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  • Karachi Scandal Rocks French Political Establishment
    Posted by Christina Mackenzie 5:59 PM on Nov 23, 2010

    Karachi. Financial capital of Pakistan. But also the name of a scandal in France which is keeping the country fascinated, if totally confused, involving as it does a contract for submarines, overhand and underhand commissions, senior politicians and military officials, financing of a presidential bid, frequent references to current President Nicolas Sarkozy and, tragically, the violent deaths of 15 people.

    I'll try and outline it for you.

    At the beginning, on September 21, 1994, there was a FFr5.5 billion (French francs at the time, worth around €850 million today) contract between DCN (as it was then, before becoming DCNS later) and Pakistan for three Agosta submarines. DCN agreed to pay 10.25% of the contract, FFr554 million francs, in commissions to the contract enablers, which was perfectly legal and usual for defense contracts until the practice was stopped by the OECD in 2000.

    These commissions went two ways:

    Way 1: FFr338 million was to the SOFMA (Société Française de Matériel d'Armement) which then channelled it via Liechtenstein and the Isle of Man to an off-shore company called Heine created by DCN with the approval of then-Prime Minister Edouard Balladur.

    blog post photo

    Edouard Balladur photo credit: www.

    and his budget minister Nicolas Sarkozy (are you beginning to see where this is going?), and another one called Eurolux.

    blog post photo

    President Nicolas Sarkozy. Photo credit: French Presidency/P.Segrette

    These FFr338 million were then to be forwarded to Pakistani military officials including Mansur Haq, the Naval Chief of Staff and to political officials, including current President Asif Ali Zardari. But between FFr10 to 20 million was never paid.

    Way 2: The remaining FFr216 million was for two Lebanese businessmen: Ziad Takieddine and Abdul Rahman El-Assir. Of this FFr33 million was never paid.

    In 2002 a car bomb exploded in Karachi killing 11 French DCN engineers who were leaving their hotel to go to work on the Agosta submarines. Four Pakistanis also died in the attack.

    At first suspicion for the attack lay with Al-Qaida but now there is increasingly strong suspicion that the attack may have been linked to the commissions that were never paid. And why were they not paid? Because Chirac ordered them stopped in 1996 when he got wind that one or both of the Lebanese were probably returning part of their commission to finance Balladur's political career. And that would be totally illegal.

    Although there is no formal proof linking the car bomb with the end of the commissions, the suspicions have been given strong credence over the past few days by Chirac's defense minister of the time, Charles Millon and his secretary general, Dominique de Villepin (who, just to add spice to the whole thing is Sarkozy's sworn enemy!)

    Meanwhile, the families of those who died in the attack have filed a manslaughter suit against Chirac, de Villepin and former executives involved in the submarine deal.

    Tags: ar99, France, Pakistan

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