French PM borrowed from 'inside trader'

PARIS - Pierre Beregovoy, the French Prime Minister, accepted an interest-free loan from a businessman who was later suspected of insider trading, the satirical and investigative weekly Le Canard Enchaine reported yesterday, writes Julian Nundy.

The newspaper said Roger-Patrice Pelat, who died in March 1989, lent 1m francs ( pounds 120,000) to Mr Beregovoy in 1986 when the Prime Minister was a National Assembly deputy in opposition during the two-year period of 'cohabitation' or conservative government that interrupted Socialist rule that has lasted from 1981 to the present day.

Mr Beregovoy, who confirmed he had taken out the loan to buy a flat, said he had accepted it in accordance with the law and the deal was registered with a public notary. He said he repaid the money on Pelat's death. Pelat was a prisoner of war in Germany with Francois Mitterrand in the Second World War and the two remained friends, hence his entry into Socialist circles.

Mr Beregovoy, who had been finance minister from 1984 to 1986, returned to the post in 1988 and remained there until becoming Prime Minister last April.

Investigators looking into insider trading involving the French firm Pechiney's purchase of American Can from the US Triangle company in 1988 suspected Pelat of being the purchaser, through Switzerland, of 20,000 Triangle shares as the deal was being struck. Alain Boublil, who was the senior civil servant in Mr Beregovoy's ministerial office, was charged in 1991 in connection with the affair and had to resign his job.

The Pechiney affair is one of the big corruption scandals of the Socialist years. Others concern illegal party funding and embezzling funds, which had been raised for developing countries, for personal gain.

Although there might be nothing strictly illegal in Mr Beregovoy's acceptance of a loan from Pelat, who was not under suspicion until three years later, benefiting from an interest-free loan, saving interest repayments of around 100,000 francs a year, is not an option available to the ordinary citizen. Under the loan agreement, Mr Beregovoy and his wife had until 1995 to repay the debt and only did so earlier because of Pelat's death.

With elections to the National Assembly starting on 21 March, the news is a boon to the conservative opposition, already tipped to win massively, since, fairly or not, it associates Mr Beregovoy with one of the murkier episodes of the Socialist decade. The Canard said the loan came to light when a judge investigating fraud allegations against a building firm ordered the seizure of documents relating to Pelat's estate.