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Former Sarkozy Minister Hit with Charges Stemming from Qaddafi Financing Allegations

Investigators charged Claude Guéant with tax evasion, money laundering, and forgery over a suspicious bank transfer related to the sale of two 17th Century Flemish paintings.

by Melodie Bouchaud
Mar 9 2015, 9:20pm

Photo by Pascal Rossignol

An investigation into allegations that the late Libyan dictator Muammar Qaddafi secretly financed former French President Nicolas Sarkozy's 2007 presidential campaign has ensnared his former interior minister and chief of staff Claude Guéant on related charges of tax evasion, money laundering, and forgery.

Guéant, who was Sarkozy's chief of staff between 2007 and 2011 and interior minister from 2011 to 2012, was arrested Friday and questioned for 30 hours about a 500,000 euro ($542,000) transfer that authorities noticed while examining his bank accounts in 2013 for evidence of covert campaign financing.

When the transfer raised suspicion, Guéantsaid thatthe funds had "nothing to do with Libya," and tried explaining that they came from his sale of two paintings by 17th Century Flemish painter Andries Van Eertvelt to Malaysian attorney Sivajothi Muthiah Rajendram.

The French magazine L'Express tried to track down the attorney in 2013, but a trip to Malaysia yielded little more than the address of a shared office on the outskirts of Kuala Lumpur and a claim by one of the firm's lawyers that Rajendram had retired.

Related: A Qaddafi-Related Scandal Could Ruin Nicolas Sarkozy's Political Comeback in France

On Monday Guéant called the charges filed against him a "manipulation of legal proceedings," and professed his innocence. Speaking on Sunday night, Guéant's attorney Philippe Bouchez el-GhozitoldFrench radio France Inter that the case against his client was "falling apart."

"Instead of the so-called Libyan financing of the presidential campaign, we have a simple case of asking him to explain the sale of these famous paintings he acquired 22 years ago," el-Ghozi remarked to LCI television, suggesting that the charges against Guéant were merely related to taxes.

Allegations that Sarkozy's 2007 campaign was partly financed by Qaddafi emerged after French news site Mediapartpublishedan official document signed by former Libyan intelligence chief Moussa Koussa that detailed a plan for the dictator to bankroll the candidate's campaign to the tune of 50 million euros.

Sarkozy and Koussa have said that the document is a forgery, while a panel of handwriting experts have validated in court that Koussa's signature is authentic. Several former members of Qaddafi's regime have backed the allegations.

Art experts cast doubt over sale of paintings
The biggest red flag for investigators was the price tag on the paintings. Experts at Artprice, a company that compiles art auction prices, have said that Van Eertvelt's paintings, which usually depict naval battles, are not highly sought-after, and usually fetch around 41,000 euros ($44,500) at auction.

The 500,000 euro transaction, according to Artprice, represents "an anomaly with regards market price and the econometric data available for the artist." Sotheby's recently sold a large painting by the Flemish master for 140,000 euros ($152,000) — the highest price yet fetched by one of Van Eertvelt's works.

The fact that the French ministry of culture was never handed a sales certificate — a customary procedure for any sale outside of France of a painting worth over 150,000 Euros ($162,000) — also raised suspicion.

Guéant is currently banned from traveling to Malaysia or contacting certain individuals, including Khalid Ali Bugshan, a Saudi businessman believed to have facilitated the sale of the paintings.

Ali Bugshan is also implicated in an earlier political scandal involving another French presidential candidate. The Karachi affair was the name given to a series of kickbacks connected to submarine contracts between France and Pakistan, which allegedly helped finance the 1995 presidential campaign of former Prime Minister Édouard Balladur.

Sarkozy, who was budget minister and Balladur's spokesman at the time of the Karachi affair, was also investigated for his role in the controversy.

Follow Mélodie Bouchaud on Twitter: @meloboucho