April 15, 2005
Texan Is Indicted in Iraq Oil Sales by Hussein Aides
By JULIA PRESTON and JUDITH MILLER 

An American oil trader and a Korean lobbyist with a scandalous past were charged yesterday in connection with illegal gains and kickbacks involving the United Nations oil-for-food program during Saddam Hussein's regime in Iraq. 
In an indictment, federal authorities in New York said David Bay Chalmers Jr., a Houston oil businessman, and his company, Bayoil U.S.A., made millions of dollars in illegal kickbacks to the Iraqi government while trading oil under the $65 billion aid program.
Separate charges were brought against Tongsun Park, a millionaire South Korean businessman, for acting as an unregistered lobbyist for Iraq in behind-the-scenes negotiations in the United States to set up and shape the United Nations program. The criminal complaint said Mr. Park received at least $2 million in secret payments from Mr. Hussein's government for serving as a liaison between Iraqi and United Nations officials. 
Mr. Park was at the center of a lobbying scandal in the 1970's, when he was accused of paying bribes to lawmakers in Washington to secure support for loans to South Korea. 
Bayoil U.S.A. Inc. is the first American company to be indicted in the widening criminal investigations of the oil-for-food program, which was established by the United Nations in 1995 to sell Iraqi oil and use the proceeds to buy food, medicine and other goods for the Iraqi people.
The authorities not only charged that Bayoil made illegal payments to secure Iraqi oil, but also that it conspired to artificially lower the price Iraq received, depriving the Iraqi people of money for sorely needed items. The charges also disclosed new information about an alleged plan to pay senior United Nations officials to influence the course of the program.
Catherine M. Recker, a lawyer for Mr. Chalmers, said the Bayoil defendants and the company would plead not guilty and vigorously dispute the criminal charges. 
According to federal authorities and the complaint against Mr. Park, he was a partner in the lobbying effort with Samir Vincent, an Iraqi-American businessman who pleaded guilty in January to illegal lobbying for Iraq. 
Mr. Vincent, who is cooperating with federal investigators, said Iraqi officials signed agreements in 1996 to pay him and Mr. Park $15 million for their lobbying, the complaint says. 
One of their tasks was to take care of a high-ranking United Nations official, which Mr. Vincent understood to mean to pay bribes, the complaint says. The authorities did not identify or bring charges against the United Nations official.
Mr. Park and Mr. Vincent met at least three times in 1993 with Iraqi officials and the United Nations official - twice in Manhattan and once in Geneva. They later received cash payments from Iraq for at least $2.2 million, delivered from Baghdad in diplomatic pouches. Mr. Vincent also received grants to sell at least nine million barrels of Iraqi oil, the complaint said. 
David N. Kelley, the United States attorney for the Southern District of New York, in Manhattan, said the complaint alleges that Mr. Park intended to bribe the official, but does not show that the official received any bribe.
The complaint also charges that Mr. Park met with a second unnamed senior United Nations official, once in a restaurant in Manhattan. After that, Mr. Park said he invested $1 million he had been paid by Iraq in a Canadian company belonging to the son of the second United Nations official, the complaint says. 
Mr. Kelley declined to say whether the officials were still actively serving at the world organization. He said, however, that the investigation was broad and large and that his office would wring the towel dry in pursuing United Nations officials. 
From 1993 through 1995, as negotiations were under way to create the program, Mr. Vincent also met or spoke frequently with a former United States official who was trying to garner support for the oil-for-food program from administration officials in Washington, according to the complaint. 
It does not name the official. 
Former President Jimmy Carter and Jack Kemp, a former housing secretary and congressman, have both said they met with Mr. Vincent, but their meetings came after the program was established. Both said they made no attempt to influence the program. 
Also named in the indictment against Bayoil were two associates of the company: John Irving, a British oil broker based in London, and Ludmil Dionissiev, a Bulgarian oil trader living in Houston. 
Mr. Chalmers and Bayoil were accused of making deals to trade Iraqi oil between 2000 and 2003, knowing that Mr. Hussein's government had imposed an illegal secret surcharge on all oil purchases after 2000. 
