Ukraine's former prime minister took millions of dollars and half ownership of a company in return for aiding that enterprise, a Ukrainian businessman testified in his U.S. money-laundering trial.

Businessman Peter Kiritchenko, who testified Wednesday, said the approval of Pavlo Lazarenko, then a regional governor in Ukraine, was essential to expanding his business in the early 1990s. He is the U.S. government's star witness in a rare criminal trial of a foreign leader on American soil.

Lazarenko, who served as prime minister of Ukraine from 1996 to 1997, is accused of defrauding and extorting hundreds of millions of dollars from businessmen in his country. His U.S. trial is on charges that he laundered $114 million of that money through U.S. banks.

Lazarenko moved his family to San Francisco during the 1990s when he was prime minister. He was arrested on his arrival in the United States in February 1999. He has previously been convicted in absentia for money laundering in Switzerland and charged with murder in Ukraine.

Kiritchenko, a former Soviet trade official who was a Communist Party member, told the court that in 1992 -- a year after the fall of the Soviet Union -- working with and paying off Lazarenko was the only way to expand his business, which imported and exported wheat, alcohol, food, and metals.

"I understood that I needed his agreement to gain access to any kind of resources," Kiritchenko told the court in Russian. He then described how he hosted Lazarenko for several days in Warsaw, where his business was based, and then showed him his dollar account bank records.

"He said, 'I work 50-50,'" Kiritchenko said of the origins of a business relationship that was to continue as Lazarenko rose through the top ranks of Ukrainian politics.

"I agreed to give him 50 percent of the profit and 50 percent of the company. I didn't see any other way to develop the company."

Appearing somewhat nervous, Kiritchenko hinted he might have faced other, noneconomic consequences had he rejected Lazarenko's proposal. "It would have been not developing the business, but there could have been other consequences. Well, everyone was under his control, including law enforcement."

He said Lazarenko was not involved in daily operations of his firm, but would provide introductions to state factory directors with whom Kiritchenko would later do business.

Kiritchenko said he set up Swiss bank accounts for his well-placed partner and acted in effect as his personal banker when he became prime minister and could no longer travel to Switzerland.

(The Moscow Times 09.iv.04)