<a href=www.vheadline.com>Venezuela's Electronic News Posted: Wednesday, May 14, 2003 By: David Coleman

Corruption convicted Venezuelan ex-President Carlos Andres Perez has surfaced in details surrounding the Paris (France) trial of top former executives and shady political associates of France's Elf Aquitaine oil company.

Massive under-the-table dealings with the Venezuelan government of 10 years ago have involved witness accounts of espionage, Swiss bank accounts; brown envelopes filled cash for politicians, luxury Paris apartments and mansions in Corsica, bribes and treachery.

The trial's latest sensational revelation is an accusation by a top aide that former Elf executive Loik Le Floch-Prigent had pocketing around $2.5 million from Venezuelan business dealings.

Alfred Sirven, one-time right hand man to Le Floch-Prigent detailed the Venezuela side of a deal where he admitted that another $2.5 million found its way to his own Swiss account.

The trial, seen as France's largest corruption case in recent history, began in March and is expected to continue runs through early July taking two investigative magistrates eight years of pre-trial work to detail charges in a 657-page report.

A previous trial, nicknamed Elf 1 had held the French nation enthralled in 2001 when it was revealed that former French Foreign Minister Roland Dumas and his ex-mistress, Christine Deviers-Joncour had also been involved up to their necks in shady dealings.

 They were all given prison sentences and hefty fines, though an appeals court later acquitted Dumas. Deviers-Joncour ... a former lingerie model ... later published several books including "The Whore of the Republic,"  detailing her dealings with Elf and top government executives.

In the Elf 2 trial, a total of 37 people have been charged with receiving corrupt payoffs and illicit funding involving tens of millions of dollars and highlights testimony by former French secret service agent Pierre Lethier who had been on the run from charges in connection with bribes allegedly paid to acquire a German oil refinery in 1992 ... Lethier turned himself in last month, after hiding for years in Switzerland and Britain.

Former Elf energy director Andre Tarallo ... nicknamed "Mr. Africa" because he directed many of the company's extensive dealings there, including alleged payoffs to African leaders ... had bought a mansion in Corsica with $11 million, allegedly lifted from Elf profits.

The trial is expected to uncover a tight relationship between Elf executives and top politicians who allegedly picked up cashed-stuffed envelopes as "campaign contributions."

Sirven admits paying off former French Prime Minister Edith Cresson and two former German ministers for the acquisition of the Leuna refinery more than 10 years ago.

Le Floch-Prigent has already admitted being "swept away by the folly of grandeur." Aluxurious, $9.3 million apartment in Paris' elegant 16th arrondissement was allegedly bought with funds from Elf. Asked to explain some $100,000 spent to equip Le Floch-Prigent's kitchen, his former wife Fatima Belaid said simply "my ex-husband loved cooking."

<a href=news.ft.com>Financial Times By Martin Arnold, Rebecca Cockburn and Robert Graham in Paris Published: April 15 2003 17:45 | Last Updated: April 15 2003 17:45 The biggest corruption trial in French history has started in Paris, with 37 defendants standing accused of accepting nearly €400m ($430m, £271m) from Elf Aquitaine, the former state oil group, for personal enrichment and political kickbacks during the late 1980s and early 1990s.

The investigation has taken eight years to reach the court and has already been overshadowed by the earlier trial and acquittal of Roland Dumas, former French foreign minister. But the centrepiece trial, which opened in March and is set to last until July, when it will finally close the book on the corruption that flourished during the final years of François Mitterrand's second term as French president. In 2000 TotalFina, the French oil company, acquired Elf, which is no longer under French state control.

The 37 defendants face varying charges of corruption relating to the misuse of Elf funds. But three have been singled out as particular movers in a network accused of siphoning off money from Elf's oil revenues through offshore and Swiss accounts. They are Loïk Le Floch-Prigent, Elf chief executive from 1989 to 1993; Alfred Sirven, the Elf executive now imprisoned for his role in the secret funding system; and Andre Tarallo, the head of Elf's Gabon subsidiary and principal contact for African leaders.

