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UPDATE 2-Canadian businessman goes on trial in Cuba for corruption

* Importer faces up to 12 years in prison

* Trials of more foreign businessmen expected

* Corruption arrests unprecedented in Cuba (Updates with end of trial's first day)

By Marc Frank

HAVANA, May 23 (Reuters) - A Cuban court on Thursday wrapped up the first day of testimony in the graft trial of a Canadian businessman whose prosecution is part of a corruption crackdown that has shaken the country's foreign business community.

The trial of Sarkis Yacoubian, originally from Armenia and the owner of import firm Tri-Star Caribbean, was expected to end on Friday. An associate of Yacoubian, Lebanese citizen Krikor Bayassalian, is a co-defendant.

Canada's ambassador to Cuba, Matthew Levin, attended the trial but did not speak to reporters. Journalists were not allowed in the courtroom to cover the proceedings.

The corruption trials of at least three other Canadian and British executives, all of them arrested shortly after Yacoubian was taken into custody in July 2011, are expected to follow.

The arrests were unprecedented for Cuba, where foreign businessmen suspected of corruption are usually deported.

They are seen as a measure of President Raul Castro's determination to end a practice he views as a threat to Cuba's socialist system.

They sent shockwaves through the country's small foreign business sector where the companies involved were among the most visible players.

Cuba's state-run media, however, has not yet reported the Yacoubian trial, nor mentioned the arrests and crackdown on foreign trade.

After his arrest, Yacoubian confessed to bribery and implicated other foreign firms. Within months, dozens of Cuban officials and state purchasers were behind bars.

"I tried to explain to them (investigators) systematically how things could be done," Yacoubian told the Toronto Star last week in his only interview from jail. "I gave them drawings, designs. I gave them names, people, how they do it, why, when, where, what."

Yacoubian was expected to plead guilty to bribery, tax evasion and other crimes and could face up to 12 years behind bars, the newspaper said. Bayassalian faces the same charges.

HIGH-LEVEL GRAFT

In September 2011, two months after Tri-Star Caribbean was shuttered, Canada-based Tokmakjian Group, one of the most important Western trading firms in Cuba, was closed and its 73-year-old head, Cy Tokmakjian, also originally from Armenia and a Canadian citizen, was taken into custody.

Yacoubian had worked for Tokmakjian before founding Tri-Star to compete with his former employer in what became a bitter rivalry for Cuba's automobile, motorized and heavy equipment market.

In October 2011, police also closed the Havana offices of the British investment and trading firm Coral Capital Group Ltd and arrested chief executive Amado Fakhre, a Lebanese-born British citizen.

Two months later police raided the offices of the powerful military-run Tecnotex trading company, taking its Cuban chief executive Fernando Noy away in handcuffs.

Coral Capital's chief operating officer, Stephen Purvis, was arrested in March 2012. Purvis is a British citizen.

Other foreigners and Cubans who worked for the companies remain free but cannot leave the island because they are considered witnesses in the cases.

Cuban officials and lawyers for the defendants could not be reached for comment.

Soon after taking over for his ailing brother Fidel, in 2008, President Castro established the comptroller general's office and gave it a seat on the ruling Council of State, even as he began implementing market-oriented economic reforms.

That step marked the start of the anti-corruption campaign that uncovered high-level graft in key sectors ranging from the cigar, nickel and communications industries to food processing and civil aviation.

The foreign trade business, which manages billions of dollars in purchases annually and is controlled by a handful of state firms, is perhaps the most vulnerable to corruption, foreign and Cuban businessmen say.

There is no open bidding in Cuba's international trade operations and state purchasers who handle multimillion-dollar contracts earn just $50 to $100 per month.

"You have people who do not make enough money to care for their families handling huge contracts. What do you expect?" a local administrator said on condition of anonymity. (Reporting by Marc Frank; Editing by Jeff Franks, David Adams and Xavier Briand)