Juppe saved from prosecution

STEPHEN JESSEL

Paris

The prosecuting authorities in Paris averted a major French political crisis yesterday by recommending to the Justice Ministry that the Prime Minister, Alain Juppe, should not face a formal investigation into allegations that he abused a former official position to allocate himself a flat owned by the city.

But the chief prosecutor, Bruno Cotte, made it clear that Mr Juppe was open to charges that he had abused his position and that the decision not to proceed with the case was conditional on Mr Juppe vacating the apartment, situated in the rue Jacob in central Paris, by the end of the year. Mr Juppe had already made it known that he would be moving. His son, Laurent, who also rented a city-owned flat at below-market rates, will move as well.

The allegations relate to Mr Juppe's time as a deputy mayor of Paris, from 1989 to 1993, when he was responsible for finances. This, his political enemies said, included control over its private stock of apartments.

The decision not to proceed with the case, even though the evidence showed that Mr Juppe, despite earlier denials, had been intimately involved in the allocation of city-owned flats, the fixing of rents and approval of repairs (in his own case costing about pounds 130,000), will end an embarrassing and damaging episode.

If Mr Cotte had decided to press ahead with an investigation by a magistrate, Mr Juppe would almost certainly have been obliged to resign. His departure would have created a serious crisis for President Jacques Chirac, who was mayor when Mr Juppe was in charge of finances. The decision not to prosecute comes at time when Mr Juppe is unpopular and his economic policies are under fire.

He had no immediate comment on the decision. The French franc jumped to 3.49 against the German mark, however, after falling to 3.51 earlier amid rumours that the Prime Minister had resigned or been arrested. Bonds also recovered but stocks fell on fears a Juppe resignation might lead to a reversal of the "strong franc" that has kept French interest rates high.

The property affair, first revealed by the satirical weekly Le Canard Enchaine, drew to attention the existence of a stock of flats owned by the city of Paris and let to the politically influential and their friends and families at very low rents.

News of the prosecutor's decision came as observers were assessing the impact of Tuesday's strike by public sector workers, judged to have attracted the highest level of support for such action for more than a decade. Leaders of the seven unions involved are to meet next week to consider what further action to take.