Arms Dealer Implicates Peru Spy Chief in Smuggling Ring

TIMES STAFF WRITERS

The business was guns.

The place was a yacht club in Lima. And the gracious host of the lunch last year, according to the man who says he was the guest of honor, was the all-powerful chief of Peru's intelligence service, Vladimiro Montesinos.

Montesinos oozed charm, says Sarkis Soghanalian, a rotund arms trafficker and occasional U.S. intelligence informant known as "The Merchant of Death." The spy chief wined and dined his guest, Soghanalian said, thanking him for brokering Peru's purchase from Jordan of 50,000 AK-47 assault rifles.

If that account is true, Soghanalian was understandably astounded in August when Montesinos accused him of belonging to a smuggling ring that had airdropped 10,000 AK-47s to Colombian guerrillas. Montesinos and Peruvian President Alberto Fujimori announced with great fanfare that the intelligence service had broken up the gun-running scheme involving, Soghanalian said, the rifles in the Jordanian deal that Montesinos himself had organized.

"The weapons I sold went to the Peruvian government," he said in an interview in Los Angeles. "None went to the Colombian side. If any illegality occurred, it was on the side of the Peruvians."

Soghanalian's allegations of an elaborate double-cross by Montesinos raise new questions about U.S. intelligence and law enforcement agencies' close ties to the spy chief, who was ousted in September and is now a fugitive.

As accusations about Montesinos piled up over the years, U.S. officials had repeated an insistent defense: Montesinos was a staunch ally in the fight against drugs and guerrillas, the top U.S. targets in the region.

It would therefore be embarrassing if he was involved in the smuggling of guns to the leftist Revolutionary Armed Forces of Colombia, or FARC, which is deeply involved in the drug trade. Especially at a time when Washington was preparing the high-budget anti-drug package known as Plan Colombia.

U.S. officials have said they were aware of the deal and initially raised no objections, thinking that it was a sale to the Peruvian military. When it was learned that the arms were ending up in Colombia, U.S. officials say, they alerted Peru. But they have said little about Montesinos' role.

"Arms-dealing with the FARC has always been an interest of ours and will continue to be," a U.S. official said. "Are we going to look [in Peru]? You can presume we will look at everything."

Suspects in Lima Also Tell of Betrayal

U.S. intelligence and federal law enforcement agents have asked to debrief Soghanalian, according to his lawyer in Los Angeles, Mark Geragos. Peruvian authorities also want to question him. The arms dealer's account of betrayal is echoed by suspects, some of them former Peruvian soldiers, who have been arrested in Lima, the Peruvian capital. The alleged ringleader accused Montesinos of recruiting him to set up the deal and claimed that the suspects were tortured to prevent them from implicating the spy chief.

"Montesinos was definitely involved in this deal," said Peruvian lawmaker Luis Iberico, whose investigations of corruption were key to Montesinos' downfall. "It is absurd to think that people like [the accused ex-soldiers] would not be commanded by Montesinos."

There have been previous allegations that Montesinos and military commanders did business with drug lords and gunrunners, despite their successes in coca eradication and other anti-drug operations, according to Peruvian critics.

"It was easy to organize something like this, lay the blame on underlings if necessary and even say you broke it up," said award-winning journalist Gustavo Gorriti, who has investigated Montesinos since the 1980s. "He has done it before. If there is any emblematic case, this could be it."

Montesinos has not responded to the allegations. Fujimori defended the official version at first but has not commented since the fall of Montesinos.

Some experts find it hard to believe that Montesinos aided the FARC and risked alienating his allies at the CIA. They theorize that the episode was a sting gone awry or a rogue operation by high-ranking Peruvian military officers.

"My guess is that Montesinos was aware of it but not part of it," said a former U.S. Embassy official. "He had plenty of ways to make money."

The case is so packed with intrigue that it may never be fully clarified. But Soghanalian adds a key piece to the puzzle: He is a veteran of the global underworld of guns, spies and gangsters in which Montesinos moved.

A Long History of Gunrunning

Soghanalian resembles an Armenian version of Sydney Greenstreet, the portly British character actor who played globe-trotting rogues in "Casablanca" and other films.

Soghanalian, 71, was born in Turkey to Armenian parents and married a U.S. citizen. He is a Lebanese citizen and owns homes and businesses in Miami, Paris and Amman, the Jordanian capital.

