Conversations with an Arms Dealer

The French are feeling the fallout from the allegations of corruption in France and internationally, brought against engineering giant Thales by Michel Josserand, a former manager at a Thales unit.

Last week in Le Monde

Michel Josserand, former chief executive of Thales Engineering and Consulting, or THEC, said in an interview with newspaper Le Monde that the paying of bribes by Thales was widespread — in violation of French law and international conventions.

“I estimate that Thales must pay out between 1 percent and 2 percent of its global revenue in illegal commissions,” he said. Thales posted revenue of 10.3 billion ($12.5 billion) for 2004.

He also said Thales had “sidestepped the (U.N.) Oil for Food Program and delivered chemical weapons to Saddam Hussein’s government.”

Already, one international investigation has begun in Athens, Greece because of the accusations by Josserand:

An inquiry has been opened to investigate possible corruption involving a contract concluded in 2003 with Thales, to modernize the country’s frigates, the ANA news agency reported.

The inquiry will be carried out through a special procedure launched by parliament, and will seek to investigate business people, ministers and former ministers, the agency said.

The case follows allegations of corruption in France and internationally, brought against Thales by Michel Josserand, a former manager at a Thales unit.

An investigation in Paris began in July as a reuslt of Josserand’s claims but last week was the first detailed desription of the story put on in the news.

Last week I wrote about the “milk plant” that was built by a Thales company in Iraq and was twice bombed by the US in 1991 and again in 1998. It was also inspected in 2002 before the War in Iraq for suspected chemical weapons manufacturing.

This week I had the opportunity to discuss this matter with an Executive from a US Arms Manufacturer about the French accusations. Here is what I found out…

As far as the bribery charges against France… The French and Americans include an “offset standard” which is an “industrial benefit” that comes with any arms sale.

In the US the government reviews and approves the sale account offset terms. In other words, the US looks into the offsets to ensure that if the government says it is building a certain item or in the case above, a milk plant, that indeed a milk plant was built. There are inspections before during and after the projects. France is not as strict with their offset standards. Therefore, a dry milk plant built by an arms manufacturer like Thales may not be your typical dry milk plant.

Some other information on the French that we discussed:

* The French Company, Thales, according to Iraqi reports, was one of the biggest contributors to the Iraqi weapon’s program.
* France sold Mirage F-1 Fighters to Saddam
* France sold Roland surface to air missiles to Saddam which were used against the Americans in Desert Storm
* France was helping Iraq build the nuclear reactor before it was bombed by Israel

Erik at the French Blog No Pasaran reported this story about questionable French business practices last week.

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