updated 3/21/2007 10:30:00 AM ET 2007-03-21T14:30:00

The new CEO of French oil giant Total SA was being held for questioning Wednesday in an investigation into the group's activities in Iran, the latest legal challenge for the company and its embattled chief.

Christophe de Margerie has already been targeted in a French probe over the scandal-ridden oil-for-food program in Iraq. He took over the helm in February of a company facing sinking profits amid lower hydrocarbon output, oil prices down from their record highs and rising exploration costs.

In the latest case, French financial police are investigating whether Total paid bribes to win a contract to develop the South Pars gas field in the Persian Gulf in 1997, among other allegations of wrongdoing, according to judicial officials.

They spoke on condition of anonymity because of laws requiring that details of investigations be kept secret.

De Margerie, who was head of Total's exploration and production at the time of the Iran deal, was being questioned Wednesday with two other Total executives, said company spokesman Paul Floren. According to French law, they can be kept in custody by investigators for up to 48 hours.

Floren said the company stands behind the officials.

"The agreement signed in 1997 was done in accordance with applicable laws," he said.

Total would not name the other two officials, but a person close to the company told Dow Jones Newswires that they were Total Chief Financial Officer Robert Castaigne and the company's upstream operations executive, Philippe Boisseau.

Investigating judge Philippe Courroye is leading the probe into the Iran contract.

Judicial officials have said it targets a contract signed with the National Iranian Oil Co. in 1997 to develop the South Pars gas field. Total joined with OAO Gazprom of Russia and Petroliam Nasional Bhd., or Petronas, of Malaysia to develop the field.

The probe follows a tip-off from authorities in Switzerland, who have provided documents to the French, judicial officials have said. They said Swiss judicial authorities have frozen 95 million Swiss francs ($78 million) in bank accounts belonging to an Iranian-born Swiss national as part of an investigation of suspected money laundering.

In October, de Margerie was kept in French police custody for two days as part of the oil-for-food probe, which Courroye is also heading. Courroye's office would not comment on the Wednesday questioning.

Investigators suspect that millions of dollars were used as under-the-table commissions to obtain entry to countries like Iraq — then under a U.N. embargo — and Russia, where Total was trying to gain a foothold.

Total insists it has abided by the rules of the U.N. oil-for-food program, which allowed Saddam Hussein to sell oil in exchange for humanitarian goods.

Last month Total reported a 4.7 percent drop in fourth-quarter profit to $2.9 billion. Full-year 2006 profit was down 4 percent to $15.33 billion.

Total is also facing a potentially bruising trial in Paris over its possible role in France's worst oil spill, the sinking of the tanker Erika in 1999. The trial opened in February and is expected to last months.

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