FILE PHOTO: Former French Prime Ministers Edouard Balladur (L) and Alain Juppe (R) attend the funeral of late former French right-wing politician Charles Pasqua at the Invalides in Paris, France, July 3, 2015. REUTERS/Charles Platiau

PARIS (Reuters) - Former French Prime Minister Edouard Balladur has been placed under formal investigation over allegations that possible kickbacks may have helped finance his 1995 presidential election campaign, a judicial source said on Tuesday.

In the so-called “Karachi Affair”, judges are trying to unravel a series of nebulous dealings by middlemen and possible kickbacks linked to the sale of Agosta class submarines by the French government to Pakistan in the 1990s.

Balladur’s office said he would contest the decision in France’s highest appeals court.

“There is no evidence in the files seen by lawyers that he personally participated in his capacity as prime minister in setting up a system of kickbacks to finance his election campaign in 1995,” the statement from his office said.

Ex-president Nicolas Sarkozy, who was budget minister at the time, has rejected media speculation that he might have known of the payments as he was also spokesman for Balladur when he was running for the presidency.