Billions of dollars of Iraqi oil had been sold under a UN program -- and food and other goods bought with the proceeds -- when former Iraqi president Saddam Hussein decided in 2000 that he personally wanted a bigger cut of the action. Documents now suggest that at least one US company acceded to that demand, paying surcharges that kept the oil flowing.
The action by the Coastal Corp, which was founded by Texas entrepreneur and oilman Oscar Wyatt, is detailed in a formal Iraqi government tally of secret payments made from September 2000 to December 2003, when steps were taken by US and British officials to stop the surcharges.
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Coastal, the only publicly traded American oil company on the list, is shown as having paid US$201,877 in surcharges. It is a small piece of the US$228 million in surcharges on oil sales that a CIA report released last week said Saddam collected, largely from Russian companies.
Wyatt, a former drill-bit salesman in South Texas who built a hydra-headed energy empire, said through a spokeswoman on Monday that he had no knowledge of Coastal paying any surcharges. A spokeswoman for the El Paso Corp, which acquired Coastal in 2001, declined to comment, citing a grand jury subpoena the company had received from federal court in New York.
The inclusion of Coastal on the list -- prepared by postwar officials from the Iraq State Oil Marketing Organization -- is one indication of the special relationship that Wyatt and Coastal had with Iraq, dating back three decades.
Wyatt, 80, acknowledged Monday through a spokeswoman that he had traveled to Baghdad as recently as last year, as the US was preparing for war, to meet with officials in Saddam's government. He declined to disclose the purpose of the visit.
Wyatt -- once called in Texas Monthly magazine "the most hated oilman in Texas" -- was the same executive who in 1972 first met Saddam, just after Iraq's oil industry had been nationalized, and eventually became one of the biggest US importers of Iraqi oil.
The two met again in 1990, after Iraq invaded Kuwait and Wyatt flew to Baghdad on a company jet to help negotiate the release of nearly two dozen American oil workers who Saddam's forces had turned into "human shields."
The relationship was so close that when the UN authorized Iraq in 1996 to begin selling oil again under the Food for Oil program, Wyatt and his energy company, Coastal Corp, secured the first tanker shipment to leave the country.
After Coastal was sold to El Paso, Wyatt is listed personally as the allocation recipient of Iraqi oil and Coastal was no longer listed.
US companies were not allowed to have any direct contact with the Iraqi government outside of the official Oil for Food program, and no money was supposed to go to Saddam that could pay for anything other than food, medicine and other approved items.
Wyatt said in an interview earlier this year that he was aware that it was a common practice within the Iraqi oil industry for companies to pay surcharges, generally US$0.10 to US$0.35 a barrel.
Regarding Coastal's shipments, Wyatt said in an interview that company executives had no doubt that a broker, but not the company, had to pay a surcharge. Officials at Coastal that Wyatt said he spoke with, also told him that "there was always a charge at the port" as well.
The years of effort on Wyatt's part to court Iraqi officials and build a venture to export Iraqi oil to the US produced ample rewards: He and companies that he has been linked to earned an estimated US$23 million profit -- a figure that Wyatt disputes -- in the seven years of the Oil for Food program, according to sales and profit estimates included in the CIA report by Charles Duelfer.
The unusually close ties with Saddam's Iraq, and the inclusion of Coastal on this list of entities that paid the surcharges, has drawn Wyatt into a maelstrom of inquiries, including efforts by committees in Congress, and officials at the Treasury Department and the US attorney's office in Manhattan.
"If you did not pay, you did not play," said a spokesman for the International Relations Committee in the House of Representatives, which is investigating the Oil for Food program, including the operations of Wyatt and other oil traders. "We have an obligation to find out what happened."
Explaining his affinity for dealing with Iraq, Wyatt once compared his approach as an independent oil trader with that of the largest American oil companies like Exxon Mobil and ChevronTexaco. These multinational concerns had a hold on the easily accessible markets in the Persian Gulf and although they also imported Iraqi crude under the UN program, they are thought to have dealt in much smaller quantities than Wyatt.
"The majors controlled the Saudi Arabian oil; most of Abu Dhabi crude was contracted to Asia," Wyatt said in an interview earlier this year. "So those that didn't have contracts had an opportunity with the Iraqi sour crude."
By the late 1980s, Coastal was importing as much as 250,000 barrels of Iraqi oil a day. As these oil imports became more and more important to Coastal's operations, Wyatt became more outspoken in his opposition to any threatened or standing trade sanctions by the US in the Middle East, including a move by Congress to impose restrictions on trade with Iraq after Saddam used poison gas against the Kurds.
It was Wyatt's surprise trip to Baghdad in December 1990, however, that finally brought his relationship with Iraq into the spotlight, when he met with Saddam to negotiate the release of American hostages there. The effort was opposed by the administration of President George H.W. Bush, but Wyatt came home a hero and he wept publicly at a meeting of the former hostages and their families.
"It was not a stunt," said Bobby Parker, a drilling rig electrician who had been held for 128 days before being rescued. "Oscar Wyatt is just not that type of person."
The hostages were safe, but ultimately, Wyatt's goal had not been fully achieved. He wanted to prevent an invasion of Kuwait, a war that the US, he said, had no reason to get into.
It would be more than five years before Wyatt's ties to Iraq again raised eyebrows, when the first tanker laden with crude oil sailed out of Mina al-Bakr, Iraq's main export oil terminal, in December 1996, marking Iraq's legal return to global oil markets.
The ship had been chartered by one of Wyatt's companies.
This was the start of the Oil For Food program, which ultimately would result in the export of 5.63 billion barrels, earning US$64.2 billion for the Iraqi government over the next seven years, money that was used to buy food, medicine, maintain oil fields and pay reparations from the first Gulf War, among other spending.
To maintain at least a hint of sovereignty, the UN allowed Saddam to pick the customers he would sell oil to and those contractors he would buy goods from, although the UN was supposed to monitor every sale or purchase and had the right to reject any proposed contract.
From the start, Saddam was apparently looking for ways to defraud the system, federal investigators say. First, investigators said, he was smuggling oil out of Iraq beyond the limits imposed by the Oil for Food program. He also was demanding payments from contractors that wanted to sell goods to Iraq. And finally, during part of the program, he was demanding that companies or individuals who intended to purchase oil, pay a surcharge for that right, the report by Duelfer says.
In total, the actions earned Saddam an estimated US$11 billion in improper profits, the report says.
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