124 on trial for £54m Paris rag trade fraud

One of the largest trials in French history - in which 124 small businessmen in the wholesale textile industry are accused of defrauding French banks and insurance companies of £54m - opened in Paris yesterday.

One of the largest trials in French history - in which 124 small businessmen in the wholesale textile industry are accused of defrauding French banks and insurance companies of £54m - opened in Paris yesterday.

The "Sentier" trial, named after the warren of streets in the city centre where hundreds of small textile businesses congregate, is expected to last for two months. The defendants are accused of taking part in a vast fraud, in which financial institutions were asked to give or underwrite short-term loans on buy and sell orders between hundreds of fake companies.

So long was the list of defendants that a courtroom had to be constructed at a cost of £300,000 in a little-used hall off the Palais de Justice. Most of the first day's hearing was taken up in reading out the names, and checking the personal details of the defendants. Defence lawyers complained it would be impossible to represent their clients properly in a case so rambling that the prosecution dossier ran to 40,000 pages.

The defendants are accused of "conspiracy to defraud". It is alleged that there were nine distinct but interlocking networks of small companies in the Sentier district - some genuine but many bogus - which processed non-existent orders for cloth or ready-to-wear clothes.

Banks and insurance companies gave, or underwrote, bridging loans on these contracts which were sometimes repaid but eventually led to "losses" on companies which disappeared overnight.