Several other figures have also become embroiled with "l'affaire Elf", not least Mr Dumas, who was acquitted on appeal; Nadhmi Auchi, a London-based Iraqi billionaire wanted in Paris for questioning over his role in a Spanish oil deal, and Maurice Bidermann, the former textile magnate who is a defendant on the case.

The men at the heart of 'l'affair Elf'

Loïk Le Floch-Prigent, 59, chief executive of Elf from 1989 to 1993

Elf's flamboyant former boss is already serving time in prison as part of a two-and-a-half year jail sentence for his part in the Dumas case, against which he is appealing. So far, he seems to be trying to play the role of victim. Throughout the investigation he has maintained his innocence, complaining of a political conspiracy in his book Affaire Elf, affaire d'Etat published in October 2001. Mr Le Floch-Prigent has denied any knowledge of payments made from slush funds and secret bank accounts, and missed the start of the trial through illness.

Nicknamed le plouc fringant (the smart peasant) for his modest origins and bearded look, he is accused of siphoning off €183m from slush funds during his four years in charge. Specifically, he needs to explain how Alfred Sirven, one of his executives, financed the $9.3m (€8.6m) purchase of a Parisian apartment on his behalf. He also faces allegations of using company funds to pay €1m to his ex-wife as part of their divorce, as well as financing the purchase and upkeep of his chateau des Genette in Orne, north of France.

Alfred Sirven, 76, former director of 'general affairs' at Elf

In the Elf corruption trials staged so far Mr Sirven has always been the missing link: the man fingered as the one who knew how and where the payments were made. He is alleged to have been at the heart of a system of secret offshore accounts - from paying commissions on arms sales to Taiwan and oil contracts in Venezuela to the setting up of the Leuna refinery investment in east Germany and the purchase of oil assets in Spain. He is also accused of siphoning off €168m for a string of purchases, including a villa in Ibiza, a chateau in central France, jewellery, furniture and works of art.

The former French Resistance fighter fled his Geneva home after the Elf scandal broke, and evaded police for three years until his eventual arrest in the Philippines in February 2001. But, in a final act of defiance, he swallowed the chip from his mobile phone before being taken into custody and extradited to France. Already in prison as part of a four-year sentence for his part in the Dumas case, he is thought likely to do a deal with the French authorities to keep quiet, rather than make good on his one-time boast of knowing enough secrets "to blow up the Republic twenty times over".

André Tarallo, 76, former head of Elf-Gabon

The group's "Mr Africa" became France's unofficial ambassador to the region and developed close links with several African leaders, including Gabon's President Omar Bongo and President Eduardo dos Santos of Angola. The former head of Elf-Gabon ran the African subsidiary as an independent fiefdom. Its location in Gabon was no accident: President Omar Bongo was a long-time friend of France whose daughter married the president of Congo-Brazzaville, where Elf picked up exclusive exploration rights.

The man whom African leaders nicknamed the "great baobab" (an African tree) has described an elaborate system of politically-endorsed "commissions" and "subscriptions" used to pay off African heads of state in return for exclusive access to oil reserves and political influence. But he has always denied allegations that he siphoned off about €35.6m to pay for, amongst other things, a Corsican villa, a €1.2m apartment on Paris' Quai d'Orsay, and a collection of fine art. The Corsican-born classmate of Jacques Chirac at Paris' elite Ecole Nationale d'Administration claims he was only "managing" the huge sums of money that passed through his various Swiss bank accounts on behalf of African leaders.

Other figures caught up in 'l'affaire Elf'

Nadhmi Auchi, 65, a London-based Iraqi billionaire

The prominent Iraqi-born UK citizen has been arrested and released on bail after voluntarily presenting himself to a central London police station. An international arrest warrant, issued by France in 2000, is belatedly being enforced by UK police and Mr Auchi made his first appearance in a British court on April 8.  He has been asked to reappear before the Bow Street magistrates' court in central London on May 20 after the judge remanded the case for six weeks.

