Case File

The Leclerc-UAE Affair

Author
B. Arneson & Devan van der Poel
Published on
May 30, 2022
(updated September 12, 2022)
Image
UAE Leclerc Tank at IDEX 2005; Image Source: Alain Servaes via Wikimedia Commons CC BY-SA 3.0
UAE Leclerc Tank at IDEX 2005; Image Source: Alain Servaes via Wikimedia Commons CC BY-SA 3.0

Contents

Contents

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Introduction

Introduction

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In 1993, the United Arab Emirates (UAE) and French-owned weapons manufacturing company, GIAT Industries SA (now known as Nexter Systems), signed an agreement for the sale of 388 Leclerc combat tanks, 46 armoured vehicles, 2 tanks, spare parts, and ammunition. Corruption associated with the $3.6 billion deal became public when WikiLeaks revealed a document from the International Chamber of Commerce (ICC) International Court of Attribution.

Abbas Ibrahim Yousef Al Yousef, an Emerati intermediary, asserted that GIAT failed to honor a contract involving $235 million in “commission.” Al Yousef claimed he had received $195 million for his role in the “lobbying” of German and French decision-makers in order to sell the Leclerc combat tanks to the Middle East. This lobbying would have been necessary since the Leclerc tanks were fitted with German engines from MTU Friedrichshafen GmbH (now owned by Rolls-Royce Power Systems).

Without a waiver, these engines could not be sold to the UAE as Article 26 (2) of the Basic Law requires permission from the federal government. Al Yousef could not support his claim as he could not remember a single German authority that he “lobbied,” and maintained that he used lobbyists instead of meeting directly with officials to obtain a waiver to sell to the UAE. Al Yousef did, however, recall a “very highly placed” contact within the French government, testifying that he had met Christian Quesnot, then-President Mitterand’s Special Military Advisor.

GIAT’s legal team argued that once the Organisation for Economic Co-operation and Development (OECD) Anti-Corruption Convention had been implemented into French law in 2000, they could not legally give the rest of the money to Al Yousef. The court declared that the “excessive nature of the compensation” provided clear evidence of corruption on behalf of both GIAT and Al Youself.

The corruption did not end there. The transmission for the Emirati variant of the Leclercs were made by RENK AG (now known as RENK GmbH), a German automotive company. In order to secure RENK’s involvement in the 1993 contract, the company moved €2.6 million to a Swiss bank account belonging to Yves Manuel, a French businessman and agent for RENK. Manuel then transferred €1.23 million to the account of Jean-Charles Marchiani, a French prefect, politician, and former intelligence officer at the Directorate-General for External Security (DGSE). The transfer, referred to as a consultation fee, was uncovered during investigations into Marchiani’s role in the Angolagate scandal, a separate corruption case involving French arms sales to Angola during the 1990s that implicated a number of high-profile figures in the French political world.

The UAE has employed its GIAT Leclerc tanks, some of which were modified with AZUR Urban kits as part of a 2011 deal with GIAT/Nexter Systems, in its ongoing intervention in the Yemeni Civil War, one of the world’s worst humanitarian crises. Florence Parly, the French Minister of the Armed Forces, has stated that any land equipment sold by France to the UAE has only ever been used in defensive operations. However, a leaked memo from France's Directorate of Military Intelligence (DRM) revealed that the tanks have been used in a number of offensives, including combat operations in August 2015 and in June and December 2018.

Moreover, data from the Stockholm Peace Research Institute (SIPRI) shows that 80 of the UAE’s Leclerc tanks were transferred to the Jordanian Armed Forces in 2020. In theory, the deal should have required French consent.

Case Details

Case details

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Seller country
France, Germany
Seller company
RENK, GIAT Industries SA (later Nexter Systems)
Buyer country
United Arab Emirates
Goods category
Tanks
Equipment sold
388 Leclerc combat tanks, 46 armoured vehicles, 2 training tanks, spare parts and ammunition
Deal value
$3.6 billion
Sum involved in corruption
GIAT Industries SA: $195-235 million; RENK AG: €2.6 million
Start year
1993
End year
2010
Outcome status
Trial Closed - Some Convictions

Actors

Actors

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  • GIAT Industries or Groupement des Industries de l'Armée de Terre, Army Industries Group (now known as Nexter Systems): a French government-owned “combat-proven” weapons manufacturer based in Roanne, Loire.

