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France - Corruption - Scandals

Unlike Anglo-Saxon countries, France, along with other Mediterranean democracies (Italy, Spain) delayed until the very end of the twentieth century the public identification of the various forms that “public misconduct” can take, and the country has only since begun to address them politically. The impunity that prevailed until recently corresponded to an absolutist conception of power that kept to a minimum the accountability of government officials. The ideology of “public interest” which is fundamental to French democracy, is often used as an excuse to avoid scrutiny of the motivations and underlying personal interest of civil servants, particularly the top ones.

Since the beginning of the 1990s, the effects on corruption of a three-fold change: a politicization of the corruption issue, a new ideological stance, and a higher degree of responsibility conferred to a new generation of players in the public sector. As a result, between 1992 and 1995 the number of corruption cases brought to court more than tripled, rising from 17 to 54.

The ever-growing focus on “political scandals” since the late 1980s led to more radical measures than had previously been the case. After 1988, all company financing of parties and candidates was forbidden, be it direct or indirect. On the other hand, public funding was increased and extended to all campaigns. Tax legislation made individual contributions more attractive and subject to an upper limit.

The lack of comprehensive government reporting could probably be explained by the fact that two successive French presidents – namely, Jacque Chirac and Francois Mitterrand – have been involved and prosecuted in a number of political corruption scandals. The shift of power from Mitterrand to Chirac in the late 1990s produced a spur of investigations, corruption trials, and a public debate that have since abated. Although a number of political party financing anti-corruption measures were introduced since the mid 1990s, the continuing lack of proactive anti-corruption mechanisms could mean that corruption networks have simply been transformed and that even subtler mechanisms are now being used.

In the early 20th century corruption cases led to governments falling. In the post-war period many cases arose from attempts to dodge the law on party finance. And there have been suicides. But today’s politicians seem to survive rather better than in the past.

  • 1892:The Panama affair – an early scheme to dig the Panama Canal went bust; Parliament had endorsed a risky manoeuvre which led to investors losing millions; far-right papers unearthed evidence of MPs taking bribes and the government fell.
  • 1933: The Stavisky affair – A crooked financier’s suicide revealed malpractice by ministers, top police officers and many more; led to a violent confrontation between fascists and police in which 14 died; the government fell.
  • 1991: The Urba affair – companies bidding for public contracts were found to have made secret payments to the Socialist Party; several prominent party members, including party treasurer and MP Henri Emanuelli, were found guilty of corruption.
  • 1993: The Pelat affair – Prime Minister Pierre Bérégovoy was found to have accepted an interest-free loan to buy a swish Paris apartment from Roger-Patrice Pelat, a friend of President François Mitterrand implicated in other corruption cases; the Socialists were defeated in that year’s election; no case against Bérégovoy was ever filed; he committed suicide in May 1993.
  • 1994: The Méry affair: As Jacques Chirac and Edouard Balladur fought for the nomination of the country's main right-wing party, the RPR, in the 1995 presidential election, businessman Jean-Claude Méry is accused of drawn up fake bills for work on council housing in Paris and the sourrounding region so as to finance the RPR; before dying of cancer in 1999, Méry recorded a video-cassette claiming to have given Chirac five million francs in cash (762,000 euros); the case against Chirac is dropped because the principal witness is dead.
  • 1995: Laurent Juppé’s apartment: Prime Minister Alain Juppé was found to have told the Paris authorities to reduce the rent of a 189m² Paris apartment, redecorated with public funds, which is being let to his son, Laurent; the case is dropped on condition that the Juppés leave the apartment.
  • 1998: Phantom jobs for the Pariscouncil – Companies bidding for contracts in Paris are found to have financed President Jacques Chirac’s RPR party by creating fake jobs for party members and employees; the RPR also created phantom jobs on the city council payroll; Alain Juppé is given an 18-month suspended sentence; an inquiry into Chirac’s implication is still ongoing.