His resume: He brokered about $1.6 billion in weapons to Iraq during its 1980-88 war with Iran. He ran guns to Christian forces during Lebanon's civil war, shipped missiles to the Argentines during the Falklands War and sold munitions to the Nicaraguan regime of Anastasio Somoza Debayle. He provided a plane in a failed bid to help Ferdinand E. Marcos, the deposed Philippine dictator, return to Manila from exile in Hawaii.

Some ventures put Soghanalian, who jokes about his "Merchant of Death" nickname, on the wrong side of the law. In 1991, he was convicted in Miami for smuggling helicopters and rocket launchers to Iraq.

But he has been agile at protecting himself by supplying information to U.S. intelligence and law enforcement agencies. He served a brief portion of his federal prison term before he was released early after assisting the Secret Service in an international counterfeit currency investigation.

Recently, he has turned to business opportunities created by the collapse of the Soviet Union: retrofitting fleets of Soviet-made military equipment in countries that can no longer rely on the Russians for spare parts and maintenance support.

But last year, he was indicted in Los Angeles on charges that he conspired with others to defraud Great Western Bank of more than $3 million in an alleged money-laundering scheme. Recently released on bail, he is confined to Southern California while awaiting trial.

Soghanalian doesn't seem to think his allegations against Montesinos will hurt his standing with U.S. justice officials. He insists that his dealings with the Peruvian military were scrupulously legitimate and that he has documents to prove it.

Asked why the erstwhile spy chief would go to such lengths to arrange the deal and then turn on him, the arms dealer said: "He has to cover [himself]. This project went on for months. . . . He knew people would find out. It could not be hidden. And they would ask what kind of intelligence person knows nothing about such an open operation."

AK-47s Allegedly Sought for Military

Central aspects of Soghanalian's version are reinforced by court testimony in Lima, U.S. and Jordanian accounts, and a review of his passport by The Times.

His story begins in Paris, where, he says, he was approached in 1998 by Peruvian operatives.

Retired Peruvian army Lt. Jose Luis Aybar, later accused of being the smuggling ringleader, was interested in buying AK-47s for "the intelligence side" of the Peruvian military, according to Soghanalian. The Peruvian military has a great deal of Soviet-made equipment, the legacy of a populist military regime that did business with the Soviet Union in the 1970s.

The arms trafficker said he negotiated with the Peruvians in Jordan because he was licensed there and was invited by authorities in Amman to broker the sale of surplus East German AK-47s.

The Peruvians agreed to buy 50,000 rifles at $95 apiece, he said. They provided letters of credit, appropriate end-user certificates for export indicating that their government was the buyer, and documents identifying them as Peruvian army representatives, he said.

Soghanalian also said he urged review of the deal by the U.S. Embassy in Amman. The State Department confirms that Jordanian officials consulted U.S. officials, who did not object because there was no sign of anything illegal at the time.

The transaction soon hit a snag, however. A shipment of 4,000 AK-47s took off for Peru aboard a Dubai-registered 707 but got only as far as Spain. Delays made it impossible to reach Iquitos, the destination in the Peruvian Amazon, in a limited window of time for which landing was authorized, Soghanalian said. The plane returned to Amman with the rifles, which the Peruvians had already paid for.

Soghanalian said he wasn't suspicious at the time. The cargo was listed on the aircraft manifest as "military equipment," and he said he had the impression that the flight would avoid Colombian airspace.

"If we had been smuggling contraband, it would have been much easier," he said. "We could have lied."

The shipment was still in limbo when Soghanalian flew to Lima in mid-January 1999. Aybar and the other suspects testified that the arms merchant visited Lima and met with Montesinos and military commanders.

Aybar also testified that he was recruited for the Jordan venture by a man he identified as an aide to Montesinos. Aybar testified that he "conversed directly and personally with Dr. Montesinos." Montesinos had Aybar sign a document stating that "I would earn a commission of $50,000 for a job that would be strictly secret," according to court papers and Aybar's lawyer.

Aybar was on the welcoming committee that met Soghanalian at the Lima airport and drove in the motorcade that took him to a hotel. Officials led a tour of a military base, where the arms dealer says he observed training, inspected a tank division and was introduced to the chief of purchasing, a general.

Montesinos and his aides were courteous and appreciative, Soghanalian said.

"We talked about military equipment," he said. "They said Peru also was interested in extending relations with Middle Eastern countries. I said I wanted to send Fujimori an Arabian horse."

No horse was sent. But Montesinos was eager to talk about bigger business, according to the arms merchant: The spy chief allegedly proposed arms and equipment purchases amounting to about $80 million.

