April 6, 2010 New Headache for Total of France
PARIS — The French oil giant Total suffered a fresh public-relations headache Tuesday after the Paris prosecutor’s office confirmed that the company was being investigated in a corruption case linked to its role in the scandal-plagued U.N. oil-for-food program in Iraq.
A spokeswoman for the prosecutor confirmed Tuesday that an investigating magistrate, Serge Tournaire, had placed the company under formal investigation — one step short of indictment — on Feb. 22 for suspicion of bribery, complicity in corrupting foreign officials and influence peddling as part of the oil program. The spokeswoman, who asked not to be identified by name in line with her office’s policy, would not provide further details.
Total said in a statement that “there is nothing to support these allegations” and that it was “confident” the inquiry would absolve it. The company emphasized that an independent report by Paul A. Volcker, the former head of the U.S. Federal Reserve, into the oil-for-food program had found no evidence of corruption by the company.
The oil-for-food program was established by a United Nations resolution in 1995. It aimed to allow Baghdad to sell oil outside the country in exchange for humanitarian goods, without allowing the Iraqi military to rearm after the Gulf War. It was wound down in 2003, the year of the U.S.-led invasion of Iraq.
The program delivered about $30 billion worth of humanitarian supplies and equipment, including $1.6 billion worth of spare parts and equipment for the oil industry, according to the United Nations.
Mr. Volcker’s committee found that illegal surcharges on oil contracts were introduced by Baghdad and applied to shipments. It also found that the program had generated $1.8 billion in kickbacks to the regime of Saddam Hussein.
The investigation was initially reported by the French publication Les Échos and mentioned in Total’s 2009 annual report, released at the end of last week.
Total, which is based in a suburb of Paris and is one of the largest European oil companies, said the case and the allegations were not new.
“This formal investigation has been pronounced eight years after the beginning of the investigation without any new evidence being added to the affair,” it said.
A French criminal investigation into the involvement of executives from Total and other figures in the program was opened in 2002, and completed five years later. In 2006, Christophe de Margerie, Total’s current chief executive, was held for questioning. He had been responsible for Total’s activities in the Middle East during the 1990s.
The inquiry was subsequently picked up by a magistrate, Xavière Simeoni. But last autumn, the prosecutor’s office recommended that the case be dismissed. In France, the magistrate decides whether or not a case should be pursued, meaning Total may yet appear in court, although the prosecutor’s office can appeal such a decision.
Specifically, Total said the new magistrate, Mr. Tournaire, was now examining whether Total bribed Iraqi officials to buy crude oil despite the imposition of an embargo at the time. It is also examining whether Total knowingly bought oil that Iraq allegedly provided to French intermediaries in exchange for influence with the French authorities.
Total — as well as its longtime domestic rival, Elf Aquitaine, which it acquired in 2000 — has sought growth in its hydrocarbon business in far-flung countries like Sudan and Iran. It is the top-ranked Western oil company in Africa, and the second-largest in the Middle East, after Exxon.
Despite Total’s healthy profitability, its reputation in France has been tarnished. For 2009, Total posted a net profit of €7.8 billion, or $10.4 billion, down 44 percent from a year earlier.
In a survey released in March by the agency Posternak-Margerit and the polling group Ipsos, Total ranked 30th among major French companies in terms of image perception, with 68 percent of respondents saying it had a bad image, a deterioration from a year earlier.
Also last month, a French appeals court confirmed a ruling that Total and related parties were responsible for environmental damage caused by a disastrous oil spill from the tanker Erika off the coast of Brittany in 1999. So far, Total has paid €172 million in compensation to a range of private and government bodies in the incident, as well as an additional €200 million to clean up the spill.
The company has recently been involved in a bruising industrial dispute with workers at one of its refineries in Dunkirk. The striking employees won some concessions from the company amid threats to choke off gasoline distribution across the country.
