Two of President Nicolas Sarkozy's close entourage have been arrested and placed in police custody for questioning over their roles in a suspected illegal political party funding scam connected to French weapons sales to Pakistan and Saudi Arabia.
Nicolas Bazire, managing director and Head of Development and Acquisitions of French luxury goods group LVMH, who was Sarkozy's best man at his marriage to Carla Bruni in 2008, was arrested early Wednesday morning when his home and business offices were also searched by police from the National Financial Investigation Division, (DNIF).
Thierry Gaubert, a former communications director for Sarkozy when he was mayor of the town of Neuilly-sur-Seine, near Paris, and who was later an advisor to Sarkozy when he was budget minister, was arrested on Monday and was brought before an examining magistrate for questioning on Wednesday.
The magistrate, Judge Renaud Van Ruymbeke, last year opened an investigation into suspected illegal party funding from bribes, officially described as commissions, paid to secure the sale to Pakistan of three French Agosta-class submarines in 1994.
The commissions, amounting to the equivalent of tens of millions of euros, were largely paid to Pakistani officials, but Van Ruymbeke is studying evidence that some of the money secretly returned to France, in a system known as retro-commissions, to fund the political activities of former French Prime Minister Edouard Balladur.
Van Ruymbeke, assisted by Judge Roger le Loire, is also investigating the existence of similar retro-commissions suspected of being paid in connection with the sale to Saudi Arabia, also in 1994, of three La Fayette frigates.
Material and verbal evidence suggests that retro-commissions helped fund Balladur's failed 1995 presidential election campaign. Bazire, 54, was Prime Minister Balladur's principal private secretary and became his presidential campaign director. Nicolas Sarkozy, Balladur's budget minister from 1993 to 1995, was his campaign spokesman.
The French national audit office, the Cour des comptes, later contested Balladur's campaign accounts, notably the origins of large sums in cash that his staff claimed were the proceeds of the sales of T-shirts and other trinkets during national meetings.
A key figure in the suspected funding scam from the Pakistani and Saudi Arabian sales is Paris-based, Franco-Lebanese arms dealer Ziad Takieddine, who was on September 13th formerly placed under investigation - a French legal move one step before charges are brought - for "aiding and abetting the misuse of company assets" and "receiving" the proceeds. He was ordered to remain in France and to regularly report his presence, and refrain from contact with other witnesses in the case.
Questioned on September 8th, Gaubert's estranged wife, Princess Hélène of Yugoslavia, told DNIF police officers how, during the period 1994-1995, Gaubert accompanied Takieddine on trips to a Swiss bank to withdraw large sums of cash with which the two men returned to France. She said the money, transported in large suitcases, was then handed over to Nicolas Bazire in person in Paris. She reiterated her statement under further questioning on Monday.
Sarkozy, Balladur, Bazire and Takieddine have all denied any knowledge of illegal funding.
Van Ruymbeke's investigation, and in particular the arrests this week of Bazire and Gaubert, is highly embarrassing for President Sarkozy notably because, as budget minister under Balladur, he authorized the financial arrangements for the payment of Takieddine and other intermediaries in the 1994 weapons sales.
According to a document obtained by Luxembourg police and detailed in an official evidence report dated January 2010, Sarkozy supervised the creation, at the end of 1994, of a company in Luxembourg, called Heine, that was set up to handle payments of secret commissions paid from the submarines sale to Pakistan.
Questioned last year by a French parliamentary committee, Bazire denied there had been any secret funding of Balladur's election campaign. "The scenarios raised in the press concerning the payment in cash of retro-commissions are totally unbelievable", he told the MPs.
Van Ruymbeke has established that Takieddine was officially imposed by the Balladur government to serve as an intermediary in the weapons sales to Pakistan and Saudi Arabia. Takieddine and his associates were promised the equivalent of 33 million euros in secret commissions for the Pakistan deal, and 213 million euros for the frigates sale to Saudi Arabia.
Following Balladur's 1995 presidential election defeat at the hands of his mainstream right arch rival Jacques Chirac, the bitter feud between the Chirac and Balladur camps saw newly-elected Chirac cancel outstanding promised commission payments. While this reduced Takieddine's cut from the frigates sale to Saudi Arabia to the equivalent of 91 million euros, he had already received the equivalent of 28 million euros in commissions for the submarines sale to Pakistan.
