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Updated: June 4, 2010 17:15 IST

Terrorism inquiry links Sarkozy to corruption

  • DPA
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French President Nicolas Sarkozy. File photo: AP.
French President Nicolas Sarkozy. File photo: AP.

A broad investigation into a 2002 terrorist attack in Pakistan that killed 11 French naval engineers has linked French President Nicolas Sarkozy to a complex kickback affair.

As a result, the lawyer representing the families of the victims of that suicide bombing in Karachi has demanded that Mr. Sarkozy resign.

“We consider that Sarkozy lied to the families when he met with them,” Olivier Morice told the German News Agency dpa. “The families are indignant. We think this was a state lie. Sarkozy must therefore resign.” Mr. Morice based his demand on the fact that the judges investigating the May 8, 2002 attack believe it was not part of al Qaeda’s terror war against the West, but rather the result of political infighting among French right—wing politicians, in which Mr. Sarkozy apparently played a major role.

“Illegal offshore company”

According to the French online daily Mediapart, Luxembourg police have found that in 1994 Mr. Sarkozy, then budget minister under Prime Minister Edouard Balladur, set up an illegal offshore company to help finance his boss’s upcoming presidential campaign.

Called Heine, the Luxembourg—based company was allegedly used to pay bribes to intermediaries in overseas arms sales by the French naval defence company DCN and funnel kickbacks from those deals back to France.

While paying bribes to foreign agents was legal at the time, kickbacks — or retro—commissions, as they are called here — were not.

“According to a document, the agreements on the creation of (Heine) appear to come directly from Prime Minister Balladur and Finance Minister Nicolas Sarkozy,” the Luxembourg police file reportedly says, misidentifying Mr. Sarkozy’s post.

Over 94.4 million francs involved

More than 94.4 million francs (14.4 million euros, or currently 17.5 million dollars) are believed to have flowed back to France in kickbacks from weapons deals, including from the sale of three Agosta 90 submarines to Pakistan for an estimated 950 million dollars.

“A part of the funds that passed through Luxembourg returned to France for the financing of French political campaigns,” Mediapart quoted the police dossier as saying.

Some of that money is believed to have been used by Mr. Balladur in his unsuccessful campaign for the French presidency in 1995, which Mr. Sarkozy managed.

He was defeated in the first round by his conservative arch—rival Jacques Chirac, who went on to win the second round of the vote.

More important for the investigation into the terrorist attack, more than 80 million dollars in bribes were allegedly to be paid to Pakistani politicians and military personnel in the submarine deal.

But when Mr. Chirac became president, he immediately shut down Mr. Balladur’s alleged bribe—and—kickback system, leaving about 15 per cent of the Pakistani bribes unpaid. Judges now believe that the Karachi bombing was a retaliation for non—payment of the bribes.

Mr. Morice said that one of the investigating magistrates, Marc Trevidic, told the victims’ families last year that this theory was “cruelly logical.” Significantly, the 11 French nationals killed in the Karachi attack were there to complete work on the three submarines. (A total of 15 people died in the bombing, and another 40 were injured.)

Grotesque, says French govt. spokesman

French government spokesman Luc Chatel labelled the reports about Mr. Sarkozy’s involvement in the affair as “grotesque.” “The president of the Republic has expressed himself in the past and said these are just fables,” Mr. Chatel said on Thursday in a televised interview. “The president has nothing to do with this affair.” However, Mr. Morice said that the Luxembourg police report “demonstrates” that the president’s implication was not a fable.

“I am certain that the operation he put in place when he was budget director played a central role in the affair,” he said.

State secrets

Opposition politicians have demanded a formal investigation into the kickback allegations, but this is unlikely to happen. For one thing, the parts of the police file cited by Mediapart provide no proof for the allegations. In addition, most of the French government documents linked to overseas arms sales are classified as state secrets, and this veil is unlikely to be lifted as long as Mr. Sarkozy or any other right—wing politician is president.

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