* Total says sought to avoid illegal surcharges on Iraq oil
* Energy says system of middlemen was not known until later
* Total charged with bribery, complicity, and influence
By Chine Labbé and Alexandria Sage
PARIS, Feb 11 France's Total told a
Paris court on Monday that it had taken precautions to avoid
illegal payments to the Iraqi government during the U.N.
oil-for-food programme, but had been thwarted by an opaque
system of middlemen that it only discovered later.
The energy giant, France's second-largest company by market
capitalisation, is accused of bribery, complicity and influence
peddling at the time of the programme, designed to allow Saddam
Hussein's Iraq to buy humanitarian goods through United
Nations-controlled oil sales at a time of international
The other defendants in the trial include the Swiss oil
trader Vitol and 18 individuals including Total's chief
"Our point of view was, 'We won't pay surcharges'," said
Total's general secretary, Jean-Jacques Guilbaud, a member of
the executive committee who is representing the company in the
"In spite of all the precautions, perhaps indirectly, we
contributed to surcharge payments," he added.
Total is accused of bribing foreign agents between October
2000 and 2002 and influence peddling and its concealment between
An independent inquiry led by the former U.S. Federal
Reserve chairman Paul Volcker found in 2005 that the 1996-2003
programme had been undermined by kickbacks and payments to
prominent individuals with access to Iraqi oil.
Iraq's 2000-2002 policy of levying so-called "surcharges" on
each barrel of oil - in general 10 to 30 cents per barrel - put
some $228.8 million in the pocket of the government, the report
found. Iraq also gave oil allocations to prominent individuals
who it hoped would lobby on its behalf to reduce sanctions.
The system was opaque and relied on little-known companies
as intermediaries that entered into contracts with Iraq, or
political beneficiaries who held oil allocations and
subsequently sold oil to traders or oil companies, it found.
An inquiry by French independent investigating magistrates
found that of the 37 contracts Total entered into to buy Iraqi
oil on the secondary market, 30 had involved surcharges.
Guilbaud argued that Total had put in place a system it
believed would protect it from the surcharge system. This
involved working only with "serious" intermediaries who could
procure Iraqi oil, and adding a clause into contracts that
forbade the payment of surcharges.
"What more could we do?" Guilbaud told the three judges and
the ornate courtroom filled with black-robed lawyers.
Total, which could be fined up to 1.88 million euros ($2.52
million), has said the charges lack merit. It cites the fact
that public prosecutors, who answer to the Justice Ministry,
have asked for the case be dropped.
The company has also denied knowing about the illegal
"It's a system that wasn't known until the (Volcker)
report," said Guilbaud.
Asked by a judge why Total would not have seen that
surcharges were included in the prices it paid its suppliers,
Guilbaud said all the prices paid matched the market rate.
"It wasn't possible to deduce from these prices that there
was a surcharge," Guilbaud said, adding that sometimes Total's
own suppliers did not realise that surcharges had been added in.
Last week, Total CEO Christopher de Margerie, who is accused
of complicity in the misuse of corporate assets, denied knowing
that Total had paid surcharges.
($1 = 0.7474 euros)
(Writing By Alexandria Sage; Editing by Kevin Liffey)