Washington, 14 April 2005 (RFE/RL) -- Prosecutors say Ludmil Dionissiev, a Bulgarian citizen with permanent U.S. residency status, was arrested today at his home in Houston. Also arrested there was American businessman David Chalmers.
The U.S. government has asked Britain to extradite John Irving to face charges in the United States. It is also seeking Tongsun Park, a South Korean citizen charged with conspiring to act as an unregistered agent for Hussein's government in creating the oil-for-food program.
The case provides another example of the willingness to help Hussein defraud the humanitarian program, says John Klochan, a top official of the U.S. Federal Bureau of Investigation in New York.
"An inherent weakness of the oil-for-food program was that Saddam Hussein was free to award the oil contracts to his cronies and his friends," Klochan said. "This was the embodiment of the fox guarding the hen house. Under the noses of the UN overseers, Saddam's people imposed a system of hidden surcharges that were actually illegal kickbacks. This proved to be [a] very profitable arrangement for both the Iraqi government and the Saddam cronies and loyalists."
The indictment says Dionissiev, Chalmers, and Irving conspired to pay kickbacks to the Iraqi government so that Chalmers' oil companies could keep selling Iraqi oil under the UN's oil-for-food program. They also are accused of plotting to fix the price of Iraqi oil.
If convicted on all charges, the three could each face up to 62 years in prison and a fine of up to $1 million. The U.S. government also is seeking to have them forfeit $100 million in assets.
The $64 billion program, begun in 1996, was designed to allow the limited sale of Iraqi oil despite the trade embargoes imposed on Baghdad by the UN after the first Gulf War. Proceeds of the sale were to pay for food and health care for the Iraqi people, who were impoverished by the embargoes.
"We also allege that Park, Vincent, and the representatives of the government of Iraq understood that some of the money Park received from the government of Iraq would be used by Park to 'take care of' one of the United Nations officials with whom Park negotiated."
David Kelley, the U.S. district attorney in New York, said one of the ways Iraq's government corrupted the program was to require recipients of oil to pay a "secret surcharge" from 2000 to 2003.
Kelley said these payments were put not into a bank account meant to buy food and medicine for the Iraqi people, but were paid to banks and companies designated by Hussein's government. He said this violated UN sanctions and U.S. law.
The U.S. investigation has so far yielded one conviction. Three months ago, Samir Vincent, a naturalized American businessman born in Iraq, pleaded guilty to being an illegal agent of the Iraqi government under Saddam Hussein.
Kelley said yesterday that Vincent and Park, the Korean defendant named yesterday, were involved in making sure all the people supporting the corruption of the oil-for-food program were properly paid.
"A large portion of the payments to Park allegedly were in the form of cash that was delivered by means of diplomatic pouches to representatives of the government of Iraq here in Manhattan. This was designated for Park's ultimate benefit. We also allege that Park, Vincent, and the representatives of the government of Iraq understood that some of the money Park received from the government of Iraq would be used by Park to 'take care of' one of the United Nations officials with whom Park negotiated," Kelley said.
A separate UN-commissioned probe has found serious problems with UN management of the program. Last month, the panel criticized Secretary-General Kofi Annan for failing to thoroughly investigate charges of conflict of interest and cited several top aides for questionable behavior.
In February, the commission found the head of the program, Benon Sevan, had directed contracts to a friend.For the latest news and analysis on Iraq, see RFE/RL's webpage on "The New Iraq".