The allegations first surfaced following a report in September by the daily newspaper Le Monde, in which the Central Directorate of Interior Intelligence (DCRI) -- the French equivalent of the CIA-- was accused of involvement in tracking down an anonymous source in the scandal linked to L'Oreal heiress Liliane Bettencourt's illegal donations to Sarkozy's 2007 presidential campaign, the Globe and Mail reported on Friday.
According to the report, the French president has allegedly set up and supervised a special unit of the secret service to tip off journalists, who launch reports or conduct any investigation into a string of affairs ranging from tax evasion to influence peddling to a conflict of interest involving Betencourt and Labor Minister Eric Woerth.
French journalists have become increasingly enraged by revelations that a group of surveillance officers allegedly barged into homes and offices of some journalists in an attempt to prevent them from reporting on allegations of widespread government corruption.
Many have likened the still-unfolding affair to the Watergate scandal, which occurred during the presidency of Richard Nixon in the United States in the early 1970s.
Meanwhile, the French Union of Journalists harshly criticized the country's secret service's spying on the media, saying these incidents are far more threatening than what they seem.
"What we are seeing is worse than Nixon, it's worse than Watergate," said union chief Dominique Pradalie. "It is very dangerous for democracy."
The fall-out comes at a time when public support for Sarkozy has significantly plummeted after his government's introduction of strict economic austerity measures and its approval of an unpopular pension reform bill. Sarkozy's office has thus far ignored the criticism.
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