A major political scandal unfolding in France has been mostly ignored by the world press. It involves, among others, a president, a prime minister, a minister of defense, a minister of the interior, a top spy, and a business executive. Every day brings some new twist.

It all started with a book published in February 2001. Révélation$ was written by the whistleblowing banker Ernest Backes and the investigative reporter Denis Robert. It details an alleged money-laundering system put in place by the Luxembourg-based financial clearinghouse Clearstream.

Then in November 2003, General Philippe Rondot, a former leader of the DGSE (equivalent to the CIA) and a Ministry of Defense civil servant, obtained the names of several French public figures who had accounts with Clearstream. Rondot said that the list had been given to him by Jean-Louis Gergorin, vice chairman of the European Aeronautic Defence and Space Company (EADS), the holding company of the aircraft manufacturer Airbus, and a close friend of then Foreign Minister Dominique de Villepin.

To obtain the list, Gergorin, in turn, had used the services of Imad Lahoud, a shady Lebanese banker and computer engineer who is related to the embattled Lebanese president. In March 2004, Lahoud was arrested by French police on one of several charges outstanding against him. On his person, the police found a letter written by Gergorin stating that Lahoud was working on a special counterterrorism project under the cover of being an EADS employee.

When Rondot found out that the letter named him as Lahoud's main contact, he was furious, and called Gergorin, who could only apologize. A few minutes after that phone conversation, Villepin called Rondot and ordered him to free Lahoud. Already skeptical about the case, Rondot decided to look into it further. He quickly concluded that the list was bogus, and so informed the defense minister. But the story did not end there.

Instead, in mid-2004, a French judge in charge of a major corruption case received an anonymous letter and a CD-Rom containing another list of people who had supposedly opened accounts with Clearstream. Those incriminated included top French politicians like Dominique Strauss-Kahn, Alain Madelin, and, most important, Villepin's archrival Nicolas Sarkozy, who is now interior minister. After investigating, the judge concluded in the fall of 2004 that the whole story was a well-orchestrated fraud.

Since then the judge has been digging to find out who was behind it. This spring, he had Gergorin's office and apartment searched, along with Rondot's, the DGSE headquarters, and even the Ministry of Defense.

But the real bombshell came on April 28, when LeMonde published snippets of Rondot's testimony before the judge last month. Rondot testified that as early as January 2004, during a meeting at the Quai d'Orsay attended by Gergorin, Foreign Minister Villepin had asked him, on Chirac's orders, to investigate potential corruption by politicians including Sarkozy. This, at a time when Villepin allegedly knew that the fake list of Clearstream accounts was the work of his friend Gergorin. Villepin also asked Rondot not to inform the defense minister, Michèle Alliot-Marie, whose husband is friendly with Sarkozy.

Rondot also admitted that he lied in June 2005 when he wrote in a note to his boss, the defense minister, that he had never investigated Sarkozy. He explained the lie by saying he had wanted to protect himself and his boss from potentially being accused of framing Sarkozy.

Then on May 3, while Villepin was protesting his innocence, Le Monde posted on its website a 26-page document: the Rondot file almost in its entirety. Rondot's notes after the January meeting are damning:

Instructions from the president of the Republic, whom Dominique de Villepin had briefed:

--direct dealing with the president, caution top secret

--keep an eye on political maneuvering

Then, regarding Sarkozy, Rondot wrote:

The political stakes: Nicolas Sarkozy. Fixation on Nicolas Sarkozy, reference Chirac-Sarkozy conflict.

Role of the Americans: support given to Nicolas Sarkozy.

Finally, summing up his impressions, Rondot wrote:

Persistent doubt. Nice intellectual scheme concocted by Jean-Louis Gergorin and involving Dominique de Villepin: conspiracy theory?

Rondot's testimony is the smoking gun that confirms what most people suspected: Villepin's involvement in the framing of Sarkozy. Sarkozy had many times implied he knew all along who was behind the plot to defame him.

The first sign of Villepin's possible hand in the business had appeared as far back as July 2004, when Le Point, headed by Villepin confidant Franz-Olivier Giesbert, published the Clearstream list. Since then Giesbert and Villepin have parted ways, mostly because the media mogul did not appreciate being used.

In his recent bestseller La tragédie du Président, Giesbert writes, with reference to the Clearstream affair, that Villepin is determined to finish off Sarkozy, with or without Chirac's approval. Nonetheless, after the LePoint story, speaking about Sarkozy, Villepin exulted to then Prime Minister Jean-Pierre Raffarin: "That's it! We got him!" Giesbert also writes that Villepin told him around the same time, "Sarkozy is finished."

Sarkozy's main reason for returning to government in 2005 was to succeed Villepin at the Interior Ministry in order to investigate who had framed him. Last summer, according to Giesbert, Sarkozy swore to Chirac that he would find his detractor and see that he ended up "on a butcher's hook." Sarkozy fired some individuals he suspected of being Villepin's accomplices. One of them, Gérard Dubois, a high-ranking officer in the police, started spreading rumors about Sarkozy's private life.

As reported in a recent book about Villepin entitled L'homme qui s'aimait trop (the man who loved himself too much) by journalists Yves Derai and Aymeric Mantoux, Dubois, after he was fired, had a heated exchange with Villepin in which he blamed the prime minister for not standing up for him. Dubois reminded Villepin of all the work he had done in connection with leaking Sarkozy's wife's infidelities. Villepin had gloated publicly that "a guy who cannot keep his wife, cannot keep France."

Villepin's lies are catching up with him: On Tuesday, May 2, he categorically asserted that Sarkozy's name had not been mentioned at the infamous January meeting. On Thursday, he changed his story, stating that Sarkozy had been mentioned only in his capacity as minister of the interior. By Friday, calls were heard for Villepin's resignation.

Why would Villepin as foreign minister have taken the lead in a case that really did not concern his ministry? Why indeed, except that it involved a close friend and conveniently incriminated not only Sarkozy but also most of the potential candidates who might run against Villepin in next year's presidential election?

To summarize, then: A prime minister known for skullduggery asked, allegedly on the orders of the president, a top-notch intelligence official to investigate his chief enemy--a man of his own party and a fellow minister--in connection with allegations he knew to be false, for the purpose of eliminating his principal rival for the 2007 presidential election.

This blatant misuse of state power by the highest officials to pursue a personal vendetta reveals how dysfunctional the French political system has become. Increasingly, the regime itself is attacked as virtually a monarchy, so great are the president's powers. Coming in the wake of the November riots in immigrant communities and this spring's demonstrations by students, leftists, and unionists that forced Villepin to abort his labor reform, the Clearstream scandal has the Villepin government, and perhaps even the Fifth Republic, reeling.

Olivier Guitta is a foreign affairs consultant based in Washington.

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