U.S. federal prosecutors have accused a Texas businessman and two of his associates: a Bulgarian, and a Briton of paying secret kickbacks to Iraq as part of the U.N. oil-for-food scandal. Prosecutors say Texas oilman David Chalmers, the head of the Houston-based Bayoil, and Bulgarian Ludmil Dionissiev, were arrested in Houston.  Federal officials say they will ask Britain to extradite the third defendant, John Irving.

Prosecutors allege that between 2000 and 2003, the three defendants were involved in manipulating the price of oil that was traded and sold under the auspices of the United Nations oil-for-food program in Iraq. 

US Attorney David Kelley addresses New York press conference, Thursday

"What they did was they worked with the pricing, so they were taking money essentially off the top...that would have gone into the escrow account," U.S. Attorney David Kelley said.

Prosecutors say the businessmen then passed money to the former regime of Saddam Hussein.  

"Instead of funneling aid to the needy as the program was intended to do, the defendants facilitated the funneling of the money from the surcharges to front companies that were designated by the Hussein regime," Mr. Kelley said.

In return prosecutors say, the men were able to sell oil from Iraq - as much as $100 million worth.  If found guilty, the men could face up to 62 years in jail.  Prosecutors are also filing a forfeiture notice seeking the $100 million. 

John Klochan, FBI

"Let's be blunt -- the conduct of the Bayoil defendants was unconscionable, motivated by greed," Federal Bureau of Investigation official John Klochan said. "They flouted along, they made a mockery of the stated aims of the oil for food program and willingly conspired with a foreign government who our country was on the brink of war."

A South Korean citizen, Tongsun Park has also been charged with taking $2 million  from the Hussein government, and using part of that money to "take care of" one of the United Nations officials he dealt with.