Schengen goodbye ?

Just back from a short trip to France. Going through the Mont Blanc tunnel was like leaving Europe: heat scanners and passport controls ! When I mentioned the Schengen agreement and the right to free movement of people, the French policeman bluntly replied "pa de Schengen" (Schengen does not exist). From other people I heard, the Italian police on the opposite side is doing exactly the same thing. They wast resources here, instead of sending them to Greece or Sicily.