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Monday, August 8, 2005 - Page updated at 04:52 PM

Former U.N. procurement officer pleads guilty to taking bribes from U.N. contractors

Associated Press Writers

UNITED NATIONS — It was Alexander Yakovlev's role in awarding U.N. contracts under the embattled oil-for-food program that put him in the spotlight, but it was his pocketing of hundreds of millions of dollars from companies eager to win other U.N. contracts that led to his downfall.

The former United Nations procurement officer pleaded guilty today to soliciting a bribe under the $64 billion program, making him the first U.N. official to face criminal charges in connection with the scandal-tainted operation.

Yakovlev, a Russian, also pleaded guilty in federal court to charges of wire fraud and money laundering for accepting hundreds of thousands of dollars in bribes from U.N. contractors in his work outside oil-for-food. He could face up to 20 years in prison for each of the three counts in the indictment.

Yakovlev surrendered to FBI agents in Manhattan earlier Monday, as U.N.-backed investigators released a report accusing him and Benon Sevan, the former chief of the program, of corruption. The probe, led by former U.S. Federal Reserve Chairman Paul Volcker, recommended that U.N. Secretary-General Kofi Annan lift their immunity if asked.

There was no suggestion that the timing of the report and Yakovlev's guilty plea were coordinated. Volcker said Monday that David Kelley, the U.S. attorney for the southern district of New York, had not cooperated with his probe.

Yakovlev's decision and the Independent Inquiry Committee's findings, put forward in its third report so far, give new ammunition to critics who have labeled oil-for-food a boondoggle at best and huge swindle at worst.

"Our conclusions are obviously significant and troubling," Volcker said. "What's important is that we contribute effectively to the needed reform of the United Nations administration."

Condemnation from Republicans in the U.S. Congress was swift.

"This report demonstrates the United Nations lacks the institutional red lights and alarms necessary to warn of misconduct," Representative Christopher Shays of Connecticut said in a statement. "This absence of basic oversight has allowed individual corruption to flourish systemwide.

Yakovlev, 52, resigned in June after separate allegations came to light suggesting that he helped his son get a job with a company that did business with the United Nations.

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He surrendered to authorities and was released later Monday on a $400,000 bond, and no new court date was immediately set, said Megan Gaffney, a spokeswoman for Kelley.

"We decided that it's in the best interest of the client to enter such a plea," Yakovlev's lawyer Arkady Bukh told The Associated Press. "In term of sentencing we expect much better deal if we enter a guilty plea."

Volcker's team said it would release a final report — expected to be up to 700 pages long — in September. Among other things, that report is expected to consider new evidence suggesting Annan knew more about an contract awarded to a Swiss company that employed his son, Kojo. Both have denied any wrongdoing.

The oil-for-food program, launched in December 1996 to help ordinary Iraqis cope with U.N. sanctions imposed after Saddam Hussein's 1990 invasion of Kuwait, was one of the largest humanitarian programs in history. It was a lifeline for 90 percent of the country's population of 26 million.

Under the program, Saddam's regime could sell oil, provided the proceeds went to buy humanitarian goods or pay war reparations. Saddam allegedly sought to curry favor by giving former government officials, activists, journalists and others vouchers for Iraqi oil that could then be resold at a profit.

The program has become the subject of several congressional investigations, as well as probes by a federal grand jury and the Securities and Exchange Commission.

Some critics have accused the United Nations of squandering millions — and even billions — of dollars in its mismanagement of the program.

Mark Malloch Brown, Annan's chief of staff, again defended the United Nations' handling of oil-for-food, saying it was the organization's very willingness to open the books that had attracted so much attention.

"Those who have kind of stayed in the shadows, who have not had a Volcker to investigate their own politicians and diplomats and companies involved in this program, have gotten away a little more lightly," Malloch Brown said. "There's a certain sort of injustice in that."

One of the most damaging claims in Volcker's latest report was that Sevan, who oversaw the program from its inception in 1996 to its conclusion in 2003, took some $147,000 in kickbacks. For the first time, Volcker's investigators gave a motive for Sevan's actions, saying his finances were "precarious" shortly before his alleged misdeeds.

Volcker's team said he helped steer contracts to a small oil trading company with the help of the brother-in-law of former U.N. Secretary-General Boutros Boutros-Ghali. Sevan's finances were said to be "precarious" shortly beforehand.

It also found that two men helped Sevan: Fred Nadler, an African Middle East Petroleum Co. Ltd. Inc. director and brother-in-law of former U.N. Secretary-General Boutros Boutros-Ghali; and Fakhry Abdelnour, the president of AMEP.

Sevan, a Cypriot citizen believed to be in Nicosia, is under investigation by the Manhattan District Attorney's office. He denies the allegations and accuses Volcker's team of succumbing to pressure from U.N. critics and of scapegoating him.

As for Yakovlev, the Volcker investigators also found that he secretly tried to bribe a company called Societe Generale de Surveillance S.A., which was seeking an oil inspection contract under oil-for-food.

But they also came across more explosive evidence of wrongdoing outside oil-for-food. Investigators said Yakovlev took as much as $1.3 million in kickbacks from companies that had won some $79 million in separate U.N. contracts.

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