Tuesday, April 22, 2003

The Socialist leaning politicians in America who assure us that over-regulation will end corporate corruption and always shout "Enron" in place of "racist" as a debate closer need to explain how even more regulations would have prevented the Elf fiasco in France. This was a state owned company in one of the most regulated markets in the world.

Last week Elf's former president, 59 year-old Loik Le Floch-Prigent, explained in painstaking detail how he won the approval of the late Socialist president Francois Mitterrand to use the equivalent of five million euros ($5,45-million) of company money to pay for his divorce.

Realising in 1991 that he could no longer live with his wife Fatima Belaid -- who he believed possessed a number of sensitive secrets about the conduct of Elf affairs -- Le Floch-Prigent went to see his political patron at the Elysee palace.

"I told (Mitterrand), 'I am probably going to divorce my wife and that could have repercussions given her character. We made a lot of trips to Africa together and the collateral damage could be significant for the country and Elf,'" he told the court on Tuesday.

Mitterrand then refused his offer to resign and instead told him, "You must sort out the problem" which Le Floch-Prigent took as authority to buy his wife's silence with Elf cash.

The story was revealing of the climate of easy money at the then publicly-owned company, which after eight years of investigations and the accumulation of 250 volumes of evidence is now at the centre of a mammoth four-month trial featuring a total of 37 accused.

At the heart of the case is the charge that Le Floch-Prigent and two other top executives Alfred Sirven, 76, and Andre Tarallo (75) creamed off millions of euros for themselves from the secret accounts that Elf ran in Switzerland and elsewhere for the purpose of buying influence and contracts.

But the evidence used to substantiate this has itself shed light on practices which at the time -- just 10 years ago -- were apparently regarded as acceptable by French governments of all hues and continued till Elf's privatisation in 1994. It is now part of TotalFinaElf.

Chief among these was the bribery of African leaders in order to exploit oil-fields and extend French influence on the continent.

Tarallo -- who was known as Elf's Mr Africa because of his contacts there -- has told the court that he was asked by President Omar Bongo of Gabon to put money into Swiss accounts as an insurance policy against his possible fall from power.

Sirven has also admitted enriching himself from accounts he set up on behalf of the former president of Congo, Pascal Lissouba.

The court has also heard from Le Floch-Prigent and Sirven confirmation of long-standing rumours that money from the secret acounts financed French political parties as well as candidates for the presidency.

Sirven said that he himself "took personal charge of things of this nature," and Le Floch-Prigent said that when he took over as Elf president in 1989 he was asked by Mitterrand to "balance things out" so that the Socialists benefitted as well as the Gaullists of France's current president Jacques Chirac.

Roland Dumas, Mitterrand's foreign minister who was himself acquitted in a related corruption trial, said Elf had become a "cash-cow. Its capital was used to reward African heads of state, but also -- one thing leading to another -- to bail out certain empty coffers."

Government officials are in just as deep as the company officials. This is something the regulation-lovers here in America don't like to talk about. By their reasoning we cannot trust private companies to do the right thing but the government, especially an un-elected bureacracy, can be trusted always and without question. While free-market economics is debatable, I admit, the other side doen't accept that the Socialist model has proven itself even worse and that in the places where some form of Socialism has worked, realities on the ground and American economic strength as guarantor have been more important to success than over-regulation and Socialist market restrictions. It is something that runs deeper and moral-relativists don't like to face it but it is time to set a standard for ethics and the understanding of right and wrong and the acceptance of responsibility for failure or wrongdoing.

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