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Iraq gov. buying guns on Italian black market

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  • Greg Cannon
    http://news.yahoo.com/s/ap/20070812/ap_on_re_mi_ea/iraq_operation_parabellum Italy probe unearths huge Iraq arms deal By CHARLES J. HANLEY and ARIEL DAVID,
    Message 1 of 1 , Aug 12, 2007

      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
      weapons catalog.

      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
      machine guns.

      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
      in prison.

      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
      are obtained."

      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
      been slow.

      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.
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