The French judiciary want to question him on the legality of an illicit €39.2m commission on Elf's purchase of Cepsa-Ertoil, the Spanish oil group in 1991. Ertoil changed hands from the Kuwait Investment Office and ended up being owned by Elf, but French investigators are keen to question Mr Auchi about sweeteners he allegedly received from Elf as part of the deal, in which he temporarily held the Ertoil shares.

While he admits earning a "commission" on the deal, he denies charges of corruption and says he has always been willing to co-operate with police. His extradition to France could be embarrassing for Tony Blair's Labour government, which has close ties with Mr Auchi. He is one of Britain's richest men and owns General Mediterranean Holding, an opaque £1.2bn business empire ranging from shipping to hotels. He is believed to have been advising British ministers on Iraq and to have sought a role in a postwar Iraqi administration. A number of British politicians have served on the boards of his companies, including former Foreign Office minister Keith Vaz and former Conservative chancellor Norman Lamont.

Maurice Bidermann, 68, former president of textiles group Bidermann

Nicknamed "the king of the Sentier" after the Paris rag-trade district, the former chairman of the Bidermann textiles group became the subject of a 1994 stock market probe into how Elf came to invest FFr787m (€120m) in his ailing company between 1989 and 1993, at the behest of the socialist government. A close friend of Elf boss Loïk Le Floch-Prigent, he is suspected of having personally benefited from the oil group's investment in his company to the tune of about FFr60m.

Much of the money invested in Bidermann to prevent its bankruptcy was channelled through offshore accounts. Mr Le Floch-Prigent, who sat on Bidermann's board, and his wife allegedly received numerous gifts from the textile magnate, including expensive holidays at the Hamptons in Long Island, a plush London flat and cash payments. The former Israeli army officer is also accused of taking part in a string of money-siphoning schemes at the Elf group, including helping to fund the purchase of a Parisian apartment for his friend Mr Le Floch-Prigent and channelling funds to his friend's ex-wife as part of their divorce settlement.

Roland Dumas, 80, former French foreign minister

For five years the former French foreign minister's name dominated the headlines in the Elf affair. However, Roland Dumas' role in the Elf scandal was limited to a peripheral part of the main judicial investigation. He was tried separately for allegedly profiting from Elf's largesse and was acquitted on appeal. Accusations of being party to corrupt payments made by Elf to his ex-mistress, Christine Deviers-Joncour, led Mr Dumas to resign from his prestigious position as president of the constitutional council. Ms Deviers-Joncour's perks, working for Elf, included a €3m Parisian apartment which she allegedly chose with Mr Dumas.

She further undermined Mr Dumas' reputation - a close associate of the late president François Mitterrand - by writing a bestseller, Whore of the Republic. However, she helped his eventual acquittal from his original two-and-a-half-year sentence by revealing he never profited from the apartment and only ever passed by for coffee. Mr Dumas has since said his only mistake was in allowing himself to fall "victim of foul schemings" and in trusting a justice system which failed him at the outset. He has sought to restore his reputation by writing a book, L'Epreuve - les preuves.

<a href=news.ft.com>FinancialTimes.com By Robert Graham

Published: April 22 2003 5:00 | Last Updated: April 22 2003 5:00 The air of injured innocence is slowly evaporating among the key defendants in France's biggest ever corruption trial.

In all, 37 people have been charged with siphoning off almost €400m (£276m) in the late eighties and early nineties from Elf, then a French state-owned oil group.

After a month of hearings, the whereabouts of most of the funds remains a mystery.

But the trial judge has succeeded in teasing out the lavish whims of Elf executives and their acolytes, forcing many to own up to serious personal enrichment.

Loïk Le Floch-Prigent, Elf's chief executive from 1989 to 1993 and a central figure in the case, admitted his personal gains with masterly understatement, saying: "Things got out of hand."

Accused of removing €183m of Elf money, and now in poor health as he serves a 2½ year prison term imposed at a previous corruption trial, he appears relieved to confess. "I see this as an occasion to get things off my chest," he said.

