The Arms Fixers

Ninety percent of all world trade is maritime trade, and considerable quantities of arms are ferried by sea.¹ If an illegal shipment is found, it can reveal a lot about international brokering networks – but the sheer quantity of cargo makes checking very difficult. To varying degrees, all countries are faced with the
enforcement problem: lack of resources for customs officials at ports to check paperwork sufficiently against cargo, and for port authorities to ensure that safety rules are
followed. Resources are very limited, and investigating suspected cargoes and traffickers using ever-more circuitous routes requires a great deal of time and effort.

At the busiest US port, Long Beach in California, an average of 8,400 cargo containers in the port area could be checked every day – but US Customs has fewer than 135 inspectors there. It was therefore almost by accident that, in March 1997, federal agents at the US–Mexico border opened two suspect sealed containers from Long Beach, and this led them to the largest illicit arms shipment ever intercepted en route from the USA to Mexico.² The arms, including M-2 automatic rifles, had originally been left behind in Vietnam by the US armed forces. They had been shipped from Ho Chi Minh City to Singapore, then to Bremerhaven in Germany, through the Panama Canal and up to Long Beach for transit to Mexico. The Mexican freight forwarder commissioned to take the containers to Mexico City could not produce an address for the purchaser when asked. According to a customs official, ‘in the normal course of business, no one would have ever opened them. [The arms] were discovered through a fluke.’³ Containers in transit or ‘in bond’ are normally never touched.

As US Customs senior special agent James McShane said: ‘The biggest problem that existed for years was that of being able to identify an illegal shipment. I don't necessarily mean the obvious scenarios, like five handguns discovered in a suitcase being carried to another country. I am referring to the shipments of hundreds of weapons with legal or quasi-legal documentation giving them an appearance of legitimacy.’⁴ Experienced and unscrupulous brokers and shippers can create the appearance of
legitimacy by using complexity, as well as by unsuspected methods at sea. The transcript of the digital diary of a Belgian-Hungarian broker shows the name and number of a certain colonel (‘Kemal’) who is said to specialize in cargo helicopter deliveries on the open sea.

It is not only aircraft operators who can hide or camouflage their logos and airline name. Several shipowners or crews are also known to have changed the name of the vessel on the open sea. In 1993, an international warrant was issued for a cargo of arms aboard a vessel registered in Greece. While authorities were searching for a ship called the Maria, the ship’s name had been illegally changed to Malo. The Malo was finally held in the Indian Ocean by the Seychelles authorities.⁵

Another vessel shipping 38,000 high-explosive mortar grenades to apartheid South Africa in 1985, in breach of the arms embargo, was actually sold on the open seas to a new owner. The new shipowner was an agent of the former one, but the original owner could apparently no longer be held accountable for the illegal cargo. In this case, the ship’s name Otter had been changed to Reef Moon by the time it arrived in the port of Durban.⁶

Indian Ocean and the Sea Pigeons

On 23 May 1997, a ship was reported as having left the Mozambican port of Beira supposedly en route to Colombo, Sri Lanka, with a cargo of 32,000 mortar shells from Zimbabwe Defence Industries (ZDI). The deal seemed at first to be brokered for the Sri Lankan government and ZDI by an Israeli, Ben Tsouk, and his company, LBG Military Supplies of Israel. However, the mortars never arrived, and the Sri Lankan government was mystified. A fax then arrived at the US embassy in Colombo, claiming to be from the Tamil Tigers (LTTE) and saying that the ship and its cargo had been hijacked on 11 July 1997.⁷ But the fax did not have the usual tell-tale signs of Tigers communiqués. Subsequent intelligence investigations in Sri Lanka began to
reveal another story.⁸

The Israeli broker, Tsouk, denied that he was involved in the sea hijacking, but ZDI officials say that he sent a fax to report that he had checked the loading of the mortars into containers. His fax says that the mortars were loaded not in Mozambique but at the port of Rijeka in Croatia.⁹ ZDI assumed that the Sri Lankan government had sent a ship to collect the munitions, but the company now alleges that they were loaded onto a ship called the Limassol, one of the Tamil Tigers’ sea freighters.¹⁰ It is claimed that the Tigers have since used the mortars against Sri Lankan government forces.¹¹

