Italy probe unearths huge Iraq arms deal
By CHARLES J. HANLEY and ARIEL DAVID, Associated Press
Writers 1 hour, 21 minutes ago
PERUGIA, Italy - In a hidden corner of Rome's busy
Fiumicino Airport, police dug quietly through a
traveler's checked baggage, looking for smuggled
drugs. What they found instead was a catalog of
weapons, a clue to something bigger.
Their discovery led anti-Mafia investigators down a
monthslong trail of telephone and e-mail intercepts,
into the midst of a huge black-market transaction, as
Iraqi and Italian partners haggled over shipping more
than 100,000 Russian-made automatic weapons into the
bloodbath of Iraq.
As the secretive, $40 million deal neared completion,
Italian authorities moved in, making arrests and
breaking it up. But key questions remain unanswered.
For one thing, The Associated Press has learned that
Iraqi government officials were involved in the deal,
apparently without the knowledge of the U.S. Baghdad
command a departure from the usual pattern of
U.S.-overseen arms purchases.
Why these officials resorted to "black" channels and
where the weapons were headed is unclear.
The purchase would merely have been the most
spectacular example of how Iraq has become a magnet
for arms traffickers and a place of vanishing weapons
stockpiles and uncontrolled gun markets since the 2003
U.S. invasion and the onset of civil war.
Some guns the U.S. bought for Iraq's police and army
are unaccounted for, possibly fallen into the hands of
insurgents or sectarian militias. Meanwhile, the
planned replacement of the army's AK-47s with
U.S.-made M-16s may throw more assault rifles onto the
black market. And the weapons free-for-all apparently
is spilling over borders: Turkey and Iran complain
U.S.-supplied guns are flowing from Iraq to
anti-government militants on their soil.
Iraqi middlemen in the Italian deal, in intercepted
e-mails, claimed the arrangement had official American
approval. A U.S. spokesman in Baghdad denied that.
"Iraqi officials did not make MNSTC-I aware that they
were making purchases," Lt. Col. Daniel Williams of
the Multi-National Security Transition Command-Iraq
(MNSTC-I), which oversees arming and training of the
Iraqi police and army, told the AP.
Operation Parabellum, the investigation led by Dario
Razzi, anti-Mafia prosecutor in this central Italian
city, began in 2005 as a routine investigation into
drug trafficking by organized-crime figures, branched
out into an inquiry into arms dealing with Libya, and
then widened to Iraq.
Court documents obtained by the AP show that Razzi's
break came early last year when police monitoring one
of the drug suspects covertly opened his luggage as he
left on a flight to Libya. Instead of the expected
drugs, they found helmets, bulletproof vests and the
Tapping telephones, monitoring e-mails, Razzi's
investigators followed the trail to a group of Italian
businessmen, otherwise unrelated to the drug probe,
who were working to sell arms to Libya and, by late
2006, to Iraq as well, through offshore companies they
set up in Malta and Cyprus.
Four Italians have been arrested and are awaiting
court indictment for allegedly creating a criminal
association and alleged arms trafficking trading in
weapons without a government license. A fifth Italian
is being sought in Africa. In addition, 13 other
Italians were arrested on drug charges.
In the documents, Razzi describes it as "strange" that
the U.S.-supported Iraqi government would seek such
weapons via the black market.
Investigators say the prospect of an Iraq deal was
raised last November, when an Iraqi-owned trading firm
e-mailed Massimo Bettinotti, 39, owner of the
Malta-based MIR Ltd., about whether MIR could supply
100,000 AK-47 assault rifles and 10,000 machine guns
"to the Iraqi Interior Ministry," adding that "this
deal is approved by America and Iraq."
The go-between the Al-Handal General Trading Co. in
Dubai apparently had communicated with Bettinotti
earlier about buying night visors and had been told
MIR could also procure weapons.
Al-Handal has figured in questionable dealings before,
having been identified by U.S. investigators three
years ago as a "front company" in Iraq's Oil-for-Food
The Interior Ministry's need at that point for such a
massive weapons shipment is unclear. The U.S. training
command had already reported it would arm all Interior
Ministry police by the end of 2006 through its own
three-year-old program, which as of July 26 has bought
701,000 weapons for the Iraqi army and police with
$237 million in U.S. government funds.
Negotiations on the deal progressed quickly in e-mail
exchanges between the Italians and Iraqi middlemen of
the al-Handal company and its parent al-Thuraya Group.
But at times the discussion turned murky and nervous.
The Iraqis alternately indicated the Interior Ministry
or "security ministries" would be the end users. At
one point, a worried Bettinotti e-mailed, "We prefer
to speak about this deal face to face and not by
The Italians sent several offers of various types and
quantities of rifles, with photos included. The
negotiating focused on the source of the weapons: The
Iraqi middlemen said their buyer insisted they be
Russian-made, but the Italians wanted to sell AK-47s
made in China, where they had better contacts.
