Lies and loathing at the heart of French government will be cruelly exposed to public view from tomorrow as a former prime minister appears in court over an alleged plot to destroy the career of President Nicolas Sarkozy.

In what the French press has dubbed the trial of the decade, Dominique de Villepin – who headed President Jacques Chirac’s government for two years from 2005 – is accused of smearing his long-time rival in a murky dirty-tricks campaign known as the Clearstream affair.

The hearings – scheduled to last for a month – will seek to discover whether Villepin had prior knowledge in late 2003 when Sarkozy’s name was added to a faked list of account-holders at the Clearstream bank of Luxembourg who were alleged to have received secret payments from big business.

At the time Sarkozy was at the ministry of interior and positioning himself for his 2007 presidential bid. But he was deeply mistrusted by Chirac, who wanted Villepin as his heir. Sarkozy believes the pair mounted an undercover conspiracy to damage his reputation and thus block his path to the Elysée.

The affair has shown French democracy in the meanest possible light. With a cast of characters that includes a Lebanese computer genius, a muck-raking journalist, an intelligence chief and the number two the aerospace company EADS, it suggests a devious world of secret networks and political skullduggery inhabited by a contemptuous Paris elite.

Posing as a champion of open government, Sarkozy said last week that “it is high time that the cabals and machinations of the Fifth Republic be brought to an end once and for all – no more victims”.

But he himself is not immune from the fall-out: according to Villepin’s camp, the president abused his position as head of the judiciary to ensure that the trial went ahead and thus wreak vengeance on his hated rival. One much-quoted remark has Sarkozy telling friends he would “see those responsible hung up on a meat-hook”.

The Clearstream affair broke in mid-2004 when a magistrate looking into illegal pay-backs from foreign defence contracts received anonymously a CD-ROM containing a list of supposedly undeclared bank accounts. Among the names were Bocsa and Nagy – which are part of Sarkozy’s full name.

It quickly became clear that the CD-ROM was fabricated, and investigators began the complex task of unravelling its origin. They now believe the list – originally without Sarkozy’s name – was compiled by Imad Lahoud, a Lebanese computer programmer working at EADS. He then passed it on to his superior, EADS vice-president Jean-Louis Gergorin.

A globe-trotting executive admired for his supposedly brilliant grasp of international affairs, Gergorin was a close friend of Villepin. Both products of the elite ENA administration school, they had worked together at a foreign affairs think-tank in Paris. In late 2003 Gergorin gave the list to Villepin – then foreign minister – who ordered intelligence chief General Philippe Rondot to conduct a discreet investigation.

But this is where uncertainty sets in. Lahoud has said that he added Sarkozy’s name to the list at the request of Gergorin and with Villepin’s knowledge. In testimony leaked earlier this month, Lahoud said that both Gergorin and Villepin regarded Sarkozy as “dangerous” and wanted him stopped.

But Lahoud has told several different stories and is widely regarded as an unreliable witness.

Prosecutors believe it is more likely that the decision to add Sarkozy’s name was Gergorin’s. For unconnected reasons (linked to a personal vendetta against industrial rivals) he was trying to interest Villepin in other names on the list, and may have added Sarkozy’s as a bait. The trial – in which Lahoud and Gergorin are also defendants – will try to establish at what point Villepin knew of Sarkozy’s presence on the list. At one extreme is the allegation that he conspired to put it there. At the other is Villepin’s own contention that he knew nothing of Sarkozy’s alleged involvement until much later.

In the middle is the claim which prosecutors think they have the best chance of standing up: that Villepin’s eye was indeed caught by Gergorin’s bait, and that even though he soon discovered the list was fake, he nonetheless encouraged its dissemination to the judge in the hope of bringing down Sarkozy.

Though few people understand the full complexities of the affair, it is brought alive by the visceral hatred that divides the protagonists: the diminutive man-on-the-make against the languid figure of the establishment. So deep is their evident mutual loathing, it begs the question how they ever managed to be part of the same government.