Taxing time for François Hollande amid claims of hypocrisy

Campaign treasurer’s involvement in Cayman Islands firms adds to crisis

French President François Hollande’s promise of “irreproachable” government suffered a further serious blow today.

In the midst of an acute political crisis following the former budget minister’s confession that he cheated the taxman for two decades, it emerged that President Hollande’s campaign treasurer was the part-owner of two companies in the Cayman Islands.

Although Jacques Augier, a friend of Mr Hollande for 30 years, denied any wrong-doing, the revelation fuelled allegations of hypocritical double-standards in a Socialist administration which has pledged to crack down on tax loopholes.

The British-owned Cayman Islands have some of the laxest banking rules in the world and have become a tax haven of choice for multinational businesses and wealthy individuals. Mr Augier, 59, admitted that he owned up to 30 per cent of two companies in the islands but said they were unsuccessful publishing and travel ventures.

“I have no personal bank account open in the Caymans and no direct personal investment there,” he told Le Monde. “There is nothing illegal going on.” Under French law, Mr Augier would be exempt from paying tax on profits from the companies so long as he could prove that they had genuine business activities in the Caymans.

Meanwhile, Mr Hollande, on a state visit to Morocco, is under growing pressure from the right-wing opposition and parts of his own Socialist party to dismiss his government in an attempt to draw a line under the “affaire Cahuzac”.

The former budget minister, Jérôme Cahuzac, who initially spearheaded Mr Hollande’s crackdown on tax evasion, confessed on Tuesday that he had hidden large sums from the taxman in Swiss and Singaporean bank accounts for two decades. Mr Cahuzac, 60, a wealthy plastic surgeon-turned-politician, had previously denied the existence of such accounts in personal statements to the President and the National Assembly.

President Hollande and senior members of the government, especially the finance minister, Pierre Moscovici, have been accused by the opposition of knowing about the illegal accounts and protecting their colleague. All have dismissed these allegations.

Centre-right politicians, and some figures within the Socialist party, are demanding that Mr Hollande dismiss his Prime Minister, Jean-Marc Ayrault, and form a new administration. The Elysée Palace insists that he has no plans to do so.

According to two polls – taken just before the Cahuzac crisis exploded – Mr Hollande’s approval rating has sunk to 25-27 per cent.