Texas oilmen charged with kickbacks to Saddam Hussein
By KRISTEN HAYS / Associated Press
Two Texas oilmen indicted in the United Nations oil-for-food scandal were brought before a federal magistrate in handcuffs Thursday to hear charges that they funneled kickbacks to Saddam Hussein with money intended for humanitarian relief.
David Bay Chalmers Jr., 51, and Ludmil Dionissiev, 58, a Bulgarian citizen and U.S. resident, were arrested Thursday as prosecutors in New York announced their indictments. Briton John Irving also was indicted.
Charges include conspiracy to commit wire fraud, wire fraud and violation of the International Emergency Economic Powers Act. If convicted, they could face up to 62 years in prison and a maximum fine of $1 million.
Bond for Chalmers, who owns Bayoil USA Inc., and for Dionissiev, a Bayoil trader, was set at $500,000 apiece. U.S. Magistrate Calvin Botley ordered the men to put up $150,000 each in cash.
Chalmers "of course denies the charges and looks forward to proving that in New York," said his attorney, Frank Spagnoletti. The formal arraignment is set for Monday in New York.
Dionissiev's attorney, David Howard, issued a statement saying, "The complete absence of specifics in the government's indictment concerning Ludmil Dionissiev demonstrate that the government has seriously over-reached by charging him. Mr. Dionissiev intends to plead not guilty because he is not guilty, and he will be found not guilty at trial."
Botley ordered the men to surrender their passports and restricted travel to parts of Texas and New York. The men also must remove firearms from their homes. Dionissiev said he had a handgun. Chalmers said his son might have a gun.
The three defendants are accused of paying millions of dollars in kickbacks so Bayoil and another Chalmers company, Bayoil Supply & Trading Limited, based in Nassau, Bahamas, could continue to sell Iraqi oil under the oil-for-food program.
The U.N. program, which was endorsed by the United States and begun in 1996, let Iraq sell oil despite a stiff U.N. economic embargo against Saddam's regime, provided the proceeds were used to buy food and medicine for Iraqi people suffering under the sanctions.
The alleged kickbacks, between mid-2000 and March 2003, involved funds otherwise intended for humanitarian relief, said U.S. Attorney David Kelley in New York.
Kelley said $100 million would be "a conservative estimate" of the value of the oil the defendants dealt with.
Chalmers is at least a third-generation oilman.
His father, David Bay Chalmers Sr., founded Coral Petroleum and became a well-known oil trader who traveled in the same circles as Texas billionaire Oscar Wyatt.
Chalmers Sr. and Wyatt both pleaded guilty in 1980 to violating price controls after the Arab oil embargo and paid more than $20 million in fines, though Wyatt's conviction was later overturned.
Chalmers Jr. was senior vice president of Coral Petroleum from 1974 to 1983, when the company foundered. He joined Carey Petroleum in New York as an oil trader.
Four years later he founded Bayoil, a wholesale distributor and trader of crude oil and petroleum products, in Stamford, Conn. He relocated the private business to Houston in 1992, and reported that it had $4.1 million in sales in 2002.
Chalmers Jr. kept a fairly low profile for a Houston oilman, but appeared in a newspaper society column for a dinner he threw in 2000 for singer Diana Ross, a former neighbor of his in Connecticut. He lives in River Oaks, Houston's wealthiest enclave.
Dionissiev, who has contributed to the National Republican Senatorial Committee and was listed as an executive of Coral Oil and Gas, lives near the Houston Country Club.