The Tigers’ chief weapons trader is known as ‘Kumuran Pathmanathan’ or ‘KP’; the arms procurement team is known as ‘the KP Department’. At the heart of the KP Department’s operations is a highly active merchant-shipping network known as ‘the sea pigeons’. A researcher who has studied the ‘sea pigeons’ describes them as follows:

Except for the Provisional Irish Republican Army and the Palestine Liberation Organisation, the LTTE is the only insurgent organisation that is known to have at its own disposal a fleet of deep sea going vessels. The LTTE started building its maritime network with the help of a Bombay shipping magnate in the mid 1980s. Today the fleet numbers at least eleven freighters, all of which are equipped with sophisticated radar and Inmarsat communications technology. The vessels mostly travel under Panamanian, Honduran or Liberian flags, …known as Pan-Ho-Lib… and are typically owned by various front companies located in Asia…ninety five percent of the time the vessels transport legitimate commercial goods…for the remaining five percent they play a vital role in supplying explosives, arms, ammunition and other war-related materiel to the LTTE theatre of war.¹²

In late 1998, the Tanzanian government was under pressure to cancel a contract that it was negotiating with the African Fishing Company for the establishment of a prawn farm and processing business over 10,000 hectares of coastal mangrove forest.¹³ The majority owner of the company, Reginald John Nolan, an Irish national, owns several ocean-going vessels and had been a supplier of arms and equipment to the Tanzanian Ministry of Defence during the 1980s. Nolan’s boats ply the East African coast. To the surprise of many people, he had a clause inserted into the contract for the prawn business that would allow the African Fishing Company to import into Tanzania $570,000 worth of arms and ammunition per year.¹⁴ Nolan had been involved in a long legal dispute with a fellow arms dealer over commission payments, and was facing a court challenge by environmentalists determined to stop the prawn contract in order to save Africa’s largest mangrove forest.

Persistent reports in 1996–97 indicated that the northern Mozambican port of Nacala was used to ‘export’ large amounts of old, cached RENAMO (Mozambican rebel movement) weapons and ammunition via the port of Mtwara in Tanzania to Lake Tanganyika and from there by boat to Fizi in former Zaire, destined for rebel groups in Burundi and in Zaire. A Tanzanian security company was believed to be receiving and transporting most of these stocks.¹⁵

In March 1997, researchers witnessed about 100 tons of weapons being off-loaded from a coastal vessel at the port of Nacala. Apart from an Indian flag on the masthead of the vessel, no other identification markings were readable. Two 10-ton trucks
removed the arms, making about five trips each. Two similar trucks (if not the same ones) were spotted one week later on the ‘civilian’ side of Nampula airport (also in Mozambique)next to a warehouse containing AK 47 rifles, RPG 7 rocket launchers and many crates of ammunition. The arms were seen being loaded onto two Cessna 210 aircraft and two medium-sized cargo planes, one bearing the name of Sky Aircargo.¹⁶ According to an airport security official, the planes were bound for Ndola in Zambia and elsewhere in Southern Africa, and they were also carrying cargo for relief agencies. The researchers saw that the two Cessnas and the Sky Aircargo plane were returning to Nampula with similar cargo matching that observed at UNITA bases in eastern Angola in November 1996.¹⁷ According to the researchers, the animal skins, blocks of hardwood, ivory and small boxes (possibly diamonds) brought back to
Mozambique were exported to Asia using a prawn-processing plant as a cover. At the plant, Chinese and Bulgarian crates and wrapping were seen.¹⁸

Embargo-Busting Ships from Argentina

Another strange maritime incident took place in early 1996 in Venezuela. A Danish ship, the Hornestrand, was held up in a Venezuelan port, loaded with ammunition. The ship had made a journey via several ports, but seemed to have started its trip in Iran, in the port of Bandar Abbas on the Strait of Hormuz. An arms broker who was present when the ship arrived was subsequently taken for questioning by Venezuelan police authorities and later released. Somehow, this suspect cargo ended up in a series of clandestine arms shipments that linked trafficking networks from Latin America and Europe to Florida.¹⁹ (See also ‘The Broker Called "Lasnaud"’ below.)

