THE TROUBLING ELF-KOHL CONNECTION

The oil and gas industry should hope that privatization, self-cleansing, and takeover cure everything that went haywire at Elf Aquitaine while the oil company was still owned by the French government.

It is well-established that Elf functioned as a conduit for government bribes during the last years of the administration of the late Pres. Francois Mitterand.

But disturbing details continue to come to light.

Former Elf Chairman Philippe Jaffre issued a statement this week acknowledging payment prior to his tenure of what he called a "commission" during Elf's 1992 purchase of the Leuna refinery in Germany. He said the payment went to the French firm Noblepac and didn't specify final use of the money.

The payment occurred, Jaffre said, on Dec. 24, 1992, several months after signing of the final agreement for the refinery purchase. Jaffre became president of Elf in the middle of the following year with orders to privatize from a then-new government intent on cleaning up the company. He resigned as chairman last September when Elf directors approved a merger with TotalFina.

The late-1992 commission payment to Noblepac has been linked to the political funding scandal now haunting former German Chancellor Helmut Kohl and his party, the Christian Democratic Union.

The Noblepac president, Andre Guelfi, is reported to have admitted making a payment equal to the Elf commission to a German political party. He said the funds were intended to dispel resistance to purchase of the package of refining, petrochemical, and marketing assets that included the 100,000 b/d Leuna Werke refinery in eastern Germany.

Elf led the purchasing group, other members of which were Germany's Thyssen group and Deutsche SB-Kauf. The transaction was approved by Treuhandanstalt, the German state entity that handled privatization of assets in the former East Germany. In addition to the Leuna refinery and associated petrochemical plant, the group acquired the 73,700 Hydrienwerk Zeitz refinery and Minol chain of service stations.

The German television station ARD reported that Elf funds related to the Leuna deal were diverted on instructions from Mitterand to Kohl's successful election campaign in 1994. Kohl, one of Europe's most popular political figures while in office, is now the subject of parliamentary and criminal investigations seen as threatening to the future of the Christian Democrats.

The Mitterand-appointee who headed Elf at the time of the Noblepac commission, Loik Le Floch-Prigent, faces charges of fraud and embezzlement. He and another former Elf official face corruption charges related to the Leuna payment.

While news of the Kohl scandal shined light on the Leuna mess this week, the second installment of a French kiss-and-tell saga embarrassing to Elf surfaced in Paris.

The Financial Times reported extracts published by Paris Match from the new book "Whore of the Republic" by Christine Deviers-Jouncour, mistress of former French Foreign Minister Roland Dumas. The author says Dumas helped place her on the Elf payroll.

"Since its foundation in 1966," she writes, "Elf's role has been not only to ensure France's independence in energy matters, but also to subsidize the politicians and to carry [on] clandestine semiofficial missions on behalf of the state."

Talk about an image problem. It all must be embarrassing for the serious professionals at Elf who probably knew few if any of the details while the scandal was under way and who now must grapple with the uncertainties of a takeover.

The damage should add impetus to recent efforts by the industry to battle corruption. Too many good and innocent people get hurt when money changes hands for the wrong reasons.

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