Enlarge imageBy Jon Boyle and Joelle Diderich
PARIS (Reuters) - French Finance Minister Herve Gaymard has resigned over a scandal about his state-paid luxury apartment that has rocked the conservative government as it forces unpopular cost-cutting measures on a restive nation.
French President Jacques Chirac on Friday named France Telecom chief Thierry Breton as his replacement, leaving a question mark over who would take over the leadership of the telecoms company.
"I have decided to hand to the prime minister my resignation as minister of economy, finance and industry," Gaymard said in a statement.
"I am aware of having made blunders and a serious error of judgment concerning the conditions of my official accommodation."
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The move came less than five hours before Gaymard was to go on national television to explain why he, his wife and eight children had moved into a vast 14,000-euro a month apartment paid for by the cash-strapped state.
French ministers are entitled to official accommodation but the price of his apartment, even for central Paris, was deemed unacceptably extravagant by many critics once it was known.
The monthly rent on Gaymard’s flat is roughly equivalent to the annual minimum wage for a worker in France.
Gaymard, 44, had denied any wrongdoing but quit the 600 sq m (6,458 sq ft) split-level home in a chic Paris district at the centre of the scandal that erupted last week.
The extra costs of converting the flat to his family’s needs dismayed public and politicians alike. His pledge to reimburse the cost failed to abate the sense of shock.
PROPERTY PORTFOLIO
Gaymard’s situation was aggravated by his accounts of the status of his property portfolio and personal finances, prompting Raffarin to give him until the end of the week to end a controversy that was harming an already unpopular government.
His fate appears to have been sealed by a report that he owned five homes, including another large flat in central Paris, coming at the same time as a glossy society magazine quoted him as saying "I’m not loaded" and that the row would not have erupted if he had had the money to buy his own apartment.
That from a man who, aides confirmed, owns five homes, his constituency office and was rich enough to pay a wealth tax last year. Gaymard said his comments had been misconstrued and he never tried to conceal the truth.
"You can imagine that if I had wanted to lie, and anyway I don’t see what I would have to gain from lying, I would have gone about it differently," he said on TF1 television.
Gaymard said he was ready to pay for his blunder but pleaded for the media to stop the "harassment" of his family.
"I made mistakes, I have assumed the consequences, I will pay what is necessary to fix them, but I honestly think the level this polemic has reached does not match the reality of things. I have committed no crime or offence," he said.
SYMBOL OF INEQUALITY
Breton, 50, takes over on the day official data showed the jobless rate -- voters’ top concern -- hit a five-year high at 10 percent and business confidence unexpectedly dipped.
The mop-haired former mathematics teacher and corporate revamp specialist will need to make full use of the skills he has deployed since 2002 to save France Telecom from huge debts.
France Telecom would not comment on a possible successor.
Breton will have to take a big cut in his 1.3 million euro salary, and it is far from clear whether his wealth would be an asset as the government tries to reconnect with ordinary people after the luxury housing row.
The scandal has been hugely damaging to a government beset by sluggish growth, high unemployment, street protests over its economic reforms and facing a tough battle to convince voters to approve the EU constitution in a referendum.
Few of Gaymard’s fellow cabinet ministers were willing to stick out their neck for him in such an uncertain climate. Raffarin, who broke off his holiday to deal with the crisis, nonetheless paid tribute to Gaymard.
"I salute a responsible man, who served the government administration with talent, competence and devotion," Raffarin said in a statement. "I regret the departure from government of a friend who keeps my trust and affection, today and tomorrow."
Three months ago, things were very different for Gaymard.
Promoted by President Jacques Chirac from farms to finance, the fiercely loyal man appeared the perfect replacement for former finance minister Nicholas Sarkozy in November. But his disastrous public relations, epitomised by his claim to be as "clean as a new penny", shredded his reputation.
Economists had worried that the longer the scandal dragged on, the tougher the government would find implementing the major reforms that are key to robust, sustainable growth. Few, however, saw any short-term damage from Gaymard’s departure.