The exposure of a series of triangular arms deals, enabling private companies acting on behalf of the government of Argentina to sell weaponry to clients under regional or international embargoes, caused the resignation and prosecution of several cabinet members of the government of Argentina. The private dealers involved in this illicit arms trade, who used representatives in third countries, were indicted but never
detained. This case focuses on one of the key brokers in a chain of private companies that were used. Investigations of these cases began in 1995 after the first revelations in the Argentine daily newspaper, Clarin.²⁰

Clarin reported that President Menem of Argentina had signed a secret presidential decree (Number 103) on 24 January 1995, authorizing the sale of 5,000 FAL rifles and 75 tons of ammunition to Venezuela. What caused the enormous scandal were the
reports that the weapons had been shipped clandestinely to the Ecuadorian port of Guayaquil. Ecuador and Peru were involved in a border war at that time, and Argentina was bound by the Rio Protocol to keep peace between the two countries.²¹

An official investigation discovered that another two presidential decrees had been signed in 1991 authorizing the sale of 6,500 tons of weapons to Panama, but in fact the weapons had been diverted in several shipments to Croatia.²² Various cargoes amounting to 6,500 metric tons of weapons had been shipped by different vessels of the state-owned shipping company Croatia Line.²³ This sale to the former Yugoslavia was particularly embarrassing for the government in Buenos Aires not only because of the international arms embargo but because Argentine troops were stationed there as part of the UN peacekeeping force.²⁴ Daniel Nelson, reported to be an official of the US Arms Control and Disarmament Agency (ACDA), was interviewed by an Argentine daily newspaper; he claimed his department had been aware of this arms supply line from 1991 onwards.²⁵ Other officials of the US government subsequently denied this, adding that Nelson was not an official but had only been a consultant for the ACDA, with no responsibility or permission to speak on behalf of the US government.²⁶

In May 1996, the Bolivian government requested a clarification by the Argentine government to the effect that Bolivia ‘did not purchase’ $51 million of arms in 1992. This request came amid investigations that in 1992 another secret presidential decree (1633) had authorized Argentine Military Industries to sell a range of arms to
Bolivia.²⁷ This shipment was also diverted to Croatia and Ecuador.²⁸

It was reported that the secret presidential decrees had authorized the state-owned company Fabricaciones Militares (FM) to sell weaponry via the private companies, Hayton Trade SA and Debrol SA. These latter two companies were based in Uruguay and acted on behalf of a retired lieutenant colonel of the Armed Forces of Argentina, Diego Palleros.²⁹ Palleros, however, never imported the arms into Uruguay, nor were they ever shipped to Venezuela, Bolivia or Panama. Instead, the arms ended up in
Ecuador, Bosnia and Croatia. It also seemed that only part of the weapons were sold by FabricacionesMilitares, and that critical amounts of ammunition were sold directly from the arsenal of the army or from international arms smugglers. The newspaper La Nacion also revealed that the amounts of weaponry sold could never have been
covered by the authorized sums of money mentioned in the presidential decrees. ³⁰

Vital links in the chain were that the companies in Uruguay acting on behalf of Palleros had first sold the weapons to the Caribbean Group of Companies in Fort Lauderdale, Florida,³¹ and then sold them to a broker in Ecuador using the company Pro-
defensa. Similar brokering arrangements were used in the dealings with Croatia.³²

For one of the shipments to Ecuador, which was based on an end-user certificate for Panama, three aircraft of a US air-freighting company, Fine Air, flew cargoes of 5,000 FAL assault rifles and 75 tons of ammunition from Buenos Aires on 17 February 1995.³³ Despite a cable to Argentine authorities from the Peruvian intelligence service on 14 February, this illegal shipment was not interrupted.³⁴

In April 1996, Interpol Argentina issued an international arrest warrant for Diego
Palleros.³⁵ He had left Argentina one year earlier for Singapore and later for South Africa. The retired officer was a well-known arms dealer who, under the government of Raúl Alfonsín in 1983, had tried to sell tanks to Iran when that country was involved in a war with Iraq. In January 1999, a court in South Africa decided that Palleros could not be extradited because he was in possession of a valid Panamanian passport. The Argentine justice minister suggested that South Africa’s refusal to extradite Palleros might have been motivated by the arms dealer’s connections to South Africa dating back to the apartheid era.³⁶

The Broker Called ‘Lasnaud’

According to Argentine sources, the arms dealer based in Fort Lauderdale, Florida, and acting through the Caribbean Group of Companies had been one of the key
organizers of the trafficking ring that comprised many official and private individuals.³⁷ Jean-Bernard Lasnaud was traced by the American Federal Bureau of Investigation to be a resident of Fort Lauderdale.³⁸ According to the register of corporations of Florida, Lasnaud was a director of several companies, among them the Caribbean Group of Companies, which was used for some of the Argentine operations.

