Karachi bomb blast: the astonishing revelations of a French defence minister

The 'Karachi affair' took a dramatic turn this week following the revelations of former French defence minister Charles Millon when he testified before examining magistrate, Judge Renaud Van Ruymbeke earlier this week.

It has had the effect of a political bombshell, with demands that President Nicolas Sarkozy should now volunteer to be questioned by the judge about an affair that he has until today denied any involvement in.

Further below here we reproduce Millon's testimony in full, and for the first time in English. Previous Mediapart articles detailing this very involved affair can be found here, and here and also here.

Judge Van Ruymbeke is leading an investigation into suspected payments of illegal kickbacks from the sale of three Agosta submarines by France to Pakistan, concluded in 1994. The so-called 'retro-commissions', which are sums of money paid as bribes, described as commissions, to secure a deal but which return to France through complex financial routes, are suspected of having financed the presidential election campaign of former French prime minister Edouard Balladur, in post at the time of the deal.

Importantly, Nicolas Sarkozy was Balladur's budget minister and election campaign spokesman. He has dismissed accusations that he was involved in the organisation of the alleged retro-commissions, and has also dismissed the suggestion that Balladur benefited from such a system. As has also Balladur.

The importance of the existence or not of the retro-commissions is founded in an ongoing Paris-based enquiry led by another investigating magistrate, Judge Marc Trévidic, into the deaths of 11 French naval engineers in a bomb blast in Karachi, on May 8^th, 2002. They were working on the construction of the submarines, and Trévidic now believes the attack was in reprisal for the non-payment of bribes that had been promised, back in 1994, to local intermediaries.

The payment of commissions to local intermediaries was, at the time of the deal, legal. What was and remains illegal is the return of kickback cash to France. Balladur's political rival Jacques Chirac won the 1995 presidential election that Balladur fought and Millon served as Chirac's defence minister from 1995 to 1997. In his testimony here, Millon confirms that Chirac ordered the halting of commission payments, although he did not say this was to starve Balladur of political funding.

The existence or not of the retro-commissions is at the heart of the campaign by the families of the 11 engineers, who are civil parties to the case led by Trévidic, to discover the truth of why they were murdered. They have openly accused president Sarkozy of lying, and of mounting a campaign to block access to evidence, notably defence documents.

Millon's statement, given on November 15_^th, refers to two arms contracts signed just before Balladur announced he was running against his fellow Gaullist and rival Jacques Chirac. These were the Agosta submarine contract and the sale of frigates to Saudi Arabia, known as the Sawari II contract.

Balladur's defence minister, François Léotard, introduced two key intermediaries for both deals, Ziad Takieddine and Abdul and Rahman El Assir, both of whom are referred to in Millon's statement below.

The book that Judge Van Ruymbeke refers to, 'The Contract', is that of Mediapart's two investigative reporters specialised in the Karachi affair, Fabrice Arfi and Fabrice Lhomme (see box).

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Judge Van Ruymbeke: "The present investigation is aimed at identifying those denounced by the civil parties as having obstructed the process of justice. [The civil parties] complain that two Nautilus reports, dated September 11^th and November 7^th were hidden from them, and only became know to them at the end of 2008 through separate judicial investigations. The Nautilus reports state that the cause of the attack on May 8^th, 2002, was the result of the halting of payments of commissions demanded during the signature of the Agosta contract, one part of which were intended for the corruption of political Pakistani decision-makers and military officials and the other part for the payment of retro-commissions. Did you have any knowledge of these reports?"

CHARLES MILLON: "Never."

Judge V.R.: "The reports make a link between the attack and the halting of payments of the commissions. In what circumstances did you intervene during the halting of commission payments in the Agosta and Sawari II contracts?"

CHARLES MILLON: "After the presidential elections in 1995, I was named Minister of Defence. In the following 15 days, the President of the Republic asked me to proceed with the revision of arms contracts and to verify as far as possible if there was evidence of the existence of retro-commissions."

Judge V.R.: "Did the President talk to you about his own suspicions?"

