Oscar S. Wyatt Jr., the
flamboyant Texas oil trader who flaunted his close
ties to the regime of Saddam Hussein, was indicted
yesterday in federal court in New York on charges
that he paid millions of dollars in kickbacks to the
regime to sell Iraqi oil under a United Nations
program.
The indictment says that Mr. Wyatt was informed by
Iraqi officials sometime in the fall of 2000 that he
and other traders would have to begin paying secret
surcharges to continue to be granted the right to
sell Iraqi oil under the United Nations oil-
for-food program.
In fax messages and telephone calls over the next
two years, the indictment says, Mr. Wyatt arranged
for the secret payments to be made through Swiss
intermediaries and overseas companies that he set
up. The money, the indictment says, was deposited in
Iraqi government accounts in a bank in Jordan.
The indictment was
unusually detailed because it is based in part on
recorded telephone conversations between Mr. Wyatt
and his representatives, and the El Paso
Corporation's oil traders. Mr. Wyatt founded the
Coastal Corporation, an energy company that El Paso
acquired in early 2001 in a deal that eventually led
to a bitter dispute between Mr. Wyatt and El Paso's
senior executives.
Mr. Wyatt can he heard in those calls discussing the
surcharge payments and also reporting on secret fees
he paid to be allowed to load oil in Iraqi ports,
according to the indictment.
Mr. Wyatt was arrested by Federal Bureau of
Investigation agents at 6 a.m. yesterday at his home
in River Oaks, the most exclusive residential
district in Houston. He was released on $2.5 million
bail secured by a property he owns in Colorado, and
is scheduled to be arraigned in Federal District
Court in Manhattan next Thursday. |
Craig Hartley/Bloomberg News
Oscar S. Wyatt Jr. and his wife, Lynn, after an El
Paso Corporation shareholders meeting in Houston in
June 2003. Photo: NY Times
Former dictator Saddam Hussein
Photo : AFP
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Mr. Wyatt, through his lawyer, denied the charges
yesterday. "Mr. Wyatt has violated no laws and will
rigorously defend against these charges," the
lawyer, Carl Parker, said in a statement.
Mr. Wyatt, 81, is one of the last legendary Texas
oilmen, a former drill-bit salesman who put together
several ambitious international energy ventures. His
company, the Coastal Corporation, eventually became
one of the largest importers of Iraqi crude oil into
the United States, until Iraq invaded Kuwait in
1990. After the United Nations allowed Iraq to begin
selling oil again, Mr. Wyatt and Coastal were
awarded the first tanker shipment to leave the
country, in December 1996.
He is the most prominent American businessman to be
swept up so far in the widening criminal
investigations in New York of corruption in the
United Nations program, in which proceeds from sales
of Iraqi oil were supposed to go into a United
Nations account to be used to buy food, medicines
and other goods for the Iraqi people.
El Paso, which is not facing charges in the
indictment, acknowledged that it had been responding
to requests for information from investigators about
its dealings with Mr. Wyatt.
"We continue to cooperate with the U.S. attorney's
office, the S.E.C. and various Congressional
committees," Richard Wheatley, a spokesman for El
Paso, said in a statement.
The charges describe at least $3.9 million in
back-door payments Mr. Wyatt and his companies are
accused of making from 2000 to 2002 to Iraqi
government accounts in the Jordan National Bank in
Amman.
The indictment says that Mr. Wyatt's representatives
were informed by Iraqi officials in a meeting in
Vienna in the fall of 2000 that he would have to
begin paying a surcharge directly to the Iraqi
government to continue to receive allotments of oil
to sell.
Mr. Wyatt, the indictment says, was not dissuaded.
He arranged to make the illegal payments through two
Cyprus-based corporations he set up and through a
Swiss energy trading consulting company, Sarenco S.A.
The companies were operated by two Swiss citizens,
Catalina del Socorro Miguel Fuentes and Mohammed
Saidji. Both, along with the companies, were also
named in yesterday's indictment.