But Soghanalian said he wanted to concentrate on the $5-million rifle transaction first. "I said, 'Let's finish this and then see what happens.' "

The arms dealer says that the military scheduled a meeting with Fujimori but that it was postponed at the last minute and he couldn't reschedule his return to Miami. But before he left Lima, he said, he was taken by military helicopter over the drop zone where he was told his rifle pallets were to be parachuted to troops in the jungle.

Despite the blessing of top commanders, the planned parachute drops seemed unusual, Soghanalian admitted. The Peruvians explained that drops were the only way to get the weapons to troops in a remote area, he said.

More troubling, he said, was that Peruvian officials wanted to start paying in cash. Soghanalian feared that this would alarm U.S. authorities, because large currency transactions are a common practice of drug lords. He insisted on bank transfers, he said.

"Cash was the biggest issue," he said. "They begged me. They wanted to pay cash through the Peru Embassy in Spain. They said I could go there and pick it up. They said, 'This is how we work.' "

Soghanalian also acknowledges that the former soldiers who went to Jordan apparently represented themselves as high-ranking, active-duty officers. The Peruvian military accuses them of using fake credentials to pose as government representatives.

But Soghanalian said it clearly was high-ranking officials in Lima who secured a substitute aircraft, a Ukrainian-registered cargo plane, with the help of a Russian military attache in Lima. Because the Russian-made plane, piloted by a Russian-Ukrainian crew, lacked the range to fly directly to Peru, a circuitous route was devised for refueling purposes: Amman to the Canary Islands to Mauritania to Grenada. After the drop, the final destination was Iquitos.

It isn't clear how many shipments were made, but they were apparently all airdrops. The plane was modified for the mission, according to Soghanalian: The belly was refitted so that it could be depressurized at high altitude. Rollers were installed so that pallets could simply slide out through the tail cargo door.

The plane would descend to 10,000 feet, open the rear doors, then start to climb, putting a steep pitch to the floor. About 22 pallets weighing about a ton each would be released and slide out the back, a 24-ton load dropped in only seven seconds.

At least four airdrops were made in March, June, July and August of last year, delivering 10,000 rifles, according to court papers and Soghanalian.

But the weapons were dropped into Colombian territory. Despite denials by Aybar and the others, their accounts have weak points: They claim that they didn't know the cargo was rifles or that the drops occurred over Colombia.

In addition, there are suspicions that the cargo of the return flights from Peru--supposedly wood, coffee and other materials--actually concealed cocaine. Peruvian anti-drug police searched the plane in Iquitos after the March flight but found nothing, according to court papers.

Soghanalian says he got so suspicious that he pulled out of the deal in July or August 1999 after shipping 10,000 rifles and receiving payment for half of them. The Jordanian government broke off the contract when it received information that the weapons weren't going to the government of Peru, according to the U.S. State Department.

Soghanalian says he was disturbed by signs that Colombians, guerrillas and drug traffickers could be involved. He says that he called the FBI counter-terrorism unit in Miami and that the chief of the unit told him he would check into it.

What happened during the next year remains unclear. Colombian authorities have said they seized AK-47s from the FARC in March 1999 and, with CIA help, traced the rifles to the Jordan-Peru transaction. U.S. officials say a U.S. tip preceded the announcement in August by Montesinos and Fujimori.

Although the Peruvian leaders proclaimed a victory against international outlaws, they made little reference to the alleged role of Soghanalian, whose notoriety would make for a bombshell headline.

Critics allege that the spy chief organized the news conference as a preemptive cover-up, intending to use control of the courts to conceal signs of his participation.

"Montesinos didn't realize the magnitude this would have," asserted Heriberto Benitez, Aybar's lawyer. "In these kind of sales, you have high-level military representatives. My client and the other suspects are just mules, the transporters."

Whatever the truth, the original version appears to have unraveled. The Peruvian judge supervising the case made it clear in a report Oct. 19 that further investigation is needed, including an interrogation of Soghanalian. The case would be complex for any court system, let alone that of a crisis-torn nation where Montesinos still casts a shadow.

But things are clear to Soghanalian. He is at home in international labyrinths and gray areas. He says he adhered to his longtime code of avoiding leftist guerrillas. Although he has supplied weapons to tyrants and outlaws around the world, he indignantly denies doing business with Colombian narco-guerrillas.

"I would not want them to fire one bullet from my rifles," Soghanalian said.

In this case, "The Merchant of Death" insists, he was a dupe.

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Rempel reported from Los Angeles and Rotella from Lima. Times staff writer Ann W. O'Neill in Los Angeles contributed to this report.

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