Alfred Sirven, who handled many of Elf's pay-offs to middlemen and foreign dignitaries, and is charged with siphoning off €168m, has been a little less contrite.

Soon after the judicial investigation began in 1994 he went on the run, and police only caught up with him in the Philippines in 2001. "I am guilty of certain things: this I have known for a long time, but all the same that does not really explain how these things happened," Mr Sirven observed in his gravelly voice.

These men and the other defendants are bitter that their political superiors are absent from the dock - even though they claim Elf was used as a secret treasury for under-the-table state activities from the foundation of the Fifth republic in 1958 until the group's privatisation in the mid-1990s. But - as the sharp-tongued judge Michel Desplan has reminded them - this is no answer to the serious corruption charges. Mr Le Floch-Prigent has, for instance, been asked to justify the purchase of a $9.3m Paris mansion, a chateau and a divorce settlement after 18 months of marriage that cost Elf €4.5m.

He replied: "At Elf everything was exaggerated. It eroded one's sense of reality . . . I allowed myself to get carried away."

At first he insisted the luxury town house had been bought for corporate relations with the ulterior purpose of being for the use of president Omar Bongo of Gabon, where Elf had vital oil interests. (A €115,000 kitchen redecoration was initially classified under the heading of 'gabonisation' of the house.)

But Fatima Belaid, Mr Le Floch-Prigent's ex-wife, told the court that the place was for her ex-husband's "personal use", and that its ownership was concealed to avoid taxes.

This prompted the judge to ask Mr Le Floch-Prigent: "For company representation, was not this place too much even for the president of Elf?" His reply became one of the most quoted lines from the case: "It was a folie des grandeurs. Let's say it was a mistake; but it was not a crime."

To defend the fact that his expensive divorce was settled through offshore Elf bank accounts, Mr Le Floch-Prigent invoked his close relationship with the late president François Mitterrand.

The court heard he told the president that if the divorce turned messy there was a risk his ex-wife might reveal what she knew of Elf's activities, causing "collateral damage" to Elf's African clients as well as the president's son Jean-Cristophe, who handled African affairs at the Elysée Palace.

This was the first time Mr Mitterrand had been overtly linked to corruption at Elf during the trial, although the group's top appointments were approved by him.

Mr Le Floch-Prigent claimed Mr Mitterrand told him: "Get on with it and settle the problem". This, he understood to be the go-ahead "to settle the divorce with secret funds."

On the broader issue of where Elf's secret funds went, Mr Le Floch-Prigent has admitted he knew of a "black box" containing some $5m a year. Nevertheless, he said he knew nothing about how the contents were used.

That task was in the hands of Mr Sirven and André Tarallo, head of Elf's Gabon subsidiary and the company's principal contact with African leaders, who is accused of corruptly handling €35m.

Neither man has yet been forthcoming about the money trail. Mr Tarallo has been the more explicit, claiming at one point that in 1990 President Bongo feared he was about to lose French backing for his long-standing authoritarian rule and needed a "savings bank" as insurance against losing power.

The trial is in its early stages, and evidence about Elf's dubious foreign operations is expected to be heard throughout May.

This could yet throw light on kickbacks paid by Elf over a deal between Mr Mitterrand and Germany's ex-chancellor Helmut Kohl to invest in the Luena refinery in East Germany - an affair which helped bring Mr Kohl down.

Also under scrutiny will be oil contracts in the North Sea and Venezuela and the purchase of Spanish group Ertoil.

But many observers will be watching most keenly for more folies des grandeurs.

<a href=news.ft.com>Financial Times By Robert Graham Published: April 21 2003 21:13 | Last Updated: April 21 2003 21:13 The air of injured innocence is slowly evaporating among the key defendants in France's biggest ever corruption trial.

In all, 37 people have been charged with siphoning off almost €400m ($436m) during the late eighties and early nineties from Elf, then a French state-owned oil group.

