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FunForOne · 05-20-2005, 08:30 PM

Indicted Texas oilman runs a company that has often been steeped in controversy

By TOM FOWLER and JOHN ROPER
Houston Chronicle
April 14, 2005

Oil trading is by nature a secretive business, but David Bay Chalmers Jr. has managed to keep his secrets better than most. Until now.

On Thursday prosecutors in New York unsealed an indictment against Chalmers, his company BayOil, and two of his employees, Ludmil Dionissiev of Houston and John Irving of London, saying they paid kickbacks to the former Iraqi regime.

While neither the company nor the men have been charged criminally before, and their attorneys say these charges do not have merit, for years turmoil has circled BayOil and Chalmers.

Colleagues of Chalmers, who asked not to be identified for fear of retribution, said when subpoenas started rolling in from congressional committees and investigators last fall after a CIA report raised questions about the U.N. Oil for Food program, that it was nothing new.

"You'd think he was a poor businessman, but he's smart like a fox," said one colleague. "Maybe devious is the right word."

Craftiness would seem to be a necessary trait given the dicey markets Chalmers and BayOil have played in over the years.

The company doesn't own or operate oil wells, oil tankers or oil refineries, but rather serves as a middleman, buying oil from producers, contracting with tanker owners to ship it and lining up buyers on the other end to refine it.

First to use U.N. program
BayOil was the first company to buy oil through the Oil for Food program in 1996. That effort proved ill-fated, however, as the tanker that BayOil hired to carry the crude to the United States developed engine problems. The oil was eventually off-loaded in South Africa to another buyer. Lawsuits ensued.

Chalmers, 51, was born in Oklahoma City and attended the University of Denver, where he received a bachelor's degree in economics and a minor in political science in 1978.

An avid tennis player âhahaha128;hahaha148; his company co-sponsored the River Oaks Country Club Tennis Tournament earlier this month âhahaha128;hahaha148; he has seen his share of wealth. Properties in River Oaks, a home in Aspen, Colo., an Aston Martin, two Range Rovers and hundreds of thousands of dollars in artwork were among assets listed in records from his 1997 divorce.

Chalmers is a second generation oilman, following in the footsteps of his father, David Bay Chalmers, 80. Chalmers Sr. had his own run in with the law when in 1980 he and former Coastal Corp. Chairman Oscar Wyatt pleaded guilty to a misdemeanor charge of manipulating oil prices.

Wyatt's name has also come up in reports about the Oil for Food program investigations.

Earlier this year Chalmers Jr. and Wyatt purchased a small Lake Charles, La., refinery.

A number of Chalmers' associates have also had brushes with trouble in the past.

He paid some of the legal fees for Roy William Harris, the former CEO of a Connecticut-based oil trading firm who was convicted in 1992 of fraud. BayOil was a counterparty in some transactions.

Sale of cluster bombs

Chalmers is also alleged to have ties to Chilean-Italian businessman Augusto Giangrandi, who in 1995 testified in a federal court in Miami that he arranged for the illegal sale of more than $200 million of cluster bombs and other equipment to the Iraqi government on behalf of arms dealer Carlos Cardoen.

Sources close to the case say it appeared Chalmers helped Giangrandi turn the Iraqis' method of payment âhahaha128;hahaha148; U.N. Oil for Food vouchers âhahaha128;hahaha148; into money by selling the oil to end users.

Chalmers was never accused of wrongdoing in connection with the case.

Dionissiev, 58, is a Bulgarian citizen who met Chalmers while working for what was once the Bulgarian national oil firm. He later went to work for BayOil and even operated his own trading business out of that firm's offices in the Rice Lofts in downtown Houston.

Colleagues describe Dionissiev as a tragic figure, noting he and his wife, Svetla, lost their only son, Alexandre, in a car crash in 1996 in Washington, D.C. According to news reports, Alexandre, 22, was a senior at American University when the accident occurred.

Offered house as collateral

During a hearing before Magistrate Calvin Botley on Thursday, Dionissiev offered to put his house up as collateral since he could not raise the necessary bond. Harris County property records show he owns a home in the Tanglewood neighborhood appraised at nearly $800,000.

Dionissiev's home, along with Chalmers' home on Kingston Street in Houston and a lot that Chalmers owns on Del Monte, are subject to forfeiture should the government be unable to recover more than $100 million in proceeds the men allegedly gained from their dealings.

