PARIS, July 12 (Reuters) - French President Nicolas Sarkozy urged a minister at the centre of a furore over alleged illegal political donations to step down as treasurer of his ruling UMP party, but said he had been cleared of any wrongdoing.
Seeking to draw a line under the damaging affair in a live television interview, Sarkozy said Labour Minister Eric Woerth still enjoyed his full confidence and would remain in charge of a crucial pensions reform due to be enacted in October.
"He is cleared of all suspicion, so there is no reason why I should get rid of him," the president said.
However, to avoid any suspicion of a conflict of interest: "I spoke to Eric Woerth and I asked him to devote himself exclusively to the reform of pensions… My advice to him is to no longer exercise that responsibility (as treasurer)."
The president said he was determined to carry out the unpopular plan to raise the retirement age to 62 from 60 and make people contribute longer for a full pension despite expected protests in September, to prevent France entering a debt spiral comparable with Greece or Portugal.
He went on prime time television to try to restore battered confidence hours after police searched the home of France’s richest woman and a close friend in a scandal that has rocked his government and driven his approval ratings to a record low.
A former bookkeeper for L’Oreal <OREP.PA> heiress Liliane Bettencourt has told police that the billionairess and her late husband made illegal cash donations to conservative politicians for years, including for Sarkozy’s 2007 election campaign.
The president insisted France was not corrupt but there had been too many bad habits in politics, and he was determined to clean them up.
The searches of Bettencourt, 87, and society photographer Francois-Marie Banier came amid calls for the appointment of an independent magistrate to investigate the case involving alleged illegal political donations and suspected tax evasion.
Sarkozy rejected any suggestion that the public prosecutor in charge of the case, who is a personal friend of his, was not independent.
In all, police carried out seven raids on Monday, the public prosecutor’s office said. In a gesture of courtesy to the Bettencourt, the prosecutor’s spokeswoman described the police action at her villa in the exclusive suburb of Neuilly as "a visit to take receipt of documents".
The former bookkeeper has accused Woerth of taking an illegal 150,000 euro cash donation from Bettencourt’s wealth manager. The minister and the wealth manager have both denied the allegation.
The Finance Ministry’s tax inspectorate concluded in a report rushed out on Sunday that Woerth had not intervened in the tax affairs of the Bettencourts, or their wealth manager or friends while serving as budget minister until March.
LOSS OF TRUST
An opinion poll conducted before the report was released indicated most voters do not trust Woerth. The LH2 survey published on Monday found that 57 percent of respondents had no confidence in the minister and only 28 percent trusted him.
The funding scandal contributed to the government’s loss of an ultra-safe parliamentary seat to the left in a by-election on Sunday.
Woerth was treasurer of Sarkozy’s campaign and remained UMP treasurer while serving as budget minister in charge of tax matters, and his wife worked for Bettencourt’s wealth manager, prompting accusations of conflicts of interest.
In the television interview, Sarkozy tried to refocus public attention on the pension reform and the need for budget savings to bring down a public deficit of 8 percent of gross domestic product and public debt of more than 80 percent of GDP.
