Global Policy Forum

By Joseph Fitchett & David Ignatius

An explosive eight-year investigation of corruption at the French oil giant Elf-Aquitaine is expected to produce a last roar next week, as magistrates file a final report naming roughly 40 executives, politicians and intermediaries as parts of a pervasive network that allegedly bilked nearly 3 billion francs from Elf in the early 1990s, according to attorneys for the prospective defendants.

The most prominent politician expected to surface in the magistrates' dossier is Charles Pasqua, France's former interior minister and a leading conservative. His attorney, Lef Forster, said late Thursday that he expected Mr. Pasqua to be among those notified next week that his name had been included in a list to be forwarded to the prosecutors. The attorney denied that Mr. Pasqua had violated any laws and said he would move immediately to challenge the magistrates' procedures before any prosecution.

The two magistrates overseeing the investigation, Eva Joly and Renaud Van Ruymbeke, have told defense lawyers that they would finally conclude their Elf inquiries, which have produced nearly 250 volumes of evidence, with their lengthy summary next week of alleged criminal activity.

The prospective defendants, said by defense attorneys to number 42 at this stage, will each receive an individual notice, known as an "avis a partie," giving them 20 days to respond. The dossier will be sent to the Paris prosecutor's office, which will review the findings and then refer the case back to the magistrates, who will file formal charges with the Paris criminal court.

With appeals, that process is likely to take some months, and the trial will not begin until well after French presidential and parliamentary elections this spring. That delay will provide a reprieve for the French political class, which has been rocked by the revelations of massive, high-level corruption that have emerged during the long-running Elf inquiry.

At the time covered by the Elf investigation, from 1989 to 1993, the oil giant was owned by the French government and was the nation's largest company. Elf was privatized in 1994 and later merged into what is now TotalFinaElf, one of the world's leading oil companies.

The final Elf dossier will mark the parting volley of Judge Joly, 58, who began the investigation in 1994 and has boldly pressed ahead with the case - despite public attacks, government resistance, limited resources and even threats against her life. For the past five years, Judge Joly has been protected full-time by bodyguards.

The Elf investigation was explosive because it exposed a side of France rarely visible: the "reseaux," or secret networks of power that subtly connect top government and business officials with shadowy intermediaries and clans, such as the Corsican underworld and France's still-potent Freemasons.

Those likely to be named in the magistrates' dossier include Elf's top management from 1989 to 1993, among them its chief executive at that time, Loik Le Floch-Prigent, 58. Attorneys said Mr. Le Floch-Prigent could face a score of charges beyond those on which he was convicted in an initial Elf trial last year. That earlier case also produced convictions of former Foreign Minister Roland Dumas, 79, and his mistress, Christine Deviers-Joncours, 54, for abuse of corporate funds. Their appeals will be heard in March, and they are not involved in the new, far broader case.

The cast of prospective defendants in this new case includes dozens of former Elf operatives and private intermediaries, both French and foreign nationals, who are alleged to have arranged payoffs around the world and helped hide the funds in front companies and secret accounts in Switzerland, Luxembourg, Liechtenstein and other tax havens. According to one defense attorney, the magistrates have estimated that the total amount allegedly looted from the company in these deals was about 3 billion French francs.

Mr. Le Floch-Prigent and other former Elf executives have said that they were merely continuing long-standing Elf practices - in some cases with explicit endorsement from France's then-president, Francois Mitterrand.

The main criminal charge that the magistrates appear likely to cite in their dossier is an obscure French statute known as abus de biens sociaux, or abuse of corporate assets. Because of its elastic statute of limitations, this charge has been frequently invoked by magistrates in cases where they suspect but cannot prove fraud and personal enrichment.

Lawyers representing likely defendants said that this group would include Alfred Sirven, 75, brought to Elf by Mr. Le Floch-Prigent to be his No. 2. Mr. Sirven ran the company's Geneva subsidiary, Elf-Aquitaine International, and also the Elf Foundation in Paris, and handled "general affairs," which investigators believe covered the company's alleged circuits of corruption. Mr. Sirven was apprehended in the Philippines last year after a global manhunt.

Also expected to be named in the dossier next week is Andre Tarallo, 74, a brilliant Elf executive who was the oil company's proconsul for Africa for decades after graduating from an elite civil-service academy in the same class with President Jacques Chirac. Mr. Tarallo is alleged to have presided over a system in which Elf and France profited from African oil, in exchange for providing political protection and secret offshore payoffs to African leaders.

Mr. Tarallo, according to French media reports that he has not publicly challenged, confirmed the existence of these payoffs to the investigating magistrates, but told them that the actual transactions had been handled by Mr. Sirven.

