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Articles on Angolagate, Israeli arms dealer
Gaydamak, Mitterand, Attali, Rich, Mandelsaft...

 

  • The Influence Peddlers - lengthy exposé of Angolagate and the connection between Jews Arcadi Gaydamak, Jean-Christophe Mitterrand and Lev Leviev and how Leviev became "Angola's diamond czar"

  • The Angolagate scandal - article which also describes the role of Jews Attali and Marc Rich in the scandal and the connections to the Clintons. Includes details on Clinton donor Marc Rich´s cooperation "as a top sanctions busters" with Apartheid South Africa

  • The man who carried millions in a shopping bag - article from Israeli paper Ha´aretz on Jewish criminal Samuel Mandelsaft and his connection to Angolagate

  • Secret Services Veterans not Beware of Gaydamak - article on Mossad and Gaydamak

 

 


 

The Influence Peddlers

By Yossi Melman and Julio Godoy

The Center for Public Integrity

 

WASHINGTON, November 13, 2002 — In his final days as mayor of New York City, Rudolph Giuliani traveled to Jerusalem to express his solidarity after a series of terrorist bombings struck the holy city. Coming just three months after terrorists flew two planes into New York's World Trade Center towers, killing thousands, Giuliani's visit resonated throughout Jerusalem. Israel's elite turned out for the Dec. 10, 2001, banquet in his honor, including Prime Minister Ariel Sharon, Jerusalem's Mayor Ehud Olmert and, one of the most extraordinary operators in world business, Arcadi Gaydamak.

That Gaydamak was invited at all was a singular achievement. Just a year earlier, in December 2000, Gaydamak had fled France, where he was wanted for illegal gun running, tax evasion, money laundering and corruption. He stood accused of helping turn one of the world's longest-standing wars into a honey pot of enrichment for himself and influential friends in Angola, Israel, Russia and France.

Giuliani likely did not know that the short, stocky man he was introduced to was a fugitive from justice and a central figure in an arms scandal that had rocked the French political establishment. Gaydamak, who by then had Hebraized his name to Ari Barlev, was invited, he said, because he had contributed a million dollars to the fund for victims of the Sept. 11 attacks on the United States.

The invitation was illustrative of Gaydamak's trademark ability to buy access and influence people. He attended the dinner with his friend and business partner, Gen. Amnon Lipkin-Shahak, the former Israeli tourism minister and ex-chief of staff of the Israeli Defense Forces. He numbered among his other business associates Danny Yatom, who headed Mossad, Israel's intelligence agency, before being appointed security advisor to former Israeli Prime Minister Ehud Barak. Gaydamak also employed Avi Dagan, Mossad's former head of intelligence gathering.

"Here I am a respected citizen," Gaydamak boasted to the French daily Le Monde in January 2002. "You see, I don't hide at all."

Gaydamak has three homes in Israel, one in the posh neighborhood of Cesaria, 30 miles north of Tel Aviv, where Israel's rich and famous reside. Another house, in the fashionable Herzliya Pituach, 10 miles north of Tel Aviv, is near the residence of the legendary former foreign minister Abba Ebban. His third home is an apartment in the Mamila section of Jerusalem, overlooking the old walled city – a view that gives him pleasure, he said, and a sense of history during his morning walks through the small, winding streets to the Wailing Wall.

Gaydamak claims to be among the five richest men in Israel, which would put him in the billionaire category. He owes this vast fortune, he said, to shrewd speculation on the Russian stock market, particularly oil stocks, and not to the profits of war. Gaydamak insists he was never an arms dealer, rather a "financier of deals."

A nearly two-year global investigation by the International Consortium of Investigative Journalists has revealed, however, that Gaydamak epitomized the business of war in the post-Cold War era – an entrepreneur with global ties to arms smuggling, resource exploitation and private military companies.

 

A 'bit of luck'

Born in Moscow in 1952, Gaydamak was 20 when he became one of the first Jews to immigrate to Israel from Leonid Brezhnev's Soviet Union, a journey that earned him two audiences with then Prime Minister Golda Meir. But life in Israel was difficult and not to his liking, he said, and he left for France six months later, with three francs in his pocket. Gaydamak said his subsequent rise to riches was due to "quite a bit of luck."


Arcadi Gaydamak

Having no formal education, Gaydamak worked initially as a gardener and a bricklayer. In 1976, he opened a translation bureau near Paris, servicing Russian commercial delegations visiting France, and made contacts at a number of French companies. By 1982, Gaydamak Translations was a highly successful business, and he opened a branch in Canada.

