`Zardari received millions in kickbacks in French sub deal`

A Paris magistrate has seized an evidence official Pakistani documents detailing how Pak`s Prez "received kickbacks" worth several millions of euros in the deal, says a media report.

Last Updated: Jan 16, 2011, 16:23 PM IST

Islamabad: A Paris magistrate, probing a
suspected scam surrounding the sale of three Agosta-class
French submarines to Pakistan`s navy, has seized as evidence
official Pakistani documents detailing how President Asif Ali
Zardari "received kickbacks" worth several millions of euros
in the deal, says a media report.

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.

PTI