Alcatel Alsthom `slush fund' deepens crisis

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While the Crdit Lyonnais rescue was unfolding, the crisis at Alcatel Alsthom deepened yesterday when France's anti-corruption judge Renaud van Ruymbeke said he was investigating alleged payments of Fr100m (£13.1m) into a slush fund for the Republican Party.

A bank account was said to have been set up at a Belgian bank and used to finance the centre-right political party in the five years up to 1991.

The French business and political world have been rocked by allegations that Alcatel's chairman, Pierre Suard, was behind overbilling the state telecoms company by Fr800m. It is also claimed company funds were used to renovate his house.

Mr Suard, one of the most powerful and well-connected businessmen in France, has been barred from working for the company. He says political rivals are behind the allegations.

The new allegations concern money that found its way into the bank account of a close associate of former industry minister Gerard Longuet, a PR leader, who resigned from Prime Minister Edouard Balladur's government last year.