The French Connection

A Paris investigation opens up a vast network of defense industry bribes in Asia 

But according to widely published facts investigated by separate teams of French magistrates and lawyers, pulled together into a single narrative, the story appears to go well beyond Thales, Taiwan and France to reach deep into the governments of India, Pakistan, Malaysia and others.

Written by John Berthelsen, Asia Sentinel 

After nearly two decades, Taiwan’s 1991 purchase of six French Lafayette-class stealth frigates has finally come back to haunt pretty much everyone involved in the deal.

Both countries, plus the French defense contractor Thales and DCN, the government-owned naval manufacturer that built the frigates have been snared in the mess. A French court ruled last week that Thales and the French government must pay Taiwan as much as US$861 million for bribery charges and repayments for nonperformance.

But according to widely published facts investigated by separate teams of French magistrates and lawyers, pulled together into a single narrative, the story appears to go well beyond Thales, Taiwan and France to reach deep into the governments of India, Pakistan, Malaysia and others. French government officials and defense contractors appear to have engaged in an intensive campaign to outfit many of the world’s governments with frigates and Agosta-class Scorpene submarines manufactured by DCN’s subsidiary Armaris.

The key to bringing the frigate scandal into the open was Article 18 of the contract, which made vendors liable to repay all bribes, plus associated interest and legal fees. The standard anti-corruption clause is thought to be in the contracts governing sales of Scorpenes to India, Pakistan and Malaysia, Renaud Semerdjian, a French lawyer investigating the Malaysia case, told Asia Sentinel, although he said he doesn’t have access to the contracts. If the clause appears in Malaysian and other contracts, it could help bring other scandals into the open – although, unlike Taiwan, Malaysia has shown no inclination to investigate the case.

“The French state’s perception that bribery and corruption, and the use of perhaps more extreme ‘direct action’ when required, can be an advantage to business reflects the country’s recent past,” said a UK-based security specialist. “Within this context, securing arms deals with public money that serve the political interests of a narrow elite while subsidizing industries otherwise struggling to survive is viewed as less of a crime and more of a duty.”

Nowhere is that more fully borne out than in the Taiwan story. According to published accounts it involves allegations of the murders of as many as eight people and reaches up to such luminaries as the late French President Francois Mitterand, the former general secretary of Taiwan’s ruling Kuomintang Party during its previous tenure in power and the Central Committee of the Communist Party in Beijing.

The case was stymied for years in French courts for “lack of evidence” although a variety of French officials including former Foreign Minister Roland Dumas had told newspapers that Mitterand okayed the payment of US$500 million in bribes to secure the frigate contract. But what has begun to emerge with the court judgment is a story of corruption so pervasive that it seems more like a movie plot than a real case and paints a picture of French politicians and government defense officials as having placed a separate cash register on arms sales designed to benefit themselves and corrupt governments around the world.

According to published sources, the story began when the French state-owned Elf Aquitaine conglomerate standard paid bribes through Thomson-CSF, which changed its name to Thales in 2000. The money was to persuade Taiwanese officials to drop a plan to buy cheaper South Korean frigates and for French authorities to approve the sale of more expensive Lafayette-class ones equipped with Thomson-CSF electronic gear. A plan to have the frigates built in Taiwan was also scrapped shortly after the deal was signed, and the work was reassigned to France.

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