The Short Chic Guide to Not Paying Taxes in France
Jérôme Cahuzac in the palace of glass (Ministry of Finances) Bercy, Paris.
In 2019 and early 2020 and presumably in 2021 once the long time-out on the war against the state is over, the Gilets Jaunes will once again mass in front of the flat on Avenue Breteuil, chanting the name that has become slang for the lawlessness of the ruling class. You don’t know this man yet, and unless he gets caught weaving toupees in the apartment near Invalides as a way to pass his confinement profitably, you haven’t heard his story.
“It bothers me that I still have an account at UBS…I can only close it if I go there ? With that account I’m fucked, since UBS is not necessarily the most hidden of banks. It stinks. Is any sort of proxy possible ? So that the holdings somehow stay at UBS but are managed from here. A word game pure and simple.” — Confessions of Jérôme Cahuzac
This is the tale of an amoral minister. Heard that one before ? All right this one is about the tale of an amoral minister who kept his job against the odds. Heard that, too ? All right, how about a minister in charge of tax collection who was up to his wellies in secret accounts — his own. Not surprised, you say ? You’re jaded, dear reader. How about seven years later and the minister is sitting comfortably at home, having never served a day in jail ?
Jérôme Cahuzac was, until March 19, 2013, Budget Minister in François Hollande’s socialist government, in charge of the enforcement of tax laws during a time of austerity, fiscal crisis and high unemployment.
Regarded as one of the more effective ministers in the Hollande government, Cahuzac lost little time lowering the boom. He grilled members of the new administration, pointedly asking Marylise Lebranchu if there wasn’t a zero missing from her husband’s tax declaration, and in September 2012, announced a 19.6% levy on plastic surgery, an industry with powerful clients which many felt was untouchable, not least because Dr. Cahuzac started his professional life as a plastic surgeon.
On December 5, 2012, the website Mediapart published the recording transcribed above, claiming it was Cahuzac’s voice speaking to a third party about a secret Swiss bank account.
Despite his ardent denials over the next three months — first that the voice was not his, and later that the account had been closed in 2010 — Cahuzac’s position became untenable. In March he finally resigned after mny testimonials to his honor and made a public apology.
Such are the twists and turns of fate that, in November, 2012, Cahuzac announced a crackdown on tax fraud and on April 2 of the next year he was standing in the dock before anti-corruption judges Renaud Van Ruymbeke and Roger Le Loire, facing charges of concealing his UBS account.
Undeclared income transferred to a second country — in this case, Switzerland — in order to avoid taxes in the person’s home country — in this case, France — was and is a crime. These aren’t little known laws that our diligent public servants may simply, from time to time, neglect to keep current with.
Cahuzac held on for three agonizing months because the Hollande regime threw him lifeline after lifeline. Pierre Moscovici, Minister of the Economy and a life-long member of the gauche caviar (limousine liberal will do fine), cleared Cahuzac and publicly embraced him in the Assembly, while Prime Minister Jean-Marc Ayrault stated he had “total confidence” in his Budget Secretary. Total confidence in what exactly ? Did Ayrault suspect the public burning that lay ahead ?
Part of President François Hollande’s belated response was the swift passage of the bill requiring his ministers to register their holdings in the public record. These are now available on-line.
On April 2, Cahuzac made a public statement to the effect that he had been “trapped in a spiral of lies and went astray,” and that his UBS account, some 600,000 Euros, had not been added to in a dozen years, was closed in 2010 and the monies would be returned to France. With his rugged good looks and forthright manner it was a splendid “modified, limited hang-out,” to steal a phrase from the man who never goes out of style, our man Dick.
Of course, it wasn’t the whole truth or anything close. We no longer expect that from ministers. We know better, we wait for the tell-all memoir or the embarassing flame-out. But the servitors, we have learned, do not squeal. That in itself is interesting. Will Roger Stone talk once the House of Trump has begun its final descent ? Unlikely, although you never know.
What began with a tape inadvertantly recorded by a political rival, ended up more than a year later with Cahuzac’s newly ex-wife revealing the existence of yet another account, this one on the Isle of Man, worth about 2.5 million Euros. A man must plan for his retirement, especially if he’s out of work.
(The recording is tale unto itself, a “heavy weight” that a political unknown named Michel Gonelle carried around for thirteen years. He was having it out with Cahuzac over the phone in 2000 when the future star decided he’d had enough of this nobody and hung up. Except he didn’t disconnect and Gonelle’s machine went right on recording Cahuzac’s next call.)
L’Affaire Cahuzac is much more than the story of a fallen minister: it’s a flow chart of the French political class. Cahuzac’s contacts and alliances among politicians and Important People are legion.
Tax evasion has become a way of life for those in the upper strata of society. People do what they think they can get away with, and poor Jérôme Cahuzac, sitting at home in the Tarn with a bracelet around his ankle, serves as illustration of how a country doctor gets to the sunny uplands where the money grows on trees and there are always new places to stash it.
“Shit, Jerome, you’ve got a few contradictions!”
