Though it's not on the official agenda when President Thabo Mbeki and French head of state Jacques Chirac meet in Paris this week, the role of French arms giant Thales in South Africa's arms deal is likely to be on both their minds. Yet if you speak to most people in France about arms, Thales and corruption, it's not South Africa they think of, but Taiwan. A contract signed in 1991 to supply frigates to Taiwan has rocked the French political and business worlds, reports Alide Dasnois, editor of BusinessReport.

Secret deals, glamorous women, huge sums of money, warships, unexplained deaths: the "affair of the Taiwanese frigates" has all the ingredients of a suspense novel.

It all started in 1989 when the French government authorised a bid by French shipyards for the supply of six frigates to Taiwan.

The bid marked a change in relations with Taiwan.

French relations with Taiwan had been changing slowly. Sensitive to the demands of the People's Republic of China and its "one China" policy, France still did not recognise the state of Taiwan. There were no official links to speak of between the two countries and unofficial relations were limited.

But the repression by Beijing authorities of the student uprising in China in 1989, coupled with the democratisation of Taiwan and the French arms industry's need for new clients, prompted a thaw in French-Taiwanese relations and French shipbuilders were allowed to bid for the contract.

The bid was only for ships' hulls and not for armaments. But even that was too much for some French officials, who worried about the effect on their relations with China. A few days later, under pressure from the ministry of foreign affairs led by Roland Dumas, the government made a U-turn, withdrawing authority from the bidders.

Yet barely 16 months later, a contract was concluded between French companies led by Thomson and the Taiwanese for the supply of six "Lafayette" frigates for a price of $2,5-billion.

The story of what happened between the end of 1989 and April 1991, and of how China was induced to accept the sale of arms to its arch rival, has become known as the "affair of the Taiwanese frigates".

Behind the successful bid was a systematic, aggressive strategy by Thomson. Three networks were set up: one to persuade the Taiwanese government to give the frigates contract to France rather than to the Hyundai shipyards in Korea with whom negotiations were already well advanced; one to persuade the French government and, in particular, Roland Dumas to authorise the deal; and one to placate China. All were oiled with huge amounts of money, what in France are called (illegal) "retrocommissions" as opposed to the (legal) commissions paid to agents which must be declared for tax purposes.

The scandal only erupted in 1997, when magistrates investigating the activities of another state-owned company, the French oil giant Elf, came across evidence which led them up a trail of corruption on a scale bigger than anything Taiwan had ever seen, according to a Taipei judge.

Slowly the magistrates probed allegations that, in order to get the deal accepted in Beijing, in Taipei and in Paris, bribes had been paid to several influential people in France, to navy officers in Taiwan and to officials in the People's Republic of China, including some very close to the Chinese head of state.

Among those who received money in France was Christine Deviers-Joncour, the long-time mistress of Roland Dumas, who had at first publicly opposed the frigates deal in the interests of good relations with China.

Deviers-Joncour had been working since 1989 as a lobbyist for Elf's Swiss subsidiary, under the orders of a man called Alfred Sirven. Since 1990, she had been mandated to lobby for Thomson.

Magistrate Eva Joly, looking into the Elf affair, found that the minister's mistress had bought a US$2,8-million flat in Paris' left bank with money she had received via Sirven.

An estate agent involved in the sale confirmed the source of the money. Sirven was taken in for questioning.

Joly and her colleagues began to piece together the story.

Deviers-Joncours was questioned for suspected fraud.

Dumas, now head of France's highest court, was subjected to searches of his offices, his Paris apartments and his country house in the Gironde in the south west of France as the magistrates searched for links between him and the money cashed in by Deviers-Joncour.

In February 1998, the former lobbyist was taken in for questioning on suspicion of corruption and participation in commissions.

The magistrates and the police were looking through Swiss bank accounts and were examining millions of francs paid to Dumas between 1991 and 1995 - money the minister said had come from the sale of part of his art collection. They found that large deposits in cash had been used for the purchase of flats for close friends.

In April, Deviers-Joncour was released, but under judicial surveillance.

Dumas was raided again, brought in for questioning and released on bail. The government refused to comment.

Meanwhile, the net was closing around him and his tax affairs were being investigated.

Christine Deviers-Joncours published a book titled The Whore of the Republic in November explaining her relationship with Dumas, who denied its truth and refused to resign from the constitutional court.

In December, he was interrogated again by the magistrates.

Meanwhile Sirven, whose luxurious lifestyle had attracted considerable attention, was arrested and the offices of his lawyers raided by the magistrates.

By 1999, hundreds of people were involved in the investigation, Deviers-Joncours had admitted that she had lobbied Dumas; Dumas had admitted to a French newspaper that 5-billion francs had been paid in bribes, and the members of the constitutional court had asked Dumas to resign. In March he announced that he was taking leave from his post at the head of the court.

Magistrate Eva Joly and her colleague Laurence Vichnievsky visited South Africa, apparently to get more information on the movements of Alfred Sirven. Among others, they are said to have interviewed Alain Thetard, the Thomson executive who is alleged to have been involved in the payment of a bribe to Deputy President Jacob Zuma in the context of South Africa's own arms deal.

Back in France, the magistrates moved in on Sirven's belongings: furniture in his castle was seized and removed.

Alongside the frigates case, the Elf investigation continued, culminating in the arrest and conviction of Alfred Sirven and another Elf executive, Loik le Floch-Prigent, on charges of corruption. Sirven, who lost an appeal against his conviction earlier this year, was sentenced again last week in a Paris court to five years in prison for misappropriating money from Elf.

But on the "affair of the Taiwanese frigates", there is still no conclusion.

The magistrates have raided the Paris headquarters of Thomson, now Thales, and applied to the French authorities for access to customs documents to find information on commissions paid by Thomson as the main contractor in the 1991 deal.

But so far they have not succeeded in forcing the state to lift the veil of secrecy which surrounds the frigates contract.

Successive ministers of finance have refused access to the documents concerning the deal, claiming that the material is classified.

Attempts by the magistrates to get information from the French banks about payments by Thomson between 1991 and 2001 have also failed: a request for a list of beneficiaries was refused by France's three biggest banks this year.

The magistrates have also heard evidence from General Imbot, a former head of the French security services, about the death in Paris in 2000 of his son.

Commercial attache at the French mission in Taiwan in the early 1990s, the general's son was found dead in the courtyard of his Paris flat. An inquiry found that his death had been accidental.

A mystery also surrounds another death, that of a Taiwanese navy officer linked to the arms deal, who was found murdered.

With acknowledgements to Alide Dasnois and The Star.