L'affaire Karachi: six on trial in France on corruption allegations

On Monday 8th October, the trial started of six men in France on charges of corruption, fraud or complicity to fraud linked to the so-called “Karachi Affair”. The focus of the trial is on kick-backs allegedly paid as part of two French arms deals in the 1990s: for frigates to Saudi Arabia and submarines to Pakistan. The men on trial include former aides to senior politicians, a former head of the international division of the a French naval defence contractor called DCN (since renamed Naval Group), and two Lebanese middlemen. The affair has been described as one of the biggest political scandals in France in the last two decades.

The investigation focuses on whether some of the money from the commission (at the time a legal process in France used to sweeten deals) was used to illegally to fund Édouard Balladur’s – the prime minister at the time - unsuccessful campaign to become the president of France. It is alleged that Balladur approved the payment of commissions to intermediaries in Pakistan, and that €2m of “retro-commissions” came back to France to fund his campaign. One of the men on trial has been accused of carrying cash back to France in suitcases. Though not on trial, the investigation also involves Nicolas Sarkozy, who was budget minister at the time and believed to have authorised the arms sales and the commission. One of the men on trial is a former aide to Sarkozy.

The payments were blocked in 1995 when Jacques Chirac became the French president and signed an international agreement blocking the payment of commission. In 2002 a suicide bomber in Karachi killed fifteen people, including French naval engineers. A French anti-terror judge believes that the attack was an act of retaliation after the payments were blocked.

Balladur and his former defence minister, François Léotard, will give evidence in a separate hearing in a special court for past and current government members.