War profiteering is an ugly label.
Thanks to a report by Charles Duelfer, chief arms inspector for the Central Intelligence Agency, it may get attached to some major U.S. oil companies and some private individuals.
Duelfers report identifies one of those individuals as Oscar S. Wyatt Jr. of Houston, Texas. Wyatt is a veteran Lone Star State oilman and an associate of such luminaries as T. Boone Pickens, Carl Icahn, Billy Sol Estes, Rupert Murdoch and others. (www.namebase.org)
Duelfers 918-page report names Chevron, Mobil, Texaco and Bay Oil and three individuals. In addition to Wyatt, those people are: Samir Vincent of Annandale, Va. And Shakir al-Khafaji of West Bloomfield, Mich. (The New York Times)
The report says the oil companies and the individuals named were among a number of entities granted profitable vouchers which enabled them to buy Iraqi oil under the U.N. oil-for-food program. Those named got a total of 111 million barrels of oil between 1996 and 2003. The vouchers gave them the right to sell or trade the oil.
Experts said receiving the oil does not mean these companies and individuals did anything illegal. They said the allocations would have been proper if those named got approval from the United Nations.
Wyatt got the biggest allocation of all74 million barrels. At the rate of 15 to 85 cents per barrel, as the study reported, his profit could have been $23 million. Identities of the companies and private people in the Iraq Survey Groups report were not in the CIAs report released last week because of U.S. privacy laws.
The names, however, were in an unedited copy given to the White House and several congressional committees. A copy was shown to the Times.
Oil company spokesmen, and those for El Paso Corp., which took over control of the assets of Coastal Corp., founded and formerly operated by Wyatt, said all the transactions were legal. Each, however, said they had been subpoenaed by a federal grand jury in New York that is investigating transactions in oil of Iraqi origin as part of the oil-for-food program. That information was stated in a federal financial filing by El Paso.
A Treasury Department spokesman said U.S. sanctions against Iraq barred American companies and people from dealing directly with Iraqi officials. Oil dealers, however, were allowed to get special authorization from the federal government to bid on U.N. contracts under the oil-for-food program. The spokesman, Tony Fratto, said Treasury is actively investigating to determine if the American companies and individuals failed to get such authority.
Circumstances outlined in the report also are being reviewed by the Independent Inquiry Committee, a U.N.-appointed panel headed by Paul Volcker, former chairman of the Federal Reserve.
Oil-for-food was launched in 1966 to allow Iraq to sell just enough oil to have the resources to buy food and medicine and maintain vital public facilities.
These sales were to be closely monitored, but the controls were foiled somewhat when Saddam Hussein personally intervened.
Saddam personally picked the people and companies to get the vouchers or allocations, which could be sold so that the approved parties did not actually have to trade the oil but could profit from the transactions. Saddam, the report said, began demanding kickbacks for the vouchers, something some of the oil dealers were willing to accept to get the very lucrative profits from the oil trades.
In the past, Wyatt has done business with Col. Muammar el-Qaddafi of Libya and aided in rescuing hostages in Kuwait.
Wyatt started Coastal Corporation in 1951 as a small natural gas-gathering business in Corpus Christi, Texas. In 1955, the company became Coastal States Gas Producing Company, distributing natural gas from the South Texas oilfields.
Early in the 60s, Coastal bought out the Sinclair Oil Corpus Christi refinery and pipelines and set up a subsidiary named Lo-Vaca Gathering, supplying natural gas to Texas cities and utilities. When Lo-Vaca cut back on supplies and boosted rates in the early 1970s, it was sued by many of its customers.
The subsidiary was ordered to pay back $1.6 billion in 1977, and Coastal then spun off Lo-Vaca as Valero Energy to finance the settlement. (Texas Handbook Online)
By 1987, Coastals sales amounted to more than $113 million; reserves totaled 26 million barrels of oil and 848 billion cubic feet of natural gas.
Before the first Gulf War in 1991, Wyatt tried to trade the companys refining and marketing assets for regular supplies of Iraqi crude oil. Along with company director and former Texas governor John B. Connally, Wyatt met with Saddam Hussein and flew 21 hostages out of Baghdad. He later criticized Operation Desert Storm and was investigated for possible violations of the U.S. trade embargo.
Company sales hit $9.5 billion in 1991. The company merged with El Paso Corp. in 2000. Wyatt still holds a large block of shares in that company, but he is not an executive of El Paso.
By 2002, a federal judge had charged the company helped to cause the energy crisis in California, and Wyatt was in a legal battle with the other company founder, William A. Wise. El Paso at that time included numerous oil and gas rigs, refineries, power plants and 58,000 miles of pipeline.
A judge of the Federal Energy Regulatory Commission ruled El Paso illegally withheld gas to spike prices in California in 2000 and 2001. But chief attention is focused on the brutal internal struggle in the company, which one lawyer termed a death dance between the lawyer who now heads the firm and the old Texas wildcatter responsible for half of its existence.
Wyatt, 72, sold his Coastal Corp. to Wise, 58, and his shareholders 18 months ago for $24 billion. That deal doubled the size of El Paso. Wyatt, who holds some 5 million shares of El Paso stock, now says he regrets selling out. He is leading a dozen shareholder lawsuits that charge Wise and other top executives of El Paso with fraud and misconduct, charging not only complicity in the California crisis but with Enron-style accounting and trading practices.
Court filings revealed that the federal government is looking into El Pasos trading practices, including what were called wash trades resembling those made by Enron. El Paso denies such transactions.
Wyatt charges Wise and his senior executives have used off-the-books partnerships that have, in Wyatts opinion, endangered some of the companys crucial hard assets. Securities and Exchange Commission filings disclosed these practices removed $2 billion in debt from El Pasos books. (political posts.com)
It looks so much like Enron, its scary, Wyatt said. He owns so much of El Pasos stock that a $1 shift in value changes his net worth by $5 million. El Paso stock has lost 87 percent of its value this year.
A former El Paso executive and operator of a New York energy investment company, calls the firm El Enron. David Huard, a Los Angeles-based energy attorney, compared El Paso to a dysfunctional family that has failed to handle explosive growth, which has changed El Pasos size, doubling the company three times in seven years.
Wise rejects such opinions. Not because we look like Enron or not because weve done anything like Enron, he said. Its just because Enron has fouled the nest, and the financial markets dont have the time to differentiate. Theyre just staying away.
The entire thing is just one more example of who benefits from war and the relentless juggernaut of corporate greed. For many, Iraq is a place of misery, flowing with blood; for others, it is a bonanza, flowing with oil and money.
Oh, another good buddy of Oscar Wyatt: Bill Clinton. United we pump!