A former French Defence Minister has told a judge in Paris that reverse kickbacks or what the French term “retro-commissions” were in fact paid in the 1995 deal to sell six Agosta Class submarines to Pakistan.
The judge is enquiring into the causes of the 2002 blast that killed 11 French naval engineers sent to Karachi to oversee the assembling of the Agosta submarines. The former Minister's declarations corroborate a 2002 French secret service report which was kept under tight wraps by the authorities and which became public only in 2008 when it was leaked by the media.
Until then it had been alleged that the engineers were killed by the Taliban or by Islamist extremists. Sources close to the enquiry in France say the Pakistan Army and the ISI engineered the blast in reprisal against the non-payment of commissions in the Agosta deal.
The reverse kick-backs in the 1995 deal were expected to finance the presidential campaign of Prime Minister Eduard Balladur. French President Nicolas Sarkozy was his Minister for the Budget and became the Prime Minister's campaign manager, turning his back on Mr. Chirac who was then Mayor of Paris and leader of the opposition RPR Party. Mr. Balladur lost the election and Mr. Chirac in his capacity as the new President of France ordered that the commissions for the Agosta contract not be paid to Saudi Arabian and Pakistani intermediaries.
Soon after, it is alleged, the French DCN, the makers of the Agosta began receiving threats that warned of “dire consequences” if the commissions were not paid. In 2002 the French engineers were specifically targeted when a bomb went off under the bus in which they were travelling.
The story has become murkier in recent months and the minister's declarations could embarrass Mr. Sarkozy who was the Minister of Budget and fully aware of all contracts signed by the French state at the time. It has been revealed that Mr. Balladur's campaign accounts show cash inflows of up to 10 million francs (€1.6 million) which have not been satisfactorily accounted for. Jean Louis Debre, the President of the Constitutional Council who is close to Mr. Sarkozy, has refused to release details relating to Mr. Balladur's campaign expenses.
Other revelations have followed. The DCN in order to cover up the payment of commissions created shadowy companies based in the Duchy of Luxembourg. One of these called Heine, was allegedly directly overseen by the then Budget Minister, Mr. Sarkozy.
