U.S. Buyers of Hussein’s Oil Acted to Assist Iraq

A month before the Persian Gulf War began in 1991, with an attack by the U.S.-led coalition imminent, famed Texas oil tycoon Oscar Wyatt rushed his corporate jet to Baghdad to rescue 21 Americans being held hostage by Iraqi President Saddam Hussein.

It was a personal triumph for Wyatt, who had clashed with the U.S. government over the private rescue mission, and a political one for Hussein, who was trying to convince the world that he remained open to negotiation after his invasion of Kuwait.

This month, Wyatt was one of three Americans whose names surfaced in a CIA report listing the people and companies whom Hussein allegedly awarded lucrative vouchers to buy oil in the decade that followed his defeat in 1991.

In the interim, Wyatt came to be a central figure in a small, loosely knit group of Americans who supported policies and activities potentially beneficial to Hussein even as they benefited from the dictator’s oil resources, U.S. officials, oil analysts and personal acquaintances said.

Their story provides a revealing glimpse at the politics of oil and the people behind it, operating in a world that mixed diplomacy, intrigue and multimillion-dollar oil deals.

The men, involved in Iraq through professional and personal relationships that in some cases stretched back decades, at times engaged in a secretive campaign of private diplomacy, offering themselves as a communications back channel between Hussein and at least two U.S. administrations, the sources said.

At least one of the men attempted to broker a peace deal between the U.S. and Iraq in a last-ditch effort to avoid war. Others waged campaigns to put an end to United Nations sanctions against Iraq, portraying their efforts as humanitarian gestures to help the Iraqi people.

At the same time, all were donating to U.S. political campaigns. Since 1991, Wyatt and his wife, Lynn, for instance, have given more than $700,000 to federal campaign and political organizations, most to Democrats and most after Wyatt and his firm began to buy oil from Iraq in 1997, according to records maintained by the Campaign Finance Analysis Project.

The other Americans named in the CIA report, Virginia oil trader Samir “Sam” Vincent and Michigan real estate developer Shakir Al Khafaji, helped sponsor high-level trips to Iraq during the 1990s with influential U.S. congressmen and brought high-ranking Iraqi religious leaders to the United States.

Friends said the men were trying to bring attention to the suffering of ordinary Iraqis under the sanctions, which had squeezed food and medical shipments to the nation’s 26 million people.

Wyatt and a former business associate, David Chalmers, whose company was mentioned in the CIA report, were primarily interested in Iraq for business reasons, friends and analysts said. They bought Iraqi oil in a market that came to be characterized by shadowy middlemen and kickbacks, backroom deals and high-stakes showdowns.

Wyatt said through a spokesman last week that all his transactions in Iraq complied with applicable laws. Chalmers, Vincent and Khafaji did not respond to attempts to contact them or their companies.

None of the men has been accused of breaking the law by trading oil with Hussein, a process overseen by the U.N. between 1996 and 2003 as part of its oil-for-food program.

Many companies, including firms run by Wyatt, Vincent and Chalmers, were on a list approved by the U.N. to buy oil from Iraq under the program, which was designed to use the proceeds from oil sales to provide humanitarian aid for the Iraqi people.

The legality of oil sales to individuals, however, is suspect, congressional investigators said. Hussein abused the U.N. program by personally issuing oil vouchers to high-ranking political figures worldwide to win friends and wage a propaganda war to lift the sanctions, according to the CIA report by special weapons inspector Charles A. Duelfer.

Hussein’s vouchers entitled the bearers to a certain quantity of oil. The holders could then sell their coupons to middlemen, who would in turn sell the oil to companies. Sometimes the vouchers were gifts; sometimes they were contracts to buy oil at a specific price.

Such vouchers are at the heart of what has become one of the gravest corruption scandals at the United Nations since its founding in 1945. The oil-for-food program generated an estimated $67 billion legally and $11 billion illegally, with top U.N. officials and officials from China to France to Russia implicated as having received such vouchers.