Presidents benefit from immunity from prosecution while in office. Post-war politicians implicated in scandals have included International Monetary Fund chief Dominique Strauss-Kahn, former Interior Minister Charles Pasqua, former Industry Minister Gérard Longuet and former economy minster Hervé Gaymard. President Valéry Giscard d’Estaing was accused of receiving a gift of one-million-francs-worth (152,000 euros) of diamonds from the Central African Republic’s dictatorial ruler, Jean-Bedel Bokassa. At least nine scandals have been associated with Jacques Chirac.

On 26 September 2005 French defense-electronics group Thales SA denied allegations from a fired company executive that it paid out millions of dollars in bribes and sold chemical weapons to the former Iraqi regime of Saddam Hussein. "The Thales Group formally denies accusations of corruption in France and internationally, lodged against it by a former manager at THEC," the company said in a statement. Michel Josserand, former chief executive of Thales Engineering and Consulting, or THEC, said in an interview with newspaper Le Monde that the paying of bribes by Thales was widespread _ in violation of French law and international conventions. "I estimate that Thales must pay out between 1 percent and 2 percent of its global revenue in illegal commissions," he said.

Siemens Aktiengesellschaft (Siemens AG), a German corporation, and three of its subsidiaries pled guilty to violations of and charges related to the Foreign Corrupt Practices Act (FCPA), the Department of Justice and U.S. Securities and Exchange Commission announced 15 December 2008. Coordinated enforcement actions by DOJ, SEC and German authorities resulted in penalties of $1.6 Billion. From the time of its listing on the New York Stock Exchange on March 12, 2001, through approximately 2007, Siemens AG made payments totaling approximately $1.36 billion through various Siemens AG subsidiaries – Siemens S.A.S. of France (Siemens France), Siemens Sanayi ve Ticaret A.S. of Turkey (Siemens Turkey), Osram Middle East FZE (Osram Middle East) and Gas Turbine Technologies S.p.A. (GTT), Siemens Argentina, Siemens Venezuela and Siemens Bangladesh.

Of this amount, approximately $554.5 million was paid for unknown purposes, including approximately $341 million in direct payments to business consultants for unknown purposes. The remaining $805.5 million of this amount was intended in whole or in part as corrupt payments to foreign officials through the payment mechanisms, which included cash desks and slush funds.

L’Affaire Elf

In 2003, the so-called L’Affaire Elf broke in France, exposing a tangled web of political ambitions, influence-peddling, oil, and corruption. Court proceedings refer to Elf, the former French oil giant, as having been created in 1965 to secure French oil independence, primarily by maintaining French influence in oil-producing countries. From the outset, Elf was very close to the French presidency, which appointed several of its key political executives. The company became equally close to political leaders in its “client” states.

Bribery at Elf ultimately extended to nearly all countries in which it operated. In 2003, 37 defendants, including the company’s former chief executive and former general affairs director, were convicted of channeling €305 million from Elf to secure business contracts in Africa, South America, Russia, Spain, and Germany between 1989 and 1993. West Africa was a particular focus of Elf’s efforts. The company’s former long-time Africa administrator told the court that annual transfers of about $20 million were made to the president of Gabon, while other huge sums were paid to leaders in Angola, Cameroon, and the Republic of Congo. The multimillion-dollar payments were partly aimed at guaranteeing Elf’s (France’s) preferential access to oil in these states, but they were also designed to ensure the African leaders’ alignment with France.

Elf’s corruption apparently was not confined to its foreign operations. The company was a major domestic French political force, contributing money to Gaullist parties. According to testimony from Elf’s former chief executive, the company paid “at the very least” €5 million ayear to all of the main French political parties to buy their support. Elf, in other words, was not only a French asset not only in the global competition for access to oil, but also in the domestic competition for political power. It developed into a cancer at the heart of France and spread to every country in which Elf operated. “The whole oil system operates in an opaque way,” Elf’s former chief executive told the court. While L’Affaire Elf is perhaps an extreme example, similar operations can probably be found in other countries of the developed world.

