Failed deal and spying claims haunt France's Areva

Wed Jan 25, 2012 11:28am EST

* Three inquiries ongoing into Areva's purchase of UraMin

* Inquiries by Areva, industry ministry and parliament

* First due to report from mid-February

By Caroline Jacobs

PARIS, Jan 25 (Reuters) - A disastrous mining deal and allegations of spying are bogging down nuclear reactor maker Areva as it struggles to recover from last year's Japanese nuclear disaster, and risk embarrassing France's president as he bids for re-election.

At the centre of the controversy is Anne Lauvergeon, the ousted boss of the French state-controlled company dubbed "Atomic Anne" for her feisty personality, and the $2.5 billion acquisition of a mining start-up that Areva made in 2007.

Areva, the world's biggest nuclear reactor maker, bought Canada's UraMin to meet buoyant demand for uranium and as the price of the radioactive heavy metal peaked at $135 per pound, up from $90 at the end of 2006.

Fast forward, and the deal now looks a huge waste of money.

Getting UraMin's three African mines to produce proved to be tougher and costlier than expected. Areva's new CEO Luc Oursel said in December he was writing down nearly their entire value, along with a wider group restructuring to reflect a slowdown in demand after March's nuclear disaster in Fukushima, Japan.

Uranium prices fell to about $50 per pound after Fukushima and are currently at roughly $52.

The extent and timing of the write-down, four years after the purchase, have called into question a deal Areva's board and the state unanimously cleared, prompting three separate ongoing inquiries: by Areva, the industry ministry and parliament.

What could be seen as misjudgement on Areva's part has turned into a detective story that involves reports of spying on Lauvergeon's husband and question marks over the role of senior Areva executives, as well as the government itself.

SPYING

Lauvergeon, ousted by the French government in June, found in her mail late last year an anonymously sent report, dubbed Pomerol 4 and carried out by ALP Services in 2011, revealing her spouse Olivier Fric had been spied upon to see if he had "illegally benefited" from the UraMin deal.

The discovery led to Lauvergeon filing a legal complaint at a Paris court against unidentified persons and the surfacing of another report written in 2010 by small French intelligence firm Apic, which suggests that UraMin may have been a scam.

Both reports, obtained by Reuters, were commissioned by Areva's security offices but the later ALP one was under the responsibility of mining chief Sebastien de Montessus, who said in a newspaper interview the "serious" conclusions of the Apic study led him to launch a counter-investigation.

Documents obtained by Reuters show notes by ALP's owner Mario Brero which say: "The mandate is problematic and delicate because it could involve Olivier Fric and/or Daniel Wouters" who was the head of development and partnerships at Areva's mining unit and involved in the UraMin deal.

Montessus denies he or Areva's security service asked ALP to snoop on people's private lives, let alone use illegal methods.

Lauvergeon, who was the only female chief executive at a French multinational and reportedly fell out of favour with French President Nicolas Sarkozy after turning down his offer to become economy minister in 2007, believes any decision to spy would have been sanctioned outside the company.

"I cannot believe that he (de Montessus) got into this adventure on his own," she said at a news conference last week. "I think one needs a hell of a guarantee, including from outside the company, to resort to criminality."

"For four years, I have been submitted to multiple attempts to destabilise me, coming from the highest state levels," she said.

In a later radio interview she directly accused Sarkozy of having attacked her as she resisted his attempts to split the group she built as a one-stop shop for nuclear power among state-controlled power utility EDF, French engineering group Alstom and conglomerate Bouygues.

AWAITING INVESTIGATIONS

Rene Ricol, who was asked by Sarkozy to look into Areva's accounts in 2010, told Reuters last week his audit led to Areva taking a 400 million-euro charge on UraMin and a mention in the group's accounts that unpromising chemical tests in Namibia could lead to new write-downs.

But Ricol, an ex-Areva supervisory board member, said he did not investigate the deal itself.

"If one has elements pointing to a fraud, one has to bring them to the prosecutor," he said.

Areva has not taken any legal steps to investigate the UraMin transaction.

"We will await the conclusions of the three supervisory board members" investigating the deal, an Areva spokeswoman said, declining to comment further on the situation.

Areva's internal investigation on UraMin is due by the end of February, before the group's 2011 earnings presentation. The industry ministry said the outcome of its research could be ready after Areva's.

Marc Goua, a French socialist parliamentarian appointed to write a report on the nuclear industry, including the UraMin deal, also said that the Apic report did not give any proof of fraud in the UraMin case. His conclusions should be out by the middle of February.

In the latest twist of events, Areva denied a media report saying Oursel told a parliamentary hearing behind closed doors on Tuesday that Areva had left out elements pointing to risks involved in UraMin's three mines in a presentation to the Government Shareholding Agency (APE) in 2007.

The report was based on an unidentified source. (Editing by Mark Potter)