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Corruption Watch: April 14, 2003

14 April 2003, Volume 3, Number 12
By Roman Kupchinsky

In September 1990, a United Nations arms embargo was imposed on the regime of Iraqi President Saddam Hussein. By denying him new weapons and the means to modernize and service the weapons he already had, the UN intended to prevent him from carrying out acts of aggression against other countries and his own population.

Almost as soon as those sanctions went into effect, the Iraqi regime went shopping for arms. It did not go to the Arab world, which saw Hussein as a pariah and would not supply his needs, but to his old supplier, the former Soviet bloc. Hussein's agents and arms buyers had numerous contacts in this part of the world, and both sides shared two traits: a love of money and a hatred for the United States.

Iraqi delegations soon began arriving in the capitals of former communist countries, where huge stores of weapons were lying unguarded in massive stockpiles waiting to be sold on a "first come, first served" basis. The Bulgarians held some $800 million worth of arms in such stockpiles, according to a report by Human Rights Watch in April 1999 ( Impoverished military personnel did not necessarily concern themselves with trivial matters like sanctions.

In Bulgaria, a country with an advanced arms industry, Iraqis rapidly began purchasing what they wanted. In 1992, they bought $15 million worth of arms from the Bulgarian company Kintex on the basis of false end-user certificates, according to "Forbes" magazine of 10 May 1993. Portuguese arms trader Jose Saldanha was quoted in the same article as saying, "They don't give a shit about embargoes and will sell anywhere."

In 1995 and 1996, Kintex shipped 20 Mi-24 Hind attack helicopters to Iraq in containers, according to "Forbes" of 10 May 1993. The Hinds had been purchased in either Russia or Ukraine. According to "The Moscow Times" of 27 March, the CEO of the Mil Moscow Helicopter Plant in 1997 told Russian journalist Pavel Felgenhauer that he had sent technicians from Moscow to Baghdad in 1996 to assemble the Hinds and prepare them for operation.

"The Chicago Tribune" of 3 April 2003 reported: "In 1995 authorities in Jordan intercepted 30 crates of 115 Russian-made gyroscopes removed from long-range missiles and being shipped from Russia to Karama, Iraq's missile development center, according to 1997 congressional testimony from the Nonproliferation Policy Education Center.

"Russia at first denied involvement but then told the State Department that it could not determine who made the shipment."

On 11 November 1997, "The Washington Times" reported that Iraq was aiming to buy the Tamara stealth-detecting radar system from the Czech Republic by working with Bulgarian arms traders who were in league with Czech Defense Ministry officials. The deal was halted under U.S. pressure on the Czech Republic. Three years later, Iraqi intelligence approached the Ukrainian arms trading company UkrSpetzExport during an arms exhibition in Amman, Jordan, to buy a similar but reportedly improved item, a Ukrainian-made Kolchuga radar, also with anti-stealth capabilities. Covert tape recordings suggest that Ukrainian President Leonid Kuchma approved the sale as a covert operation, but Kuchma denies that the Kolchuga was ever shipped to Iraq.

The Kolchuga was not the only military item the Ukrainians had that interested Iraq. Numerous documents found in Iraq by UN weapons inspectors point to numerous items for which delivery contracts had been signed between Ukrainian firms and Iraq, including gyroscopes for missile-guidance systems. According to an article in "Commentary" magazine on July/August 2001 by Gary Milhollin and Kelly Motz, Ukrainian involvement in the arms trade with Iraq goes back to 1993.

In the current conflict in Iraq, the U.S.-based magazine "Newsweek" reported on 31 March that Iraqi forces used Russian-made Kornet missiles to destroy two U.S. Abrams tanks, citing unnamed Pentagon officials who claimed that "Ukrainian arms dealers" sent some 500 Kornets to Baghdad in January. Those charges were vehemently denied by Ukrainian authorities, who claimed it was impossible for anything of the sort to get past Ukrainian export controls.

Russian officials, including military strategist Colonel General Leonid Ivashov, who has been highly critical of the West in the past, denied U.S. allegations that Russia sold any of its missiles to Iraq, and a spokesman for the Tula factory that manufactures the missile told ORT television in Russia, "None of our products are in Iraq; otherwise, coalition losses would be much higher."

The former Soviet republic of Belarus, ruled by President Alyaksandr Lukashenka, is another major supplier of arms to Iraq. Belarus acts as a direct supplier, a training ground for Iraqi personnel, and a surrogate dealer for Russian weapons.

