Fresh evidence has emerged implicating Nicolas Sarkozy's involvement in two controversial arms deals that lie at the centre of an investigation into suspected illegal political party financing via French weapons sales abroad.
Written and verbal evidence obtained in December by magistrates investigating the case suggest that Sarkozy, when budget minister in 1995, gave the go-ahead for the French national arms export agency Sofresa to organise the financial arrangements for payment by Saudi Arabia for the sale three French Lafayette-class frigates. The frigates deal involved kickbacks equivalent to more than 200 million euros paid to two French-imposed intermediaries, Ziad Takieddine and Abdul Rahman El Assir.
Meanwhile, a key witnessin the investigation has said the then-budget minister had "necessarily" given his authorisation for the creation of a Luxembourg-based company set up to handle the payment of commissions paid out in a separate, simultaneous sale of French submarines to Pakistan.
President Sarkozy's office issued a statement last September insisting that he was "totally foreign" to the suspected illegal political funding case, and that his name did not appear "in any elements" of the ongoing investigation. The statement added, confusingly, that "at the period when he was Minister of the Budget, he manifested his opposition to this contract, as is apparent in the case file."
Takieddine was last September formally placed under investigation - one step short of charges being brought - for "misappropriation of company assets and funds" as part of his suspected role in the illegal financing of former French Prime Minister Edouard Balladur's 1995 presidential election campaign. Nicolas Sarkozy was Balladur's budget minister and, in 1995, his presidential campaign spokesman.
Also placed under investigation in September for "misappropriation of company assets and funds" in connection with the case was Thierry Gaubert, a former Sarkozy aide, and Nicolas Bazire, managing director and Head of Development and Acquisitions of French luxury goods group LVMH, who was Balladur's presidential campaign director. Bazire was also President Sarkozy's best man at his marriage to Carla Bruni in 2008.
Mediapart has published a series of investigations revealing how Takieddine continued to work with Nicolas Sarkozy's close aides as an intermediary in a number of arms sales negotiations, including after Sarkozy became president in 2007 (links to these are listed at the end of this article).
Paris-based judges Renaud Van Ruymbeke and Roger Le Loire opened an investigation in November 2010 into the suspected funding of Balladur's late-called bid for the presidency through the siphoning-off of commissions paid in both the 1994 Saudi deal and for the sale that same year of three French Agosta-class submarines to Pakistan. Their enquiries centre upon evidence suggesting that among the showering of commissions - in reality bribes - paid to local officials, some went to intermediaries whose role was to send the secret sums back to France, via complex financial routes.
Both deals were concluded shortly before Balladur announced his surprise challenge against fellow conservative Right candidate Jacques Chirac, who eventually went on to win the May 1995 elections. Importantly, Chirac had the financial backing of the RPR Gaullist party, forerunner of the current ruling UMP party.
The investigation by Van Ruymbeke and Le Loire was initially prompted by evidence found in a separate ongoing judicial investigation in France into the 2002 murders of 11 French naval engineers in the Pakistani port city of Karachi, where they were helping to build one of the three Agosta submarines. It is from this case that the political funding scam has been dubbed in France as ‘the Karachi affair' (see a Q&A guide to the Karachi affair here and a video presentation here).
The engineers were killed in a suicide bomb attack, which both France and Pakistan had initially claimed was the work of terrorists. However, the investigation into their murders, led by Judge Marc Trévidic, has since uncovered strong evidence that the attack was in revenge for the non-payment of bribes, officially described as commissions, promised, during the conclusion of the submarine sale, to several Pakistani officials.
After his election as president in 1995, Chirac retaliated against Balladur's betrayal by ordering the halting of all ‘commission' payments suspected of being re-routed to France. While some had already been paid, this blanket order blocked others that were staggered over several years.
Police acting under judges Van Ruymbeke and Le Loire recently seized the archives of the former chairman of the French national arms export agency Sofresa, Jacques Douffiagues, who died in October 2011. They contained a letter dated March 30th 1995 - at the height of Balladur's presidential election campaign - sent to Douffiagues by François Lépine, principle private secretary of then defence minister François Léotard.
The letter, to which Mediapart has gained access and which is presented above, insisted on "the necessity to put in place within the shortest time possible time a financial arrangement to allow the Saudi authorities to make the first payment as foreseen by the State to State contract Sawari II."
Sawari II was the codename given to the sale of the three Lafayette frigates to Saudi Arabia. The "arrangement" to allow for the Saudis to begin payments for the frigates required firstly that a French state financial guarantee, approved by the budget minister, be given to the Sofresa. In his letter, Lépine, writing on behalf of defence minister Léotard, announced: "I confirm to you that I have obtained the agreement of my colleague [in charge of] the Budget for this intermediary solution, and notably that you will be given the State guarantee."
