Merchant of Death: Money, Guns, Planes, and the Man Who Makes War Possible

by Douglas Farah

  Irbis planes not only flew into Baghdad, they also landed repeatedly in high-security military bases in Iraq that required additional military clearances. Bout’s planes made regular stops at Balad Air Base in northern Iraq, a hub for F-16 fighter planes and the central depot for distributing matériel to U.S. forces across the country, and at Al Asad, a vital Marine Corps air and helicopter facility. At times Irbis planes landed at all three bases on the same day. In one stretch in early May 2004, for example, a single Irbis Antonov An-24 flying in from Dubai made daily stops at the three airfields with FedEx cargo for two days running, then returned to Baghdad on a third day with deliveries for the CPA.16 Even as Irbis’s role in Iraq drew scrutiny, other UAE-based air firms suspected as Bout affiliates were also flying under lucrative Iraq contracts. Two firms already in the sights of U.S. intelligence officials were Jet Line and Aerocom, Moldovan-registered airlines that shared a single address and phone number at Chisinau Airport in Moldova, and also operated flights from the UAE. Jet Line’s general manager, Igor Abadeyev, had acknowledged to Los Angeles Times reporters in April 2002 that he was a longtime acquaintance and former partner of Viktor Bout’s. And American intelligence officials had concluded in the same year that Jet Line was among the “Victor Butt-associated airlines.” At least nine Jet Line planes, including several Ilyushins and Lock-heeds, had been linked to the Bout fleet by intelligence officials. Both Jet Line and Aercom had also leased planes back and forth, and one of Aercom’s Antonov An-26 freighters traced back to Bout’s defunct Centrafricain Airlines.17

  Aerocom appeared to specialize in heavy-duty arms flights. According to an April 2003 report by a Security Council panel of investigators, the airline had carried arms shipments from Serbia to Liberia in 2002 in violation of a UN arms embargo. U.S. intelligence officials quickly concluded that the firm’s sudden appearance in Serbia represented Bout’s effort to get back into the air transport business after his planes were temporarily grounded in Sharjah. “Aerocom is obviously dirty,” one official said.18 By 2004 Aerocom had found new opportunities in Iraq. RAMCC flight records documented a January 20, 2004, flight of a mammoth Aerocom Il-76 to Baghdad carrying forty-four tons of ammunition for the American coalition and the Iraqi Ministry of National Security. The plane had picked up the ammunition from Plovdiv, Bulgaria, an arms transshipment point where Bout-orbit planes had often been spotted in the past. By August, accused of safety lapses, Aerocom was stripped of its flying license by Moldovan aviation authorities. The firm flew on illegally. Later that month, Aerocom played a pivotal part in an unsolved mystery of four missing shipments of ninety-nine tons of Kalashnikovs and other used weapons. The arms, seized in the mid-1990s during the Bosnian conflict and controlled by U.S. authorities, disappeared in August 2004, en route from American military storehouses in Bosnia. According to an Amnesty International investigation, the weapons were destined for the Iraqi Ministry of Defense under a deal authorized by U.S. Defense officials. But the Kalashnikovs allegedly never arrived at their destination. An Aerocom Ilyushin supposedly picked up the Bosnian arms during four stopovers at a U.S. military base in Bosnia. But RAMCC officials could provide no record of the plane’s arrivals in Baghdad. Amnesty International reported that the Ilyushin had been leased to Aerocom by Jet Line.19

  Jet Line, Aerocom’s twin, was also busy in Iraq in early 2004. The airline flew in telecommunications equipment for Siemens in March and April 2004, and carried oil field equipment for KBR in April. Despite being banned from most European airports because of its deafening Ilyushin engines, the airline was also granted a special noise exemption from Britain’s Civil Aviation Authority in March 2004 to fly armored cars into Baghdad and Basra. The airline had been hired by the Department for International Development, Britain’s foreign aid agency—a relationship that was suddenly severed the next month when British officials realized Jet Line was tied into the Bout network. The Blair government acknowledged the flights, but gave no explanation about how an arms dealer who had been publicly castigated as a “merchant of death” had managed to land a military contract. Peter Hain, who had been promoted from the Foreign Ministry to Blair’s cabinet in 2002 as secretary of state for Wales, was silent. “I was gone by then,” he explained recently. He acknowledged that countering Bout’s network required a long-term commitment, one that even the most resourceful governments were reluctant to make. “We need to do much better,” he said.20

  Another suspect UAE air cargo firm that pressed hard for U.S. Defense Department contract work in Iraq was Dolphin Airlines, the latest incarnation of Flying Dolphin, the Sharjah-based company that sold Antonovs to the Taliban in concert with Bout’s Air Cess and that was cited for arms embargo violations by UN investigators. Chris Walker almost banned Dolphin from operating anywhere in Iraq after company officials announced in November 2003 that they were inaugurating the first commercial passenger service into the country. “They wanted to bring in a delegation to meet with the Kurdish National government so they put out this release saying they were going to be the new Iraqi airlines,” Walker recalled. “It was a dinky little charter, but we had to put out a statement correcting their BS. Dolphin stayed in my sights from them on.” But the firm still managed to fly contract runs into Baghdad. By August 2004, Dolphin had joined nearly three dozen air cargo firms on RAMCC’s daily e-mail list—an indication that they had finally won prized American flight contracts.21

