Oilman Indicted Over Kickbacks To Saddam Hussein's Regime
Oilman Indicted Over Kickbacks to Saddam Hussein's Regime
http://www.nytimes.com/2005/10/22/bu...rtner=homepage
By JULIA PRESTON and SIMON ROMERO
Published: October 22, 2005
Oscar S. Wyatt Jr., the flamboyant Texas oil trader who flaunted his close ties to the regime of Saddam Hussein, was indicted yesterday in federal court in New York on charges that he paid millions of dollars in kickbacks to the regime to sell Iraqi oil under a United Nations program.
The indictment says that Mr. Wyatt was informed by Iraqi officials sometime in the fall of 2000 that he and other traders would have to begin paying secret surcharges to continue to be granted the right to sell Iraqi oil under the United Nations oil- for-food program.
In fax messages and telephone calls over the next two years, the indictment says, Mr. Wyatt arranged for the secret payments to be made through Swiss intermediaries and overseas companies that he set up. The money, the indictment says, was deposited in Iraqi government accounts in a bank in Jordan.
The indictment was unusually detailed because it is based in part on recorded telephone conversations between Mr. Wyatt and his representatives, and the El Paso Corporation's oil traders. Mr. Wyatt founded the Coastal Corporation, an energy company that El Paso acquired in early 2001 in a deal that eventually led to a bitter dispute between Mr. Wyatt and El Paso's senior executives.
Mr. Wyatt can he heard in those calls discussing the surcharge payments and also reporting on secret fees he paid to be allowed to load oil in Iraqi ports, according to the indictment.
Mr. Wyatt was arrested by Federal Bureau of Investigation agents at 6 a.m. yesterday at his home in River Oaks, the most exclusive residential district in Houston. He was released on $2.5 million bail secured by a property he owns in Colorado, and is scheduled to be arraigned in Federal District Court in Manhattan next Thursday.
Mr. Wyatt, through his lawyer, denied the charges yesterday. "Mr. Wyatt has violated no laws and will rigorously defend against these charges," the lawyer, Carl Parker, said in a statement.
Mr. Wyatt, 81, is one of the last legendary Texas oilmen, a former drill-bit salesman who put together several ambitious international energy ventures. His company, the Coastal Corporation, eventually became one of the largest importers of Iraqi crude oil into the United States, until Iraq invaded Kuwait in 1990. After the United Nations allowed Iraq to begin selling oil again, Mr. Wyatt and Coastal were awarded the first tanker shipment to leave the country, in December 1996.
He is the most prominent American businessman to be swept up so far in the widening criminal investigations in New York of corruption in the United Nations program, in which proceeds from sales of Iraqi oil were supposed to go into a United Nations account to be used to buy food, medicines and other goods for the Iraqi people.
El Paso, which is not facing charges in the indictment, acknowledged that it had been responding to requests for information from investigators about its dealings with Mr. Wyatt.
"We continue to cooperate with the U.S. attorney's office, the S.E.C. and various Congressional committees," Richard Wheatley, a spokesman for El Paso, said in a statement.
The charges describe at least $3.9 million in back-door payments Mr. Wyatt and his companies are accused of making from 2000 to 2002 to Iraqi government accounts in the Jordan National Bank in Amman.
The indictment says that Mr. Wyatt's representatives were informed by Iraqi officials in a meeting in Vienna in the fall of 2000 that he would have to begin paying a surcharge directly to the Iraqi government to continue to receive allotments of oil to sell.
Mr. Wyatt, the indictment says, was not dissuaded. He arranged to make the illegal payments through two Cyprus-based corporations he set up and through a Swiss energy trading consulting company, Sarenco S.A. The companies were operated by two Swiss citizens, Catalina del Socorro Miguel Fuentes and Mohammed Saidji. Both, along with the companies, were also named in yesterday's indictment.
Federal prosecutors have recovered fax messages, invoices and bank statements that they say describe the illegal payments. The indictment cites one phone call on Dec. 21, 2001, made shortly after a Dec. 9 payment of 222,000 euros to the Iraqi accounts in Jordan. In it, Mr. Wyatt complained to an El Paso trader about "that $200,000 I've already paid," the indictment states.
Mr. Wyatt is also accused of lobbying United Nations officials to persuade them to lower the officially designated selling price of Iraqi oil, to leave a margin that would allow Mr. Wyatt and his associates to pay the surcharges and still make a profit on the oil sales.
The charges against Mr. Wyatt came in a superseding indictment that expanded on one brought in April against another Texas oil trader, David B. Chalmers; his company, Bayoil Inc.; and two of his associates, John Irving and Ludmil Dionissiev.
Mr. Wyatt is accused of conspiracy, wire fraud and trading with a country that has been designated by the United States as supporting terrorism. Mr. Wyatt has known for at least a year that he was under investigation.
Mr. Wyatt, Ms. Miguel Fuentes and Mr. Saidji each face a maximum of 62 years in prison and a maximum fine of at least $1 million. Sarenco and two other companies operated by Mr. Wyatt face fines of at least $2 million. The government is seeking criminal forfeiture of property of at least $1 billion from all the defendants.
The inquiry by the United States attorney for the Southern District of New York has also yielded indictments against Tongsun Park, a South Korean lobbyist, and Vladimir Kuznetsov, a Russian diplomat who formerly headed the United Nations budget watchdog committee.
Mr. Wyatt's arrest brings rare scrutiny to the murky world of oil trading and shipping, a business that relies largely on close contacts with officials at oil companies and in governments of oil-producing countries. Mr. Wyatt began traveling to Iraq in the early 1970's, shortly after the nationalization of the Iraqi oil industry, and established envied ties with officials in Baghdad.
Once described as "meaner than a junkyard dog" in a profile by Texas Monthly magazine, Mr. Wyatt started the Hardly Able Oil Company in 1951 using the proceeds from an $800 loan. He later founded the Coastal Corporation, which became his main conduit for dealings in the Middle East.
Mr. Wyatt cultivated a rough-hewn image, speaking out, for instance, against a Congressional effort to impose trade restrictions on Mr. Hussein's regime after it was discovered that it had used poison gas against the Kurds.
Mr. Wyatt's relationship with Mr. Hussein drew attention in late 1990, when he flew to Baghdad to negotiate the release of American oil field workers held hostage in Iraq. He was also an outspoken critic of the war led by the United States to drive Iraqi forces from Kuwait.
Such positions appeared to come naturally to Mr. Wyatt, who would often travel to Vienna for meetings of the Organization of the Petroleum Exporting Countries to maintain contacts with oil ministers from countries tarnished by sanctions, like Iraq or Libya.
Back in Houston, Mr. Wyatt's profile was often just as gruff, standing in contrast to that of his wife, Lynn, a doyenne of the city's flamboyant party scene.
The indictment is likely to shake Houston's arts and charitable communities. Mr. Wyatt's wife is known for her parties in the south of France and her work as the chairwoman of the Houston Grand Opera. She and Mr. Wyatt were recently seen at the Founders Suite, an exclusive enclave at Reliant Stadium in Houston where the city's elite watches the football games of the Houston Texans.
The federal investigation of the United Nations oil-for-food program has proceeded largely apart from the inquiry by the commission headed by Paul A. Volcker, and sometimes there have been tensions between them. Mr. Volcker announced yesterday that he would release his final report on the companies involved in oil-for-food corruption next Thursday.
