A heated confrontation between the judge and Al-Ismail reveals that oil-group officials knew about Meziane’s son’s partnership in Contal–Funkwerk.
The trial of defendants in the Sonatrach scandal entered a more substantive phase on its fourth day after an initially procedural and superficial focus. The confrontation between the judge and principal defendant Mohamed Reda Jaafar Al-Ismail, chairman of Contal–Funkwerk, intensified when the judge secured a clear admission that Sonatrach officials knew CEO Mohamed Meziane’s son, Bachir Fawzi Meziane, was his partner in Contal Algeria.
Contal Algeria formed a consortium with the German company Funkwerk Plettac and won three contracts to install electronic protection systems at oil facilities. French companies had initially been assigned to secure 123 facilities against possible terrorist attacks. The French partner’s failure led to the consortium receiving contracts for 13 facilities through direct negotiation, despite the reported breach of the law.
Judge Mohamed Reffad began the session by confirming the presence of Funkwerk Plettac representative Matthias Berlin, who arrived at the courtroom yesterday morning after obtaining a visa. He also rejected the defense argument that Sonatrach was not subject to public-procurement law.
The Supreme Court had already rejected lawyers’ appeals on October 16, 2014, on the basis of Presidential Decree 02/54 of February 2002, which subjects state-owned commercial and industrial enterprises to public-procurement law. The defendant had tried to argue that Sonatrach was a strong institution that would not break the law or disregard contract specifications.
Contracts, but…
Al-Ismail said the German consortium signed 3 contracts with Sonatrach. The first concerned the Hassi Messaoud industrial center, with a quoted value of 197 billion, and another concerned the Hassi Messaoud residential base, worth 3 billion centimes; these were awarded by direct agreement. The third, for securing the February 24 base, followed a limited tender.
He rejected the suggestion that Sonatrach’s contracts were illegal. He said a contract dated June 12, 2006, concerned a pilot visual-surveillance system at Hassi Messaoud, worth 1.97 million dinars, signed with production director and defendant Mustapha Hassani.
The judge confronted him with his earlier statement that Sonatrach executives had suggested dealing with a single legal entity, prompting him to establish the consortium. He replied that he had submitted separate Contal and Funkwerk offers, but Sonatrach wanted a single offer from a consortium subject to Algerian law, operating in dinars and enabling technology transfer. The initial offer included a free engineering study for the pilot project. Sonatrach liked it and signed the contract.
Asked about Bachir Fawzi Meziane’s involvement, the defendant said Sonatrach held a limited tender on March 14, 2006. Contal obtained the specifications and had 5 branches, including a transport branch managed by Fawzi, who was a partner in Contal. There was another limited tender involving the transport company, for which specifications were also obtained. A French company won the second tender, worth 3.5 billion dinars, at Haoud el-Hamra.
Four companies submitted bids to secure 123 oil facilities nationwide. Financial and technical offers were submitted, and the technical specifications included advanced solutions. The German partner provided guarantees worth €22 million before a contract worth 2.2 billion dinars was signed.
The defendant said the consortium received a second lot of 18 facilities, with Souleiman Azli as project manager, after submitting an offer of between 30 and 40 billion dinars per facility. After 18 facilities were selected, their value was set at 8.9 billion dinars.
Onerous conditions imposed for partnership by the American company, which had received 5 facilities, reduced Contal–Funkwerk’s allocation to 13 facilities in Hassi Messaoud, worth nearly 6 billion Algerian dinars. The contract was signed with the production and exploration directorates.
Security Concerns and Questionable Contracts
Questioning revealed that Sonatrach perceived terrorist threats to its oil facilities in 2007 and announced an urgent tender for security coverage and surveillance systems. Sonatrach officials rejected the initial financial offer as too high and sought a reduction. Negotiations produced a 15% reduction, and the contract was awarded by direct agreement because group officials considered it urgent.
The defendant said he received an urgent letter from regional director Zenasni Ben Omar to secure the residential base with an electronic intrusion-detection system that would allow security forces to respond within seconds.
Sonatrach Officials Knew
Through indirect questions, the judge obtained an admission after evasive answers that Sonatrach officials, including deputy general manager for upstream activities Belkacem Boumediene, knew Bachir Fawzi Meziane was a partner in Contal–Funkwerk, which had received negotiated contracts. Before each contract, the defendant presented the consortium’s articles of association listing all partners.
The German company refused consultancy contracts for the CEO’s other son, Mohamed Reda Meziane, for the same reason, and refused to partner with a holding company in which he owned 480 shares.
The defendant said his own German consultancy contract paid €30,000 a month for 24 months. Similar contracts benefited former Credit Populaire d’Algerie chief executive El Hachemi Meghaoui at €10,000 a month and his son Yazid Ilyes at €8,000 a month. He denied acting as an intermediary for them.
Copies of consultancy contracts found on a flash drive bore the names of CEO Mohamed Meziane’s wife and son Mohamed Reda. The defendant said he had copied them so Mohamed Reda could understand the duties involved. Mohamed Reda then offered his services to the German company, but it refused after learning who his father was.
Meziane’s son nevertheless benefited from a Paris apartment worth €650,000, registered in his mother’s name, J. Goussem, with his father’s knowledge. She signed an acknowledgment of debt before a French notary, although it was not registered. The defendant gave a copy to Societe Generale in Paris to obtain a check paying for the apartment in the name of the notary who drew up the purchase agreement. He said he had lost his copy of that agreement.
A Humanitarian Favor
The defendant said he was doing a humanitarian favor for his friend, whose mother was receiving treatment in France, with Mohamed Reda Meziane to repay the money after 3 months. He also described buying a villa in Khraissia in 2003 from the son, with the property registered in the father Meziane’s name. The sale agreement was to be signed after full payment, which occurred in 2007.
The judge questioned movements in the defendant’s personal bank account and his younger daughter’s account. He confirmed depositing €12,000 as an investment in his daughter Noha’s account, whose total balances were €26,149. His own account received €2,385,000 from the German partner.
Properties acquired after he won Sonatrach contracts included a building in Bouzareah worth 17 billion, a villa in al-Basatin worth 5 billion and 200 million centimes, and another in Ben Aknoun worth 9 billion. Contracts were drawn up in Contal’s name. He said other Paris properties were connected with establishing a company called Mouzaia there.
The defendant continued to contradict his earlier statements. He withdrew a previous admission that Sonatrach CEO Mohamed Meziane had helped him obtain 5 contracts for the benefit of his two sons and denied deliberately allowing the sons to benefit from the company’s profits.
He tried to persuade the court that his statements to the investigating judge had been made when he was exhausted and that he had meant receiving assistance, rather than contracts and privileges. He then said he had signed the judicial police interview records under what he described as tremendous pressure.