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The French Agosta subs and Karachi-Gate affair

On May 2002, eleven French submarine engineers and four Pakistanis were killed in a car bomb attack in Karachi next to the Sheraton Hotel, this was blamed on Al-Qaeda terrorists. Not many people remember that the entire New Zealand Cricket team, staying in the Pearl Continental opposite, was about to board a bus to the National Cricket Stadium when the bomb went off. An investigation is underway in France to look the claim by kins of the French victims that this was a revenge attack by disgruntled Pakistani officials angered by the non-payment of promised commissions in the sale of three attack class Agosta 90B submarines meant for the Pakistan Navy.

To facilitate the sales of frigates and submarines France has a govt company called the “Direction Construction Naval International” (DCNI). Because the DCNI being a govt entity could not directly pay out commissions, for the sales to Taiwan a middlemen network was mobilized. Ziad Takieddine a Franco-Lebanese businessman, was hired as the “consultant” for that sale. This contract, worth 840 million Euros, was done by Francois Leotard, then Minister of Defence under then French PM Eduoard Balladur’s government. The French seemed to be in a mad rush to effect as many sales as possible before the 1995 Presidential elections, Balladur, was preparing to campaign against Chirac and Jasper. Mr. Sarkozy at that time was PM Balladur’s Budget Minister.

Two months before the French Defence Minister signed the sale of submarines to Islamabad during the summer of 1994, DCNI, though its Vice President Emmanuel Aris, signed a consulting contract for Takieddine through his Panama-based company Mercor Finance wherein he was to receive 4% of the total value of the contract, about 33 million Euros. Several witnesses have told the magistrates that Takieddine was curiously imposed at the last moment by the Balladur camp as the intermediary in the sales to Pakistan. Of the three submarines ordered by the Pakistan Navy, “Khaled” was built in Cherbourg and commissioned in 1999, assembled at the Karachi Naval Dockyard “Saad” was launched in August 2002 and commissioned in 2003 while the “Hamza”, whose construction in Pakistan was delayed by the 2002 bomb attack, was launched in 2006 and commissioned in 2007. While Takieddine acknowledges receiving payment as commission from the sale of frigates to Taiwan, he received 91 million Euros between 1997 and 1998, he flatly denies receiving any commissions from the submarine sales to Pakistan even though a French parliamentary commission of inquiry estimates he received 33 million euros (29 million pounds) for the deal. Nicola Johnson, the estranged British second wife of this middleman, alleges that Takieddine’s fortune was hidden in a web of offshore accounts to escape the French tax authorities. This fact came out during her recent divorce case, she received a huge settlement to replace the paltry £ 750 a month Takieddine was proposing to give her.

Because it is alleged half the commissions were kickbacks for French politicians, notably Mr. Balladur, Ziad Takieddine was placed under investigation. Balladur’s Budget Minister Sarkozy, now President of France, the Presidential spokesman at that time, is reported to have validated the commissions for the arms deals, he vehemently denies any knowledge of such “retro commissions”. When Jacques Chirac won the 1995 presidential elections, he immediately stopped payment of commissions, the French allege that this led to the fatal Karachi bombing.

The biggest French corruption scandal since World War 2, the ongoing investigation is known in France as the “Karachi-gate Affair” or more simply as the “Karachi Affair”. It involves a saga of alleged illegal party funding, suitcases stuffed with banknotes, right-wing political rivalry and, ultimately, the deaths of 15 people in a bomb attack in Pakistan. It has made life difficult for the French President, who while denying any wrongdoing has been forced to distance himself from the scandal. The problem is that unfortunately Sarkozy has a very close relationship with those charged with graft related to the arms contracts. On September 21, 2011, two of Nicolas Sarkozy’s close friends were detained for questioning.

One of Sarkozy’s closest friends, a former political aide and also best man at his wedding to Carla Bruni, Nicolas Bazire has been charged with misuse of public funds by magistrates investigating allegations of the illegal funding of former right-wing prime Minister Edouard Balladur’s presidential campaign in 1995. At the time of the alleged crime, Bazire than Mr. Balladur’s Cabinet chief and Presidential campaign manager, is suspected of taking kickbacks specifically from the sale of submarines to Pakistan. Detained by the police, he has recently had his home and office searched. Another Sarkozy ally, Thierry Gaubert, Sarkozy’s former Ministerial cabinet chief, has also been charged as part of the probe into the Pakistan deal. Judges detained the two men after Mr. Gaubert’s ex-wife. Princess Helene of Yugoslavia, told them Gaubert had brought back briefcases stuffed with cash from Switzerland in the mid-1990’s, handing them over to Mr. Bazire.

Princess Helene first met Sarkozy through her husband when he was Mayor of Neuilly-sur-Seine. Gaubert than served as the Project Manager for Communications for Sarkozy and subsequently because his Cabinet Chief. Princess Helene said that Sarkozy and her husband were very close, “Thierry had become indispensible to Sarkozy.” Mayor Sarkozy married Gaubert and Princess Helene in 1988, they have now been separated for five years. Descendent of King Umberto II of Italy, the Princess reportedly told the judge that during the 1995 presidential campaign, Gaubert, accompanied frequently by Ziad Takieddine, made numerous trips to Switzerland every two months. She said Gaubert systematically brought the money “back in small bags” and returning via London to avoid customs checks at the Franco-Swiss border.

More seriously soon after Princess Helene started talking to the French magistrate, the gist of her accusations became known to her former husband. Princess Helene says, “On September 14 Gaubert called me and once in the car, he became very angry and furious. ‘What you told the cops, it seems you threw me? You’re crazy. You’re going to the asylum.’ I understood he had very accurate information from my statement.” According to police wiretaps of Bazire and Gaubert, this inside information was leaked to Gaubert by Brice Hortefeux, one of President Sarkozy’s most loyal political allies and personal friends. Hortefeux has had a long public service career and is very close to Sarkozy being Godfather of one of Sarkozy’s sons. His long ministerial career has included serving over the years at various times as Minister of the Interior, Overseas, Local Authorities and Immigration, etc.

With extensive coverage in the French media, the “retro commissions” made by middleman Takieddine will certainly hurt President Sarkozy in the next Presidential elections. Pakistani names are rumoured and have been bandied about but nothing conclusive has yet to surface in the investigations, for diplomatic reasons the French magistrates will most probably keep the sensitive matter confidential.

The French magistrates do care about kickbacks made to their own politicians, public officials and men in uniform but not about the bribes made in foreign lands. Since in Pakistan our magistrates are far more forgiving despite their bellicosity, we are resigned to accept that is a fact of life in our country!

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