  Intelligence officials were also curious about another Sharjah-based airline, British Gulf International. The airline was cleared to fly into Baghdad ninety-two times in early 2004, according to RAMCC files. British Gulf’s ties to Bout were more tenuous than the others, and both UN and American intelligence officials were uncertain how closely they coordinated; some doubted that they had any formal relations. But suspicions remained, fanned by information that UN investigators had learned in the late 1990s about frequent money transfers between British Gulf and San Air General Trading, another formerly active Bout airline.22

  Igor Zhuravlyov, British Gulf’s flight manager, said he knew of the Bout brothers, but insisted he had no face-to-face dealings with them. Still, Zhuravlyov admitted his firm had leased planes to Irbis in early 2004 “because they had only one plane. So we carried stuff for them also on U.S. Defense Department contracts to Iraq and to Afghanistan.” Irbis and many of the Russian air firms in Sharjah, the flight manager insisted, worked for each other on an informal basis that blurred the Iraq contracting chain and made a mockery of the U.S. military’s confidence in its vetting system for contractors and subs. Despite carving out a huge business flying for the American military and its contractors, British Gulf never had a direct U.S. contract. “Sometimes there were three or four companies in the chain which subcontracted to each other,” Zhuravylov said, “before they even gave us the cargo to carry to Iraq.”23

  The haphazard American military scrutiny in Baghdad that allowed Irbis and British Gulf International to fly into and out of Iraq almost at their own initiative also provided the two air cargo firms with unlimited access to American-provided fuel. On their constant routes into and out of Sharjah, the fuel-guzzling Russian planes needed constant replenishment. The only fuel available in Baghdad was stored by the U.S. Air Force. Special fuel permission cards known as “identaplates” were doled out to air firms that flew for the military and private U.S. contractors, but they were supposedly provided only after tough vetting by Defense Department officials.

  The fuel cards were absurdly easy to obtain. British Gulf International won its own identaplates after a chance encounter at Balad Air Base in December 2003. After landing on a cargo run, flight manager Zhuravlyov asked an air force fueler if he could buy kerosene for the return flight to Sharjah. “You can’t buy it, but you can have it free if you do it the right way,” the soldier replied, handing the Russian a blank form. The American explained to Zhuravylov that all he had to do was scrawl basic information on an application and mail it off to the Defense Department. In April 2004
, after mailing the form and filling out more correspondence, Zhuravylov received “a plastic card for each of our planes which allowed us to get military fuel.”

  “This made our business really much more productive,” a bemused Zhuravlyov explained later. “It was really so good, all by the mail. No inspectors, nothing like that. Write a letter, fill a form, get a card.”24

  CHAPTER 14

  Blacklisted and Still Flying

  After Chris Walker’s reluctant decision to allow Viktor Bout’s planes to keep flying into Baghdad, the Bush administration remained mum about the almost daily procession of Antonovs and Ilyushins that flew among Sharjah, Baghdad, and U.S. air bases across Iraq. On May 18, 2004, in a weekly cable to diplomatic posts around the world, the State Department’s public affairs office sent out talking points for diplomats confronted with pesky questions about the Bout plane sightings. The suggested nonanswer was that the United States continued “to support international efforts to end Mr. Bout’s illegal activities.” A firm “no comment” was advised to address “any alleged connections.”1

  Behind the scenes, officials from Washington to Baghdad struggled to account for Bout’s Iraq contracts and contain the damage. Several days after he forwarded his report to Jeffrey Oster, Walker was contacted by a CIA official from headquarters at Langley. The intelligence official messaged that he was seeking to learn anything Walker knew about “airlines/planes associated with Russian arms trafficker Victor Butt.” The CIA man said that “interest here” had been whipped up by the exchange between Feingold and Wolfowitz: “With the above in mind, we are interested in learning the following to better understand the situation there.” The CIA official wanted to know who was tracking commercial flights into and out of Baghdad and what information was kept. And he pointedly asked for any evidence that Irbis (or its alter ego Air Bas), Jet Line, and British Gulf planes “are flying to/within the country.” Walker responded with a detailed list of the information compiled on the Baghdad-bound air firms and their planes.

  Then he vented some bureaucratic spleen. “When it comes to situations like Victor Bout,” Walker replied, “we are not given the intel to determine which airlines are run by alleged ne’er-do-wells. That being said, when we were made aware of the Victor Bout situation... we immediately looked into it. Apparently the U.S. Army did use the services of Air Bas before, and FedEx is presently using one of the planes allegedly tied to the Bout.”

