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Hollande Gets First Ministerial Resignation on Cahuzac Probe

French Budget Minister Jerome Cahuzac
French Budget Minister Jerome Cahuzac was identified by witnesses as the speaker in the recording of a telephone conversation referring to the existence of a Swiss account, the Paris prosecutor’s office said March 19 in an e-mailed statement. Photographer: Balint Porneczi/Bloomberg

March 19 (Bloomberg) -- President Francois Hollande received a first ministerial resignation as Budget Minister Jerome Cahuzac departed following an investigation into whether he had an undeclared Swiss bank account.

Cahuzac, 60, will be replaced by Bernard Cazeneuve, the French president’s office said in an e-mailed statement today. Cazeneuve was previously minister of European affairs in the French government.

At the budget ministry, Cahuzac was responsible for clamping down on tax evasion. The former plastic surgeon and Socialist lawmaker was identified by witnesses as the speaker in the recording of a telephone conversation referring to the existence of a Swiss account, the Paris prosecutor’s office said March 19 in an e-mailed statement.

Hollande, who came to power last May, has raised taxes by about 27 billion euros ($34.8 billion) and is now trying to cut spending by 60 billion euros by the end of his mandate to reduce France’s budget deficit. The need to ask the population for economic sacrifices at a time when growth has stalled made it difficult for Cahuzac to stay in his post even though he has yet to face formal charges.

“It can pose a political problem,” Socialist Senator Francois Rebsman said on LCI television.

Sinking Popularity

The departure comes as Hollande’s popularity is sinking in the face of budget cuts and unemployment that has climbed to a 13-year high. Hollande’s approval rating fell in February, leaving him the most unpopular French leader since 1981, a TNS-Sofres poll showed. More than two-thirds of the French and 44 percent of those who voted for him in the second and decisive round of the May election say they’re disappointed with him, according to a BVA poll in Le Parisien on March 3.

Cahuzac said he resigned out of concern for the smooth functioning of the French government.

“This changes nothing with regard to my innocence or the libelous character of the accusations against me and I will henceforth devote all my energy to prove it,” Cahuzac said in a statement from his office.

To contact the reporters on this story: Mark Deen in Paris at markdeen@bloomberg.net; Helene Fouquet in Paris at hfouquet1@bloomberg.net

To contact the editor responsible for this story: Vidya Root at vroot@bloomberg.net

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