Russian UN diplomat guilty of money laundering

NEW YORK, Mar 7 (Reuters) A Russian diplomat who once chaired a UN budget committee was found guilty today of helping launder hundreds of thousands of dollars in bribes and taking a share of the money.

A federal jury in Manhattan found Vladimir Kuznetsov, 49, guilty of a single count of laundering more than 300,000 dollars, said a spokeswoman for the US Attorney's Office.

Kuznetsov had helped fellow Russian Alexander Yakovlev, a UN staff member who handled procurement, pocket illegal payments from firms seeking UN contracts. Yakovlev pleaded guilty in 2005 to soliciting more than million in bribes and cooperated with authorities.

Kuznetsov, arrested in September 2005, is a Russian Foreign Ministry official who served as chairman of an influential UN General Assembly budget committee. Kuznetsov, who will be sentenced on June 25, faces a maximum of 20 years in prison.

The charges grew out of a criminal probe into corruption in the now-defunct billion humanitarian UN oil-for-food program for Iraq. The programme was first investigated by a UN-established commission, headed by former Federal Reserve chairman Paul Volcker, who traced about 950,000 dollars held by Yakovlev to companies that won UN contracts.

Kuznetsov was alleged to have found out about the secret payments in 2000 and arranged to receive a share in a bank account in Antigua.

The oil-for-food program was designed to soften the blow to civilians of UN sanctions against Iraq by allowing Baghdad to sell oil to finance purchases of humanitarian goods. The sanctions were imposed after Baghdad's troops invaded Kuwait in 1990. It began in late 1996 and ended in 2003.

Saddam Hussein's government raised 1.8 billion dollars through kickbacks and surcharges on the sale of oil in the program.

But he probably earned 10 billion dollars more from oil that he smuggled out of the country outside of the UN programme in violation of sanctions. More than 2,300 companies have been investigated and some governments accused of paying bribes or receiving funds.

US federal prosecutors have indicted 12 people in relation to the programme, including oil traders. Three UN staffers have been indicted.

Reuters SRS VP0245