Judges Examining Contracts between Air France-KLM and Air Secuirty Company Pretory

July 24, 2006
Authorities probing alleged money laundering and illegal employment practices at security company

PARIS_Air France-KLM was formally put under investigation Thursday by authorities probing alleged money laundering and illegal employment practices at a bankrupt airline security company.

Air France-KLM lawyer Jean-Rene Farthouat announced that the group is under investigation, a step short of full charges. The announcement came two days after the group's chairman and CEO, Jean-Cyril Spinetta, was questioned in the case.

Judges are looking into contracts between Air France and Pretory, which supplied security agents to travel undercover on the airline's planes from 2001-2003, after the Sept. 11 attacks.

Farthouat protested Thursday's legal step and said he would seek its reversal, saying there were "no serious elements" justifying the move to put the company under formal investigation.

Spinetta insisted after his hearings Tuesday that he was "totally innocent." Judge Herve Lourau decided against placing Spinetta under investigation.

Pretory's founding CEO, Jacques Gaussens, and three others have also been placed under formal investigation.

Pretory went bankrupt in 2003, a year before Air France merged with Dutch carrier KLM.

Pretory allegedly paid some of its personnel via companies set up in fiscal paradises to avoid social and other charges in France. In addition, ?10 million reportedly went missing from the company's coffers.

Spinetta's lawyer, Jean-Pierre Versini-Campinchi, has said that his client was unaware of possible irregularities at Pretory until December 2002, after government inspectors alerted Air France about their suspicions that Pretory was evading labor taxes.