Ex-Sarkozy aide faces French bank lawsuit

The controversy over President Nicolas Sarkozy's appointment of a top aide to head a new private banking group deepened on Wednesday, after anti-corruption campaigners filed a lawsuit against the nomination.

Anticor, a group lobbying for ethics in politics, filed a complaint against Francois Perol, until recently Mr Sarkozy's deputy chief of staff, alleging a conflict of interest between his government role and his new position as head of Groupe Caisse d'Epargne and Groupe Banque Populaire.

The two mutuals are in the process of merging to create France's second biggest retail bank after Credit Agricole.

The Paris prosecutor's office has three months to decide whether to investigate Mr Perol over the accusation of conflict of interest, which is a criminal offence punishable by a maximum of five years in prison and a €75,000 ($98,434) fine. The move could encourage others that have threatened legal action, including trade unions and regional banks.

Jerome Karsenti, Anticor's lawyer, claimed Mr Perol had a conflict of interest over steering the merger of the two mutual banks on the government side before becoming its head. Mr Perol has maintained in newspaper interviews that his appointment does not transgress the law. He has asked to be left to get on with his job of meeting the July 1 deadline for the merger.

However, the controversy shows no sign of abating since last month's appointment and could force Mr Sarkozy to back down. That could mean a new head for the merged group, which has already been convulsed by the sudden resignations of the former chairman and chief executive of Caisse d'Epargne last October following a €600m unauthorised trading loss.

Opposition politicians accuse President Sarkozy of riding roughshod over legal concerns and behaving like an autocrat by making the appointment before an independent ethics commission could rule on the legality of the move.

Olivier Fouquet, head of the committee that reviews transfers from the civil service to the private sector, told MPs last week that the members of the commission had considered resigning collectively over the issue.

Mr Perol is to appear before a parliamentary committee next week to answer questions about his appointment. He has justified the state's interest in the merged group, because it is taking a 20 per cent stake and injecting €7bn into it.

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