Kazakh "bribe" millions to go to poor children

ALMATY, May 4 (Reuters) A frozen Swiss bank account containing 84 million dollar that US prosecutors say was intended as bribes for Kazakh officials is to be spent on projects to help poor children in Kazakhstan, a US justice official said.

The money is linked to a pending corruption case in the United States in which businessman James Giffen is accused of bribing three senior Kazakh officials, including President Nursultan Nazarbayev, on behalf of Western oil companies.

Nazarbayev, in power in the oil-producing Central Asian state since 1989, has said in the past that the allegation, contained in prosecution documents, that he took more than 60 million dollar in bribes was ''a set up''.

Giffen has denied any wrongdoing.

US Attorney for the Southern District of New York Michael J Garcia said in a statement yesterday that the US, Kazakh and Swiss governments had agreed to release the 84 million dollar to a new foundation for poor children.

''The complaint alleges that the funds are subject to civil forfeiture as proceeds traceable to bribery and wire fraud and property involved in money laundering,'' the statement, posted on the US Justice Department web site, said.

''The indictment against Giffen charges him with diverting tens of millions of dollars paid by oil companies for oil and gas rights in Kazakhstan and to make unlawful payments to three senior Kazakh officials.'' Garcia said the funds would be released, subject to court approval, to a foundation supervised by the World Bank once Kazakhstan had also set up a five-year programme ''for improving public financial management'' and an ''action plan for transparency in the oil, gas and mining industries''.

There was no immediate comment from the Kazakh government.

Kazakhstan has been seeking to burnish its image as politically stable country with a fast-growing economy but it has faced repeated criticism that corruption is widespread.

Last week, US oilfield services company Baker Hughes Inc.

said one of its units had pleaded guilty to violations of the US Foreign Corrupt Practices Act for payments made in 2001-2003 related to a project in Kazakhstan.

The Giffen case, sometimes dubbed ''Kazakhgate'', grew out of a Swiss money laundering investigation and subsequent FBI probe.

The businessman was arrested in March 2003 and has been awaiting trial since.

Reuters KK GC1520