The Jérôme Cahuzac Affair

Jérôme Cahuzac at the French Presidential Inauguration. 15th of May 2012, 09:34:55.

Background

The global financial crisis of 2008 is considered by many to be the worst financial crisis our world has seen since 1929’s Black Thursday. It had left France and the rest of Europe exhausted and indebted. Nicolas Sarkozy, President of France from 2007 to 2012, was in charge at the time. Following his five years of tenure, he was ousted after losing the second round of the 2012 presidential elections against Francois Hollande.^[1] French people had grown distrustful and wary of the political scene and its participants, making this affair extremely timely.^[2]

Jérôme Cahuzac is a French politician born in 1952, in Talence - a small town located in the South of France. Father of three children with his wife Patricia by the early 1990’s, both decided to open a surgical clinic specialized in hair implants. After thirty-two years of marriage, the couple filed a divorce in 2012.

At the age of 25, Jérôme Cahuzac joined France’s Socialist Party (known as the “PS,” aka “Parti Socialiste”). His personal career however, truly started in 1997 when he was elected to be one of the National Assembly deputies.^[3] Currently composed of 577 deputies, the National Assembly is one of the pillars of the French nation and government. It forms, along with the Senate, the Fifth French Republic’s Parliament. Going from general counsel of the Department of "Lot-et-Garonne" to mayor, and back to deputy, Mr. Cahuzac was starting to make a solid name and reputation for himself.^[4] In 2010, he is elected President of the Finance, General Economy and Budgetary Control Committees of the National Assembly. Two years later, in 2012, he decides to join François Hollande’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, Jérôme Cahuzac was appointed Delegated Minister of Budget on the 16th of May, 2012.^[5]

The Breakdown of the Key Moments in the Cahuzac Affair

This affair will be broken-down into three main parts: the beginning of the affair, the downfall of its participants, and the reason for the affair’s unveiling.

This affair originally came out with the publishing of a “secret recording” by Mediapart. This informational website was launched in 2008 by an editorial team of 35 influential journalists.^[6] The recording originally took place towards the end of the year 2000, but was only revealed in the beginning of March 2013. It contained the voices of two individuals, Jérôme Cahuzac and his wealth manager Hervé Dreyfus.^[7] Both were discussing a variety of financial and private matters. Among these matters, was that of his bank account with UBS.^[8] 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 on that bank account to another one overseas.^[9] 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.”^[10]

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.”

Jérôme 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.^[11] 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 the 19th of March, 2013.^[12] Mr. Cahuzac was accused of money laundering and fiscal fraud, two crimes that inevitably go hand-in-hand. He later admitted to having transferred 600,000 euros to a bank account in Singapore. Subsequently, he was condemned to three years in Prison along with a 375,000 euro fine.^[13] 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.^[14] 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, she was consequently condemned to two years of prison.^[15]

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.^[16]

Two other players that had a crucial role in the developing of this affair were the French 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.^[17] By doing so, he would encourage the removal of dozens of ground military-units, the cancellation of on-going military contracts for aircrafts and helicopters, as well as the rumored removal of France’s one and only aircraft carrier, the “Charles de Gaulle.” In an article published by Atlantico, 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.^[18] 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.”^[19]

Political Impacts and Reforms

Following the revelation of the previously discussed information, a multitude of impacts and reforms took place. This story primarily impacted and weakened President Hollande’s stature, as he was credited for appointing Jérôme Cahuzac in the beginning of his tenure.^[20] 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 (Minister of Finance and Economy from 2012 to 2014) and Jean-Jacques Augier (active politician and inspector of finances) were put under investigation as a result.^[21]

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 or mandate.^[22] 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.^[23] French laws do not sanction the lie of an elected politician in front of the National Assembly. However, to fight perjury 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.^[24] These laws and new regulations were put in place after French politicians realized how dissatisfied the French population was. "LeMonde,” “LeFigaro,” and “LCI," three famous and reliable French news companies, 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.^[25]

In a Nutshell...

Jérôme Cahuzac was a well-known and respected surgeon and politician. His position as Delegated Minster of Budget attracted a lot of unwanted attention. This unwanted attention ultimately resulted in his resignation and trial for fiscal fraud and money laundering, after the discovery of irrefutable evidence (recordings, bank statements, etc…). His public opinions and political opponents were responsible for the documentation and contribution of key pieces of information to the affair as a whole. 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 Jérôme Cahuzac’s foreign bank accounts, “LeMonde” and “LeFigaro-LCI" published a study that accurately depicted the current public opinion. Within its findings, the research indicated that 77% of French citizens deemed their country’s politicians “rather corrupt.”^[26]

Sources and References

"Affaire Cahuzac: L'audition très attendue de Pierre Moscovici." (2013). Retrieved October 27, 2016, from http://www.lexpress.fr/actualite/politique/affaire-cahuzac-l-audition-tres-attendue-de-pierre-moscovici_1266683.html