As East Europe's old regimes crumbled in 1989, Gaydamak's financial genius found its true expression. He diversified and expanded into more lucrative import-export trades with the former Soviet Republics in coal, meat, wheat and, finally, weapons. According to ICIJ's investigation, Gaydamak created a maze of enterprises in Russia, the Netherlands, France, Luxembourg, England, Switzerland, and Israel. In France, he formed the International Company of Technology and Investment. In London, among others, it was Minotaure (UK) Ltd and Edsaco Holdings (UK) Ltd; in Jersey, Edsaco Participation Ltd; in Luxembourg, Extrainvest, Palmeto, Luxstreet, and Pivoine; in the Netherlands, Reminvest BV; and he registered at least one company, Rangoon, in the Isle of Man.

Gaydamak seldom signed or put his name to anything. The wide network of shell companies, and the labyrinthine paper structures of his companies, some of them administered by offshore trust accounts, gave him further cover.

Gaydamak cultivated relations with Russian leaders and the country's emerging tycoons. His contacts in the post Soviet power structure came to include Russian Foreign Minister Igor Ivanov; the president of Kazakhstan, Nursultan Nazarbayev; the former military chief and later governor of Russia's Karatchevo Cherkesia province, Vladimir Semenov; and the Russian oil magnate Mikhail Khodorkovsky, president of Yukos Oil. In December 2000, Gaydamak was appointed chairman of the Russian Credit Bank, a post that was filled when he stepped down in 2001 by the economics minister and adviser to former President Boris Yeltsin, Aleksandr Livsits.

Gaydamak was "remarkably capable of profiting from the political and commercial opportunities offered by the end of the Soviet Union," according to a document prepared by the Direction de Surveillance de Territoire, or DST, France's domestic security service. A Dutch intelligence report obtained by ICIJ said that Gaydamak, through his connections in Russia, was able to purchase old Soviet and East European weapons systems that still had markets in war zones in Africa, Asia or Latin America. For example, according to the Dutch report, the Russian state-owned arms company Rosvoorouzhenie was the majority (67.5 percent) shareholder in the Slovakian arms manufacturing company, ZTS Osos, whose weapons Gaydamak sold to the Angolan government during the early 1990s. An Interpol document obtained by ICIJ notes that in 1995 Gaydamak was the representative of ZTS Osos in Russia.

Gaydamak also attracted the attention of Russian and French law enforcement agencies. According to a 1995 communiqué from Russia's Interpol office, a copy of which was obtained by ICIJ under the U.S. Freedom of Information Act, American Interpol officials in Washington, D.C., were alerted that Gaydamak was "suspected by our law enforcement authorities of firearms and drug trafficking." In the April 19 letter, the Russians said Gaydamak was "reported to be one of the members of criminal association having international connections" and that "Moscow Organized Crime Control Department advised us the subject was exercising threats through his connections in Moscow to the Bank of Russian Credit."

Russian Interpol officials also contacted their counterparts in France for assistance in investigating Gaydamak. In April 1996, Russian Interpol said Gaydamak was "under suspicion of ... being a member of a criminal organization operating at international scale."

French law enforcement agencies found Gaydamak's new-found prosperity suspicious. The Direction Centrale des Renseignements Généraux (DCRG) – France's equivalent of the FBI – started asking questions about his lifestyle.

"He led a modest life during the first 15 years (from 1972 until 1987) of his stay in France," said a DCRG file from May 29, 1998. "But suddenly, without any apparent reason and financing, his lifestyle became extravagant. His professional activities in France cannot pay for the opulence he likes showing." Even the DST – the French secret service agency that, it was later revealed, had worked with Gaydamak – described his business acquaintances as "troubling," according to a French government memo.

France's foreign intelligence agency, the Direction Générale de la Secrete Exterieure (DGSE), reported that Gaydamak was a business partner of Alimjar Tokhtakhounov, "a leading member of the Russian Mafia ... involved in kidnappings of Russian exiles in Germany and racketeering," according to a July 28, 1998, DGSE file, shown to ICIJ. Judicial and police sources in France suspected Gaydamak of being involved with Tokhtakhounov in a scheme to launder money, using complicated transactions with real estate and Russian art.

Tokhtakhounov emerged from obscurity on July 31, 2002, when he was arrested in Italy on a U.S. complaint that he had conspired to fix the figure skating and ice dancing pair's competitions at the winter Olympics in Salt Lake City. Tokhtakhounov is fighting extradition, and his lawyer has proclaimed his client's innocence.

Gaydamak acknowledged in an interview with ICIJ that he knew Tokhtakhounov socially and had found him to be a "sympathetic" person, but claimed he severed ties with him in 1994 when media stories surfaced about Tokhtakhounov's links to criminal organizations, because such an association "was not good for my image."

Gaydamak also had ties to several foreign intelligence agencies, including the Russian and the French. His contacts among Russian intelligence were the result of political upheaval of the 1990s, when business people "had very strong relationships with the political and the security people," Gaydamak said. In 1995, his Russian contacts enabled him, he said, to secure the release of French hostages held in a part of Bosnia controlled by Serbs loyal to Belgrade, which was close to Moscow at the time. French President Jacques Chirac later awarded Gaydamak the Legion d'Honneur, although whether he was honored for his business acumen, negotiating skills or aid to French intelligence remains a subject of dispute in France.