L’Affaire Sarkozy

Prosecutors are looking into allegations that former Libyan leader Muammar Gaddafi secretly gave Sarkozy €50 million for his inaugural presidential campaign in 2007. The allegations were first made by one of the late dictator’s sons, Saif al-Islam, in 2011. The allegations of illicit funding by Gaddafi's regime lost him a re-election bid in 2012.

Former French interior minister Claude Gueant was on 06 March 2015 charged with tax evasion and forgery in connection with a probe into allegations that former Libyan dictator Muammar Gaddafi helped finance Nicolas Sarkozy's 2007 presidential election campaign. Investigators discovered a 500,000-euro transfer in Gueant's bank account during a raid in February 2013. Gueant, who was Sarkozy's right-hand man for a decade, claimed the money was the proceeds of the sale of two 17th-century Flemish paintings to a Malaysian lawyer.

Accusations that Sarkozy's successful 2007 campaign was financed by Gaddafi’s Libya emerged after the first round of voting in the 2012 election, when the Mediapart website published a document dating from 2006 and setting out an arrangement for 50 million euros to be paid, illegally, to the campaign. Sarkozy said the document is a forgery, and was backed by the former Libyan intelligence chief Moussa Koussa whose signature was on it.

On 04 May 2016, a Cayenne appeals court sentenced the mayor of Saint-Laurent-du-Maroni in French Guyana to 18 months in prison and a fine of 100,000 euros ($110,000) for complicity in the misappropriation of corporate assets. He was accused of encouraging a private company, whose main shareholder was his municipality, to provide 887,000 euros ($976,000) in compensation benefits to the company’s director, a friend and associate of the mayor.

In November 2016 Franco-Lebanese businessman Ziad Takieddine said he delivered three suitcases stuffed with Libyan cash to Sarkozy's former chief of staff and campaign director, Claude Guéant, between 2006 and 2007. In January 2018, British police detained French businessman Alexandre Djouhri at Heathrow Airport as part of the long-running investigation into Sarkozy’s suspected Libyan financing.

Sarkozy told investigators that allegations he received campaign funding from late Libyan leader Muammar Gaddafi are making his life "hell", a French newspaper reported on 22 March 2018. Conservative daily Le Figaro published a lengthy account of Sarkozy’s purported comments to investigators who told him after two days in custody that he was formally suspected of passive corruption and other offences. "I stand accused without any material evidence,” the newspaper quoted the 63-year-old as saying. "This calumny has made my life a living hell," Sarkozy reportedly told investigative magistrates.

Being placed under "formal investigation" in France indicates that magistrates have found sufficient evidence of wrongdoing – in this case of illegal campaign financing, "passive" corruption and the misuse of Libyan public funds – that the investigation can go forward, possibly to trial.

Airbus

Airbus SE, a global provider of civilian and military aircraft based in France, agreed to pay combined penalties of more than $3.9 billion to resolve foreign bribery charges with authorities in the United States, France and the United Kingdom arising out of the Company’s scheme to use third-party business partners to bribe government officials, as well as non-governmental airline executives, around the world and to resolve the Company’s violation of the Arms Export Control Act (AECA) and its implementing regulations, the International Traffic in Arms Regulations (ITAR), in the United States. This is the largest global foreign bribery resolution to date.

Airbus entered into a deferred prosecution agreement with the department in connection with a criminal information filed on Jan. 28, 2020 in the District of Columbia charging the Company with conspiracy to violate the anti-bribery provision of the Foreign Corrupt Practices Act (FCPA) and conspiracy to violate the AECA and its implementing regulations, the ITAR. The FCPA charge arose out of Airbus’s scheme to offer and pay bribes to foreign officials, including Chinese officials, in order to obtain and retain business, including contracts to sell aircraft. The AECA charge stems from Airbus’s willful failure to disclose political contributions, commissions or fees to the U.S. government, as required under the ITAR, in connection with the sale or export of defense articles and defense services to the Armed Forces of a foreign country or international organization. The case is assigned to U.S. District Judge Thomas F. Hogan of the District of Columbia.