This African-based system, in many ways the origin of the networks examined by the magistrates, was created in the 1950s by President Charles de Gaulle and his key adviser, the late Jacques Foccart, according to French scholars. Mr. Foccart saw these networks as a way of using oil wealth, via Elf, from newly independent colonies in West Africa. The system of split commissions afforded a way of maintaining French influence and later subsidizing Gaullist political activities.

The chief heir to the Foccart system, according to French analysts, was Mr. Pasqua, 74, a right-wing Gaullist who served twice as interior minister. He has been caught up directly in the Elf case by evidence that he used Elf corporate jets or charter flights on more than 70 occasions, allegedly including trips for private or political purposes, including some during his 1992 campaign against the Maastricht treaty on European monetary union. The free travel was said to have been arranged by a sometime Elf adviser named Andre Guelfi, 82, a free-wheeling tycoon known in Paris as "Dede-la-Sardine" because he made his first fortune with an Africa-based fishing fleet. Mr. Guelfi has extensive international business connections, largely thanks to contacts he made as a key promoter and intermediary for the International Olympic Committee.

In heated meetings in the magistrates' chambers during the past two weeks, defense attorneys said, Mr. Pasqua insisted that he had thought the travel was a gift from his old friend, Mr. Guelfi. In turn, Mr. Guelfi said he had billed Elf for some trips without telling his fellow Corsican, Mr. Pasqua. Mr. Guelfi has said that his dealings with Elf were routine business and has denied wrongdoing.

A Pasqua attorney said the air-travel issue is blurred by the fact that so many French government cabinet ministers, in and out of office, have for years availed themselves of free travel on what one called "Air Elf."

"We are expecting to be notified" that Mr. Pasqua's name is included in the dossier, Mr. Forster said Thursday, adding: "That will give us 20 days to start challenging the process before it can go to the prosecutor." He suggested that most defendants were likely to try similar appeals.

Another Pasqua associate likely to be named in the dossier, defense attorneys said, is Daniel Leandri, a former policeman and Africa specialist. Mr. Leandri has been among the closest and longest-serving aides to Mr. Pasqua. Mr. Leandri's attorney declined to respond to questions about his client.

Defense attorneys said the evidence that is alleged to implicate Mr. Leandri emerged only thanks to help from the government of the Lebanese prime minister, Rafik Hariri. The Lebanese authorities are said to have lifted the country's normal banking secrecy laws and disclosed details of an account that allegedly benefited Mr. Leandri. Defense attorneys said the account allegedly contained funds derived from a secret commission from an Elf deal with Cameroon. Mr. Leandri has told the magistrates he was simply holding money for an African leader, one defense attorney said.

Another powerful figure whose dealings were examined by the magistrates is a British-Iraqi businessman, Nadhmi Auchi. Defense attorneys said the magistrates investigated Mr. Auchi's alleged role in Elf's 1991 purchase of the Spanish oil company, Ertoil, from its Kuwaiti owner. According to French press reports, Mr. Auchi helped Elf by initially buying the company quickly - and avoiding regulatory delays - and then selling it on to Elf. Defense attorneys said Mr. Auchi allegedly received a commission from Elf of more than 300 million French francs for his role. Among the magistrates' questions is whether Mr. Auchi funneled any "retro-commissions" on the deal back to Elf executives or political figures in France.

Commissions and corporate bribes for foreign officials were legal under French law at the time - indeed, they were tax deductible. But it was illegal to kick money back to France through these so-called retro-commissions, which nonetheless are thought to have been widespread on major oil and arms deals.

Mr. Auchi has denied any wrongdoing, and defense attorneys said he had offered to buy Ertoil back and repay any commissions he received. But he has refused to appear in France before the magistrates, who have issued an international arrest warrant for him. Although Mr. Auchi's name is almost unknown to the French or British public, he is sometimes described as the eighth-richest man in Britain, with a broad portfolio of assets grouped under his holding company, General Mediterranean. At one time, he was also reputed to be the largest individual shareholder in the French bank, Banque Paribas, and a member of its international advisory board. According to press reports, the French government last year seized his shares in Paribas, said to be worth $500 million. Queried about his holdings Thursday, Paribas failed to respond.

Another controversial chapter in the Elf saga that is to be covered in the magistrates' final dossier is the company's 1992 purchase of the Leuna oil refinery in eastern Germany. Elf paid secret commissions on that deal totaling at least 256 million francs to two former intelligence operatives, Pierre Lethier, a Frenchman, and Dieter Holzer, a German. An arrest warrant has been issued for Mr. Lethier, while Mr. Holzer is free on bail, after having agreed in January to talk to the magistrates.

Mr. Le Floch-Prigent and other Elf officials have contended, without proof, that the Leuna commissions were intended as a French political payoff for Chancellor Helmut Kohl - authorized by President Mitterrand himself - to help Mr. Kohl win re-election after German reunification.