Gaydamak was close to Raymond Nart, the former assistant chief of France's domestic security agency, the DST, who was instrumental in his receiving the Legion d'Honneur. According to reports in the French media, Nart had used Gaydamak's contacts in Eastern Europe to improve his agency's penetration of the region, and in return offered Gaydamak protection. The French weekly Le Point reported that in December 1996 DST agents seized documents on Gaydamak held by France's fiscal police, which they had obtained in a raid on a French business that Gaydamak had ties to. The documents were never returned, the weekly said.

Documents from Russian Interpol from the mid-1990s seem to support suspicions that Gaydamak was protected by political associates in the French Interior Ministry, which controls the police and the French secret service. Russian Interpol complained that their Paris counterparts were ignoring their requests for help in the investigation of Gaydamak's links to criminal organizations: "Our previous messages (of January and March 1994) have never been answered (by French Interpol)," the Russian agents wrote in an April 1996 telex.

The scrutiny into his lifestyle resulted in his prosecution. On March 3, 1999, Gaydamak was given a 13-month suspended prison sentence and fined $35,000 for tax evasion. The French Finance Ministry had found that, at the beginning of the 1990s, Gaydamak officially reported annual earnings of less than U.S. $100,000 a year when he actually earned more than 10 times that amount. Gaydamak disputed the charges, claiming he had lived in London at the time, and was not liable for the French taxes.

 

A clique of gunrunners

Much of what is publicly known about Gaydamak's international dealings is the result of an extraordinary influence peddling, money laundering and illegal arms sales scandal involving Angola that erupted in France in December 2000 and came to be known as "Angolagate."

The investigation began when two French prosecutors were appointed to examine suspicions of bribery and corruption in the state's weapons export business. The resultant findings rocked the French political establishment and led to the highly publicized arrest of Jean-Christophe Mitterrand, the son of former President Francois Mitterrand who is free on bail pending his trial for influence-peddling. Other leading French politicians, such as former Interior Minister Charles Pasqua, were implicated in the scandal, but never charged.

Aside from the big political names, the scandal's central figures were Gaydamak and his French partner in the arms deals, Pierre Joseph Falcone. Gaydamak met the Algerian-born Frenchman in the early 1990s. Falcone's father, Pierre Falcone Sr., was a Corsican fruit merchant who had settled in Algeria and become an arms dealer in Venezuela and Argentina.

Although Falcone was well connected in France, he had lived many years abroad, including in Brazil and the United States. He married a Bolivian beauty queen named Sonia and settled in Arizona, where his wife became one of the queens of Arizona high society.

The Falcones bought a ranch in Paradise Valley, northeast of Phoenix, for $10.5 million – at the time the most expensive home sale in Arizona history. They were known for large donations to local charities, such as the Phoenix Children's Hospital. They also gave to political campaigns. Joyce Haver, a Phoenix member of the Republican Party's national finance committee, told The Arizona Republic that Sonia Falcone was "a major campaign contributor who responded to all of the George W. Bush fundraisers" in the Phoenix area during the presidential campaign. She added that the Falcones wanted to hold a fund-raiser for then-candidate Bush, but it never happened because Republican Party officials didn't know the Falcones well enough.

Through her Utah-based company Essante Corp., Sonia Falcone donated $100,000 in two installments to the Republican Party in 2000. When the party discovered, in January 2001, that Sonia Falcone was the wife of an accused arms dealer, it returned the money.

But when Gaydamak met him, Falcone was still flying high. He effectively was running the Sofremi, an arms export agency controlled by the French Interior Ministry. Sofremi was created in 1985 to coordinate the export of French police and military equipment and, critics contend, to circumvent the diplomatic scruples of the Foreign Affairs Ministry. France originally owned 35 percent of Sofremi, while several arms manufacturing companies, such as Thomson SA, Alcatel SA and Aerospatiale SA, controlled the rest. However, a clique of gunrunners soon assumed control of the organization and held it until well into the 1990s.

Henri Hurand, CEO of the Sofremi since 1997, told the French newspaper Le Figaro that "the most significant period of the Sofremi's domination by gunrunners was that of Pasqua's term as Minister of the Interior" – when Pierre Falcone was dominant within the organization. Pasqua was interior minister – effectively the country's top law enforcer – from 1986 to 1988 and again between 1993 and 1995. A veteran of the French resistance against the Nazis, he was also one of the founders of the Service d'Action Civique (SAC), disbanded in the 1980s under order of the French parliament, which branded it "a criminal organization" and "a private militia."

Sofremi was a gold mine for Falcone. Under normal circumstances, it would pay weapons dealers up to 10 percent of each transaction, but Falcone's commissions were well above that, Hurand told the newspaper in January 2001. "Normally, there was a different middleman for each market. But by 1992 Falcone was the Sofremi's sole representative abroad. This was totally abnormal. He received exorbitant remunerations on each operation."

