UPDATE 2-France to publish ministers' assets as scandal deepens

Mon Apr 8, 2013 12:19pm EDT

Related Topics

* Government says to issue wealth declarations by April 15

* Foreign minister rejects media report of Swiss account

* Affair could hurt Hollande reform effort (Adds hard left, Greens turning against government)

By Catherine Bremer

PARIS, April 8 (Reuters) - France's Socialist government promised on Monday to publish details of individual ministers' assets next week as it scrambled to stem a deepening scandal over a former budget minister's secret foreign bank account.

Jerome Cahuzac quit his post in March and was placed under formal investigation for alleged tax fraud last week as he acknowledged he had been caught "in a spiral of lies" over his previous denials of holding a Swiss bank account.

The affair risks upsetting President Francois Hollande's economic reform effort, with even left-wing allies criticising his handling of the scandal. Hollande's opinion poll ratings are already at record lows for his failure to tackle unemployment.

While government opponents are calling for more heads to roll, one minister said a hasty reshuffle would be unwise and it was more likely to happen a few weeks from now.

"We find ourselves in a more complicated situation than before in dealing with a difficult economic situation. We will probably have to have a reshuffle, but not right away," the minister told reporters, asking not to be quoted by name.

The Cahuzac affair has dealt a grave blow to a 10-month-old government Hollande had promised would be beyond reproach.

Weekend surveys found 60 percent of the public want Hollande to reshuffle his team and three-quarters view most politicians and elected officials as corrupt.

"To begin with, wealth declarations of all the members of government will be made public by April 15," Jean-Marc Ayrault, Hollande's Prime Minister, said in a statement.

Ayrault said the move - which echoes requirements in the United States and elsewhere for public officials to make asset declarations - would be followed by a law in the coming months setting out moral standards in public life.

Threatening an escalation of the Cahuzac scandal, Swiss RTS TV reported on Sunday, citing banking sources, that the minister had sought to transfer 15 million euros ($20 million) from one Swiss account to another - far more than the 600,000 euros he said last week he had in an undeclared foreign account.

Reached by Reuters on Monday, Cahuzac's French lawyer declined to comment. BFM TV quoted his Swiss-based lawyer, Didier Bottge, as saying the report was "balderdash".

Separately, Foreign Minister Laurent Fabius firmly denied local media speculation that he may also hold a Swiss account.

CALLS FOR ACTION

The fact the man in charge of state coffers was cheating the tax authorities will not help Hollande's efforts to convince a sceptical outside world that he has public finances under control as France falls short on its growth and deficit goals.

Finance Minister Pierre Moscovici, to whom Cahuzac reported, has rejected criticism from that he was too ready to believe Cahuzac's denials and did not adequately investigate the matter.

Calls for protest action from Socialist Party allies betrayed a rift that could hamper Hollande's efforts to pass labour and pension reforms deemed vital for the sickly economy.

Maverick far-left leader Jean-Luc Melenchon - a bugbear for Hollande since his rallies drew some of the biggest crowds of the 2012 election campaign - has called for a May 5 march to demand a "Sixth Republic" to be set up with a new constitution.

Ex-Greens Party head Eva Joly, a former anti-corruption judge still influential in a party the ruling Socialists count on as a parliamentary ally, said she would march with him.

Hollande has a slim parliamentary majority so could push through laws without far-left and Green backing. But with his approval ratings as low as 22 percent, noisy protests could limit the scope of his legislation.

($1 = 0.7679 euros) (Reporting by Catherine Bremer and John Irish; editing by Mark John and Michael Roddy)

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