In November 2010, Claude Guéant, then President Sarkozy's chief-of-staff (and now interior minister) said Sarkozy "was not called upon to approve commission [payments] relative to export markets". However, commission payments were in fact always studied by budget ministers in order to approve them to be deducted from company tax returns, as the law then allowed.
Last month, Gérard-Philippe Menayas, former administrative and financial director of the international arm of the state-run DCN shipbuilding company (now re-named DCNS), in charge of building the Agosta submarines sold to Pakistan at the same time as the Sawari II deal, confirmed in a statement that the payment of commissions for the sale could not have been made without the then-budget minister's involvement. He said this was notably true regarding the creation of a company called Heine, based in Luxembourg, which was set up to handle the payment of commissions made in February 1995.
In his statement given to Judge Van Ruymbeke on December 2nd, and revealed by weekly news magazine Le Nouvel Observateur and daily Libération, Menayas said: "It is clear that the budget minister had necessarily given his agreement for the creation of Heine, given the importance of the subject, this decision could only be taken at the ministerial cabinet level."
Menayas added that the creation of Heine needed the joint agreement of the cabinets of both the defence and budget ministries. He underlined the fact that the ministries of defence, finance and budget were represented on the DCN board, and told Van Ruymbeke that he had obtained the agreement "regarding fiscal statements" from the tax authorities "to pay the commissions". This implied the approval for deducting the payment of bribes from his company's tax burden.
Below are the DCN's tax declarations concerning commision payments in the Agosta submarine contract:
'Takieddine came into the system with Douffiagues'
Several key witnesses, including Balladur's defence minister François Léotard, have offered contradictory accounts about the role and their relationships with arms sales intermediary Ziad Takieddine. In January 2011, Léotard gave a statement to Judge Trévedic, in charge of the investigation into the 2002 murders of the French DCN engineers in Karachi, in which he confirmed meeting Takieddine but had no "precise memory" of their encounters. "I received Monsieur Takieddine at the ministry because I was told it was my duty," Léotard said. "At no time was there question of money," he declared. "I add that in the end, all the ministries were in favour of the contract."
However, questioned on December 13th by police acting under Judges Van Ruymbeke and Le Loire, Léotard's former senior ministerial aide in 1995, Renaud Donnedieu de Vabres, who later became French European affairs minister and subsequently culture minister, said in a statement: "I never negotiated the amount in the envelope, nor how it was shared [...] I thought that a certain number of people were going to be paid commissions, including Monsieur Takieddine. However, I did not know in which manner, nor the amount they would receive."
Questioned by the two judges on December 15th, he said: "François Léotard knew Ziad Takieddine and received him [at the ministry]," adding: "It was a time when numerous interlocutors came knocking at the door of the Ministry of Defence and other ministries. The important thing is, at that time, the verification of the potential usefulness. Ziad Takieddine raised with the minister his knowledge [relationships] of a certain number of people who could be useful for the conclusion of these contracts."
Jacques-Yves Gourcuff is a former deputy chairman of the Sofresa arms export agency. Questioned by Van Ruymbeke and Le Loire in September 2011, he said that Takieddine was introduced into "the system" after Jacques Douffiagues was appointed chairman of the agency. Douffiagues, a former transport minister and member of Léotard's centre right party, the Parti Républicain, arrived at his post "with no knowledge or competence in arms sales, exports or Arab countries" said Gourcuff.
"I met Monsieur Takieddine because he came into the system with Monsieur Douffiagues, middle of 1993 [...] after the general elections," he recalled. The parliamentary elections in March 1993 returned a Right majority, and resulted in Balladur's appointment as prime minister. "The arrival of Douffiagues represented a change in the strategy of the Sofresa, which until then was not involved in politics," continued Gourcuff.
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For more on the background to the issues raised in this interview and Mediapart's exclusive investigations into the political scandal surrounding the activities of arms dealer Ziad Takieddine, click on the links below:
A Q&A guide to the Karachi affair
How the Karachi affair caught up with Nicolas Sarkozy
The Sarkozy aide and his secretly-funded Colombian mansion
Exclusive: British witness in French funding scandal hits back at ‘protected’ arms dealer
The arms dealer and his 'friendly' services for UMP leader Copé
French IT group Bull horned by libyan internet espionage deal
French judge finds key evidence in illegal funding probe
British divorcee becomes key witness in French political funding scandal
Net closes in on French presidency after funding 'scam' arrests
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
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English version: Graham Tearse