Villepin is 'linked with' an attempt to smear Sarkozy

The French Prime Minister, Dominique de Villepin, is fighting for his political life after being linked with an attempt to smear his colleague, and deadly political rival, Nicolas Sarkozy.

The allegations, which also encompass the President, come from a retired senior intelligence officer in sworn evidence to two investigating magistrates.

General Philippe Rondot says M. Villepin - on Jacques Chirac's orders - asked him to conduct an investigation in January 2004 into allegations of financial corruption against his fellow minister, M. Sarkozy. The allegations turned out to be a crude forgery.

According to other material presented to the magistrates a senior business figure close to the Prime Minister is accused of being involved in concocting them.

M. Sarkozy was, at the time, already favourite to succeed President Chirac as the centre-right candidate in the presidential election next year. The President and M. Villepin are said to detest M. Sarkozy, then the finance minister, now the Interior Minister, and it is widely assumed that M. Chirac, 73, would prefer to see his protégé, M. Villepin, succeed him as the leading figure on the French centre-right.

A "wave of panic" was said to have passed through the senior levels of French government yesterday when it became known that General Rondot's testimony would be leaked in the afternoon edition of Le Monde. Later President Chirac and M. Villepin took the unusual step of issuing formal statements to the press denying they had launched the secret investigations into the alleged financial corruption of their colleague and rival.

The general's testimony, leaked to Le Monde, directly contradicts a statement on the affair already made by the Prime Minister the previous day.

M. Villepin told the centre-right daily Le Figaro that, as Foreign Minister in 2004, he had asked the general to lead an investigation into international corruption and money laundering. No individual politicians were targeted, he said.

General Rondot, one of the most senior and respected figures in the intelligence community, had told the investigating judges that M. Sarkozy's name had been specifically raised by M. Villepin at the meeting in January 2004. According to Le Monde, the investigating judges seized a memo written by the general after the meeting. The memo reads: "Political objective: N. Sarkozy. Fixation on N. Sarkozy (cf conflict J. Chirac/ N. Sarkozy)."

The affair turns not so much on sex, lies and videotape as on political ambition, lies and CD-roms.

Two years ago another investigating judge received an anonymous letter and then a CD-Rom containing the numbers of secret accounts at off-shore banks in a number of countries listed by Clearsteam International, a clearing bank in Luxembourg.

Among several senior business and political figures named in the letter and the disc was the then finance minister, M. Sarkozy. A brief investigation by the judge revealed that the allegations had been faked.

Henri Pons and Jean-Marie d'Huy have been placed in charge of a judicial investigation into "slanderous denunciation". The judges raided several government offices over the past two weeks. A raid on M. Villepin's offices at the Matignon palace is expected in the next few days.

M. Sarkozy is now runaway favourite to be the main centre-right candidate for the presidency. But with the centre-right government discredited by the retreat on an "easy hire-easy fire" jobs contract for the young, a political scandal could cripple the chances of all right-wing candidates in next year's elections.