Erg executives in Italian tax fraud probe

December 3, 2013

* Erg deputy chair, CEO under investigation

* TotalErg confirms tax police visited offices

* Erg shares down 6.7 pct

By Mario, Sarzanini and Stephen Jewkes

ROME, Dec 3 (Reuters) - Two top executives at Italian energy company Erg are under investigation in a probe into suspected tax fraud at Italy's No. 3 petrol service station operator TotalErg, Erg said on Tuesday confirming media reports.

The two executives being probed are deputy chairman Alessandro Garrone, a member of the controlling family, and Chief Executive Luca Bettonte, the company said, adding it had always acted lawfully and was confident it would be cleared in the probe.

Erg also said in a statement it had been notified with a search warrant by Rome prosecutors probing alleged tax irregularities carried out in 2010 and involving TotalErg, its joint venture with French oil major Total.

News of the investigation was first been reported by judicial sources, sending Erg shares down 6.7 percent and Total shares down 1.6 percent.

Erg, which has exited oil refining to focus on renewable energy, owns 51 percent of TotalErg. With 3,300 petrol stations, it has a market share of around 12 percent behind Eni and Esso. Total owns the rest of TotalErg.

"Erg considers that it has always fully respected the law," Erg said. Garrone and Bettonte could not immediately be reached for comment.

Earlier on Tuesday, judicial sources said Italian tax police had searched the offices of TotalErg in Rome, Milan and Genoa over suspected false invoices for 904 million euros ($1.2 billion) issued by a Bermuda-based company.

TotalErg confirmed the tax police had visited its offices and said it was co-operating the authorities.

Besides the two Erg executives, three other people were also under investigation, the sources said.

Business at TotalErg has been under pressure in recent years due to a fall in petrol consumption caused by the economic crisis as motorists leave their cars at home.