A menacing storm is closing in on Bourbon, a French group specialised in providing maritime services and engineering support for the offshore oil and gas extraction industry, one of France’s biggest employers in maritime activities with more than 8,000 people on its payroll across 47 countries.
The group, whose clients include national oil companies and energy giants such as Shell, Total, Exxon and BP, is navigating rough times on both financial and legal fronts.
On July 16th, it was ordered by magistrates in the southern French port city of Marseille, where it is headquartered, to stand trial, as a corporate entity, on charges of “corrupting public sector employees of a foreign country”. The case, in which members of its management are also sent for trial, centres on Bourbon’s alleged corruption of civil servants in Nigeria, Cameroun and Equatorial Guinea in order to escape about 200 million euros in tax payments.
The group firmly denies the charges.
Meanwhile, on August 7th, Bourbon Corporation, the holding company of the group – which has debts of 2.7 billion euros – was put into receivership by the Marseille commercial court. “The procedure will concern only the holding company and not the operational companies,” the group said in a statement shortly before the decision, in late July. “The aim is to maintain in the best manner the operational activities of the group in order to actively take part in the recovery that has begun in a market that is experiencing profound change.”
The move follows an offer made in June by the struggling group’s principal creditors, notably Chinese banking giant ICBC Leasing but also several French banks, to transform 1.4 billion euros of the debt into capital, by taking a 90% stake in the group. That was rejected by its chairman and CEO Jacques de Chateauvieux, 68, whose wealth comes from his family’s sugar production business on France’s Indian Ocean island of La Réunion. Chateauvieux, who has close links to the Catholic organisation Opus Dei, has 60% of the voting rights and appears determined to remain in control of the company.
The group’s current problems stem from its strategy of centring its growth ambitions solely in the oil and gas production sector, abandoning its activities in less volatile sectors like port towage and retail, leaving it dependent upon an energy market in regions where political instability, corruption and a fall in prices are recurrent.
The fall in oil prices that began five years ago has seen the group’s turnover sink, from 1.385 billion euros in 2014 to 689.5 million euros in 2018. Its share price has plunged from 21 euros in 2014 to less than 4 euros today. As the French regional daily Ouest-France reported in July, around 150 of the group’s 483-strong fleet of vessels are currently inactive.
Enlargement : Illustration 1
The alleged corruption by Bourbon of civil servants in Nigeria, Cameroun and Equatorial Guinea concerns tax adjustments it received for the period 2007-2012, when, French prosecutors allege, the group attempted to have a total of around 200 million euros in tax debts written off in exchange for the distribution of “presents” worth 3 million euros. Along with the group itself, members of Bourbon’s senior management face charges of corruption and complicity in corruption.
The group has denied any involvement in corruption, and has dismissed the evaluation of its tax debts in the African countries as “far-fetched”.
The forthcoming trial follows the postponement of initial hearings which opened in March, when defence lawyers successfully challenged the case on a technicality; the defendants were sent for trial before the minimum period allowed under French law for them to question the details of the case against them. That forced the case to be sent back to the investigating magistrate to begin the procedure again, almost seven years after the investigation began.
The magistrate in charge of the investigation has accused Bourbon’s management of playing an active role in the alleged corruption scheme, adding that they “at no moment” presented “any protest nor the least sign of indignation”, and “on the contrary, the practice of bribery appears [as something that is] agreed”.
Meanwhile, as the investigation progressed, most of those cited in the case were allowed to remain in their posts within the company despite the mounting evidence against them.
France’s junior economy and finance minister Agnès Pannier-Runacher, 45, was an independent member of Bourbon’s board from 2009 to 2018. A former member of staff of France’s inter-ministerial audit and supervisory department, the Inspection general des finances, who, until her appointment to government in October 2018, spent six years in the private sector in executive and board member roles, she also served Bourbon as chairwoman of it’s audit committee between 2010 and 2018.
As chair of the audit committee, her mission, as set out on Bourbon’s website, was to assist the board in ensuring the exactness of the group’s accounts. The audit committee’s responsibilities, as explained by the group, include evaluating “the effectiveness and quality of the group’s internal control systems and procedures, and in particular, sees to it that the Internal Control Committee is established and operating properly”. It also monitors “the group’s financial and cash position and any significant risks faced by it”.
