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NEW YORK (CNN) -- A senior United Nations official and a Miami businessman were arrested Wednesday as a two-count indictment was unsealed, charging them in connection with a procurement scheme involving more than $50 million in U.N. contracts, federal prosecutors said.

Sanjaya Bahel, 55, who is currently the chief of the commercial activities service in the U.N. Postal Administration and was previously the chief of the Commodity Procurement Section with the U.N.'s procurement division, is accused of using his influence as a procurement officer to benefit Nishan Kohli in getting U.N. contracts.

According to the indictment, Kohli in return provided New York real estate to Bahel.

Kohli, of Miami, represented companies including Thunderbird Industries and Telecommunications Consultants India Ltd. (TICL), an enterprise owned by the Indian government.

The indictment alleges the scheme began in or about 2000.

"Bahel granted exceptional access to Kohli, providing Kohli with a line of communication and source for information within the U.N. that exceeded what U.N. vendors could typically expect to receive," said a statement issued by the U.S. Attorney's Office for the Southern District of New York.

"In addition, Bahel was a vocal advocate within the U.N. for the companies represented by Kohli. On occasion, Bahel even canceled bids by competing companies and re-bid contracts in order to give a competitive advantage to Kohli's business interests."

Bahel also helped Kohli when problems arose regarding contracts, the indictment charged. On Aug. 6, 2000, Bahel received a memo from the U.N. officer responsible for evaluating Thunderbird's proposal for a contract, saying the company lacked sufficient documentation and suggesting the U.N. investigate its Dun and Bradstreet report.

"That very same day, Kohli, for the first time, listed Thunderbird with Dun and Bradstreet," the indictment said.

During the period, TCIL secured U.N. contracts for radio communications equipment, desktop computers, laptop computers and other items.

In 2003, Kohli bought a mid-town Manhattan apartment and provided it to Bahel and his family for two years, the indictment alleges. "During that time, Bahel paid a greatly-reduced monthly rent, and no rent at all for certain months."

Kohli sold the apartment to Bahel in May 2005, prosecutors said, at a purchase price that was so low the condominium board of the building considered blocking the sale.

Suspended without pay

A spokesman for U.N. Secretary-General Kofi Annan said Wednesday in a statement that Bahel had been the subject of an internal allegation by the U.N.'s Office of Internal Oversight Services and was formally charged with misconduct on Aug. 31. He has been suspended without pay since that time.

The United Nations provided its final report to authorities in the United States and India and has cooperated with prosecutors during the investigation, the spokesman said.

"Today, the secretary-general has received a request from the U.S. authorities to waive Mr. Bahel's immunity from legal process," the statement said. "The secretary-general confirms that he has waived Mr. Bahel's immunity."

Both men are expected to appear in federal court on Thursday -- Bahel in Manhattan and Kohli in Miami.

If convicted, authorities said, each faces a maximum sentence of 10 years in prison. Prosecutors are also seeking the forfeiture of proceeds including Bahel's interest in the Manhattan apartment.

"Sanjaya Bahel allegedly sold his influence as a U.N. procurement official. He favored Nishan Kohli's companies in obtaining and maintaining valuable U.N. contracts, and he personally profited as a result," said U.S. Attorney Michael Garcia.

-- CNN's Sarvi Batmanhelidj and Deborah Brunswick contributed to this report.


A spokesman for U.N. Secretary-General Kofi Annan, above, said Bahel has been suspended without pay since August 31.

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