The Day Oscar Wyatt Caved

In the right light, the ornery octogenarian oilman’s guilty plea can be seen as a victory: After all, he won’t spend the rest of his natural life in jail. But the fact is, he couldn’t beat the rap—and he knew it.

For Houston it was a real “say it ain’t so” moment. Oscar S. Wyatt Jr., that archetype of Texas archetypes, for decades the city’s orneriest, wiliest, most litigious, most feared, most hated, and most beloved son of a bitch, stood before a judge and pronounced upon himself the word few had ever successfully attached to his name: “guilty.” Within minutes—once the Houston Chronicle e-mail alerts started reaching influential BlackBerrys late in the morning of October 1—the news seemed to be all over town, along with the concurrent reactions. Oscar (and it’s always been “Oscar,” whether you really knew him or not) shouldn’t have copped. Oscar could have beat it. Or simply: Oscar, wow. Whatever was said, the undercurrent of disbelief ran fast and furious. Oscar Wyatt—a man who, in 83 years, had never backed away from a fight—had caved.

The trial, in a sunny New York courtroom with paneled walls and a view of the Hudson River, had been going on for nearly four weeks by then, but it hadn’t been looking particularly good for the infamous Texas oilman from the beginning. For those in need of background: Two years ago he was indicted on five criminal counts, including wire fraud, in connection with what came to be known as the Oil-for-Food scandal. As retaliation for Saddam Hussein’s 1990 invasion of Kuwait, the United Nations imposed economic sanctions on Iraq, which caused undue suffering among the Iraqi people and great consternation for the West, which could no longer buy Iraq’s oil. In 1996 the U.N. came up with a compromise, in which Iraqi oil profits were put into a U.N. escrow account to be used for humanitarian purposes (medicine, food, etc.). The U.N. allowed Saddam to pick his customers, and he selected a handful of his most loyal, including Oscar. Yet four years later, Saddam decided he wasn’t making enough of a profit on the price set by the U.N., so he started demanding “surcharges,” or bribes, from his customers. Many turned to middlemen, keeping themselves out of trouble, but, according to prosecutors, Oscar instead set up front companies overseas that paid the bribes and continued to do business with the Iraqis—illegally.

On October 21, 2005, when the feds pulled up to Oscar’s new mini-mansion on quiet, leafy Meadow Lake Lane, they manhandled him in such a way that he threw out his shoulder and required examination by that world-famous orthopedist Michael DeBakey. (Subsequent photos showed Oscar, scowling, in a sling.) Leading up to the trial, his defense appeared informally two-pronged: He didn’t violate the sanctions, and, besides, everyone else was doing it. (In fact, a commission that investigated the scandal—headed by former Federal Reserve Board chairman Paul Volcker—concluded that about half of the 4,500 companies in the Oil-for-Food Program paid a total of $1.8 billion in kickbacks and illicit surcharges to Saddam’s regime.) The defense also floated the issue of “vindictive prosecution”—that is, the Bush administration singling out its old nemesis in both the oil patch and politics, Oscar Wyatt, for punishment but leaving other possible violators of the sanctions alone. Prosecutors, in turn, amassed a daunting paper trail and rewarded a few former Iraqi petrocrats with help in obtaining U.S. green cards—as long as they agreed to testify against sanction breakers like Oscar. By the time jury selection rolled around, it looked as if the prosecution essentially intended to try him for treason, which infuriated Oscar’s cousin and defense team member, former state senator Carl Parker. “Those bastards are so intent on making Wyatt a traitor,” he told me, as voir dire was about to begin. “He’s done more for this country than all the asshole lawyers put together.”

Clearly this was going to be nothing like the trial of Enron bosses Ken Lay and Jeff Skilling, another defining moment in the life of Houston. By the time those two faced a judge and jury, they had no reservoir of goodwill in court or in the community; they were just two fairly typical corporate chiefs who had been looking out for themselves as their company went down the tubes. But Oscar was different: Born into poverty in Beaumont, abandoned by an alcoholic father, raised by a devoted single mom in Navasota, he grew up to become a World War II combat pilot and, later, the billionaire owner of Coastal Corporation, a company he started all by his lonesome. And yes, he’d sued and countersued, and he’d shrugged off (minor) guilty pleas in the past. In the seventies, he’d curtailed gas supplies to Austin, Corpus Christi, and San Antonio during one of the coldest winters on record. After Congressman Henry B. Gonzalez suggested in 1984 that “a more corrupt nor least trustworthy person could hardly be imagined,” Oscar retorted that Gonzalez was “a mental incompetent and has been for years.” In a brilliant reputation overhaul in 1990, Oscar flew to Iraq with former Texas governor John Connally and liberated U.S. hostages held by Saddam. When a Middle Eastern official claimed that “white slaves from America would liberate Kuwait,” Oscar took on George H. W. Bush’s war in a public forum, arguing, “I have five sons, and I damned sure don’t want any of them, or any of your sons, to be the white slaves of an Arab monarch.” Then, in 1991, in a continuation of an old feud, Oscar put Lynn’s son Douglas up to suing her brother, Robert Sakowitz, for $8.5 million, accusing him of self-dealing and plundering the family’s Sakowitz department store chain. Robert won, but as Oscar told me recently, chuckling, “You see how well he’s done since then.”

Oscar seemed to be easing offstage in January 2001, when he sold Coastal to El Paso Energy Corporation and announced his retirement. But then, surprising almost no one, he subsequently decided he didn’t like how El Paso was running things, launched an unsuccessful proxy fight, and started a new company for himself. No wonder he and his fourth wife, Lynn—a fixture of the fashion press, a best-dressed

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