Federal prosecutors have recovered fax messages,
invoices and bank statements that they say describe
the illegal payments. The indictment cites one phone
call on Dec. 21, 2001, made shortly after a Dec. 9
payment of 222,000 euros to the Iraqi accounts in
Jordan. In it, Mr. Wyatt complained to an El Paso
trader about "that $200,000 I've already paid," the
indictment states.
Mr. Wyatt is also accused of lobbying United Nations
officials to persuade them to lower the officially
designated selling price of Iraqi oil, to leave a
margin that would allow Mr. Wyatt and his associates
to pay the surcharges and still make a profit on the
oil sales.
The charges against Mr. Wyatt came in a superseding
indictment that expanded on one brought in April
against another Texas oil trader, David B. Chalmers;
his company, Bayoil Inc.; and two of his associates,
John Irving and Ludmil Dionissiev.
Mr. Wyatt is accused of conspiracy, wire fraud and
trading with a country that has been designated by
the United States as supporting terrorism. Mr. Wyatt
has known for at least a year that he was under
investigation.
Mr. Wyatt, Ms. Miguel Fuentes and Mr. Saidji each
face a maximum of 62 years in prison and a maximum
fine of at least $1 million. Sarenco and two other
companies operated by Mr. Wyatt face fines of at
least $2 million. The government is seeking criminal
forfeiture of property of at least $1 billion from
all the defendants.
The inquiry by the United States attorney for the
Southern District of New York has also yielded
indictments against Tongsun Park, a South Korean
lobbyist, and Vladimir Kuznetsov, a Russian diplomat
who formerly headed the United Nations budget
watchdog committee.
Mr. Wyatt's arrest brings rare scrutiny to the murky
world of oil trading and shipping, a business that
relies largely on close contacts with officials at
oil companies and in governments of oil-producing
countries. Mr. Wyatt began traveling to Iraq in the
early 1970's, shortly after the nationalization of
the Iraqi oil industry, and established envied ties
with officials in Baghdad.
Once described as "meaner than a junkyard dog" in a
profile by Texas Monthly magazine, Mr. Wyatt started
the Hardly Able Oil Company in 1951 using the
proceeds from an $800 loan. He later founded the
Coastal Corporation, which became his main conduit
for dealings in the Middle East.
Mr. Wyatt cultivated a rough-hewn image, speaking
out, for instance, against a Congressional effort to
impose trade restrictions on Mr. Hussein's regime
after it was discovered that it had used poison gas
against the Kurds.
Mr. Wyatt's relationship with Mr. Hussein drew
attention in late 1990, when he flew to Baghdad to
negotiate the release of American oil field workers
held hostage in Iraq. He was also an outspoken
critic of the war led by the United States to drive
Iraqi forces from Kuwait.
Such positions appeared to come naturally to Mr.
Wyatt, who would often travel to Vienna for meetings
of the Organization of the Petroleum Exporting
Countries to maintain contacts with oil ministers
from countries tarnished by sanctions, like Iraq or
Libya.
Back in Houston, Mr. Wyatt's profile was often just
as gruff, standing in contrast to that of his wife,
Lynn, a doyenne of the city's flamboyant party
scene.
The indictment is likely to shake Houston's arts and
charitable communities. Mr. Wyatt's wife is known
for her parties in the south of France and her work
as the chairwoman of the Houston Grand Opera. She
and Mr. Wyatt were recently seen at the Founders
Suite, an exclusive enclave at Reliant Stadium in
Houston where the city's elite watches the football
games of the Houston Texans.
The federal investigation of the United Nations
oil-for-food program has proceeded largely apart
from the inquiry by the commission headed by Paul A.
Volcker, and sometimes there have been tensions
between them. Mr. Volcker announced yesterday that
he would release his final report on the companies
involved in oil-for-food corruption next Thursday.
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