Jérôme Cahuzac, now 68, used the rural department of Lot et Garonne as his political base for years. Until March of 2013 he also represented it in the National Assembly.
Trained as a surgeon, he began his medical career as a cardiologist before changing, in the early ’90s, to the lucrative profession of plastic surgery, where he specialized in hair transplants.
From 1988 to 1991, he worked for the government under Minister of Social Affairs Claude Evin, on policy relating to cigarettes and alcohol as well as pharmacology and medicines. In 1993, while maintaining his plastic surgery practice, he set up Conseil Cahuzac, where he acted as a “purely technical advisor” to the pharmaceutical laboratories. At the Conseil, he worked closely with Daniel Vial, the lobbyist’s lobbyist, the man who knows everyone in the “Paris that counts.”
A Socialist since 1977, he first ran for the National Assembly in the Lot et Garonne in the same year, picking up other offices such as regional Counsellor General and Mayor of Villeneuve-sur-Lot along the way. A rebarbative critic of the Sarkozy government’s handling of finances and debt, he was the classic “hairsplitter” at the head of the Commission of Finances. (Make noise, bang the drum, do nothing.) At various times, he either worked for or took Michel Rocard, Lionel Jospin, Dominique Strauss Kahn and François Hollande as political mentors. He frequented the Cercle de l’Union Interalliée, and became a member of the Grand Orient de France, associations that enrich the portrait of a comer in the political world. The Grand Orient, an insider’s club, promptly kicked him out when l’affaire became public. Still, all in all, a résumé of Who’s Who in political France during the terminal decline of the Socialist Party.
In 2000, he made the now-fatal phone recording. In June of 2008, Remy Garnier, a tax inspector in the Lot et Garonne, tried to interest Eric Woerth of the UMP (then ex-President Sarkozy’s party, now les Républicans) in allegations that Cahuzac had a Swiss bank account. No takers. In 2007, Cahuzac was found guilty of paying a Filipina maid 250 Euros a month for 40 hours work off the books. He got the obligatory slap on the wrist and did the right thing, helping his former domestic through the hurdles of becoming legal in France.
A heating-seeking Socialist on a career arc, Cahuzac went out of his way to cultivate friendships on the other side of the spectrum. Jean-Pierre Emié, a longtime counsellor to the National Front for Paris and its suburbs, is a close friend of thirty-four years. Emié has ties to GUD, a far-right student union and it was Emié who introduced Cahuzac to Philippe Peninque, the lawyer who opened Cahuzac’s UBS account. (Peninque and Emié share an office on Rue Marbeuf on the Champs Elysées.) Peninque, a militant ideologue in GUD during his student days, is one of Marine le Pen’s “shadow advisors.” The Front National was conspicuously silent while Cahuzac twisted in the wind.
Gilles August, Cahuzac’s former lawyer, was once a member of UNI, the conservative student union and his country digs were the place where Manuel Valls, former security minister in the Hollande government, celebrated his 50th birthday along with Cahuzac and numerous stars from the firmament, the singers Patrick Bruel and Nolwenn Leroy, the Marseille real estate mogul Marc Pietri, TV producer Michel Drucker. The list goes on. (Valls is a sweaty headcase who has since bottomed out politically and was last seen in Cataluña waving his Spanish birth certificate and searching for his Falangist roots. Auditors are still trying to ascertain what part of 0% of the vote he received for mayor of Barçelona.) Cahuzac is a militant sportif, one of his bike partners being Patrick Sayer of Eurazeo Investment Bank, a member of the CAC40, the upper crust of the French Bourse. At this point on our trek, watching Jérôme Cahuzac feels like a French version of Zelig, a man who met everyone and was no one.
Among the many clients at Cahuzac’s plastic surgery practice were former GUD militants, Philippe Peninque, Stephane Fouks of Havas Worldwide Marketing, Socialist Party leader François Patriat, as well as, by Cahuzac’s admission, one Hervé Dreyfus.
When Jean-Pierre Emié complained to Cahuzac that, “Shit, Jerome, you’ve got a lot of contradictions !” Cahuzac replied on a whole other level: “Who doesn’t have contradictions? You, Jean-Pierre, you don’t ?” Cahuzac once characterised himself as a “maquisard,” a resistance fighter, a man capable of many disguises and identities. In his case, the war was fought entirely on behalf of the career of one Jérôme Cahuzac.
Reyl & Co.
If Jérôme Cahuzac is the fuse that lit the scandal, the dynamite — at least the first stick of dynamite to explode — is the private investment bank Reyl & Co. Mediapart called Reyl “a den of thieves,” but French show biz personalities, captains of industry and politicians call it their preferred banker.
The history of Reyl closely parallels what we might call The Golden Age of Tax Evasion, with an explosive growth of revenue in the first decade of this century when cheating on taxes reached the level of a national sport.
Reyl & Co. was founded by Dominique Reyl in 1978 as a private management company in Geneva. For twenty years or so it was indistinguishable from dozens of other financial “boutiques.” With increased pressure from the European Union on big banks like UBS, the unregulated, extremely discreet Reyl & Co. came into its own, converting into a full-fledged bank in 2010. Its modus operandi is to advise clients how they might conceal their money behind unnamed accounts or fictive organizations, giving them the ability to disavow holdings at one of the large banks.
