LAWFUEL – MICHAEL J. GARCIA, the United States Attorney for the
Southern District of New York, announced the sentencing today of
DAVID B. CHALMERS, JR., 54, a resident of Houston, Texas, and two
corporations that he operated, BAYOIL (USA), INC., a Delaware
corporation with principal offices in Houston, TX, and BAYOIL
SUPPLY & TRADING LIMITED, a Bahamian company with principal
offices in Nassau, Bahamas (collectively, the “BAYOIL
COMPANIES”), by United States District Judge DENNY CHIN in
Manhattan federal court. CHALMERS and the BAYOIL COMPANIES
previously pleaded guilty to participating in a scheme to pay
illegal kickbacks to the former Government of Iraq, in connection
with the purchase of crude oil through the United Nations
Oil-for-Food Program between mid-2000 and 2003. CHALMERS was
sentenced to a term of imprisonment of 2 years, and was ordered
to pay restitution in the amount of over $9 million; BAYOIL
(USA), INC. and BAYOIL SUPPLY & TRADING LIMITED were each
sentenced to 3 years of probation and ordered to pay the
restitution, for which they have joint and severable liability
with WYATT. According to the charges, guilty pleas, and the
evidence in related trials:
The United Nations established the Oil-for-Food Program
in the mid-1990’s as an exception to the comprehensive
international sanctions on SADDAM HUSSEIN’s regime in Iraq.
Under the Program, the former Government of Iraq was allowed to
sell a limited quantity of oil, and the proceeds from those oil
sales were deposited into an escrow bank account managed by the
United Nations. That money could only be used for humanitarian
purposes approved by the United Nations, including food and
medicine for the Iraqi people and reparations to the victims of
the Hussein regime’s 1990 invasion of Kuwait. Iraq was permitted
to determine which purchasers could obtain allocations of oil
under the Program.
In 2000, the Hussein regime found a way to get money
free of United Nations supervision: Iraq began conditioning the
right to purchase its oil under the Oil-for-Food Program on the
purchasers’ willingness to make secret payments directly to the
Hussein regime. CHALMERS, working with and through the BAYOIL
COMPANIES, elected to pay these illegal kickbacks. By
participating in this scheme, CHALMERS and others diverted
millions of dollars that otherwise would have been available for
humanitarian purchases for the Iraqi people under the
Oil-for-Food Program.
CHALMERS and the BAYOIL COMPANIES each pleaded guilty
before Judge CHIN on August 17, 2007 to one count of conspiracy
to commit wire fraud related to the payment of secret illegal
surcharge payments to the former Government of Iraq.
On August 17, 2007, LUDMIL DIONISSIEV, an associate of
CHALMERS, pleaded guilty to facilitating the transportation and
sale of Iraqi oil in January 2001, despite knowing that a BAYOIL
COMPANIES representative had promised to pay a secret surcharge
to the Government of Iraq in connection with an oil allocation to
a Russian legislator. On December 13, 2007, DIONISSIEV was
sentenced by Judge CHIN principally to a fine of $5000 and a twoyear
term of probation.
In addition to guilty pleas from CHALMERS, the BAYOIL
COMPANIES, and DIONISSIEV, this Office’s Oil-for-Food
investigation has led to the following convictions:
• on October 1, 2007, OSCAR S. WYATT, JR., the
founder of the COASTAL CORPORATION, pleaded
guilty, four weeks into his trial before Judge
CHIN, to conspiring to make illegal kickback
payments to the SADDAM HUSSEIN regime;
• on July 13, 2006, TONGSUN PARK, a South Korean
national, was found guilty, following a three-week
jury trial before Judge CHIN, of conspiring to,
among other things, serve as an unregistered agent
of the SADDAM HUSSEIN regime in the United States;
• on January 18, 2005, SAMIR A. VINCENT, an Iraqi-
American businessman, pleaded guilty before Judge
CHIN to, among other things, conspiring to serve
in the United States as an unregistered agent of
the Hussein regime.
During the trials of WYATT and PARK, VINCENT testified
for the Government as a cooperating witness. WYATT and PARK are
incarcerated, having been sentenced by Judge CHIN to terms of
imprisonment of one and five years, respectively; VINCENT has not
yet been sentenced.
Federal charges related to the Oil-for-Food Program
have also been returned against JOHN IRVING, a United Kingdombased
associate of CHALMERS; CATALINA del SOCORRO MIGUEL FUENTES,
a/k/a “Cathy Miguel,” and MOHAMMED SAIDJI, a Switzerland-based
associates of WYATT; NAFTA PETROLEUM COMPANY LIMITED and MEDNAFTA
TRADING COMPANY LIMITED, Cyprus-based companies associated with
WYATT; and SARENCO, S.A., a Swiss-based company associated with
WYATT. Charges have also been filed against EPHRAIM NADLER and
BENON V. SEVAN. SEVAN, who at the time was the Executive
Director of the United Nations office that operated the Oil-for-
Food Program, allegedly received more than $150,000 from NADLER
on behalf of the Government of Iraq, as a result of an oil
transaction during the Oil-for-Food Program. None of these
people or entities have yet appeared in the United States.
Large sums of money have been remitted to the
Government in connection with its investigation of abuses of the
Oil-for-Food Program — including over $11 million from WYATT, $20
million from the CHEVRON CORPORATION, and over $5 million from
the EL PASO CORPORATION. CHEVRON and EL PASO are two publiclytraded
companies that obtained Iraqi oil under the Oil-for-Food
Program from third parties that paid secret, illegal surcharges
to the former Government of Iraq.
Money remitted to the
Government from WYATT, CHEVRON, and EL PASO CORPORATION has been
transferred by the Government to the Development Fund of Iraq
(established on May 21, 2003, by United Nations Security Council
Resolution 1483) — as restitution for the benefit of the people
of Iraq, who were among the victims of the Hussein regime’s
solicitation of illegal kickback payments on Iraqi oil.
The Government will also seek to transfer to the
Development Fund of Iraq the restitution that Judge CHIN ordered
CHALMERS and the BAYOIL COMPANIES to pay.
Mr. GARCIA praised the Federal Bureau of Investigation,
Criminal and Counterintelligence Divisions. He also expressed
appreciation to the United States Treasury Department, Office of
Foreign Assets Control; the United States Department of State;
the Securities and Exchange Commission; the United Nations Office
of Legal Affairs; the former Independent Inquiry Committee into
the United Nations Oil-for-Food Program; and the New York County
District Attorney’s Office.
Assistant United States Attorneys EDWARD C.
O’CALLAGHAN, STEPHEN A. MILLER, MICHAEL FARBIARZ, and SHARON
LEVIN are in charge of the prosecutions.
08-060 ###