Official documents in Argentina show that Lasnaud had also been in Argentina in
order to supervise the loading of the Fine Air cargo aircraft to Ecuador in February 1995, and to inspect a cargo bound for Croatia in December 1995.³⁹ A Panamanian company, Tornasa, acted as a go-between for the transactions between Lasnaud and Palleros. According to the Florida registrar of corporations, Lasnaud’s Caribbean Group of Companies was officially incorporated on 13 March 1995, this was a few weeks after Palleros had sold the cargo bound for Ecuador on to Lasnaud. ⁴⁰

Argentine journalists are in possession of Lasnaud’s e-mail correspondence with a former Argentine navy captain, Horacio Estrada, who was found shot dead in his apartment in August 1998. A few days before that, Estrada had sent a written testimony to the Argentine judge investigating the case.⁴¹ Estrada, a veteran of former military junta death squads, had been prosecuted for 21 cases of torture in 1987. He was reportedly also connected to Tornasa, the Panamanian go-between company.

In the course of 12 days before Estrada died, Lasnaud had sent the Argentine officer over 90 e-mail messages.⁴² Once decoded, the correspondence showed an intensive trade of illicitly smuggled weaponry, from small arms to armoured personnel carriers, naval vessels, helicopters and small aircraft. In one of the messages, dated 25 August 1998, Lasnaud had an order for 1,500 Argentine-produced rifles for shipment to Sierra Leone. In other messages, it was Lasnaud who offered Estrada a Bell helicopter, 50 mobile anti-air missile launchers, M113 armoured personnel carriers and NATO-standard small arms and ammunition. Argentine investigators opined that that it would be very hard to prosecute Lasnaud if he could ever be found, due to the intricate network of go-between companies and countries that were used for the transactions.⁴³

‘Jean-Bernard Lasnaud’ has been in the arms trafficking business since at least 1978.⁴⁴ He was convicted in absentia in Belgium in May 1983 for illicit international trafficking in weapons. His immediate arrest was requested but his whereabouts were
unknown, and he has never been caught.⁴⁵ Officials investigating the case in the early 1980s in Belgium told us that Lasnaud’s real name was Bernard Lasnosky, of Polish origin but born in the French Alsace. He had used the letterhead for a company based in Panama, but several documents from this period show that the contact numbers for this corporation were all in Brussels. For his operations in Belgium with several other convicted traffickers, he used false names such as ‘Jean-Francois Bernard’ and later ‘de Bernard’. In this capacity he was involved in illicit trafficking to Libya, Iran, South Africa and several other embargoed destinations.⁴⁶

Information from the French section of Interpol shows that Lasnaud was indeed born in France in 1942. He was known in France under the various aliases that he later used in Belgium and also as ‘Francois Laroche’. The information shows Lasnaud had been convicted seven times in France, mostly for financial crimes. He had been convicted in 1979 for the illegal sale of 500 Heckler & Koch 21s to Somalia and again in 1980 for the use of forged official documents.⁴⁷

After a series of six convictions Lasnaud apparently left France and went to live in Brussels, where he was again convicted in 1983. Although he did not have a licence to export weaponry in Belgium, he was able to use the licence of another convict for his own deals. In 1993, the French justice authorities again convicted Lasnaud for a ‘swindle’. After that, Lasnaud was thought to have moved to the United States, where he established several companies. Recent documents from the Florida Division of Corporations show that Lasnaud used various first names – ‘Jean-Bernard’, ‘Jean-Bertrand’, ‘Gean-Bertrand’ etc., – and that he ran at least ten companies from the same address in Fort Lauderdale.⁴⁸

