Villepin refuses to resign over 'campaign to smear Sarkozy'

The French Prime Minister, Dominique de Villepin, rejected calls for his resignation yesterday, following allegations that he was linked to an attempt to smear his rival Nicolas Sarkozy, the Interior Minister.

M. Villepin said the accusations were "a damp squib", based on a partial and distorted leak from a criminal investigation into the scandal. "In this affair, I have done my duty, nothing but my duty, and my whole duty," he told the Europe 1 radio station.

The affair turns on false allegations - sent anonymously to a French judge two years ago - that M. Sarkozy, who was Finance Minister at the time, held undeclared foreign bank accounts. Last Friday, the newspaper Le Monde published extracts from the testimony of a senior intelligence officer who said M. Villepin had asked him to investigate the bank accounts - and M. Sarkozy - in January 2004, before the allegations were sent to the judge.

In an interview with Le Figaro yesterday, the intelligence officer, General Philippe Rondot, partially repudiated this version of events. He said M. Villepin had asked for the investigation and that M. Sarkozy's name was mentioned, but he had not been asked to target him. Questions remain, however, such as how M. Villepin came to have the information about undeclared bank accounts listed by a Luxembourg bank, Clearstream International, and why he mounted his own investigation rather than pass it to the authorities or to Jean-Pierre Raffarin, who was Prime Minister at the time.

The two magistrates investigating the scandal are expected to seek a meeting with M. Villepin in the next few days. They may even demand the right to inspect documents at his official residence and offices - something that has never happened to a previous French prime minister.

In late 2003 and early 2004, when the affair began, M. Sarkozy had already emerged as the likely successor to President Jacques Chirac, but M. Chirac harboured ambitions to run for a third presidential term.

In the testimony from the criminal investigation, leaked to Le Monde, General Rondot suggests it was M. Chirac who asked for the investigation of M. Sarkozy. M. Chirac has denied any connection with the affair.