 

The French-Angola connection

In early 1993, Angolan President Jose Eduardo dos Santos feared his government was on the brink of collapse. His nemesis, rebel leader Jonas Savimbi, was poised for the first time in Africa's longest-running war to seize key government strongholds. Savimbi – once embraced by the United States and the CIA for his opposition to Angola's Soviet- and Cuban-backed government – had become adept at turning the riches of Angola's diamond fields into money for arms purchases. Angola is the world's third-largest producer of diamonds.

By 1993, Savimbi's UNITA, or the National Union for the Total Independence of Angola, had in place the world's largest diamond smuggling network, netting hundreds of millions of dollars a year, funding almost entirely its war effort. UNITA's switch from Cold War surrogate to import-export business had been assisted by former military and intelligence men from South Africa's apartheid era. Experienced in running covert operations disguised as businesses for apartheid front companies, many sought new lines of work in the private sector.

Dos Santos was prevented by a U.N. arms embargo from buying weapons on the legitimate market. So he contacted his friend, Bernard Curiel, a former southern Africa expert from the French Socialist Party then in the private sector. Dos Santos received Curiel in the Angolan capital in March 1993 and, over a map of the country, explained the difficult military situation he faced. As Curiel later recalled for prosecutors, Dos Santos warned that "Savimbi is coming to Luanda to cut my throat."

Curiel approached Mitterrand, son of France's then-president, who had once served as chief counselor to his father on African affairs. Mitterrand, in turn, sought out Falcone and Sofremi. French prosecutors investigating "Angolagate" alleged that Falcone paid Mitterrand at least $1.8 million for making that contact.

Mitterrand later admitted to receiving the money as "an endowment for strategic and geopolitical counseling" and spent three weeks in prison before posting bail. He is still awaiting trial, charged along with Falcone for peddling influence. In a French newspaper interview, Mitterrand conceded his role as a middleman and counselor to Falcone, but added, "I never knew that Pierre Falcone was involved in the selling of weapons to Angola before I read about it in the newspapers. Therefore, I couldn't imagine such dealings had an illegal character."

Falcone and Gaydamak had become business partners by the time of Mitterrand's approach. One of the first transactions they conducted together was to purchase seven Russian helicopters for Venezuela's national petroleum company, Gaydamak said. The Venezuelans failed to pay, and they put the helicopters in storage. It was then, Gaydamak told ICIJ, that Falcone introduced him to an Angolan delegation visiting Paris. "Falcone told me that he had met with the delegation and that they were interested in the helicopters but that they didn't have the money to pay for them. I leaped at the opportunity and told them to take the helicopters for free and pay me when they could. I asked them to pay me in oil. The president (Dos Santos) liked the idea; he invited me for a talk and we became friends."

Gaydamak discovered that he and Dos Santos had a lot more than helicopters to talk about. With his knowledge of banking systems, he said, he managed to secure $500 million credit lines from the French bank, Paribas, for the Angolan government in return for collateral in the form of Angolan oil.

"I knew that Russia had an interest in ridding itself of extra weapons and was greatly in need of cash," Gaydamak told the Israeli publication Yediot Aharanot in January 2000. "So I initiated a deal in which Angola would sell oil franchises and, with the money earned, buy weapons from the Russian Defense Ministry. It seemed to me a legitimate move that many business bodies take routinely. Naturally, I received a handsome commission, but I was not party to the deal."

Between 1993 and 1994, Gaydamak and Falcone moved $633 million dollars in weapons to the government of Luanda through the Sofremi, allegedly without authorization. These included tanks, rockets, helicopters, combat vehicles and troop transporters of Russian manufacture. Falcone's Paris-based company Brenco International provided a legal cover for the deals. The weapons were obtained through ZTS Osos and transported directly from Eastern European countries to Angola, bypassing France.

Re-armed, the Luanda government counterattacked. Angolan cities became ferocious battlegrounds as the war turned in favor of the government, and UNITA was dislodged, city by city, in a series of grinding battles. UNITA forces held out for 18 months in the eastern provincial city of Kuito, where the city's main street served as the front line. The inhabitants of Kuito camped in the husks of former apartment buildings and in the football stadium. Makeshift cemeteries – little mounds with wooden crosses and flowers – were constructed in backyards. Aid organizations were blocked from entering the area for almost a year. People resorted to eating corpses, and soon there were no dogs left in the city. When UNITA was finally driven out in July 1994, the city of 140,000 was left with one of the highest amputee populations in the world. UNITA had laid most of the mines, but the government's cluster bombs, resembling shiny toys, cost many children their limbs.

