Oil-for-food Probe into Total Revived

07 April 2010 - Financial Times

French judicial investigators have revived their eight-year inquiry into corruption linked to the United Nations oil-for-food programme in Iraq by placing Total under formal investigation for bribery in the affair.

The French oil major has disclosed in its annual report that a formal investigation was launched - on February 27 - in spite of the recommendations last year from the French prosecutor to dismiss the case against Christophe de Margerie , Total's chief executive, and other current and former employees.

However, a new investigating magistrate appointed at the end of last year has now decided to put the spotlight on the company itself rather than its employees.

"This judge claims that Total knowingly purchased oil that Iraq had allegedly allocated to prominent French individuals in exchange for influence with the French government," Total said in a statement yesterday. "The judge also contends that Total bribed Iraqi public officials in order to purchase oil in violation of the embargo. There is nothing to support these allegations."

Total said it believed its activities were in compliance with the oil-for-food programme organised by the United Nations in 1996, for which many other companies have also been under investigation.

Jean Veil, Total's lawyer, told AFP news agency: "This decision reactivates the judicial process. The judge has taken this decision against all expectations, even though his predecessor and the prosecutor had judged the contrary - at least implicitly."

Under French law, the formal investigation can either lead to charges being made or the investigation being dropped.

However, this could take years and the decision to place Total under formal investigation means that its top executives could again find themselves held for questioning.

Mr de Margerie was held for 48 hours in 2006.

Total said yesterday in a statement: "We are confident in the result of the inquiry and that Total will be exonerated."*

The oil-for-food programme, which ran from 1996 until the US-led invasion of Iraq in 2003, allowed sanctions-hit Iraq, then headed by Saddam Hussein, to sell oil in exchange for humanitarian goods.

A committee headed by Paul Volcker, the former US Federal Reserve chairman, alleged in 2005 that more than 2,000 companies had been involved in paying $1.8bn of illicit surcharges and kickbacks around the programme.

According to the oil-for-food report, Iraq favoured selling oil to companies and individuals based in countries, such as France, that supported the lifting of sanctions against Iraq.

Total had one of the largest oil contracts under the programme, worth $1.75bn

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