OECD report finds "serious deficiencies" in following up corruption probes
More than a decade after France signed the OECD Convention on Bribery, the OECD remains seriously concerned about the lack of bribery convictions, according to a report released today on the country’s progress on cleaning up international corruption.
The OECD Working Group studying France’s efforts “is seriously concerned that despite the very significant role of French companies in the international economy, only 33 foreign bribery proceedings have been initiated and five convictions – of which only one, not yet final, concerns a legal person – have been handed down since France became a party to the Convention in 2000.”
France has been struggling with a huge corruption scandal involving the sale of armaments by the state-owned defense giant DCN and a flock of subsidiaries which appears to have been a major campaign to dominate world marine defense sales.
While the defense market is notoriously corrupt, with substantial payments going to defense officials particularly in third-world countries for favorable treatment, France was at the head of the pack. “Commissions” allegedly were made on the sale of submarines and other vessels at least to Taiwan, Pakistan, India, Malaysia, Saudi Arabia, Chile and unknown other countries. At least 19 people have died in mysterious circumstances and former Prime Minister Edouard Balladur, former French President Nicholas Sarkozy, former Foreign Minister Alain Juppe and a long list of government officials and politicians from other countries have been brought under scrutiny.
The Working Group, the report notes, “recommends that France ensure that companies and their subsidiaries cannot avoid criminal liability. The applied and available penalties, along with the lack of any recourse to measures to confiscate the proceeds of corruption do not appear to be effective, proportionate or dissuasive: France should increase the maximum fines and make full use of confiscation and additional penalties that are available under the law, in particular debarment from public procurement.”
The Working Group does commend France for “moving forward to guarantee that the role of prosecutors in opening and in conducting criminal proceedings is performed in a manner that is independent from political power and that investigations and prosecutions in foreign bribery cases are not influenced by the consideration of factors prohibited under Article 5 of the Convention.”
In particular, that phrase appears to apply to what has become notorious as “l’affaire Karachi” in which kickbacks on the 1994 sale of DCN-affiliated submarines to the Pakistani military allegedly were used to partly finance then-Prime Minister Edouard Balladur’s unsuccessful 1995 presidential campaign against Jacques Chirac. Nicholas Sarkozy was Balladur’s campaign finance manager. Allegedly other kickbacks were paid to top Pakistani leaders. Chirac won the race for the presidency and began an investigation that resulted in stopping the commissions, which amounted to millions of dollars.
The enraged Pakistani military and intelligence services in May 2002 allegedly sent suicide bombers to attack a bus in Karachi, killing 11 French naval engineers training Pakistani submariners and three Pakistanis. Although the Pakistanis blamed Al Qaeda, French authorities believe the strike was organized as revenge for cutting off the kickbacks. But French military and government officials have stonewalled attempts to get to the bottom of the affair, largely leaving investigators impotent.
They have also resolutely stonewalled a probe into the 1991 purchase by Taiwan of US$2.8 billion of Lafayette-class fast French frigates. A major bribery scandal involving hundreds of millions of dollars has percolated for several years, involving the murders of several individuals including a Taiwanese naval captain who sought to blow the whistle. A French operative, Thierry Imbot, who some investigators believe may have been involved in payments to members of the Standing Committee of the Politburo in Beijing to buy acquiescence for allowing Taiwan to receive sophisticated weapons, “committed suicide” at his flat in Paris by jumping – off of his first-floor balcony. One other DCN official “committed suicide” by leaping from his hotel room window after expressing fears he was in danger. The murdered Taiwanese naval captain’s nephew died under mysterious circumstances as well.
In 2000, when the French government signed the OECD Commission on Bribery, as Asia Sentinel reported on June 12, Jean-Marie Boivin, formerly the chief international financial officer for DCN, retired to form a consulting company with arms in Malta, Luxembourg and other principalities that allegedly became the conduit for the commissions as DCN sought to put a space between the defense company and the bribes.
Boivin has gained notoriety in France as Boivin, Celui Qui Fait Trembler le Republique (Boivin, the Man Who Shakes the Republic). When his Luxembourg-based company Eurolux – which allegedly was established through DCN and is also under investigation by French prosecutors – was on the edge of bankruptcy, according news reports, Boivin wrote to Nicolas Sarkozy, Michele Alliot-Marie, then the defense minister, and President Jacques Chirac, saying he had explosive letters in a safe in Zurich, Switzerland. The letter, described as “friendly but determined,” was on the theme “Retain me, or I do something.” Apparently it worked. Boivin, according to several other publications including Le Nouvelle Observateur, was paid €8 million by DCN.
Among those cases in which Boivin made an appearance is that of Malaysian Prime Minister and former Defense Minister Najib Tun Razak and the purchase for US$1 billion of two Scorpene submarines from the DCN subsidiary Thales by Malaysia, with a €114 million commission paid to a shell company wholly owned by Abdul Razak Baginda, at the time Najib’s best friend. Razak Baginda’s onetime mistress, the Mongolian translator and party girl Altantuya Shaariibuu, accompanied Baginda on at least one trip to France dealing with the training of the submarine crews. DCN also paid a Hong Kong company owned by Razak Baginda and his father €39 million for a document allegedly describing the Malaysian military’s specifications for the submarine purchase.
Altantuya was murdered by two of Najib’s bodyguards at the direction of unknown persons after she had flown to Kuala Lumpur to demand US$500,000, which she termed “blackmail” in a letter found after her death in September of 2006. The French law firm headed by William Bourdon and representing the Malaysian NGO Suaram, said that Gifen had intervened in negotiations over the submarines “so as to facilitate the money transfers in this case,” and particularly to finance the trips of Baginda and Altantuya.”
Boivin has since taken out citizenship in Luxembourg. He was summoned by French magistrates in June of 2010 but he did not show and was eventually indicted. However, he remains free although he has said he would cooperate with authorities. When his lawyer, Philippe Lauzeral, was asked if the €8million requested in his letters to Sarkozy and others was paid for his silence, Lauzeral answered: "False. There have been discussions, but no financial agreement has been formally signed. My client is very upset by what he reads. It is not the deus ex machina that is presented. He merely carried out orders from his superiors in the DCN, which is a state enterprise. It is the feeling of having served his country."
(John Berthelsen is the editor of the Asia Sentinel)