24 June 2008

By John C K Daly for ISN Security Watch (24/06/08)

Editor's note: This is part two of " The deadly convenience of Victor Bout." For part one, please click here:

www.isn.ethz.ch/news/sw/details.cfm

Bout with the law
Belgium was the first nation to seek legal sanctions against Bout, where in the mid-1990s the Service Général du Renseignement et de la Sécurité (Belgian Military Intelligence Service, or SGR) began "Operation Boomerang" against Bout on suspicion that he was supplying weapons in return for diamonds to African countries under UN sanction.

On 18 February 2002, Belgium transmitted a secret warrant to Interpol for Bout's arrest on a charge of money laundering and weapons smuggling worth US$32.5 million through Belgium. The warrant was based on Sanjivan Rupriah's secret FBI testimony of the previous month.

Russia's Interior Ministry (MVD) also began to investigate Bout for possibly shipping weapons to al-Qaida. The MVD Information and Regional Communications Division ordered then-deputy interior minister Nikolai Boborovskii to investigate the case when it was learned that Bout's Air Cess had chartered planes owned by the Aerostan air transport firm registered in Kazan in central Russia, Interfax reported.

Global embarrassment
While Washington was congratulating itself on Bout's detention in Bangkok, there were many clues about his activities scattered across the US, too.

The 2002 Interpol warrant described Bout's power of attorney over Delaware's Vial company bank accounts, reporting that he used them to launder weapons trafficking proceeds. Vial, established by Bout for African operations in the early 1990s, was an acronym from the first two letters of the founders' names, Viktor Bout and Aleksandr Kibkalo, who founded the company after working for a firm in Angola following Bout's discharge from the military, according to Izvestia.

Equally prominent were the activities of the man described by the UNSC Committee on Liberia Assets as Viktor Bout's "chief financial officer," Richard Chichakli. From a suite of offices in Richardson, Texas, Chichakli was president and director of the Trans Aviation Global Group, Inc. The UN identified Chichakli as the Chief Financial Officer for San Air General Trading in the UAE and president of Orient Star Aviation. Other subsidiaries that Chichakli operates from Richardson include Central Africa Development Fund, DHH Enterprises Inc., IB of America Holdings, Inc, Richard A. Chichakli, PC, Chichakli & Associates PLLC, Daytona Pools, Inc and Continue Professional Education, Inc. While admitting knowing Bout, Chichakli has denied all the federal charges against him.

Following the March 2003 US invasion of Iraq, Bout's British Gulf aerial armada was a godsend for US forces, as the logistical supply aircraft using Baghdad International Airport were under constant threat, and any downing of US military aircraft there would be a public relations disaster.

The commander of the US Transportation Command, Air Force General John Handy, noted that insurgents fired on US military aircraft using Baghdad International on almost a daily basis; "As we fly around, we are repeatedly shot at, with manpads [man-portable air defense systems], small arms, and triple-A [anti-aircraft artillery]," Stars and Stripes magazine reported.

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," ABC news reported.
In the strongest signal of Bout's usefulness to the Pentagon in Iraq, in March 2004 the UN Security Council began drafting a resolution to freeze the assets of mercenaries and weapons dealers who backed ousted Liberian dictator Charles Ghankay Taylor, including Bout, but French diplomats and UN sources say the US worked to keep Bout off the list because of Bout's British Gulf flights to Iraq, IPS reported.

Washington's pressure resulted in Bout's name disappearing from the British list submitted in April, even though it headed the list in January's version. While Bout's name remained on the French list, according to British sources it was "rejected," even while "the affair is still being discussed in New York."

Bout's resupply activities broke in the western media in May 2004, when western diplomats were quoted as saying that Bout's freight companies might be involved in delivering goods to US forces in Iraq, and that the Pentagon was "recycling" his cargo network, according to the Financial Times.

Perhaps to deflect international criticism of the move, as well as the fact that Bout had no substantial US-based assets, in July 2004 the US Treasury Department sanctioned Bout because of his association with Taylor.

