By Edith Honan

NEW YORK, Sept 12 (Reuters) - Prosecutors played a tape on Wednesday of a conversation between Saddam Hussein and Texas oilman Oscar Wyatt, who is accused of paying bribes to Baghdad to win oil contracts.

Oscar Wyatt, an 83-year-old oil tycoon, faces five counts in Manhattan federal court, including engaging in prohibited financial transactions with Iraq, deals alleged to have violated the U.N. oil-for-food program.

The U.N. program was designed to provide humanitarian assistance to Iraq while it was under international sanctions.

Prosecutors played the tape of the 1990 conversation among Wyatt, Hussein and former Texas Gov. John Connally in a bid to establish the oilman's long-held close ties with the Iraqi leader and his government.

Wyatt and Connally, who died in 1993, had traveled to Iraq in a successful bid to free U.S. citizens held in Baghdad just before the U.S. operation to dislodge Iraqi forces that had invaded Kuwait just months earlier.

"...the American people did not want, were not prepared to die for oil," Hussein told Wyatt and Connally, according to a transcript of the conversation from prosecutors. "You know, you know Mr. Wyatt that the Iraqis sold one third of their oil exports to the United States until the second of August."

Wyatt replied, "I was largely responsible for a lot of those sales."

"So we don't know why Mr. (George H.W.) Bush has cornered the things in this way," Hussein said in reference to the impending U.S. military action.

Saddam was hanged to death in December following his trial in Iraq for crimes against humanity.

Wyatt, known for unfettered opinions and a flamboyant style, faces a maximum of 74 years in prison if convicted of all charges.

After getting his start selling oil drill bits out of the trunk of his car, he founded Coastal Corp. that was sold to El Paso Corporation for $17 billion in stock in 2000 and 2001.

Wyatt's defense lawyer Gerald Shargel argued that the federal case against the oilman was "entwined" with his opposition to both U.S.-led wars against Iraq.

Shargel said he will set out to prove Wyatt was a patriotic American whose advice was sought by nearly every U.S. president from John F. Kennedy to Bill Clinton, but not the Bushes.

In the tape Wyatt tells Hussein: "I've made it very clear that (former President Bush is) playing with a fire that will burn his hands up to the shoulder. This is no Panama... it won't be a cake walk."

"This is serious business and I know the Iraqi people well. And he better recognize their resolve," he said.

AlertNet news is provided by