A large sum of money left Switzerland in 2010, the year Jerome Cahuzac “closed” his account. New regulations had come into effect: the Swiss had agreed to furnish information about certain kinds of accounts to the EU. His money did not come back to France; it moved to Singapore, where along with Hong Kong, Reyl had established subsidiaries. From Singapore it moved “off-shore,” to fiscal paradises with names like Wind Charm Corporation, Fame Eagle Corporation, Oceania City International, Inc., Sunny Ridge Group Limited, Jade Green Investments Limited, Moonlite Overseas LTD. in the Seychelles — all Reyl subsidiaries. In yet another layer of secrecy, these transaction are carried out by middlemen like Swiss-Asia Holding Ltd., so that nothing can be traced back to Reyl or its clients.
(Swiss-Asia is a booking platform that operates between banks and financial management. Reading its on-line prospectus is like a nice hit of OxyContin : “Swiss-Asia Holding operates from the core of its investment universe, where proximity and access to investment opportunities make it possible to produce superior returns with a pro-active and efficient risk monitoring. While Swiss-Asia’s mission is to build a sustainable “East meets West” style of Asset Management out of Singapore and Hong Kong, its dedicated team strives itself to provide High Net Worth Individuals, Financial Institutions and Corporate clients with the best-in-class asset-management, advisory and execution services.” Execution services, eh ? Risk monitoring ? Investment universe ? Unicorns anywhere ? Whatever you’re on, give me some.)
Cahuzac confessed to keeping 600,000 Euros in Switzerland. 600,000 — barely enough, as one joker commented, to buy a modest apartment in Paris — is the kind of figure held in a individual’s name, while a significantly larger amount is hidden behind the bank’s firewall. Was Jérôme Cahuzac the beneficiary, either directly or indirectly, of other non-declared accounts in Switzerland ? Did he only confess to the one account that could be traced back to him ?
Singapore law makes it impossible for non-residents to transfer money into their banks in amounts less than 1,000,000 Euros. If Cahuzac’s Swiss account was closed in 2010, and the money transferred to Singapore, as he says, how much was really transferred?
One thing we do know: undeclared money traveling from France to Switzerland does not travel by check or wire or any other traceable route. It crosses the border by suitcase or van. And for that the services of a porter are required. A discreet porter who knows how to keep quiet. And now our story verges on the fantastic, on the kind of thing one might find in a novel on sale at, say, Gare de Lyon.
Enter Hervé Dreyfus, according to Le Temps, Dominique Reyl’s half-brother, a senior partner at both Reyl & Co. and Raymond James Asset Management International (“managers for private clientele”) in Paris — an off-shore specialist. (Just try getting in their door without an appointment. I even put on my best suit.) A man with a myriad of contacts, who’s pulled off a stupendous, unbeatable feat in our Age of Publicity: he’s somehow kept his face almost entirely off the net. A man Jerome Cahuzac claims he met only once — in his office, for a “transplant consultation.” They must have had a lot to talk about: Dreyfus is, or was, bald as an egg. No one knows what he looks like now.
Mediapart and Antoine Peillon, author of The 600 Billion Missing in France have named Dreyfus as Reyl’s “delivery man for French affairs.” And so, we might imagine Hervé Dreyfus there in the Gare de Lyon, with a fresh weave cross-hatching his pate and a medium-sized suitcase that’s seen just the right amount of wear, looking like a middle-aged traveler waiting for the train to Zurich, paid, perhaps, on the senior discount, standing next to us, perusing the financial section of Figaro. Neither we nor the police would be any the wiser, not in 2013 or 2020. If that seems too cinematic or novelistic to you, you perhaps need to change your life or at least your perspective. Reyl and Dreyfus and the good doctor from the Tarn who went bad are waiting for the chance to star in a novel, provided a French writer has the courage to cover something other than the niaiseries of the dominant social class.
Jérôme Cahuzac, brooding at home in the Tarn or dragging his bracelet around the luxurious Avenue Breteuil apartment he owns in the tony Parisian 7th, has never said a word about any of this. He could tell a few tales but like a good soldier he’s kept his mouth shut while the Gilets Jaunes mass on the street chanting his name. You sometimes wonder what he makes of it, his rise through the ranks and his spectacular public flame out. Was it preordained ? Was it willful ? He certainly made himself a handy offering for the gods of public fury.
You know and he knows he’s a small fry. Who was he, exactly ? A man who became a doctor who became a minister who crashed and burned, and ran around making excuses while the flames grew. A man disowned by the class he spent his life protecting. He could tell a few tales and why shouldn’t he ? No point in hinting about conspiracies if a man won’t talk. Then it’s just business, and that’s the way it stays.
He’s only 68. He won’t rile old friends far more powerful than he is. And yet he knows their names and how they operate. Still, they might need him some day.
I didn’t have any luck with Raymond James but I wonder if Cahuzac pays an out-of-work club bouncer to guard the fort ?