 

A gateway to riches

Angola in the 1990s was not a country for the squeamish. The capital city Luanda, built for 600,000 people, held up to 3 million – almost a third of the population – as people fled fighting in the interior. Corruption was rampant. When Falcone and Gaydamak came to Angola to do business in 1994, the monthly minimum wage was 240,000 kwanzas – about 50 U.S. cents. It cost twice that much to send a child to private lessons (very little of the state school system was intact), a quarter of a month's wages for a loaf of bread, one-eighth for a bucket of clean water, and one-sixteenth to use a toilet in private. Women sold goods and themselves in the marketplace in a desperate scramble to keep up with inflation, estimated by the World Bank at 1,800 percent. Anything with the slightest value was bartered or sold. One family, in the toothpaste business, had their children rummage through trash dumps for spent toothpaste tubes that the adults would then scrape out until they had a full tube to sell.

In this sadly reduced nation, Falcone and Gaydamak saw the gateway to a fortune. Angolan oil fields, already pumping more than half a million barrels a day in 1994, had known reserves comparable to Kuwait. But Angola also had diamonds and other minerals and, as a developing country with an infrastructure destroyed by war, had to import everything and rebuild from scratch. In recognition of his key position as war financier, Gaydamak said that Dos Santos appointed him as economic adviser, issued him a diplomatic passport and made him an authorized signatory on the bank account of the Angolan government.

The French investigation revealed that Gaydamak was also at the center of a web of corruption in Angola, uncovering more than 40 bank accounts in Monaco of Angolan citizens, including members of the Dos Santos family. Sofremi gave Dos Santos the "gift" of an armored luxury Renault Safrane worth $150,000 – a practice which Falcone defended, saying that the payment of illegal commissions to government officers "belongs to the way things work out in Angola."

Gaydamak was close to Angola's chief arms buyer, Gen. Manuel Helder Vieira Dias, also known as Kopelipa, and to the director of Angola's military intelligence, Gen. Fernando Miala. Together, they were able to access vast profits from the country's war machine.

According to the French indictment, Gaydamak, Kopelipa and Miala jointly owned the Angolan company Simportex, which enjoyed a monopoly on food and uniform delivery to the Angolan Armed Forces. In addition, Falcone and Gaydamak controlled CADA, a company in Angola that had an exclusive contract to deliver food and pharmaceutical products to the country, worth an estimated $200 million a year.

Gaydamak also helped the Angolans with debt relief, conjuring up a scheme that was designed to satisfy both the Angolans and their Russian creditors. Angola had accumulated a $5.5 billion debt to the Soviet state during the Cold War. The Russians never expected to recover the debt, but it remained on the books, undermining Luanda's creditworthiness. In 1996, Gaydamak said he came up with a plan. He proposed to the Russians that they accept 30 percent of the face value of the debt, not unusual for a country seeking returns on a debt considered virtually unrecoverable. Thus, the debt on the books was reduced to $1.5 billion. The Angolan government issued promissory notes of about $50 million each for the repayment of the debt and would pay $100 million a year for 15 years, starting in 2001 and ending in 2016.

The debt had been converted into financial instruments, like treasury notes. Then Gaydamak made another offer to the Russians, this time to purchase the notes from them. "I gave them an unbelievable price – 50 percent of the value of the promissory note – that is $750 million," he told ICIJ. The advantage for the Russians was that they would not have to wait five years to start recovering the money. To finance the purchase of the notes, Gaydamak turned to yet another firm he and Falcone had established, Abalone Investment Limited.

According to the deal structured by the Angolans, the promissory notes could be used to purchase Angolan oil at the face value of the notes — $1.5 billion worth. Gaydamak approached the oil trader Glencore, the former company of Marc Rich, the fugitive financier that President Bill Clinton pardoned in January 2001, and offered to sell the promissory notes for cash equal to 90 percent of their value – or $1.35 billion. The profit, according to Gaydamak's own telling, was $600 million.

Gaydamak paid 10 percent to the Angolans, still leaving a sizeable profit for himself, and the deal was completely legitimate, he told ICIJ. However, Swiss authorities – who launched their own investigation of Gaydamak and Falcone in April 2002 – said the Russian state never received what it was owed from Gaydamak. The deal resulted in a massive misappropriation of funds: Russia should have received $750 million but, according to Swiss prosecutor Daniel Devaud, it took in only $161 million.

Falcone received about $120 million and Gaydamak about $60 million, according to Devaud. Other people who profited from the debt reduction were Russian banker Vitali Malkine, a close associate of former Russian President Boris Yeltsin and Gaydamak's predecessor as chairman of the Russian Credit bank ($48.8 million); Angolan ambassador to France, Elisio Figuereido ($18.8 million), and Dos Santos himself (over $20 million). The money, according to Swiss investigators, traveled through bank accounts in Luxembourg, kept by firms based in Panama, Israel, and Cyprus.

Dos Santos has protested strongly to the Swiss government, denying the claims, and Falcone has said he did not pay any money to the Angolan president. Falcone also said that any payments to Figuereido were made to him as an official of the Angolan state and not for personal use. Malkine could not be reached for comment.

