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. Last Updated: 07/27/2016

Yakovlev Charged In UN Probe

NEW YORK -- A U.S. prosecutor investigating corruption in the $64 billion oil-for-food program issued the case's first criminal charges against a UN official, accusing a former Russian procurement officer of receiving hundreds of thousands of dollars in bribes from companies doing business with the United Nations.

Alexander Yakovlev, 52, pleaded guilty to three counts of wire fraud, conspiracy to commit wire fraud and money laundering, said David Kelley, the U.S. attorney for the Southern District of New York. The charges could carry a penalty of up to 60 years in prison.

The case against Yakovlev grew out of the United Nations' own investigation of its tarnished oil-for-food program, and it came on a day when a UN-appointed panel accused Benon Sevan, the program's former director, of receiving nearly $150,000 in kickbacks from a company run by relatives of former UN Secretary-General Boutros Boutros-Ghali.

The criminal charges represent a turning point in the UN scandal, which until now had yielded no public evidence that UN officials had broken any laws. Even so, the allegations of corruption have damaged Secretary General Kofi Annan's standing and shaken confidence in the organization.

Monday's events also signaled that UN investigators and prosecutors have expanded their probes beyond the oil program to include allegations of corruption in other parts of the UN bureaucracy.

Former Federal Reserve Chairman Paul Volcker, who is leading the UN investigation, said Yakovlev tried to solicit bribes from a Swiss company that was bidding for business in the oil program.

In addition, Volcker alleged that Yakovlev received more than $950,000 in an offshore bank account from contractors doing other types of business with the United Nations.

A senior UN official said that Annan waived Yakovlev's diplomatic immunity from prosecution Monday and was prepared to do the same in the case of Sevan, who has denied wrongdoing and who recently returned to his native Cyprus. Cyprus does not have an extradition treaty with the United States covering financial crimes.

In a document outlining charges Monday, Kelley's office said Yakovlev faxed privileged bidding information in 1996 to a company pursuing business through the oil program. Yakovlev was also charged with creating a front company, Moxyco Ltd., "to facilitate the illicit and secret payment of money to him by foreign companies" trying to do business with the United Nations.

Yakovlev was released from custody Monday on a $400,000 bond and restricted from travel, said Megan Gaffney, a spokeswoman for Kelley. Yakovlev declined to comment through his attorney, Arkady Bukh. Bukh would not say whether his client was cooperating with Kelley. But he said he expected a "substantially more lenient" sentence than the maximum allowed.

Congressional leaders conducting their own investigations said the latest revelations underscore the need for far-reaching changes in the way the world body does business. John Bolton, the new U.S. ambassador to the United Nations, did not respond to a request for comment.

The oil-for-food program was created in 1996 to permit Iraq, which had been under UN sanctions since its 1990 invasion of Kuwait, to sell oil in order to buy food and medicine and pay war reparations. Saddam Hussein's government used the program to collect more than $2 billion in kickbacks from companies, according to a report last year by CIA adviser Charles Duelfer.