The Clearstream trial: a conflict in the French bourgeoisie

By Alex Lantier

7 November 2009

The month-long Clearstream trial, hearings for which ended on October 23, is a cynical judicial façade for ruthless state politics.

It stems from French President Nicolas Sarkozy's accusations that ex-Prime Minister Dominique de Villepin, together with intelligence and corporate figures, allowed Sarkozy’s name to be falsely added a list of account holders at the Clearstream inter-bank payment-clearing firm, in an attempt to slander him. The trial found evidence that Villepin knew of these listings far earlier than he had previously admitted. Judges will return a sentence in January 2010.

By itself, however, this is completely insufficient to understand the significance of the trial. Its preparations date back to 2006, when Sarkozy and Villepin were vying for the presidential nomination of the conservative Union for a Popular Movement (UMP) in the 2007 elections. Facing mounting challenges from the working class, Sarkozy was proposing a re-orientation towards Washington, away from the alignment toward Berlin and Moscow that underlay Villepin's 2003 opposition to the US invasion of Iraq. This entailed significant shifts in corporate alignments inside France's military-industrial complex, and in French foreign policy.

A related dimension of the trial is the attempt to settle and suppress investigation of a series of politico-financial scandals that have shaken the French establishment ever since the early 1990s. After the collapse of the USSR, as tensions rose with other powers, notably with the US, disagreements over the corrupt and bloody arrangements of French imperialism increasingly rose to the surface of public life.

Prominent among these were the Elf Affair & Angola arms sale scandal, the Taiwan frigate sale affair, the publication of journalist Denis Robert's book Révélation$ accusing Clearstream of hiding large-scale criminality, and the EADS insider trading scandal. [See, “France: the affairs the Clearstream trial aims to suppress”]

The anti-democratic content of the Clearstream affair was the suppression of these scandals—through government use of the state secrets privilege, judicial complicity, and murder—and their use to settle policy differences outside of elections and behind the backs of the population.

The Clearstream listings

Five people stand accused of falsification and/or slander in the trial: Villepin; former EADS executive vice-president and intelligence official Jean-Louis Gergorin; former Merrill Lynch trader, EADS executive, and Franco-US intelligence asset Imad Lahoud; investigative journalist Denis Robert; and a former intern at the now-defunct auditing firm Arthur Andersen and provider of information for Denis Robert's writings, Florian Bourges.

The presence of Denis Robert and Florian Bourges on the list is, at first glance, surprising: neither man was in a position to initiate or benefit from investigations of accusations against Sarkozy. The chilling effect such prosecution will have on political and financial journalism, however, is clear. In this regard, it is significant that shortly before the November 2008 announcement of the Clearstream trial, on October 16, 2008, Denis Robert's blog announced that it would cease publication.

The February 2001 publication of Révélation$ was a political bombshell in Europe, with ramifications throughout global politics. Robert worked on the book with former Clearstream executive Ernest Backes, who Clearstream fired in 1983 after Backes testified that he helped Italy's Banco Ambrosiano make off-the-books payments through Clearstream. Backes testified about the investigation into the murder of Banco Ambrosiano's CEO Roberto Calvi, and allegations that Banco Ambrosiano was funneling CIA funds to the Polish Solidarnosc trade union and the Nicaraguan contra rebels.

Basing himself on Backes' records and Clearstream account listings, Robert made several explosive charges, including:

(1) That the Bank of Credit and Commerce International (BCCI), through which both the CIA and Osama bin Laden directed funds to Afghan anti-Soviet mujahedin during the 1980s, secretly continued to operate through Clearstream after its sudden bankruptcy and disappearance in 1991.

(2) That in 1997, the Menatep Bank linked to Russian oligarch Mikhail Khodorkovski embezzled $7 billion in IMF funds destined for the Russian government, which Menatep then shared with US banks.

(3) That Clearstream had helped transfer illegal kickbacks in France's Taiwan frigates sale scandal.

