President Nicolas Sarkozy's staff issued a communiqué on Thursday to distance him from the growing storm surrounding his close political ally.
They stressed Sarkozy's assertion that he had exercised "not the slightest responsibility" for the financing of 1995 presidential campaign of Edouard Balladur.
Sarkozy's best man Nicolas Bazire denies links to allegations that money paid in a Pakistani submarine contract was channelled into the 1995 presidential campaign of Edouard Balladur.
Another Sarkozy ally, Thierry Gaubert, was charged on Wednesday in connection with the same investigation.
Bazire was Balladur’s 1995 election campaign manager and prosecutors suspect that middlemen paid huge kickbacks on the Pakistani contract into the campaign coffers.
The 1995 election saw a battle between Jacques Chirac and Edouard Balladur, who was prime minister at the time.
Nicolas Sarkozy, who was budget minister, decided to back Balladur and became campaign spokesman.
Controversy over the arms contract erupted when investigators began probing whether a 2002 bomb attack in Karachi in Pakistan was a revenge action for promised bribes not paid.
Balladur was defeated by Chirac, who, on taking office, reportedly cancelled payments to middlemen on the contract, allegedly angering Pakistani intelligence officers who stood to profit from the deal.
Sarkozy has always claimed that the explosions were the work of al-Qaeda and dismisses the theory of revenge attacks argued by relatives of the French people who died.
The story has hit the headlines again because a witness, who some media outlets identify as the estranged wife of Thierry Gaubert, reportedly told investigators that her husband made trips to Switzerland and collected suitcases stuffed full of cash, which were handed to Bazire.