Mr. Lethier has claimed in interviews, however, that Elf executives and advisers actually skimmed some of the money and then invoked Mr. Mitterrand's authority, in hopes of scaring off the magistrates from a full investigation.

Another person expected to be named in the dossier is Mr. Le Floch-Prigent's former wife, Fatima Belaid. According to defense attorneys familiar with the investigation, she is alleged to have received Elf funds, culminating in an 18 million franc payment - nominally to settle her divorce with the former Elf chief.

It was the Belaid connection that helped get the Elf inquiry rolling in the first place. She had been introduced to Mr. Le Floch-Prigent in 1989 by Regine, a female nightclub celebrity whose brother was Maurice Bidermann - who eventually received an Elf investment in his clothing business. A U.S. lawsuit was subsequently filed by an American associate of Mr. Bidermann, Jeffrey Steiner, which in turn led to a 1993 investigation by the French stock-exchange watchdog, the Commission des Operations de Bourse. Those findings, in turn, were referred to the Paris prosecutor's office, which assigned the case to Judge Joly in 1994 for investigation.

As the Elf case widened, Judge Joly gradually requested help from other magistrates - first from Laurence Vichnievsky and later from Judge Van Ruymbeke.

Judge Joly's background and steely temperament seem to have destined her for the struggle. Originally Norwegian, she came to France as an au pair girl, put herself through law school and then worked her way up the ladder as a juge d'instruction - the position in the French system that collects and assesses evidence as both prosecutor and initial judge in serious criminal cases.

Judge Joly has epitomized the new independence of magistrates in France - especially in recent years, when power has been shared by a conservative head of state and a Socialist-led government. But she and other magistrates have also been accused of abusing their new powers, of getting meager results and of indulging in abusive tactics. Critics have complained, for example, that Judge Joly has frequently resorted to preventive detention to make witnesses talk, putting them in jail for weeks or even months until they produce answers that satisfy her. That practice has been curbed by recent legal reforms.

Defense attorneys said that about 50 additional people could be charged in a related case involving allegedly fictitious jobs on the payroll of the Geneva-based subsidiary, Elf International. Some of these paychecks allegedly went under code names to secret accounts controlled by people close to prominent French politicians, according to the defense attorneys.

Ms. Deviers-Joncours, who was herself paid through Elf International and spent an estimated 200,000 francs a month on her Elf credit card, has publicly recalled seeing wads of Elf money "handed out like candy."

Elf's paymaster and the man who is alleged to have known all the company's secrets is Mr. Sirven: According to defense attorneys, witnesses have testified that he shuttled between Paris and Geneva, overseeing the widening network of commissions and secret bank accounts in offshore tax havens - and therefore would have known the details of the alleged retro-commissions for recipients in France.

Lawyers involved in the case say that Mr. Sirven, now in solitary confinement, sometimes agrees to answer magistrates' questions, apparently when he thinks his testimony can help exonerate individuals accused of Elf-linked abuses. But he refuses to answer magistrates' questions about what he calls "sensitive matters" - essentially the names of French politicians whose political and personal lives were subsidized by Elf, according to the defense attorneys.

The Elf dossier will be, in part, a snapshot of an unusual moment in French political life, when a changing of the guard allowed a peek behind the veil that has traditionally obscured networks of power and their secret financial transactions. Corruption had been rampant in the final years of Mr. Mitterrand, who seemed ready to let his Socialist followers claim some of the spoils at Elf.

But as Judge Joly began delving into Elf, the time was opportune for an investigation. A conservative government had been elected in 1993 parliamentary elections and Mr. Le Floch-Prigent had been dismissed as Elf CEO. His successor, Philippe Jaffre, was a high-ranking civil servant with strong financial credentials. Mr. Jaffre was critical of Mr. Le Floch-Prigent as a manager who tended to be overambitious, undisciplined and profligate in his corporate spending. At Elf, Mr. Jaffre zealously inventoried his predecessor's record and eventually filed a complaint that is the basis for the current case.

Despite Judge Joly's dogged pursuit of the case, public opinion in France has recently wavered about the magistrates' anti-corruption crusade. The judicial corps itself has publicly split about how far to go in trying to wield greater independence from France's traditional practice of providing political direction about sensitive cases.

The magistrates face complaints from opposite directions: They are alleged to have gone too far in challenging France's political leaders and at the same time to have failed to get more convictions against prominent offenders, sometimes because of sloppy procedural moves.

The magistrates have often had difficulty proving ambitious cases like the one that will be outlined in the Elf dossier. For example, a dozen current and former government cabinet ministers have been forced out of office by magistrates' actions in the last two governments. But only two of them have been finally convicted.

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