|The activities of a few famous arms brokers can illustrate their origins as agents for covert state security operations during the Cold War, as well as their links to international organized crime. In the 1970s, the Northrop and Lockheed bribery scandals erupted, involving companies that today are still listed among the world’s top-100 weapons producers. Governments from the USA to the Gulf and Japan were rocked. Some of the brokers involved, such as Lockheed’s agent for the Middle East, Adnan Khashoggi, remained actively involved in the rogue business after the scandals. Khashoggi, who is thought to live in Spain, was once said to be one of the richest men on earth.3 Apart from his role in the sale of aircraft to Saudi Arabia in the 1970s, Khashoggi turned out to be a key player in the Iran-Contra case. 4 He was also a key figure in the US Senate report on the collapse due to fraud of the Bank of Credit and Commerce International, 5 as well as to numerous smaller scandals involving the arming of dictatorships and of US-favoured guerrilla movements in the Third World. In 1997, Thai authorities issued an international warrant for his arrest, in connection with the near collapse of the Bangkok Bank of Commerce Khashoggi was wanted on charges of falsifying documents and embezzling $77 million. 6|
Recently, Rakesh Saxena, an acquaintance of Khashoggi and a former adviser to the Bangkok Bank, has been fighting his extradition in Canada. While being ‘the most wanted man in Thailand’ according to Asiaweek,7 Saxena financed the $10 million consignment of arms that were sent to UN-embargoed Sierra Leone by the British private military company Sandline International, causing considerable embarrassment to the British government. 8
Another acquaintance of Khashoggi is the Syrian dealer Monzer Al-Kassar, described by the US Drug Enforcement Administration as one of the most important figures in the international drug trade. The US Senate investigation on the BCCI Affairs refers to Al-Kassar as a ‘Syrian drug trafficker, terrorist and arms trafficker’.9Al-Kassar was under investigation in Switzerland for violating the arms embargo on Croatia and Bosnia-Herzegovina. 10 He was involved in the ‘Irangate’ affair 11 and in the sale of weapons to Libya in 1983, was sought by Interpol for swapping weapons supplied by the Italian mafia for drugs in 1977, and was suspected of supplying weapons to the commando group that hijacked the Achille Lauro in 1985. 12 He was also named as a suspect in the terrorist attack on the passenger jet over Lockerbie. 13 Recently, he was named in political scandals involving the president of Argentina 14 and the mayor of the coastal resort of Marbella in Spain, where Al-Kassar – the ‘Prince of Marbella’–owned a large residence. 15
Already in the early years of the Cold War, intelligence services started using complex arrangements involving private airlines for clandestine weapons shipments to disguise their operations. In time, independent arms brokers and shippers simply copied these techniques, especially as the Cold War began to wane and former officers joined the private security markets. Air America, one of the biggest private airlines in the 1960s, was secretly owned by the US Central Intelligence Agency to camouflage its clandestine missions in Laos, Vietnam and Cambodia.16 Other such airlines served the hidden agendas of the colonial powers during the wars of independence in Africa. Many of the pilots from the Western war effort in Indochina in the 1960s later supplied the
favoured regimes and opposition groups in Central America, Africa, South Asia or the Middle East during the 1980s.
In 1998, the CIA released a report on the agency’s policy towards the US-backed Contra guerrillas in Nicaragua.17 It revealed that at least ten privately operated airlines and crews were involved. The final report of the Walsh Commission investigating the Iran-Contra affair also listed a few of the cargo companies involved in clandestine missions. 18 The CIA also used privately operated aircraft to arm UNITA in Angola. It was almost inevitable that, over the years, many of the pilots and operators of these secret missions would turn to business in the private sector and would simply apply the same tricks of the trade independently, wherever they could earn more money.
