Executive Sentenced For Iraq Kickbacks
Hussein's Government Got Payments in U.N. Program
David B. Chalmers Jr. was given two years in prison for buying United Nations-restricted Iraqi oil.
(By Bebeto Matthews -- Associated Press)
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Saturday, March 8, 2008
NEW YORK, March 7 -- A Texas oil executive was sentenced Friday to two years in prison for approving the payment of millions of dollars in kickbacks to the Iraqi government of Saddam Hussein so it could secure large oil shipments through a United Nations program.
U.S. District Judge Denny Chin also fined the executive, David B. Chalmers Jr., $9 million and sentenced his companies, Bayoil USA and Bahamas-based Bayoil Supply and Trading, to three years of probation.
Chalmers, 54, of Houston, pleaded guilty in August to conspiracy to commit wire fraud. Without securing a deal with prosecutors, he could have faced more than 60 years in prison.
"I didn't think through all the consequences at the time, and I'm sorry," he said. "In my heart, I should have known it was wrong."
Chalmers said he agreed to begin paying the surcharges after a Baghdad-based representative of his companies told him the Iraqis had demanded it. Chalmers said he was concerned about the safety of the employee and the employee's family.
The oil-for-food program ran from 1996 to 2003 and was designed to let the Iraqi government sell oil primarily to buy food and medicine for its citizens. Sanctions were imposed after Iraq invaded Kuwait, which set off the 1991 Persian Gulf War.
By 2000, authorities said, Hussein had begun insisting that kickbacks be paid to secure oil contracts.
Assistant U.S. Attorney Edward O'Callaghan said most legitimate oil companies refused to pay the kickbacks and stopped buying Iraqi oil. Chalmers, however, agreed to pay and, in return, the Iraqi government rewarded him with 30 million barrels of oil, he said.
O'Callaghan had argued that Chalmers should be sentenced to more than three years in prison.
An attorney for Chalmers, Andrew Weissmann, said Chalmers was less directly involved than his co-defendant, Oscar S. Wyatt Jr., another Texas oilman. Wyatt was sentenced last year to a year and a day in prison after he interrupted his trial by pleading guilty to conspiracy in the case.
But O'Callaghan said the government had only proven that Wyatt paid $200,000 in kickbacks whereas it could be proven that Chalmers paid at least $9 million.
