Chirac friends convicted in Paris housing scam

PARIS, July 5 (Reuters) A court found businessmen and friends of French President Jacques Chirac guilty today of corruption for their involvement in a housing scam allegedly used to fund Chirac's former party while he was mayor of Paris.

The verdict was the culmination of a decade-long probe into graft allegations, one of several corruption scandals linked to Chirac's tenure as mayor from 1977 to 1995.

The case was made famous in 2000 by a beyond-the-grave confession from a former Chirac aide, Jean-Claude Mery.

In a video tape recorded three years before his death in 1999, Mery alleged that Chirac was present when a building contractor seeking business handed over five million francs to an official of Chirac's party, which was then called the Rally for the Republic (RPR).

Chirac has denied any wrongdoing or any knowledge of a corruption racket.

In 2001, he refused to testify in the case and France's highest court later ruled that, as president, he was immune from criminal prosecution.

The court convicted 37 of the 49 businessmen accused of involvement in the scheme, which the court said was a ''vast system of influence trafficking''.

No prominent politicians were involved in the trial.

The prosecution charged that under the scheme, the RPR used phoney middlemen to cream off money from orders made by the Paris public housing office, the OPAC.

The main defendant, Georges Perol, former head of the OPAC, received a suspended prison sentence of 2 years and was fined 20,000 euros. Perol, 80, headed the OPAC from 1982 to 1993 and is a close friend of Chirac's.

''He abused ... the privileges of his office, faking competition, discrediting the impartiality of public service and damaging the essential confidence which citizens must have in their institutions,'' the court said in a 465-page written ruling.

Another friend of Chirac's, businessman Francis Poullain, was handed an 18-month suspended prison sentence and fined 40,000 euros.

The court also passed 33 suspended jail terms of between two months to two years and fines of 3,000 to 60,000 euros.

It was the third time people close to Chirac have been found guilty of involvement in such schemes.

Former Prime Minister Alain Juppe was convicted in December 2004 for his role in the misuse of Paris City Hall funds and banned from elected office for a year.

Chirac's former cabinet director Michel Roussin was found guilty of corruption in 2005.

REUTERS SHB KP2323