France: Sleaze Scandal Winds Up as Oil Chiefs are Jailed

Trial for huge kickbacks by publicly owned firm reveals years of corruption at top of French state
Publisher Name: 
The Guardian

France's mammoth Elf corruption case, probably the biggest political and
corporate sleaze scandal to hit a western democracy since the second world
war, drew to a close yesterday as three key former executives of the oil
giant were jailed for up to five years.

Elf's former chairman, Loik Le Floch-Prigent, 60, was sentenced to five
years in jail and fined 375,000; his principal bag-man, the
former director Alfred Sirven, was given the same prison term and ordered
to pay 1m. The company's "Mr Africa", Andr Tarallo, was jailed for four
years and fined 2m.

The judge, Michel Desplan, said Le Floch bore "the primary responsibility" for the Elf affair and was "personally behind a majority of the
misappropriations". To Sirven, he said: "All this would not have happened
without Le Floch, but it could not have existed without your help."

The three were among 37 defendants on trial for illegally siphoning off an
extraordinary 350m of the then state-owned company's funds, from 1989 to
1993, while Le Floch was chairman. The never-ending stream of cash was
used to buy political favours at home and abroad, and to fund some
extravagant lifestyles.

But the four-month trial, which had France riveted with its tales of
political graft and sumptuous living, was also that of a system of
state-sanctioned sleaze that flourished in France for years: successive
politicians saw the country's state-owned multinationals not just as
undercover foreign policy tools, but as a convenient source of ready cash
to keep friends happy and enemies quiet.

Le Floch, whose lawyer said yesterday his client would not be appealing to
the court, insisted throughout his trial that he was in "daily contact"
with the Elyse palace, and that "all the presidents of France" had known
of, and condoned, the company's illicit dealings.

Elf, now privatised and part of the Total group, paid "at the very least"
5m a year to all of the main French political parties to buy their
support, Le Floch told the court at one stage. Most of the money went to
the centre-right RPR party founded by the present president, Jacques
Chirac, until the socialist Franois Mitterrand, soon after his
presidential election in 1982, demanded that the spoils be evenly spread

In their 1,045-page indictment and a further 44,000 pages of documents,
the investigating magistrates described in detail "a large number of
operations carried out on the margins of normal functioning of the group's
structures, and destined... to collect assets off the books".

In addition to jail terms totalling 60 years, the public prosecutors
sought a record 34.5m in fines against the 37 defendants, who included
business associates of the company and executives' relatives accused of
having benefited from illegal largesse.

Among those sentenced yesterday was Le Floch's former wife, Fatima Belaid,
found guilty of receiving 4.6m from Elf in exchange for her silence over
the company's underhand dealings after the couple agreed to divorce. She
was sentenced to three years in prison, of which two were suspended, and
fined 1m.
Many of the missing millions were paid out in illegal "royalties" to
various African leaders and their families.

Tarallo told the court in June that annual cash transfers totalling about
10m were made to Omar Bongo, Gabon's president, while other huge sums
were paid to leaders in Angola, Cameroon and Congo-Brazzaville. The
multi-million dollar payments were partly aimed at guaranteeing that it
was Elf and not US or British firms that pumped the oil, but also to
ensure the African leaders' continued allegiance to France. In Gabon, Elf
was a veritable state within a state. France accounts for three-quarters
of foreign investment in Gabon, and Gabon sometimes provided 75% of Elf's
profits. In return for protection and sweeteners from Elf's coffers,
France used the state as a base for military and espionage activities in
west Africa.

Illegal commissions were also paid to businessmen and third-party
associates to smooth Elf's business dealings closer to home: about 30m
was paid out "under the counter" in the company's 1992 acquisition of the
Leuna refinery in east Germany.

Among those sentenced yesterday were Nadhmi Auchi, an Iraqi-born British
billionaire, who was fined 2m over a 1992 transaction with Elf, and
Dieter Holzer, a German businessman, who was accused of taking kickbacks
on the Leuna deal, and given 15 months in jail and a fine of 1.5m.
But the bulk of yesterday's convictions focused on the way Elf's senior
executives shamelessly enriched themselves. Michel Desplan, the judge,
told Le Floch he was "the source of most of the misappropriations...
carried out to enrich yourself personally".

Le Floch was found guilty of personally misappropriating 180m, while
Sirven and Tarallo, both now aged 76, were convicted of pocketing 106.7m
and 25.9m respectively. Much of the money was spent on jewellery,
artworks and sumptuous apartments: the magnificent villa that Tarallo
bought on Corsica was estimated at 23.1m, while Sirven spent 1m a year
for six years on jewels alone.

Le Floch and Sirven are already serving jail terms after another Elf court
case: the former socialist foreign minister Roland Dumas was convicted of
accepting kickbacks but then acquitted when it was found he did not
realise the gifts from his mistress - including 1,100 Italian shoes, and
five antique statues worth 26,400 - were paid for by Elf.

Landed: big fish who swam in murky waters

Andre Tarallo

Ex-head of hydrocarbons division, 76, (outside court, above) nicknamed 'Mr
Africa' for friendships with African leaders. Brilliant mandarin;
graduated alongside Chirac from elite ENA civil service college. Ensured
up to $30m a year was paid into secret bank accounts of Gabon's Omar
Bongo. Convicted of embezzling 30m. Four years jail and 2m fine.

Loik Le Floch-Prigent

Former Elf chairman, 60, appointed by Mitterrand after running state
railway SNCF. Once one of France's best-known civil service high-flyers,
claims he is a scapegoat for the French state's 'subtle game'. Convicted
of pocketing 180m. Once bought 6,800 worth of CDs on company credit card
in a single afternoon. Sentenced to five years and 375,000 fine.
Alfred Sirven

Le Floch's deputy, 60. Held purse strings of Elf's entire embezzlement
operation, running secret bank accounts in Switzerland, Liechtenstein,
Monaco, Luxembourg, Austria and Virgin Islands and personally carrying
suitcases of cash around world. Four years on run before arrest in 2001.
Misappropriated 107m; sentenced to five years and fined 1m.

Fatima Belaid

Le Floch's ex-wife and, according to judge Michel Desplans, a 'pernicious'
influence on her husband. Managed to ensure Elf paid for divorce
settlement; effectively received 4.6m of company money in exchange for
keeping her mouth shut about what she knew (a great deal) about dodgy
dealings. Sentenced to three years (two suspended) and fined 1m.

AMP Section Name:Money & Politics