French officials probe bribery allegations in Brazil Scorpene sale

PARIS — French legal authorities are conducting an inquiry into alleged corruption tied to the 2008 sale of Scorpene attack submarines to Brazil, French media reported.

"The national financial prosecutor has been investigating since autumn 2016 an arms contract between France and Brazil based mainly on five submarines," daily Le Parisien reported May 20.

The preliminary inquiry concerns an alleged "corruption of foreign public officials," relating to a Dec. 23, 2008, contract for Scorpene submarines, the report said. French judges are seeking to determine whether bribes were paid relating to the submarine sale with some of the money allegedly sent back to France in a "retrocommission."

A DCNS spokesman told Defense News: "DCNS strictly abides by the provisions of international treaties and local laws in every country in which the company operates, as well as the highest level of compliance."

In the deal with Brazil, DCNS agreed to the sale of four Scorpene boats, technology transfer and help to build the conventional part of a planned nuclear-powered submarine.

DCNS’ local partner, Odebrecht, is under investigation by Brazilian officials for alleged corruption. Executives of the Brazilian building company disclosed the name of the French partner, the weekly paper Journal du Dimanche reported.

A source close to the investigation confirmed to Agence France-Presse that a French corruption inquiry is underway but declined to give further details, AFP reported.

Foreign arms sales can be viewed on a strategic basis not just as a commercial deal, with countries adapting their regulations and jurisprudence to accommodate the financing of such contracts, a defense specialist told Defense News. In the past, some of the money paid to win foreign deals found its way back to France to help fund political campaigns of senior politicians, the specialist said. 

DCNS received €4.1 billion (U.S. $4.6 billion) of the total €6.7 billion on the submarine sale with Brazilian firms receiving the rest, French media reported. French President Nicolas Sarkozy signed the contract Dec. 23, 2008, with his counterpart, Luiz Inácio Lula da Silva, known simply as Lula.

DCNS built half of the first Scorpene in Cherbourg, northern France, allowing the training of Brazilian engineers and transfer of technology. The other submarines will be built at a new assembly plant and military base at Itaguaí, by Rio de Janeiro.  

The head of the French national financial prosecution office, Éliane Houlette, recently went to Brazil with a team including the police chief of the office of French anti-corruption, AFP reported. Their Brazilian host, Attorney General Rodrigo Jano, raised the possibility of conducting joint inquiries on "concrete cases" involving corruption in a May 9 statement .   

Besides the submarine deal, France also signed a contract for 50 Caracal military helicopters from Airbus Helicopters in 2008.

In Brazil, President Michel Temer faces political turmoil following corruption allegations last week reported by O Globo newspaper. The allegations, which stemmed from a giant meatpacker, José Batista Sobrinho, threaten to overturn the center-right government and wipe out nearly 9 percent of the value of Brazil’s stock market, the Financial Times reported.

Brazil’s interest in acquiring a submarine fleet stemmed from the advantage the British had in the Falklands War when a single Royal Navy nuclear-powered submarine threatened the Argentinian navy, Journal du Dimanche reported.