Mr. Chalmers is charged with devising a plan with Iraqi officials to artificially deflate the official price of Iraqi oil, which was determined by United Nations monitors, so traders could pay the illegal surcharge to the government and still reap profits on the sales.
The authorities did not charge any United Nations officials with participating in the price-fixing scheme. 
Bayoil is also accused of transferring millions of dollars in illegal commissions through a foreign company, which was not named, to a company in the United Arab Emirates, Al Wasel and Babel General Trading L.L.C. The authorities charged that Al Wasel was a front set up to channel at least $2 million to pay the hidden commissions to officials in Iraq.
Motivated by greed, they flouted the law, 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, said John Klochan, the acting assistant director of the F.B.I. in New York. He said the defendants had turned the United Nations program into a cash cow masquerading as a humanitarian venture.
Mr. Chalmers and Mr. Dionissiev were arrested yesterday morning at their homes in Houston and will be arraigned Monday in Federal District Court in Manhattan, Mr. Kelley said. An arrest warrant and extradition request have been filed for Mr. Irving. 
If convicted, Mr. Chalmers and the other two Bayoil defendants each face a maximum of 62 years in prison and fines of up to $1 million, and the Bayoil companies face fines of $2 million.
A warrant has been issued for Mr. Park, who is believed to be in South Korea. He faces up to five years in prison and a fine of up to $250,000.
An official at the South Korean Foreign Ministry said the ministry had not received any request from United States prosecutors for the extradition of Mr. Park. He said he had not known that Mr. Park was in South Korea and learned of the case from news reports.
The United Nations had no comment on the charges yesterday. But Secretary General Kofi Annan, addressing a seminar about coverage of the United Nations in the media, said more illicit profits had been made for Iraqi oil deals outside the oil-for-food program than under it, and said the United States and Britain were partly responsible for not cracking down on the corruption. 
The bulk of the money Saddam made came after smuggling outside the oil-for-food program, Mr. Annan said. It was on the American and British watch. 
A spokesman for Paul A. Volcker, who is leading an independent United Nations inquiry into the troubled program, said his committee was well aware of the activities in the charges. The committee will release information when it has definitive findings, the spokesman, Michael Holtzman, said. 
Michel Tellings, one of the three oil overseers who monitored Iraq's oil sales for the United Nations, played down the significance of the government's charge that Mr. Chalmers and Bayoil conspired to deflate the sales price that the United Nations' overseers set for Iraqi oil.
Most oil companies and brokers said the price could be lower, he said in a telephone interview from London. All the oil companies wanted that, and Bayoil was no exception. I don't think if you say to the oil overseers that oil should be cheaper, that it is a crime.
Mr. Tellings, who served as an overseer from September 2000 until the program's end, acknowledged that some were a bit more aggressive than others in pushing for lower prices. But he declined to say whether Mr. Chalmers or Bayoil were among those who pushed most actively for lower prices. 
I don't want to discuss individual cases, he said, noting that he had not yet read the complaint filed in New York. 
Charles A. Duelfer, the special investigator for the Central Intelligence Agency looking for illegal weapons in Iraq, said in his report last October that from September 2000 through the end of the oil-for-food program, it was commonly known among oil companies and dealers that a surcharge had to be kicked back to the regime before they could take out any of the oil they were allocated. Many refused. 
In addition, Mr. Hussein's government demanded other kickbacks in exchange for issuing vouchers for oil. Mr. Duelfer reported that Mr. Hussein got about $2 billion from the surcharges and kickbacks under the program.
Mr. Duelfer also reported that Benon Sevan, who ran the program, got secret vouchers to market 7.3 million barrels of oil.
Senator Norm Coleman, Republican of Minnesota who heads a committee investigating the program, called the indictment a significant step forward in exposing the abuses and criminal misconduct in the program, which had levied a terrible cost to the Iraqi people, our allied forces, and the integrity of the U.N. 
Representative Henry Hyde, the Illinois Republican and chairman of the House Foreign Affairs Committee, which is also investigating the program, said the indictment showed the degree to which the oil-for-food program was so pervasively corrupted. 
Choe Sang-Hun of The International Herald Tribune contributed reporting from Seoul, South Korea, for this article.