Did Pakistani Spies Kill 11 French Naval Engineers?

When, in May 2002, suicide bombers attacked a bus in Karachi in southern Pakistan and killed 11 French naval engineers, most officials believed it was the work of radicals tied to al-Qaeda. Although no such group ever took credit for the attack, the jihadist theory has long remained the one favored by authorities in both Pakistan and France. But now French authorities are turning to far less conventional — and more controversial — suspicions: that the strike may have been organized by members of Pakistan’s military and intelligence services, as revenge for France cutting off millions of dollars in kickback payments promised in a 1994 submarine deal.

“This theory is being considered as the most likely, especially now that all the other plausible explanations have been seriously undermined,” says a French counter-terrorism official who has knowledge of France’s inquiry into the Karachi bombing. “Investigations in France have produced written evidence and testimony that kickbacks to Pakistani authorities had been agreed upon, paid, then unilaterally terminated from Paris. That theoretically provides the Pakistani authorities involved with a motive for an attack — meaning we now have to see if that can be fully substantiated.”

(See pictures of a Jihadist’s journey from Pakistan.)

French counter-terrorism officials have for months been privately airing their growing skepticism about jihadist responsibility for the 2002 attack. It wasn’t until last week, however, that word leaked to the press that the specialized investigating magistrates handling the case in France appeared to have all but abandoned the al-Qaeda theory. On June 19, lawyers representing families of the bombing’s French victims told reporters they’d received a briefing earlier that day by judges Yves Jannier and Marc Trévidic describing the scenario of Pakistani officials having organized the strike as credible, and citing supporting evidence obtained over the course of France’s inquiry into the attack.

This new theory hinges on a change in French government as the possible trigger. In 1994, Paris signed a $1 billion deal to sell and assemble Agosta submarines to Pakistan; a year later, the cabinet of newly elected President Jacques Chirac decided to start holding back payment of some $33 million in kickbacks that had been promised to Pakistani officials who had helped secure the contract. French security officials tell TIME that last year French investigators obtained documents and testimonies by people involved with the transaction showing that after those funds were retained, Pakistani officials who were designated in the contract to receive “commissions” for their help repeatedly insisted they be paid. By 2000, when France applied an international anti-corruption convention banning kickbacks, Paris could truthfully claim it was unable to pay such “commissions” without breaking the law.

(Read: “France’s Chirac Under Investigation.”)

That, some French authorities now believe, is when some Pakistani officials got mad. The authorities suspect that members of Pakistan’s overlapping military, intelligence and political circles decided to settle their score by symbolically targeting the French submarine engineers tied to the contract. Then they allegedly manipulated extremists whom Pakistan has long been accused of supporting to carry out the attack in order to maintain plausible deniability.

“[Investigators] have now established that these contracted commissions had become a major point of dispute, and are now trying to see if they were the motive for whomever ordered the bus carrying the French engineers to be bombed,” the French counter-terrorism official says. “Right now, retaliation for the undelivered payments to Pakistani officials is seen as the strongest theory there is.”

Skeptics ask what Pakistani officials would gain by killing the French workers. They still wouldn’t get their money, since France presumably wouldn’t be bullied into paying up in response to such an outrageous attack. French officials say the logic of the attack would have been similar to Mafia hits on outstanding debtors: to make an example of someone deemed unlikely to pay up, and thereby send a message that others will understand while officially being able to point the finger at another culprit.

(Read: “Busting the Sicilian Mafia’s Board of Directors.”)

After news of the French investigators’ suspicions broke last week, Pakistan’s media carried a cascade of official denials from leaders, while Farah Ispahani, spokeswoman for President Ali Zardari, qualified the allegation as “farcical at best.” In France, President Nicolas Sarkozy — who was economy minister at the time the submarine contract was signed — responded with outrage. “This is ridiculous. Grotesque,” Sarkozy told reporters. “We have to respect the grief of the families. Who would ever believe such a tale?”

(See pictures of Sarkozy in the U.K.)

Pakistan continues to note that its own investigation into the bombing — which killed the highest number of Westerners yet in a single attack on Pakistani soil — traced it directly to jihadists. Following several months of inquiries, Pakistani police arrested seven suspected members of Harkat-ul Mujahideen al-Alaami, a group described as an offshoot of the Harkat-ul Mujahideen currently waging jihad in Kashmir. Three men were convicted and tried for organizing the Karachi attack, which Pakistani officials said was retaliation for the U.S.-led invasion of Afghanistan.

But French officials ridicule Pakistan’s inquiry, saying it contained countless errors and ignored all leads that didn’t conveniently point to the usual suspects in a post-9/11 world. Because of that, one French security official tells TIME, the entire Pakistani case “seemed to be out to justify the obvious suspicion of jihadist responsibility, rather than studying the evidence to find out who else might have been behind the bombing”.

And the Pakistani courts seem to agree. Last month, two of the principle suspects in the attack saw their earlier convictions and death sentences overturned on appeal. A third man who had also been convicted in the case is awaiting appeal.

The implosion of Pakistan’s case has further stoked French allegations that the actual goal of the investigation was to hand France plausible culprits while diverting attention from the real plotters. But an article in Thursday’s daily Libération indicates Pakistan had some help in that, claiming key French officials themselves long discounted indicators that the attack had directly targeted people linked to the submarine contract as they focused on al-Qaeda connections.

(See pictures of Osama Bin Laden.)

If true, that makes Sarkozy’s rush to discredit the latest theory even more puzzling. Some French security officials have a possible explanation for the president’s reaction: his concern that it could complicate his efforts to do away with France’s independent investigative magistrates and entrust all inquiries to public prosecutors appointed by politicians — which, critics say, would make them more likely to intervene in sensitive cases out of political concern rather than in the pursuit of justice. But for now, the country’s independent investigators are pushing politics aside in their search for justice for the Karachi attacks — even if it means rocking Franco-Pakistani relations to their core.
— With reporting by Aryn Baker / Kabul

Read: “Pakistan: A Mounting Problem for Obama.”

See pictures of a Pakistan police academy under fire.