Video: Oil-for-food indictments

updated 4/15/2005 8:57:48 AM ET 2005-04-15T12:57:48

Two high-ranking U.N. officials have been cited in a U.S. criminal complaint against a South Korean businessman who was at the center of a 1970s congressional corruption scandal and is now accused of accepting millions of dollars from Iraq related to the U.N. oil-for-food program.

The reported involvement of the two unidentified U.N. officials was likely to cast a new shadow on the world body, which has spent more than a year trying to get to the bottom of allegations of massive corruption in the $64 billion humanitarian program that was aimed at helping Iraqis cope with U.N. sanctions.

The complaint calling for an arrest warrant against Tonsun Park was made public at the same time as an indictment charging a Texas oil company owner and two oil traders from Britain and Bulgaria with paying millions of dollars in secret kickbacks to Saddam Hussein’s Iraqi regime to secure oil deals.

The legal action was taken by U.S. attorneys in the Southern District of New York as congressional investigators and a panel led by former U.S. Federal Reserve chairman Paul Volcker continue their probes into the oil-for-food program and oil smuggling by Saddam.

More prosecutions expected
Volcker and the leaders of his inquiry say their final report — expected in midsummer — will likely lead to dozens of criminal prosecutions by legal authorities in various countries for bribery, sanctions busting, money laundering and fraud.

The U.S. Attorney’s office in New York has already gotten one guilty plea. On Jan. 18, Samir A. Vincent, 64, an Iraqi-born American businessman accused of skimming money from the program, admitted to being an illegal agent of Saddam’s government.

The allegations regarding the unidentified U.N. officials were contained in a complaint accusing Park of accepting millions of dollars from the Iraqi government while he operated in the United States as an unregistered agent for Saddam — during negotiations with the United Nations on establishing the oil-for-food program and after it started operating.

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 limited — and eventually unlimited — amounts of oil primarily to buy humanitarian goods.

But Saddam chose the buyers of Iraqi oil and the sellers of humanitarian goods. In a bid to curry favor and end sanctions, Saddam allegedly gave former government officials, activists, journalists and U.N. officials vouchers for oil to be resold at a profit.

U.S. Attorney David Kelley said Thursday’s charges were “two more pieces in the oil-for-food puzzle,” which is still being unraveled. “We’re going to wring the towel dry,” he said.

Park, described as residing in Seoul “among other places,” was in the United States in December, according to the complaint, but his current whereabouts were not disclosed. In the 1970s, Park was at the center of what became known as the “Koreagate” scandals in which he was accused of trying to buy influence in Congress.

Witness talks of U.N. officials
The reference in the complaint against Park to two mystery high-ranking U.N. officials sparked widespread speculation in U.N. corridors of possible names.

Kelley, pressed repeatedly by reporters at a news conference to say whether U.N. officials had actually received money tied to Park, would say only that that issue was not part of the indictment.

Park was accused of telling a cooperating government witness in 1995 that he needed $10 million from Iraq to “take care” of his expenses and his people, which the witness believed meant a person identified in court papers only as “U.N. Official 1.”

In 1996, another high-ranking U.N. official attended a restaurant meeting with Park, an Iraqi official and the government witness. After “U.N. Official 2” left, Park claimed that he had used a $5 million guarantee from the Iraqi government to fund business dealings with the “U.N. Official 2,” court papers said.

Park told the government witness in 1997 or 1998 that he had invested about $1 million that he had gotten from Iraq in a Canadian company established by the son of “U.N. Official 2,” though the company failed and the money was lost.

The agent also said the cooperating witness wrote a letter to Iraqi government officials in July 1997 to say that he and Park were splitting funds the Iraqi government was forwarding, but that both groups were supposed to “take care” of “U.N. Official No. 1.”

Asked about the allegations Thursday, U.N. associate spokesman Stephane Dujarric said the United Nations had not been contacted by the U.S. attorneys office.

“We’ve always maintained that anyone who’s found to have committed any criminal wrongdoing in relation to the program should be prosecuted. So in that sense, what you’re seeing today is progress,” he said.

Oil traders arrested
The indictment in Manhattan federal court named David B. Chalmers Jr., sole shareholder of Houston-based Bayoil (USA) Inc., and oil traders Ludmil Dionissiev, a Bulgarian citizen and permanent U.S. resident, and John Irving, a British citizen.

It accused them of paying millions of dollars in secret kickbacks to Saddam’s regime between mid-2000 and March 2003, thus cheating the oil-for-food program of at least $100 million in funds that should have gone for humanitarian aid. It calls for the company and three men to pay back at least that amount of money.

Chalmers and Dionissiev were arrested Thursday at their homes in Houston. Kelley said he will seek Irving’s extradition from England.

Catherine Recker, a lawyer for Chalmers and for Bayoil, said: “We will vigorously dispute the allegations of criminal conduct.” David Howard, a lawyer for Dionissiev, accused the government of over-reaching and said his client “intends to plead not guilty because he is not guilty, and he will be found not guilty at trial.”

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