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Wednesday, 24 July, 2002, 11:31 GMT 12:31 UK
The Steel Maharajah
Lakshmi Mittal, one of the UK's richest businessmen
Lakshmi Mittal, the steel billionaire embroiled in a Labour party cash-for-favours scandal, gave millions in "special commissions" to facilitate the purchase of another steel plant, the BBC's Money Programme has been told.

Mr Mittal gave $100m to the controversial Chodiev group for its help in the purchase of a steel plant in the former Soviet republic of Kazakhstan.

Key members of the Chodiev group are said to have had business links with organized crime in the former Soviet Union.

Mr Mittal, 51, hit the headlines earlier this year when it was discovered he had given the Labour Party 125,000. The donation came just two months before Tony Blair wrote to the Romanian prime minister supporting Mr Mittal's bid to buy the country's largest steel plant, Sidex.

Mr Mittal's company, LNM Holdings, is not British and is registered in the Dutch Antilles, a Caribbean tax haven.

Dr Johannes Sittard was Mittal's number two between 1995-2001. He negotiated Mr Mittal's purchase of the massive Karmet steelworks in Kazakhstan for $310m in 1995.

He told the Money Programme that he used the Chodiev group as the go-between with the Kazakh President, Nursultan Nazarbayev, and admitted paying them a huge commission.


"We paid a certain commission over a period of time... because it was very important to get help with the local authorities and the tax issues."

Dr Johannes Sittard

US oil companies are currently being investigated by the Swiss and US justice departments, because of allegations that they paid bribes into secret Swiss bank accounts held by the Kazakh president and some of his officials.

German born Dr Sittard told the Money Programme: "We paid a certain commission over a period of time for the service what they have provided on the beginning of the process, because it was very important to get help with the local authorities and the tax issues."

When asked: "We've been told $100m was the figure paid", Dr Sittard replied: "It was a substantial amount."

Dr Sittard who became chief executive of the Chodiev's Eurasia group last year, added: "So, I mean everybody who hears a figure of what you call $100m is a little astonished for sure."

He was then asked again: "It's a huge amount of money though isn't it?" Speaking from his offices in London's St James's Street, Dr Sittard replied: "It's a nice bundle of money, yes."

The energy company Tractebel is being investigated by the Belgian authorities over $55m in commission it paid to the Chodiev group for acting as its intermediaries in Kazakhstan.

Those involved in brokering the deal have told the Money Programme the commissions paid were in fact bribes, although Tractebel denies this. The three leading members of the Chodiev group have also been charged with money laundering in Belgium.

In Almaty, the Kazakh business capital, local businessman and politician, Bolat Abilov, told the BBC: "The Belgian company Tractebel bought a power grid in Almaty with a turnover of $100m. And for that they paid a bribe of $50m. Mr Mittal's company has a turnover of a billion and a bit, so you can judge for yourself how much extra he had to pay."

Annanya Sarin, spokesperson for Mittal's LNM Group, told the BBC that the $100m was not a commission, arguing that the figure had been taken out of context and the money was paid to the Chodiev group for supplying the Karmet works with iron ore and energy.

The Money Programme: The Steel Maharajah is broadcast at 7.30pm on Wednesday 24th July on BBC Two

See also:

11 Feb 02 | Politics
07 Nov 01 | Business
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