The former Soviet Union was long believed to be less reliant on brokers and private players, but this was not always true. Al-Kassar was as well connected in the Warsaw Pact countries as he was in NATO and allied countries. As soon as the Berlin Wall came down, more light was shed on the private networks used by Moscow and its satellites. In December 1989, angry East German citizens accompanied by TV camera crews stormed a highly guarded site near Rostock and uncovered a huge secret arms and ammunition depot.19 The depot had been under control of IMES GmbH, a little-known East German state company that was run by East Germany’s deputy foreign trade minister, Alexander Schalck-Golodkowski.
The East German company had been a key part of an international smuggling network with secret bank accounts and shell companies in West Germany, Switzerland and Liechtenstein. The IMES company name had been exposed in the West back in 1985, when Swedish customs officials started investigating the activities of the ‘munitions cartel’ mentioned in the first section of this chapter. Some years later, Western intelligence agencies, including the US Iran-Contra arms and money networks, used IMES and the East German structure for secret weapons supplies to guerrilla movements in Central America.20 Schalck-Golodkowski had reportedly been involved in a massive, decade-long smuggling operation of weapons, antiques and even drugs. 21 He was, however, only charged with the illicit import of military and dual-use items into East Germany between 1986 and 1989 and with the embezzlement of rather small amounts of foreign currency. He was sentenced to one year’s imprisonment in January 1996, and to 16 months’ imprisonment in 1997, respectively. 22 In April 1999, a higher court acquitted him on the latter of the two charges. 23
In Britain, David Stirling, founder of the Special Air Service (SAS), set up a company in 1967 called Watchguard, to ‘tackle really important military objectives which couldn’t be tackled officially because of questions in the House of Commons’.24 It was registered on the island of Guernsey. He took his inspiration from Airwork Ltd, a subsidiary of the British Commonwealth Shipping Company. Airwork was a private airline, specializing in aircraft maintenance, pilot training and defence procurement and training. Between 1936 and 1954, Airwork trained some 35,000 air crew. By the 1980s it was employing 3,000 specialists, mostly on work for the UK Ministry of
Defence, and it had ferried special force personnel to trouble-spots in the Middle East, West Africa and Malaya. Its anonymous charter flights and use of different names and uniforms sometimes appeared in the media. Airwork also specialized in the ‘purchase of defence systems and the formulation of national defence policies’ in Commonwealth countries.25 It was also accused of sanctions-busting operations in white-ruled southern Africa, providing 400 British nationals to do maintenance work for the Rhodesian air force in the late 1960s. 26
By 1976, when Watchguard closed, the company was known in SAS circles as ‘Plan-a-War’. Clandestine UK arms supply operations could also be subcontracted to a range of companies with SAS links. One was KMS Ltd., which was contracted by the Foreign and Commonwealth Office. In the wake of the ‘Irangate’ Tower Report, the
London Daily News commented: ‘KMS is no ordinary security company.’ According to White House documents and Congressional Hearings, it ‘had a contract to supply air crews to fly arms to Nicaragua.’27 Other companies were Thor Security Systems and J. Donne Holdings, both specializing in brokering and delivering supplies of military and security equipment. The first managing director of Thor, established in 1976, was also a director of the Royal Ordnance Corporation, one of Britain’s major arms and ammunition manufacturers. These UK companies set the scene for today’s ‘private military companies’ like Sandline International and Executive Outcomes.
The French Connection
Throughout the Cold War, French authorities made extensive use of business networks in the former French colonies to transfer arms secretly. As the only world power with a permanent military presence in several ‘independent’ African countries, successive governments in France kept a close eye on the arms supply and military support of its preferred heads of state.
When discretion was needed in supplying political clients, the private networks of Jacques Foccart and the influential lobbies and private intelligence structures of oil companies or French commodity traders could be activated. They tried to make sure developments in the newly independent states would stay in line with the interests of the former colonial power.28 Until his death in 1997, Foccart, the mysterious architect and broker of French Africa policy since de Gaulle, maintained an obscure web of former intelligence and military experts for this purpose. These were people, often recruited from the French Foreign Legion or veterans of the de-colonization war in
Algeria, who could be activated at any time.29 Usually when the interests of Paris or the French business community in Africa were at stake, clandestine weapons shipments, the secret backing of unpopular leaders or the recruitment of mercenaries could all be arranged through a convenient and quasi-private network.
