France ups the ante in EU tax evasion battle after scandal

PARIS (AFP) - France said on Sunday it was looking to tighten Europe-wide measures against tax evasion as it scrambles to contain a fraud scandal that has rocked President Francois Hollande's government.

The move comes as Jerome Cahuzac - the former budget minister who triggered the scandal last week when he revealed owning an undeclared foreign bank account - faced fresh allegations of tax fraud.

Finance Minister Pierre Moscovici announced that France would seek to reinforce the exchange of banking information throughout Europe, based on a United States ruling in place since 2010 that seeks to fight offshore tax evasion.

The so-called US Foreign Account Tax Compliance Act (FATCA) requires foreign financial institutions to provide the IRS tax agency with information on accounts held by American clients, such as withdrawal and payment amounts.

"I propose that there be an automatic exchange of information, a European FATCA," Moscovici said on Europe 1 radio.

Hollande's government has been shaken by the scandal, which erupted Tuesday after Cahuzac - once in charge of tackling tax evasion - admitted to investigators that he had a foreign account containing some 600,000 euros ($962,218).

Cahuzac - who resigned on March 19 after prosecutors opened a probe into the account, first revealed by the Mediapart news website in December - had repeatedly denied its existence to the president, in parliament and in media interviews.

Further fanning the flames of the scandal, the Zurich-based Tages Anzeiger newspaper reported over the weekend that Cahuzac had lied to a bank about the 600,000 euros when he had them transferred from Switzerland to Singapore.

According to the newspaper, he presented a "bogus" certificate to the Singapore branch of a wary Julius Baer bank, purportedly proving that his money had been declared to tax authorities.

Swiss broadcaster RTS also reported on Sunday that Cahuzac had tried to place 15 million euros with a fund management firm in Switzerland, which refused the money for fear of future complications, "Cahuzac being a politically prominent figure."

The former budget minister's lawyer, however, told AFP the RTS report was "not credible." Critics have been quick to round on Hollande and his ministers, accusing them of either trying to cover up the scandal or of mismanagement for having believed Cahuzac's denials.