4 indicted in Iraq oil program scandal

U.S. accuses them of cutting secret deals with Hussein

`Facilitated payment of illegal surcharges'

Some Congress members see proof of corruption at U.N.

April 15, 2005|By T. Christian Miller | T. Christian Miller,LOS ANGELES TIMES

WASHINGTON - A Texas oil trader, a South Korean once accused of bribing U.S. congressmen and two other businessmen were charged yesterday with crimes in which they allegedly made millions of dollars in illegal profits by cutting secret deals with Saddam Hussein through the United Nations' oil-for-food program in Iraq.

David B. Chalmers Jr., 51, and a business associate, Ludmil Dionissiev, 58, a Bulgarian national, were arrested at their homes in Houston shortly before the Justice Department announced their indictments on charges of paying bribes to the Iraqi government. Authorities were seeking the extradition of a third business partner, Briton John Irving.

Also indicted was South Korean businessman Tongsun Park for allegedly receiving illegal payments from the Iraqi government for arranging deals between Iraq and U.N. officials. In the 1970s, Park allegedly channeled bribes to Democratic members of Congress.

The businessmen are the latest targets of a wide-ranging investigation by the Justice Department into the U.N. program, which was supposed to allow Hussein to swap oil in exchange for humanitarian goods.

"We're going to wring the towel dry," David N. Kelley, the U.S. attorney for the Southern District of New York, told reporters. One Iraqi-American businessman, Samir Vincent, has already pleaded guilty and is believed to be cooperating with investigators.

Kelley said Chalmers and the other defendants played "a pivotal role" in efforts to fix the price of oil that was traded and sold under the oil-for-food program and "facilitated the payment of illegal surcharges" on the oil to Hussein's government.

The kickbacks went to Baghdad through front companies and banks, instead of to the needy, as the program intended, Kelley said.

Several members of Congress said the indictments were further proof of the depth of corruption at the United Nations.

"These disturbing indictments illustrate a continuing pattern of corruption that we have found in numerous instances involving the United Nations," said Rep. Henry J. Hyde, an Illinois Republican who is leading one of five congressional inquiries into the scandal.

Sen. Norm Coleman, a Minnesota Republican, has called on U.N. Secretary-General Kofi Annan to resign.

Annan has rejected such demands. He said yesterday that the United States and Britain are partly to blame for Hussein's regime making billions of dollars in illicit money from smuggling oil.

"They were the ones who had interdiction, possibly they were also the ones who knew exactly what was going on, and the countries themselves decided to close their eyes to smuggling to Turkey and Jordan because they were allies," he said.

Chalmers and Dionissiev, both of whom worked for Houston-based Bay Oil USA, denied wrongdoing yesterday. Irving and Park could not be reached.

"We will vigorously dispute the allegations of criminal conduct," Catherine M. Recker, a lawyer for Chalmers and for Bay Oil said in a statement.

"Mr. Dionissiev intends to plead not guilty because he is not guilty and he will be found not guilty at trial," his attorney David Howard said in a statement.

The indictments provide insight into the early days of the program, suggesting that high-ranking U.N. officials might have received payments from the Iraqi government for helping set up the program in a way Baghdad wanted.

The indictment describes Park and another man, identified as a cooperating witness, as having illegally received millions of dollars from the Iraqi government for setting up a series of meetings in New York in the mid-1990s between a U.N. official and an Iraqi official.

In late 1995, Park allegedly told the cooperating witness that he needed $10 million to "`take care' of his expenses and his people" - an apparent reference to the U.N. official. At the time, the United Nations was in the final stages of approving details of the oil-for-food program.

As payment, the cooperating witness traveled to Iraq in 1996, where he was allegedly given a bag of cash containing $450,000. Later, he allegedly was given an additional $1 million in cash, which had been shipped to the United States in a diplomatic pouch. The cooperating witness allegedly later turned some of the money over to Park.

Park allegedly told another witness that he received $1 million on a 1997 trip to Baghdad, which he then invested in the Canadian firm owned by the son of a high-ranking U.N. official, the indictment said. The firm later went bankrupt. None of the U.N. officials was identified in the indictment.

After long negotiations with the United Nations on the oil-for-food program, Hussein was awarded the right to determine who could do business with Iraq. He gave favored companies and individuals coupons that allowed them to buy oil. Money from the purchases was deposited into an account that was to be used to buy humanitarian supplies. Hussein also chose which companies supplied the goods.

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