In May 1999 one of the world’s most notorious mercenaries, Bob Denard, stood trial for his alleged involvement in the assassination of the president of the Comoros in 1989.30 Denard, who had been involved in numerous operations and coup attempts all over Africa, had mostly acted with the blessing of Foccart and, discreetly, of the French presidency, according to his version of the facts. 31 In recent years, French
brokers, or decommissioned special force officers, have acted more independently and have incorporated themselves, competing with US, British, Portuguese, South African, Israeli or Russian private military-supply networks. The recent allegations involving the oil giant Elf Aquitaine’s brokering role in several major weapons transactions in France only add another chapter to the long list of scandals.32
Another spectacular case came before a Paris court in 1998 when a Portuguese arms dealer – with a company registered in Britain – was seeking payment of $3 million for his role in a sanctions-busting transaction to South Africa during the apartheid era. He claimed to have brokered the sale of military helicopters to the Pretoria regime from French arms producer Aerospatiale, involving the Portuguese aerospace producer Ogma and Armscor, the state arms company in South Africa. The Portuguese dealer said he had arranged the smuggling of crates of helicopter engines and rotors from France, via Portugal, to embargoed South Africa in 1989, but had never received his 10% commission.33 Such networks spawned a generation of South African arms
brokers who have plied their trade in Africa and beyond.
Small Arms and Mr Cummings
At the low-tech level of arms brokering, the international trade was long dominated by a US- and British-based trading company, the International Armament Corporation, better known as Interarms. The sole owner of the company, Samuel Cummings, was a former CIA agent who used his connections to run the operations from the time he set up the company in the USA in 1953 until his death in April 1998.34
Cummings began brokering private arms deals, buying and selling small arms at the age of 26. He later started subsidiaries in the UK, Canada and elsewhere. He made his first millions by buying surplus weapons left over from World War II in Europe and shipping them to the newly independent states of Africa, Latin America and the Far East. By 1960 Cummings was the most important private arms dealer in the world, boasting he could arm, within 24 hours, half a million men. Between 1953 and 1968, he bought more than 4.5 million guns and 500 million rounds of ammunition from European stocks. Most of his clients were Third World governments; he developed personal friendships with numerous dictators and heads of state, generating a turnover estimated at US $80 million each year from buying and selling pistols, rifles, sub-
machine guns and hand grenades.
Cummings was prepared to sell to anyone. He claimed never to have broken the laws of the USA and the UK, where his headquarters were based – which itself is an indication of how loose the laws have been. He was caught only once for breaking an
embargo, when he brokered a deal for Pakistan in 1965. The shells were flown from West Germany to Iran and then sent to Pakistan ‘for repair’.35
In 1968, the US government passed the 1968 Gun Control Act prohibiting the importation of military weapons. Anticipating the ban before it went into effect, Interarms went on a global buying spree that enabled Cummings to keep his US operations thriving for many years. When the ban finally came into effect, Cummings had some 700,000 small arms stored in his warehouses in Alexandria, Virginia. Interarms also supplied the massive American sports shooting market. Among Cummings’ most profitable deals were the US franchises for Uzi sub-machine guns, and pistol sales for the Walther company in Germany. In the 1980s, the US Customs Service conducted a probe into the way in which the Walther pistols were being marketed, but all charges were eventually dropped36
Changing Old Assumptions
The increasing globalization of trade and electronic info-commerce make it easier than ever for experienced arms dealers and operators to circumvent national arms control systems and to exploit the weakest links in a fragile international regulatory chain. Globalization has enabled the aviation industry to move away from traditional public ownership and regulation. Cross-border mergers between airlines, marketing alliances, leasing, chartering, franchising and offshore registration of fleets, crews and companies all make it very difficult to monitor and regulate the airspace and freighting
industry. Brokers and shipping agents have become skilled exploiters of these new market realities.
