Witness Links Wyatt to Firms: But Former Iraqi Oil Company Official Concedes to Not Knowing Ownership

By David Ivanovich, Houston Chronicle

Sep. 25–NEW YORK — A former Iraqi oil company official testifying in Oscar Wyatt’s fraud and conspiracy trial Monday repeatedly linked the Houston oilman to two Cyprus-based companies prosecutors contend paid illegal surcharges to Saddam Hussein’s regime.

But Mubdir Al-Khudhair, a former manager with Iraq’s State Oil Marketing Organization or SOMO, conceded under cross examination that he didn’t really know who owned those entities.

That’s a key defense argument — that Wyatt may have adopted a paternalistic attitude toward the people involved with those entities but did not control them.

Wyatt lawyer Gerald Shargel is expected to continue his cross examination of Al-Khudhair today.

Wyatt, 83, is accused of funneling millions of dollars in surcharges or kickbacks to Saddam’s regime under the United Nations’ Oil-for-Food program. Charged with fraud, conspiracy and violating U.S. laws governing dealings with Saddam’s regime, Wyatt could be sentenced to 74 years in prison if convicted on all counts.

Wyatt does not dispute he purchased oil under the Oil-for-Food program but contends all his dealings were lawful.

Al-Khudhair testified Wyatt visited SOMO’s headquarters in Baghdad in January 2001, at a time when Iraq was trying to force its customers to pay hefty surcharges on Iraqi crude.

This also would have been just been less than a month before El Paso Corp. completed its purchase of Coastal Corp., the Houston-based oil company Wyatt founded.

During that visit, Wyatt met with Iraqi oil minister Amir Rashid, Al-Khudhair said.

Al-Khudhair said he did not attend that meeting, but that Rashid briefed him and other SOMO officials later that day, and Al-Khudhair took notes.

Wyatt told Rashid he planned to set up what Al-Khudhair called four “front” companies to purchase Iraqi oil and then sell this crude to four different regions of the world, according to Al-Khudhair’s notes on the briefing by Rashid.

But Wyatt wasn’t willing to pay the 40-cent-per barrel surcharge the Iraqis were demanding, insisting he couldn’t pay more than 20 to 25 cents a barrel, Al-Khudhair said.

In parentheses Prosecutors then had Al-Khudhair run through a long list of Iraqi oil company internal documents and correspondences mentioning Wyatt in connection with Cyprus-based Nafta Petroleum and Mednafta Trading Co.

English translations of the documents repeatedly mentioned Nafta or Mednafta, followed by the name “Oscar Wyatt” in parentheses.

Iraqi documents indicated those entities had paid surcharges of as much as 30 cents a barrel.

While many documents openly referenced Wyatt’s name, some correspondences from Mohammed Saidji, an Algerian born trader associated with Mednafta, referred obliquely to the “doctor.” Al-Khudhair said that referred to Wyatt.

With the oil industry rife with rumors during this period that Iraq’s oil customers were paying surcharges, the U.N.’s oil overseers implemented a strategy called “retroactive pricing.”

It was designed to set the official selling prices for Iraqi crude so close to actual market prices that buyers wouldn’t be able to pay a surcharge and make a profit.

‘Port fees’ In 2002, Al-Khudhair testified, Wyatt suggested the Iraqis drop the surcharge plan and instead raise their “port fees,” which otherwise typically would be small.

Instead, in June 2002 Iraqi oil officials racheted back their surcharge demands from what had been a high of 50 cents a barrel a year and half earlier to 15 cents a barrel, Al-Khudhair testified.

He said Wyatt’s negotiations with Iraqi oil company officials continued into February 2003, just weeks before the U.S.-led invasion of Iraq.

Al-Khudhair testified Wyatt met with SOMO officials in Baghdad on Jan. 27, 2003, and discussed potential troop levels and dates for an attack prior to the invasion.

A document containing what Al-Khudhair said were his notes from that meeting had been the subject of a fierce legal debate prior to the trial, with Wyatt’s lawyers warning the notes might lead jurors to conclude that Wyatt had committed “the deplorable crime of treason.”

Brief and undramatic But in the courtroom Monday, the discussion of that document was minimal. While lead prosecutor Edward O’Callaghan walked Al-Khudhair through the entire document, the testimony was brief and undramatic, coming in the middle of a long sequence of Iraqi oil company documents.

In his cross examination of Al-Khudhair, Shargel pushed the Iraqi to concede that he had not seen any documents indicating Wyatt owned Mednafta or Nafta Petroleum.

Indeed, Al-Khudhair agreed with Shargel that Wyatt’s signature did not appear on documents granting Mohammed Saidji and another individual, Catalina or “Cathy” Miguel, power of attorney for Mednafta.

But Al-Khudhair insisted that in the January 2003 meeting, Wyatt said “that this company is his.”

Shargel also asked Al-Khudhair several questions about his interviews with U.S. authorities negotiating his deal to testify. In exchange for his testimony, Al-Khudhair and his family have been permitted to relocate to the United States and were given $115,000, Al-Khudhair said, to cover moving costs. Al-Khudhair said it would have been unsafe to remain in Iraq once it became known he was cooperating with U.S. authorities.

But Shargel suggested Al-Khudhair, at one point, was trying to sell his notes to U.S. officials.

“Isn’t that right, sir?” Shargel said to finish off questioning for the day.

“No,” Al-Khudhair insisted.

david.ivanovich@chron.com

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