CHARLES MILLON: "If my memory is correct, the President said to me, as he declared during a press conference around July 14^th, that he wished there to be a moralisation of public and political affairs and that there was too much noise about arms contracts and the existence of retro-commissions. He therefore asked me to proceed with a verification of all the contracts. Some contracts were confirmed, but, on the contrary, there were others which were the object of revision and even annulment. That was the case of the Agosta contract."

Judge V.R.: "Was that also the case for Sawari II?"

CHARLES MILLON: "I think it was."

Judge V.R.: "How did you proceed?"

CHARLES MILLON: "I asked my ministerial staff to alert all the heads of services so that they proceeded with verifications. In my cabinet, it was Marwan Lahoud who was responsible, under the authority of my principal private secretary."

Judge V.R.: "Were there phone taps targeting the collaborators of François Léotard (extract from the book 'The Contract' –, report D5,– Page 225), François Lépine, Patrick Molle and Pierre-Louis Dillais?"

CHARLES MILLON: "Yes. I asked for them from the Prime Minister, Monsieur [Alain] Juppé, in the person of his principal private secretary, Monsieur Gourdault-Montagne, who is today an ambassador. It was my principal private secretary, Jean-Louis Chaussande, who contacted him. François Lépine, Patrick Molle and Pierre-Louis Dillais had received death threats and that was the reason the phone taps were ordered. It involved an official procedure, the taps having been carried out by, I think, the centre at the Invalides."

Judge V.R.: "What came from the phone taps?"

CHARLES MILLON: "Nothing."

Judge V.R.: "According to an article in Le Monde dated July 9th, 1993, quoted on page 222 of the book 'The Contract', phone taps were apparently carried out by the DGSE under the authority of the Ministry of Defence. Is that true?"

CHARLES MILLON: "That's possible. I don't remember who carried out the taps. I know that it was done under the terms of official procedures."

Judge V.R.: "Did DGSE agents carry out checks on contracts?"

CHARLES MILLON: "I think so. The head of the DGSE was Monsieur Dewatre, who is now retired."

Judge V.R.: "Were the phones of Messrs Léotard, Donnedieu de Vabres and Douffiagues also tapped?"

CHARLES MILLON: "No, not to my knowledge. What I remember is that it was the collaborators who received death threats."

Judge V.R.: "On page 223 of the book, the authors write that you told them that this surveillance targeted the collaborators who had received death threats, between July and October 1995. You are quoted as follows: 'What's more, when Léotard found out, he called me in a total panic, he thought that we had discovered all Balladur's secrets over the arms sales'?

CHARLES MILLON: "I confirm that Léotard, who had learnt that there were phone taps, asked me for an appointment to question me over the reasons for the taps. I met him and I told him them. At that occasion he pointed out that he found it inelegant to investigate contracts concluded during the time he was minister."

Judge V.R.: "Did he speak of the existence of secrets of the Balladur government concerning arms sales?"

CHARLES MILLON: "No."

Judge V.R.: "Did the Ministry of Defence task the secret services to trace the movements of funds from retro-commissions as you indicated while citing [the names of countries] to the authors of the book (page 225)?"

CHARLES MILLON: "I told them exactly that the DGSE had investigated whether there were deposits of sums that came from commissions linked to armaments, and it appeared that there were movements in the countries cited by the authors, but the DGSE never managed to find solid proof of these deposits and movements. It was Dewatre who supervised these operations."

Judge V.R.: "You indicated to the authors of the book that traces had been found in banks in Spain, Switzerland, Malta and Luxembourg. Do you confirm this?"

CHARLES MILLON: "Yes, from memory, according to the reports that were given to me by the DGSE agents."

Judge V.R.: "Did the agents tell you about their suspicions over retro-commissions?"

CHARLES MILLON: "No. The [mission] request covered the movement of funds."

Judge V.R.: Why were these commissions halted?

CHARLES MILLON: "When there was a doubt, we stopped. For the Pakistani contract, going on the secret service reports and the analyses carried out by the ministerial services, we had an intimate conviction that there were retro-commissions. That was the case of the Agosta and Sawari II contracts."

