign aimed at bringing in a billion extra euros in tax revenues next year.

Médiapart says its report was based on several witness accounts and documents showing that Cahuzac owned the Swiss bank account, undeclared to French tax authorities, for several years before transferring the funds to a Singapore account in 2010.

The news site released an audio recording reportedly of Cahuzac admitting to having the account. In the recording, a man is heard saying: "It bothers me to have an account there, UBS is not necessarily the most hidden of banks."

The recording was left on an answering machine in 2000, when Cahuzac reportedly pressed redial on his phone by accident and then had the conversation with someone in his office.

Médiapart said it confirmed the information with a former tax official, who had raised the existence of the account in a memo to his superiors in 2008, and with a source at UBS.

In a statement after the report was released, Cahuzac said the evidence presented by Mediapart was neither "impressive" nor "convincing".

"I do not have, and have never had, a bank account in Switzerland or elsewhere abroad," he said.

"No credible witness can assert or try to corroborate something that does not exist and has not existed."

Médiapart is known for its investigative reporting and in 2010 broke the story of a campaign financing scandal involving ex-president Nicolas Sarkozy and L'Oréal heiress Liliane Bettencourt.

Sarkozy was questioned for 12 hours last month by judges investigating the allegations but was not charged.

Little-known before being named a minister, Cahuzac, 60, began his career as a cardiologist before switching to the more lucrative world of plastic surgery, in particular hair transplants.

Elected to the National Assembly in 1997, he headed its commission on public finances and was named budget minister when Hollande formed his first government.
 French media reported in October that Cahuzac's 300-square-metre (3,230-square-foot) apartment in Paris's exclusive 16th district was robbed, with thieves taking 100,000 euros ($130,000) worth of luxury watches.

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Switzerland’s banks remain among the world’s most secretive

Despite the progress made over the years, the Swiss financial sector continues to be one of the least transparent in the world. But there is good news too.

Switzerland’s banks remain among the world’s most secretive
Switzerland remains one of the world's least transparent nations. Photo AFP

Switzerland is in the third place in the 2020 Financial Secrecy Index released by the non-governmental organisation (NGO) Tax Justice Network (TJN), which rates 133 nations based on their financial transparency.

Two other European countries, Luxembourg and the Netherlands, are also ranked among the top 10 least transparent nations on the TJN’s list.

Despite being in the third place, Switzerland ranks better this year than it did in the previous edition of the Index, which is released every two years — it slipped from the first to third place. The Cayman Islands and the United States took the first and second spots, respectively.

Switzerland reduced its risk of being an offshore haven for tax cheats by 12 percent, “finally improving enough to move off the top of the index”, TJN said. 

READ MORE: Switzerland's strangest taxes – and what happens if you don't pay them

This improvement is mainly due to Switzerland extending its international network for the automatic exchange of customer information to more than 100 countries. 

Also, in a referendum held last year, Swiss voters accepted the Federal Act on Tax Reform and AVS Financing (TRAF). This legislation introduced major changes in the Swiss tax system by ending some preferential tax schemes and replacing them with new regulations which are in line with international standards.

This tax reform prompted the European Union to change Switzerland's status from ‘tax haven' to one which is EU-compliant, removing strict controls on transactions within the EU. 

So why, despite all the reforms, does Switzerland still rank among the world’s least transparent nations?

According to a Swiss NGO Alliance Sud, wealthy people from poor countries can still hide their money here from the tax authorities of their home nations.

Alliance Sud noted that despite the progress made in the past years by Swiss financial institutions, “the fight against tax evasion remains insufficient”.

Switzerland is the world’s biggest centre for managing offshore wealth, with a quarter of global assets invested here.

For years, it has been placed on various lists of tax havens where wealthy foreigners could park their money. Faced with widespread criticism for this practice, Switzerland passed an anti-money laundering law in 1997 and introduced strict regulations against tax evasion.