Reuters/AFP/Paris

French budget minister Jerome Cahuzac has resigned from his post after being targeted in a tax fraud inquiry, the president’s office said yesterday.
The announcement – a major embarrassment for President Francois Hollande’s government – came hours after French prosecutors opened a formal investigation into allegations that the junior minister held a secret bank account in Switzerland.
Cahuzac, who is in charge of battling tax evasion, has denied any wrongdoing following a report in December by the Mediapart investigative website that he had an undeclared Swiss bank account until 2010.
Mediapart said he then transferred the money in the account to Singapore.
It said it had a “trace” of a conversation between the minister and one of his former aides in which he allegedly fretted about the UBS account and then said he had “dealt with the matter”.
Cahuzac had dismissed reports of offshore accounts as “crazy claims”. In a statement in December he said: “I have never had an account in Switzerland or any other place abroad.”
He also denied figuring in the recording reported by Mediapart.
Mediapart claimed that Cahuzac closed the account in 2010 just before becoming head of the finance committee of the National Assembly.
It alleged he made a trip to Geneva to close the account.
The brief presidency statement said that the move came at Cahuzac’s own request. It named Europe Minister Bernard Cazeneuve as his successor.
Earlier, the public prosecutor said police laboratory tests showed a correlation between the voice of Cahuzac and that in a recording of a telephone call published by Mediapart, in which a male voice acknowledges holding an account at UBS.
“In other words, the result of our analysis reinforces the hypothesis that Jerome Cahuzac is the unidentified speaker,” the office of the Paris prosecutor said in a statement.
French prosecutors opened a preliminary investigation into the affair in January, but this step takes the inquiry to a new level and will involve deploying greater resources to the case and cooperation with other judiciaries, notably in Switzerland.
Cahuzac, a former plastic surgeon who rose to prominence as the Socialist Party’s toughest budget-watcher, has led efforts to crack down on tax evasion and fraud by French citizens seeking to avoid high levies at home.
His resignation could hardly come at a more sensitive time as Hollande’s government is in the process of redrafting deficit reduction plans vital to maintaining fiscal credibility with France’s eurozone partners.
Weaker-than-expected growth forced the government to abandon Hollande’s pledge to cut the public deficit to an EU-imposed ceiling of 3% of economic output this year, tumbling a key pillar of Cahuzac’s fiscal policy.
His replacement, Cazeneuve, is familiar with the inner workings of Brussels as europe minister. That could help Finance Minister Pierre Moscovici as he tries to convince the European Commission and other eurozone countries that France should get more time to meet its deficit target.