Total chief charged in oil-for-food scandal
By Martin Arnold
October 20, 2006
The Financial Times
Original Source: http://www.ft.com/cms/s/eeca7ff8-602c-11db-b929-0000779e2340.html
A Paris investigative judge has charged the incoming chief executive of Total, the French oil and gas group, with corruption during the scandal-plagued United Nations’ oil-for-food programme in Iraq.
Christophe de Margerie, Total’s head of exploration and production, was imprisoned for 48 hours, questioned by judicial police and a judge, before being charged with aiding and abetting corruption of foreign officials and misuse of company property.
He was released from custody on Thursday night. The surprise move cast a shadow over plans for Mr Margerie to replace Thierry Desmarest as chief executive when the latter steps up to non-executive chairman after the group’s annual results in February. 
But Total insisted the succession would proceed as planned. “Presumption of innocence is absolute and so life goes on,” said Catherine Enck, spokeswoman at Total. The French judicial system can often put people under investigation for years, sometimes without ever going to trial.
“The group would like to reassure Mr de Margerie of its solidarity. Total confirms that at no time did the group circumvent the United Nations embargo against Iraq and strictly adhered to the rules of the oil-for-food programme,” the company said on Friday.

The move is a setback for the image of France s biggest company with a market capitalisation just short of ¬ 130bn. It employs 95,000 staff and had profits of ¬ 12bn and sales of ¬ 143bn in 2005. Yet analysts shrugged off the news and Total shares rose ¬ 0.50 to ¬ 53.70. 
Mr de Margerie, 55, was head of Total s activities in the Middle East between 1995 and 1999. He is well respected in the industry as an affable and outspoken expert on the Gulf region s oil sector. His lawyer, Olivier Rosenfeld, said the charge
s were “without foundation”. 
Bernard de Combret, Total’s former head of trading, who quit in 2001, was taken into custody with Mr de Margerie and charged with the same crimes. The charges add to growing discomfort in Paris political and business circles about the damage being done to France’s prestige by the inquiry. Mr de Margerie is due to accompany President Jacques Chirac on next week’s state visit to China.
He is suspected of participating in kickbacks to the Iraqi regime of Saddam Hussein from 1996 to 2002. Total is suspected of making the payments via Telliac, the Swiss trading company, to gain better access to Iraqi oil during the UN embargo. 
Total said: “All oil acquired by the company, without exception, was purchased officially with the required authorisations under UN within the framework of the oil-for-food programme put in place in 1996. The group has never purchased, either directly or indirectly, oil that has been smuggled illegally from Iraq.” 
The group has only recently recovered from a big corruption scandal at Elf, the former state oil group it acquired in 1999. The “Elf affair” lasted eight years, becoming France’s biggest corruption trial and exposing rampant corruption in the final years of the Mitterrand presidency.
Judge Philippe Courroye has already charged a handful of more junior Total executives with similar offences, as well as leading French diplomats and politicians, most notably Charles Pasqua, former interior minister, and Jean-Bernard Mérimée, France’s former UN ambassador.

An independent report by former Federal Reserve chairman Paul Volcker last year accused some 2,253 companies of paying kickbacks to Saddam Hussein’s regime, while officials and middlemen around the globe were accused of receiving illicit oil allocations in return for political support.
The payments were in contravention of international law and the rules of the oil-for-food system. Politicians and executives in countries from Germany to India have been snared by the scandal. But France’s strong ties to Saddam Hussein’s regime seemed to mean it was more involved than most.