"We are in a hurry with this deal," an impatient
Waleed Noori al-Handal, Jordan-based general manager
of the Iraqi firm, wrote the Italians on Nov. 13 in
one of the e-mails seen by AP.
He added, in apparent allusion to the shipment's
clandestine nature, "You mustn't worry if it's a
problem to import these goods directly into Iraq. We
can bring the product to another country and then
transfer it to Iraq."
By December, the Italians, having found a Bulgarian
broker, were offering Russian-made goods: 50,000 AKM
rifles, an improved version of the AK-47; 50,000 AKMS
rifles, the same gun with folding stock; and 5,000 PKM
The Iraqis quibbled over the asking price, $39.7
million, but seemed satisfied. The Italians were set
for a $6.6 million profit, the court documents show,
and were already discussing air transport for the
weapons. At this point prosecutor Razzi acted, seeking
an arrest warrant from a Perugia court.
"The negotiation with Iraq is developing very
quickly," he wrote the judge.
On Feb. 12, in seven locations across Italy, police
arrested the 17 men, including the four alleged arms
traffickers: Bettinotti; Gianluca Squarzolo, 39, the
man whose luggage had yielded the original clue;
Ermete Moretti, 55, and Serafino Rossi, 64. If
convicted, they could be sentenced to up to 12 years
The at-large fifth man, Vittorio Dordi, 42, was
believed to be in the Democratic Republic of Congo,
where he apparently is involved in the diamond trade.
Italian authorities were seeking information on him
from the African country.
In the parallel Libya case, the Italians allegedly
paid two Libyan Defense Ministry officials about
$500,000 in kickbacks to speed that transaction for
Chinese-made assault rifles. It isn't known whether
such bribes were a factor in the Iraq deal. No Libyans
or Iraqis are known to have been detained in
connection with the cases.
Al-Handal's operations have caught investigators'
notice before. In 1996-2003, the company was involved
as a broker in the kickback scandal known as Oil for
Food, the CIA says.
In that program, Iraq under U.N. economic sanctions
bought food and other necessities with U.N.-supervised
oil revenues. Foreign companies, often through
intermediaries, surreptitiously kicked back payments
to officials of Saddam Hussein's Iraqi government in
exchange for such supply contracts.
Those Iraqi middlemen also engaged in "misrepresenting
the origin or final destination of goods," said the
2004 report of the CIA's Iraq Survey Group, which
investigated both Iraq's defunct advanced weapons
programs and Oil for Food.
That report also alleged that during this period
Al-Handal General Trading, from its bases in Dubai and
Jordan, secretly moved unspecified "equipment" into
Iraq that was forbidden by the U.N. sanctions.
Reached at his office in Amman, Jordan, Waleed Noori
al-Handal denied the family firm had done anything
wrong in the Italian arms case.
"We don't have anything to hide," he told the AP.
Citing the names of "friends" in top U.S. military
ranks in Iraq, al-Handal said his company has
fulfilled scores of supply and service contracts for
the U.S. occupation. Asked why he claimed U.S.
approval for the abortive Italian weapons purchase, he
said he had a document from the U.S. Army "that says,
'We allow al-Thuraya Group to do all kinds of
In Baghdad, the Interior Ministry wouldn't discuss the
AK-47 transaction on the record. But a senior ministry
official, speaking on condition of anonymity because
of the matter's sensitivity, acknowledged it had
sought the weapons through al-Handal.
Asked about the irregular channels used, he said the
ministry "doesn't ask the supplier how these weapons
Although this official refused to discuss details, he
said "most" of the 105,000 weapons were meant for
police in Iraq's western province of Anbar. That
statement raised questions, however, since Pentagon
reports list only 161,000 trained police across all 18
of Iraq's provinces, and say the ministry has been
issued 169,280 AK-47s, 167,789 pistols and 16,398
machine guns for them and 28,000 border police.
A July 26 Pentagon report said 20,847 other AK-47s
purchased for the Interior Ministry have not yet been
delivered. Iraqi officials complain that the U.S.
supply of equipment, from bullets to uniforms, has
A Pentagon report in June may have touched on another
possible destination for weapons obtained via
secretive channels, noting that "militia infiltration
of local police remains a significant problem." Shiite
Muslim militias in Iraq's civil war have long been
known to find cover and weapons within the Interior
In fact, in a further sign of poor controls on the
flow of arms into Iraq, a July 31 audit report by the
U.S. Government Accountability Office said the U.S.
command's books don't contain records on 190,000
AK-47s and other weapons, more than half those issued
in 2004-2005 to Iraqi forces. This makes it difficult
to trace weapons that may be passed on to militias or
The Pentagon, meanwhile, has described the Interior
Ministry's accounting of police equipment as
Here in Italy, Razzi expressed puzzlement at the Iraqi
officials' circumvention of U.S. supply routes.
"It seems strange that a pro-Western government,
supported by the U.S. Army and other NATO countries on
its own territory, would seek Russian or Chinese
weapons through questionable channels," the anti-Mafia
prosecutor wrote in seeking the arrest warrant that
short-circuited the complex deal.