Gigantic sleaze scandal winds up as former Elf oil chiefs are jailed Trial for huge kickbacks by publicly owned firm reveals years of corruption at top of French state
Jon Henley in Paris Thursday November 13, 2003 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 â375,000 (Â260,724); his principal bag-man, the former director Alfred Sirven, was given the same prison term and ordered to pay â1m. The company's "Mr Africa", Andrà Tarallo, was jailed for four years and fined â2m. 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 â350m 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 ElysÃe 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" â5m 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 FranÃois 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 â34.5m 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 â4.6m 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 â1m. 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 Â10m 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 Â30m 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 â2m 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 â1.5m. 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 â180m, while Sirven and Tarallo, both now aged 76, were convicted of pocketing â106.7m and â25.9m respectively. Much of the money was spent on jewellery, artworks and sumptuous apartments: the magnificent villa that Tarallo bought on Corsica was estimated at â23.1m, while Sirven spent â1m 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 Â1,100 Italian shoes, and five antique statues worth Â26,400 - 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 â30m. Four years jail and â2m 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 â180m. Once bought Â6,800 worth of CDs on company credit card in a single afternoon. Sentenced to five years and â375,000 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 â107m; sentenced to five years and fined â1m. 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 â4.6m 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 â1m.