The news media and public are also increasingly aware that arms – especially small arms and light weapons – are being allowed to fall into the hands of violent criminal gangs, as well as unauthorized, unaccountable, untrained, and irresponsible soldiers and police. TV and radio broadcasts all too often recount horrific atrocities and
preventable abuse carried out with small arms. As a result, nongovernmental humanitarian and other organizations working in the field are calling out, more frequently and vociferously, that loopholes in arms control systems and arms embargo regulations must be closed without delay. Some governments have acknowledged that they need to take pro-active steps to provide a more effective regulatory system, but the majority still hesitate to rein in the arms brokers and their shipping agents.
When challenged, several powerful Western governments have retorted that these loopholes are not their problem – because arms export cargoes ‘should’ be checked and approved by the authorities in the sending country as well as by authorities in the territory of trans-shipment or transit, and finally in the recipient country. However,
officials do acknowledge that, in the real world, senders and recipients of arms in countries chosen for business by unscrupulous brokers may turn out to be corrupt
officials, or regimes that grossly violate human rights, or even armed opposition or criminal groups.
It is increasingly recognized that the real economic cost to arms-exporting countries of such activities can be measured in terms of lost export markets, lost opportunities for new productive investment abroad by civilian companies, and squandered development and relief assistance. This loss of potential income is massive compared to the very small income accruing from sales of cheap arms, much of it regarded as surplus. The World Bank estimated that armed conflict in Africa was responsible for poverty of at least 250 million people – nearly half the population of the continent.37 This phenomenon is replicated, to a lesser degree, in other regions that also face chronic
problems of economic underdevelopment, armed conflict and violent crime.
Perhaps the worst-affected region has been Central Africa, from Burundi, Rwanda and Uganda across the Democratic Republic of Congo, to Angola and the Congo Republic (Brazzaville). Arms trafficking and direct military intervention in this region have become interlinked with those in neighbouring regions, including the Horn of Africa, Southern Africa and West Africa. Governments and armed opposition groups there bear responsibility for targeting civilians through acts of reprisal killing, arbitrary
arrest, abduction and torture. The most common weapons used in these crimes are small arms and associated equipment such as air and road military transport vehicles. Over the past five years, these items have flowed to the perpetrators of international crimes in Central Africa from over 20 member-states of the Organization for Security and Co-operation in Europe (OSCE), as well as from certain other states, such as China, Israel and South Africa.38 Recent arms and equipment supplies have occurred in disregard of appeals by the governments of the European Union (EU) and EU
Associated Countries, Canada and the USA, as well as international humanitarian and human rights organizations. Arms brokers and their associates have arranged the
supply of much of this military equipment, as some of the evidence presented in the following chapters will testify.
With the end of the Cold War, the role of arms brokers and trafficking agents in the market has been rapidly changing. The cases in this study describe this shift, and show that arms brokers and trafficking agents are increasingly:
businessmen with military and security backgrounds and contacts;
motivated by economic gain rather than strategic political considerations;
able to use loopholes and enclaves of weak regulation between national legal systems to conduct ‘legal’ but often unethical business via third countries;
able to use agents and techniques developed in the modern international transport industry to conduct covert deliveries to sensitive destinations;
able to arrange complex international banking transactions and company formations in many countries, including the use of tax havens;
able to locate sources of cheap, easily-transportable arms for desperate customers in areas of violent conflict willing to pay much higher prices;
reliant on personal contacts and networks more than corporate identities;
thriving on corruptible officials and weak law enforcement;
tempted in some cases to use fake documentation and bribery which can lead into an involvement with smuggling and organized crime.
The pace of redefining the common interests of the international community so that all states can bring arms brokers and transport agents into a strict national regulatory system is still very slow, when viewed in relation to the humanitarian crises and the growth of organized criminal networks. Officials do acknowledge that controls will have to be harmonized across frontiers, so that the problem is not simply chased away from one country to the next, but too many governments remain stuck in a Cold War mentality. Before such international cooperation can be realized, a great deal more political will needs to be generated. The most powerful states have already declared their support for effective measures to control international arms transfers.39 However, as this study shows, the rhetoric far exceeds the reality.
