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France

Kickback scandal tightens around ex-prime minister

Text by Joseph BAMAT

Latest update : 2011-07-09

Former French prime minister Edouard Balladur (pictured) is back in the spotlight after new testimony from his ex-chief of staff added weight to accusations that defence contract kickbacks were used to fund Balladur's 1995 presidential bid.

As the Strauss-Kahn affair unfolding in New York continues to steal international headlines and enrapture France’s attention, another scandal threatening the political right in France has also taken an interesting twist.

Edouard Balladur, a former French prime minister and close ally of President Nicolas Sarkozy, has once more come under fire as investigators this week stepped up the inquiry into suspected kickbacks from defence sales in the 1990s. Balladur’s former chief of staff, Pierre Mongin, provided testimony this week that lends weight to accusations against the ex-prime minister in the scandal.

Investigating judges in France are trying to determine the source of around 3 million euros that were deposited into Balladur’s 1995 presidential campaign fund. Specifically, they want to know if the questionable money came from an elaborate kickback scheme involving the sale of submarines to Pakistan’s military.

Balladur has vigorously denied allegations that the cash came from kickbacks, and earlier told a court that the money was probably raised from the sale of t-shirts and other knick-knacks at campaign rallies. His supporters also advanced the claim that the 3 million euros could have come from a “special fund” (fonds spéciaux, in French) particular to the prime minister’s office, the use of which French PMs have traditionally not been required to report on.

However, Mongin, the former prime minister’s chief of staff from 1993 to1995, told investigators on Monday that no money from that special PM fund had been transferred to Balladur’s separate campaign war chest. “I did not give cash directly to Mr. Balladur,” Mongin, who was directly in charge of overseeing payments, insisted.

The kickback scandal, dubbed Karachigate by some commentators, touches several senior political figures in France, including the current president. Nicolas Sarkozy, who was Balladur’s campaign spokesman during his unsuccessful bid for the presidency, is suspected of approving the creation of an offshore company called Heine to process payments to defence contract intermediaries.

Jacques Chirac beat Balladur to become France’s president, and subsequently ordered a halt to commissions for French officials in the sale of submarines to Pakistan. In 2002 a suicide attack in the Pakistani city of Karachi killed 11 French navy engineers. The victims’ families suspect the bombing was payback for ending kickbacks and want answers.

Balladur’s return

A Turkish-born, right-wing politician, Balladur was favoured to win the 1995 presidential elections before Chirac won the Rally for the Republic party’s nomination and pulled off a major political upset. Balladur mostly slipped out of public view after his defeat, but in April 2010 the left-leaning daily Liberation set Karachigate in motion after it wrote that it had unearthed documents proving the dubious cash deposits.

Balladur reacted to the affair by reminding people that his campaign funds were given the all-clear by the French Constitutional Court.

Sarkozy recently named Balladur a special envoy for the Group of Eight world’s richest countries, with the mission of helping “Arab countries in their transition towards free and democratic societies.”

The president’s office said trips to Tunisia and Egypt would keep Balladur out of the country from July. The office added that the special mission would last until December 2011, when France passes on the G8 presidency to the US.

Process of elimination

After Liberation’s revelations, inquiries by both French officials and other journalists spun out a complex web between the alleged kickbacks and the defence contracts, counting numerous players among France’s ruling elite. But now the case is focusing on Balladur.

Judge Renaud Van Ruymbeke, one of the judges in charge of the case has been questioning several members of Balladur’s former entourage, including the ex-chief of staff Mongin, as well as Balladur’s former campaign manager and accountant.

Mongin’s denial that special PM funds were tapped into has been widely seen in France as a blow to Balladur. “Now, only one hypothesis is left for judge [Van Ruymbeke] to study,” the leading French daily Le Monde wrote on Friday. That is, that Balladur’s run for the presidency was fuelled by kickbacks, with deadly consequences.

Date created : 2011-07-09

  • FRANCE

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  • FRANCE

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