The report drawn up by Paris prosecutor Yves Bot and handed over to the justice ministry on January 15 warned that France is financially liable because of a clause in the contract that stipulated that if commissions were found to have been paid the amount should be deducted from the sale price, officials said.

Taipei paid more than 16 billion francs (2.44 billion euros) for the six La Fayette class frigates, and judicial investigations have since revealed that around a third of that was spent on a complex lobbying operation to secure the deal by the then state-owned French defense-electronics giant Thomson.

Thomson -- now the privatised Thales -- and the Taiwanese government have resorted to an international commercial tribunal to settle the dispute.

The controversial frigates sale was "easily the biggest politico-financial scandal of the last ten years" in France, according to a recent investigation into the case by former judge and European parliamentarian Thierry Jean-Pierre.

In his book "Taiwan Connection -- Scandals and Murders at the Heart of the Republic," he warned that France would have to pay the 600 million dollars twice over -- once in the form of the commissions to middlemen and a second time in fines to Taiwan.

In his advice to the justice ministry, Bot said that Thales could not be made to pay the fine, because though as Thomson it led the negotiations for the contract, it was covered by guarantees provided by the state via its Naval Construction Directorate (DCN) which actually built the ships.

"As far as we understand the matter, the guarantees ... will mean that the public authorities must take on the whole of the financial charges which the arbitration tribunal will hand down," the report said.

Two French judges looking into the affair have been consistently refused access to documents that could be used to trace the commissions, as successive French governments have invoked a "defence secrecy" law -- prompting speculation about a top-level cover-up.

Last October the Taiwanese govermnment became a civil plaintiff in the judges' investigation, giving it access to the legal dossier that contains the proof that commissions were paid. Armed with this evidence the Taiwanese case before the commercial tribunal is unanswerable, Bot warned.

According to Jean-Pierre's book, Thomson paid out millions of euros to persuade Taiwanese officials to drop plans to buy warships from Korea, and then to defuse obstruction to the deal from Beijing and parts of the French political establishment.

The Taiwan frigates formed the background to the trial of former foreign minister Roland Dumas, who was cleared a year ago of being bribed by his lover to drop his opposition to the sale. It also featured in last year's mass trial of officials at the oil group Elf, which ran part of the lobbying operation on behalf of Thomson.

Jean-Pierre said that at least eight people linked to the affair had died in suspicious circumstances, including a Taiwanese naval official who was about to report his suspicions of bribe-taking and a French intelligence agent tasked with following the negotiations for the deal.

All rights reserved. Copyright 2003 Agence France-Presse. Sections of the information displayed on this page (dispatches, photographs, logos) are protected by intellectual property rights owned by Agence France-Presse. As a consequence, you may not copy, reproduce, modify, transmit, publish, display or in any way commercially exploit any of the content of this section without the prior written consent of Agence France-Presse.

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