Total settles U.S. bribe probe for $398 million; CEO may be tried

PARIS/NEW YORK Wed May 29, 2013 3:57pm EDT

PARIS/NEW YORK (Reuters) - Total SA (TOTF.PA) agreed to pay $398.2 million to settle U.S. criminal and civil allegations that it paid bribes to win oil and gas contracts in Iran, and a French prosecutor has recommended that the company and its chief executive be brought to trial.

France's largest oil producer on Wednesday agreed with the U.S. Department of Justice to enter a deferred prosecution agreement and pay a $245.2 million fine to resolve three charges that it violated the Foreign Corrupt Practices Act.

Total will also give up $153 million of illegal profit in a related civil settlement with the U.S. Securities and Exchange Commission.

The criminal penalty is the fourth-largest under the FCPA, an anti-bribery law, Justice Department spokesman Peter Carr said.

U.S. authorities said that between 1995 and 2004, Total paid about $60 million in bribes to induce an Iranian government official to help the company obtain lucrative development rights in three oil and gas fields.

The U.S. criminal case will be dropped after three years if Total complies with the deferred prosecution agreement, which calls for it to retain an independent compliance monitor.

But the affair is not over, as a French prosecutor said Total and its Chief Executive Christophe de Margerie should face trial for allegedly corrupting foreign public officials over contracts with Iran in the 1990s and early 2000s.

The prosecutor also said de Margerie should face trial for misuse of company funds.

A Total spokesman confirmed that the company had been notified of the Paris prosecutor's recommendation and said the company and de Margerie would demonstrate in any trial that their behavior had been legal.

COORDINATED ACTION

According to papers filed with a federal court in Alexandria, Virginia, Total funneled the illegal payments mainly to Swiss bank accounts designated by two unnamed intermediaries who acted at the behest of the Iranian official.

One intermediary worked at a Swiss private bank, and the other was a company in the British Virgin Islands, the court papers show.

"We announce the first coordinated action by French and U.S. law enforcement in a major foreign bribery case," Acting U.S. Assistant Attorney General Mythili Raman said in a statement.

"Our two countries are working more closely today than ever before to combat corporate corruption, and Total, which bought business through bribes, now faces the criminal consequences across two continents," Raman added.

Carr said the largest criminal penalty imposed under the FCPA is the $450 million that German engineering company Siemens AG (SIEGn.DE) agreed to pay in 2008, as part of an overall $800 million settlement with U.S. authorities.

Total had flagged a possible settlement in an SEC filing last year when it took a 316 million euro ($409 million) charge against its accounts, a relatively small sum for a company that makes billions of dollars in profit every quarter.

Talks between U.S. authorities and Total, Western Europe's third-largest oil company, had begun in 2010.

A decision on whether the outspoken, mustachioed 61-year-old de Margerie will face trial is up to the French investigating magistrate.

Total's chief is a well-known figure in international oil circles who was in charge of the company's Middle East division at the time the alleged wrongdoing began. He and the company have been under investigation in France since 2006.

Shares in Total closed down 1.7 percent at 39.40 euros.

The cases are U.S. v. Total SA, U.S. District Court, Eastern District of Virginia, No. 13-00239; and In re: Total SA, SEC Administrative Proceeding No. 3-15338.

(Additional reporting by Chine Labbe and Michel Rose; Writing by Andrew Callus and Jonathan Stempel; Editing by Mark Potter, David Holmes and Tim Dobbyn)

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