Iraq bribes alleged at US oil-for-food trial

NEW YORK, June 27 (Reuters) The prosecutor in the first federal US trial over the UN oil-for-food program said today he would show evidence of cash-stuffed envelopes, intrigue and back-channel communication with Baghdad.

Prosecutor Michael Farbiarz laid out his case during opening arguments at the trial of South Korean lobbyist Tongsun Park, who is accused of acting as an unregistered foreign agent of former Iraqi President Saddam Hussein in the scandal-ridden oil-for-food program.

Farbiarz said evidence would show Park began receiving substantial amounts of money from Iraq, including an envelope with 100,000 dollar, in 1996 and by the end of the year the oil-for-food program was in place.

But defense attorney Michael Kim said Park was just ''a middleman or facilitator, like almost everybody else involved in the giant international game of oil and money.'' The 1996-2003 oil-for-food program allowed Iraq to sell oil and use the proceeds to buy nonmilitary goods, under U.N.

supervision. It aimed to ease the impact of U.N. sanctions imposed after Iraq's 1990 invasion of Kuwait, but the billion program was rife with corruption, investigators say.

Kim urged jurors not to be blinded by the prosecution's presentation of intrigue and reminded them that Park was not charged with spying or selling access to the United Nations.

Park, 71, faces charges in U.S. District Court of conspiracy to commit wire fraud, acting as an unregistered agent of a foreign government and money laundering. He has pleaded not guilty and faces a maximum of five years in prison and a 250,000 dollar fine if convicted.

''(The prosecutor) kept saying to you 'Saddam Hussein, Saddam Hussein,' as if by saying that, he could convert what really at the end of the day was not a crime into a crime by arousing your passions,'' he said.

The prosecutor said a U.S.-Iraqi businessman who has admitted acting for Saddam would testify about meetings with former UN Secretary General Boutros Boutros-Ghali, who has not been implicated in any wrongdoing.

NIGHT-TIME MEETINGS Farbiarz said Park was enlisted by Samir Vincent, the businessman who has pleaded guilty in the case, to use his contacts at the United Nations to promote Iraq's interests by lobbying for creation of the oil-for-food program.

''Tongsun Park explained he had access to the person at the very top of the United Nations, the Secretary General Boutros Boutros-Ghali,'' he said.

''They went to the personal residence of Boutros Boutros-Ghali for night-time meetings about the economic sanctions,'' Farbiarz said, describing how Vincent would then pass ''back-channel'' information to Baghdad.

Mismanagement and fraud in the oil-for-food program were extensively documented by a U.N.-established independent committee report last year.

The report said Iraq set aside up to million to bribe Boutros-Ghali, who was U.N. Secretary-General from 1991 to 1996, but there was no evidence he ever received any money.

Park gained notoriety in the 1970s as a lobbyist who gave hundreds of thousands of dollars to members of Congress as part of the influence-peddling scandal dubbed ''Koreagate.'' Reuters SK VP0057