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by Euro Reporter
2011-09-26 07:09:39
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Chirac protests innocence in absentia

Former French president Jacques Chirac gave an impassioned defence of his morals on Friday in a statement read out by a lawyer during his trial over the misuse of public funds when he was mayor of Paris in the 1990s. Chirac, 78, was excused from attending due to his failing memory. He vowed to abide by the decision of the court which is widely expected to dismiss the case.

On the final day of the high-profile three-week trial, the culmination of nearly a decade of legal back-and-forth, defence lawyer Jean Veil read a statement he said was written by Chirac, who has been in poor health since a stroke a few years ago. "I assert that I have not committed any fault -- neither legal nor moral," Veil quoted Chirac as saying. "I want the French people to know that there are not two Chiracs ... there is only a man made from a block of flesh, blood and principles." A few dozen spectators, attorneys and reporters listened to Chirac's words in a courtroom adorned with yellow silk walls, carved leather chairs and fleur de lys insignias, the same chamber where former Queen Marie Antoinette was condemned to the guillotine during the French Revolution.

Chirac is accused of using public money to create 28 phantom jobs for political party cronies at Paris Town Hall between 1992 and 1995 during his long stint as mayor. The ex-president has denied the charges and even prosecutors, who owe their jobs to the executive branch, have argued for the case to be dismissed. The court could announce its decision any time in the days or weeks ahead. Under French law, judges can proceed with a trial even over the objections of the prosecution. Chirac, while denying wrongdoing, has already reimbursed the town hall 500,000 Euros ($670,000), while his conservative political party has paid back 1.7 million Euros ($2.3 million). He has denied that he attempted to pad the town hall despite accusations from a French anti-corruption group, Anticor, that the 28 jobs at issue are just a small sampling of a much wider system put in place by Chirac to increase his political influence.


BNP, SocGen beat retreat as Europe's crisis deepens

BNP Paribas SA and Societe Generale SA, France's two largest banks, are trimming about 300 billion Euros ($405 billion) off their balance sheets as Europe's deepening debt crisis threatens to make them too big to save. At the end of March, French financial firms had $672 billion in public and private debt in Greece, Portugal, Ireland, Italy and Spain, according to Basel, Switzerland-based Bank for International Settlements. That's the biggest exposure to the euro-area's troubled countries and almost a third more than German lenders. The four largest French banks have 5.9 trillion Euros in total assets, including loans and bond holdings, or about three times France's gross domestic product.

"The banks are entering a slimming cure, which is forced by the sovereign crisis," said Jerome Forneris, who helps manage $10 billion, including the two French lenders, at Banque Martin Maurel in Marseille, France. Rather than tap the market for capital, BNP Paribas and Societe Generale are seeking to free up a combined 10 billion Euros through asset cuts and disposals. Paris-based BNP Paribas plans to cut $82 billion of corporate- and investment-banking assets, while Societe Generale may exit businesses such as aircraft and real-estate finance in the U.S.

The banks have been forced to act after concerns about their sovereign debt holdings made funds reluctant to lend to them, crimping liquidity options. At the end of 2010, France's three largest banks had at least 500 billion Euros of short-term and interbank funding rolling over within three months or less, according to a Barclays Capital note dated Sept. 7.


Sarkozy facing surge to left in Senate

French President Nicolas Sarkozy could lose his majority in the Senate to a resurgent left in an election this Sunday for half the seats in the upper house, dealing him an electoral blow just seven months before a presidential election. The opposition Socialist Party needs to take just 23 new seats from Sarkozy's ruling conservative UMP party, out of the 170 seats up for grabs on Sunday, for a victory the UMP's Senate head Gerard Larcher said would have "seismic" consequences. A swing to the left in successive local elections in many of the regions where some 150,000 municipal officials will vote in the Senate election makes gains by the left inevitable.

Sarkozy has struggled with some of the lowest ratings of any recent French presidents, with the French public resentful of economic gloom, stubborn unemployment and a widespread perception that his presidential manner is too impulsive and showy. "There is no doubt that there will be a gain in seats for the opposition," Bernard Accoyer, head of the lower house national assembly, told France Info radio this week. Losing his upper hand in the Senate, where the UMP has 147 seats out of a total 343 to the Socialist Party's 115, would hobble Sarkozy, symbolically at least, in the last few months of his term, even though the lower house holds sway on legislation.

A left-leaning Senate would only have the power to delay parliamentary proceedings but a defeat on Sunday would be a psychological blow for Sarkozy coming on top of opinion polls which consistently show the left would win a presidential election held today. It would also mark the first ever swing left for the upper house since France's Fifth Republic was founded in 1958. "I don't know where it would be on the Richter scale, but it would be pretty seismic at any rate," Larcher said of the prospect of a UMP defeat. There is no major legislation outstanding that a left-wing Senate could hold up, but losing his majority there would bury Sarkozy's grand plan to get a budget-balancing debt rule written into the French constitution, a measure that could have been an anchor for France's AAA-rating. Otherwise, parliament already has approved an adjustment to the 2011 budget bill to incorporate a bigger bailout for Greece as agreed by euro zone states on 21 July, and the 2012 budget bill should pass without hitches.

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