French energy giant Total S.A. said bribery allegations it disclosed last week for its role in the U.N. oil for food program in Iraq are nothing new. A Paris judge brought the charges on February 22, the company said in its annual report released Friday. They include misappropriation of corporate assets and being an accessory to the corruption of foreign public agents. Total’s 2009 annual report can be downloaded here.
But in a press release Tuesday, the company said the story is old news. “This formal investigation comes eight years after the initial investigation began and three years after it closed, with no new elements having been uncovered,” Total said. “The public prosecutor has already stated that earlier allegations against Total executives in this matter were unfounded and, in September 2009, asked that the case be dismissed.”
Total blamed the new charges on a gung-ho judge who just came into the case. “In early 2010,” it said, “despite the advice of the prosecutor’s office, a new investigating judge decided to place Total S.A. under formal investigation on bribery charges as well as complicity and influence peddling. . . .There is nothing to support these allegations.”
Total said the prosecutor’s office last year recommended dismissing the case against “all current and former employees.” Based on the prosecutor’s recommendation, the Ministry of Justice can now stop the judge’s investigation.
French enforcement actions against overseas corruption are rare. In March 2009, GRECO– the Council of Europe’s Group of States Against Corruption — explained that under French law, corruption offenses committed abroad can only be investigated by French authorities at the request of the foreign prosecutors and following a complaint from the victim, or an official report by the authorities of the country where the offense was committed. In other words, GRECO said, French law provides “exceptional guarantees” to French companies that they won’t be prosecuted for bribery abroad. See our post here.
Total S.A. is the fifth largest publicly-traded oil and gas company in the world and the largest company on the Euronext Paris exchange, with a market cap of around €100 billion. It also trades on the New York Stock Exchange under the symbol TOT. It has nearly 100,000 employees in more than 130 countries, and is actively exploring for or producing oil and gas in 40 countries.
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Total’s disclosure in its 2009 annual report said:
Several countries have commenced investigations concerning possible violations related to the United Nations (UN) “Oil-for-Food” program in Iraq. Pursuant to a French criminal investigation, certain current or former Group employees were placed under formal criminal investigation for possible charges as accessories to the misappropriation of corporate assets and as accessories to the corruption of foreign public agents.
The Chief Executive Officer of the Company, formerly president of the Group’s Exploration & Production division, was also placed under formal investigation in October 2006. In 2007, the criminal investigation was closed and the case was transferred to the Prosecutor’s office. In 2009, the Prosecutor’s office recommended dismissing the case for all the Group’s current and former employees and for the Chief Executive Officer.
In early 2010, despite the advice of the Prosecutor’s office, a new investigating judge decided to place TOTAL S.A. under formal investigation on bribery charges as well as complicity and influence peddling. This formal investigation has been pronounced eight years after the beginning of the investigation without any new evidence being added to the affair.
The Company believes that its activities related to the “Oil-for-Food” program have been in compliance with this program, as organized by the UN in 1996. The Volker report released by the independent investigating committee set up by the UN had discarded any bribery grievance within the framework of the “Oil-For-Food” program.
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The company’s press release Tuesday said:
April 6, 2010: The Group confirms that it published its 2009 Annual Report, specifying that Total S.A. was placed under formal investigation on February 22, 2010 as part of a wider investigation in Paris being conducted into the Oil for Food program.
Contrary to what has been claimed this morning in a French daily newspaper, this is not a new case.
This formal investigation comes eight years after the initial investigation began and three years after it closed, with no new elements having been uncovered. The public prosecutor has already stated that earlier allegations against Total executives in this matter were unfounded and, in September 2009, asked that the case be dismissed.
Nonetheless, Total S.A. is now being accused of bribery, complicity and benefiting from influence peddling by a new investigating judge in charge of this case since the end of 2009.
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.
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.
The Volcker Report, issued by the independent inquiry committee into the United Nations
Oil for Food program, found that no corruption had occurred.
We are confident about the investigation’s outcome and that Total will be cleared of these allegations.
The Group reiterates that it has never, by any means, been sued for compensation by the proceedings entered into by Iraq against the numerous companies concerned by the Oil for Food program.
However complex the situation in our host countries, The Group operates in compliance with applicable legislation and with its Code of Conduct.