Texan admits guilt in oil-for-food scam

NEW YORK – A Texas oil executive pleaded guilty Friday to conspiracy to commit wire fraud in a scheme to cheat the United Nations oil-for-food program out of millions by paying kickbacks to Saddam Hussein’s Iraq regime.

David Chalmers, the sole shareholder of Bayoil USA Inc. in Houston, was set to go on trial next month on charges he used a cozy relationship with Iraq in the 1980s to secure oil contracts, and paid millions in kickbacks between 2000 and 2003 to ensure his participation in the oil-for-food program.

He could have faced more than 60 years in prison if convicted and a maximum of 20 years for the conspiracy charge. Under a plea agreement, prosecutors will recommend a 37- to 46-month term when he is sentenced Nov. 19.

Chalmers, 53, uttered a barely audible “guilty” when asked to enter his plea by U.S. District Judge Denny Chin. He also agreed to pay more than $9 million in restitution.

His two companies, Bayoil USA and the Bahamas-based Bayoil Supply & Trading Ltd., also admitted to conspiracy to commit wire fraud.

Oil trader Ludmil Dionissiev, 61, of Houston, also entered a guilty plea earlier Friday to a charge of smuggling for helping bring Iraqi oil into the United States in January 2001. He faces a 20-year maximum term when he is sentenced on Nov. 19, but sentencing guidelines call for a term of up to six months, said his attorney, David Howard.

Ten people and five companies have been charged so far in connection with the scheme to cheat the UN program of millions that should have been used for humanitarian aid. Oscar Wyatt, another Texas oilman who once chaired Coastal Corp., still faces trial next month on similar charges.

The program, which ran from 1996 to 2003, was created to help Iraqis cope with U.N. sanctions imposed after Saddam’s 1990 invasion of Kuwait. It let the Iraqi government sell oil primarily to buy humanitarian goods.

Chalmers told the judge that he allowed money to be illegally wired to Iraq through another agent at his company in the spring of 2001. He said that letters faxed to the UN during the same period did not disclose the illegal payments.