Elf slush funds oiled French political machine

The scandal over illegal political funding by the French state-owned oil firm, Elf, deepened yesterday when the Socialist former finance minister Dominique Strauss-Kahn was told he would be questioned over alleged fraudulent payments from the company.

Elf's role at the centre of backhanded payments sanctioned by the Elysée palace when the late François Mitterrand was president was underlined at the weekend by allegations that the oil firm contributed about £10m to Helmut Kohl's Christian Democrat Union (CDU) 1994 election campaign.

Some £2.1bn was allegedly milked from Elf's profits in a web of international corruption and mismanagement between 1989 and 1994.

The allegations facing Mr Strauss-Kahn are small in comparison. But if he cannot justify a payment of £19,000 from Elf's funds to his private secretary, Evelyne Duval, his political career could be over.

Mr Strauss-Kahn resigned last year to answer charges of fraudulently receiving unjustified legal advice fees from a students' health insurance fund, MNEF, used as a slush fund by the Socialist party.

Although he has dismissed the Elf accusation as baseless, it fuels a six-year scandal which has damaged many reputations, including those of Mitterrand and his friend, the former German chancellor Helmut Kohl.

More than six years of investigations into the oil firm have brought down the company chairman, Mitterrand's foreign minister and a score of lesser dignitaries. They have left no doubt that Elf was involved in a gigantic international illegal funding operation controlled from the Elysée palace.

Two examining magistrates, Eva Joly and Laurence Vichnievsky, have piled up so much evidence about Elf's undercover bribery and corruption that the judges' offices have been moved to a whole floor in a separate building.

Mitterrand would probably be facing a judicial inquiry had he not died in 1996. Instead, his close friend, the former foreign minister Roland Dumas, is expected to face trial this year over alleged kickbacks in an Elf-managed deal over frigates for Taiwan.

His former mistress Christine Deviers-Joncour, who this week brought out her third book on the inner workings of Elf, could join him.

The list of public figures under investigation for pumping millions of pounds of Elf profits for political causes or private gain becomes more impressive by the day. Most are from Mitterrand's personal entourage. They include Elf's disgraced former chairman, Loik Le Floch-Prigent.

Other leftwing figures suspected of profiting from Elf's largesse include the novelist Françoise Sagan; the SOS Racisme executive Eric Ghebali; and the late president's son and adviser on Africa, Christophe Mitterrand.

The Gaullist former interior minister Charles Pasqua allegedly used Elf to finance an influential network in Africa, headed by Omar Bongo, the president of Gabon, where Elf has large oilfields. All deny any wrongdoing.

Other allegations include routine operations to provide cash to friendly politicians from Russia to Venezuela and bizarre transactions, such as the purchase of handmade shoes worth £1,100 for Mr Dumas and a £1.8m divorce settlement for Mrs Floch-Prigent.

Several officials are on the run, including the head of the African operations, Alfred Sirven. But no one has dared to identify themselves as the source of revelations over the Mitterrand-Kohl deal.

Despite a categorical denial by the justice minister, Elisabeth Guigou, no media have refuted the allegations.

The transaction was allegedly covered by the purchase at an inflated price of a rundown oil refinery in Leuna, in former east Germany. A former manager of Elf International, Maurice Malet, said everyone knew that the refinery was worthless and would never make a profit.

"But we also knew at the time that the only factors that counted were political considerations," he said. "The sale was a good point for Helmut Kohl just before the general elections."

Mitterrand saw himself and Mr Kohl as the only men able to safeguard the single European currency project; £10m was a bargain for maintaining the odd-bedfellow friendship between conservative Germany and socialist France.