Two ministers quit French government as reshuffle looms

PARIS, June 20 (Reuters) - French armed forces minister Sylvie Goulard unexpectedly quit her job on Tuesday, saying she did not want to stay on because of an investigation overshadowing her Modem party's affairs in the European parliament.

That followed an announcement late on Monday that Richard Ferrand, an aide to President Emmanuel Macron and minister for territorial planning, facing a separate judicial investigation, would move out of government to a job as leader of his party in parliament.

After a solid win for his centrist Republic On the Move party in a parliamentary election on Sunday, Macron is preparing a government reshuffle before embarking on far-reaching economic and social reforms, including overhauling labour rules.

The ministers' departure gives Macron a chance to reshape his government without including names who could prove awkward. The president, elected just over a month ago, made improving transparency in politics a priority.

The reshuffle will now be more far-reaching than expected. It is due to be announced by Wednesday evening, with Prime Minister Edouard Philippe staying in the job.

Goulard is a member of Modem, the centre-right party that allied itself to Macron's Republic on the Move (LREM) centrist party in the presidential and legislative elections. Since June 9, Modem has been the subject of an investigation into allegations of misuse of public funds.

"Defence is a demanding portfolio. The honour of our armies, that of the men and women who serve and who put their lives in danger, should not be mixed up with controversies that have nothing to do with them," Goulard said in a statement.

Macron appointed members of several parties among his ministers after he was elected president in May, including from Modem and the conservative The Republicans, seeking to further redraw a political landscape blown apart by his election on an independent centrist ticket.

LREM's solid majority in parliament means Macron will not depend on Modem's votes to get legislation through parliament, giving him more margin of manoeuvre on how to deal with them and whether to keep them in government.

Alongside Goulard, he also picked Modem chief Francois Bayrou as justice minister and Modem member Marielle de Sarnez as junior European affairs minister.

De Sarnez, a former EU lawmaker who was elected to France's parliament on Sunday, told Reuters she would be happy to stay on in government but would be equally happy to head the Modem group in parliament.

While widely viewed by pundits as a way of getting his case out of government, Ferrand told RTL radio his becoming leader of his party in parliament was "strategic."

A preliminary investigation is under way over allegations he benefitted improperly from property deals done six years ago by a health insurance fund he managed in the Brittany region.

Being a target of a preliminary investigation in France is not an indication of guilt. Prosecutors can decide to either drop it or proceed to a full-fledged investigation.