French ex-budget minister goes on trial

France's former budget minister Jerome Cahuzac, who stashed millions abroad while cracking down on tax cheats at home, went on trial Monday for tax fraud and money laundering.

The 63-year-old former rising star in the French Socialist Party, now dubbed the finance ministry's "Pinocchio", fended off reporters as he arrived at the Paris criminal court.

His ex-wife and co-defendant Patricia Menard, with whom he ran a lucrative hair transplant clinic, arrived separately.

Nearby, dozens demonstrated against the impunity of the banking system, with one cigar-chomping protester in top hat and tails impersonating a banker.

Cahuzac and Menard face up to seven years in jail and two million euros ($2.2 million) in fines if found guilty of tax fraud and money laundering.

The defence opened by challenging the constitutionality of the case, arguing that Cahuzac has already settled his debts and should not be tried twice over the same matter.

"Even if the press calls someone a 'pariah' we can still follow the law, and (the double jeopardy recourse) is a question of law," said Cahuzac's lawyer Jean Veil.

Both Cahuzac and Menard have paid back taxes and penalties, their lawyers argued. The court was told she had paid more than two million euros, although no figure was given for the ex-minister.

The court will announce Wednesday whether to allow consideration of the constitutional question, in which case the trial could be delayed by several months. If not, it is scheduled to end on February 18.

In an opening argument dripping with sarcasm, prosecutor Jean-Marc Toublanc observed: "When (Cahuzac) was minister, he had a law passed... to increase the penalty for tax fraud. Today, the law shouldn't be applied to him?"

- 'Remorse' -
The scandal was the first of a series that have tarnished the presidency of Francois Hollande, who had promised a squeaky clean government after succeeding Nicolas Sarkozy, the subject of several graft investigations, in 2012.

To begin with, Cahuzac vehemently denied the allegations, notably before parliament and to Hollande, after the Mediapart news website broke the story in December 2012.

Cahuzac, whose remit included fighting tax fraud, lodged a defamation suit against Mediapart.

But the trained surgeon resigned his post after a formal investigation was launched in March 2013.

Two weeks later, he confessed to having held an account with Swiss banking giant UBS and said he was "consumed by remorse".
The scandal prompted Hollande to order his ministers to disclose their personal wealth, a first in France, where personal finances are rarely discussed and the wealth of public officials had long been considered a private matter.

But many, including Cahuzac himself, say he has served as a scapegoat as tax havens continue to conceal riches, not just for individuals but also for corporations, notably banks.

The protesters outside the court Monday, who partially blocked a bridge over the Seine with chairs stolen from banks, said Cahuzac's case did little to change the status quo.

"They say the Cahuzac affair was an electroshock, but only small steps have been taken," said activist Thomas Coutrot, claiming: "French banks are massively present in tax havens."

- 'Family affair' -
Prosecutors described the Cahuzacs' swindle as "determined" and "sophisticated" as well as a "family affair" that also involved the ex-minister's mother, although she is not on trial.

Also in the dock are the divorced couple's erstwhile advisers, Swiss banker Francois Reyl and Dubai-based lawyer Philippe Houman.

The Reyl bank of Geneva, which in 2009 allegedly helped Cahuzac transfer funds to Singapore to avoid detection, is also being tried.

The story of the fraud began when a "friend" opened an account with UBS in 1992. Then Cahuzac himself opened one in his own name the following year. In 1998, all the funds were allegedly transferred to Reyl, totalling some 600,000 euros by 2009.

That was when Switzerland's tradition of banking secrecy began to fall apart.

Cahuzac then allegedly channelled the funds to Singapore, taking a labyrinthine route through a shell company registered in the Seychelles set up by Houman, the Dubai-based lawyer.

For her part, Menard is alleged to have deposited cheques from British clients in a secret Isle of Man account, which press reports said held some 2.5 million euros.

She then opened her own account in Switzerland, reportedly containing one million euros, as her marriage with Cahuzac began falling apart.

Source: AFP