As Bout's usefulness in Iraq diminished Washington slowly applied more pressure. On 26 April 2005, the Treasury Department expanded its sanctions against Bout by identifying 30 companies and four individuals linked to Bout, whom it labeled "an international arms dealer and war profiteer," and submitted the 30 companies and four individuals to the UN Sanctions Committee to add to the consolidated list of individuals and entities tied to Taylor. The sanctions prohibited transactions between US citizens and the designated entities and also froze the assets of designated persons within US jurisdiction.

By late 2004, Bout's activities had also become a liability for the Pentagon. During a 15 December 2004 Special Defense Department Briefing on Iraq Reconstruction Update press conference (PDF), a journalist asked Charlie Hess, director of the Project and Contracting Office in Iraq, about Bout. To a question about whether the DoD had ever used Bout's services Hess replied, "I have not heard anything about that. But if you had some details, we can certainly check into it."

On 31 October 2006, President George W Bush issued an executive order freezing Bout's US assets. Andrei Smulian estimated the value of Bout's fiscal assets affected by Bush's executive order at US$6 billion, Kommersant reported. After apparently severing ties with the Pentagon, Bout continued his activities in Iraq, reportedly in 2006 selling 200,000 Kalashnikovs from Bosnia-Herzegovina to Iraq, Zagreb Vecernji List reported.

Nor was Iraq the only Middle East market that Bout operated in.
In July 2006, prior to the outbreak of hostilities between Hizbollah and Israel, western intelligence agencies spotted Bout at a Hizbollah facility in Lebanon. Shortly before Bout's arrival in Beirut, Chichakli, after leaving Texas when the federal government froze his assets, moved to Damascus, where he currently lives. Fuelling Israeli suspicions of possible Bout shipments, Israeli intelligence concluded that Hizbollah had used Russian-made anti-tank weaponry in Lebanon, according to chechennews.com.

A delegation under Deputy General Director of the Israeli Foreign Affairs Ministry Mark Sofer arrived in Moscow on 18 August and complained that Hizbollah guerrillas had used Russian-made anti-tank missiles in their 34-day conflict with Israeli forces in Lebanon. The following month Russian Foreign Affairs Minister Sergei Lavrov arrived in Israel on a visit to more complaints about Hizbollah's use of the RPG-29 Vampir and 9K129 Kornet anti-tank weaponry, Kommersant reported.

For most Americans, however, the most disquieting item in Bout's record of carnage is that according to Britain's MI6, Bout was still supplying arms to Osama Bin Laden's terror network until just before the 9/11 attacks, according to De Standaard.

The potential for embarrassment resulting from Bout's prosecution is global.
In 2001, the Romanian media reported that the Flying Dolphin air transport company, the parent company of Flying Dolphin Romania, while registered in Liberia had its work offices in Dubai, UAE, where Bout lived at the time. Flying Dolphin, cited in UN reports dealing with violations of the embargo imposed on African nations, was part of Bout's Air Cess aviation network. Sheikh Abdullah Zayed Saqr al Nayhan was the sole shareholder of both Flying Dolphin and Flying Dolphin Romania, and is described in the UN reports as close to Bout. Al Nayhan is a member of the ruling family in Abu Dhabi and former UAE ambassador to the US.

Bout had UK connections dating back to at least 1999, when British gunrunner Christopher Barrett-Jolley leased Bout's aircraft to run armaments to Sudan, the DRC and other African hotspots. In 2000, Peter Hain, Minister for Africa at the Foreign and Commonwealth Office, used MI6 reports and his parliamentary immunity publicly to name Bout as one of Angola's sanction busters.

In March 2005, according to official Civil Aviation Authority records, in one instance Britain's Ministry of Defense hired Bout's Trans Avia and Jet Line International to transport armored vehicles and a small number of British troops from RAF Brize Norton in Oxfordshire and RAF Lyneham to Kosovo, according to the Evening Standard.

