Editorial: Looking at the phenomenon of kickbacks (1)

SEPTEMBER 21, 2000, an 'explosive' scandal broke in France that President Jacques Chirac received an equivalent of 750,000 euros cash kickback on public contracts when he was mayor of Paris. This was according to a video-taped confession by a former official of the president's party published that day. The confession, taped in 1996, three years' before the official died, was the closest direct link yet established between Mr Chirac and allegations of corruption practices in Paris town hall during his mayorship from 1977 to 1995. It might be called the smoking gun from beyond the grave. Already by 1998, Alain Juppé the former French prime minister, had been placed under formal investigation by magistrates dealing with that alleged corruption at Paris city hall.

The President's office broke with its normal practice and issued a formal denial of the claims that very afternoon. They knew that the fact that the allegations were made by a dead man - Jean-Claude Mery, a property developer and former member of the central committee of Mr Chirac's party, the conservative Rally for the Republic (RPR) – would limit their legal impact. The political consequences may be explosive. Mr Mery made the private video-recording - allegedly for his own protection - when his role in corrupt funding of the RPR was under criminal investigation in 1996. In the transcript of the tape, published by the newspaper, Le Monde, Mr Mery alleged that he was raking in up to pounds 4m a year in cash from companies working on public housing and schools for the Paris town hall for more than seven years up to 1996. Mr Mery says this money was divided secretly between all the main French political parties, with the lion's share for Mr Chirac's RPR and lesser payments to the Communist party and the Socialist party, whose first secretary was then Lionel Jospin, Chirac's Prime Minister in 2000. Mr Mery went on to allege however that one payment of FF5m (about 750,000 euros) in cash in 1986 was "paid directly" not to the RPR, but to Mr Chirac, who was then prime minister as well as Paris mayor.

Mr Mery described a meeting in October of that year, when he visited Michel Roussin, the head of Mr Chirac's private office at the Matignon Palace, the official residence and workplace of French prime ministers. He said that Mr Chirac came to the meeting and was present in the room when he placed FF5m in cash on Mr Roussin's desk. Mr Mery said the money came from kick-backs on heating contracts for public housing which had been awarded by the city of Paris to two large companies, Lyonnaise des Eaux and Generale des Eaux (now Vivendi). Was this money being "paid directly" to the RPR, Mr Mery asked himself on the tape. "No - to Mr Chirac," he replied.

Two years later, in May 2002, Jacques Chirac won a landslide victory (82%) in the French presidential election after voters surged to the polls to keep out far-right leader Jean-Marie Le Pen. In spite of the sleaze, French voters simply said a big no to the alternative.

Chirac won again not because the French are cool with corruption. But, because they knew it was a systemic problem that required a systemic solution. Investigations were undertaken, and big men prosecuted.

For example, by Friday January 30, 2004, the French right was thrown in turmoil l after Alain Juppé, the chairman of President Jacques Chirac's ruling UMP party and widely seen as its next presidential candidate, was found guilty in a party financing scandal and barred from elected office for 10 years.

Mr Juppé's conviction stemmed from another scandal: a fake jobs scheme in which Paris town hall and private companies paid the salaries of up to 175 activists from the RPR - the UMP's predecessor which launched Mr Chirac to power. Mr Juppé ran the town hall's finances for most of the 18 years that Mr Chirac was mayor of Paris, and was general secretary of the RPR between 1988 and 1993 when the scam was at its height.

Mr Juppé was one of 27 people, mainly former RPR officials and businessmen, on trial in the case - 21 of whom were convicted. He had been suspected of overseeing the entire scheme, but the charges against him were confined to the hiring of seven people paid by Paris taxpayers between 1990 and 1995. His defence was badly undermined when a series of witnesses told the court the scheme was "common knowledge" within the RPR.

Mr Chirac, who has been named in several corruption and malpractice scandals, was not immediately concerned by the trial since France's highest court in 2003 declared him immune from prosecution - and even from questioning - as long as he remains in office.

The reason we have chosen to feature but just two French case studies in this editorial is simple. Generally, it shows that kickbacks are a global phenomenon. Not an issue that should lead to a violent overthrow. But an issue that can feature large on voters' shopping list; a problem that voters know do happen yet expect action to be taken when exposed and remedial steps taken to fix the system.

Again, it showed that in France the parties that tasted power (either at the local or national level) were united in sleaze. The impressive range and quantity of suspected crimes shed light on one of subsequent French election campaig''s more curious features: the failure of any mainstream party to play the sleaze card. The major parties on both sides of the political divide, Right and Left, each had a fair share of skeletons in their closets, and they knew very well that the first to take aim would get an answering machine gun-burst of scandals. So rather than picking up the loudspeakers of hypocrisy they spoke responsibly of how to fix the system and left the police and the courts to deal with specific allegations.

For example, the Socialists, who comprehensively blotted their copybook during the 14 years of President Mitterrand's rule, dropped the word "sleaze" from their campaign ammunition as too risky. The only major political figure to unleash regular jeremiads against corruption was Jean-Marie Le Pen, the president of the far-Right National Front and the majority of the French could simply not trust their country in the hands of such populist human pounds of xenophobia.

At the end of this series, The Statesman will make recommendations, but we owe it to our readers to look at this issue in a broader more systemic context, first.