* French general says Algeria army helicopter killed monks
* Sarkozy says inquiry must find truth about Trappist deaths
By Thierry Leveque
PARIS, July 6 (Reuters) - A French general has said seven French monks murdered in Algeria in 1996 were killed by the army there rather than by Islamist militants and Paris helped cover up the truth, a judicial source said on Monday.
Retired General Francois Buchwalter, France's defence attache in Algiers at the time, told a closed-door inquiry an army helicopter killed the Catholic monks when it fired on an isolated camp they thought was a militant hide-out.
Algeria says the Trappist monks, who lived in a hilltop monastery in Tibehirine 70 km (45 miles) southwest of Algiers, were abducted by militants in March 1996 and found dead with their throats slit two months later.
When an Algerian source told him the official version, which blamed the Islamists for their death, was false, Buchwalter informed Paris but was told to keep quiet, according to a report in Le Figaro daily confirmed by the source.
The murder shocked France and strained relations with Algeria.
Asked about the charge while at a French-British summit in Evian, President Nicolas Sarkozy said he had been deeply upset by the murder at the time and the present inquiry must find out the truth. "Justice must do its job," he said.
A lawyer for relatives of the monks called for secret defence files on the case be opened, a demand seconded by former Prime Minster Jean-Pierre Raffarin. "We must find out what happened. This is a very painful affair," he said.
ONLY HEADS HANDED OVER
France opened a probe into the killings in 2004 after a former Algerian secret service agent said Algiers had ordered agents to kidnap the monks as part of a plot. But militants in the area seized them from the agents and later killed them.
The aim of the plot is not clear. One theory in the French media says it was to warn the monks, who had refused to leave the area that had become a stronghold of the militant Armed Islamic Group (GIA). Another says it was to discredit the GIA.
According to Le Figaro, Buchwalter said his source, an Algerian officer, told him his brother had been in the attacking helicopter and that it landed at the camp after the shooting.
"The monks' bodies were riddled with bullets," he quoted the source as saying. Buchwalter said his superiors told him to keep quiet to avoid harming relations between France and Algeria.
In other testimony to the investigation, Trappist Procurator General Rev. Armand Veilleux said he went to Algeria after the murders and insisted on opening the coffins to identify the monks.
They contained only the dead men's heads, he said, adding he thought someone disposed of the bodies to hide the evidence of how they died. He said the French embassy had urged him not to discuss this in public.
Buchwalter also told the inquiry he suspected Algerian authorities were behind the killing of the Catholic bishop of Oran, Pierre Claverie, shortly after the monks were murdered. (Writing by Tom Heneghan; Editing by Sophie Hares)