Paris, April 30: French president Nicolas Sarkozy and the slain Libyan dictator Col Muammar gaddafi had made an illegal financial deal under which the Libyan leader gave him 42 million pounds to fund his election bid for presidency in 2007, French media reported.
With the surfacing of the new evidence, Sarkozy's hopes of being re-elected to the presidency have dwindled.
French law bans candidates from receiving cash payments above £6,300, but a news website claimed that the massive donation was laundered through bank accounts in Panama and Switzerland.
Sarkozy is now under huge pressure to explain himself in the light of what his opponents called compelling evidence.
A document made public in Paris is said to show that the French leader and the former Libyan dictator made an illegal financial deal that propelled Sarkozy to power in 2007.
Written in Arabic and signed by Mussa Kussa, Gaddafi's intelligence chief, in 2006, it refers to an 'agreement in principle to support the campaign for the candidate for the presidential elections, Nicolas Sarkozy, for a sum equivalent to Euros 50 million'.
It comes as Sarkozy faces an uphill battle to be re-elected president in a week's time, with his Socialist rival Francois Hollande enjoying an opinion poll lead of up to ten per cent.
A bundle of incriminating evidence has been leaked by senior members of the National Transitional Council, the organisation now governing Libya, to Left-wing investigative French news site Mediapart.
Hollande's spokesman Bernard Cazeneuve said: 'Faced with such serious allegations, backed up by documents sourced from the Libyan dictator's own entourage, Nicolas Sarkozy must explain himself before the French people.
Several times in recent weeks, specific information has been published by the press relating to France's relationship with Colonel Muammar Gaddafi's regime.'
A governmental briefing note among papers sent to Mediapart points to numerous visits to Libya by Sarkozy and his colleagues which were aimed at securing funding.
One, said to have taken place on October 6, 2005, led to 'campaign finance to NS' being 'all paid' – assumed to be a reference to Sakozy.
At the time, Sarkozy was an ambitious interior minister who was raising money for his presidential election campaign, even though taking cash from a notorious tyrant would have broken political financing laws.
Mediapart claims that the €50 million referred to in the note was laundered through accounts including a Swiss one opened in the name of the sister of Jean-Francois Cope, the leader of Sarkozy's ruling UMP party, and the President's right-hand man.
The money was then allegedly distributed through an arms dealer called Ziad Takieddine, who was acting as a middle man between Arab despots and French politicians.
The news follow claims last year by Gaddafi's son, Saif-Al Islam Gaddafi, that Libya had financed Sarkozy's election.
Saif-Al Islam, who is now being held in Libya following the toppling of his father's regime, said: 'Sarkozy must first give back the money he took from Libya to finance his electoral campaign. We funded it.
'We have all the details and are ready to reveal everything. The first thing we want this clown to do is to give the money back to the Libyan people.
'He was given the assistance so he could help them, but he has disappointed us. Give us back our money.'
Eyebrows were first raised when Gaddafi was honoured with a state visit to Paris in late 2007. He was referred to as the 'Brother Leader' by the French president, and allowed to pitch his tent next to the Elysee Palace.
The apparently incriminating evidence – which will now be passed to French police – emerged through an investigation into Takieddine's activities. The arms dealer's doctor, Didier Grosskopf, says he witnessed negotiations about funding.
As France's head of state, Sarkozy cannot be prosecuted while in office, but if he loses the presidential election next week, it would pave the way for a full investigation into his funding.
Sarkozy turned on his friend Gaddafi at the beginning of the Arab Spring. French jets were the first to attack Gaddafi's tanks in a brutal military campaign which ended with the Libyan leader being murdered.
The Elysee Palace would not comment on the revelations, but Sarkozy has previously claimed that the Gaddafi accusations are 'grotesque'.