Amid rumours of the imminent resignation of the Prime Minister, Alain Juppe, the French franc came under attack yesterday and prices fell on the Paris stock exchange.
Mr Juppe denied the rumours last night, and said he and his son would move out of apartments owned by the city of Paris which have been the subject of a judicial investigation of allegations Mr Juppe abused power to lower rent or pay for renovations. "My children have or will move in the coming weeks and I will do the same to turn the page which is for me a deep wound," he said.
It was not clear what effect, if any, the move would have on the investigation of his actions while assistant Paris mayor in charge of finances from 1989 to 1993.
The rumours were prompted by the disclosure that police had opened a preliminary inquiry into possible abuse by Mr Juppe of his position to allocate himself a luxury flat belonging to the city of Paris, and to reduce the rent of another city-owned flat let to his son.
At this stage the affair stops short of being a major scandal but it is proving embarrassing and damaging to the Prime Minister. The political rumour mill has begun to grind out names of possible successors in the unlikely event that President Jacques Chirac feels able to do without Mr Juppe.
A collapse in support for the Prime Minister was confirmed by three opinion polls yesterday which showed that, in the space of a month, backing for Mr Juppe had fallen by 21 percentage points in one poll, 18 in a second poll and 16 in a third. They provided little comfort for Mr Chirac, whose own standing fell by 10, 11 and 13 points in the surveys.
Although tax increases, a public-sector wage freeze and disappointment over the failure of the government to achieve early economic success lie behind the steady drop in the two men's ratings, Mr Juppe is being further damaged by the controversy about the use of city-owned housing. He appeared to have beaten back one legal challenge arising from revelations that he reduced the rent of a flat let to his son Laurent, by Fr1,000 a month while in charge of the finances at the Paris city hall. Prosecutors decided that since Mr Juppe himself had not benefited financially he had committed no offence.
But attention has turned to an apartment let to Mr Juppe, in a chic area of central Paris at a rent well below the market rate. Claims that he was not directly involved in the distribution of city-owned flats appear to have been demolished by evidence from a city employee that Mr Juppe was closely involved in allotting flats, authorising repair work and setting rents. Renovation work worth Fr1.1m (pounds 140,000) was done to Mr Juppe's flat before he moved in.
The case is with prosecutors who have asked Paris city hall for a number of documents, and called on the police to conduct an inquiry to establish the facts. The legal position is not clear, as any offence committed by Mr Juppe may be covered by a statute of limitations.
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