The book was met with denunciations in the press. In subsequent years, its authors have faced 31 trials on accusations of slander in France, Belgium, Switzerland, and Canada. Robert has been cleared on all but 2 of these trials: a symbolic 1-euro fine that Robert appealed, and a condemnation for slander in 2005 for a speech Robert made after the publication of Révélation$.

Despite the massive media campaign denouncing Robert's charges as fabrications, intelligence circles closely scrutinized his sources after the publication of Révélation$. It was in this context that Clearstream account holder lists came to be used as a weapon in French bourgeois politics.

In 2002, the Franco-Lebanese financier Imad Lahoud was convicted of fraud in the collapse of the Volter investment fund, which led to the disappearance of $42 million. Lahoud had connections not only to London financial circles, but to French political circles through his father-in-law François Heilbronner, the ex-deputy chief of staff for then-President Jacques Chirac. Released in October 2002 after a three-month prison stay, he contacted his brother Marwan, a top executive at European defense firm EADS, saying he had information about Osama bin Laden's financial networks.

Marwan Lahoud put his brother in touch with EADS executive and French intelligence official Jean-Louis Gergorin. Gergorin passed Imad on to General Philippe Rondot. Rondot worked at France's DGSE (General Directorate of External Security), which was operating a joint anti-terrorism and analysis center with the CIA and other Western intelligence agencies in Paris.

Marwan Lahoud also introduced Imad to journalist Eric Merlen, who arranged in December 2002 that Imad Lahoud would meet Denis Robert. The DGSE official handling Imad Lahoud, whose notes have been released, gave Lahoud detailed instructions on this meeting. Robert apparently did not know that he was meeting with a DGSE asset, but gave Imad Lahoud a CD containing his information on Clearstream account lists.

The sudden death of business mogul Jean-Luc Lagardère on March 14, 2003—barely a week before the US invasion of Iraq, which Chirac and de Villepin had opposed—threw these relationships into crisis.

Lagardère's death was a major event in French foreign and industrial policy. He owned Matra, a French defense firm that had merged into the Franco-German EADS, and which had employed both Marwan Lahoud and Jean-Louis Gergorin. It was a major rival of French defense firm Thomson-CSF, seen as more oriented to supplying the British and US militaries, and with whom Matra engaged in bitter competition during the scandal-ridden Taiwan frigates sale.

Gergorin noted that Lagardère had died of a sudden and rare form of encephalitis, and that at the time the US investment fund Highfields was increasing its stake in the Lagardère Group. Gergorin confided in Imad Lahoud his suspicions that the Russian mafia or US agents might have assassinated Lagardère, hoping to profit from confusion while his son Arnaud took over the family firm. He asked Lahoud to investigate whether the Clearstream listings shed any light on the matter.

Also during 2003, Lahoud met with Brigitte Henri—a top assistant of Yves Bertrand, the former head of France's DST (Direction for the Surveillance of Territory) internal intelligence service. Yves Bertrand, considered close to Chirac, was seen as hostile to Sarkozy since investigating Sarkozy's alleged role in the Elf Affair in the early 1990s. At the time, Sarkozy was backing Chirac's right-wing rival, Edouard Balladur, for the 1995 presidential campaign.

In the course of meetings involving Gergorin, Lahoud, Villepin and—according to some allegations—others such as Yves Bertrand, the names of Nagy and Bocsa were placed on listings of Clearstream accounts. These names are those of Sarkozy's family, which is of Hungarian origin. Ultimately, the names of several other French corporate and political figures—notably PS politician and IMF head Dominique Strauss-Kahn, and former PS minister Jean-Pierre Chevènement—appeared on the listings.

Gergorin anonymously sent these supposed Clearstream account lists to investigating judge Renaud van Ruymbeke, writing that they would assist him in investigating the Taiwan frigates scandal.

