A Texas oil executive, his two companies and two foreign associates were indicted Thursday on charges that they illegally paid millions of dollars to former Iraqi officials in exchange for lucrative deals to buy discounted oil from the government of then-Iraqi President Saddam Hussein.
A separate criminal complaint charged Tongsun Park, a South Korean businessman who was at the center of a congressional influence-peddling scandal in the 1970s, with acting as an "unregistered agent" of Saddam's government and trying to bribe a U.N. official for relief from economic sanctions imposed on Iraq after its 1990 invasion of Kuwait.
Thursday's action, announced by David N. Kelley, the U.S. attorney for the Southern District of New York, represents the largest round of criminal charges against individuals accused of abusing the $64 billion U.N. oil-for-food program. Recently Samir A. Vincent, an Iraqi American businessman, pleaded guilty to illegally lobbying U.S. officials on behalf of Saddam's government and agreed to cooperate with Kelley's continuing investigation.
The oil-for-food program was created in December 1996, to offset the consequences of sanctions by allowing Iraq to sell oil to purchase food, medicines and other humanitarian goods; it ended after the United States invaded Iraq in 2003. The Iraqi regime raised more than $2 billion illicitly through the program, which has become the focus of a U.N. probe, six congressional inquiries and a federal criminal investigation.
A federal grand jury in Manhattan charged that David B. Chalmers Jr., founder of Houston-based Bayoil U.S.A. Inc. and Bayoil Supply & Trading Ltd.; Ludmil Dionissiev, a Bulgarian citizen who lives in Houston, and John Irving, a British oil trader, funneled millions of dollars in kickbacks through a foreign front company to an Iraqi-controlled bank account in the United Arab Emirates. If convicted, the men could each face up to 62 years in prison, $1 million in fines and the seizure of at least $100 million in personal and corporate assets.
The federal complaint against Park charges that he received a total of $2 million in cash from Iraq, including a fee to "take care" of an unnamed U.N. official. It also states that Park invested $1 million in Iraqi funds in a Canadian company owned by the son of another unknown, "high-ranking" U.N. official. Park could face up to five years in jail and a fine of up to $250,000 or twice the value of profits he earned as a result of his alleged activities.
"The individuals and corporate defendants charged today reaped huge benefits from the corruption of the oil-for-food program," said FBI acting Assistant Director John A. Klochan Jr., who accompanied Kelley at a news conference. "But they didn't merely participate in the illegal scheme. They helped further it."
Chalmers and Dionissiev were arrested at their homes Thursday in Houston and were due to appear before a federal judge in Manhattan today. Kelley's office will seek Irving's extradition from England.
A spokeswoman for Chalmers, Catherine Recker, issued a statement saying that he and his two Bayoil companies "will all enter pleas of not guilty."
David Howard, an attorney representing Dionissiev, said his client "intends to plead not guilty because he is not guilty."
Robert Luskin, a lawyer at the firm Patton Boggs LLP who is representing Park, said that "our client formally denies any wrongdoing."
Efforts to reach Irving in London were unsuccessful.