After a month of hearings, the whereabouts of most of the funds remains a mystery. But the trial judge has succeeded in teasing out the lavish whims of Elf executives and their acolytes, forcing many of the accused to admit to serious personal enrichment.

Loik Le Floch-Prigent, Elf's chief executive from 1989 to 1993 and a central figure in the case, admitted his personal gains with masterly understatement, saying: "Things got out of hand.""At Elf everything was exaggerated. It eroded one's sense of reality... I allowed myself to get carried away." Loik Le Floch-Prigent

Accused of removing €183m of Elf money, and now in poor health as he serves a 2½ year prison term imposed at a previous corruption trial, he appears relieved to confess. "I see this as an occasion to get things off my chest," he said.

Alfred Sirven, who handled many of Elf's pay-offs to middlemen and foreign dignitaries, who is charged with siphoning off €168m, has been a little less contrite.

Soon after the investigation began in 1994 he went on the run, and police only caught up with him in the Philippines in 2001. "I am guilty of certain things: this I have known for a long time, but all the same that does not really explain how these things happened," he said in his gravelly voice.

These men and the other defendants are bitter that their political superiors are absent from the dock - even though they claim Elf was used as a secret treasury for under-the-table state activities from the foundation of the Fifth republic in 1958 until the group's privatisation in the mid-1990s.

But - as the sharp-tongued judge Michel Desplan has reminded them - this is no answer to the serious corruption charges against them.

Mr Le Floch-Prigent has, for instance, been asked to justify the purchase of a $9.3m Paris mansion, a country chateau and a divorce settlement after 18 months of marriage that cost Elf €4.5m. He replied: "At Elf everything was exaggerated. It eroded one's sense of reality . . . I allowed myself to get carried away."

At first he insisted the luxury town house had been bought for corporate relations with the ulterior purpose of being for the use of president Omar Bongo of Gabon, where Elf had vital oil interests.

But Fatima Belaid, Mr Le Floch-Prigent's ex-wife, told the court that the place was for her ex-husband's "personal use", and that its ownership was concealed to avoid taxes.

This prompted the judge to ask Mr Le Floch-Prigent: "For company representation, was not this place too much even for the president of Elf?"

His reply became one of the most quoted lines from the case: "It was a folie des grandeurs. Let's say it was a mistake; but it was not a crime."

To defend the fact that his expensive divorce was settled through offshore Elf bank accounts, Mr Le Floch-Prigent invoked his close relationship with the country's late president François Mitterrand.

The court heard he told the president that if the divorce turned messy there was a risk his ex-wife might reveal what she knew of Elf's activities, causing "collateral damage" to Elf's African clients as well as the president's son Jean-Cristophe, who handled African affairs at the Elysée Palace.

This was the first time Mr Mitterrand had been overtly linked to corruption at Elf during the trial, although the group's top appointments were approved by him.

On the broader issue of where Elf's secret funds went, Mr Le Floch-Prigent has admitted he knew of a "black box" containing some $5m a year. Nevertheless, he said he knew nothing about how the contents were used. That was in the hands of Mr Sirven and André Tarallo, head of Elf's Gabon subsidiary and its principal contact with African leaders, who is accused of corruptly handling €35m.

Neither man has yet been forthcoming about the money trail. Mr Tarallo has been the more explicit, claiming at one point that in 1990 President Bongo feared he was about to lose French backing for his long-standing authoritarian rule and needed a "savings bank" as insurance against losing power.

The trial is in its early stages, and evidence about Elf's dubious foreign operations is expected to be heard throughout May.

This could yet throw light on kickbacks paid by Elf over a deal between Mr Mitterrand and German ex-chancellor Helmut Kohl to invest in the Luena refinery in East Germany - an affair which helped bring Mr Kohl down.

Also under scrutiny will be oil contracts in the North Sea and Venezuela and the purchase of Spanish group Ertoil.

But many observers will be watching most keenly for more folies des grandeurs.