Devaud said Gaydamak and Falcone had built a "secret organization" with multiple fictitious enterprises to hide the flow of money resulting from the debt renegotiation, to the detriment of Angola and the Russian Federation.

In April 2002, Falcone and Gaydamak were again accused of trafficking weapons to Angola, this time for the period 1994 to 2000. Prosecutors in Paris have documents that allegedly prove that Falcone and Gaydamak masked their trade through yet another company. Instead of using ZTS Osos, the French prosecutors alleged, in 1996 they created Vast Impex to continue to furnish weapons to Angola until the summer of 2000.

French investigators discovered that – after the Angolan sales of the early 1990s – Falcone and Gaydamak's domination at the Sofremi continued and extended into other countries. The prosecutors inquiring into "Angolagate" have demanded that the French Defense Ministry reveal the contents of classified documents related to the authorization of exports of weapons to Angola, Congo-Brazzaville, Cameroon and the Democratic Republic of the Congo by Sofremi, Brenco International and ZTS Osos between 1999 and 2000. Six demands were presented, and three of them were rejected on national security grounds. Former Cameroonian Defense Minister Edouard Akameme Mfoumoufou confirmed that he had negotiated a deal with Falcone for light arms from ZTS Osos.

Falcone was omnipresent at the Sofremi. Between 1994 and 1997, he received commissions related to exports to Latin America, including the selling of antiquated police equipment to Bogotá and Buenos Aires. Falcone was also supposed to earn a commission from the Sofremi for exports of equipment to the federal police in Brazil for $40 million. But in 1997, the Sofremi's new board of directors blocked the payments.

 

The players

In late 1994, at the same time the Angolans were receiving weapons via Gaydamak and Falcone, they hired an army of South African mercenaries – warriors of the defunct apartheid state – known as Executive Outcomes. EO, as the company was called, had been a front company for a dirty tricks and hit squad run by South Africa's military intelligence. It was first hired by the Angolan oil company, Sonangol, to protect the company's assets. Drawn from some of South Africa's most notorious military units, the men who worked for EO proved effective because they understood the nature of the bush war and they knew the enemy – in fact, they had been one-time UNITA allies. They provided high-tech skills in communication and weapons systems and piloted the Angolan government's fleet of MiG fighter jets. They also offered training, intelligence, logistics and battlefield planning. The combination of fresh arms and South African mercenaries helped the Angola government force Savimbi to the peace table.

Though that was not to last, Gaydamak was inspired. He saw private military services as a further commercial opportunity and teamed up with two former senior officials of Mossad, Danny Yatom and Avi Dagan, to create a private military company, which they called Strategic Consulting Group. The Israelis, like the South Africans, had a track record of providing security in Angola. In September 1992, Israel had armed the Angolan police, preventing Luanda from falling to UNITA, though the Angolan police were accused of committing atrocities against UNITA supporters.

Yatom met Gaydamak through Moshe Levy, the owner of Lordan-Levdan, another private military company that was training the president of Congo-Brazzaville's private militias under a $50 million contract. The Israelis were under retired Brig. Gen. Zeev Zachrin, who had trained the pro-Israeli militia in Southern Lebanon. But the Congo-Brazzaville deal, which also involved a trade for oil concessions, was controversial in Israel, and Zachrin moved over to Angola, where he took charge of Gaydamak's projects there. Yatom went to Angola, met with Dos Santos and offered him a personal security package to train the presidential guard for $50 million. But even to Dos Santos, this seemed overpriced, and the contract was not awarded. Yatom left the partnership when he was appointed security advisor to then Israeli President Ehud Barak in 1999. Dagan continues to work for Gaydamak.

Toward the end of the 1990s, a new player appeared on Angola's horizon – again with ties to Gaydamak. Lev Leviev, like Gaydamak, was a self-made entrepreneur from the former Soviet Union who immigrated to Israel. And like Gaydamak, the Tashkent-born Leviev had a taste for playing politics. On the mahogany table of his Tel Aviv office sits strategically placed photographs of Leviev shaking hands with Russian President Vladimir Putin, Ukrainian President Leonid Kuchma and Nazarbayev of Kazakhstan.

Leviev became involved in Angola after buying into the Catoca diamond mine – a joint venture between the Russian state diamond company, Almazy Roskii Sakha (Alrosa), and the Angolan state diamond company, Empresa de Diamantes de Angola (Endiama). Leviev, who was close to the then-head of Alrosa, Valery Rudakov, said he helped bail out the financially ailing venture with a $58 million investment, thus becoming a partner in what at the time was the largest diamond mine in Angola.

In 1997, Leviev met with Dos Santos, who "wished to know this crazy businessman who was ready to invest $58 million in his country without knowing anyone from the authorities," Leviev told ICIJ in an interview.

