UPDATE 2-Total and CEO acquitted in Iraq oil-for-food scandal

Mon Jul 8, 2013 11:57am EDT

Related Topics

* Eighteen individuals plus Total and Vitol acquitted

* U.N. programme mired by kickbacks and illicit payments

* Total CEO still faces inquiry in Iran oil case

By Gérard Bon and Alexandria Sage

PARIS, July 8 (Reuters) - French oil giant Total was acquitted on Monday of corruption charges related to the U.N. oil-for-food programme in Iraq by a Paris criminal court.

The court also cleared 18 individuals, including Total CEO Christophe de Margerie who was accused of misusing assets in the decade-old case into corruption in the programme, in which an illicit $1.8 billion flowed to Saddam Hussein's government.

Swiss oil trader Vitol was found not guilty of corrupting foreign public agents and Charles Pasqua, an ex-French interior minister, was cleared of passive peddling of influence and corrupting foreign public agents.

Designed to ease the suffering of the Iraqi people, the oil-for-food programme allowed Iraq to sell some of its oil, despite the embargo imposed after the first Gulf War, in exchange for humanitarian goods.

The programme became mired in controversy after an independent inquiry, led by the former U.S. Federal Reserve chairman Paul Volcker, disclosed in 2005 a system of kickbacks, surcharges and payments to individuals with access to Iraqi oil.

Total, Europe's third-largest oil group by market capitalisation, was accused of bribery, complicity and influence peddling during the 1996-2003 programme.

But during the trial that began in January, prosecutors struggled to identify which Total executives might have been aware of how the U.N. programme was being illegally manipulated and whether they had given orders to participate regardless.

De Margerie, 61, who at the time headed Total's Middle East operations, had testified he did not know about Baghdad's system of oil allocations to influential individuals, from which his company benefited.

SHARES FIRM

Total's lawyer, Jean Veil, said the company was satisfied.

"For eight years our clients have been anxiously awaiting this decision. Not influence peddling, not corruption, not misusing company assets - what we've been saying since the beginning," Veil told Reuters.

Vitol, which has already been convicted of oil-food-food offences in a New York court, declined to comment.

Prosecutors have 10 days to appeal against the verdict.

Total had faced a fine of up to 1.88 million euros ($2.4 million) while de Margerie, who was charged with complicity in misusing company assets, could have been jailed for five years and fined 375,000 euros.

Shares rose slightly after the ruling and closed up 2.3 percent, slightly outperforming the CAC 40 Index.

De Margerie's six years as Total head have been dogged by legal investigations into the company's dealings with Iraq and Iran.

In May, Total agreed 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 recommended that de Margerie be brought to trial in France.

In the Iraq case, Total argued that the system in which middlemen procured Iraqi oil for energy firms was complex and opaque and resulted in companies paying surcharges without being aware of it.

Volker's 2005 report found Iraq levied surcharges of 10 to 30 cents on each barrel of oil, which, together with other aspects of the scheme, resulted in Baghdad receiving $1.8 billion in illicit income.

Baghdad also allocated oil to prominent individuals whom it hoped would lobby on its behalf to reduce sanctions.

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