Arms and corruption

Pierre Péan further reveals that these corruption mechanisms are especially used for arms deals. He explains: “All major arms markets involve an agreement between the Ministry of Defense and the Ministry of Finance. Once the agreement is made (…) the Ministry of Defense sends a note to the General Direction of Taxes and to the Customs Administration, in a technocratic slang, to order them to close their eyes on funds transferred to Switzerland (or somewhere else) by the company having just signed for the “agreement of the century”.

Finally, he gives the last important part of the jigsaw puzzle: “(Some) exporters (…) benefit from a State warranty for their export operations. This warranty is managed by an export insurance credit organization called Coface, which is managed by the Ministry for Economy and Finance. This insurance policy, which covers all risks, and firstly non-payment, is granted by a Committee for Warranties composed of high-ranking civil servants. In article 13 of the application, one can read “commission payable abroad”.

Backhanders and bribes given to administrative executives and leaders of third world countries fall under this article. When filling in the application, a high-ranking civil servant asks the corrupter indiscreet questions : When do these expenses need to be paid ? Can this be considered as aftersales services ? Are they due in case of nonepayment ? But names of the recipients are never asked. Indications about the amounts and how they are paid are kept very confidential to prevent the bankers (who will see the amounts being transferred) from “wrongly using” this information. In other words, in the case of arms deals, we find out that clients and middlemen receive bribes but that the Ministry of Finance insures not only the contracts but also the backhanders.

Pierre Pean adds further: “for “sensitive” operations, article 13 is not filled in. The application has then an encrypted attachment which is kept in a special safe at Coface. These secret deals which involve huge amounts, are generally very “political” and are supported by the Presidency or the Prime Minister’s Office. The private office of the Minister of Finance supervises the whole deal. The green light of the Committee of Warranties applies to the contract and the bribes. This is to say that French Government “launders” black money for leaders of Third World countries. In short, it gives the exporters the following message: if for one reason or another, your contracts are breached and that you have already given bribes to this President or that Emir, we will refund you.”