- The Washington Times - Thursday, April 14, 2005

Federal prosecutors yesterday charged a Texas businessman, a Bulgarian and a Briton with paying millions of dollars in secret kickbacks to Saddam Hussein’s regime during the United Nations’ oil-for-food program.

An indictment unsealed in New York federal court says David B. Chalmers, of Texas, Ludmil Dionissiev, of Bulgaria, and John Irving, of Britain, paid the kickbacks to secure preferential treatment under the program for two oil companies owned by Mr. Chalmers.

The three each face up to 62 years in prison and a $1 million fine if convicted. Mr. Chalmers’ oil companies, Houston-based Bayoil Inc., and Bahamas-based Bayoil Supply and Trading Limited, each would be required to pay a maximum fine of $2 million.

Prosecutors also unsealed a criminal complaint charging South Korean Tongsun Park with receiving $2 million from Iraq to work as an unregistered agent in the United States in creating the oil-for-food program. He faces a five-year prison sentence and a $250,000 fine if convicted.

The indictment and complaint signal the second round of charges brought by authorities probing the $64 billion program. Iraqi-born American businessman Samir A. Vincent pleaded guilty in January to skimming money from the program.

An independent probe recently by former U.S. Federal Reserve Chairman Paul Volcker, has outlined a series of glaring problems with the program’s setup, contract procedures, administration and auditing.

Interim findings revealed how Benon Sevan, who was U.N. director of oil-for-food during the late-1990s, received $160,000 in questionable payments while drumming up oil contracts worth millions for a company to which he had close ties.

Mr. Sevan has not been indicted in the scandal, and while Mr. Volcker’s findings have criticized the management tactics of U.N. Secretary-General Kofi Annan, they have cleared him of any illegal activity. Mr. Annan’s son, Kojo, has been a focus of the Volcker probe, but also has not been charged.

After it’s invasion of Kuwait in 1990, Iraq was under comprehensive U.N. economic sanctions, which were modified by the oil-for-food program in 1996 to allow Iraq to sell oil, provided the proceeds were used to purchase humanitarian goods for the Iraqi people.

Prosecutors contend that between 2000 and 2003, Iraq began requiring companies chosen to buy oil through the program to pay secret and illegal surcharges to Iraqi-run front companies. Mr. Chalmers and his co-defendants are charged with participating in the “surcharge scheme,” and also of conspiring with Iraqi officials to fix the price of Iraqi oil so that the scheme would remain undetected.

Acting FBI Assistant Director John Klochan, who heads the bureau’s New York office said the men “made a mockery of the stated aims of the oil-for-food program and willingly conspired with a foreign government with whom our country was on the brink of war.”

Mr. Chalmers and Mr. Dionissiev were arrested yesterday in Houston. Authorities said a warrant was being issued in Britain for Mr. Irving, whom the United States intends to extradite for trial.

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