French political scandal threatens Jaques Chirac's legacy

PARIS -- In Paris they're calling it the French Watergate. What began as a discreet investigation into a computerized list of secret bank accounts has exploded into major scandal that threatens to disgrace President Jacques Chirac at the end of his long political career.

A CD-ROM sent to an investigative judge listed Interior Minister Nicolas Sarkozy among industrialists, secret agents and politicians holding accounts at Luxembourg bank Clearstream, flush with kickback money from the $2.8 million sale of French frigates to Taiwan in 1991.

The list turned out to be fake, embarrassing Prime Minister Dominique de Villepin, who ordered an investigation into the allegations.

Villepin is fending off demands for his resignation and allegations that the whole thing was a scheme to discredit Sarkozy, his chief rival for the governing party's presidential nomination in elections next year.

Now politicians are demanding that Chirac -- who is widely believed to support Villepin for the nomination -- break his silence over the scandal and answer questions over his own alleged role. This president's office insists he had little to do with it. But last week, Le Monde newspaper published extracts of testimony from an intelligence agent who said Villepin asked him to investigate Sarkozy on Chirac's orders.

An ignoble end

In what is likely the final year of his political life, the 73-year-old president -- who served as prime minister 30 years ago -- could see his long climb to the summit of power wither to an ignoble end. Even members of his center-right party are getting impatient with his refusal to address the controversy publicly.

"The president of the Republic, where is he? What is he doing? Has he disappeared?" said lawmaker Nicolas Dupont-Aignan, of Chirac's Union for a Popular Movement party.

Sarkozy, meanwhile, is being portrayed as a victim -- and profiting from a scandal that had threatened to smear his reputation.

The affair had a discreet beginning -- an investigation in November 2003 at the Defense Ministry to verify the list of Clearstream accounts.

It is Villepin's entrance into the case that raises questions today.

Villepin -- then foreign minister -- summoned Gen. Philippe Rondot, in charge of special Defense Ministry operations, to a January 2004 meeting.

Also present was Jean-Louis Gergorin, vice-president of European Aeronautic Defense & Space Co., which owns 80 percent of Airbus. It was Gergorin who allegedly provided the list to Rondot and informed Villepin of a potential problem.

Villepin said he had been made aware of "national security risks" from money laundering -- potentially tied to terrorism or organized crime -- that could threaten French economic interests. He said it was his duty to ask Rondot to investigate.

The prime minister at first denied that Sarkozy was mentioned in the meeting, saying he only saw the list of names later.

But Villepin backtracked slightly this week after the daily Le Monde published alleged extracts of Rondot's testimony to investigators in which he says that the prime minister -- on Chirac's orders -- specifically asked for an investigation into Sarkozy.

Villepin admitted Thursday that Sarkozy's name was mentioned, but only "as interior minister," not in connection with the probe. He denied that Chirac ordered the probe, as did the president's office.

Rondot eventually concluded that the list was fabricated. But Sarkozy contends that Villepin refused to quash the investigation even after he found out the list was phony.

In January, Sarkozy filed suit to clear his name. That prompted an April search of the Defense Ministry that thrust the affair in the media spotlight.

One of the main mysteries surrounds the identity of the person or people who fabricated the list -- and to what end?

The crisis is the third in six months for Villepin, who faced riots in poor suburbs in November and recent student protests that forced his government to withdraw a youth jobs law.

Chirac, president since 1995, has been left to watch seemingly helpless as the Gaullist right majority he helped build tears itself apart.

"The real question is to know whether the president is going to continue for a year like this, deaf and blind," said Dupont-Aignan, the governing party lawmaker.