In June 2004, Rondot presented information on bin Laden from Lahoud to the CIA. Ultimately, however, the CIA declared it did not trust Lahoud as a source and convinced Rondot to drop him as an asset. Shortly thereafter, news magazine Le Point revealed the existence of the allegedly faked listings, publicly launching the Clearstream affair.

An emerging political crisis

The prospect of a trial investigating presumably fake Clearstream listings emerged in French political circles by November 2004, when Sarkozy charged Villepin with concealing the conclusions of a report showing these Clearstream listings were bogus.

In April 2005, at a dinner with top Lagardère group executives, Sarkozy issued a now-famous threat: "I have nothing to lose. There will be blood on the walls. When I come to power, we will hang them all from butchers' meat hooks." Sarkozy reportedly named Gergorin, Villepin, and top police and DST officials among his targets.

Two major blows by the working class to the government of then-Prime Minister Dominque de Villepin triggered a full-blown crisis of French state policy. On May 29, 2005, the public voted down a referendum to establish a European constitution. While this reflected popular hostility to the right-wing social policies promoted by the European institutions in Brussels, it also shattered hopes that the European bourgeoisie could organize political unity and foreign policy independent from the US.

Also, the Villepin government's announcement of a First Job Contract (Contrat Première Embauche) significantly limiting younger workers' workplace protections prompted widespread opposition and large-scale demonstrations of students and workers in February-April 2006. Ultimately, Villepin withdrew large sections of the law in early April 2006.

As the trade unions and "far left" parties wound down popular demonstrations, the main political beneficiary was Villepin's most prominent opponent: Sarkozy.

By that point, police investigators were moving rapidly on the Clearstream listings case. They searched the offices of EADS, the DGSE, and the Defense Ministry, returning to the offices of Defense Minister Michèle Alliot-Marie and General Rondot on April 13. On April 28, Villepin and Chirac denied claims in Le Monde that Villepin had ordered Rondot to investigate Sarkozy on Chirac's authority. On May 2, Villepin was forced to publicly deny that he intended to resign as Prime Minister.

In January of 2007, Sarkozy was officially named the UMP's presidential candidate for the May 2007 elections. Shortly after Sarkozy's election, in July, Villepin was charged with complicity to slanderous denunciation, complicity to forgery, and related legal offenses. In November 2008, the courts officially determined that Villepin and the other defendants would stand trial.

The Clearstream trial

The trial, lasting from September 21 to October 23, was marked by tactical initiatives by the various parties to influence the court and broader public opinion. Villepin's lawyer attacked Sarkozy's vendetta against his client, noting that Sarkozy's presidential immunity shielded him from lawsuits in return. Sarkozy aided Villepin on September 23 by publicly referring to the accused as "guilty parties," violating the presumption of innocence. The testimony of Lahoud and Gergorin, who both sought to pin responsibility for first creating the listings on the other, repeatedly clashed.

On October 5, in testimony widely seen as damaging to Villepin, Rondot described Villepin's participation in July 2004 meetings dealing with the Clearstream lists. In particular, he quoted Villepin as warning that "if our names appear, the President of the Republic [i.e. Jacques Chirac] and I, we'll go up in smoke."

The trial oddly ignored major participants in the affair. Though Yves Bertrand's assistant worked closely with Lahoud, Bertrand was only questioned for one day, during which he simply asserted he had never met Lahoud. He largely escaped public scrutiny.

Though dealing with essential questions of state policy and evidence of widespread criminality in the ruling class, the trial degenerated into unresolved disagreements about the actions of a small camarilla around Villepin. This was a further indication of the anti-democratic character of the proceedings.

Sources:

Frédéric Charpier, Une affaire de fous: Le roman noir de l'affaire Clearstream (Seuil: Paris, 2009).

Frédéric Charpier, La CIA en France (Seuil: Paris, 2008).

Thierry Gadault, EADS: La guerre des gangs (Editions Générales First: Paris, 2008).

Véronique Guillermard & Yann le Galès, Le bal des ambitions: avions, argent, armes et politiques (Roger Lafont: Paris, 2009).