The British were also discomfited by the revelation that Bout actually ran many of his activities from British territory, including Gibraltar's Westbound, Ltd, owned by Ronald De Smet, who had a lengthy history of acting on behalf of Bout. Westbound is also a major shareholder in Centrafrican Airlines. Other Centrafrican Airlines major shareholders based in Gibraltar were Southbound Ltd. and ATC Ltd.

Little ado about much
Since the mid-1990's, not one UN arms embargo has resulted in the conviction of an arms trafficker, as the UN has no detention powers, while Interpol depends on the cooperation of local authorities. Astonishingly, despite having the toughest arms-trafficking laws in the world, the US has not prosecuted a single case of arms trafficking.

After his arrest Bangkok police chief Lieutenant General Adisorn Nonsi said that Bout may face up to 10 years in prison or may be fined from 4,000 to 200,000 baht (US$130-6,400), according to the Bangkok Post. Given his activities in the rest of the world, Bout would doubtless prefer to remain in Southeast Asia. His lawyers fear that Smulian, already in US custody, may strike a deal, further implicating his former business partner, Poliarnaia Zvezda reported.

The timing and operatives behind Bout's arrest remain a mystery, but it is possible that, as he flew directly from Moscow to Bangkok, Russia's security forces might have been involved, especially given Bout's previous relations to the Pentagon.

Russian arms exports are now only second to oil exports in value to the Russian government, and are surging toward US$8 billion annually. Given that many Russian weapons exporters are now either security officers on active duty or in reserve, they may have been tempted to betray Bout because of suspicions that he was a possible US collaborator.

Further incentive to clean house may have come from the fact that Russia's defense minister and former presidential hopeful Sergei Ivanov was passed over for promotion while President Dmitrii Medvedev, former first deputy prime minister, succeeded Vladimir Putin, further reducing their potential krisha, or patronage, protection.

The reality is, that even after Bout's arrest, Russia's transport aviation earns income from foreign wars and will continue to do so. Bolstering perceptions that Bout's transport activities may have been superseded by Russian governmental activity, on 8 June Deputy Prime Minister Sergei Ivanov told participants at the 12th St Petersburg International Economic Forum, "Our business participates in the transportation support of wars led by other nations. We earn income from wars, however cynical that may sound," RIA-Novosti reported.

Bout's brother Sergei sees darker forces at work behind Bout's arrest, with Washington seeking Bout as part of a decade-long campaign to exclude Russian aviation from the lucrative global transport market.

During a recent interview he said that his brother was a victim of a "specific battle for the international aviation transportation market. For the last 10 years the US has attempted to exclude [Russia] from this market in order not to allow Russian aviation to survive. Attempts to resuscitate it were made. We showed the entire world that our aircraft can fly, that our aircraft can transport. This was not at all profitable to Americans, they lost markets, but our aviation, considerably more effective in this plan, worked."

Bout's organizational skills have impressed many western observers. Misha Glenny, author of McMafia, a study of global criminal networks, told ISN Security Watch when asked about Bout, "He's a spectacular success - my own personal opinion. […] "You generally find behind spectacular success of criminals shady government support.

"That Bout has been arrested is a very positive sign. […] The influence of gangsters in Russia is diminishing," Glenny concluded.

Bout's trials promises to be a unique and disturbing peak into the shadowy world of illicit arms trafficking, and the US must be nervously contemplating what he might say in court about his transports flights into Baghdad and Afghanistan as a Pentagon contractor.

Perhaps however, Viktor Bout is merely misunderstood; as his wife Alla recently observed in her first interview with a western newspaper: "He's a poet, not the lord of war," she told the UK Sunday Times.

Those interested in following Bout's legal difficulties can now visit his "official" website, which promises to "provide you with information, details, and all the facts the world's governments wanted to suppress about the Victor Bout story, and the man behind the story that grew into a legend."

As for Bout himself, in his first and so far only prison interview with a western journalist since his arrest, the "merchant of death" stated simply: "Today I despise Americans," the Sydney Morning Herald reported.

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Dr John C K Daly is a Washington DC-based consultant and an adjunct scholar at the

www.isn.ethz.ch/news/sw/details.cfm