Man with local ties indicted in oil-for-food scheme
NEW YORK – A Texas businessman with Aspen connections, as well as a British and a Bulgarian citizen, have been indicted in New York for reportedly paying millions of dollars in secret kickbacks to Saddam Hussein’s government in Iraq as part of the United Nations oil-for-food program.The Texan, David B. Chalmers, a principal of Bay Oil (U.S.A.) Inc., and an associate of the oil trading company, Ludmil Dionissiev, a Bulgarian and permanent American resident, were arrested Thursday morning at their homes in Houston.The U.S. attorney for the Southern District of New York, David N. Kelley, said at a news briefing Thursday morning in Manhattan that he would seek the extradition from England of a third defendant, John Irving, another associate of Bay Oil.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 surchages” on the oil to Saddam’s government.The kickbacks went to Baghdad through front companies and banks, instead of to the needy, as the program intended, Kelley said.Chalmers purchased a portion of a home in Snowmass Village on Sinclair Lane in 1984, according to the Pitkin County assessor’s office. Chalmers and two other men bought the home in Wildridge subdivision for $397,500. Chalmers sold his portion of the home in 1997 for $190,000.Bay Oil (U.S.A.) Inc. also has connections to Pitkin County. The company purchased a mining claim in the county for $1.25 million in 1991 and in 1994 purchased two lots at Castle Creek Valley Ranch for about $2.2 million, according to the Pitkin County clerk and recorders office.
That ranch land is now worth $3.6 million, according to the assessor’s office. The company also owns one lot of Aspen’s Promontory subdivision at Hopkins and Park avenues on the east side of Aspen. The property was purchased for $5 million in 2002 but is now worth $3.27 million – possibly because the company subdivided the lot and sold portions of it.The defendants could each face sentences of up to 62 years in prison and a maximum fine of $1 million on charges that include wire fraud and wire fraud conspiracy, and defrauding the oil-for-food program and the people of Iraq. They are also accused of engaging in prohibited financial transactions with a country known to be supporting international terrorism, “namely, and obviously, Iraq,” Kelley added.According to the indictment, the government also seeks the forfeiture of at least $100 million in assets that the defendants are said to have gained from the sale of Iraqi oil.The two arrested in Texas will appear in court in Houston on Thursday, and will be brought to Manhattan on Monday for arraignment, Kelley said.Charges were also unsealed Thursday against a South Korean, Tongsun Park, who is accused of conspiring to act in the United States as an unregistered agent of the Iraqi government in negotiations of the terms of the oil-for-food program.Park, who is believed to be living in South Korea, is said to have received $2 million from the Iraqi government, and to have used some of that money “to take care of” a United Nations official, Kelley said. He faces a maximum five-year sentence if convicted.Chalmers is the second American indicted in the scandal-ridden program.Under the U.N. program, Iraqi oil allocations could be bought only by those who had been granted that right by Baghdad. The oil was then typically bought by oil companies or brokers at a price that was set by U.N. overseers, plus a commission paid to the allocation holder or its broker.
“One of the ways the oil-for-food program was corrupted by the Iraqi regime was their requirement that recipients of allocations of oil had to pay a secret surcharge to the Iraqi government,” Kelley said.The payments, which were required from mid-2000 through March 2003, Kelley said, were not made to a U.N. bank account from which relief payments intended for the Iraqi people could be monitored.Instead, in violation of United Nations sanctions and United States criminal law, “these secret kickbacks” went to the Iraqi front companies, Kelley said.To cover up the illegal payments, the “people or entities” who were allocated the oil were forced to demand higher commissions from purchasers, Kelley added.Many member countries at the United Nations have refused to cooperate fully with a separate, independent inquiry by investigators looking into waste, fraud and mismanagement in the oil-for-food program, which was approved by the Security Council in 1995, allowing Iraq to sell limited quantities of oil in return for essential goods.The Independent Inquiry Committee, led by Paul A. Volcker, former head of the Federal Reserve, has issued two interim reports of its findings, and a final report is due in midsummer.In its first interim report, on Feb. 4, the commission found that the former head of the program, Benon V. Sevan, had a “grave and continuing conflict of interest” in helping a friend obtain valuable Iraqi oil contracts and said a second U.N. official, Joseph Stephanides, had violated procurement rules. Both men have been suspended and are in the process of answering U.N. charges against them.
Questions have also been raised about the participation of Kojo Annan, son of the U.N. secretary general, Kofi Annan. The elder Annan was criticized in the most recent interim report on the grounds that he failed to perceive the appearance of a conflict of interest when Kojo Annan was employed by a contractor employed by the program.Kofi Annan told 1,600 employees gathered in the General Assembly hall on April 6 that there had been “troubling lapses” in the management of the Iraq program but that he was making changes to prevent any recurrence.The other American indicted in connection to the oil-for-food program was Samir A. Vincent, an Iraqi-American businessman. On Jan. 18, he pleaded guilty to lobbying influential Americans on behalf of Saddam without registering as a foreign agent. Vincent admitted he had secretly been paid hundreds of thousands of dollars and granted rights to sell millions of dollars’ worth of Iraqi oil, in exchange for working to end U.N. economic sanctions imposed in 1990. He is now cooperating with Kelley.Aspen Times Staff Writer Naomi Havlen contributed to this report.
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