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Joint Oil Venture Sought to Recoup $30 Million : A Teetering Shah Led to Bogus Billings

February 22, 1987|WILLIAM C. REMPEL and RONALD J. OSTROW | Times Staff Writers

DUESSELDORF, W. Germany — For Wilfried Tillmann, an ambitious, 40-year-old middle-manager at Europe's largest steelmaker, the assignment handed to him in the autumn of 1978 seemed beneath his station: order a simple rubber stamp. But the $2.50 purchase would be one of the most significant and frightening experiences of his career.

Tillmann's employer, the respected German industrial giant Thyssen Rheinstahl Technik GMBH, had been building a $1.2-billion oil refinery for the Shah of Iran in partnership with an American giant, the Irvine-based Fluor Corp. And, by late 1978, with the shah's regime beginning to teeter, Thyssen-Fluor executives feared that the revolution would erupt before they got paid.

That is why Tillmann waited nervously to buy the rubber stamp and worried that "someone might call police." The stamp, bearing the name of a Japanese businessman he had never met, was phony--part of a hastily concocted scheme to extract $30 million from Iran using scores of fake invoices that Tillmann had ordered from a local print shop, he now says.

Tillmann's unusual enterprise, which he insists was done at the behest of higher-ups in the Thyssen-Fluor joint venture, provides an extraordinary glimpse of the pressures that can develop when major corporations have invested hundreds of millions of dollars in an overseas venture--only to see it threatened by political upheaval.

The case also raises questions about the ethical and other responsibilities of senior corporate executives for monitoring and controlling the actions of lower-level managers. And, in this case, years before the Iranian arms-and-hostages scandal, it is Iran that claims to be the victim.

Thyssen, which refused to allow its top executives in Germany to be interviewed, acknowledged in a written statement that bogus billings had taken place. But the West German firm contended that no harm was done, because it was merely obtaining money legitimately owed it under terms of a fixed price contract.

Fluor officials, expressing shock over Thyssen's admissions about contrived invoices, claim no knowledge of such a scheme. Fluor executives insist that the American company had no part in processing any false bills, despite a claim by Tillmann that Fluor's top man on the refinery project, James C. Dixon, helped concoct the phony bills. Dixon also denies creating false invoices.

Details of the financial drama behind the oil refinery project--to be built in the Iranian city of Esfahan--emerged from interviews with Tillmann and other corporate sources and from confidential company documents and private investigative reports only recently made available to The Times.

The documents describe a "hectic atmosphere" in the fall of 1978 in which German accountants, allegedly with help from an American project engineer and inside sources at the Iranian oil company, processed $30 million in phony invoices in only two weeks.

False Japanese Invoice

Among the recently discovered telltale documents are a false Japanese Steel Works invoice for $776,412 supposedly authorized by a deputy general manager who had left the company a year before the invoice was dated, and a contrived invoice for 7.6 million French francs drafted under the name of a French construction company whose own books showed that its legitimate invoice of the same number was for only 2,257 francs on an unrelated project.

A former director of the government-controlled National Iranian Oil Co. told The Times that the company, which maintained an account in a Duesseldorf bank to pay Thyssen and Fluor for their services, would not have paid the fake invoices were it not for the chaos of the revolution.

"If the project had been finished before the revolution . . . one of our internal auditors would have caught up with it," said Majid Diba, a top National Iranian Oil Co. official when the shah was deposed. Because of spreading political unrest, he said, "there was no possibility" of detecting the false documents at the time.

The refinery, which Fluor said was 99.2% complete when the Iranian revolution forced Thyssen and Fluor to abandon it, is now processing oil--reportedly 280,000 barrels a day--for the government of the Ayatollah Ruhollah Khomeini.

'Grossly Misleading'

Thyssen's contention that the bogus billings did no harm because they merely procured funds legitimately owed by the Iranians was labeled "manifestly and grossly misleading" by a three-judge panel in the Hamburg Regional Court, which recently dismissed a libel action brought by Thyssen against the German magazine Der Spiegel. The publication characterized the participants as "a gang of forgers" from highly respected international companies "plundering the treasury of a foreign state."

Blames Thyssen

Dixon, Fluor's chief official on the refinery project, laid all the blame for the bogus billings on Thyssen. "These (Thyssen) guys probably did a lot of monkey business," he said in an interview. "But I was not involved."

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