Latest update: 22/11/2010
Timeline: The Karachi bombing and kickbacks allegations
In 2002 a suicide bomber killed 14 workers of French marine engineering company DCN in Karachi, 11 of whom were French citizens. These killings are linked to submarine sales by France to Pakistan that go back to the early 1990s.
By FRANCE 24 (text)
Edouard Balladur is French prime minister under then President Francois Mitterrand.
The French Naval Construction Executive (DCN) is looking to sell French submarines to Pakistan.
As France is competing with Germany for the contracts, SOFMA, the company responsible for the export of French military hardware, is offered a 6.25 percent commission on any future sales. This commission was perfectly legal at the time.
In September 1994 a contract is signed between Pakistan and France for the purchase of submarines for a total of 5.41 billion francs (826 billion euros).
SOFMA looks to pocket 338 million francs, while two Lebanese businessmen, through off-shore company Mercor Finance, look set to receive a four percent commission (216 million francs) to be shared with Pakistani intermediaries for securing the deal.
The French presidential election campaign pitches Prime Minister Edouard Balladur against Jacques Chirac for the Gaullist RPR party’s nomination. Budget Minister and future French president Nicolas Sarkozy is in charge of Balladur’s campaign.
According to left-leaning French daily Liberation in an April 2010 report, the Lebanese businessmen sold their commission contract to a Spanish bank in June 1995 for an immediate down-payment of 54 million francs, with the rest to be paid once the DCN contract with Pakistan was concluded.
Almost simultaneously, 10 million francs in cash (mostly in 500-franc notes) is paid into Balladur’s campaign fund account (one fifth of the total funds), according to the Liberation report.
Jacques Chirac wins the party nomination and is elected president. On discovering the scale of the sales and commissions to be paid, he orders an immediate inquiry led by Defence Minister Charles Millon.
In November 2010, Millon confirmed that he had concluded in his 1996 investigation that there had been kickbacks from the commission payments.
Jacques Chirac orders that all commission payments to Mercor Finance be halted immediately, although according to Liberation, payments continued well into 2001.
A suicide bomber in Karachi, Pakistan kills 14 people, of whom 11 are French naval engineers working for DCN.
France immediately accuses al Qaeda of instigating the attack - although no one has ever claimed responsibility for it.
Anti-terrorism judge Jean-Louis Bruguiere, assigned to lead the investigation into the bombing, is replaced by two investigating magistrates, Marc Trevidic and Renaud Van Ruymbeke.
Marc Trevidic opens a new direction in the investigation, namely that the attack was linked to the halting of commission payments.
Weekly French news magazine Le Point reveals that a 2002 report by a former agent of the DST (French homeland defence and intelligence agency) concluded that the attacks were “financially motivated”.
2010 – June
French investigative news website Mediapart claims that, according to the Luxembourg authorities, Sarkozy (as budget minister in 1994) set up off-shore company Heine to handle transactions to Mercor Finance in the submarines deal.
The website says that Luxembourg police believed “some of the funds that passed through the Luxembourg account were channelled back to France to finance the campaigns of French political parties.”
Such allegations had been described as a “grotesque fairytale” by Sarkozy in 2009.
Investigating magistrate Trevidic confirms that there were indeed kickbacks associated with the submarine sales.
2010 – August
The families of the 2002 bombing victims start civil proceedings against Jean-Marie Boivin, former administrator of the Heine offshore fund set up in Luxembourg in 1994, for perjury.
The case is handled by Ruymbeke. But Paris prosecutor Jean-Claude Marin says that allegations of corruption by politicians in the 1990s are too old to be investigated.
2010 – October
Ruymbeke announces that he will, after all, investigate the corruption allegations - in particular, the allegations that kickbacks from the submarine sales were used to fund Balladur’s 1995 election campaign.
Balladur says that his campaign funds were given the all-clear by the French Constitutional Court in 1995 and that there is no case to answer.
2010 – November
On November 10, Bernard Accoyer, speaker for France’s National Assembly, refuses to hand Tredivic the testimony of some 60 people – including Balladur - who gave evidence to a parliamentary inquiry into the affair, citing France’s constitutional separation of power between parliament and the judiciary.
News website Mediapart says that two of its journalists working on the Karachi file are under constant surveillance by the French security services.
The satirical newspaper Canard Enchaine claims, in the same week and in a separate case, that Sarkozy is supervising the surveillance of journalists personally. The Elysee Palace denounces these claims as “utterly ridiculous”.
On November 17, in an interview with Mediapart, Gerard-Philippe Menayas, former financial director of the DCN, says that the payment of commissions from the submarine sales passed through a Luxembourg company called Cedel, later known as Clearstream.
Clearstream is the subject of another scandal alleging illegal kickbacks from the sale of warships in the early 1990s which was linked to senior politicians including former Prime Minister Dominique De Villepin, Sarkozy’s arch enemy.
On November 18, the families of the French engineers killed in the 2002 bomb attack in Karachi call for Sarkozy to testify in the case.
A lawyer for the families said they had lodged a demand with Ruymbeke that he question Sarkozy, Jacques Chirac and also Dominique de Villepin in the case.