PARIS, Jan 2: President Nicolas Sarkozy knew about a shell company used to channel arms sales commissions in the 1990s, French media said on Monday, amid a probe into alleged illegal party funding in France that focuses on the 1994 sale of submarines to Pakistan and frigates to Saudi Arabia.

The Liberation daily quoted testimony to a judge from a former senior civil servant that in 1994 then-budget minister Sarkozy authorised the creation of Luxembourg-based company Heine to pay intermediaries in arms deals, notably with Pakistan.

“Clearly the budget minister necessarily gave his agreement for the creation of Heine,” Gerard-Philippe Menayas, former head of the DCNI defence ministry agency in charge of naval exports, was quoted as saying when interviewed on Dec 2.

“Given the importance of the matter, this decision could only have been taken at the level of the minister’s personal staff.”

Magistrates are also probing whether a 2002 Karachi bombing that killed 11 French engineers was revenge for the cancellation of bribes secretly promised to Pakistani officials in the submarine deal.—AFP