“We have opened the first pages of what will be a long and very sordid book,” said California insurance commissioner John .

The probe began a week ago when New York attorney general Elliot Spitzer sued broker Marsh & McLennan.

Mr Spitzer alleges that Marsh took illegal payments for steering clients to particular firms.

Shares in Marsh, the world’s largest insurance broker, have collapsed since the Spitzer investigation was unveiled, and the firm is now renegotiating $2.8bn in bank financing.

This is going to be a long, long unhappy situation for the insurance industry John Garamendi, California insurance commissioner

Those of the companies alleged to have made the payments - insurance giant AIG, Ace and Hartford Financial - have also suffered.

The firms concerned have said they will with the investigation.

Rules change

California has yet to identify which firms it will be looking into.

But Mr Garamendi made it clear that he was working closely with Mr Spitzer - and that his inquiry, already eight months old, would go beyond the corporate insurance which was the focus of the New York suit and into the consumer market too.

“The early indication is that it’s an extremely serious breach of trust,” he told reporters.

“Where (the investigation) leads we do not know. This is going to be a long, long unhappy situation for the insurance industry.”

California, the largest state in the US and by some measures the sixth largest economy in the world, has also tightened up its rules on how insurance is sold.

In the future, firms will have to disclose any money they get for selling a product.

At the start of the day Yell shares rose to 306p from 285p in conditional trading - dealing between big city banks ahead of the official start of trade - but by had settled back to 292.25p.

The price slid further to close at 289.5p, 1.6% higher than its debut.

The pricing of Yell shares at 285p gives the total group a market of about 2bn ($3.2bn), making it large enough to enter the FTSE 100 list of top companies.

The flotation, which was last summer because of poor market conditions, is the largest so far this year and is seen by some analysts as a sign of renewed confidence in the stock market.

Official trading in Yell’s shares is due to start on 15 July, which is when private investors will be able to buy the shares.

Strong response

“We are delighted with the way new investors have embraced the Yell story,” said chief executive John Condron.

YELL GROUP Publishes Yellow Pages and Business Pages UK telephone directories Operates Yell.com, the online directory service Operates Yellow Pages 118 247, a telephone directory service (formerly called Talking Pages) Publishes Yellow Book directories in the US Had a turnover of 1.1bn in 2002/03 Employs 7,800 people (3400 in UK)

“The strong response to the Yell share offer reflects the quality and potential of the business.”

The telephone directories business was bought by private equity firms Apax and Hicks, Muse, Tate & Furst from BT Group in 2001.

They will continue to hold 30% of the listed company with Yell management and staff holding 5%.

Appetite returns

Yell is the biggest firm to come to market since insurance group Friends Provident floated in 2001.

Neil Austin, head of new issues at KPMG Corporate Finance, said the float was an sign that the market could be about to pick up.

“I think it does signal that the appetite’s come back,” Mr Austin told BBC Radio Five Live.

“We’ve had twelve months of complete silence with institutions sitting on their hands - this shows there is some appetite there.”

“I hope, and I also believe, this scandal proves to be a fairly unique occurrence, and that it is not a question of a corruption culture,” Mr Lindbaek said in an interview with BBC News Online.

Investigation

Mr Lindbaek has appointed the consultancy firm Ernst & Young to look through all Statoil’s international consultancy agreements.

“I’m not starting from the assumption that there is a need to clean up anything from the past,” Mr Lindbaek said.

“Statoil has very good policies with relation to the question of corruption,” he insisted.

A summary of Ernst & Young’s findings will be made available, but “the report itself will not be published”, Mr Lindbaek said.

It is no secret that oil companies regularly pay bonuses to governments and facilitation fees to companies or individuals to secure contracts - in fact, some such payments are perfectly legitimate.

But problems tend to arise when payments are kept secret, or when illegal bribes are paid to officials to speed up or secure deals.

The Organisation for Economic Cooperation and Development (OECD) has said it wants to outlaw such bribes.

And recently Nigeria’s President Olusegun Obasanjo urged oil firms to become more transparent and accountable.

Mr Lindbaek believes the whole oil industry is in the process of cleaning up its act.

“I believe it is perfectly possible to work in developing countries without bribing. That is also Statoil’s policy,” he said.

“We are publishing what we are paying. That principle is quickly gaining ground.”

Indeed, Shell and BP have both signalled a willingness to declare their legal payments.

And the French oil giant Elf - whose former bosses were given prison sentences recently for embezzling money from its facilitation fund - says it no longer pays bribes.

Missing money

Mr Lindbaek has also asked Ernst & Young to investigate one of Statoil’s deals in Nigeria where it has sold a 20% stake in an exploration site to the local oil company Allied Energy for $5m, apparently without ever getting paid.

The stake had been bought in 1993, and in 1997 oil was found.

When Statoil and BP, who owned 20% each, decided it was not commercially viable, they sold their stakes to Allied Energy, the owner of the remaining 60%, for a fraction of what they had paid for it.

Statoil insists the investigation into this affair is not a search for instances of corruption.

Anti-corruption

Mr Lindbaek’s make him more than suitable for the Statoil chairmanship.

Mr Lindbaek is also searching for a new chief executive for Statoil.

An economist by training, he has held senior positions with the World Bank’s Finance Corp and with the Nordic Investment Bank.

He was also the chief executive of Norway’s leading insurance company Storebrand for ten years, and he is the former chairman of the former Norwegian oil company Saga Petroleum.

But it is his role as the head of the Norwegian division of the anti corruption organisation Transparency International that should give him the greatest leverage as he gets on with the task of patching up Statoil’s tattered image.

“I believe I was chosen on the basis of my qualifications as a business leader, but I also believe that my involvement with Transparency International was a welcome plus,” Mr Lindbaek said.

New chief

Beyond his tough stance on corruption, Mr Lindbaek is also searching for a new chief executive for Statoil.

The current caretaker chief, Inge Hansen, is in the running, but other candidates will also be considered, Mr Lindbaek said.

Statoil’s next chief executive is probably going to be a Norwegian speaker with extensive industry experience and proven leadership skills.

Following Mr Lindbaek’s appointment, Norwegian energy minister Einar Steensnaes expressed a desire for a female chief executive, in line with the country’s push for greater female representation in the world of business.

Mr Lindbaek said he would make sure there were women on the final shortlist, but in the end the choice would not be made on the basis of the candidates’ gender.

headhunting firm Egon Zehnder will help Statoil identify likely candidates.