According to a Belgian diplomatic source, Jean-Bernard Lasnaud was questioned in January 1996 in Venezuela in connection with the Danish ship Hornestrand, which was loaded with Belgian-produced NATO-standard ammunition on its way from Iran. The Venezuelan customs and police authorities held up the ship after discovering the real contents of the cargo. Shortly afterwards, Lasnaud was released. According to a journalist of the Argentina daily newspaper, Clarin, who wrote a book about these cases, the ship’s cargo included 9,200,000 cartridges of 7.62 mm ammunition (type FAL), shipped from the Iranian port of Bandar Abbas to Guayaquil in Ecuador.⁴⁹

When we called the charterer of the Hornestrand at the offices of a shipping company in Denmark, he said that ‘this was none of [our] business’. The person responsible for the Hornestrand’s cargo services said he had never heard of Lasnaud.⁵⁰

¹    Worldwide Maritime Challenges 1997, Office for Naval Intelligence, United States, March 1997, p. 20.
²    We are grateful to Lora Lumpe for pointing out this case. Valorie Alvord, ‘Illegal Weapons Were Well Travelled’, San Diego Union Tribune, 21 March 1997.
³    Valorie Alvord, ‘2 Truckloads of Illegal Arms Found’, San Diego Union Tribune, 14 March 1997.
⁴    James McShane, Senior Special Agent, US Customs Service, paper delivered at a conference of the American Association of Arts and Sciences, December 1997.
⁵    Arms from the Malo were later transferred from the Seychelles to the perpetrators of the Rwandan genocide. See Chapter 3 in this report.
⁶    Hugo Gijsels, ‘Het Schip dat in de mist verdween’, Humo, 1 June 1987, pp. 16–17. The end-user certificate had been signed by an Indonesian senior military officer and had been sent to the licensing authorities via a company based in Frankfurt. When Dutch police investigators started to probe the transaction, it seemed that this Frankfurt-based company did not exist. Two Britons, who had been running a marketing company at the address in Frankfurt, disappeared and were never traced. See also ‘Danish Arms Smuggler Could be Charged’, Weekly Mail and Guardian, 29 March 1996, in which it is reported that the Danish Seafarers Union uncovered over 60 sanctions-busting shipments to South Africa between 1978 and 1994, one of which was negotiated by a German arms broker in Paris who arranged for a Bulgarian arms shipment from Burgas, supposedly to Nigeria, but actually via the Canary Islands, to Durban.
⁷    The UK Seafarers Union says there are a growing number of armed attacks on merchant ships at sea – 1,380 since 1991, and 115 during January to June 1999,with some ships literally disappearing without trace. Most attacks have been around Indonesia, Brazil and in the Mediterranean Sea.
⁸    Peter Chalk ‘The Tamil Tiger Insurgency in Sri Lanka’, in Abdul Musa, ed., Over a Barrel: Light Weapons and Human Rights in the Commonwealth (Commonwealth Human Rights Initiative, New Delhi, 1999); see also ‘Tamil Guerrillas in Sri Lanka: How They Have Built Their Deadly Arsenal’, The New York Times, 7 March 1998.
⁹    ‘Tamil Guerrillas…’, New York Times, 7 March 1998.
¹⁰    Zimbabwe Independent, 7 August 1998.
¹¹    Chalk, ‘The Tamil Tiger Insurgency…’.
¹²    Ibid.
¹³    Briefing on the Rufiji Prawn Farm case, Tanzania: Lawyers' Environmental Action Team (LEAT), Dar es Salaam, 1998.
¹⁴    ‘Tanzania: Gunning for Prawns’, Africa Confidential, 9 October 1998, vol. 39, no. 20, 1998.
¹⁵    Information supplied by the Institute for Security Studies, Pretoria, South Africa, 1999.
¹⁶    Research information provided by Jakkie Potgieter of the Institute for Security Studies, 1999.
¹⁷    Ibid.
¹⁸    Ibid.
