kickback investigation could implicate Sarkozy

PARIS - A French magistrate has decided to open an investigation into possible kickbacks from a sale of submarines to Pakistan that could implicate President Nicolas Sarkozy, LCI television reported Thursday.

The investigation grew out of a judicial inquiry into the motives for a 2002 terrorist attack in Karachi, Pakistan, that killed 15 people, including 11 French naval engineers.

The judge investigating the May 8, 2002, suicide attack believes it was not part of Al Qaeda’s plot, but the result of political infighting among French right-wing politicians, in which Sarkozy may have played an important role.

According to that theory, the attack was carried out by elements of the Pakistani military because of non-payment of part of the bribes for the 1994 purchase by Pakistan of three Agosta 90 submarines from France for an estimated 950 million dollars.

Significantly, the 11 French nationals killed in the Karachi attack were there to complete work on the three submarines.

The sale of the submarines was negotiated by then prime minister Eduoard Balladur. Investigators believe that some 13.2 million French francs (2.1 million euros; currently about $2.94 million) flowed back to France in the form of kickbacks, much of it to help Balladur’s unsuccessful 1995 presidential campaign.

At the time, Sarkozy was Balladur’s budget minister, as well as the treasurer of his presidential campaign.

The French online daily Mediapart reported earlier this year that Luxembourg police have found that in 1994 Sarkozy 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 - were not.

More than 80 million dollars in bribes were allegedly to be paid to Pakistani politicians and military personnel in the submarine deal.

But the payments were stopped by Balladur’s conservative arch-rival Jacques Chirac when he became president in 1995. Investigators now believe this might have been the motive for the deadly attack.

The lawyer for families of the French victims of that bombing, Olivier Morice, told DPA earlier this year that the Luxembourg police report “demonstrates” that the president’s implication was not implausible.

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

Opposition politicians had demanded a formal investigation into the kickback allegations, and this is now likely to happen. However, as president, Sarkozy is immune from all criminal prosecution except treason until his term expires.

He and Balladur have denied all of the allegations.