French Minister Resigns - Corruption Spreading

The French finance minister, dogged by fraud allegations, has resigned, while a UN-sponsored report says corruption in South Asia is widespread and dangerous. John Howard reports.

Following on from corruption allegations in Russia, Armenia, Indonesia and the United States, including against our possible new US ambassador, comes the news that French finance minister, Dominique Strauss-Kahn, resigned Tuesday sparing his government the possibility of a messy ministerial court-case.

Strauss-Kahn was a close ally of Prime Minister Lionel Jospin and stepped down after it became clear a formal investigation against him in a fake payment scam was edging closer. Jospin had made ministerial integrity a centre-piece of his government after three ministers resigned in corruption scandals under the previous centre-right government.

"I am resigning, and I say this with conviction, it is in no way because I feel guilty." Struass-Kahn said.

After questioning him, investigating magistrates seized evidence showing that Strauss-Kahn had been paid for non-existent legal work, then letters forged and back-dated to suggest he had been properly commissioned to carry it out.

He was swiftly replaced by Christian Sautter, who has been budget secretary under Strauss-Kahn since the government came to power in mid-1997.

Jospin paid tribute to Strauss-Kahn hoping he would be back. Strauss-Kahn's resignation is a blow to the socialist-led coalition because of his reputation as a pragmatic economist whose policies - such as a large privatisation campaign - won over business leaders and the country's trading partners.

Meanwhile, a UN sponsored report says corruption in South Asia is widespread in high levels of government and especially insidious because it hurts millions of poor people struggling to survive.

The 1999 report on human development in South Asia, released Monday, covers India, Pakistan, Bangladesh, Sri Lanka and Nepal.

It says corruption was one of the most damaging consequences of poor governance undermining investment and economic growth and deepens the extent of poverty.

"South Asia is facing a crisis of governance which, if unchecked, could halt the region's democratic progress and economic and social well-being of its teeming millions of people," the report warned.

ENDS

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