  • MTU Friedrichshafen GmbH (now owned by Rolls-Royce Power Systems): German manufacturer of internal combustion engines. In 2014, MTU Friedrichshafen was wholly acquired by Rolls-Royce Power Systems AG, a German subsidiary of British Rolls-Royce Holdings.

  • RENK AG (now known as RENK GmbH): German automotive firm. RENK manufactures power transmission components, gear units, and couplings used in industry, ships, motor vehicles, and tanks. It has three German production plants, and production subsidiaries in France, Romania, and the United States.

  • Abbas Ibrahim Yousef Al Yousef: Former UAE Air Force pilot, and one of the wealthiest Emirati businessmen and arms dealers. Al Yousef has connections in France, Germany, and the UAE, which have aided him in other cases of corruption, such as the Airbus-Egyptair case.

  • Kenoza Consulting and Management, Inc.: Al Yousef’s company, registered in the British Virgin Islands. GIAT transferred funds to Al Yousef through Kenoza.

  • Alexander Breuer: Al Yousef’s Swiss-based “certified fiduciary expert” (i.e. wealth manager).

  • Christian Quesnot: Former Special Military Advisor to the then-French President Mitterand of France, the former Chief of Staff of the Elysée Palace (1991-1995), and Al Yousef’s lobbying contact in the French government.

  • François Mitterrand: Former President of France (1981-1995). Al Yousef’s lobbyist, Christian Quesnot, was Special Military Advisor to Mitterand.

  • Sheikh Zayed bin Sultan Al Nahyan: Founding father and first President of the UAE (1971 to 2004). The Sheikh, who also acted as Minister of Defence and head of the Emirati Armed Forces, was amongst Al Yousef’s many contacts in the UAE.

  • Philippe Léthier: Al Yousef’s contact at GIAT. Léthier, along with Pierre Chiquet, was one of the two GIAT employees with whom Al Yousef claimed to have direct contact.

  • Pierre Chiquet: Former Chairman of GIAT Industries.

  • Jean-Charles Marchiani: Former French prefect and politician. Marchiani is a Member of the European Parliament, a special advisor to France’s Homeland Security Minister, Charles Pasqua, and an ex-officer of the French External Intelligence Agency, DGSE. In 1988, Marchiani shot to fame as the lead negotiator during the Lebanon Hostage Crisis.

  • Yves Manuel: French businessman and secret intermediary between Marchiani and RENK AG. Manuel received and concealed $2.59 million at HSBC, a British multinational investment bank and financial services holding company.

  • Martin Hirt: Former CEO of RENK AG. Martin Hirst received a three-year suspended prison sentence and fined €150,000 for his role in bribing Jean-Charles Marchiani.

  • Norbert Schultze: A deputy under Martin Hirt at RENK AG. Norbert Schultze received a one-year suspended prison sentence fined €100,000 for his role in bribing Jean-Charles Marchiani.

Allegations

Summary of Corruption Allegations

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Two separate strands of corruption emerged from the Leclerc-UAE affair:

First, GIAT funneled up to $195 million to Al Yousef through Kenoza Consulting & Management Inc., a shell company registered in the British Virgin Islands. The ICC Tribunal suggested that part of Al Yousef's commission may have been used to bribe government officials in the UAE, France, and Germany, although this is denied by Al Yousef. GIAT, however, has claimed that it stopped the payments as “Kenoza intended to commit and indeed committed corruption acts,” which had become illegal after the OECD Anti-Corruption Convention was implemented into French law in 2000.

Second, RENK AG transferred €2.6 million into a Swiss bank account belonging to Yves Manuel. Of that money, €1.25 million was used to bribe Jean-Charles Marchiani, a French politician implicated in a number of corruption cases. Marchiani was said to have “facilitated authorizations usually associated with such extremely sensitive contracts”.

