Global Policy Forum

By David Pallister and Jon Henley

The cascade of French corruption investigations has been extended to Britain where a provisional arrest warrant has been issued by Bow Street magistrates against a Russian-born multi-millionaire believed to be at the centre of one of the scandals that has mired some leading political names from the Mitterrand years.

Arcadi Gaydamak, 49, who carries French, Israeli, Canadian and Angolan passports, is wanted for questioning by Paris magistrates about a £450m allegedly illegal arms deal with Angola in the early 1990s. The scandal led to the arrest in December of Jean Christophe Mitterrand, son of the former president.

An international arrest warrant has also been issued for Mr Gaydamak for "fraud, abuse of trust and trafficking in influence". But Scotland Yard was specifically alerted by the French authorities because he has had the right of residence in Britain since 1995. Mr Gaydamak, however, has been living in Israel for the past two years. In a telephone interview with the Guardian last week, he insisted that the deal and his involvement in it was a legitimate transaction between the governments of Angola and Russia. "I am not a fugitive," he said.

Mr Gaydamak's one-time associate, Pierre Falcone, a Franco-Brazilian arms dealer, is under arrest in Paris on the same charges. He is the director of a number of British companies linked to Brenco International, the company which gave £1.3m in alleged bribes to Mitterrand's son. Mr Gaydamak said this money was paid in 1998 and had nothing to do with the arms deals three years before.

The investigation widened last week when Jacques Attali, a former adviser to Mitterrand and former head of the London-based European Bank for Reconstruction and Development, was put under criminal investigation for allegedly receiving £150,000 from Mr Falcone to help with a £44m tax claim against the arms deals. Mr Attali, who has been released on bail, claims the money was a consultancy fee from the Angolan government for banking advice.

Mr Gaydamak said that he and Mr Falcone were both given Angolan citizenship in the early 1990s with the status of officials in the Angolan ministry of external affairs. "My main activity is supplying of materials for the oil fields and trading in oil, particularly in Angola," he said.

It was at a time when the Angolan government desperately needed military equipment. The rebel movement Unita had returned to civil war, but the purchase of lethal weapons was prohibited under the 1991 Bicesse Accords.

Mr Gaydamak said the Angolan government decided to buy combat helicopters and ammunition from Russia using a Slovak company, ZTS-OSOS, in which a Russian state-owned enterprise had a large shareholding. The payment would be in oil through an account at the French bank Paribas. Both he and Mr Falcone were given authority to control the bank account and to sign contracts on behalf of ZTS. "Everyone knew about the operation and everything was legal," he said. "Our profit was the difference between the price we fixed for the oil and the price we sold it."

But it was that profit - allegedly in excess of £50m - which raised questions about the financial affairs of both men and led to the money-laundering and tax avoidance inquiry headed by investigating magistrates Philippe Courroye and Isabelle Prevost-Desprez. The inquiry has thrown a spotlight on the pair's extensive international interests and powerful connections.

Arcardi Gaydamak was born in Moscow but left the then Soviet Union for France in 1972 at the age of 19. In 1976 he started a translation and interpreting business which put him in contact with a number of high-ranking business and political figures in France and the USSR - which would be useful in his later career. In 1990 he launched into the far more lucrative business of international trading, primarily in metals but also in arms. He says he met Mr Falcone in 1992, or early 1993, and the two men soon began doing business together in Latin America. In 1996 he was awarded France's order of merit by President Jacques Chirac, purportedly for his work in helping French agricultural concerns to win contracts in Russia. In fact, the decoration was for Mr Gaydamak's intervention in securing the release of two French pilots captured by Serb forces in former Yugoslavia in 1995. Mr Gaydamak says high-level French officials, including the former interior minister Charles Pasqua, asked him to intervene and that the operation cost him several million francs. In 1997 he was involved in freeing four French aid workers being held in Dagestan. For his services he won the support of senior figures in French intelligence including Raymond Nart, the then deputy head of DST, the French equivalent of MI6.

In Israel, Mr Gaydamak has teamed up with Russian/Israeli businessman Lev Leviev. Their Africa-Israeli Investments holding company now has the exclusive rights through a joint venture with the government to market Angolan diamonds and owns the assets of TotalFinaElf in the US - a $400m deal that included an oil refinery in Texas and the franchise for 1,700 filling stations.

But not all has been plain sailing. After the French international arrest warrant was issued in December, Mr Gaydamak resigned from an influential post as president of the Russian Rossiyski Kredit Bank.