“Affaire Cahuzac : Les trois réformes annoncées par François Hollande.” (n.d.). Retrieved October 17, 2016, from http://www.linternaute.com/actualite/politique/affaire-cahuzac-les-trois-reformes-annoncees-par-francois-hollande-0413.shtml

Béguin, François (2013-03-20). "L'affaire Cahuzac vient bousculer le travail de reconquête de Hollande." (n.d). Retrieved October 27, 2016, from http://www.lemonde.fr/politique/article/2013/03/20/l-affaire-cahuzac-vient-bousculer-le-travail-de-reconquete-de-hollande_1851166_823448.html

BFMTV. "L'enregistrement de Jérôme Cahuzac aurait été authentifié." Retrieved October 27, 2016, from http://www.bfmtv.com/politique/lenregistrement-de-jerome-cahuzac-aurait-ete-authentifie-359376.html

“Ces raisons qui auraient pu pousser l'armée française à vouloir se débarraser de Jérôme Cahuzac.” (n.d.). Retrieved October 16, 2016, from http://www.atlantico.fr/decryptage/ces-raisons-qui-auraient-pu-pousser-armee-francaise-vouloir-se-debarrasser-jerome-cahuzac-695816.html

Frémont, Anne-Laure (2013-04-04). "Mentir à l'Assemblée pourrait bientôt être sanctionné." (n.d.). Retrieved October 27, 2016, from http://www.lefigaro.fr/politique/2013/04/04/01002-20130404ARTFIG00761-mentir-a-l-assemblee-pourrait-bientot-etre-sanctionne.php

"France election 2012: Voters suffering election fatigue." (n.d.). Retrieved October 27, 2016, from http://www.telegraph.co.uk/news/worldnews/europe/france/9181679/France-election-2012-voters-suffering-election-fatigue.html

“French tax fraud trial of disgraced former minister Cahuzac Opens.” (n.d.). Retrieved October 17, 2016, from https://www.theguardian.com/world/2016/feb/08/french-tax-trial-of-disgraced-former-minister-cahuzac-opens

"Jérôme CAHUZAC." (n.d.). Retrieved October 27, 2016, from http://www.politique.net/jerome-cahuzac.htm

“Jérôme Cahuzac démissionne” - Libération. (n.d.). Retrieved October 15, 2016, from http://www.liberation.fr/france/2013/03/19/information-judiciaire-ouverte-dans-l-affaire-cahuzac_889698

“La piste de l’argent au menu du procès Cahuzac” - lemonde.fr. (n.d.). Retrieved October 16, 2016, from http://www.lemonde.fr/police-justice/article/2016/09/07/la-piste-de-l-argent-au-menu-du-proces-cahuzac_4993749_1653578.html

“Le bureau national du PS exclut Jérôme Cahuzac à l'unanimité.” (n.d.). Retrieved October 15, 2016, from http://www.lemonde.fr/politique/article/2013/04/09/le-bureau-national-du-ps-exclut-jerome-cahuzac-a-l-unanimite_3156859_823448.html

"Le compte Cahuzac | Mediapart." (n.d.). Retrieved October 27, 2016, from https://www.mediapart.fr/journal/france/dossier/le-compte-cahuzac

Magazine, Le Point. “Jérôme Cahuzac : Biographie et articles” – Le Point. (n.d.). Retrieved October 16, 2016, from http://www.lepoint.fr/tags/jerome-cahuzac

Monde, L. (2016). "Fraude fiscale : Trois ans de prison ferme requis contre l’ex-ministre Jérôme Cahuzac." Retrieved October 27, 2016, from http://www.lemonde.fr/police-justice/article/2016/09/14/requisitoires-attendus-au-proces-cahuzac-pour-fraude-fiscale_4997496_1653578.html

"Nicolas Sarkozy. Pourquoi il a perdu." (n.d.). Retrieved October 27, 2016, from http://www.parismatch.com/Actu/Politique/Nicolas-Sarkozy-Pourquoi-il-a-perdu-l-election-presidentielle-149185

Piel, Emeline Cazi et Simon (2013-10-31). "Hervé Dreyfus, ex-gestionnaire de fortune de Jérôme Cahuzac, mis en examen." Retrieved October 27, 2016, from http://www.lemonde.fr/societe/article/2013/10/31/herve-dreyfus-ex-gestionnaire-de-fortune-de-jerome-cahuzac-mis-en-examen_3506224_3224.html

“Pour 77 % des Français, les politiques sont "plutôt corrompus." (n.d.). Retrieved October 15, 2016, from http://www.lemonde.fr/politique/article/2013/04/07/pour-77-des-francais-les-politiques-sont-plutot-corrompus_3155552_823448.html

“Procès Cahuzac : Qui est Patricia Cahuzac, l'ex-femme de l’ancien minister.” (n.d.). Retrieved October 15, 2016, from http://www.sudouest.fr/2016/09/12/proces-cahuzac-qui-est-patricia-cahuzac-l-ex-femme-de-l-ancien-ministre-2493013-4697.php

References