France: The affairs the Clearstream trial aims to suppress

By Alex Lantier

7 November 2009

A decades-long series of corruption scandals, bound up with oil and arms deals, constitute the legal background to the Clearstream Affair lawsuit by President Nicolas Sarkozy against ex-Prime Minister Dominique de Villepin.

While the principal aim of the trial is to legitimize and reinforce right-wing changes in policy carried out by Sarkozy since his 2007 election, a related goal is to hide the staggering corruption these affairs have revealed. Instead of elucidating the broader context of these "politico-financial affairs," the trial has focused narrowly on whether Villepin attempted to slander Sarkozy through preparing fake financial listings. Sarkozy also decided this January to suppress the positions of investigating judges, who have uncovered the scandals.

A remarkable aspect of the affairs has been the legal impunity enjoyed by the politicians and businessmen involved—even as investigations discovered evidence of embezzlement, large-scale fraud, and murder. Being a member of the European bourgeoisie, the record shows, means never having to say you're sorry.

The Elf Affair

The Elf Affair involved large-scale embezzlement by top management of the Elf oil firm—now merged into French oil major Total. Besides enriching top executives, the funds were used to pay off French-backed African rulers and fund wars in sub-Saharan Africa, where French and US imperialism fought a series of proxy wars in the 1990s.

Elf was set up in 1963 by then-President Charles de Gaulle, under the direction of Pierre Guillaumat. Guillaumat was the former head of France's Commissariat on Atomic Energy, which created France's nuclear weapons program under his direction, and a former Gaullist intelligence official during World War II. Elf CEO Loïk Le Floch-Prigent explained at the 2003 trial: "In 1962, [Guillaumat] convinced [de Gaulle] to set up a parallel structure of real oil technicians. The Gaullists wanted a real secular arm of the state in Africa…a sort of permanent ministry of oil…a sort of intelligence office in the oil-producing countries."

The Elf Affair broke in 1994, amid investigating judge Eva Joly's inquiry into Elf's illegal financing of the Bidermann textile firm. Joly uncovered large-scale illegal financing networks at Elf, active during President François Mitterrand's second term (1988-1995), which embezzled at least €305 million. These funds were paid via Gabonese President Omar Bongo to the governments of Angola, Cameroon, and Congo-Brazzaville. Elf money also went to then-German chancellor Helmut Kohl and then-Spanish Prime Minister Felipe González.

Joly faced state intimidation during her investigations. In a 2004 book, Is That the World We Want to Live In, Joly stated that her phone was tapped and her house watched. She received 24-hour police protection after receiving death threats tacked to her office door. After deciding the police protection was more threatening than reassuring, she requested that it be lifted; however, her request was denied and her permanent guard of two policemen was doubled.

Le Floch-Prigent and Elf executives Alfred Sirven and André Tarallo ("Mr. Africa") ultimately went to trial. Le Floch-Prigent testified that Elf paid "at the very least" €5 million to each of France's main political parties, and was in "daily contact" with the Elysée presidential palace about Elf's dealings. However, no politicians were ever found guilty of illegal behavior in the Elf Affair.

Le Floch-Prigent, Sirven, and Tarallo all received light sentences. In particular, Tarallo's sentence of 4 years in prison and a €2 million fine was not applied: he left prison after two months and did not pay the fine.

A related aspect of the Elf Affair was the scandal that touched ex-Parti socialiste (PS) Foreign Minister Roland Dumas. It emerged in 1998 that in the early 1990s, Elf had provided large sums of money for an apartment and luxury goods to Christine Deviers-Joncour, an Elf employee who was Dumas' lover and bought Dumas presents. It is suspected that one of Elf's main goals in its relations these relations with Dumas was to win approval for the Taiwan frigates sale.

To raise funds for her legal defense, Deviers-Joncour wrote a tell-all autobiography, expressively titled The Whore of the Republic, largely confirming suspicions that Elf was trying to buy influence with Dumas. Dumas was found guilty of fraud in 2001, but released on appeal in 2003—on the grounds that he might not have known that Deviers-Joncour's salary at Elf was inflated to buy influence with him.

