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'Koreagate' figure arrested in oil-for-food probe

From Phil Hirschkorn
CNN

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Tongsun Park is accused of illegally acting as an agent of Iraq during the U.N. Oil-for-Food Program.

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Boutros Boutros-Ghali
Michael Garcia
Paul Volcker

NEW YORK (CNN) -- A South Korean man was arrested Friday in Houston, Texas, after being charged with illegally accepting $2 million -- delivered in diplomatic pouches -- from the Iraqi regime in connection with the U.N. Oil-for-Food Program, a prosecutor said.

Tongsun Park, 70, is expected to make an initial appearance at a Houston federal court before being transported to New York, said Michael Garcia, U.S. attorney for the Southern District of New York.

Park was charged in April with acting as an unregistered lobbyist for Iraq beginning in the early 1990s and receiving $2 million from then-President Saddam Hussein's regime.

"A large portion of the payments to Park allegedly were in the form of cash that was delivered by means of diplomatic pouches to representatives of the government of Iraq in Manhattan for Park's ultimate benefit," states a U.S. Department of Justice news release.

The complaint alleges that some of the money Park received was to "take care" of an unnamed U.N. official.

If convicted, Park faces a maximum sentence of five years in prison.

The former Korean lobbyist is no stranger to scandal. In the 1970s, he was a central figure in an influence-peddling scheme known as "Koreagate," which involved dozens of members of Congress. He was never convicted of any wrongdoing.

Park is now among nine people and five companies facing federal charges in New York in connection with the now-defunct U.N. humanitarian program. (Full story)

He joins two Texas oilmen, Oscar Wyatt and David Chalmers, and two Russian diplomats, Vladmir Kuznetsov and Alexander Yakovlev. The first person charged in the scandal, Samir Vincent, pleaded guilty in January to charges of illegal lobbying for Iraq.

Wyatt and Chalmers, and their respective companies, Coastal Corp. and Bayoil, are accused of paying illegal surcharges on Iraqi oil and kickbacks on the humanitarian contracts.

An independent probe found that more than 2,000 companies paid close to $2 billion in similar surcharges and kickbacks under the program that allowed Hussein to choose his own vendors.

Park's attorney, Jamie Gardner, had no immediate comment.

The Oil-for-Food Program began in 1996, after Iraq was placed under sanctions for its 1990 invasion of Iraq. Under the program, which lasted until 2003 when Hussein was deposed, the country was allowed to sell some of its crude oil and use the money to buy approved shipments of food, medicine and other humanitarian supplies.

In the program's seven years, 248 companies from 61 nations imported 3.4 billion barrels of oil from Iraq, generating about $64 billion in U.N.-monitored oil sales.

Paul Volcker, a former chairman of the U.S. Federal Reserve under Presidents Carter and Reagan, was tapped to investigate the program after allegations of corruption arose.

His investigation found that the corruption began when Iraq paid two middlemen to bribe the U.N.'s then-Secretary-General Boutros Boutros-Ghali to secure the launch of the program.

Park and Vincent were those middlemen, said Volcker, who claimed they were each paid "well over $1 million" by the Iraqi government.

Boutros-Ghali is not mentioned in the criminal complaint, but a "high-ranking United Nations official" is alleged to have met with Park in Geneva, Switzerland, and at his own Manhattan apartment before the United Nations authorized the program in 1995.

The complaint further alleges that Park and the U.N. official met with two representatives of the Iraqi government during the 1993 meeting in Switzerland.

Garcia said that at no time while acting as an agent of the Iraqi government did Park register as such with the attorney general. Not doing so violates federal law, Garcia said.

Park is charged with acting as an unregistered agent of Iraq, conspiring to commit wire fraud and laundering the proceeds of those alleged offenses.

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