A Russian paper with some incriminating words about their partners-in-crime. Interesting. More French perfidy, too!
Tuesday, October 5, 2004. Page 1.
Total Officials in Bribes Probe
By Catherine Belton
Staff Writer Executives at French oil major Total have been detained for questioning as part of an investigation into transfers of millions of dollars in suspected bribes to win oil development rights in Russia and Iraq.
A spokeswoman for Total, the world's fourth-largest publicly traded oil company by market value, confirmed by telephone from Paris on Monday that French investigators had raided the company's headquarters and questioned several employees last week. But she said the probe targeted the activities of officials and not the company itself, and declined to comment further.
A spokeswoman for the French Justice Ministry refused to comment Monday.
The French daily Le Monde, which first broke news of the probe last week, cited Total's former head of operations Jean-Michel Tournier as saying that the company had used a Geneva-based firm, Teliac SA, to funnel bribes to "certain beneficiaries" in return for gaining access to reserves in Russia and Iraq.
"Behind these beneficiaries, there was Russia and Iraq. If we had not paid, we would not have had any crude oil," Le Monde cited Tournier as saying.
The Wall Street Journal reported Friday that French investigators are looking into whether Total transferred as much as $20 million in bribes through Teliac to gain oil exploration permits in Russia and Iraq from 1996 to 2001. Investigators have questioned three former Total employees over the last few months in a probe headed by French magistrate Phillippe Courroye, the newspaper reported. Investigators have not disclosed into which particular deals they are looking.
News of the investigation comes just weeks after Total announced it intends to sign off on its first major Russian project. The company announced Sept. 22 it was buying a blocking stake of 25 percent plus one share in Novatek, Russia's largest independent gas producer, for a reported $1 billion.
All of Total's other projects in Russia so far have been plagued by international lawsuits, red tape and corporate infighting. Total's 1995 production sharing agreement to develop the Kharyaga field in northern Russia turned sour last year over a $48.5 million tax claim the government tried to levy on it.
The company took its case to the international arbitration court in Stockholm after the government and regional authorities refused to approve Kharyaga's capital expenditures of about $340 million in 2001 and 2002 and told Total it should pay an additional $48.5 million in alleged tax arrears.
Vedomosti on Monday quoted a former official of the Yamal-Nenets autonomous district, where the field is located, as claiming that Total had artificially inflated its capital expenditures and accused the federal government of closing its eyes to the practice.
"They continuously raised expenses on developing the field and the [region's] administration did not confirm the project's accounts," the unnamed official was quoted as saying. "The lawsuits are still going on. But officials at the Economic Development and Trade Ministry and at the Energy Ministry closed their eyes to Total's behavior."
A former official at the Economic Development and Trade Ministry denied these claims, Vedomosti reported. Instead, however, the unnamed local official told the newspaper that PSA agreements often included expenses on "agreeing" on project documents with officials that could go up to $1 million for each "agreement."
Another potential Total project in Russia, to develop the vast Vankor field in partnership with the field's license holder, AngloSiberian, was also derailed last year. State-owned oil company Rosneft bought a controlling stake in AngloSiberian last year and changed its management. Since then Total has been trying to renegotiate its way back into the field, which holds 905 million barrels of oil reserves.
Total signed a smaller deal with Rosneft to develop a deep-water field in the Black Sea last October.
Rosneft spokesman Dmitry Panteleyev said Monday he was unaware of Total ever having to pay any bribes. He declined to comment further. Total currently has no contracts in Iraq. But before the U.S.-led invasion to overthrow Saddam Hussein, TotalFinaElf, as the company was formerly called, held the rights to develop the $3.4 billion Bin Umar project and for the vast Majnoon field. France was widely viewed as retaining ties to the Hussein regime and was a major player in the UN oil-for-food program.
The latest investigation into alleged corruption by Total executives comes as a further blow to the French oil major, which is only just recovering from the scandal over Elf, the former state oil company that Total bought in 1999.
The Elf affair was the country's biggest corruption scandal. Eight years of investigations into the company's dealings uncovered rampant bribery, a sanctions-busting arms deal with Angola and ties to the top levels of former President Francois Mitterrand's administration.
Former French Foreign Minister Roland Dumas was sentenced to six months in jail after a Paris court ruled he had accepted illegal payments from Elf.
His former mistress, Christine Deviers Joncour, received 18 months in jail, while Loik Le Floch-Prigent, a former Elf-Aquitaine president, and Alfred Sirven, a former senior executive at the company, received jail terms of 3 1/2 years and four years, respectively.
Le Monde reported last week that French investigators were also targeting payments made through Teliac by Vivendi Water and Alcatel for access to markets in Iraq and Tanzania, respectively. Teliac representatives could not be reached for comment Monday.
Staff Writer Lyuba Pronina contributed to this report.