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Saturday, October 9, 2004 - Page updated at 12:00 AM

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Americans among beneficiaries in oil scandal

Los Angeles Times

WASHINGTON — Three U.S. citizens, all of whom campaigned against Iraq sanctions, were among those who received special grants from a scandal-ridden oil program overseen by Saddam Hussein, according to congressional officials and a CIA report released this week.

The individuals named were: Texas oil baron Oscar Wyatt, Detroit businessman Shakir al-Khafaji and Virginia businessman Samir Vincent. Al-Khafaji's involvement was reported earlier this year by the Financial Times of London.

Five U.S. corporations were also among the beneficiaries of the so-called oil vouchers that Saddam gave to top political figures and important companies to win diplomatic or military favors, the sources said. They include major companies such as Chevron, Texaco and Exxon Mobil, as well as smaller companies such as Houston-based Bay Oil USA.

Typically, Saddam would personally approve the issuance of the vouchers, which provided the holder the right to a certain quantity of Iraqi oil. If issued to an individual, the vouchers could be sold to a middleman who would then actually purchase the oil.

The American names were left out of a massive report released to the public this week by Charles Duelfer, who headed the CIA effort to document Saddam's weapons of mass destruction. Privacy was cited as the reason. A complete copy with the names included was given to some congressional representatives on Thursday.

Wyatt, who received more money than any other individual, announced in March 1997 that he would retire and begin lobbying in Washington to lift sanctions against Iraq and Libya.

Wyatt has had a long relationship with Saddam, dating back to before the Gulf War when his company Coastal Corp. was a major buyer of Iraqi oil. He won fame in 1991 by taking his company's plane to Iraq to pick up American citizens being held hostage during the run-up to the war.

Wyatt received six vouchers made out to him between 1999 and 2003 for 29.7 million barrels of oil that netted him a profit of $12.6 million, according to the records in Duelfer's report. His company, Coastal, was given vouchers for 42 million barrels of oil with a profit of $10.1 million between 1996 and 2000, the Duelfer's report said. Wyatt didn't return a request for comment.

Al-Khafaji has long led missions to deliver food and medicine to Iraqi villages.

In 2000, he also provided $400,000 to fund the production of a documentary by former weapons inspector Scott Ritter that claimed inspections had succeeded in removing Saddam's weapons of mass destruction, a then-controversial assertion.

Khafaji was listed as having been awarded 2 million barrels of oil that provided a profit of $931,000 when they were loaded in 2001, according to Duelfer's report and congressional investigators. Khafaji was awarded three more vouchers for 5 million barrels of oil between 2001 and 2003, but he never collected on them, the records show. Khafaji didn't return calls for comment, though in the past he has said he didn't support Saddam.

In April, U.S. Rep. Jim McDermott, D-Seattle, returned a $5,000 contribution from al-Khafaji, who had accompanied McDermott on his highly publicized trip to Iraq in 2002.

A nonprofit organization, Life for Relief and Development, paid McDermott's $5,510 travel expenses for the Iraq trip, according to a disclosure form filed with the House clerk. Al-Khafaji has been named as a financial supporter of the organization, though the extent of his support is not known. The group says it ships humanitarian aid to Iraq.

Mike DeCesare, McDermott's spokesman, said at the time that McDermott decided to return the contribution immediately upon hearing of al-Khafaji's alleged involvement in the oil vouchers. He said McDermott was unaware of al-Khafaji's business dealings with the Iraqi government at the time of the trip to Iraq.

Vincent, who headed a firm called Phoenix International, in 1999 and 2000 helped to organize a tour through the United States in which Iraqi religious leaders met with U.S. religious leaders such as New York Cardinal John O'Conner and the Rev. Billy Graham and political figures such as former President Carter.

Vincent told a Catholic magazine in 2000 that one of the Iraqi religious leaders told Graham, "Help our people by using your influence on the decision-makers in your country to see clearly what they have done to Iraq, their malicious actions."

Vincent was awarded 1.5 million barrels of oil in 1999 and 2000 that netted him a profit of $1 million, according to the CIA report. All told, Vincent and Phoenix were given vouchers for 7.9 million barrels of oil that netted $2.8 million between 1997 and 2001, the Duelfer report showed. Vincent was also given four vouchers for 4 million barrels of oil between 2000 and 2003 that he did not use. Vincent could not be reached for comment.

Oil giants San Ramon, Calif.-based Chevron-Texaco and Dallas-based Exxon Mobil or their predecessor companies were also listed in the Iraqi documents in Duelfer's reports, congressional investigators said.

Chevron and Texaco, then separate companies, were listed as having purchased 11.3 million barrels of oil for a profit of $2 million between 1996 and 1999. Mobil, which later merged with Exxon, bought 9.2 million barrels of oil for a profit of $1.7 million, the records show.

Both companies said yesterday that any oil pumped from Iraq was done in accordance with applicable U.S. laws and U.N. regulations.

Besides Coastal and Phoenix, the fifth company on the list was Bay Oil, run by David Chalmers. Chalmers was an ex-business associate of Wyatt's, according to Platts, an oil-industry trade publication.

Bay Oil bought 5.7 million barrels of oil that netted $1 million under the oil-voucher program, according to the Duelfer report and congressional investigators.

Chalmers, who did not receive vouchers personally, did not return phone calls for comment.

It remains unclear whether any of the companies' transactions were illegal since all companies named in the report were cleared to purchase oil from Iraq in the early days of the United Nations' Oil For Food program, which began in 1996.

But it appears to violate U.N. sanctions for an individual to have been awarded an oil grant, since petroleum purchased in the program was supposed to be sold to corporate end users, oil experts said.

House investigators said they planned to look into whether any of the individuals or companies were awarded the oil contracts in exchange for carrying out propaganda or other activities for Saddam.

The Oil For Food program is currently the subject of nine separate investigations, including one by federal prosecutors in New York who have sent subpoenas to several U.S. oil companies seeking information on their activity in the program.

"Every American who is involved in allegedly abetting Saddam deserves to be investigated," said one congressional investigator who is looking into the program. "It warrants investigation."

The program was poorly monitored, and opportunities for corruption were rampant, according to those who have studied the U.N. program, under which Saddam sold oil in return for food and humanitarian aid.

"It's like peeling an onion. We really don't have a good sense of what the whole thing looks like yet. But obviously, it's not attractive," said Edward Luck, a professor at Colombia University who has followed the scandal.

Material on McDermott's relationship with al-Khafaji was provided by Seattle Times staff reporter Jim Brunner.

Copyright © 2004 The Seattle Times Company

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