NEW YORK (Reuters) - Texas oilman David Chalmers and two companies he owns pleaded guilty on Friday to paying millions of dollars in secret kickbacks to Iraq in connection with the United Nations oil-for-food program.
Chalmers, 53, pleaded guilty in Manhattan federal court to one count of conspiracy to commit wire fraud, just weeks before he was due to go on trial with Texas oil tycoon Oscar Wyatt.
Earlier on Friday, Ludmil Dionissiev, a Bulgarian oil trader based in Houston, pleaded guilty to smuggling. Prosecutors said Dionissiev, 61, worked with Chalmers to buy Iraqi oil for Chalmers’ companies — Bayoil USA Inc and Bayoil Supply and Trading Ltd.
The $67 billion oil-for-food program began in 1996 and ended in 2003 to ease the impact of sanctions imposed on Saddam Hussein’s government after it invaded Kuwait in 1990.
The charges against Chalmers and his co-defendants stemmed from Iraq’s requirement from 2000 to 2003 that recipients of oil should pay a secret surcharge, in violation of U.N. sanctions and U.S. law, to front companies and bank accounts controlled by the Iraqi government.
The secret payments were not made to the United Nations’ monitored bank account from which humanitarian goods could be purchased for the Iraqi people, but in a secret deal with Baghdad outside of the program.
Chalmers, who was the sole shareholder of Bayoil, decided to pay illegal kickbacks, prosecutors said, while Dionissiev helped facilitate the export of Iraqi oil.
Both men face a maximum sentence of 20 years in prison, but under a plea deal Chalmers is likely to receive between three and four years when he is sentenced on November 19. Dionissiev is likely to receive up to six month under his plea agreement, his lawyer said.
Chalmers and Bayoil USA Inc, based in Houston, and Bayoil Supply and Trading Ltd, based in the Bahamas, also agreed to pay a total restitution of more than $9 million dollars. A lawyer for Chalmers and the two companies declined comment.
When Bayoil was indicted in April 2005, prosecutors said the oil trader played a pivotal role in efforts to fix the price of oil under the oil-for-food program.
U.S. and U.N. investigations have found that lobbyists and U.N. and Iraqi officials enriched themselves through kickbacks and bribery.
Wyatt, former chairman and founder of Coastal Corp, is also accused of paying million of dollars in kickbacks and is due to go to trial on September 5.