05-20-2005, 08:30 PM
FunForOne Confirmed User Join Date: Nov 2003 Location: USA Posts: 8,704	Indicted Texas oilman runs a company that has often been steeped in controversy By TOM FOWLER and JOHN ROPER Houston Chronicle April 14, 2005 Oil trading is by nature a secretive business, but David Bay Chalmers Jr. has managed to keep his secrets better than most. Until now. On Thursday prosecutors in New York unsealed an indictment against Chalmers, his company BayOil, and two of his employees, Ludmil Dionissiev of Houston and John Irving of London, saying they paid kickbacks to the former Iraqi regime. While neither the company nor the men have been charged criminally before, and their attorneys say these charges do not have merit, for years turmoil has circled BayOil and Chalmers. Colleagues of Chalmers, who asked not to be identified for fear of retribution, said when subpoenas started rolling in from congressional committees and investigators last fall after a CIA report raised questions about the U.N. Oil for Food program, that it was nothing new. "You'd think he was a poor businessman, but he's smart like a fox," said one colleague. "Maybe devious is the right word." Craftiness would seem to be a necessary trait given the dicey markets Chalmers and BayOil have played in over the years. The company doesn't own or operate oil wells, oil tankers or oil refineries, but rather serves as a middleman, buying oil from producers, contracting with tanker owners to ship it and lining up buyers on the other end to refine it. First to use U.N. program BayOil was the first company to buy oil through the Oil for Food program in 1996. That effort proved ill-fated, however, as the tanker that BayOil hired to carry the crude to the United States developed engine problems. The oil was eventually off-loaded in South Africa to another buyer. Lawsuits ensued. Chalmers, 51, was born in Oklahoma City and attended the University of Denver, where he received a bachelor's degree in economics and a minor in political science in 1978. An avid tennis player âhahaha128;hahaha148; his company co-sponsored the River Oaks Country Club Tennis Tournament earlier this month âhahaha128;hahaha148; he has seen his share of wealth. Properties in River Oaks, a home in Aspen, Colo., an Aston Martin, two Range Rovers and hundreds of thousands of dollars in artwork were among assets listed in records from his 1997 divorce. Chalmers is a second generation oilman, following in the footsteps of his father, David Bay Chalmers, 80. Chalmers Sr. had his own run in with the law when in 1980 he and former Coastal Corp. Chairman Oscar Wyatt pleaded guilty to a misdemeanor charge of manipulating oil prices. Wyatt's name has also come up in reports about the Oil for Food program investigations. Earlier this year Chalmers Jr. and Wyatt purchased a small Lake Charles, La., refinery. A number of Chalmers' associates have also had brushes with trouble in the past. He paid some of the legal fees for Roy William Harris, the former CEO of a Connecticut-based oil trading firm who was convicted in 1992 of fraud. BayOil was a counterparty in some transactions. Sale of cluster bombs Chalmers is also alleged to have ties to Chilean-Italian businessman Augusto Giangrandi, who in 1995 testified in a federal court in Miami that he arranged for the illegal sale of more than $200 million of cluster bombs and other equipment to the Iraqi government on behalf of arms dealer Carlos Cardoen. Sources close to the case say it appeared Chalmers helped Giangrandi turn the Iraqis' method of payment âhahaha128;hahaha148; U.N. Oil for Food vouchers âhahaha128;hahaha148; into money by selling the oil to end users. Chalmers was never accused of wrongdoing in connection with the case. Dionissiev, 58, is a Bulgarian citizen who met Chalmers while working for what was once the Bulgarian national oil firm. He later went to work for BayOil and even operated his own trading business out of that firm's offices in the Rice Lofts in downtown Houston. Colleagues describe Dionissiev as a tragic figure, noting he and his wife, Svetla, lost their only son, Alexandre, in a car crash in 1996 in Washington, D.C. According to news reports, Alexandre, 22, was a senior at American University when the accident occurred. Offered house as collateral During a hearing before Magistrate Calvin Botley on Thursday, Dionissiev offered to put his house up as collateral since he could not raise the necessary bond. Harris County property records show he owns a home in the Tanglewood neighborhood appraised at nearly $800,000. Dionissiev's home, along with Chalmers' home on Kingston Street in Houston and a lot that Chalmers owns on Del Monte, are subject to forfeiture should the government be unable to recover more than $100 million in proceeds the men allegedly gained from their dealings.