Larry Neumeister / The Associated Press – 2008-03-09 22:19:18

http://www.chron.com/disp/story.mpl/ap/business/5601425.html

NEW YORK (March 7, 2008)— A Texas oil executive was sentenced Friday to two years in prison for approving the payment of millions of dollars in kickbacks to Saddam Hussein’s Iraq regime so he could secure large oil shipments through a United Nations program.

US District Judge Denny Chin also fined David Chalmers $9 million. He sentenced Chalmers’ companies, Bayoil USA and the Bahamas-based Bayoil Supply & Trading Ltd., to three years probation.

Chalmers pleaded guilty in August to conspiracy to commit wire fraud. Without 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, 54, of Houston told the judge he carried “heavy, heavy guilt.”

He 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.

Operating from 1996 to 2003, the oil-for-food program 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 and brought about the first Gulf War.

By 2000, authorities said, Saddam Hussein had begun insisting that kickbacks be paid to secure oil contracts.

Assistant US Attorney Edward O’Callaghan said most legitimate oil companies refused to pay the kickbacks and stopped buying Iraqi oil. He said Chalmers agreed to pay them and the Iraqi government rewarded him with 30 million barrels of oil.

“Bayoil agents accepted an enormous amount of oil knowing it was going to have surcharges attached to it,” he said.

O’Callaghan had argued that Chalmers should be sentenced to more than three years in prison.

He disagreed with a lawyer for Chalmers, Andrew Weissmann, who urged leniency for Chalmers in part because he did not know Saddam personally and had never met with him. Weissmann said Chalmers was less directly involved than his co-defendant, Oscar Wyatt, 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.

O’Callaghan said the government had only proven that Wyatt paid $200,000 in kickbacks while it could be proven that Chalmers paid at least $9 million.

Korean businessman Tongsun Park has been sentenced to three years and one month in prison for accepting at least $2 million to work on Iraq’s behalf to influence the oil-for-food program.

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