The arms dealer's French-based wealth, which includes luxury apartments in Paris, a French Riviera villa and a yacht, were acquired from the proceeds of the commissions and are not declared in his French tax returns.
Van Ruymbeke's investigation was opened in 2010 following evidence obtained in a separate ongoing French judicial investigation into the 2002 murders in Karachi of 11 French naval engineers who were helping build one of the three Agosta submarines. It is suspected by the magistrate leading that investigation that they were the victims of a revenge attack for the non-payment of commissions to Pakistani officials, after all the payments were halted immediately after Balladur's political rival Jacques Chirac beat him to the presidency in 1995. (For more on this, see Mediapart's Q&A guide here and a video presentation here).
The intermediary and the president's men
Beginning in July, Mediapart has published a series of exclusive investigations into the continued role of Takieddine as an intermediary in arms and commercial deals negotiated between 2002 and 2009 with several Arab countries and managed by Nicolas Sarkozy's closest and longest-serving aides, both when Sarkozy was a minister and after he became president.
The aides include current interior minister Claude Guéant, the president's former chief-of-staff, and the former minister and current presidential advisor, Brice Hortefeux. The latter, along with the current head of Sarkozy's ruling UMP party, Jean-François Copé, enjoyed holidays with Takieddine, as photos exclusively obtained and published by Mediapart have demonstrated. Copé, 47, was French budget minister between 2004 and 2007.
Mediapart's exclusive investigations (beginning here) into Takieddine's role and relations among Nicolas Sarkozy's close entourage have revealed how the arms dealer surprisingly pays no income nor wealth tax in France, his fiscal domicile and where his fortune is estimated to total 40 million euros.
Mediapart has further disclosed how in 2003 Takieddine was destined to receive 350 million euros in secret commissions from another arms contract, this time with Saudi Arabia, negotiated on behalf of Nicolas Sarkozy's aides via a company run by the French interior ministry when it was headed by Sarkozy. Mediapart has also disclosed how the arms dealer, while negotiating that contract, was saved by Sarkozy's entourage after an alleged assassination attempt on the exclusive Caribbean island of Mustique. Mediapart has detailed how Takieddine was mandated by Nicolas Sarkozy's staff, before and after he became French president, to negotiate major weapons and security contracts with the Libyan regime of Colonel Muammar Gaddafi.
Mediapart revealed how Takieddine played a central role in establishing close ties between France and Syria in the period between 2007 and 2009, including the introduction of French President Nicolas Sarkozy to Syrian President Bashar al-Assad. In return, Takieddine took part in negotiations led by French oil giant Total for contracts in Syria. According to internal notes and documents from Total, exclusively obtained by Mediapart, President Sarkozy leant political support to Takieddine's involvement in the discussions.
On August 30th, Takieddine's estranged British wife Nicola Johnson, who is engaged in a bitter divorce battle with the arms dealer (see Mediapart article here), notably over the size of a financial settlement,was also questioned by French police acting on Van Ruymbeke's instructions. Johnson, 50, was asked to detail what she knew about Takieddine's personal fortune and his political relations. She is seeking a settlement of 25 million euros from Takieddine, who also has properties in London and Beirut.
Enlargement : Illustration 4
According to a statement of assets he signed on October 23rd 2008 in an application for a loan from Barclays Bank and exclusively revealed by Mediapart, the aggregate value of Takieddine's assets was assessed at 97.2 million euros, over 40 million of which are located in France - where he pays no taxes. Based on an estimate of her husband's "real and movable properties", Nicola Johnson evaluates the couple's overall estate at a value of 104,036,000 euros.
-------------------------
For more on this story and Mediapart's exclusive investigations into the political scandal surrounding the activities of arms dealer Ziad Takieddine, click on the links below:
Arms dealer probe brings illegal funding scandal closer to Sarkozy
The secret financier who brings danger to the Sarkozy clan
Sarkozy, the arms dealer, and a secret 350 million-euro commission
The well-connected arms dealer and his tax returns
How Sarkozy aides saved arms dealer from paradise island 'death blow'
Exclusive: how Sarkozy's team sought grace for Gaddafi's murderous henchman
The arms dealer and his Paris party for the glitterati
Exlusive: how President Sarkozy's team dealt with Gaddafi
When Total paid the bill for the Elysée's secret emissary
How French intelligence shields the sarkozy clan's unofficial emissary
Divorce court freezes arms broker's assets
The French-built stealth offroader that may be hiding Gaddafi
-------------------------
English version: Graham Tearse