Stinking from the Top

Corruption in the Botswana of Europe

In the past decade over five hundred French politicians and businessmen have been investigated or convicted for corruption. In France, officially the most corrupt country in Western Europe, many of them still walk free while the magistrates investigating them face death threats, press hostility and political interference.

In January 1998, Roland Dumas – Resistance hero, connoisseur of the arts and of beautiful women, lawyer to artists like Picasso and Giacometti, former foreign minister of France, friend to presidents and currently president of its highest court, the Conseil Constitutionnel – found himself trapped in his own apartment. With mounting fury, he watched as the place was thoroughly ransacked by a shortish, fiftyish woman. 

He told the woman he had urgent business and would have to leave. The reply, reported in a French paper, was humiliating: "You stay," snapped Eva Joly, "or I'll have you arrested." Mme. Joly was a juge d’instruction (investigating magistrate) with wide powers to root out the corruption endemic at the highest levels of French society.

Dumas, as it turned out, was implicated in a set of interlocking corruption cases up to his eyeballs.

These cases, known as Les affaires, touch every aspect of French life. Scandals erupt in every western liberal democracy, from Enron and Worldcom in the US to Jeffery Archer’s trial for perjury in the UK. In those countries, public sentiment is outraged, judicial investigations are conducted swiftly and the guilty end up in jail. In France, in the words of French philosopher Montesquieu, writing in the 16th Century, "The law is like a web, big insects fly right through it, only the little ones get caught”. 

Today France is officially rated by Transparency International, the Berlin-based think-tank, as the most corrupt country in western Europe while analysts Fredrik Galtung and Charles Sampford, working for the 2003 UN Anti-Corruption Convention, give France a corruption rating of “3”, on a par with Botswana.

Elf: Paymaster to the “Whore of the Republic”

Roland Dumas was mixed up in the case of Elf-Aquitaine, the gigantic state-owned oil firm. Under President Mitterand (now safely dead) the company had been used as a general piggybank by successive governments. A €305m slush fund was created from the loot that was then passed on as bribes, sweeteners and kickbacks. Allegedly, "royalties" went to African leaders for drilling rights; commissions were paid to acquire desirable industrial properties and sweetheart loans were granted to undeserving companies.

The most infamous instance concerned the 1991 sale to Taiwan of six modern frigates built by the French defence firm Thomson-CSF. The contract was worth more than €1 billion, but the deal conflicted with French government policy towards mainland China which aggressively opposed the deal. The sale was cancelled, then reversed. The Taiwanese, who were near to completing a similar deal with Hyundai of Korea, pulled out of that sale and opted for the French offer. By the time the six frigates are finally paid for, their price had rocketed €2.44bn euros, of which nearly a third is estimated to have been the cost of the bribes and commissions.

The warships were delivered to Taiwan. At just about the same time, Mitterand’s prime minister of the time, Edith Cresson, was passing on full details of the commercial and technical specifications of the deal to the People’s Republic of China in order to soften the transaction (and reportedly getting herself a €1.5m kickback from Elf).

The deeper Eva Joly, dug, the deeper she got in. In 1996, she began receiving death threats and was assigned a police bodyguard. A year later, a case of documents disappeared from a locked police storage room. Then her office was broken into and two computers tampered with.

Only when Joly zeroed in on Roland Dumas did the press start taking notice, reporting the €1.4 million luxury Paris apartment and a €6000 monthly expense budget allotted to Dumas's mistress Christine Deviers-Joncour, who had been put on the Elf payroll for unspecified duties. Joly banged up Deviers-Joncour in jail, called Dumas in for questioning and, with relish, presided over a search of that expensive Parisian apartment. 

She found links to Loïk Le Floch-Prigent, boss of Elf in 1989-1993, and Alfred Sirven, his deputy, as well as to their ex-“Mr Africa”, André Tarallo, These three insisted that they were operating an inherited système Elf designed to further French oil policy and benefit certain African leaders. So, the palatial Paris apartment that he acquired, insisted Mr Tarallo, was for the use of Gabon's president, Omar Bongo. A villa in Corsica was intended to house a “Franco-African foundation”. 