1 United Nations experts agree: ‘Just as they are key to the legitimate trade, some brokers also service the illicit trade. During the cold war period, brokers often served the Government-sanctioned ‘grey markets’ which provided them with a certain level of legitimacy. With the end of the cold war, their role in the market has changed.’ United Nations, Report of the Group of Experts on the problem of ammunition and explosives, Note by the Secretary-General, A/54/155, 29 June 1999.
2 ‘International Connections of the Bofors Affair’, Swedish Peace and Arbitration Society,
December 1987. Also: Documents and extracts of the Swedish customs investigation, 1985–86 (IPIS archives, Antwerp).
3 On the scandals of the 1970s, including Khashoggi’s early career in the business, see Anthony Sampson, The Arms Bazaar (London: Hodder and Stoughton, 1977). (Published in the USA by Bantam Books, New York, 1978.)
4 Lawrence E. Walsh, Independent Counsel, Final Report of the Independent Counsel for Iran/Contra Matters, volume 1, Investigations and Prosecutions, US Court of Appeals for the District of Columbia Circuit, Washington, DC, 4 August 1993.
5 Senator John Kerry & Senator Hank Brown, The BBCI Affair: A Report to the Committee on Foreign Relations, United States Senate, December 1992 (Section 11, ‘BCCI, The CIA and Foreign Intelligence’).
6 S. Sivararnan & P. Golub, ‘Wild Goose Chase for Khashoggi’, Asia Times News, 17 March 1997.
7 Ian Mulgrew, ‘Thailand’s Most Wanted Man’, Asiaweek, 31 July 1998.
8 Report of the Sierra Leone Arms Investigation (London, Her Majesty’s Stationery Office, 27 July 1998.
9 The BCCI Affair (Section 23, ‘Matters for Further Investigation, Witnesses and Writs’).
10 ‘Lucky Al Kassar’, The Geopoloticial Drug Dispatch, No. 23, September 1993.
11 Final Report of the Independent Counsel for Iran/Contra Matters (see note 4 above).
12 ‘El eterno arrependito’, El Mundo, 21 June 1998; Tim Brown, ‘Police Informer Shot Dead in Spain’, The Daily Telegraph, 22 June 1998.
13 Russel Warren Howe, ‘What if the "Lockerbie Bombers" are Innocent?’, Daily Mail and Guardian, 26 April 1999.
14 ‘Politics-Argentina: Cavallo Links Arms Dealer with Yabra’, IPS, 27 May 1998; ‘Argentina: President Menem’s Scandalous Friendships’, The Geopolitical Drug Dispatch, Number 23, Paris, September 1993 (http://www ogd.org/gb/47AARAA.html).
15 ‘Anticorrupcion vincula a Gil con Al Kassar y la mafia siciliana’, El Pais, 24 June 1997.
16 W. M. Leary, Perilous Missions: Civil Air Transport and CIA Covert Operations in Asia (University of Alabama Press, 1984); F. Lert, Les Ailes de la CIA (‘The Wings of the CIA’) (Paris, Histoire & Collections, 1998).
17 Allegations of Connections between CIA and the Contras in Cocaine Trafficking to the UnitedStates, Report of Investigations, Volume II , The Contra Story, Central Intelligence Agency, Inspector General, 1998 (www.odci.gov/cia/publications/cocaine2/index.html).
18 Final Report of the Independent Counsel for Iran/Contra Matters, Part V, Investigations and Cases: the Flow of Funds and the Private Operatives (Washington, DC, 4 August 1993).
19 Andreas von Bulow, Im Namen des Staates: CIA. BND und die kriminellen Machenschaften des Geheimdienste (München: Piper, 1998), p. 624.
20 von Bulow, Im Namen des Staates…
22 Bundesgerichtshof verwirft die Revision von Dr. Schalck-Golodkowski, Pressmitteilung des Bundesgerichtshofs Nr. 47/1997 vom 09.Juli 1997. Urteil vom 09. Juli 1997 - 5 StR 544/96. (Press communiqué of the German Federal Court.)
