L'Oréal row minister to resign as Sarkozy party treasurer

Eric Woerth, labour minister embroiled in Liliane Bettencourt tax scandal, seeks to appease critics calling for his resignation

French labour minister Eric Woerth stepped down as treasurer of the ruling centre-right UMP party today. He is at the centre of a furore over alleged illegal political donations. Photograph: Philippe Wojazer/Reuters

Eric Woerth, the French minister at the heart of a political furore surrounding the fortune of L'Oréal heiress Liliane Bettencourt, said today he would step down as treasurer of Nicolas Sarkozy's party in a move designed to appease critics calling for his resignation from the government.

In the latest twist of a saga which has focused attention on the habits and alleged hypocrisies of the French power elite, the labour minister told journalists this morning he would be giving up his responsibilities over the finances of the rightwing Union for a Popular Movement (UMP) party before the end of the month.

"Yes, I'm going to do it. I will look at the calendar and I will do it, of course," said Woerth, leaving a cabinet meeting at which he presented the president's flagship pensions reform.

Sarkozy, who has backed the former budget minister to the hilt, is depending on Woerth's survival as a credible minister to push through the single biggest – and most divisive – reform of his remaining time in office.

To that end, he said in a television interview last night that he had "advised" Woerth to step down as party treasurer – a fundraising job that has led to accusations of a conflict of interests since suggestions of Bettencourt's tax evasion emerged last month.

Until March, Woerth was France's budget minister in charge of stamping out tax fraud. Opposition critics have accused him of turning a blind eye to the inconsistencies in the management of the 87-year-old heiress's €17bn fortune – a charge vehemently rejected by Woerth and Sarkozy, and ruled out by an official finance ministry report.

It is also Woerth who is directly implicated by allegations of illegal funding to Sarkozy's presidential campaign. He is alleged to have accepted a donation of €150,000 from Bettencourt in the months leading to the president's victory in 2007.

After a television performance hailed by UMP members as a "breath of fresh air" following weeks of alleged scandal and rampant speculation, Sarkozy will hope to raise his floor-scraping approval ratings before Paris goes on summer holiday.

A key part of that effort is focused on the controversial pensions reform, which plans on raising France's legal retirement age from 60 to 62. That proposal – marketed by Woerth as "pragmatic and responsible" and endorsed by the cabinet today – is likely to see the government battered by fresh union-led protests come September.