December 18, 2004
www.LATimes.com Warning on Russian Didn't Reach Defense Staff
State Department sent out a list of firms tied to Viktor Bout, but word didn't get to the military.
By Stephen Braun and Judy Pasternak, Times Staff Writers
WASHINGTON - The State Department circulated a list of nine air companies linked to reputed arms trafficker Victor Bout in June, warning diplomatic posts against hiring the firms. But the Defense Department, which oversees most of the massive military contracts in Iraq, made no similar effort to warn its agencies, officials said Friday.
Planes flown by four firms suspected of ties to the Russian businessman's aviation network landed in Baghdad at least 195 times over the last year, government documents show. The flights operated under military contracts. Defense officials took action against two of the firms in August, but freighters owned by those firms still flew into Iraq as late as November under contracts with other defense agencies, U.S. officials and an executive of one of the firms said.
The State Department list was the only known action taken by a U.S. government agency to warn contracting officials against using specific air cargo firms tied to Bout. Critics asked why the Defense Department had not circulated its own list and expressed concern about an apparent lack of coordination between the State and Defense departments.
The Treasury Department, meanwhile, publicly targeted Bout in July by ordering his assets frozen, but did not name any of his companies.
Bout's aviation network has been accused by United Nations and U.S. officials of arms embargo violations in Africa and also reportedly aided the Taliban in Afghanistan.
Defense moved against suspected Bout firms Air Bas and British Gulf International in August, rescinding government credentials they had used to obtain fuel at military installations in Iraq. In September, the Air Force pressed Federal Express to stop using Air Bas for cargo flights, and it agreed.
Bout, contacted by phone this week in Moscow, declined to respond in detail to questions about his relations with the firms.
"You are not dealing with facts. You are dealing with allegations," he said.
Senior State Department officials and spokesman Jay Greer declined to comment on the warning list circulated in June. But other U.S. officials confirmed its contents.
U.S. officials said the list was compiled by the State Department's Bureau of Economic and Business Affairs and the Treasury Department's Office of Foreign Assets Control, then cabled to State's "procurement executives" in diplomatic posts around the world.
The officials said they did not know whether State had offered its list to other agencies, but added that Defense could easily have devised its own by drawing from internal intelligence and information from other agencies.
"There was a lot floating around on these companies," one official said.
Former officials of the U.S.-led Coalition Provisional Authority, which governed Iraq until this summer, told The Times they did not see any list of air firms suspected of ties to Bout until May. The CIA had raised suspicion about the flights six months earlier.
The State Department made the decision to circulate its warning list after Deputy Secretary of State Richard L. Armitage and Deputy Secretary of Defense Paul D. Wolfowitz were questioned about possible dealings with Bout firms by Sen. Russell D. Feingold (D-Wis.) during a May 18 hearing of the Senate Foreign Relations Committee.
A State official acknowledged to Feingold in a letter two weeks later that the department had "inadvertently" contracted with "air charter services believed to be connected with . Bout."
Wolfowitz did not answer Feingold's questions until November, when he confirmed the use of suspected Bout air firms in a classified response, sources said.
Feingold said this week that the "apparent lack of Defense supervision over its subcontractors is a real concern."
Lee Wolosky, a former White House National Security official who tracked Bout for the Clinton and current Bush administrations, said the fact that the Pentagon had not devised "an integrated watch list speaks to a lack of communication within the government."
In addition to Air Bas and Irbis, the State Department's warning list named seven suspected Bout-linked firms and cited Bout and three of his aides. Air Bas and Irbis have been cited in U.N. reports as "fronts" for Bout's arms transport network. The list also names Air Cess, a United Arab Emirates firm that operated out of the office that now houses Air Bas. The Times reported in 2002 that Air Cess was one of several suspected Bout-linked firms that supplied cargo planes to the Taliban.
Government records show that Air Bas and Irbis flew for the Air Force, Army and Army Corps of Engineers, as well as Federal Express and KBR, the latter as late as October. KBR is a subsidiary of Halliburton Co. The State warning list also named Jetline, an air firm that flew for KBR and also ferried armored cars into Iraq for the British government.
The State list did not mention British Gulf International, which had come under scrutiny by the CPA.
There is no evidence that any firms on the State list other than Air Bas, Irbis and Jetline have operated flights into Iraq.
At least one charter subcontractor who hired Air Bas planes at $60,000 per flight complained Friday that the U.S. had failed to provide proper guidance. Dinu Kabiwar, manager of Frames International Travel in Middlesex, Britain, said he had hired Air Bas "three or four times" to fly personnel from Bombay, India, to Baghdad for KEC International, an Indian power company working for the U.S. Army Corps of Engineers.
"They should have stipulated in any contract not to use these Russians," Kabiwar said.
(Page was found through Douglas Farah's blog)
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