Wyatt, Khafaji and Vincent are the only Americans on the list of recipients, which was obtained from records kept by Iraq’s State Oil Ministry and recovered by U.S. troops. Five U.S. companies were also named: Chevron-Texaco, Exxon Mobil, Wyatt’s Coastal Corp., Vincent’s Phoenix International, and Chalmers’ Bay Oil.

There are nine investigations into various aspects of the scandal. They include a federal investigation in New York that has subpoenaed records from El Paso Corp., which acquired Wyatt’s old company, Coastal Corp.; Chevron-Texaco and Exxon Mobil. All have said their oil purchases were legal.

Treasury officials recently announced that they were investigating the possibility that U.S.-based sanctions against trade in Iraq had been violated.

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In 1990, Vincent was among a small group of businessmen who fled Iraq by taxi after Hussein invaded Kuwait on Aug. 2.

Unlike the others, however, the Iraqi-born Vincent, a naturalized U.S. citizen, had a mission, according to friends and former U.S. officials: He was carrying a last-minute peace proposal to the Bush administration from Hussein, prepared by a longtime friend, Nizar Hamdoon, the former Iraqi ambassador to the U.S.

Immediately upon his return to the U.S., Vincent contacted Col. Carl Bernard, a decorated war hero with connections at the White House. The plan was reviewed by national security advisor Brent Scowcroft, who rejected it, Bernard said.

By that time, however, Vincent’s role had been made clear to the U.S. government:

“Vincent was an asset that we needed and could have used but didn’t,” Bernard recalled of the initiative.

A few months later, with Hussein still holding hostages seized after the start of the invasion, a top aide to Rep. Charles Wilson, a Texas Democrat, asked Vincent to intervene.

The aide, Charlie Schnabel, was a squash partner of Vincent, a former Iraqi Olympic athlete. Vincent, who had gone to high school with the Iraqi oil minister and other top Iraqi officials, agreed. After speaking with top-ranking Iraqi officials, he told Schnabel that Hussein, who was trying to show the world he would cooperate, had agreed to free some of the hostages.

Schnabel then turned to Wyatt, an old acquaintance and a maverick even by the iconoclastic standards of independent Texas oilmen. Wyatt, the head of Coastal Corp., noted for his corporate takeovers and dealings with rogue nations, had long done business in Iraq.

In fact, one of Coastal’s principal refineries, in Aruba, was especially configured to handle the high-sulfur Iraqi oil. Wyatt’s financial success depended in part on his ability to procure Iraqi crude oil, experts said.

Wyatt volunteered the use of his plane for the mission and accompanied Vincent on the trip.

“He has a much stronger social conscience than he wants people to think,” said Barbara Shook, who has covered Wyatt as a journalist for more than two decades, most recently as the Houston bureau chief for the Energy Intelligence Group. “I never sensed that he was pro-Saddam. He was pro-Iraqi people.”

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Although their efforts failed to stop the war, Wyatt and Vincent pressed ahead with their opposition to U.S. policies in Iraq and to the U.N. sanctions.

With malnutrition and child mortality rates skyrocketing, Hussein agreed to allow the U.N. to carry out its oil-for-food program. Started in late 1996, it authorized contracts between the Iraqi government and oil companies for the purchase of Iraqi oil. Money from the sales was then deposited in a U.N. account and used to buy humanitarian goods.

The first company to win approval to buy Iraqi oil was Wyatt’s company, Coastal, according to the records contained in Duelfer’s report. Vincent’s company, Phoenix, followed soon after. Though Duelfer’s public report did not name the U.S. companies and individuals involved, citing privacy concerns, congressional sources provided the names to The Times.

From 1996 until the U.S. invasion of Iraq in 2003, Wyatt, Vincent or their firms won the right to ship millions of barrels of oil from Iraq. Wyatt or his company pumped 71.8 million barrels of oil under the voucher program at a profit of $22.8 million. Vincent and his firm pumped 7.9 million barrels of oil and made a profit of $3.5 million, the report said.

Wyatt stepped down as head of Coastal in 1997, although he remained a consultant. In his final speech as head of the company he founded, Wyatt used the occasion to denounce unilateral sanctions as harmful to U.S. business -- though he did not mention Iraq by name.