23 Erfolglose Verfassungsbeschwerde von Dr. Alexander Schalck Golodkowski, Pressemitteilung des Bundesverfassungsgericht Nr. 37 vom 25. März 1999, 2 BvR 1565/97. (Press communiqué of the German Criminal Court.)
24 Quote in Jonathan Bloch & Patrick Fitzgerald, British Intelligence and Covert Action (Dingle, Co. Kerry: Brandon, 1983), p. 46.
25 Bloch & Fitzgerald, p. 51.
26Ibid., p. 185
27 Quoted in Nigel South, Policing for Profit: The Private Security Sector (London: Sage, 1988) pp. 95–96.
28 Roger Faligot & Pascal Krop, La piscine: Les services secrets francais 1944-1984 (Paris: Editions du Seuil, 1985); see also Antoine Glaser & Stephen Smith, Ces Messieurs Afrique, Vol. 1 & 2 (Paris: Calman-Lévy, 1992 for Vol. 1; 1997 for Vol. 2).
29 Douglas Porch, The French Secret Services: A History of French Intelligence from the Dreyfus Affair to the Gulf War (New York: Farrer, Strauss and Giroux, 1995).
30 Marc Pivois, ‘Bob Denard, "le vieux" sur le banc, Libération, 5 May 1999; David Defresne, ‘Bob Denard: les Comores aux assises’, Libération, 4 May 1999; Parc Pivois, ‘Bob Denard acquitté’, Libération, 20 May 1999.
31 Bob Denard, Corsaire de la République (Paris: Editions Robert Lafont, 1998).
32 Hervé Gattegno, ‘Un lien est établi entre l’affaire Elf et la vente par Thomson de frégates à Taiwan’, Le Monde, 5 December 1997; ‘France/Elf – Devier-Joncour accuse Dumas’, Reuters, 4 March 1999; Cécile Prieur, ‘La Suisse justifie son refus d’extrader l’ancien président d’Elf International’, Le Monde, 13 March 1998; Hervé Gattegno, ‘Affaire Elf: le labyrinthe des comptes suisses de Mme Devier-Joncours’, Le Monde, 7 March 1998.
33 Jose Vegar, ‘Stiffed Arms Merchant Sues’, The Bulletin of the Atomic Scientists, vol. 53, no. 6, November/December 1997.
34 J. Y. Smith, ‘Arms Dealer Samuel Cummings Dies’, The Washington Post, 2 May 1998.
35 Patrick Brogan & Albert Zarca, Deadly Business: Sam Cummings. Interarms and the Arms Trade (New York: W.W. Norton, 1984).
36 J.Y. Smith, ‘Arms Dealer…’.
37 World Bank News, Washington, DC, 18 July 1996.
38 National Security News Service briefing for journalists, May 1998; selected publications on Central Africa by Amnesty International and Human Rights Watch.
39 Principles underlying the arms control policies of most states have been set out in the 1996 UN Guidelines on Conventional Arms Exports, the 1993 OSCE Principles Governing Conventional Arms Transfers and in the 1991-2 European Union Criteria on Arms Exports, now elaborated in the 1998 EU Code of Conduct on Arms Exports. The 1996 UN Guidelines commit all members of the United Nations to establish: ‘an adequate body of laws and administrative machinery for regulating and monitoring effectively their transfer of arms, to strengthen and adopt strict measures for enforcement, and to co-operate at the international, regional and sub-regional levels to harmonize, where appropriate, relevant laws, regulations and administrative procedures as well as enforcement measures, with the goal of eradicating illicit arms trafficking’ (paragraph 10).
Preface / Acknowledgments / Introduction / Chapter 1 / Chapter 2 / Chapter 3 / Chapter 4 / Chapter 5 / Chapter 6 / Chapter 7 / Chapter 8 / Chapter 9 / Chapter 10 / Chapter 11