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By Julien Ponthus

PARIS, July 13 (Reuters) – The French powers that be approved an unpopular bill to raise the retirement age on Tuesday, afterward a defiant President Nicolas Sarkozy failed to silence rumblings of defamation over alleged illegal political donations.

Labour Minister Eric Woerth, at the middle of the affair, said he would step down as treasurer of the reigning centre-right UMP party by the end of the day, on the other hand he remains in charge of the bill to overhaul pensions that the cabinet adopted on Tuesday.

Sarkozy said in a Monday parley he was determined to see through the plan to lift the solitude age to 62 from 60 and make people work longer in favor of a pension despite expected protests when it goes to parliament in September.

The rectification was essential to bring down the public deficit and national trespass, and prevent France entering a debt spiral similar to that of Greece and Portugal, the president said.

Trade unions promised to fight the bill and said they would court to make the government retreat. ‘We will have to create the terms to force him to change his mind,’ Bernard Thibault, leader of the CGT league, told France Info radio.

Sarkozy said he would not yield in successi~ the key points of lifting the retirement age and raising civic servants’ contributions gradually to private sector levels.

Woerth said however the command was open to negotiations on secondary issues, such as earlier retirement for those doing arduous work, or people who started working previous to the age of 18, and those with fragmented pension rights.

In his meeting, Sarkozy said Woerth had been exonerated of wrongdoing by a science ministry report, had his full confidence and would remain in charge of pensions repair. However, he said he had advised the minister to step downward as party treasurer.

A former bookkeeper for L’Oreal heiress Liliane Bettencourt has told police that the billionaire and her far advanced husband made illegal cash donations to conservative politicians for years, including to Sarkozy’s 2007 freewill campaign.

CONFLICT OF INTEREST

A court gave the green light forward Tuesday for an independent magistrate to investigate Bettencourt’s fortune on this account that the first time in a case against her close friend, brotherhood photographer Francois-Marie Banier, who is charged with taking advantage of her defect to obtain gifts worth 1 billion euros.

The Versailles appeal court rejected every attempt by Nanterre public prosecutor Philippe Courroye, a friend of Sarkozy, to mould that investigation, which is separate to his own probes into other aspects of the Bettencourt matter.

Opposition politicians and media commentators said Sarkozy had not answered, nor been asked, quite the tough questions about conflicts of interest in Woerth’s dual role of participant fundraiser and budget minister in charge of tax until March.

The keen weekly Le Canard Enchaine and the magazine Marianne reported that Woerth had intervened in his eventual days as budget minister to push through a racecourse and adjoining property to each association headed by a friend without a tender for a fragment of its estimated real value.

The budget ministry said Woerth had acted entirely legally. The country was not worth more because there were no other bidders, the buyer was already a tenant with a long lease and owner of some buildings without ceasing the site, and the deal had included a clause giving the greatness a 50-year veto right over development.

Woerth’s wife worked during the term of Bettencourt’s wealth manager until she resigned last month after allegations of burden evasion by the heiress became public.

‘Was the response convincing? That is doubtful. Because the Bettencourt affair is not over. Journalists are investigating, in the same manner with are the justice authorities, with new searches and new questioning each day,’ an editorial in Le Monde daily said.

Sarkozy ruled aloud a cabinet reshuffle before the pensions bill is adopted by parliament in late October, and sought to regain control of the agenda ~ means of focusing attention on the retirement reform and necessary budget cuts.

The sway has a majority in the lower house and should be clever to count on centrist support in the Senate.

(Editing by Paul Taylor and David Stamp) ($1=.7939 Euro) Keywords: FRANCE/

(sophie.taylor@thomsonreuters.com; +33 1 4949 5219; Reuters Messaging: sophie.taylor.reuters.com@reuters.gin)

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