According to her official declaration of financial interests and activities – a statement all members of French government are required to produce and which is made public – Pannier-Runacher earned a gross sum of 45,000 euros from Bourbon in 2017 in board attendance fees. This was on top of her salary as deputy chief executive of the Compagnie des Alpes, which manages ski resorts and leisure parks, which in 2017 amounted to a net sum of 350,371 euros. She also received remunerations for sitting on the boards of several other companies, including hygiene services provider Elis, news agency Agence France-Presse, and motorway investment fund Macquarie Autoroutes de France (a French arm of the Australian investment bank Macquarie Group).
Since taking up her post as a secretary of state at the economy ministry, Pannier-Runacher has spoken out about the social responsibilities of private corporations. In June, the French anti-fraud agency, the DGCCRF, revealed that minced beef bought from Poland by charitable organisations in France for distribution among the needy was in fact so full of fat, soy and starch that it could not be labelled as meat. Speaking about the scam before the French Senate, Pannier-Runacher said that, “Faced with cynical fraudsters who they could act in all impunity […] all fraud will be sanctioned”.
In July, her ministry sent the public prosecution services in the northern town of Amiens the conclusions of a report by audit agency KPMG into the use of funds provided to a company that had taken over the former Whirlpool tumble-dryer factory in the town. It had found failings in the financial management of the new owners, who went into liquidation. “When a company is not doing well, it is the responsibility of the management to take part in the war effort,” commented Pannier-Runacher, who said she was “shocked” by the spending of the company.
The case began with a suitcase stuffed with cash
Questioned by Mediapart in email exchanges in July and August, Agnès Pannier-Runacher indicated she had no regrets about her time at Bourbon. Regarding the poor financial health of the group, she said: “When the oil market collapsed, I concentrated on seeking solutions, and on the transparency of information that was given to the market.” Regarding the corruption allegations, she said that when a judicial investigation was launched into the matter at the end of 2012, “the situation was taken very seriously by the board members”. She added that she had, herself, “strongly supported the setting up of a compliance plan that places the company within the best Anglo-Saxon standards, several years before the Sapin II law was promulgated”. (The 2016 Sapin 11 law, named after the then French finance minister Michel Sapin, established stricter legislation to combat corruption and to introduce greater transparency in public office).
Enlargement : Illustration 3
Today, members of Bourbon’s senior management argue that they were unaware of the failings which have led to the forthcoming corruption trial. According to statements given to the investigation in 2013 by the group’s former legal affairs director, it appears as if a leaden silence fell over the events. She spoke of the “weak weight” of the legal department within the group. “When I would want to travel abroad to meet people and see how things were happening, I was refused everything,” she told investigators. She said that she felt she was not listened to by senior management, complaining of “huge difficulties in making myself heard, notably on anti-corruption aspects”. She added that she had “spoken” to the management committee about the importance that needed to be placed on establishing anti-corruption measures but that she had received “no follow-up”.
The corruption investigation began when, on October 19th 2012, customs officers at Marseille-Provence airport came across a suitcase containing 250,000 dollars in cash. The baggage, which had arrived on a flight from Lagos, Nigeria, was the property of Marc Cherqui, who was then Bourbon’s tax affairs director. Cherqui, formerly a tax expert with the Royal Bank of Scotland and who was recruited by Bourbon via a head hunter in 2009, was arrested.
He at first gave conflicting accounts to justify the presence of the cash, beginning by suggesting it had been planted in his case without his knowledge, but subsequently agreed to help the investigation. In his statements, he said that soon after his recruitment by Bourbon he realised he had “very quickly understood” that he had not joined the “right company”. In a lengthy statement he described the functioning of the group (one of whose mottos is "Building together a sea of trust"), in which he said the accounts were in an “unspeakable” disorder, and supplied the investigators with dozens of copies of emails and confidential notes which he said illustrated the existence of an “organised system aimed at paying the least possible taxes”. Cherqui was sacked by Bourbon very soon after his arrest.
The public prosecution services widened the probe, with the placing under investigation (a legal status that is one step short of bringing charges, but which requires serious or concordant evidence of criminal behaviour) of Bourbon’s managing director, two deputy chief executives, and the heads of several of the group’s subsidiaries. In March 2013, Bourbon managing director Christian Lefèvre, during a press conference to present the group’s annual report, spoke about the probe prompted by Cherqui’s arrest, insisting that “Bourbon has never remunerated in cash nor given cash to its staff”, adding: “We have naturally carried out an internal audit following this arrest and we can tell you that this money does not come from Bourbon companies, nor its subsidiaries.”