¹⁹    We were notified in early 1999 on the incident by an official from the Belgian Foreign Office. Additional information obtained from Daniel Santoro, author of Venta de Armas: Hombres del Gobierno, a book on the following case (Buenos Aires: Editorial Planeta , 1998).
²⁰    Reported in ‘Argentina Arms Scandal Hits Peacekeeping’, Inter Press Service, International News, 27 March 1995; ‘Argentina Arms Trading Scandal’, Inter Press Service, 31 March 1995.
²¹    ‘Argentina Arms Scandal Hits Peacekeeping’.
²²    ‘Varying Reports Reveal Arms Sales to Bolivia’, Clarin, in FBIS Daily Report, FBIS-LAT-96-105, 28 May 1996.
²³    Juan Castra Olivera, ‘Confirman en Croacia el envio de armas’, La Nacion, 18 January 1999.
²⁴    ‘Argentina Arms Scandal Hits Peacekeeping’.
²⁵    ‘El amigo americano’, Clarin (Suplemento Zona), 4 October 1998.
²⁶    ‘US Denies Knew of Argentine Arms sales To Croatia’, Reuters, 7 October 1998.
²⁷    This included 8,000 FALs (light automatic rifles), 18 155-mm cannons, 2,000 automatic pistols, 211,000 hand grenades, 3,000 Pampero rockets, 30,000 rifle grenades, 3,000 anti-personnel mines, 60 mortars and several million rounds of diverse ammunition.
²⁸    ‘Varying Reports Reveal Arms Sales to Bolivia’, Clarin, in FBIS Daily Report, FBIS-LAT-96-105, 28 May, 1996.
²⁹    Jorge Urien Berri, ‘Un olvidado testimonio illumina la trama secreta’, La Nacion, 15 June 1998.
³⁰    Ibid.
³¹    Pablo Calvo, ‘Estrada vendio armas casi hasta el final’, Clarin, 31 August 1998.
³²    Ibid.
³³    ‘Estudian citar a declarar al ex numero dos de Carnilion’, Clarin, 4 October 1998. The report based its date on a cable sent from Peruvian intelligence to Argentina, signed 13 February 1998.
³⁴    ‘Camillion apunto a un aviador’, Clarin, 9 September 1998.
³⁵    ‘Argentina Slams South Africa Over Arms Dealer’, Reuters, 26 August 1998.
³⁶    Ibid.
³⁷    Calvo, ‘Estrada vendio armas…’; ‘Lasnaud en Estados Unidos’, La Nacion, 13 February 1999.
³⁸    ‘Lasnaud en Estados Unidos’.
³⁹    Calvo, ‘Estrada vendio armas…’; Castro Olivera, ‘Confirman en Croacia…’.
⁴⁰    Florida Department of State, Division of Corporations, Profit Corporation Annual Report 1998. Document # P95000020139 (8), Caribbean Group of Companies.
⁴¹    ‘Varias Muertes Misteriosas’, Clarin, 8 September 1998. Also: ‘Argentina Slams South Africa over Arms Dealer’, Reuters, 26 August 1998. We are grateful to journalist Daniel Santoro who sent us a sample of the e-mail correspondence (9 April 1999).
⁴²    ‘Estrada vendio armas…’.
⁴³    Ibid.
⁴⁴    Ollivier Ralet, Illegale Wapenhandel (Berchem: EPO, 1982).
⁴⁵    ‘Condamnations à terme d'une très longue affaire de trafic international d'armes’, Le Courrier de L’Escaut, 25 May 1983.
⁴⁶    Defensor of Panama and Armaco of Panama. Armaco was a company name that was also used by Frank Wilson, an ex-CIA agent who was convicted in 1982 by a US Federal Court on seven counts of smuggling arms to Libya. Armaco’s Belgian agent was convicted in 1983, together with Lasnaud, who at that time had already left the country and could never be arrested. Copies of correspondence printed in: Ollivier Ralet, Illegale Wapenhandel (Berchem: EPO, 1982).
⁴⁷    Spanish transcript of the Interpol cable from Argentina Interpol section.
⁴⁸    Florida Division of Corporations, Inquiry by officer/registered agent. J.-B. Lasnaud still filed an annual report for the Caribbean Group of Companies on 5 May 1999.
⁴⁹    Correspondence with Daniel Santoro, 9 April 1999; see also Santoro, Venta de Armas: Hombres del Gobierno.
⁵⁰    Telephone interview with spokesman for the Hornestrand’s cargo services at a shipping company in Denmark, 31 March 1999.