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U.S. Attorney Charges Three In Oil-for-Food Investigation
By CHAD BRAY
DOW JONES NEWSWIRES
October 21, 2005 7:44 p.m. wall street journal

NEW YORK -- A Texas businessman and two Swiss executives, as well as three companies, are facing conspiracy, wire fraud and other charges in connection with an alleged scheme to pay kickbacks to obtain oil under the United Nation's defunct oil-for-food program, according to a newly unsealed indictment in Manhattan.

In a press release on Friday, the U.S. Attorney's office in Manhattan said Oscar S. Wyatt Jr., former chairman of Coastal Corp., and Swiss executives Catalina del Socorro Miguel Fuentes, also known as Cathy Miguel, and Mohammed Saidji have been charged with paying millions of dollars in kickbacks to Saddam Husseins's government in Iraq.

Nafta Petroleum Co., Mednafta Trading Co., and Sarenco S.A., a Swiss consulting firm operated by Ms. Miguel and Mr. Saidji, also are facing criminal charges in the matter.

The individuals and businesses have been charged with conspiracy, wire fraud, prohibited financial transactions with Iraq and violation of the International Emergency Economic Powers Act, according to court documents.

The new indictment updates charges originally brought in April 2005 against David B. Chalmers Jr., the sole shareholder of Houston oil company Bayoil Inc., London oil trader John Irving and Ludmil Dionissiev, a Houston oil trader.

Mr. Wyatt was arrested Friday at his home in Houston and was presented before a federal judge there. Mr. Wyatt's bond was set at $2.5 million, secured by property he owns in Colorado.

Mr. Wyatt's lawyer initially declined comment but said he expects to make a statement later Friday. Ms. Miguel and Mr. Saidji haven't been taken into custody at this time, a spokeswoman for the U.S. Attorney's office in Manhattan said Friday afternoon. An arraignment is scheduled for all of the individuals in the case on Oct. 27 before U.S. District Judge Denny Chin.

The oil-for-food program was designed to allow the government of Iraq, which was facing international sanctions, to sell oil in exchange for food, medical supplies and other humanitarian needs.

Instead, an investigation headed by Paul A. Volcker found Saddam Hussein's government was instead allowed to pocket billions of dollars by manipulating the program. The probe also uncovered kickbacks to U.N. officials.

The oil-for-food program ended in 2003. The ensuing scandal has led to calls to overhaul and reform the U.N. According to the new federal indictment, Mr. Wyatt, Ms. Miguel and Mr. Saidji paid millions of dollars of "secret illegal surcharges" to Iraq's government for the purchase of oil on behalf of Coastal Corp., the two Cyprus oil trading firms and Sarenco from December 2000 to March 2003.

To conceal the payments, the kickbacks were deposited in a bank account in Jordan controlled by the Iraqi government, according to the indictment.

On Thursday, Manhattan District Attorney Robert M. Morganthau announced that Midway Trading, a Reston, Va., oil trading firm, pleaded guilty to grand larceny in the first degree in connection with the payment of more than $440,000 in kickbacks to Iraqi officials in exchange for the purchase of $42 million in oil from that country. Midway has agreed to pay a $250,000 fine in the matter.

A former U.N. procurement officer pleaded guilty earlier this year to wire fraud and other charges in connection with several hundred thousand dollars he allegedly received from foreign companies seeking to secure contracts to provide goods and services to the United Nations. He has also been accused by prosecutors of faxing information to an unnamed foreign company related to its bid for an inspection contract under the oil-for-food program.

Earlier this month, a judge in France placed two former French diplomats, including that country's one-time representative to the U.N., under investigation as part of a separate probe of corruption in the program.

Write to Chad Bray at chad.bray@dowjones.com

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