In May 2002, 11 French engineers working on the assemblage of Agosta class submarines sold by France to Pakistan died in a bomb blast in Karachi. Initially presumed to be the work of Islamist terrorists, the blast was later revealed to be an act of retaliation by elements in the Pakistani military and the ISI in response to the French state's failure to pay Pakistani officials $33 million in promised kickbacks for a €1.8-billion contract for the purchase of Agosta submarines in 1994.
Judges investigating the affair are now attempting to prove or disprove whether French Prime Minister Edouard Balladur received “retro commissions” or reverse kickbacks for the contract. Mr. Balladur has given no credible explanation for 10 million French Francs (€1.5 million) which found their way into his campaign coffers.
Mr. Balladur, it is alleged, imposed two Lebanese businessmen as intermediaries on the Pakistani negotiators. The deal then struck, was that Pakistani officials would receive 338 million French Francs as commission for signing on the dotted line, while another 216 million French Francs would be added to the price of the contract and returned to the French as reverse kickbacks.
A web of offshore companies was created to channel the alleged commission payments. It also quotes from a confidential report written by a former French intelligence officer about the case. The secret memo says that Pakistani officials kept asking for the unpaid bribes for several years.
Mr. Balladur lost the election to his arch rival Jacques Chirac, who then decided to stop the payment of commissions to the Pakistani officials. The Pakistanis sent several messages to the French warning of dire consequences if the “debt” remained unpaid.
In June 2009, The Hindu , on the basis of discussions with lawyers close to the enquiry, reported that investigating magistrates Marc Trevidic and Yves Jannier had obtained a top-secret memo containing the above allegations in October 2008 from the state-owned shipbuilder DCN which supplied the submarines.
It was Judge Jean-Louis Bruguiere, who is close to both Mr. Balladur and President Nicolas Sarkozy (then the Prime Minister's campaign spokesman), who decided after an initial investigation that the blame for the May 2002 Karachi blast lay with Islamist militants. Ironically, it is Judge Marc Trevidic (who has now reversed the Rwanda report), who decided to reopen the case to begin tracking the “reverse kickbacks” enquiry. Giving commissions was not illegal (it is now) but receiving reverse kickbacks has and remains illegal.
