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Current Affairs

Managers Sentenced to Jail in Elf Corruption Trial

In France's biggest corporate crime trial, a judge on Wednesday sentenced two former Elf Aquitaine executives to five years in prison for using company money as bribes. A German lobbyist will spend 15 months behind bars.

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The Elf refinery in Leuna is now called Total.

Loik Le Floch-Prigent, Elf Aquitaine's former chief executive, was sentenced to five years in prison on Wednesday. Alfred Sirven, the oil giant's former general affairs manager, received the same sentence.

Apart from Le Floch-Prigent and Sirven, 35 other defendants stood trial, including German lobbyist Dieter Holzer for his role in Elf Aquitaine's acquisition of an oil refinery in Leuna in eastern Germany.

Holzer will have to spend 15 months behind bars and pay back about €24 million ($27.8 million) in "consultant fees" he received for helping Elf to close the Leuna deal. Alfred Tarallo, the company's "Mr. Africa," was sentenced to four years in prison.

France's biggest corporate scandal

The Elf scandal ballooned into one of the most extensive legal proceedings in France's history. Investigators spent eight years researching for the trial, generating more than 45,000 pages of documents.

The court found that the defendants stole a total of €300 million ($346.8 million) from Elf Aquitaine, still a state-owned enterprise at the time, to use as bribes to secure Elf business contracts in Africa, South America, Russia, Spain and Germany between 1989 and 1993. Sirven, Le Floch-Prigent's right hand, allegedly funneled about €168 million ($194 million) through his Swiss bank accounts.

The trial revealed a system that allowed French governments to turn Elf into an extension of the country’s foreign-policy machine. At the time of the alleged misconduct, Elf was France's biggest company and was controlled by the state.

Allegations of bribes paid to German politicians

The trial, however, did not establish whether French or German politicians had been bribed. Le Floch-Prigent admitted that payoffs were part of Elf's corporate culture. "It was like that before me," the former Elf boss said. "And my successors are doing it as well." He claimed that top-level German politicians had been bribed during the sale of the Leuna refineries in eastern Germany to Elf. But Le Floch-Prigent did not name names.

Loik Le Floch-Prigent

A 1996 file photo of Loik Le Floch-Prigent, then president and general manager of the French National Railroad (SNCF).

Sirven, who once claimed his testimony could "blow up the French Republic," also said he could not remember the exact details of what had happened. But he claimed that two former German government ministers had received "large sums" during the Leuna sale.

Francois Mitterand, the late French president, and his Socialist party allegedly approved this to help a reelection bid by former German Chancellor Helmut Kohl and his Christian Democratic Union. Kohl has vehemently denied this.

Germany's federal prosecutor concluded two years ago that there was no evidence that politicians here were bribed in a deal to privatize the former East German oil refinery.

Leuna refinery sale one aspect of scandal

The Leuna scandal began in the early 1992, when Elf Aquitaine acquired East Germany's network of gas stations, Minol. In return, the company agreed to build a new refinery in Leuna, which is in the eastern German state of Saxony-Anhalt and just west of Leipzig.

According to the investigation, Elf managers transferred €47 million ($54.5 million) from secret coffers to accounts in Liechtenstein, Switzerland and Luxembourg. Holzer, the central figure in the scandal surrounding the Leuna sale, received about €24 million ($27.8 million).

Holzer

Dieter Holzer leaving Germany's parliament after hearings on the Leuna sale in 2001.

The lobbyist and businessman claims the money was an advisor's fee customary in his line of work. Without his help, Elf would not have received about €1 billion ($1.18 billion) in German subsidies to build the refinery, he said, adding that he did not give any of the money to others.

French prosecutors said Holzer did not offer the company a "real service" in return for the fee, which made the money paid to him a bribe.

Elf now called Total

Le Floch-Prigent's successors -- he left Elf in 1993 -- were joint plaintiffs in the case. They have been trying for years to rid the company of its image as a corrupt state corporation. Even the old name has all but disappeared. After merging with former competitors Total and Fina, the oil giant is now called Total. Only a few "Elf" gas stations remain.

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