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Police Question Total CEO in Iran Corruption Probe

Reuters
Wednesday, 21 Mar 2007 | 7:23 AM ET

The head of oil group Total, France's biggest listed company, is being questioned by police in a probe into alleged corruption in Iran, a spokesman for the company said on Wednesday.

Christophe de Margerie, who became chief executive at Total last month, has been under investigation for several months by French judges probing corruption allegations linked to the Iraqi oil-for-food program and a gas project in Iran.

The Total spokesman said questioning of de Margerie -- and two other employees which the group declined to name -- related to a probe opened in December 2006 into the South Pars natural gas project in Iran.

"Total is confident in the fact that (the) investigation will establish the absence of any illegal activities and hopes that it will be conducted with serenity," Total said in a statement, renewing its "full support" for the three.

The Paris prosecutors' office opened an investigation into the contract, signed in 1997, following the discovery of 95 million Swiss francs ($78.32 million) in the Swiss bank accounts of an intermediary, a judicial source said in December.

De Margerie headed Total's Middle East operations from 1995 to 1999, and then oversaw the group's global exploration and production activities. He succeeded Thierry Desmarest as chief executive last month.

Last October, he was put under formal investigation by a French judge over oil purchases made under the United Nations oil-for-food program in Iraq, after being held in custody for 48 hours and then released.

It is common practice in France for a suspect to be held for questioning, after which the judge may or may not file formal charges.

Calm

On Feb. 14, a day after he was confirmed in his new post, de Margerie told a news conference: "I would like to underline it's just an inquiry and there has been no outcome. I am calmly waiting for that."

Total shares in Paris were almost flat at 49.86 euros at, while the DJ Stoxx European oil and gas sector index was up 0.1%.

"We know there is a risk. Investors are waiting to see how things develop and if these developments go against Total, then this would certainty pressure the stock," said an analyst, who asked not to be named.

"If things escalated, people think that Thierry Desmarest would probably come back at the helm of the group but they would still be worried because it means they would not get the smooth transition they thought they would get."

Desmarest is now non-executive chairman.

The probe comes just as Total is mulling taking part in a project worth nearly $10 billion to build Iran's first liquefied natural gas export terminal.

De Margerie said last week Total's decision depended on technical and geopolitical issues. Washington is urging its allies not to invest in Iran as part of a campaign to force Tehran to abandon its nuclear program.

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