Known as "Karachi affair", the case is looking into whether the alleged kickbacks from the arms deals financed Edouard Balladur's 1995 presidential election campaign which he eventually lost to late Jacques Chirac.

Edouard Balladur joins a long list of senior French politicians pursued for alleged financial wrongdoing, including former president Nicolas Sarkozy and his predecessor, Jacques Chirac. [FILE]
Edouard Balladur joins a long list of senior French politicians pursued for alleged financial wrongdoing, including former president Nicolas Sarkozy and his predecessor, Jacques Chirac. [FILE] (AFP)

Former French prime minister Edouard Balladur is going on trial on charges that he used kickbacks from arms deals in the 1990s to fund a presidential bid, a case known as the "Karachi affair".

Balladur, 91, will appear in court on Tuesday "to face his judges and answer their questions," his lawyer Felix de Belloy said.

The conservative ex-premier will be tried by the Court of Justice of the Republic in Paris, a tribunal dedicated to hearing cases of ministerial misconduct.

Also in the dock will be his former defence minister Francois Leotard, 78, though his presence at the trial's opening is uncertain because of illness.

The two men were charged in 2017 with "complicity in the misuse of corporate assets" over the sale of submarines to Pakistan and frigates to Saudi Arabia between 1993 and 1995, when Balladur was prime minister in the final years of Francois Mitterrand's presidency.

The kickbacks are estimated at 13 million francs, now worth some $3.3 million, after accounting for inflation.

The sum is believed to have included a cash injection of about 10 million francs to Balladur's 1995 unsuccessful presidential campaign against Chirac.

Balladur, 91, joins a long list of senior French politicians pursued for alleged financial wrongdoing, including former president Nicolas Sarkozy and his predecessor, Jacques Chirac.

Baladur denies any wrongdoing 

Balladur, who also has to answer to a charge that he concealed the crimes, has denied any wrongdoing, saying the 10 million francs came from the sale of T-shirts and other items at campaign rallies.

The claims came to light during an investigation into a 2002 bombing in Karachi, Pakistan, which targeted a bus transporting French engineers.

Fifteen people were killed, including 11 engineers working on the submarine contract.

The Al-Qaeda terror network was initially suspected of the attack.

But the focus later shifted to the arms deal as investigators considered whether the bombing may have been revenge for Chirac's decision to halt the commission payments for the arms deals shortly after he beat Balladur in the presidential vote.

Secret financing of Balladur's campaign

Leotard is accused of having created an "opaque network" of intermediaries for the contracts signed with Pakistan and Saudi Arabia.

The ex-premier also stands charged with instructing the budget ministry – led at the time by Sarkozy – to approve state guarantees for "deficient or underfunded" contracts, because of the alleged kickbacks.

Investigators say that cash deposits in Balladur's campaign fund coincided with trips to Switzerland by Ziad Takieddine, a Lebanese-French intermediary who has long been active in French rightwing circles.

Takieddine fled to Lebanon last June after a Paris court sentenced him and another middleman, Abdul Rahman El-Assir, to five years in prison over their role in the "Karachi" kickbacks.

Balladur's former campaign manager Nicolas Bazire was given a three-year sentence by the same court, as did Leotard's adviser Renaud Donnedieu de Vabres.

Thierry Gaubert, an adviser to Sarkozy at the finance ministry, and a former executive at state-owned naval contractor DCN (since renamed Naval Group) got two-year sentences. All have appealed the rulings.

Takieddine told judges in 2013 that he participated in the secret financing of Balladur's campaign after being asked by Bazire and Gaubert, though he retracted the claim six years later.

In November, Takieddine also took back his claim that he delivered suitcases carrying a total of five-million-euros ($6 million) from then Libyan ruler Muammar Gaddafi to Sarkozy's chief of staff in 2006 and 2007, to help his successful presidential campaign.

Sarkozy has denied the allegations, and investigations into the case are continuing.

Source: AFP