Timeline

Timeline

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1989
  • From 1989-1993, Al Yousef, the Emirati arms dealer, flew three or four times a week to France to “review progress, brainstorm and strategise” with the chairman of GIAT industries, Pierre Chiquet, and GIAT employee, Philippe Léthier, with regards to this deal. Based on his own assessment, Al Yousef should have only received $51-60 million in compensation as a consultant.
1991
  • 29 AugContract negotiations between GIAT and the UAE began.
1992
  • 8 DecThe German Federal Security Council, led by Chancellor Kohl, approved the delivery of MTU motors and RENK AG transmission units, giving the green light for the contract between the UAE and GIAT.
1993
  • 6 AprThe UAE and GIAT signed the contract for the weapons.
1997
  • OECD Anti-Corruption Convention drafted.
2000
  • 22 MarThe final “legal” commission installment from GIAT was transferred to Al Yousef’s account.
  • 30 JunThe OECD Anti-Corruption Convention takes effect in France through the introduction of Article 435-3 of the French Penal Code.
2002
  • 13 SepA French Court opens an investigation after Swiss authorities uncover suspicious payments made from RENK to HSBC bank accounts owned by Yves Manuel and Jean-Charles Marchiani. The money was discovered during investigations into the separate Angolagate Scandal, in which Marchiani was also implicated.
2008
  • 29 OctAl Yousef filed an arbitration request with the ICC regarding unpaid commissions from GIAT.
2009
  • Proceedings of an extraordinary tribunal session overseen by the ICC began.
2010
  • 17 FebAl Yousef provided his witness statement to the ICC tribunal.
  • 30 SepThe ICC tribunal delivered the final award, denying Al Yousef’s claim. The tribunal stated that the amount Al Yousef had received was three times the remuneration which he would have received had he been on a monthly sum. Al Yousef is fined $550,000, and forced to pay GIAT’s legal costs.
2011
  • The UAE signed a new contract with Nexter (formerly GIAT) for a dozen AZUR Urban upgrade kits for the Leclerc.
2015
  • AugFootage emerged of the first combat deployment of the UAE’s Leclerc tanks as part of the Emirati’s intervention in the Yemeni Civil War. The tanks were pictured during an operation to take the Southern port city of Aden and the Al Adnad air base.
2018
  • 28 SepA secret document detailing Al Yousef’s ICC case and allegations of his corrupt activities was leaked to WikiLeaks.
  • NovA leaked memo from France’s Directorate of Military Intelligence revealed that the Emirati Leclercs again saw action in Yemen in the port of Hodeida.

Outcomes

Investigation Outcomes

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2002
  • During an inquiry into the Angolagate Scandal, Swiss authorities discovered RENK’s suspicious payments to Jean-Charles Marchiani and Yves Manuel’s HSBC bank accounts. Responding to French requests, the Swiss handed the evidence to French investigators, who promptly opened a criminal investigation into the GIAT-UAE deal.
2005
  • DecMagistrates in France convicted Marchiani and Manuel, as well as Martin Hirst and Norbert Schultze, for their roles in the affair. Marchiani was found guilty of money laundering and influence peddling as a public official (including by bribery) and was sentenced to three years in prison. Manuel was handed a three-year suspended sentence for influence peddling and fined €150,000. Martin Hirst and Norbert Schultze received one-year suspended sentences and were fined €100, 000 each.
2008
  • NovPresident Nikolas Sarkozy granted pardons to 27 French prisoners, including Marchiani who received a partial pardon. Officially, the decision was motivated by “acts of courage or bravery exhibited during or before their incarceration.” The pardon came after Marchiani’s associates, including Charles Pasqua—who was also implicated in the Angolagate scandal—and former hostages freed by Marchiani during the 1988 Lebanon Hostage crisis, lobbied the president for months.
2010
  • 30 SepAl Yousef lost his arbitration case with the ICC. He was forced to pay for the costs of arbitration ($550,000) in addition to part of GIAT’s legal costs (€115,000).
2020
  • No criminal investigation into Al Yousef’s role in the Leclerc-UAE affair has ever taken place.

References

References

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