Judge V.R.: "Why these two contracts?"

CHARLES MILLON: "Because we came to positive conclusions, we acquired an intimate conviction."

Judge V.R.: "What elements led you to have an intimate conviction about these two contracts in particular?"

CHARLES MILLON: "I don't know. I based myself on the reports that were given to me verbally by the DGSE."

Judge V.R.: "You also told the authors of the book, page 214, about the following scene during the handing over of powers with Monsieur Léotard: "I was persuaded that Léotard was going to talk to me about reserved affairs or the terrorist threat. Well, no, he said to me, quite feverishly, that I absolutely must go to Saudi Arabia to complete a contract that he had begun under Balladur. I couldn't believe it." Do you confirm this?"

CHARLES MILLON: "Yes."

Judge V.R.: "You added: 'When I later went to Saudi Arabia, one of the kingdom's dignitaries, exasperatedly said to me: 'do you realise, your friends are far too greedy with the commission deals. They give me 8% and keep the remaining 10% for themselves. That's nonsense. May they never come back here, or else I'll cut their tongues off '. Do you confirm this?"

CHARLES MILLON: "Yes. It is a dignitary who said this to me. I do not wish to give his name."

Judge V.R.: "Was he pointing at Monsieur Takieddine?"

CHARLES MILLON: "He wasn't pointing at anybody. It was a preliminary statement. I was negotiating other contracts for France."

Judge V.R.: "Did you have relations with Monsieur Takieddine?"

CHARLES MILLON: "On one occasion. Either at the end of 1995, either the beginning of 1996, he wanted to continue to be an intermediary in Saudi Arabia. Takieddine was not alone but I do not remember by whom he was accompanied. I told him no, in fact I myself never had used any intermediary during negotiations of contracts drawn up at the time I was minister."

Judge V.R.: "Did you have any dealings with El Assir?"

CHARLES MILLON: "I wonder if he wasn't with Takieddine, I don't remember."

Judge V.R.: "Did you have any dealings with Ben Mussalam?"

CHARLES MILLON: "I wonder if he might have been in the same delegation as Takieddine."

Judge V.R.: "At the end of the investigations, what did you do?"

CHARLES MILLON: "Certain commission contracts were ended. Marwan Lahoud and perhaps also the principle private secretary, Monsieur Chaussendre, gave instructions to that end, either to Monsieur Castellan of the DCN, either to M. Mazens, or to the companies involved."

Judge V.R.: "Did you inform the President?"

CHARLES MILLON: "Absolutely. I was in direct contact with his collaborators, in particular with the [Elysée Palace] General Secretary Monsieur Villepin, who I kept regularly informed of the investigations."

Judge V.R.: "Before cancelling the contracts, did you not make sure with the countries concerned that this would not have negative consequences for arms sales contracts?"

CHARLES MILLON: "I am almost certain to have informed the Saudi defence minister, Prince Sultan. He saw no inconvenience in the halting of the commissions concerned."

Judge V.R.: "Were you in direct contact with Monsieur de Villepin?"

CHARLES MILLON: "Yes, me or my principle secretary."

Judge V.R.: "Did he himself have information?"

CHARLES MILLON: "No. I kept him informed because the President held this issue to heart."

Judge V.R.: "Did others have information about the situation?"

CHARLES MILLON: "It was essentially Monsieur Mazens and Monsieur Lahoud who looked after that."

Judge V.R.: "How did that end up?"

CHARLES MILLON: "It was Monsieur Mazens who was given the task."

Judge V.R.: "At the time, articles in the press referred to this affair. Why was there no follow-up?"

CHARLES MILLON: "At a point in time the President told me that my mission was accomplished."

Judge V.R.: "Was an agreement made with Monsieur Léotard or Monsieur Balladur, cited in the Nautilus reports as having possibly benefited from part of the commissions?"

CHARLES MILLON: "If there was an agreement, I was absolutely not informed."

Judge V.R.: "Did Monsieur Léotard know Monsieur Takieddine?"

CHARLES MILLON: "That is of public notoriety, if I believe the newspapers."

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English version: Graham Tearse