‘Karachi Affair’: Former French PM acquitted in submarine deal

According to the French news agency AFP, Edward Balador was accused of "taking commissions from the deal to fund the 1995 presidential election."

Former Secretary of Defense François Gerard was fined $120,000 for misappropriation of assets.

Six more people were sentenced to prison last year in the case.

Pakistani officials blamed Islamic extremists, but it was suspected that the attack was retaliated by then-French President Jacques Chirac for failing to pay a commission for the secret deal.

Former Prime Minister Edouard Balladur and former Defense Minister Francois Leotard have denied the allegations.

In June last year, three former government officials and three others were sentenced to two to five years in prison for their involvement in the Karachi affair.

They included Edward Balador's former campaign manager, former adviser to Francois Leotard, and adviser to former French President Nicolas Sarkozy, who was in charge of sales and commission at the time.

Nicolas Sarkozy was jailed in another corruption case but was also legally questioned in the Karachi affair case however he denied any involvement in the deal.

The allegations against Balladur and Leotard came to light during an investigation into a 2002 bombing in Karachi, Pakistan, that targeted a bus transporting French engineers.

Fifteen people were killed in the attack, including 11 engineers working on the submarine contract, with the Al-Qaeda terror network initially suspected of carrying out the assault.

But the focus shifted and French investigators began to consider whether the bombing had been carried out as revenge for a halt in commission payments for the arms deals.

Leotard was accused of having created an "opaque network" of mediators who took commissions on contracts signed with Pakistan and Saudi Arabia and then paid back some of the money with illicit cash transfers.

Prosecutors alleged that the commissions totalled 550 million francs, or 117 million euros in today's money, some of which was funnelled back to Balladur's campaign.

At the centre of the case was a deposit of 10.25 million francs in cash made into Balladur's campaign account three days after his electoral defeat in 1995.

Ziad Takieddine, long active in French right-wing circles, fled to Lebanon last June after a Paris court sentenced him and another middleman, Abdul Rahman El-Assir, to five years in prison over their role in the "Karachi" kickbacks.