Throughout the investigation, Bourbon’s legal team have expressed indignation over the developments, and have even thrown doubt on the actions of the examining magistrate (who also has the title of ‘judge’), leading it. “The judge took everything that Mr Cherqui said at face value, whereas any other judge would have discredited it,” Ludovic Malgrain, then lawyer for the group, told French daily Le Monde in March. “It’s more a Cherqui affair than a Bourbon affair. It’s he who was caught red-handed.”
Despite all the evidence collected by the investigation, the group and its senior management have recurrently claimed they are victims of fabrications by Cherqui, who they accused of exaggerating the group’s tax debts in Nigeria as part of his supposed machinations.
“The strategy that consists of trying to place the entire responsibility for the corruption pacts on employee Marc Cherqui appears particularly clumsy,” wrote the examining magistrate in the formal document detailing the case to be sent for trial. “It had, on the other hand, the effect of sealing a rupture between him and his employer, which produced particularly useful revelations for establishing the truth.”
The magistrate added that “the statements by Marc Cherqui were systematically corroborated by material elements attesting the veracity of his statements […] He has shown an unwavering will to denounce the illicit actions which he engaged in on the instructions of his employer”.
In Nigeria, these “actions” were to save Bourbon significant sums. The Nigerian tax authorities addressed Bourbon with a tax adjustment in July 2012 demanding the payment of 227 million dollars (equivalent, at the time, to around 185 million euros). The group had notably funnelled some of its profits made in Nigeria through one of its subsidiaries in Madeira, a Portuguese free zone where company tax is very low (currently 5%). In 2010, Cherqui had alerted his hierarchy to the risk involved in that set-up, when he calculated that it represented a potential tax adjustment of about 200 million dollars.
The French investigation has established that the tax debt was written down to 4 million dollars “in return” for a payment of 700,000 dollars to Nigerian tax inspectors, and another payment of 2 million dollars to the head of the local tax authorities.
Concerning the cash in the suitcase discovered by customs officers at Marseille airport, Cherqui initially claimed that it was a sum he had syphoned off for himself, before finally stating that it was a retro-commission – a return bung – for the benefit of his employers. As a result, Cherqui will appear in court on charges of failing to officially declare the sum and “receiving” the proceeds of “active corruption”. In his interview with Le Monde in March, the group’s lawyer Ludovic Malgrain insisted: “It is not money disbursed by Bourbon, nor destined for Bourbon.”
In the central African state of Cameroon, the French investigation found that a subsidiary of Bourbon escaped a tax adjustment of 11 million euros that was claimed for the period 2007-2010 after two tax inspectors were paid a total of 150,000 euros. During the investigation, members of Bourbon’s management committee were questioned about the payment, when they said that, at the time, they believed the sum was either to pay back tax payments due, or represented the fees owed to a local intermediary. But in his conclusions, the examining magistrate noted that members of the committee “not only had knowledge of the acts of corruption, but also validated the principle and the methods”.
In a scenario similar to that employed in Nigeria, the probe found, the group’s total tax debts for the period 2006-2009 in Equatorial Guinea, in central Africa, were written down from 8 million euros to just 444,849 euros after the payment of a total of 400,000 euros to three of the country’s civil servants. The group’s management applied for the case to be dropped on the grounds that they had no knowledge of the final destination of the 400,000 euros.
But, referring to the numerous emails supplied to the investigation by Marc Cherqui, the magistrate in charge of the French investigation noted: “The members of the Comex [management committee] were perfectly informed about the secret negotiations underway and the fraudulent nature of the settlement which they appear to have authorised.”
Questions unasked
In his written justification for sending the case to trial, the magistrate said his investigation had “demonstrated that not only the members of the Comex knew about the corruption practices, but even more, they planned them, structured them, validated them and put in place or authorised the human, legal, financial and logistical means that allowed for their application according to the situation and requirements”.
Without the “combination of circumstances” that led to the discovery of the suitcase at Marseille airport in October 2012, he wrote, “the perpetrated fraudulent practices could manifestly have continued ad libitum”, and because they were committed on behalf of the group, he argued, it bears responsibility in the crime.
However, the investigation has not broached the issue of responsibilities of board members, and the question of whether they should have put in place adequate procedures to counter the dangers of fraud and corruption. What is known is that since 2010, all senior management at Bourbon were aware of the tax issue in Nigeria. Questioned in 2013, the group’s former deputy chief executive, Christian Munier, who became a board member, said that, given its “importance”, the matter had been raised within the audit committee before Marc Cherqui’s arrest in October 2012. However, the “practical” methods for settling the tax dispute had not been discussed in detail. Questioned by Mediapart, he said that, “It was indicated that there were tax problems in Africa”, but that for him this was not “unusual”.