The Taiwan frigates scandal

In 1988 French defense firm Thomson CSF (now Thales) arranged the sale of six Lafayette-class frigates to Taiwan for $2.8 billion. The price was inflated to pay for kickbacks to officials in France and Asia. Under legal pressure during his trials in the Elf affair, Dumas stated that the kickbacks amounted to 2.5 or even 5 billion French francs ($500 million to $1 billion).

The sale initially ran into opposition from mainland China, and Dumas as Foreign Minister vetoed the sale. Thomson and Elf set up influence-peddling networks in China, Taiwan, and France to overcome this opposition. At least 10 officials related to the deal died suspect deaths. These included Taiwanese Navy Captain Yin Chen-Feng, who had opposed the deal, found drowned in Taipei Bay in 1993, with violent blows to the neck. Thomson's Taiwan agent, Andrew Wang, was forced to flee Taiwan to London after being charged with fraud, money-laundering, corruption, and murder.

Thomson executive Jacques Morisson and French intelligence official Thierry Imbot both died from falls from upper stories of their apartment complexes in Paris. The French courts concluded that both deaths were suicides. General René Imbot, Thierry's father and the former head of France's DGSE (Direction Générale de la Sécurité Extérieure) exterior intelligence service, formally denied that his son's death was a suicide. He said his son had told him the Taiwan frigates affair had allowed certain individuals to make "fortunes" and that he was receiving death threats.

Successive French Finance Ministers—Laurent Fabius of the Socialist Party in 2001, and Francis Mer of the UMP in 2002—used the states secrets privilege to halt investigations of the case. The Taiwanese government sued in 2003 to recover the kickbacks it suspected having paid. In 2004, using Swiss bank records, Taiwan proved that the final sale price of the frigates included at least $520 million in kickbacks. In June 2007, the Swiss courts awarded $34 million of these funds to Taiwan.

In France, in 2008, Paris prosecutor Jean-Claude Marin declared a mistrial in all investigations related to the case.

The EADS insider trading scandal

The implication of EADS executive and intelligence official Jean-Louis Gergorin in the Clearstream affair was one consequence of the crisis that shook Franco-German aerospace and defense giant EADS, after the 2003 death of business mogul Jean-Luc Lagardère. Another was the EADS insider trading scandal surrounding the Lagardère Group's sale of its stake in EADS.

Jean-Luc Lagardère's death put Lagardère Group under the leadership of his son Arnaud—a man considered to be largely interested in sports and publicity, not the defense industry. Moreover, the A380 jumbo jetliner, the key new product of EADS subsidiary Airbus, soon began to suffer production delays, which were later blamed on errors in planning the plane's inner cabling.

Leading EADS executives and stockholders—including Airbus CEO Noël Forgeard, the Lagardère Group, and German corporation Daimler-Chrysler—sold their shares before a collapse in EADS stock in spring 2006, after the announcement of further delays. Lagardère Group had sold €2 billion in EADS shares, including a €600 million stake to the French government (the Caisse des dépots et consignations, CDC), whose value promptly fell by at least €125 million—effectively realizing this sum as a profit at the expense of the French taxpayer.

In an interview with Le Monde, Arnaud Lagardère said: "I have the choice of being seen as a crook or an incompetent, who does not know what is going on in his own factories. I choose the second version."

According to a leak in the well-known satirical weekly Le Canard Enchaîné, the AMF (Autorité des Marchés Financiers, the financial regulator) found documents in Lagardère's residence demonstrating that he knew of the A380 delays before selling his stake in EADS, netting €890 million in profits. Arnaud Lagardère has not been charged with any wrongdoing in the stock sales.

The author also recommends:

Gabonese President Omar Bongo (1935-2009)
[5 September 2009]

France: Elf verdicts reveal state corruption at highest levels
[25 November 2003]