Sarkozy caught up in scandal over 'illegal funds'
FRENCH President Nicolas Sarkozy was caught up in a scandal yesterday when police in Luxembourg named him as the creator of a company that handled tens of millions of euro in illegal funds.
An inquiry appears to implicate Mr Sarkozy in a case involving the sale of French submarines to Pakistan in 1994.
It will strengthen suspicions of French investigators that money from the contract was funnelled to finance a 1995 presidential campaign managed by Mr Sarkozy, who was then budget minister. Two French judges believe that a dispute between France and Pakistan over unpaid commissions led Pakistani agents to bomb a bus carrying French-employed shipyard workers in Karachi in 2002, when 14 people died in the attack, 11 of them French. The attack was originally blamed on al-Qa'ida. Last year, Mr Sarkozy dismissed as fantasy allegations that money intended for secret commissions to middlemen during the sale of the submarines had been used to finance the 1995 campaign of Edouard Balladur. Mr Balladur, then the prime minister, was backed by Mr Sarkozy in an unsuccessful race against Jacques Chirac. After Mr Chirac won, he halted further payment of the submarine commissions, it has emerged from the French inquiry. The president is immune from legal action while in office and there was little sense of political crisis in Paris. (© The Times, London)