After Wyatt stepped down as chairman, the pace of the Wyatt family political donations more than doubled to about $67,200 per year, according to campaign finance records.

The Wyatts gave to both top Republicans and Democrats, including President Clinton, Vice President Al Gore and Sen. Hillary Rodham Clinton on the Democratic side and Sen. John McCain and Rep. Tom Delay on the Republican side. About 75% flowed to the Democrats. None went to the Bush family, whom Wyatt disliked, analysts said.

“His differences with both Bushes are well established,” one industry analyst said.

Coastal Corp., meanwhile, donated $2.5 million to a variety of political action committees and political organizations between 1991 and 2000, before the company was sold to El Paso, the records showed.

Bob Baer, a former CIA officer, said that his Iraqi sources told him that Wyatt had represented himself as a way to send a message to President Clinton.

Vincent worked to end sanctions when he helped to bring a trio of Iraqi religious leaders to meet with top U.S. church leaders and others in 1991. A longtime acquaintance said Vincent worked directly with the Hussein government to arrange the trip, which was opposed by the U.S. government.

The three Iraqis, a Christian, a Sunni Muslim and a Shiite Muslim, met with former President Carter, Cardinal John O’Connor and the Rev. Billy Graham in an effort to convince them to appeal for ending the sanctions, the acquaintance said.

The acquaintance described Vincent’s motives as humanitarian, though he acknowledged that Vincent’s efforts benefited Phoenix International. The source dismissed any suggestion that Vincent was working for Hussein.

“This guy is a true-blue American who is also a business guy,” the acquaintance said. “[The Iraqis] appreciated what he was doing. If they had a certain number of allocations to give out, they would direct them to the people who were pulling for them. I think it was simple as that.”

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Scott Ritter, a former weapons inspector, met Khafaji after briefing a group of U.S. congressmen in Washington in April 2000.

Khafaji had grown up in Iraq in a politically well-connected family, moving to America to establish a real estate business that was highly profitable, he told Ritter.

He said he wanted to help Ritter, who was trying to raise funds for a documentary to show how the inspection effort had successfully disarmed Hussein -- a controversial proposition then, but one which has since been proven correct.

Khafaji gave Ritter $400,000 between August 2000 and June 2001 to make the film, Ritter said. The next month, Khafaji showed up on the list of oil voucher recipients for the first time, selling a little more than 2 million barrels of oil for a profit of nearly $1 million, according to Duelfer’s report.

Khafaji sold his oil through a middleman to Bay Oil, Chalmers’ company, according to a joint investigation by the Financial Times newspaper and an Italian business journal. The report could not be independently confirmed.

Ritter said Khafaji exercised no editorial control over the documentary and that Khafaji had personally assured him that the money did not come from Hussein, but Ritter acknowledged the possibility that he was a “useful idiot.”

“The regime felt they needed a movie like the one I made to be made. They had no input. I told the Iraqi government, ‘The truth is your friend,’ ” Ritter said. “Shakir facilitated the truth being told. I view him as an American patriot.”

In September 2002, as Congress prepared to vote on whether to authorize war in Iraq, Khafaji helped arrange a trip to Iraq by Democratic Reps. Mike Thompson of St. Helena, Calif., Jim McDermott of Washington state and David E. Bonior of Michigan, who is no longer in office.

Republicans accused the three Democrats of handing a public relations victory to Hussein. The three called on Hussein to admit weapons inspectors to clear up doubts over his arms program.

In a statement, Thompson said he had had no contact with Khafaji since the trip. McDermott, who received a one-time donation of $5,000 from Khafaji after the trip, returned the money upon learning of the possible links between Khafaji and the oil-for-food corruption, an aide said.

Khafaji’s final attempt to stop the growing threat of war in Iraq came in January 2003, as he and Ritter tried to arrange a trip to Baghdad by a group of Nobel Peace Prize winners, Ritter said.

This time, with an attack by another U.S.-led coalition imminent, the plan fell apart.

American and British troops invaded two months later.