A Paris judge investigating the suspected illegal financing of former French Prime Minister Edouard Balladur’s presidential election campaign has uncovered new and compelling evidence that he received a significant sum of cash siphoned off from a weapons deal with Saudi Arabia, Mediapart can reveal.
The discovery centres on a cash withdrawal from a Swiss bank account belonging to a member of Kuwait’s ruling Sabah family, Sheik Ibrahim Al-Duaij Al-Sabah, governor of the Al-Ahmadi province in southern Kuwait.
The account, with a Geneva branch of the SCS Alliance bank, was used by Abdul Rahman El Assir, a Lebanese-born businessman and arms intermediary, to pay in and withdraw cash sums transferred from offshore companies belonging to him. The offshore companies were the beneficiaries of commissions paid from French weapons sales to Pakistan and Saudi Arabia by Balladur’s government.
The two deals are at the centre of a far-reaching judicial enquiry, led by judges Renaud Van Ruymbeke and Roger Le Loire, that has placed members of President Nicolas Sarkozy’s close entourage (1) under investigation – a legal status one step short of being charged – and which has thrown up evidence indirectly implicating the president himself.
The weapons sales are suspected to have provided substantial illegal funds for Balladur's 1995 presidential election campaign. Between 1993 and 1995, when the deals were concluded, Sarkozy was budget minister under Balladur, widely regarded as his political mentor, and he served as Balladur’s 1995 presidential campaign spokesman.
Both Sarkozy and Balladur have denied involvement in the alleged illegal funding.
Van Ruymbeke and Le Loire suspect that Balladur’s campaign received financing through the siphoning-off of commissions paid in both the 1994 sale to Saudi Arabia of three Lafayette-class frigates and for the sale, that same year, of three French Agosta-class submarines to Pakistan. Their enquiries centre upon evidence that amid the showering of commissions – mostly bribes - paid to local officials, some went to intermediaries whose role was to send the secret sums back to France, via complex financial routes.
El Assir and Paris-based arms dealer Ziad Takieddine, who is also under investigation in the case, were introduced as intermediaries in the Saudi deal by Balladur’s staff. Their commissions amounted to the equivalent of 82.6 million euros, of which 32.4 million euros were paid by April 23rd 1995.
Crucially, Balladur’s campaign finance records, as inspected by France’s Constitutional Council, showed he received a mysterious cash payment of 10,050,000 French francs (equivalent to about 1.53 million euros), paid into an account with the Crédit du Nord bank in France on April 26th 1995.
The account was held in the name of an association used for Balladur’s campaign finances, the AFICEB. Balladur’s campaign staff previously claimed the money came from the sale of gadgets and T-Shirts at election rallies.
However, Judge Van Ruymbeke has now discovered that the same sum of 10,050,000 French francs was withdrawn in cash from Sheik Al-Sabah’s Geneva account, used by El Assir, in April 1995.
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1: Judges Van Ruymbeke and Le Loire last September placed two longstanding close Sarkozy allies - Balladur’s former campaign treasurer, Nicolas Bazire, and a former advisor to Sarkozy when he was budget minister, Thierry Gaubert - under formal investigation for their suspected roles in managing the return to France of secret cash sums destined to intermediaries in the deals with Pakistan and Saudi Arabia. Bazir, 54, Managing Director of French luxury goods group LVMH, was Sarkozy's best man for his marriage to Carla Bruni in 2008. Gaubert, 60, is currently employed as communications director for the chairman of French banking group Banques populaires-Caisses d'épargne (BPCE).
Offshore cash shuttled through sheik's account
The discovery, a major development in what has become known in France as the 'Karachi Affair' (see Mediapart's Q&A guide here and a video presentation here), was revealed after Van Ruymbeke last month travelled to Geneva to pursue his investigations in cooperation with the Swiss authorities.
Mediapart has gained access to statements from several witnesses questioned, in Van Ruymbeke’s presence, by Geneva public prosecutor Jean-Bernard Schmid. They include that of Khaleel Hassan, a wealth investment manager who, in 1995, worked for the SCS Alliance bank (now part of CBH Holding SA).
During his questioning on February 2nd, prosecutor Schmid told Hassan that there was evidence that Sheik Al-Sabah provided Mustafa Al-Jundi, an associate of El Assir, with access to his SCS Alliance account “for a simple transit operation of 10,000,000 French francs in April 1995”.
Hassan replied: “I remember Messrs Mustapha Al-Jundi and Abdul Rahamn El Assir. I met them during my contacts with my former client, Sheik Ibrahim Al-DuaijAl-Sabah. The three were friends. I met them during lunches or meetings organized by Sheik Al-Sabah […] who had above all a political function that was equivalent to that of a mayor or a prefect of a region of Kuwait. I had the impression that Monsieur El Assir was the ‘master’ of Mustapha Al-Jundi.”
Asked about the withdrawal of cash sums, Hassan said he was not “directly responsible” for the account.
Hans Ulrich Ming, a lawyer who acted as the manager of two offshore companies belonging to El Assir, Mercor and Rabor, was questioned by prosecutor Schmid on February 3rd, again in the presence of Judge Van Ruymbeke. “Mercor invoiced commissions on contracts with Pakistan, and Rabor with Saudi Arabia,” said Ming in his statement. “Abdul Rahman El Assir ordered me to pay part of the commissions received by Rabor in Litchenstein into a SCS Alliance [bank] account in Geneva.”
Ming confirmed that Sheik Ibrahim Al-Duaij Al-Sabah was the beneficiary of the sums paid into the account with the SCS Alliance bank. “When I pointed out to Monsieur Abdul Rahman El Assir that he was paying a lot of money into this account, he told me that it concerned an associate in his business dealings in the Middle East,” Ming added.
“You indicate that according to investigations until now, it appears that every one of the payments by Rabor into this SCS Alliance account were immediately withdrawn in cash […] by a certain Mustafa Al-Jundi,” Ming’s statement continued. “[…] I was in total ignorance of this."
Ming was questioned about the relationship between El Assir and Ziad Takieddine. “I had the impression that he [Takieddine] was his right-hand man, or his principal assistant,” Ming said. “They were youths together in Lebanon. They went to the same university. Abdul Rahman El Assir gave me the clear impression of being ‘the boss’ who introduced me to his representative.”
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For more about the issues raised in this article, Ziad Takieddine, and the political funding scandal behind the Karachi Affair, click on the links to Mediapart's investigations below:
Judges step up hunt for the phantom figure behind the Karachi Affair
The Sarkozy aide and his secretly-funded Colombian mansion
Exclusive: British witness in French funding scandal hits back at ‘protected’ arms dealer
Inside story: the Constitutional Council, Balladur and the row over his election funds
Karachi blast probe rapporteur demands truth from Constitutional Council
The arms dealer and his 'friendly' services for UMP leader Copé
Judges step up hunt for the phantom figure behind the Karachi Affair
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 British thriller writer caught in the plot of the Karachi affair
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
A Q&A guide to the Karachi affair
How the Karachi affair caught up with Nicolas Sarkozy
Senior French defence chief told of former PM's 'kickback scam
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English version: Graham Tearse
(Editing by Michael Streeter)