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Texas Tycoon Charged in Oil-for-Food Indictment

October 22, 2005|Richard B. Schmitt | Times Staff Writer

WASHINGTON — A famed Texas oilman was charged Friday with paying millions of dollars in kickbacks to Saddam Hussein's regime, in the highest-profile prosecution yet stemming from the defunct United Nations oil-for-food program.

In the indictment against Oscar S. Wyatt Jr., the founder and former chairman of Coastal Corp., prosecutors in New York alleged that he had used secret bank accounts and other shadowy tactics to funnel millions of dollars to Hussein to obtain the right to pump millions of barrels of oil from Iraq between 2000 and 2003.

Two Swiss business executives and three others who were first charged in April were also named in the indictment.

The indictment of Wyatt -- a Texas wildcatter and political donor known for his sometimes flamboyant dealings with dictators -- is the latest in a wide-ranging investigation into the oil-for-food program run by the U.N.

The program was set up after the 1991 Persian Gulf War to offset the effects of U.N. sanctions on Iraqi citizens. The Iraqi government was allowed to sell oil and the revenue was deposited in a U.N.-monitored bank account and used to pay for food and other essential supplies.

But the program has been found to have been rife with corruption. Bribes were paid to secure the right to purchase Iraqi oil. Some investigators suspect the regime pocketed billions.

Wyatt, 81, was arrested Friday at his home in Houston and released. He is scheduled to appear next week in court in New York.

If convicted, Wyatt could face a maximum prison sentence of 62 years and a fine of up to $1 million, prosecutors said. They are also seeking restitution -- at least $1 billion that they say were the proceeds from sales of oil obtained as a result of the alleged violations.

Wyatt has denied wrongdoing. "Mr. Wyatt has violated no laws and will vigorously defend [himself] against these charges," Carl Parker, a Texas lawyer representing the tycoon, said Friday in a statement.

Wyatt was named by the CIA in an October 2004 report that listed people and companies to whom Hussein had awarded lucrative vouchers to buy Iraqi oil. Prosecutors said Friday that Wyatt and his network of companies were a favored purchaser for Hussein, receiving the first allocation when the oil-for-food program started in 1996.

"The oil-for-food program was designed to provide humanitarian relief to the Iraqi people; these defendants undermined those relief efforts to line their own pockets with oil profits," said Michael J. Garcia, the U.S. attorney in New York.

The indictment alleges that Wyatt and his associates lobbied the U.N. to set an official selling price for the oil they bought -- a price that would allow them to pay the kickbacks allegedly demanded by Hussein and still make a profit. It alleges that Wyatt conspired in the scheme with David B. Chalmers, the owner of another Houston oil company, Bayoil USA.

Chalmers was one of those charged in April with paying bribes to Hussein and was also named in Friday's indictment, which supersedes the previous one.

The indictment details a series of suspect transactions by Wyatt and the other defendants between mid-2000 and the start of the Iraq war in March 2003. In fall 2000, Iraqi officials allegedly told Wyatt and other buyers that future oil allocations would be provided only if they paid what prosecutors say were illegal surcharges to Hussein's regime.

In an attempt to conceal the payments, prosecutors allege, the defendants on numerous occasions made secret deposits to a bank account in Jordan controlled by the Iraqi government.

Prosecutors also alleged that Wyatt once sought reimbursement for an illegal $200,000 payment he made to Hussein in 2000 from a unit of El Paso Corp., which acquired Coastal in 2001. Wyatt stepped down as head of Coastal in 1997 but remained a consultant.

The indictment alleges that Wyatt operated through two Cyprus-based oil-trading companies, Nafta Petroleum Co. Ltd. and Mednafta Trading Co., which were also charged. Two other people, Catalina del Socorro Miguel Fuentes, also known as Cathy Miguel, and Mohammed Saidji, who prosecutors said operated the trading firms "in close consultation with Wyatt," were named in the indictment.

Prosecutors said they were seeking the extradition of Miguel and Saidji, who are Swiss citizens.

The individuals and businesses were charged with conspiracy, wire fraud, prohibited financial transactions with Iraq and violation of the International Emergency Economic Powers Act.

Wyatt has long done business in Iraq. He may be best known for using his corporate jet to rescue 21 Americans being held hostage by Hussein a month before the Persian Gulf War began.

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