Publication: Cape Times Issued: Date: 2005-11-23 Reporter: Laurent Leger

What's in a Name? Corruption Claims Still Smell as Foul

 

Publication 

Cape Times
Date 2005-11-23

Reporter

Laurent Léger

Web Link

www.capetmes.co.za

 

Seventy million euros. That's more than half-a-billion rand, and is the sum Thomson-CSF paid, at the end of 2000, when Denis Ranque, the chief executive of the French defence electronics company, decided the group should change its name.

Goodbye to Thomson-CSF, hello to Thales ... a 100-year-old conglomerate, with an annual turnover of $10bn, 31% owned by the French government, with 60 000 employees, specialising in ultra-sophisticated equipment and electronics, from the systems on the Airbus and Boeing jets and French nuclear submarines to components for satellites.

Ranque, who has headed the group since 1998, could no longer bear to read articles accusing the group of corruption.

At the time, the 1991 sale by France to Taiwan of six frigates, built in French naval shipyards and fitted with Thomson-CSF electronic systems, was at the centre of a huge judicial inquiry. French industrialists were suspected, not only of paying hefty commissions to politicians in Taiwan and in China, but of setting up a system to pay back money to French politicians *1.

Part of the commission paid in China and Taiwan apparently found its way back to the pockets of those in France who had authorised the sale and export of the ships. A new word appeared in the vocabulary of journalists: "retrocommissions".

Ranque had had enough. From now on, he decided, his group would be called Thales. In private, he told journalists: "There was the Thomson-CSF chapter, and there is the Thales chapter."

The Thales team, he felt, could not be accused of alleged corruption or bribery committed in the earlier era *2. He will not admit that pressure of judicial inquiries led to the name change. But the plan was clever: the well informed *3 might know there is no difference between Thomson-CSF and Thales, but the public doesn't.

For the Thales directors, 2000 marked the birth of a new company. The scandals were over and serenity was to return to the business.

No such luck. Thales is again mired in judicial dossiers, one more embarrassing than the next.

In South Africa, two subsidiaries, Thint Holding and Thint, are accused of corruption alongside former deputy president Jacob Zuma. This is the first time the company has ever been charged *4.

Nor is the Zuma affair the only one. This month, the sordid affair of the frigates sold to Taiwan caught up with Thales. The scandal took a dramatic turn in 2001 in France when a Swiss bank told authorities in Geneva about some strange movements of money. By a sheer fluke, the judges had stumbled on the secret stash hidden by the Taiwanese intermediary through whom the frigate commissions were paid.

An inquiry was launched in Paris. The 46 bank accounts of the intermediary, Andrew Wang, were frozen and analysed by the Swiss authorities. More than $900m had moved through these accounts - the biggest sum ever targeted by a French judicial investigation.

On November 9, the Swiss judges finally sent their files to France, after repeated judicial, political and diplomatic attempts to stop them.

The French defence industry, of which Taiwan is a major customer, feared that the money paid in commissions would be made known and that other big contracts with Taipei would be investigated.

According to a source close to the matter, the accounts of the Taiwanese intermediary also contain information about another sale - that of Mirage 2000-5 aircraft and Mica missiles.

So far the files apparently do not contain enough information for the investigating judges to identify who pocketed the retrocommissions. But there is material to follow up. They are likely to ask for the inquiry to also cover possible commissions paid during the sale of the Mirages.

Meanwhile, Michel Josserand, an executive who was fired from a subsidiary of Thales after having been accused by Thales of corruption, has in turn accused the group of setting up a wide system of corruption and a plan to get around rules of the Organisation for Economic Co-operation and Development banning signatory states - including France - from paying foreign officials or politicians to win contracts. He says several contracts won by Thales in France and abroad involved bribes. Among them, 10 foreign contracts are likely to be investigated.

An investigating judge is likely to be named this month. Logically, it should be Renaud van Ruymbeke, who is already investigating the Taiwan frigates affair and the award by Argentine president Carlos Menem to a Thales subsidiary, of the concession to manage the national radio waves.

The directors of Thales have not yet finished with the law ...*5

Léger is a freelance journalist who mostly writes for the weekly magazine Le Point.

With acknowledgements to Laurent Léger and the Cape Times .

*1  And probably to Thomson-CSF Executives. That's why some of them have bank accounts in odd places like Lebanon.

*2  Nonsense, even people like Thetard came from Taiwan and Saudi Arabia after doing deals there. They had the experience and the ethics.

*3  Not so clever. Before long, the well-informed informed the ill-informed.

Selby Baqwa invited me to do so in a public forum. But be didn't make it easy for me.

*4  Good on them, Advocates Dowbner, Steynberg and SSI du Plooy.

*5  That's the Criminal Law, then the wounded get bayoneted with the Civil Law with a couple of accountants and actuaries at the sharp end.

Excellent article.