Also questioned by Mediapart, French junior minister Agnès Pannier-Runacher, chairwoman of Bourbon’s audit committee between 2010 and 2018 and also a member of the group’s board, insisted: “At no moment were the audit committee or the board informed of an eventual implication of intermediaries in the settlement of these disputes.” Christian Munier, however, argued that given the significant sums in question, the ongoing negotiations and the potential risk of corruption in the country, the audit committee could, of its own volition, have sought to clarify the methods employed to reach a settlement. “A transactional agreement is a normal solution in tax matters,” said Pannier-Runacher in response to that suggestion. “There was therefore no reason a priori to take up the question.”
Enlargement : Illustration 4
Pannier-Runacher told Mediapart that she had done what was necessary in ensuring “the follow up of the putting in place, in an accelerated manner, of a complete compliance programme that met the best international standards”, and which required staff involved in such matters to follow a training course. This was confirmed to Mediapart by several of the group’s employees.
But the question remains as to why those senior management figures implicated by the French investigation were allowed to remain in their posts, in stark comparison to Marc Cherqui who was sacked immediately after his arrest at Marseille airport.
Placed under investigation in 2015, the then managing director Christian Lefèvre remained in the job until September 2017, when he was appointed managing director of Jaccar, the personal holding company of Bourbon’s chairman and chief executive Jacques de Chateauvieux. Lefèvre was replaced as managing director of Bourbon by Gaël Bodénès, who has also been sent for trial in the corruption case.
Pannier-Runacher told Mediapart that when she left the group in October 2018 to take up her post in government, she did not have “information in my possession that allowed me to place into question the personal integrity of a director of Bourbon”. Asked whether the decision in 2015 to place under investigation both the group and its senior management team did not lead her to question the events, she replied: “I did not have knowledge, at a personal level, of specific information that would have allowed me to qualify the actions of the people concerned.”
The judicial investigation also found that Bourbon’s managing director, Christian Lefèvre, was paid, over several years, an annual 150,000 euros on top of his salary. The money was paid into accounts belonging to a company called SAS Marine, whose principal client was Bourbon, along with two other companies controlled by Jacques de Chateauvieux. Lefèvre is the chairman and unique employee of SAS Marine, and two associates of the company are his two daughters. According to the case file prepared by Judge Cotelle, the structure acted as “an artificial externalisation of activities which were part of his [Lefèvre’s] functions within Bourbon”, and was aimed at avoiding social welfare contributions otherwise due from the remuneration. As a result of that conclusion, Lefèvre will stand trial not only on corruption charges but also for “concealed employment”.
The remunerations of Lefèvre via SAS Marine were noted in the documents of reference which the group, quoted on the stock exchange, published every year. They were, on occasion, justified as “management services”, while other years they were described as being for “specific technical services concerning the management of the fleet”. The members of Bourbon’s board could not reasonably have been unaware of this. Pannier-Runacher told Mediapart that, “This situation prevailed before my arrival”. She underlined that the payments were the subject, in 2008, of a regulated agreement that was submitted to the board for approval, and also that of the group’s auditors in their annual report.
Under questioning, Lefèvre himself told the investigation that there had been an internal study by Bourbon which concluded the arrangement represented a “tax risk”, but that, “The company didn’t want to modify [the system of remuneration] because it had been done like that for a number of years”.
“Nothing predisposed me to imagine that these methods of payment, decided before my arrival [at Bourbon], could cause a problem,” Agnès Pannier-Runacher told Mediapart, adding that such arrangements “were not isolated among commercial companies”.
While Pannier-Runacher’s resignations from the board and her role as head of the audit committee met the requirements made upon those who enter government, she told Mediapart that she had in 2017 already announced her decision not to renew her positions with the company after the end of her mandates. Despite that, she served another year, which she said was “due to particular circumstances that made my replacement impossible at a moment when the company finances were under pressure and the financial department needed support”.
Mediapart in July sought comment from the legal team representing Bourbon, but the lawyers declined to be interviewed on the grounds that the judicial investigation had not then been concluded. The lawyers did not respond to a second request for comment submitted by Mediapart, on August 9th, after Judge Henri Pons had officially concluded the investigation and sent the case for trial.
Mediapart also requested an interview with Jacques de Chateauvieux, contacting him via his professional email address in July and again in early August, but received no response.
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- The French version of this report can be found here.
English version by Graham Tearse