Related stories Time up for men accused of greasing palms with Elf's oil  Apr 22 2003 05:00 The Elf affair - who's who  Apr 15 2003 17:45 Total launches review of corporate ethics  Apr 14 2003 21:53
Exiles call for Iraq to let in oil companies  Apr 07 2003 03:49
Pentagon to blacklist companies investing in Iran  Mar 28 2003 22:25
Moving places  Mar 26 2003 04:00

forbes.com Money & Investing Megan E. Mulligan, 04.28.03

Russia has more oil reserves than any other non-OPEC nation, and ADRs for Americans who want to brave a rather forbidding climate for investors.

As the Soviet Union sank, a cluster of insiders plucked vast energy resources from the state at knockdown prices and turned them into an oil industry. Many of these oligarchs are now listing their companies on U.S. exchanges, thus offering equity investors an opportunity to drill for hidden value.

Lukoil, with $14.8 billion in revenues in 2001, is the industry's heavyweight. It pumps 460 million barrels of oil a year, 20% of Russia's output, and has at least another 30 years' worth in the ground at present production rates. Lukoil also operates gas stations across the ex-Soviet republics, and it bought Getty's gas stations in the U.S. It owns refineries throughout eastern Europe. Vagit Alekperov, an oil-and-gas minister in the former Soviet Union, cobbled the company together out of some of the best Russian oil properties. The 10% stake he stitched up for himself is worth $1.2 billion, and he ranked number 329 on FORBES' list of the world's billionaires.

Lukoil, which has joint ventures with BP and ConocoPhillips, is pushing for new deepwater facilities in the all-weather port of Murmansk. That would let it ship more oil to North America.

The analysts' consensus estimate is that the company will earn $9.79 per American Depositary Receipt for 2003, and Lukoil is trading at a mere 6 times that amount. That makes it look like a bargain in comparison with U.S. oil majors. ExxonMobil shares cost 16 times projected 2003 earnings. But lately Lukoil has had its problems.

Alekperov has endured the mysterious kidnapping of his chief financial officer, a messy political struggle with the governor of the oil-rich Nenets region and Saddam Hussein's tearing up a long-standing contract to develop one of Iraq's biggest oilfields. The ADR has dipped 10% since January.

Yukos, with $9.2 billion in annual revenue, is Lukoil's rising challenger. Run by 39-year-old Mikhail Khodorkovsky, a former Communist Youth Leaguer who is now the richest Russian (26 on the FORBES list), Yukos has been transformed since he bought it for a song in 1995. Hardball tactics that had aroused complaints from shareholders, foreign banks and partners like Amoco have been changed by Western directors, managers and auditors. Yukos seems destined to become Russia's number one in production, profits and market value.

Like Lukoil, it wants to export more crude. Storms close its Black Sea oilterminals in winter. In February Yukos bought the Eastern Oil Co. of Siberia. Khodorkovsky is urging the Russian government to build a pipeline to connect Siberian oilfields to China and the Pacific coast port of Nakhodka.

Moscow's recent announcement that foreign oil firms investing in Russia will no longer get special legal protection could also work to the advantage of Russian outfits. The Russian oil and gascompanies listed below all trade in the U.S. as ADRs. Two warnings: First, while they make a show of following U.S. accounting standards, they sometimes publish balance sheets that are as impenetrable as a Siberian winter.

Second: Lukoil and Yukos have big interests in Iraq. The retention of these is far from certain.

Put a Bear in Your Tank Russia is the world's number two oil producer and exporter. These Russian oil and gas companies are growing to keep up with demand.   Company ADRprice Change from 52-wk high 2001 revenues ($bil) Market value ($bil) Gazprom $11.70 -42% $19.3 $27.7 Lukoil 55.38 -24 14.8 11.8 Sibneft 20.55 -20 3.4 9.7 Surgutneftegas 14.50 -39 5.6 10.4 Yukos 145.00 -16 9.2 21.6 Prices as of Apr. 1. Sources: Bloomberg Financial Markets; J.P. Morgan Chase; Worldscope via FactSet Research Systems.