The guilty plea by a Virginia-based oil trading company, won yesterday by the district attorney of New York County, opens a new front in the U.N. oil-forfood scandal.

The plea bargain to charges of grand larceny followed a yearlong investigation that disclosed that Midway Trading, Inc., based in Reston,Va., and one of its partners Bulf Drilling and Oil Servicii SRL, a Romanian company, paid more than $440,000 in kickbacks to Iraqi officials in connection with oil purchases by deceiving the United Nations, according to the charges. According to the district attorney’s office, U.N. officials believed that Midway was going to adhere to resolutions of the world body, and so its officials approved the contracts and authorized millions of dollars in payments under the oil-for-food program, which was established in 1995 and allowed Saddam Hussein’s regime in Iraq to sell oil in exchange for the purchase of humanitarian goods for Iraqis.

The district attorney, Robert Morgenthau, said yesterday in Hogan Place that the Iraqis on the receiving end of the kickbacks “were high up in the Iraqi hierarchy,” but he would not elaborate. The chief of the investigation division of the district attorney’s office, Daniel Castleman, said that it was reasonable to assume that the money went into the coffers of the family members of Saddam.

The charges and guilty pleas raised eyebrows among those watching the oil-for-food scandal, as something of a tug-of-war has been under way between the United States attorney’s office in the Southern District of New York and Mr. Morgenthau’s office. The Manhattan District Attorney reportedly began a criminal investigation of the former director of the oil-for-food program, Benon Sevan, but Mr. Sevan left the country before any indictments were handed down against him. Mr. Morgenthau has also been credited with instigating the oil-for-food investigation of former U.N. procurement officer, Alexander Yakovlev, which ended in a federal guilty plea announced by federal prosecutors.

Mr. Morgenthau said his office worked closely with the Kofi Annan-appointed Independent Inquiry Committee, headed by a former chairman of the Federal Reserve, Paul Volcker. The committee is on course to release its findings about the companies participating in the oil-for-food program later this month.A spokesman for the committee, Michael Holtzman, did not return a call seeking comment.

There is a camp within those following the oil-for-food saga, however, that is cautious about the role of Mr.Volcker’s committee, feeling the committee itself has lacked aggressiveness. The House International Relations Committee, led by Rep. Henry Hyde, is expected to release a report soon that will include details on Mr.Volcker’s investigation. In any event, a fellow at the Foundation for the Defense of Democracies and former federal prosecutor, Andrew McCarthy, said that just because Mr. Morgenthau investigated the Midway Trading case does not mean that federal prosecutors could not conduct their own investigation. While state prosecution would not stop federal prosecution, Mr. Mc-Carthy said, “Presumptively, the feds would not prosecute something the state did.”

A spokeswoman for the United States attorney for the Southern District declined to comment.

Midway, which is still operating, will pay a $250,000 fine.The amount levied was appropriate, Mr. Morgenthau said, because Midway did not make any money from the illegal dealings. It had, he said, a loss of more than $1 million through the two transactions. Neither Bulf Oil nor any U.N. officials have been charged, Mr. Morgenthau said, but the investigation continues.

The attorney for Midway Trading, Mark MacDougall, did not return calls for comment.

While Mr. Morgenthau defended the move, saying his office discovered the illegal activity during the course of oth er investigations and the illegal transactions maintained “a lot of connections with New York,” some experts said that prosecuting such a case might be indicative of a turf war between state and federal prosecutors.

The United States attorney’s office has prosecuted oil-for-food cases, said a professor in the Fordham University School of Law, Daniel Richman, so one would naturally expect that a case that was even tangentially related would be handled by federal prosecutors. “Is this case evidence of a clash?” Mr. Richman said. “In and of itself it’s not a problem. Is it a sign that there may be problems? Sure.”

A law professor at Columbia University, Jeffrey Fagan, said he was not familiar with the case but noted that it was unusual that the state would take possession of a case that the federal prosecutors could handle. “Normally the traffic, it’s in the other direction,” Mr. Fagan said.

Mr. Morgenthau announced the news yesterday after Midway Trading pleaded guilty to grand larceny and agreed not to appeal the decision in New York State Supreme Court.