This defence evaporated under Joly’s fiery scrutiny. Mr Sirven, who fled to the Philippines (and swallowed the chip in his mobile phone) before his arrest, turned on his former boss. He had spent over €100m on Mr Le Floch-Prigent's behalf, he said. This included purchases like yet another multi-million euro house in Paris that Mr Le Floch-Prigent had reported (for tax purposes, naturally) as a “business flat”. This extraordinary world of bribery and personal profit, of jewellery and furs, villas and mistresses was all revealed in a carnival of trials lasting well into the 2000s. (To court uproar, it was revealed that Le Floch-Prigent had used €4.5m of company money to fund his divorce.)

As a result of Joly’s investigations, Le Floch-Prigent, Sirvent and Tarallo, as well as twenty-seven others, all got prison sentences and combined fines of nearly €20m.

But not Dumas. In 2001, he was convicted of complicity in taking bribes. At his sentencing, he warned the judges “You will hear from me after this trial”. On appeal, in 2003, he was cleared of all charges. "I am happy that I have been given justice," he told the French news agency AFP. His former mistress, Christine Deviers-Joncour, was not so happy. She got three and half years.

Crédit Lyonnais: The Bank That Dripped Red Ink

In 1988 Crédit Lyonnais, France's biggest state-owned bank, began a dynamic programme of explosion and acquisition under its peppy new CEO, Jean-Yves Haberer. 

Haberer had a mighty dream; he wanted this staid, solid bank to be a French rival to Germany's Deutsche Bank or the vast US investment banks. So he began creating a giant portfolio of stakes in French companies, splurging large sums buying other banks and giving loans to rackety businessmen, many of whom were tainted by their association with other French business and financial scandals. 

This explosive growth was overseen by the governor of the Banque de France, Jean-Luc Trichet, acting as treasury director, and France's government which saw Crédit Lyonnais as a channel for its industrial policy. 

But in the early 1990s France's economy slumped and Crédit Lyonnais began bleeding red ink. In the words of Rob Jameson of financial analysts, Erisk, “It seemed that no one with authority over the bank was able to draw a clear line between the bank's risk capital and the deep pockets of the French taxpayer.”

By 1992, though bank’s management had deliberately inflated its results, it was obvious that Crédit Lyonnais was bankrupt. The savings of eight million people were in jeopardy. The French finance ministry stepped in with a vast injection of taxpayers’ cash, saving it from collapse at a total cost €190 billion.

New management, led by Jean Peyrelevade, was installed in 1993 and the bank was privatised in July 1999, lending it some respectability. In late 2002 Crédit Lyonnais was bought by Crédit Agricole. 

Investigations into criminal wrongdoing at the bank were hampered by the destruction of crucial bank archives in a fire that began in the main trading room of the bank in May 1996. Another fire at a Le Havre depot later destroyed documents that were critical to unravelling the story behind some of Credit Lyonnais' worst property-linked investments. 

Nonetheless, Jean-Yves Haberer was found guilty of fraud in 2003, and given an 18-month suspended sentence and a €50,000 fine. Two other former officials, François Gille and Bernard Thiolon, were also convicted and given suspended sentences and fines of €10,000. All are appealing.

Jean-Luc Trichet, the link between the government and the bank, was also tried. He claimed that he was “was given little information by the bank's management while, as treasury director, I was not given access to internal ministry reports.” He was acquitted. In the same year, President Chirac appointed him to head the European Central Bank.

Paris: The Gardens of Corruption

Jacques Chirac was President of France between 1995 and 2007. Between 1977 and 1995, he was mayor of Paris, the city called, not without affection, the “Gardens of Corruption” by poet Charles Baudelaire.

Chirac was named in numerous cases of corruption and abuse relating to his time as mayor. However, as president, Chirac had near total legal immunity for acts not only as president but for acts preceding his time in office. This was thanks to decision 98-408 DC of the Conseil Constitutionnel (Constitutional Council). The Council committee that made the decision was handpicked by Chirac and headed, inevitably, by Roland Dumas.

Maybe he should not be blamed. Paris seems to bring out the worst in everybody involved in its governance. 

