Karachi affair

This article is part of a series about Benazir Bhutto
Early life Political career Burial Political views Social democracy Charter of Democracy Elections 1988 1990 1993 1997 Prime Minister of Pakistan (First Government Second Government) First Women Bank Midnight Jackal Mehrangate Karachi affair Repression in Karachi Coup d'état attempt Seventh Five-Year Plan Murder of Murtaza Bhutto Corruption scandals Books written Daughter of Destiny: An Autobiography Reconciliation: Islam, Democracy, and the West Assassination Assassination attempt Assassination (reactions) Gallery: Picture, Sound, Video
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The Karachi affair (French: affaire Karachi), otherwise known as Agosta Submarine scandal, was a major military scandal that took place in the second administration of Prime Minister Benazir Bhutto, involving the presidencies of François Mitterrand and Jacques Chirac in 1992–97.^[1]

The scandal involved the payment of massive commissions and kickbacks between France and Pakistan over the negotiations to acquire Agosta 90B-class submarines. The submarines utilized the emerging air-independent propulsion (AIP) proprietary designs, which Pakistan was eager to acquire over the nuclear submarines.^[1]

In 1992, the Benazir administration began negotiating with French President François Mitterrand to procure the designs for the expensive and complex submarine, eventually signing the contract in 1994 for a sum equivalent to €826 million ($996m).^[2] Negotiations and the decision-making for defense procurement with France was extremely controversial, with the United Kingdom later entering in the competition by offering its four Upholder-class submarines, which were being decommissioned from the military service with the Royal Navy.^{: 149–150 [3]}

The Pakistan Navy NHQ wanted to procure the four used British-manufactured diesel-electric Upholder-class submarines, which were already available and at a lesser cost than newly build Agostas, which were still in the prototype phase, and would have taken years to manufacture and deliver.^[1] Nonetheless, the Benazir administration selected the Agosta, taking advantage of the lucrative financial credits provided by France.^{[1]: 149 [3]}

Commissions of 6.25% of the contract, approximately €50 million, were paid out to the lobbying firms in Pakistan and France.^[4] Some €50m were allegedly paid as "sweeteners" to various senior Pakistan Navy admirals and officers as well as the political leaders.^{: 130 [5]} In 1996–97, the Naval Intelligence led by its Director-General, Rear-Admiral Tanvir Ahmed, secretly launched its investigations into this matter and began collecting physical evidence that eventually led to the exposure of Chief of Naval Staff, Admiral Mansurul Haq, in receiving massive monetary commissions in 1997.^[6] Massive media coverage and the news of the dismissals of one and two-star admirals tarnished the image of the Navy, with Admiral Fasih Bokhari, who took over the command of the Navy from Admiral Mansurul Haq, forced to attempt damage control of the situation.^[7][8]

In 1990s, it was legal in France to award monetary commissions and kickbacks to the political lobbyists involved in the bilateral deals until France began partied and ratified the OECD Convention that led to the outlawing the practice of awarding monetary commissions in 2000.^[9]

Since its exposure in the news media of both France and Pakistan, the scandal has been involved in various investigative journalism and attracted sensations and conspiracy theories in both countries, including this scandal's allegement of financing the political campaign of then-Prime Minister Edouard Balladur in the presidential elections took place in 1995. Upon electing President Jacques Chirac cancelled the commissions and kickbacks, angering many officials in Pakistan and France according to the media reports.^[10] Other theories and subsequent investigative journalist reports alleged that the bus bombing on 8 May 2002 in Karachi that killed eleven French engineers in Karachi was in retaliation for the cancellation of these commissions.^[11][12] This theory was rejected by the Government of Pakistan when the FIA and the CID made potential discovery in linking the HuM and the al-Qaeda had carried out the terrorist attack in Karachi, mistaking the French nationals for the Americans.^[13][14]