Virginia oil firm admits kickbacks to Iraq

By Jeanne King

NEW YORK (Reuters) – A Virginia oil trading company pleaded
guilty on Thursday to charges of scheming to pay more than
$400,000 in kickbacks to Iraq for oil purchases made as part of
the defunct U.N. oil-for-food program for Iraq.

Midway Trading, a Reston, Virginia-based firm, agreed to
pay a $250,000 fine in a plea deal, according to the Manhattan
district attorney’s office.

The kickback scheme also involved one of its trading
partners, Bulf Oil, the office said. But it provided no details
on Bulf Oil.

The case grew out of an investigation into the
scandal-ridden $64 billion oil-for-food program launched by
District Attorney Robert Morgenthau’s office this year.

Also investigating corruption in the program, which was
shut down in 2003 after the U.S.-led invasion of Iraq, are the
federal U.S. Attorney’s office in the Southern District of New
York, several congressional committees and a U.N.-appointed
commission led by former Federal Reserve Chairman Paul Volcker.

Morgenthau’s office said the case against Midway began as a
result of cooperation with Volcker’s Independent Inquiry
Committee, which is expected to issue its final report this
month, on companies around the world who benefited from the
U.N. program.

Morgenthau has also opened a criminal investigation of
Benon Sevan, the U.N. official who headed the U.N. program.

The Volcker inquiry has accused Sevan, a Cypriot and
veteran U.N. senior staff member, of getting about $150,000 in
kickbacks from an oil trading firm while he was in charge of
the program. Sevan has denied the charges, but has fled to his
native Cyprus which has no extradition agreement with the
United States.

The oil-for-food program began in December 1996 and allowed
former Iraqi President Saddam Hussein to sell oil to buy
civilian goods to ease the impact of U.N. economic sanctions on
ordinary Iraqis. The sanctions were imposed after Iraq’s 1991
invasion of Kuwait.