French prosecutor seeks 3 years' jail for ex-minister over foreign bank account

By Chine Labbé

PARIS (Reuters) - France's financial prosecutor on Wednesday sought a three-year jail term for former budget minister Jerome Cahuzac, who was forced to quit government three years ago over the discovery that he owned a secret bank account abroad.

Cahuzac, 64, a plastic surgeon by profession who was appointed budget minister when Socialist President Francois Hollande took power in 2012, stands accused of tax fraud and money laundering.

"You have tarnished this country's honor," Prosecutor Eliane Houlette said. "What has not been repaired, and will never be, is the harm done to our country, which became a laughing stock."

She also asked for a five-year ban from seeking elected office.

Cahuzac's downfall cast a pall over Hollande's government in its first year, all the more so because he had stood up in parliament in December 2012 to declare: "I do not have and never had a foreign bank account, neither now nor before."

The ex-minister, who had presented government proposals to clamp down on tax evasion in December 2013, quit three months later and admitted that he had indeed placed 600,000 euros ($667,000) abroad.

Judicial investigators later unearthed an account opened at Swiss bank UBS in the early 1990s that was later transferred to Singapore under the codename "Birdie".

Cahuzac, who wept in the dock on Tuesday as he hinted he had considered taking his own life rather than admit to lying, said that after the revelations surfaced in the press, Hollande had not asked him in a one-to-one meeting whether he held a foreign account.

"This question, 'Do you or do you not have a bank account?', I was not asked that during that meeting, so if I lied, it was by omission," he said. "Unlike what was said, I never lied to the president's face."

The prosecutor also sought a 1.875 million euro ($2.10 million) fine from the Reyl bank of Geneva, which in 2009 allegedly helped Cahuzac transfer funds to Singapore to avoid detection by French tax authorities, and an 18-month suspended jail term for its director, Francois Reyl.

The bank denies any wrongdoing. Francois Reyl told the court he had only played a technical role in the confidential request from the former minister, which appeared to have no tax evasion motive to him at the time.

(This story corrects Cahuzac's age)

(Reporting by Chine Labbe; writing by Michel Rose; editing by Richard Lough and Mark Trevelyan)

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