At their first meeting, Leviev discovered that he and Dos Santos shared a common language, Russian (Dos Santos had studied in Moscow during the war against Portuguese colonialism), and a mutual loathing for the De Beers diamond monopoly. Leviev had once been a favored customer of De Beers, but was cut off for selling Russian stones through his offices in Tel Aviv – a challenge to the De Beers monopoly. De Beers refused to discuss its relationship with Leviev, citing client confidentiality.


Lev Leviev - Angola's diamond czar

Dos Santos complained bitterly to Leviev about how little De Beers was doing for Angola. "He said De Beers had no interest in developing Angola's diamond industry. All the buying firms were controlled by and worked with De Beers, but Angola did not gain and benefit from them. These companies claimed zero profits and paid nothing to the government," Leviev said.

When Dos Santos asked him what he should do, Leviev replied, "I said, ‘You must reform the industry,' and suggested to him to form a joint venture between the government and us as private investors."

Dos Santos followed up that meeting in 2000 by creating Ascorp – a partnership between Leviev, Belgian diamond dealers Sylvain Goldberg and Guy Laniado, and the Angolan state. There were also hidden shareholders, notably Dos Santos' daughter, Isabella, through the Swiss Company Tais, according to diplomats in Luanda and diamond industry sources, all of whom spoke on condition they not be named. The creation of Ascorp made Leviev Angola's diamond czar and, in 2001, De Beers announced its complete withdrawal from the lucrative Angolan market. Ascorp more than trebled the revenue that the Angolan government received from diamonds just three years before. The Israeli security team that Leviev brought in largely cleaned up the smuggling of stones, and he claimed that the UNITA movement was no longer able to launder its "blood diamonds" through the official system.

What Leviev neglects to mention when he tells his Angolan success story is his partnership with Gaydamak. On his annual visits to Angola, Leviev would travel about in Gaydamak's plane. One commercial intelligence report, obtained by ICIJ, said: "Confidential sources inside the Angolan presidency confirm that Leviev used the influence and extensive contacts of Gaydamak to negotiate and secure the exclusive diamond buying arrangement with the Angolan government." Leviev denied that Gaydamak had introduced him to the Angolan market, saying that his involvement there began through the Russian company Alrosa. "I came to Angola in 1997, while my encounters with Arcadi began in 1999."

Gen. Miala, Gaydamak's business associate in a number of deals in Angola, was involved in appointing and chairing the commission that runs Endiama, Angola's state-owned diamond company. And Gaydamak said it was his idea to establish Ascorp and that he helped draft the decree that created the company.

In January 2000, Gaydamak paid $75 million for a 15 percent stake in Leviev's company, the Africa Israel Group, an Israel-based holding company involved in real estate and construction. Africa Israel next acquired 26 percent in Alon Israel Oil Company. In August 2000, Alon Israel Oil Company purchased the assets of TotalFinaElf SA in the United States for $250 million. The deal included an oil refinery in Texas with a 60,000 barrel-per-day capacity, various depots for oil storage, pipelines, and a franchise for 1,700 gas stations on the U.S. East Coast and part ownership of the attached "7-11" convenience stores.

The partnership had already expanded geographically. In April 1999, Gaydamak and Leviev were granted permission by the president of Kazakhstan to acquire the Tsellinnoye Chemical Metallurgical plant, a producer of polymetals and chemical products.

Tsellinnoye had produced enriched uranium for the Soviet nuclear program during the Cold War, and was located near the world's largest biological warfare development and production facility. It is still the largest uranium manufacturer in Kazakhstan, according to some reports, though Gaydamak says it has nothing to do with uranium anymore and is now a fertilizer factory.

Whatever charm Leviev and Gaydamak used to acquire the property, they acquired it over the protests of the Canadian company World Wide Minerals of Toronto, which had fallen out of favor with Nazarbayev. In 1998, World Wide, which had invested $29 million in the project, launched a billion dollar lawsuit against the government of Kazakhstan. It had taken over management of the complex in 1996 and had an option to boost its interest to 90 percent. However, the Kazakhstan government refused to issue uranium export licenses and revoked the option from World Wide.


Dos Santos and Lev Leviev 
 


Lev Leviev and Ariel Sharon

"I am a good man"

In December 2000, when the "Angolagate" scandal broke, Gaydamak was in London. He eluded arrest by moving back to Israel, claiming he had forgotten to do his military service. He rejected all allegations that he was involved in criminal activity, including influence peddling, money laundering and illegal arms sales and, in April 2001, filed libel suits against the two French government agencies – the DCRG and the DGSE – responsible for some of the accusations. His French lawyer, Gilles-William Goldnadel, claimed the files of the French secret services were based on defamatory press reports that Gaydamak had always contested.

Falcone, who was charged on Dec. 1, 2000, with fiscal fraud, influence peddling, misuse of public property, deception and corruption of public officials, and gunrunning, was imprisoned for a year. Released in January 2002 on a multimillion-dollar bail, he was charged again with illegal weapons smuggling on March 27, 2002, and is awaiting trial. He is under orders to remain in France and refrain from contact with any of his alleged co-conspirators.

