FRANCE WARNS MONACO ON 'DIRTY MONEY'

Relations between France and Monaco, the tiny country on its southern
coast, plunged to their lowest ebb in 38 years yesterday.

The French government threatened to tear up all its political, economic and
administrative agreements with Monaco, unless it took steps to control the
influx of "dirty'' money from drug-trafficking and organised crime.

The threat, although based on real international concerns about Monaco's
involvement in money-laundering, creates a bizarre state of affairs. Monaco
is largely administered by French officials.

At a press conference yesterday, the chief minister of Monaco, Patrick
Leclercq, angrily rejected the allegations made earlier in a report from
the French finance ministry.

It said the tiny state's legislation against money-laundering had "serious
gaps'' and that there were ``large discrepancies between (banking) law and
reality'' in Monaco.

Efforts to investigate by French magistrates had been impeded by the Monaco
authorities, the report said.