Did Two French Ministers Quit to Save a Third?

When two French Cabinet ministers resigned on Sunday night, it seemed the logical response to public outrage over the news that the two men had been living the high life using taxpayers' money. But many think the motivation behind the move may run much deeper. Observers believe the ministers were forced to step down by President Nicolas Sarkozy in an attempt to divert attention from an even bigger political problem: a blossoming controversy involving L'Oréal heiress Liliane Bettencourt that is threatening the future of a key member of France's conservative government.

On the evening of July 4, Secretary of State for Cooperation Alain Joyandet and Christian Blanc, who oversaw government plans for the development of the Paris region, tendered resignations that French press reports claim were demanded by Sarkozy. The reason: uproar following revelations that Joyandet had spent about $142,000 to charter a private jet to attend a conference in Martinique and that Blanc had used nearly $15,000 of state money to buy himself Cuban cigars. Neither act was illegal or secret. When Joyandet resigned, he stressed that he was "a man of honor who cannot accept being the victim of an amalgam," and earlier, Blanc had sought to right things by reimbursing about $4,000 worth of the controversial cigars he had consumed.

Those are but two examples that have surfaced recently in a spate of media scoops about officials who appear to have lavishly expensed public funds or taken advantage of ministerial perks like state-owned apartments for their private use. The news has shocked a recession-rattled French public, as it watches the government roll out debt-battling austerity measures. As a result, Sarkozy in late June not only insisted that Cabinet members and their staffs tighten their belts but also decided on a government reshuffle for October to rid himself of half a dozen of the most controversial members.

But while the original plan may have been to ride out the storm until voters began turning their attention to other matters, the enduring outcry apparently forced Sarkozy to respond immediately by sacrificing Blanc and Joyandet. And it may not end there. Opposition politicians decry how long it took Sarkozy to respond to the expenses scandal — Joyandet's flight occurred in March, and the news of Blanc's cigar purchase broke in mid-June — and are demanding that other members suspected of free-spending or misusing ministerial perks be sacked. Even that may not appease an angry public. A poll released July 5 found that 64% of the French think their leaders are "rather corrupt" and 75% deride as insufficient Sarkozy's measures to rein in free-spending by government members.

As bad as that is, some observers believe that Sunday's resignations and any that might follow are about more than just the spending ruckus. Radio debate shows featured pundits generally suggesting that the drama was largely designed to draw focus away from the controversy currently threatening Eric Woerth, the Labor Minister tasked with seeing through a much contested pension reform crucial to Sarkozy's political future.

Woerth has been tangentially linked to a complex battle between L'Oréal heiress Bettencourt and her daughter over control of the $15 billion family fortune — about $1 billion of which has been given in various forms by the elder Bettencourt to society photographer François-Marie Banier, a man her daughter claims manipulated her mother. Banier denies the charges and says Bettencourt financed his acquisitions of artworks and real estate and gave him money in gratitude for his role as a trusted confidant. Amid that struggle arose recordings secretly made by a family butler of discussions between the senior Bettencourt and her financial and legal advisers. When initially revealed on June 16, partial contents of those clandestine tapes drew attention to the fact that Woerth's wife worked for a company that was managing Bettencourt's money — a detail that raised a red flag because of comments by Mrs. Woerth's boss that suggested her hiring was influenced by her husband's government post. Fuller examination of the recordings later indicated that at least $80 million of Bettencourt's money was being held in foreign accounts, raising questions about whether or not the funds were being reported to authorities. That has provoked conflict-of-interest allegations by observers, given that Woerth's wife could have known about Bettencourt's tax affairs at the same time that Woerth was serving as Budget Minister, a job in which one of his main objectives was combatting tax evasion.

Both Woerth and his wife have vehemently denied knowing anything about Bettencourt's foreign holdings and reject all other allegations of wrongdoing that the affair has generated. Still, pressure on Woerth to resign continues to grow with each new revelation.

Other conversations on the tapes indicate that French officials — including Sarkozy — met with Bettencourt or her advisers repeatedly to hear their appeals for help in the legal battle with Bettencourt's daughter and that these officials closely followed the case's development. More recently, a prosecutor close to Sarkozy was forced by media revelations to acknowledge that he had informed French tax authorities back in January 2009 of his concerns that Bettencourt's case likely contained "elements of tax fraud." But it wasn't until last month that authorities decided to investigate Bettencourt's accounts. At the same time, Bettencourt publicly promised to "regularize" the family's foreign holdings.

While there is no proof that either of the Woerths had any knowledge of Bettencourt's tax arrangements, media and public speculation about their involvement continues to grow. Why? Because the L'Oréal heiress has long financed conservative parties, including Sarkozy's Union for a Popular Majority (UMP). Some pundits believe that Bettencourt's importance as a donor may have protected her from unwanted scrutiny of her tax affairs — conjecture that is further fueled by Woerth's long-held position as UMP treasurer and main moneyman. Woerth is adamant that his party financing and public service have not overlapped and flatly rejects any suggestion of his protecting wealthy donors or knowing about their tax circumstances.

And now some observers think Sarkozy may have decided to punish the tainted Blanc and Joyandet with banishment from government in the hope that the President may yet spare himself from having to do the same to Woerth.