  • Vote-Rigging: This is endemic across the different districts of Paris. In the 3rd arrondissement alone, 859 (being 5% of the registered voters) were fraudulently registered on the electoral rolls during Chirac’s time as mayor. During the tenure of his successor, Jean Tiberi, 7,228 dead, missing or simply made-up names were registered in the 5th arrondissement (allowing Tiberi to win his election with a 2,725 vote majority).
  • Kickbacks: One easy way to raise funds is by manipulating the bidding of public contracts. Charles Pasqua, one of Chirac’s former interior ministers, was allegedly involved in a kickback scheme for works on the public housing projects of the Hauts de Seine département. Forty other officials are under investigation for corruption in the Île-de-France regional council. Police investigations show that at least 2% of the payments from companies involved in building or repairs on the region's high schools were channelled back to political parties. 
  • Payroll Padding: On 31 January 2004, Alain Juppé, former prime minister of France and also former deputy mayor in charge of finances of the City of Paris (1983-1995) was sentenced to an 18-month suspended sentence for paying party workers from the city employee payroll.
  • Jobs for the Boys (and Girls): Xavière Tiberi, the wife of mayor of Paris Jean Tiberi, received €30,000 for a report on la francophonie (the coalition of French-speaking nations) for the Essonne département. This 36-page report was poorly written and littered with child-like spelling and grammatical mistakes. Police now suggest it was written after payment when investigators actually asked what was being paid for. 
  • Uphill Gardening: In 2004, the mayor at the time, Bertrand Delanoë, complained that for the last decade, City of Paris gardeners had been diverted from their jobs to tend the gardens of senior figures in President Chirac’s RPR party (Rassemblement pour la République, Rally for the Republic). He estimated the loss to the public purse to be upward of €700,000.

The Horrors of Toulouse

In 2002, Patrice Alègre, a pimp and cocaine pusher in Toulouse was convicted of five murders and six rapes in the region during a decade-long murder spree. He was only caught when a when a special homicide squad began to investigate the unexplained disappearance of 115 women and girls in the Toulouse region dating back to 1992.

At his trial, policeman’s son Alègre claimed that the reason his crimes had gone undetected so long was the official protection that he received from the local police and government officials who attended the regular sado-masochistic orgies he hosted in a council-owned chateau and, bizarrely, a courthouse.

At first, his claims were dismissed as fantasy until two prostitutes, given the witness-protection pseudonyms “Patricia” and “Fanny”, corroborated his story. The women testified repeatedly that they informed gendarmes about Alègre and the parties years ago but had always been ignored. This was during a time when, the investigations revealed, the region’s police were reclassifying some of Alègre’s murders as “suicides”.

Their testimony included the description of Alègre’s strangling a transvestite, Claude Martinez, who had boasted of secretly filming the orgies and was threatening to name names. Those names soon came out, including the former mayor of Toulouse, three judges and, incredibly, one of the prosecutors conducting the case against the killer. 

The appointment of Michel Barrau, to replace the dropped local prosecutor, concerned some observers because he had been blamed with blocking an investigation into corruption among senior right-wing politicians in Paris before the 2002 general election.

In 2005, charges of rape against two of the leading names implicated, Dominique Baudis, the former mayor of Toulouse, and Marc Bouraque, the substituting prosecutor of Toulouse, were dropped.

The Culture of Corruption

Why the French people seem to care to little about the corruption that riddles the upper echelons of its business, political and judicial institutions is a mystery to its English, Scandinavian and German neighbours. Eva Joly, former investigating magistrate sums up the current situation: “The law applies to all, except for those who wield political or economic power.”

The problem is that corruption seems not simply endemic, it is systemic, built into the structure of public institutions in France. During his time as Mayor, President Chirac was able to pay for twenty, first-class trips abroad for himself and his family – at a cost of €440,000 – using an official but “secret” fund available to him by virtue of his office. The source of this cash is officially unaccountable and, as Eric Halphen, the investigating magistrate looking into “travelgate” found out when he tried to explore how it was spent, so is its disbursement.

Slowly but surely, the investigating magistrates, the only people in France with the power to clean it up, are being sidelined, pressurised and forced from their jobs. Halphen resigned in disgust at the Chirac’s refusal to testify in the myriad cases of bribery regarding his time as mayor of Paris. Eva Joly took early retirement and went back to her native Norway, intimidated by political and police pressures. She had received police protection after receiving death threats but found the 24-hour armed guard “more like police arrest than police protection”. When she asked that the guard be removed, her request was denied and the guard was doubled. Joly’s colleague Laurence Vichnievsky has also resigned.

Perhaps the problem is that the corruption at the top of French society reflects the attitude of French society. A government report in 1996 estimated that the cost of tax evasion in France could be as high as £21 billion per year - equal to two-thirds of the revenue from income tax. French authorities are so bad at collecting income taxes (or the people so good at evading them) that between a third and a half of the adult population pay no income tax at all.

