French intelligence chiefs yesterday faced embarrassment after it emerged that £18m from a secret emergency war chest had gone missing and that some of it may have been spent on what one spymaster called dancing girls, writes Matthew Campbell.
Judges investigating a separate affair learnt of the missing funds from a note written by General Philippe Rondot, a former intelligence chief, to Michèle Alliot-Marie, the defence minister, in 2002.
It mentions a "serious breakdown in the management of special funds allotted to the service". The money was part of a fund established secretly after the second world war. It was maintained during the cold war to finance a French state in exile if the country were ever invaded by the Soviets.
According to Le Parisien newspaper, the money was controlled by a handful of agents. No records were kept and details of bank accounts around the world were passed to successors only by word of mouth.
The money was supposed to be available "in case of crises or major operations to be undertaken urgently", Rondot wrote, "and not to entertain the dancing girls of a few out-of-control contacts of the DGSE" (the French overseas intelligence service).
Rondot's notes were seized by judges investigating the Clearstream affair, which came to light when an anonymous letter gave details of supposed payments made through a clearing house to French officials including Nicolas Sarkozy, the interior minister and likely centre right presidential candidate in next years elections.
The details turned out to have been fabricated, however, and the judges, who questioned Alliot-Marie on Friday, were trying to determine if Dominique de Villepin, the prime minister, tried to use the affair to discredit Sarkozy, his chief political rival. 
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