According to "Jane's Intelligence Digest" of 28 March, Lebanese intelligence officers in January were tipped off by their Western counterparts that a large consignment of innocently labeled cargo at Beirut airport that had arrived from Belarus in fact contained military equipment. The 12 tons of equipment subsequently discovered included 600 helmets, army uniforms, 240 wireless-communication sets for tank crews, and other military items that had arrived aboard a flight from Minsk on 12 January (see "Jane's Intelligence Digest," 12 January 2003). Investigations revealed that the military equipment was destined for Iraq and was being shipped via Syrian middlemen. Belarusian officials denied that the material had originated in Belarus but accepted that Minsk, like Syria, might have served as a transit country. Lukashenka, Russia's closest ally in the Commonwealth of Independent States, described the Lebanese accusations as "thoughtless and senseless statements."

The former chairman of the Belarusian Supreme Soviet, Stanislau Shushkevich, wrote in the "Narodnaya Volya" newspaper (No. 55) that Belarus is not selling arms directly but is being used by Russia as a channel for arms sales to Iraq because "Belarus does not have and cannot have such weapons in sufficient quantities."

Russian arms sales to Iraq were vehemently denied by Russian officials after U.S. accusations in March that Russian companies sold GPS jamming devices to the Iraqis. But those allegations are not new. The "Financial Times" on 8 February reported that Russian suppliers attempted to sell Igla surface-to-air missiles to Iraq through cover purchases in neighboring countries such as Syria. On 23 February, "The Sacramento Bee" reported that Russian-made S-300P missiles had been sold to Iraq by a Russian-Belarusian company. Accusations in "The Moscow Times" of 27 March that Moscow sold Kornet guided, antitank missiles to Iraq using Yemen as a false end user, all might seem credible in this context.

The seeming pattern of Russian sales and deliveries to Iraq suggest a vast covert operation might have been undertaken by the Russian intelligence service to supply Saddam Hussein. Utilizing criminal arms dealers, fake end-user certificates, and Belarusians and Ukrainians as surrogates, Russia seems to have been a major supplier of arms to Iraq for over a decade.

It is no simple task to sell large quantities of weapons to Iraq. These items must be shipped to a third country, clear customs, and then be transported to Iraq. In order for such schemes to work, considerable bribes need to be dished out, and an organization needs to be in place to arrange secure transportation. Without the help of the Iraqi intelligence service, the Mukhabbarat, the undertaking might seem all but impossible. In those cases, the Russian intelligence service might have covertly lent a hand to arms dealers. This, after all, was the intended plan for getting the Ukrainian radars to Iraq �-using the intelligence service, which could bypass export-control mechanisms and arrange for the secure shipment to Iraq.

Gulbuddin Hekmatyar, a former leader in the war against the Soviet occupation of Afghanistan who reportedly received much of his support from the United States during that struggle, has recently re-emerged at the head of a new anti-Western coalition comprising remnants of Al-Qaeda and the Taliban. According to the 1 April edition of "The Boston Globe," Hekmatyar is responsible for a number of attacks on Western targets in Afghanistan, including "the first-ever direct hit on a base of the UN-mandated security force in Kabul Sunday [31 March]; a brazen daylight ambush that killed two U.S. servicemen Saturday [30 March]; and the execution of a foreign Red Cross worker Thursday [28 March]."

According to "The Boston Globe" account, Hekmatyar has established some 15-30 mobile training camps in tribal areas of eastern and southern Afghanistan near the Pakistani border. He is reportedly being supplied with arms from stockpiles hidden by the Taliban prior to their defeat by Western forces.

German Lieutenant Colonel Thomas Lobbering, spokesman for the German- and Dutch-led International Security Assistance Force (ISAF), told "The Boston Globe" in an interview: "The Taliban and Al-Qaeda are no longer capable of acting in a military sense'' of forming battalions and conducting maneuvers, ''but Hekmatyar obviously has the money, influence, political will, and power to reorganize these elements."

"The Boston Globe" quoted from an interview that Hekmatyar gave to a Pakistani newspaper, "The Friday Times," in which he denied having formed an alliance with Osama bin Laden or with former Taliban leader Mullah Mohammad Omar, but said he admired and welcomed them "to join us in our struggle.... Our strength is increasing at an encouraging rate, and we are more than capable of making life hell for America."

