PARIS: Alain Thetard, the former arms company director who wrote the diary that South African prosecutors want brought back from Mauritius for use as evidence against Jacob Zuma, is embroiled in a controversy involving the company's parent in France.

Thetard formerly headed Thint, the southern African division of Thales, and now works for Thales in Germany.

His name has been mentioned in a corruption investigation into the sale in 1991 of six combat frigates to Taiwan.

The sale could see France being fined a record sum by the court of the International Chamber of Commerce here.

The E1.5-billion contract has long been the subject of rumours about the payment of huge commissions to Taiwanese politicians and French political figures.

Thales supplied the electronics for the frigates.

The French courts have not found any trace of the money paid to politicians in France, but judges have located the sums Thales paid to a Taiwanese intermediary, Andrew Wang. The courts have seized at least $520 million in 46 bank accounts.

After the Taiwanese elections in 2000, the new government condemned the rumoured bribes and demanded reparations. If the court's decision, to be taken soon, goes against Thales, France will have to pay Taiwan more than $1bn.

The affair hinges on a clause in the sales contract, a few ambiguous lines that ban the payment of commissions but allow recourse to intermediaries and agents, provided they are known to both parties.

Thetard was questioned in France by a judge and the Taiwanese have a copy of his evidence. On May 14, 2002, Thetard, then in South Africa, said the French group had taken a few liberties with the clause in the frigates contract that banned commissions.

"This is a standard clause," he said. "In some cases the company had to sign this type of clause because the buyer insisted on it.

"The company had the choice of not signing a sales contract because of this type of clause, and losing the deal, or signing the clauses and not sticking to them, which meant a risk for the company. In general the company accepted this risk rather than lose the deal."

Thetard was at one time Thales's "notary", the man who managed the contracts and who put the company's stamp of approval on them.

"In the 1980s he was in a position to sign … thousands of tricky contracts," a Thales executive says.

Called to Geneva on March 15, 1994, as a witness in another case, Thetard told how Thales worked with intermediaries.

"It is not my business to know personally who the beneficiaries are," he said. "When we deal with (intermediaries), it happens often that (they) … point us to a fiduciary company, in Switzerland, for example (so their name does not appear on the documents)."

Thanks to intermediaries, the commissions could find their way secretly to beneficiaries.

In the battle between France and Taiwan, the French government has acknowledged that commissions were paid.

"As regards the remuneration of Wang, Thales cannot reply fully for reasons of state security," one of the advocates writes in his report. "But the documents submitted by Taiwan show clearly … the navy knew of every cent spent."

France is trying to prove that Taiwan knew of Wang's role as intermediary. The Taiwanese claim to have found this out through the press.

The dossier shows Wang had been the link between Thales and Taiwan since the 1980s. He brought Taiwanese generals and French industrialists together, organised the visits of VIPs to Paris, and set up meetings with ministers.

The Taiwanese authorities, Thales's lawyers argue, knew all about the contract that had linked Wang to the French group since 1989. According to this contract, he would get 15% of the price of the ships.

Taiwanese police raided Wang's offices in Taiwan, like those of Thales, in 1994 and froze his bank accounts, so Taiwan was aware of his role.

The three judges who are to make the ruling have not called Wang to the witness stand. Could there be fears about what he may disclose?

If called, he might have been able to explain the details of an arms sale to a state France does not officially recognise.

With acknowledgements to Laurent Léger and Cape Times