France is a banana republic!

29th July 2003, Comments 0 comments

France's establishment has become engulfed in corruption and the wave of revelations of scam deals on high have sadly made this country alike to a 'banana republic'. That's the conclusion of a former ranking French examining magistrate. Hugh Schofield reports on the scandal of "les fonds spéciaux".

Every month a solemn ceremony takes place in one of the panelled chambers of Prime Minister Lionel Jospin's 18th-century residence on the rue de Varenne in central Paris.

Whirring shut the lock on his safe, Jospin's cabinet director welcomes a line of supplicants. To each he vouchsafes an envelope. A quick signature, and the bearers are whisked off in official cars to destinations around the capital.

This tradition, hallowed by half a century of usage, has now come under close and critical scrutiny. For these envelopes contain very large sums of money in cash. It is hidden government money amounting to hundreds of millions of francs – and no-one knows for sure how it is spent.

The so-called "special funds" have been an open secret since they were first written into the budget in 1946. Today they amount to around FR 400 million (EUR 62 million) a year, of which about a half is spent by the intelligence services. The rest is entirely at the government's discretion.

"These are practices worthy of a banana republic!" fumed Thierry Jean-Pierre, a Euro-deputy for the pro-free market Liberal Democracy party, who launched a campaign to have the funds abolished.

"In a totally secret and uncontrolled fashion, some 200 million francs in 500 franc notes are circulating between the prime minister's office, the presidency and the various ministries. The whole ruling elite is complicit," he said.

Officially the money is spent in a variety of ways. The cash sent around the ministries in the monthly ritual is for topping up the salaries of senior civil servants. The ministers distribute the money to their aides in yet more sealed envelopes. None is ever declared to the tax authorities.

Of the rest about 60 percent is kept at Jospin's office in the Hotel Matignon, and 40 percent is remitted to President Jacques Chirac. In theory it is for "extraordinary" expenses – the example of ransom payments is always cited – but in fact, the money is entirely unaccounted for.

The only surveillance is a yearly visit from the state auditors at the Cour des Comptes. A balance sheet is perused in the same panelled room at the Hotel Matignon, and then burned.

The resurgence of the special funds as a political issue is largely linked to the scandal lapping around President Chirac throughout the summer.

After it was revealed in July that as mayor of Paris he had paid for FR 2.4 million (EUR 370,000) worth of travel tickets in cash, his office explained that much of the money had come from "bonuses" he received as prime minister between 1986 and 1988. This was taken to mean "special fund" money.

Another case, involving the Education Minister Jack Lang, has also excited interest. He has sued two authors for libel after they claimed that as culture minister in the 1980s he kept most of the "special funds" under his control for himself.

In fact the suspicion is that the money has been used over the years by leaders of all parties for political purposes or for illegitimate private ends. But no legal enquiry can ever reach the truth because the funds are treated as an official secret, and questions go unanswered.

"How many electoral campaigns were part-financed from the funds? How many dinners, luxury suites, business-class flights, media-training sessions, bouquets of flowers and intimate week-ends have also been paid for?" asked Thierry Jean-Pierre.

Politicians of every stripe have been united in condemning the system. Mindful of approaching elections, and of the public's growing intolerance of high-level corruption, they called for either the funds' abolition, or at least stricter democratic controls.

"There must be a limit on the amount of the special funds – there's been an inflationary increase in the last 15 years – and there must be greater control of their use," said Socialist Party secretary Francois Hollande.

But the funds have resisted scrutiny before. Some say they are necessary because ministerial aides receive official salaries that are ludicrously low. The more cynical argue that they have served too many political leaders too well, and there are too many secrets to keep hidden.

July 2001


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