The far-right party of French presidential candidate Marine Le Pen has begun paying a settlement of 12 million euros—equivalent to $12.94 million—to a Russian military contractor under U.S. sanctions, part of a debt restructuring that granted her party more time to repay a loan it took from a Russian bank, according to Russian and French government records.
Aviazapchast JSC—a Moscow-based company that supplies Russian military aircraft and parts across the Middle East, Africa and Asia—took over the €9.4 million loan in 2016 after the bank that originated it, Moscow-based First Czech-Russian Bank, went bankrupt, the records show. Holding loans is well outside of Aviazapchast’s normal line of business, according to the company’s corporate reports, which contain no mention of the transaction.
In June 2020, Ms. Le Pen’s party, National Rally, and Aviazapchast reached an agreement allowing the party to pay €12 million in principal and interest to Aviazapchast in quarterly installments through 2028, according to a copy of the agreement reviewed by The Wall Street Journal. The settlement followed a complaint for nonpayment of the loan that Aviazapchast brought in Moscow Arbitration Court against Ms. Le Pen’s party.
The 2020 agreement allowed Ms. Le Pen’s party to conserve cash as she prepared to run for president by pushing the deadline for repaying the loan back nearly a decade from its original due date of September 2019. That is far longer than French political parties usually have to repay when they borrow from banks, French election experts say. The party had been making interest payments to a notary in Moscow but hadn’t repaid any of the principal by the original due date, according to French election records.
On Sunday Ms. Le Pen will face off with President Emmanuel Macron in the runoff of France’s presidential election.
Aviazapchast declined to comment. A spokesman for National Rally and Ms. Le Pen didn’t respond to requests for comment on the agreement.
Wallerand de Saint Just, a senior National Rally official who was involved in the negotiations with Aviazapchast, said the Russian company was willing to restructure the debt because the original loan had a relatively high interest rate of 6% that was maintained under the settlement. “They considered that their money was well-compensated,” Mr. de Saint Just said.
On Wednesday, Ms. Le Pen acknowledged there had been a long delay in repaying the loan.
“We are a poor party, but that’s not dishonorable,” Ms. Le Pen said during a debate with President Emmanuel Macron. She didn’t mention Aviazapchast or the agreement.
Mr. de Saint Just said the party has continued to make payments to Aviazapchast according to the schedule set out in the settlement. Ms. Le Pen’s party made its first payment of the loan’s principal in the second half of 2020, sending €1 million to Aviazapchast, according to French campaign records. It was scheduled to pay up to €1.3 million annually until 2028, according to the Russian court records.
French law forbids banks and other companies from making campaign contributions, but they can lend to campaigns. The law doesn’t impose deadlines for when such loans must be repaid.
The National Commission for Campaign Accounts and Political Financing, France’s campaign finance watchdog, said it reviewed the settlement with Aviazapchast to determine whether the repayment terms could be considered a form of donation under French law.
Frederique Dooghe, spokeswoman for the commission, said its examination found that the settlement “could not be considered as indirect aid” under French law, because the agreement amended the existing loan rather than replacing it.