“Airbus engaged in a multi-year and massive scheme to corruptly enhance its business interests by paying bribes in China and other countries and concealing those bribes,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division. “This coordinated resolution was possible thanks to the dedicated efforts of our foreign partners at the Serious Fraud Office in the United Kingdom and the PNF in France. The Department will continue to work aggressively with our partners across the globe to root out corruption, particularly corruption that harms American interests.”

“International corruption involving sensitive U.S. defense technology presents a particularly dangerous combination. Today’s announcement demonstrates the Department’s continuing commitment to ensuring that those who violate our export control laws are held to account,” said Principal Deputy Assistant Attorney General David P. Burns of the Justice Department’s National Security Division (NSD). “The resolution, however, also reflects the significant benefits available under NSD’s revised voluntary self-disclosure policy for companies that choose to self-report export violations, cooperate, and remediate as to those violations, even where there are aggravating circumstances. We hope other companies will make the same decision as Airbus to report potential criminal export violations timely and directly to NSD so that they too can avail themselves of the policy’s benefits.”

“Today, Airbus has admitted to a years-long campaign of corruption around the world, said U.S. Attorney Jessie K. Liu of the District of Columbia. “Through bribes, Airbus allowed rampant corruption to invade the U.S. system. Additionally, Airbus falsely reported information about their conduct to the U.S. government for more than five years in order to gain valuable licenses to export U.S. military technology. This case exemplifies the ability of our prosecutors and law enforcement to work with our foreign counterparts to ensure that corruption around the world is prevented and punished at the highest levels.”

According to admissions and court documents, beginning in at least 2008 and continuing until at least 2015, Airbus engaged in and facilitated a scheme to offer and pay bribes to decision makers and other influencers, including to foreign officials, in order to obtain improper business advantages and to win business from both privately owned enterprises and entities that were state-owned and state-controlled. In furtherance of the corrupt bribery scheme, Airbus employees and agents, among other things, sent emails while located in the United States and participated in and provided luxury travel to foreign officials within the United States.

The admissions and court documents establish that in order to conceal and to facilitate the bribery scheme, Airbus engaged certain business partners, in part, to assist in the bribery scheme. Between approximately 2013 and 2015, Airbus engaged a business partner in China and knowingly and willfully conspired to make payments to the business partner that were intended to be used as bribes to government officials in China in connection with the approval of certain agreements in China associated with the purchase and sale of Airbus aircraft to state-owned and state-controlled airlines in China. In order to conceal the payments and to conceal its engagement of the business partner in China, Airbus did not pay the business partner directly but instead made payments to a bank account in Hong Kong in the name of a company controlled by another business partner.

The Paris Court of Appeal on 27 May 2020 found veteran right-wing politicians Patrick and Isabelle Balkany guilty of money-laundering and sentenced them both to jail, sealing the power couple’s fall from grace after a protracted legal battle. The Balkany couple, who for years governed the chic Paris suburb of Levallois-Perret, were sentenced to prison terms of five and four years respectively. But they were not ordered behind bars immediately pending an appeal to France’s highest court. Patrick Balkany, a close friend of former president Nicolas Sarkozy, had been released to house arrest in February because of health problems.

The two had already lost in March an appeal against tax fraud convictions after they were found guilty of using offshore accounts to hide at least €13 million ($14.4 million) in assets from the tax authorities, including luxury villas in the Moroccan city of Marrakesh and in the West Indies. Patrick Balkany was first elected mayor of Levallois-Perret in 1983 and also held a seat in parliament for many years.

The jail terms handed down last year — extremely rare for French politicians — were widely heralded as proof that the legal system no longer shirks from holding the powerful to account.




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Page last modified: 30-06-2021 12:06:11 ZULU