Strauss-Kahn denies giving tax break for Chirac video

PARIS, France -- France's former finance minister Dominique Strauss-Kahn has denied that he received a video cassette containing corruption allegations against President Jacques Chirac in exchange for granting a tax break to a star designer.

Reasserting his innocence in an escalating scandal, Strauss-Kahn said he did not know where the videotape, given to him early last year, was or what was in it.

He also flatly denied he was given the tape in return for a huge tax break granted to the prominent haute couture designer Karl Lagerfeld and threatened to sue anyone who asserted this. Lagerfeld has declined to comment.

"I am outraged about what people have said or written implying this cassette was taken in exchange for a tax favour. Never, never have I put serving the state second to below-board political business," Strauss-Kahn told Europe 1 radio.

"I had this cassette, I accepted it... but I didn't watch it. I know it doesn't seem very believable that I didn't look at it but it didn't interest me," he said.

Karl Lagerfeld: has not commented

"I talked to nobody about it. I didn't exploit it. I took it, put it in a drawer and sadly we can't seem to find it."

Strauss-Kahn, who resigned last year over a separate corruption scandal, admitted on Monday he had been handed a copy of the tape, in which a former Chirac aide details a substantial slush fund set up to help the president's centre-right RPR party.

Chirac immediately called Prime Minister Lionel Jospin, a friend of Strauss-Kahn, to demand a swift inquiry.

Strauss-Kahn told Europe 1 there was no link between the videotape and the settlement of Lagerfeld's taxes in France, after it was found he had not paid them for 15 years. "The tax authorities consider this took place in a correct way," he said.

"The issue, if what's said is true, implicates the president. It's not me that's accused, this is a tremendous diversion which is serving as a distraction, but the fact that I had this cassette is not the centre of the issue."

The scandal broke last week when French daily Le Monde published excerpts from a copy it obtained of the 1996 video of the late Jean-Claude Mery, formerly a key RPR member, saying he got companies to make hefty bribes in return for public work contracts in the Paris area when Chirac was city Mayor.

President Chirac denies the allegations

Chirac immediately dismissed the report as rubbish.

Strauss-Kahn, whose link with the affair was reported by L'Express magazine at the weekend, said he hoped investigators would get to the bottom of the scandal.

"We mustn't let the tree hide the forest. The question is the financing of the RPR. I did not finance any party," he said.

"If I had looked at the tape and handed it in to the legal authorities there would have been claims of manipulation. I kept it in the drawer and I tried hard to forget about it."

Last year France's constitutional court, debating on another corruption case, ruled that Chirac cannot face criminal charges as long as he is president.

Reuters contributed to this report.

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