Friday, September 2, 2005

NEW YORK — A Russian diplomat who oversees a powerful budget committee at the United Nations has been arrested and charged with money laundering, the second arrest of a Russian U.N. official in connection with the scandal-plagued oil-for-food program.

The FBI arrested Vladimir Kuznetsov Thursday night at his Bronx home. He is accused by the Justice Department of laundering money that was paid to a U.N. procurement officer who has admitted seeking bribes in exchange for inside information on the oil-for-food program and other U.N. missions.

The procurement official, Alexander Yakovlev, was not named in the grand jury indictment unsealed yesterday.

However, U.N. officials believe he worked with Mr. Kuznetsov to hide hundreds of thousands of dollars.

U.N. Secretary-General Kofi Annan lifted Mr. Kuznetsov’s diplomatic immunity when asked by U.S. officials on Thursday.

Russian officials said yesterday afternoon that they were still trying to get information from the authorities, and had not yet decided whether to waive Mr. Kuznetsov’s immunity, or whether he even has immunity, under the circumstances.

Sergey Trepelkov, a spokesman at the Russian Mission to the United Nations, described him as “an active official of the Russian foreign ministry.”

Mr. Kuznetsov, 48, is the chairman of the powerful Advisory Committee on Administrative and Budgetary Questions, or ACABQ, a 16-member body that reviews and amends the secretary-general’s budget proposal before it goes to the full General Assembly.

He has worked in various budget-related positions in the U.N. Secretariat and the Russian Mission since 1980.

The chairman is the only member of the ACABQ to draw a U.N. salary and benefits, and also gets diplomatic immunity.

Diplomats reacted with surprise and incredulity yesterday upon hearing of the arrest.

“Kuznetsov, really?” one envoy asked. “I guess you don’t really know someone from looking at him. Or listening to him. Or knowing him for these years.”

According to the indictment, Mr. Kuznetsov was told about a “fraudulent scheme” of kickbacks in early 2000, including the use of an offshore company to collect secret payments from foreign companies seeking U.N. contracts.

Instead of informing authorities, Mr. Kuznetsov agreed to receive a share of the money in his own offshore company, called Nikal Ltd., with accounts at an Antiguan bank.

Yakovlev was arrested last month and pleaded guilty to charges of soliciting a bribe and fraud.

An independent inquiry accused him of pocketing nearly $1 million in kickbacks from U.N. contract seekers.

The illicit activity was uncovered by the U.N. Office of Internal Oversight Services, or OIOS, as part of an overall investigation into the procurement department.

“This indictment shows what OIOS has to offer in its current capacity,” said one Senate staff member. “Who knows what else it could uncover if it had more resources, which hopefully it will receive as part of the U.N. reform process.”

Officials at the U.N.-funded Independent Inquiry Committee, which is releasing its own report on the management of the oil-for-food program on Wednesday, said they were unaware of Mr. Kuznetsov’s purported activities.

The U.N. oil-for-food program allowed Iraq under Saddam Hussein to sell oil to pay for food, medicine and humanitarian supplies.

U.S. officials welcomed Mr. Annan’s cooperation and used the arrest as a spur to strengthen the U.N. watchdog agency.

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