Zardari received kickbacks in French sub deal
The documents, revealed for the first time by Mediapart, a French online publication, show that the payments to Zardari and others took place on the fringes of the sale of three submarines by the French defence contractor DCN to Pakistan in the 1990s. The French sale succeeded against rival offers by Swedish and German contractors.
The sale, and the payment of bribes associated with it ?- officially termed as commissions – are at the core of what has come to known as the `Karachi affair`, currently the subject of two French judicial investigations. The issue has rocked the French political establishment with its potential far-reaching ramifications within France, Pakistan`s `The Nation` daily said quoting the Mediapart report.
A key allegation in the developing affair is that the cancellation of commissions paid out in the submarine deal was the motive behind a suicide bomb attack in Karachi on May 8, 2002 that left 11 French engineers dead. They were in Pakistan to help build one of the Agosta submarines.
Increasing evidence suggests that cancellation of the commissions, ordered by former French president Jacques Chirac, was decided after it was discovered they were in part re-routed back to France to fund political activities of Chirac`s principal political rival, Edouard Balladur.
The documents now in possession of Paris-based judge Renaud Van Ruymbeke were found during a French police search in June 2010 of the home of Amir Lodhi, one of the intermediaries involved in securing the Agosta contract. Lodhi held a copy of a report by a Pakistani anti-corruption service, the Ehtesab Cell, the report said.
Lodhi, 61, the brother of a former Pakistani ambassador to the UN, is a close friend of Zardari, who became President in 2008 one year after the assassination of his wife Benazir Bhutto.
The raid on Lodhi`s home in the French capital was carried out by detectives from the French police national financial investigation division, the DNIF.
The Ehtesab Cell documents were the object of a formal report by the DNIF, established on June 17th, 2010, and reveal that Zardari received a kickback worth 6,934,296 euros between October and December 1994, the report said.
That report is now among the evidence collected by Van Ruymbeke in his investigation into the financial aspect of the Agosta submarine sale, and in particular whether commissions paid abroad were re-routed to fund political activities within France.
Originally written in English, the Pakistani documents were translated by the DNIF investigators and now provide the first clear details about the scale of the payments made to Zardari, amounting to several million euros, as well as the channels used, including offshore companies, bank accounts and a British tax haven, the report said.
The Agosta submarine contract was signed between the two countries on September 21, 1994, just weeks before the first payments began.
At the time, Zardari was a minister in the Pakistani government then led by his wife, Prime Minister Bhutto.
Importantly, Zardari was the key figure for all public contracts signed with foreign countries. That position earned Zardari the unflattering nickname in his own country of "Mister 10 per cent", the report said.
The main document seized by French investigators is a photocopy of an original dated November 9, 1997, concerning a request by Pakistan to Switzerland for cooperation in a judicial investigation.
The French police report said the document explicitly referred to the Agosta contract: "This request concerns several cases of malpractice including that of the purchase of French submarines."
According to the French investigators, the official Pakistani documents seized in Lohdi`s Paris home also explain that "Messieurs Lodhi and Zardari received their bribes in the bank accounts of a series of offshore companies".
Mediapart also reports that Van Ruymbeke`s investigation has already established that, in order to convince the Pakistani authorities to choose the French submarines, a very structured network of corruption was established by a French state company dedicated to such activities.
Zardari was one of the main benefactors of the paid bribes, according to Henri Guittet, a former managing director of French defence firm SOFMA.
He evaluated the sum paid to Zardari as being 4 per cent of the total value of the sales contract, which amounts to a value of 33 million euros.
"I believe there was one per cent paid upon the signature of the sales contract, which means at the moment when everything can get underway and when notably the deposit and (partial) down payment has been paid, and one per cent later," he said in a formal statement.
"The remaining two per cent was pro rata with the payment of the clients."
But French judicial investigators are investigating whether the Agosta contract also involved illegal payments in France.