In 2002, while covering the French presidential election, a BBC reporter asked a selection of French voters why they were not more worried about the crooked tendencies of their politicians. One answer provided by a chuckling waiter sums up the attitude of the entire country: "Don't talk about corruption in France or in Paris – everybody is corrupt, myself too.”

Clear Corruption

Transparency International gave France a score of 71 out of 100 in the 2012 Corruption Perceptions Index score. This put it well behind the Nordic countries, the Netherlands, Germany, Belgium and the United Kingdom. There was a 29 point difference between France and the top-ranked countries (Denmark, Finland and New Zealand). “While these scores don’t tell the complete story of corruption in a country”, concluded the report, “they do demonstrate how France is perceived to lag behind [...] its European peers in terms of tackling corruption.” 

Bernard Tapie: You Can’t Cheat A Dishonest Man

One name constantly recurs in any discussion of corruption in France: Bernard Tapie – or “Nanard” as he is known to his fans that are surprisingly many for a businessman, sports owner, politician, disgraced politician, payer off of other politicians, jailbird, bankrupt, film actor, crooner and alleged gangster. 

Tapie has dominated news in the south of France for forty years. Between 1986 and 1994, he was president of the football club, Olympique de Marseille, which won the French championship five times in a row, an amazing feat but one that appeared slightly less amazing when he was convicted of match-fixing. The Club was stripped of its championship status and relegated to a minor division. Over the years, Tapie has been charged with a number of offences including corruption, witness intimidation and tax fraud. Features of his life during the second half of the 1990s include: five months in prison for having bribed a rival soccer team and suborned a witness; two suspended prison sentences, bankruptcy, a ban on corporate activity and the loss of his civil rights for company fraud; expulsion from the parliaments of both France and the European Union.

By the turn of the millennium, it seemed he was finished. But then, out of pure cheek, it seemed, he decided to sue his various prosecutors for damages incurred while cleaning up his mess and putting him in jail. In a stunning turn of events, in 2008 an arbitration panel awarded him $528 million.

This was a bit iffy, even for the lackadaisical French. A preliminary examination found that the panel was rigged and “might have been influenced by Mr. Tapie”. Investigations are ongoing but it is useful to note that amongst people who played a part in the panel’s findings are Stéphane Richard, now the head of France Télécom, and Christine Lagarde, who become managing director of the International Monetary Fund, after the previous boss   Dominique Strauss-Kahn – was arrested in suspicion of raping a hotel maid in New York. Meanwhile Mr. Tapie is free, and as he always is, on bail.

“Mr Clean-Hands” Gets Dirty

Nicolas Sarkozy was elected President of France in 2007 on a pledge to clean out the corruption at the highest levels of French government. This pledge did not apparently include him. During that very election, it has been alleged by the online newspaper Mediapart, Éric Woerth, the treasurer of Mr Sarkozy’s political party, was given an envelope containing €150,000 in cash in March 2007 by Liliane Bettencourt, the principal shareholder of  billion-dollar cosmetics company, L'Oréal. The money was to be spent on the electoral campaign of the president-to-be. This was nothing new apparently since Sarkozy was a frequent visitor to the Bettencourt mansion while he was mayor of Neuilly-sur-Seine from 1983 to 2002 and often received envelopes containing cash, all payments regarded as illegal under French electoral law. Mme Bettencourt might well have been regarded as a soft touch by Mr Sarkozy, since she is in her nineties and has been described by members of her family as “senile”. An independent French magistrate is currently conducting investigation into the truth of the allegations.

The Tax Tsar Who Was Hair Today, Gone Tomorrow

François Hollande was elected President of France in 2012 also on a pledge to clean out the corruption at the highest levels of French government. He immediately appointed Jérôme Cahuzac (a former plastic surgeon specialising in hair transplants) as budget minister and tax tsar with a specific duty to crack down on France’s many tax evaders, especially those who had salted away taxable assets in havens such as Switzerland. Cahuzac resigned in 2013 when it emerged that he had been keeping €600,000 in a Swiss bank account to avoid tax. "I was caught in a spiral of lies and I did wrong," he said. "I ask the President, the Prime Minister, my former colleagues in the government, to forgive me for the damage I have caused them." He added that he was "devastated by remorse".


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