Legal heat rises for Total's 'Big Moustache' in Iran bribery case
PARIS (Reuters) - Total SA's (TOTF.PA) Christophe de Margerie, who faces a possible trial over alleged bribes in Iran, has been dogged by legal investigations and market skepticism during his six years at the top of Europe's third-largest oil group.
The 61-year-old, whose mandate expires in 2015, has so far failed to convince that he can deliver on a riskier exploration strategy. Currently trading at 39.4 euros, Total's stock is valued at 7.8 times 12-month forward earnings, a 7 percent discount on BP (BP.L) and Shell (RDSa.L) and close to a 20 percent discount on average to its global peers.
The decade-long investigations of bribery allegations linked to Total's dealings with Iraq and Iran have been a persistently nagging background feature of de Margerie's ascent.
Now the Iran case has come to a head with the company agreeing on Wednesday to pay $398 million to settle U.S. criminal and civil allegations that it paid bribes to win oil and gas contracts in Iran, while a French prosecutor is recommending de Margerie himself go to trial.
De Margerie firmly denies any wrongdoing and a Total spokesman said that the company and de Margerie would demonstrate in any trial that their behavior had been legal.
But for the man nicknamed "Big Moustache" inside the company, the development comes at a potentially crucial time, with just two years left to assure his legacy at the group before he leaves the chief executive position.
After graduating from the standard Ecole Superieure de Commerce business school - an anomaly in a company filled with engineers from elite French schools - de Margerie joined the financial department of Total in 1974 because, as he once joked, the company was the nearest to his home.
The comment was typical of a free-wheeling style that admirers and adversaries alike say masks an astute business sense and tough negotiating skills.
"KING OF CRUDE"
From a family of ambassadors and top corporate executives, de Margerie's mother is the daughter of Taittinger group founder Pierre Taittinger.
Former Qatari Energy Minister Abdullah bin Khalifa al-Attiyah once asked de Margerie - a personal friend - whether he needed to work after being told the plush Crillon hotel in Paris where they were having dinner belonged at the time to the Taittingers.
"He could have become king of 'Brut' but he has opted to become king of crude," cousin Pierre Emmanuel Taittinger said of de Margerie in an interview with the Wall Street Journal - a pun as "Brut" means both dry champagne and crude oil in French.
De Margerie oversaw Total's Middle East operations and then joined the group's exploration and production branch, the most prestigious, in 1995. He became chief executive in 2007.
Aside from the Iran case, de Margerie has watched legal difficulties mount over Total's dealings in Iraq.
Paris prosecutors asked a criminal court on February 12 to fine Total 750,000 euros ($1 million) for corrupting foreign agents during the U.N. oil-for-food program for Iraq a decade ago.
Total is accused of bribery, complicity and influence- peddling at the time of the program, designed to allow Saddam Hussein's Iraq to buy humanitarian goods through United Nations-controlled oil sales at a time of international sanctions.
Total told the court it had taken precautions to avoid illegal payments to the Iraqi government during the U.N. oil-for-food program, but had been thwarted by an opaque system of middlemen that it only discovered later. The final verdict is due on July 8.
"Christophe was very affected by the legal episodes in Iraq and Iran," a close adviser and friend to de Margerie said. "He was not destroyed, but hurt."
None of that has discouraged de Margerie from pursuing a "high-risk, high-reward" exploration strategy -- drilling more wells in difficult-to-reach places -- praised by some but criticized by investors who say it has yet to yield cash results.
The strategy is intended to exploit "frontier" basins such as in the North Sea off the coast of Norway and Scotland to help Total meet its 2017 output capacity goal of about 3 million barrels of oil equivalent a day.
At the same time, de Margerie has sought to reduce the group's exposure to its home French market in the past few years, notably with the 2010 closure of its Dunkirk refinery.
The closure plan sparked a nationwide two-week strike by unions, which finally agreed to concede the site after a final nine hours of talks with management at Total's headquarters.
"He's smart and a charmer, which makes him that bit more dangerous," said Charles Foulard, the coordinator of the CGT union at Total who led the 2010 strikes.
(Editing by Mark John and Dan Grebler)