  The CIA official responded with a new revelation. Intelligence officials in Washington had sent a “heads up” about possible Iraq flights by Bout’s air firms to the agency’s Baghdad station in October and November 2003—more than six months before the Financial Times report blew the lid on Bout’s flights into Iraq. The warning was supposed to have been relayed to CPA officials. But “it would appear,” the CIA official wrote, “that it did not make its way to the correct folks.”2

  Walker had heard nothing about the earlier warning. Oster later recalled that he had talked with an unnamed CPA transportation aide who mentioned looking into a suspected Bout flight dating to January 2004. “I recall a little black brief that the shipment in question was not something that the CPA had contracted,” Oster said. “It came through Air Mobility Command. There was so much coming and going at that particular time, it could have been any kind of cargo. The issue was whether the airline or plane was owned by or under control of this guy.” But Oster said he knew nothing about the 2003 warning and could not explain why it had gone unheeded. “Where it went after that, I honestly don’t know,” he said.3 Walker checked through old files to see if the agency’s earlier intelligence warning had been buried in his backlog of paperwork but found nothing. He wanted to wash his hands of the entire matter. But he knew he had not heard the last of it.

  Within days, there were new reports of Bout contracts—this time from within the government itself. On June 2, the State Department replied officially to Feingold’s questions about Bout. Paul V. Kelly, an assistant secretary for legislative affairs, said that a sweep of State contract files had discovered that the department had unwittingly hired Bout planes through freight forwarding firms at least twice in the past, though prior to the Iraq invasion. In response, Kelly said, State vowed to warn overseas posts “to ensure that contracts with freight forwarders preclude any use of entities connected to Bout.” Kelly also insisted that the United States still supported the United Nations’ plans to freeze Bout’s assets as part of Liberia sanctions against Charles Taylor and his associates.

  The United States, it turned out, had never tried to remove Bout from the UN sanctions list, as the Financial Times reported. Johan Peleman had checked with colleagues on the Liberia panel and learned that the United States and Britain had both sent Bout’s name on short lists provided to the UN Secretariat for discussion by the Liberia sanctions committee. “People who had been present in the meetings of the sanctions committee on Liberia assured me that neither the U.K. nor the U.S. had ever raised any questions about Viktor,” Peleman said.4

  The United States had been preparing its own series of sanctions against Bout since March. After gathering investigative string for two years on Bout’s holdings, Andreas Morgner saw the United Nations’ move against the Russian as a defining international one that provided the United States with an opening to finally take legal action against the Bout network. When he first read the tough sanctions language that the Security Council planned to use to freeze Bout’s and Taylor’s assets, Morgner grew excited. “It’s Taylor-made, excuse the pun, to go after Viktor,” he told his superiors at the OFAC. “You could use Liberia as a shoehorn to go after his assets.” He was told: “Go for it.”

  Morgner and a small circle of OFAC attorneys and investigators began building a case against Bout, using the United Nations’ research as Treasury’s legal spine. As they worked, they meticulously charted the tangled corporate structure of the Bout empire. The detailed UN reports on Bout’s role in evading Liberia arms sanctions “got down to specific weapons transactions and that was useful to us as a legal underpinning,” a senior Treasury official recalled.5 Their position was strengthened when a senior State Department attorney ruled that the United States would accept the United Nations’ research on Bout in all of the sanctions reports as definitive fact.6 The “name and shame” campaign doggedly researched by Johan Peleman and his colleagues now buttressed the building U.S. effort to freeze the Bout network’s assets.

  “We couldn’t have replicated what Peleman and the others did, at least not in any reasonable amount of time,” Morgner said. “They had summaries, narratives, and source documents. This was golden. The decision to take the UN documents as fact that we were not going to question was vital.”

  But the rash of reports about the Bout organization’s contract flights into Iraq blindsided the Treasury team and slowed its progress. The Bush administration was on high embarrassment alert, and officials were pressed to figure out the extent of Bout’s contracts and come up with a way to deal with them without ham-stringing the military’s supply lines. “There was definite concern about the Iraq stories,” Morgner recalled. “There was a lot of confusion over who was using him and how much vulnerability there was. We were all working on it urgently, but the underlying tone was that at bottom, it was DoD’s problem.” Top Treasury officials felt the OFAC freeze was still the best and cleanest solution to taking on Bout, but were wary of moving ahead until the Iraq mess was under control. “In an emergency situation like a war, it’s always a calculus to hire those who can get things done,” a senior Treasury official said. “Still,” he added carefully, “it would strike me that other airplane contractors could have been used.”7

  The State Department wasted no time making sure its own house was clean. On June 7, State’s Office of Logistics Management warned overseas posts and dispatch agents against hiring any Bout network firms. The cable was accompanied by a ninety-day suspension of all known Bout firms and top lieutenants. The list named Bout, three ass
ociates, and eight affiliated companies.8 Several State officials urged the department to go even further. They wanted State to place Bout, his associates, and his known air companies on the federal government’s “excluded parties” list. The action would prevent any federal agency from doing business with Bout or the named parties for sixty days. Then, under federal rules, there would be a hearing to determine whether the government could debar Bout permanently from federal contracts.