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US federal prosecutors have accused a Texas businessman and two of his associates: a Bulgarian, and a Briton of paying secret kickbacks to Iraq as part of the UN oil-for-food scandal.

Yesterday, the U.S. attorney’s office in New York revealed its indictment of Houston oil trader and Bayoil owner David Bay Chalmers, who, the government alleges, used intermediaries to pay at least $3 million to Saddam Hussein’s dictatorship over the course of the seven-year-long United Nations Oil for Food Program.

The program was meant to use Iraqi oil proceeds to buy humanitarian goods for Iraq’s people while still constraining Hussein’s government with sanctions. Today, Chalmers was released on a $500,000 bond.

Chalmers’ attorney, Catherine Recker, says that Chalmers will plead not guilty. If convicted, Chalmers could face a 62-year prison sentence and the seizure of $100 million in assets. The indictment alleges that Chalmers overpaid commissions to foreign trading partners, knowing that those overpayments would be passed on to Hussein’s government.

In recognition of Iraq’s sovereignty and the legitimacy of Hussein’s government, despite its pariah status, the U.N. allowed Hussein to choose which companies he would sell oil to, and throughout much of the program, Hussein demanded kickbacks for companies that wanted his crude. In an effort to drum up demand for Iraq’s oil, the U.N. also set the price of Iraqi oil at a discount to the market. This discount allowed companies to pay bribes but still profit. While the U.N. monitored the loading of oil from Iraq’s ports, it did not monitor the trading of that oil on the secondary market.

A Londoner named John Irving, indicted alongside Chalmers, was the head of oil trading at a firm called Crown, which had been based in Switzerland but then moved to Gibraltar during the Oil for Food program. Irving has told the British press that he is innocent of all charges. Crown was a frequent trading partner of Bayoil and was also a subsidiary of Russia’s Alfa Group, owned by Moscow billionaire Mikhail Friedman.

According to a report by CIA analyst Charles Duelfer, completed about a year after the fall of Baghdad, the Alfa Group was one of the companies that paid kickbacks to Hussein’s regime. The Alfa Group has repeatedly denied this.

In November, Forbes reported that the Alfa Group traded Iraqi oil on the secondary market among its own subsidiaries and with friendly companies like Bayoil. Each trade drove the price per barrel higher as the oil was daisy-chained in a scheme that Alfa’s traders called “the rondo.” The purpose of the rondo was to divert Alfa’s profits to its subsidiary in Gibraltar, which is a tax haven. Bayoil engaged in 32 rondo-style trades with Alfa Group entities between 1999 and 2000.

In many cases, once the oil had been passed around enough, it wound up sold to larger companies like ExxonMobil. The U.N. did nothing to monitor the flow of money on the secondary market, so it’s no wonder that $229 million found its way into Hussein’s hands.

British MP George Galloway and his opponent the Daily Telegraph will leave no stone unturned to sort out what could be a spectacular libel case.

One of the authors claiming Dan Brown’s bestseller The Da Vinci Code copied his ideas has admitted he exaggerated his case in an interview with a journalist.