Paris 'scam' blamed on rag trade

BARCLAYS and HSBC breathed easier when it emerged that the alleged money laundering scam in Paris was more rag trade rip-off than Taliban terror.

French detectives are concentrating on the Sentier district where, allegedly, bogus clothing businesses write cheques to each other and launder the proceeds to Belgium, Austria and Israel.

The Paris Court of Justice is shortly to hold its second trial. In the first, in February, 124 people - mostly Jewish - were accused of frauds involving £54m. When 13 of the accused fled to the Middle East, public prosecutor Francois Franchi accused Israel of harbouring fugitives.

Detectives have since questioned 80 people about alleged cheque-writing scams going back to 1998. These include Barclays managing director Henri-Paul Pelligrino and three of his staff, plus bankers from once State-owned Societe Marseillaise de Credit and BRED, part of HSBC's Credit Commercial de France.

The first trial alleged that some religious organisations were involved as two rabbis were charged with illegally transferring money between France and Israel.