General Din Mohammad Jurat, chief of security for the Afghan Interior Ministry, gave "The Boston Globe" the following description of Hekmatyar: Hekmatyar was a "potentially more effective mobilizer of anti-Western forces, thanks to his association with radical elements and Pakistan's intelligence agency dating to the mid-1970s, long before the Taliban and Al-Qaeda were born." RK

The Bosnian Serb member of the tripartite Bosnian Presidency, Mirko Sarovic, was forced to resign after having failed to prevent weapons sales to Baghdad, "The Times" of London reported on 3 April. According to "The Times," "Sarovic is also alleged to have turned a blind eye to illegal spying activities carried out by the Bosnian Serb military intelligence on members of the international community, NATO forces and on state institutions in Bosnia." In September 2001, NATO forces raided the Orao aircraft plant in the Bosnian Serb town of Bijeljina. There they found evidence that the company, which has close ties to the Bosnian Serb military, had been supplying spare parts for Iraqi fighter jets and had been sending technicians to Baghdad. Most of the effort was conducted through a Belgrade-based arms-trading company, Yugoimport. RK

The trial of the former secretary-general at the Czech Foreign Ministry, Karel Srba, began on 18 March in the southern city of Ceske Budejovice. Srba is accused of hiring a contract killer to murder investigative reporter Sabina Slonkova. According to previous reports in the Czech press, Srba wought to murder Slonkova for her exposure in the newspaper "Mlada Fronta Dnes" of a dubious real-estate deal in Moscow that led to Srba's resignation. The alleged murder plot failed after the would-be hired killer, Karel Rziepel, went to the police with the story. When police arrested Srba at his home in July, they found 30 million crowns ($1.35 million), two handguns, and a photo of Slonkova with the word "liquidate" scrawled on the back. Srba's lawyers have blamed the whole affair on a vindictive acquaintance and suggested that powerful political enemies are to blame for what they call an elaborate frame-up.

Srba was appointed secretary general of the Foreign Ministry in 1999 by then-Foreign Minister Jan Kavan, who currently is presiding over the 57th session of the UN General Assembly. Srba's jobs included implementation of the Social Democratic government's "Clean Hands" anticorruption program within the ministry.

The scandal that Slonkova had exposed -- and which implicated Srba -- concerned the ministry's leasing out of a 10-story building in downtown Moscow known as "Cesky Dum." A contract negotiated by Srba leased the structure at far below market value, effectively costing the Czech government 100 million crowns ($3 million) in lost revenue, according to a number of estimates. As part of the contract, the tenants were allowed to import goods into Russia duty-free.

According to the 26 March edition of "The Prague Post," one of the witnesses who appeared at the trial, Eva Tomsovicova, told the court that Srba "asked me if it were possible not to beat her up but to shut her up."

Srba testified at the trial: "I have never prepared a murder, and I have never made an attempt on anyone's life," according to the paper. RK

A federal court in New York on 28 March ruled that a $3 billion civil suit filed against Russian Aluminum (Rusal) does not belong in a U.S. court, according to "The New York Times" of 2 April.

"The Moscow Times" of 1 April reported: "The plaintiffs, however, including Deripaska rival Mikhail Zhivilo's company Mikom and offshore metal-trading firms Base Metal Trading and Alucoal Holdings, consider the ruling 'clearly wrong' and will appeal within 30 days, Bruce Marks, Zhivilo's lawyer, said by telephone from Philadelphia."

In 2000, Zhivilo and other plaintiffs filed a claim against Oleg Deripaska and his company, Rusal, and more than a dozen other companies and businessmen under the U.S. Racketeering Influenced and Corrupt Organization Act (RICO). In the claim, Deripaska is accused of fraud, money laundering, extortion, and complicity to murder.

According to "RFE/RL Business Watch" of 8 June 2001: "The Sibirsky Aluminum Group and other defendants filed motions on 31 May to dismiss a $2.7 billion case under...RICO and argued that it should be transferred to Russian courts. The RICO suit alleged criminal acts including murder, extortion, and intimidation to gain control of the assets of an aluminum plant in Russia, called Novokuznetsk Aluminum Zavod (NKAZ).

"In his ruling, U.S. District Court Judge John Koetltl said: 'The plaintiffs' claims involve the bankruptcies of two major Russian companies.... The controversy presents issues that are of clear import to Russian citizens that should be resolved by the Russian courts.... The case has virtually no connection with the United States. As such, the local interest in resolution of the dispute is virtually none.'" RK