In 2001, an explosion at a fertilizer factory in Toulouse, owned by a Total unit, resulted in a number of deaths.
http://www.nytimes.com/2010/04/07/business/global/07iht-total.html?ref=global-home
PARIS — The French oil giant Total suffered a fresh public-relations headache Tuesday after the Paris prosecutor’s office confirmed that the company was being investigated in a corruption case linked to its role in the scandal-plagued U.N. oil-for-food program in Iraq.
A spokeswoman for the prosecutor confirmed Tuesday that an investigating magistrate, Serge Tournaire, had placed the company under formal investigation — one step short of indictment — on Feb. 22 for suspicion of bribery, complicity in corrupting foreign officials and influence peddling as part of the oil program. The spokeswoman, who asked not to be identified by name in line with her office’s policy, would not provide further details.
Total said in a statement that “there is nothing to support these allegations” and that it was “confident” the inquiry would absolve it. The company emphasized that an independent report by Paul A. Volcker, the former head of the U.S. Federal Reserve, into the oil-for-food program had found no evidence of corruption by the company.
The oil-for-food program was established by a United Nations resolution in 1995. It aimed to allow Baghdad to sell oil outside the country in exchange for humanitarian goods, without allowing the Iraqi military to rearm after the Gulf War. It was wound down in 2003, the year of the U.S.-led invasion of Iraq.
The program delivered about $30 billion worth of humanitarian supplies and equipment, including $1.6 billion worth of spare parts and equipment for the oil industry, according to the United Nations.
Mr. Volcker’s committee found that illegal surcharges on oil contracts were introduced by Baghdad and applied to shipments. It also found that the program had generated $1.8 billion in kickbacks to the regime of Saddam Hussein.
The investigation was initially reported by the French publication Les Échos and mentioned in Total’s 2009 annual report, released at the end of last week.
Total, which is based in a suburb of Paris and is one of the largest European oil companies, said the case and the allegations were not new.
“This formal investigation has been pronounced eight years after the beginning of the investigation without any new evidence being added to the affair,” it said.
A French criminal investigation into the involvement of executives from Total and other figures in the program was opened in 2002, and completed five years later. In 2006, Christophe de Margerie, Total’s current chief executive, was held for questioning. He had been responsible for Total’s activities in the Middle East during the 1990s.
The inquiry was subsequently picked up by a magistrate, Xavière Simeoni. But last autumn, the prosecutor’s office recommended that the case be dismissed. In France, the magistrate decides whether or not a case should be pursued, meaning Total may yet appear in court, although the prosecutor’s office can appeal such a decision.
Specifically, Total said the new magistrate, Mr. Tournaire, was now examining whether Total bribed Iraqi officials to buy crude oil despite the imposition of an embargo at the time. It is also examining whether Total knowingly bought oil that Iraq allegedly provided to French intermediaries in exchange for influence with the French authorities.
Total — as well as its longtime domestic rival, Elf Aquitaine, which it acquired in 2000 — has sought growth in its hydrocarbon business in far-flung countries like Sudan and Iran. It is the top-ranked Western oil company in Africa, and the second-largest in the Middle East, after Exxon.
Despite Total’s healthy profitability, its reputation in France has been tarnished. For 2009, Total posted a net profit of €7.8 billion, or $10.4 billion, down 44 percent from a year earlier.
In a survey released in March by the agency Posternak-Margerit and the polling group Ipsos, Total ranked 30th among major French companies in terms of image perception, with 68 percent of respondents saying it had a bad image, a deterioration from a year earlier.
Also last month, a French appeals court confirmed a ruling that Total and related parties were responsible for environmental damage caused by a disastrous oil spill from the tanker Erika off the coast of Brittany in 1999. So far, Total has paid €172 million in compensation to a range of private and government bodies in the incident, as well as an additional €200 million to clean up the spill.
The company has recently been involved in a bruising industrial dispute with workers at one of its refineries in Dunkirk. The striking employees won some concessions from the company amid threats to choke off gasoline distribution across the country.
In 2001, an explosion at a fertilizer factory in Toulouse, owned by a Total unit, resulted in a number of deaths.
http://www.nytimes.com/2010/04/07/business/global/07iht-total.html?ref=global-home
