August 21, 2007 12:53 PM

Justin Rood Reports:

The U.S. government paid a wanted international criminal roughly $60 million to fly supplies into Iraq in support of the war effort, a new book alleges.

Intelligence officials have considered arms merchant and international trafficker Viktor Bout one of the greatest threats to U.S. interests, in the same league as al Qaeda kingpin Osama bin Laden. Interpol has issued a warrant for his arrest; the United Nations Security Council has restricted his travel.

Yet from 2003 through at least 2005, Pentagon contractors used air cargo companies known to be connected to Bout to fly an estimated 1,000 supply trips into and out of Iraq, according to "Merchant of Death: Money, Guns, Plans, and the Man Who Makes War Possible."

It could have been worse, the authors report. Shortly after the Sept. 11, 2001 attacks, Bout -- whose arms shipments to the Taliban regime in Afghanistan were believed to have aided al Qaeda -- pitched the CIA a multi-million dollar proposal to help rout the Taliban from the country and capture Osama bin Laden, according to Douglas Farah and Stephen Braun.

Farah is a former reporter for the Washington Post; Braun is a national correspondent for the Los Angeles Times.

The deal never came together. But Bout found business with the United States in 2003, flying supplies into newly-invaded Iraq as a subcontractor to U.S. military contractors, including Fluor and Kellogg, Brown and Root (KBR), the authors say, citing military flight records as evidence. The flights continued even after President Bush signed an order banning Americans from doing business with Bout or his associates, the authors report.

A spokeswoman for KBR acknowledged to the authors the company had hired a Bout-connected cargo firm through an intermediary, but that it had no knowledge of the ties at the time. A request for comment to the Fluor Corporation from ABC News was not immediately answered.

In a January 2005 letter to Congress, then-Assistant Defense Secretary Paul Wolfowitz admitted the Defense Department "did conduct business with companies that, in turn, subcontracted work to second-tier providers who leased aircraft owned by companies associated with Mr. Bout."

Defense officials were busy making sure Bout's planes no longer flew for the United States, he wrote. Nine days after Wolfowitz's letter, a Bout-controlled plane touched down in Mosul, Iraq, according to the book's authors.

Bout's work in Iraq first became public in a May 2004 article in the Financial Times newspaper. CIA officials in Washington secretly warned colleagues in Baghdad of the ties in fall 2003, the authors report. "It would appear...that it did not make its way to the correct folks," the two quote an unnamed CIA official as saying.

In an interview with the Blotter on ABCNews.com, Farah said he and Braun calculated the number of flights by Bout-owned planes by reviewing U.S. Air Force fueling logs, military flight records and interviewing U.S. military officials and private air cargo contractors.

Bout didn't just walk away with millions of taxpayer dollars, the authors found. The military issued Bout's pilots supply cards allowing them to gas up their planes for free when landing in Iraq. A Defense Department spokesman confirmed to the authors that Bout's fleet made off with nearly 500,000 gallons of fuel from the Baghdad airport courtesy of the U.S. Air Force.

Bout made his fortune in the 1990s selling Soviet-era weaponry to Third World despots and insurgent groups. Using a "veiled, complex corporate structure," Bout dispatched fleets of Cold War-era Soviet cargo planes to some of the most inhospitable corners of the earth, running guns for dictators, including Liberia's Charles Taylor and Zaire's Mubuto Sese Seko, as well as rebel leaders in Angola, Sierra Leone and beyond. By 2000, U.S. government officials considered him one of the leading threats to the United States, on par with Osama bin Laden and global warming.

Bout was the inspiration for the 2005 film, "Lord of War," starring Nicolas Cage as an international arms dealer who will sell to all sides of any conflict. Bout reportedly rented his planes to the movie's producers for use in the film.

Bout's net worth is not known, Farah told ABCNews.com, but a conservative estimate is "in the tens of millions of dollars." Bout now lives in Moscow, Russia, he said, and travels on false passports because of an international travel ban. An e-mail to Bout's lawyer for comment was not returned.

"Bout pulled off the ultimate metamorphosis," the authors write, "from hunted international criminal to the U.S. military's secret deliveryman."

blogs.abcnews.com/theblotter/2007/08/book-wanted-cri.html