Friday, December 17, 2004

The Alleged Arms Broker is Behind Four Air Cargo Firms Used by U.S. Contractors, Officials Say

Published on Tuesday, December 14, 2004 by the Los Angeles Times
by Stephen Braun, Judy Pasternak and T. Christian Miller

Blacklisted Russian Tied to Iraq Deals

WASHINGTON — Air cargo companies allegedly tied to reputed Russian arms trafficker Victor Bout have received millions of dollars in federal funds from U.S. contractors in Iraq, even though the Bush administration has worked for three years to rein in his enterprises.

Planes linked to Bout's shadowy network continued to fly into Iraq, according to government records and interviews with officials, despite the Treasury Department freezing his assets in July and placing him on a blacklist for allegedly violating international arms sanctions.

Largely under the auspices of the Pentagon, U.S. agencies including the Army Corps of Engineers and the Air Force, and the U.S.-led Coalition Provisional Authority, which governed Iraq until last summer, have allowed their private contractors to do business with the Bout network.

The list of the Bout network's suspected clients over the years includes the Taliban, which allegedly bought airplanes for a secret airlift of arms to Afghanistan. The Taliban is known to have shared weapons with Al Qaeda.

CIA officials expressed concern more than a year ago that air cargo firms linked to Bout were cashing in on U.S.-funded reconstruction efforts....

In a letter to Sen. Russell D. Feingold (D-Wis.) in June, Paul V. Kelly, an assistant secretary of State for legislative affairs, acknowledged that the department had "inadvertently" allowed contractors to deal with "air charter services believed to be connected with … Bout." Feingold, a member of the Senate Foreign Relations Committee, has taken a lead role in investigating Bout's activities.

During the chaotic period after the collapse of the Soviet Union, Bout was among the Russian entrepreneurs who seized opportunities to make a fortune. He built a global air cargo network by obtaining old Russian planes and using them to deliver, among other things, munitions to world trouble spots in defiance of U.N. arms embargoes.

A confidant of dictators, warlords and guerrilla leaders, Bout juggled a murky group of companies for much of the 1990s, transferring his planes' registrations from country to country. His fleet, which grew to nearly 60 aircraft by 2000, often carried legitimate wares such as flowers and fish. But U.N., American and British officials who tracked his activities say his empire's stock in trade was weapons, ammunition and helicopter gunships.

Although Bout is wanted for money laundering by Interpol and Belgian authorities and various agencies raised red flags during the last year, his network continued to do business with some U.S. agencies and their contractors, officials said.

Among the firms holding U.S. government contracts that officials said were using the network's services: FedEx and KBR. The latter, formerly known as Kellogg Brown & Root, is a subsidiary of Halliburton, the Houston conglomerate formerly headed by Vice President Dick Cheney and holder of a massive no-bid contract for reconstruction projects in Iraq.

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