Falcone has denied he committed any offense and contends he is the victim of political machinations. "The weapons for Angola never passed through France, and were not freighted on French transports," he told a French newspaper. "There was neither illegal trade in weapons, nor traffic of influence, nor illegal commissions, no fiscal fraud." As to the allegations of bribery, Falcone said, "Prosecutors in their logic cannot admit that someone like me can be generous. Because I am rich, [to them] I am guilty."

Pasqua, the former French foreign minister, has complained publicly that his government's pursuit of Gaydamak and Falcone could hurt France's oil investments in Angola. The world's largest offshore oil platform began pumping oil from the Girassol field in December 2001. Operated by the French concern TotalFinaElf, it is expected to add 200,000 barrels of crude oil per day to Angola's output. "Angola has up to now given France important oil concessions," Pasqua told Le Parisien in March 2001. But, because of the French inquiry, that dominance "is about to fall into the hands of the Americans."

Pasqua may have had a point. A year later, after the death of Savimbi and the collapse of UNITA, Dos Santos was feted in Washington, D.C. But since the "Angolagate" scandal began, he has refrained from visiting Paris, a city he once frequented regularly.

Dos Santos has also urged French President Jacques Chirac to stop the judicial inquiry and to release Falcone. "The legal action against our official envoy Mr. Pierre Falcone," Dos Santos wrote Chirac on April 18, 2001, "causes grave moral prejudice to the Republic of Angola and might damage the good relations prevailing between our two countries." Dos Santos even called the inquiry "an offense to [Angolan] sovereignty" and Falcone "a great friend of my country … an important contributor to our successes in our battle against armed subversion and terrorism." Dos Santos had even tougher words for the Swiss. In a May 24, 2002, letter to the president of the Swiss Federation, Dos Santos called the inquiry by Swiss prosecutor Devaud a "violation of the principles of international law that rule the relations between Switzerland and Angola. …We consider Devaud's investigations as hostile acts."

Responding to Angola's ire, the French foreign minister traveled to Luanda in July 2002 to "turn a page" on the relations between both countries. Stories are circulating in Paris that the French want to drop the charges of gunrunning and corruption against Falcone and Gaydamak, rumors which the French government has pointedly failed to deny.

Despite an outstanding international warrant for his arrest, Gaydamak continues to shuttle between Israel, Angola and Kazakhstan. Operating with a small staff and three cellular phones, which sometimes ring all at once, he continues to scout for business opportunities in Africa.

However, he no longer does business with Leviev, the Russian-Israeli diamond mogul whom he helped ensconce in Angola and who has now become a global challenger to the De Beers monopoly. The "Angolagate" scandal, which embarrassed Leviev, soured their friendship, and Gaydamak claims to have sold his shares in Africa Israel back to Leviev as it was "not a good investment." Leviev is also no longer a shareholder in the Kazakh operation. "We agreed to go out of all common projects," said Gaydamak.

There is an edge of bitterness to Gaydamak, a desire to convince people that he is not the gun-running scam artist that French prosecutors have alleged. He has invested millions in repairing his reputation, such as the donation he said he made to the World Trade Center victims. In Angola, he has established schools, a fleet of fishing boats, a hospital, and a water treatment plant.

He supports Jewish old age homes in Moscow, as well as 12 orphans' homes, and has funded 20 Angolan agricultural students who have been sent to hone their skills on an Israeli kibbutz. "There are thousands of people around the world who are now eating because of me," he told ICIJ. "I don't care what people think. I am a good man."

 

André Verlöy and Phillip van Niekerk contributed to this report.

 

 
Jewish gun runner Arcadi Gaydamak (right), with a fellow Jew in Israel

 

  • More information on Lev Leviev - Angolas diamond czar and leading Russian Jew - can be read here

     


The Angolagate scandal

by Francois Misser

African Business, May 1, 2001

 

The web of intrigue that has become known as Angolagate stretches from Africa, across Europe to the United states. Some very high profile names, such as Pierre Falcone, Marc Rich, Jean-Christophe Mitterrand and Jaques Attali have already been snared; others like Bill and Hillary Clinton are struggling to break free. Francois Misser recounts the incredible story.

 

Over the past few months, the French media has been smacking its lips over juicy revelations from what has been dubbed The Angolagate scandal - a series of complicated oil for arms deals. It is easy to understand the media interest. The cast of characters being sucked into the scandal is impressive enough - former US President Bill Clinton, his wife Hillary - now a New York senator, Mark Rich - on the wanted list in America before being pardoned by Bill Clinton, Francois Mitterrand's son, Jean Christophe-currently out bail, Angolan President Dos Santos, and the principal actor, the flamboyant Pierre Falcone currently serving a prison sentence in France.

The story begins in 1992 in Angola. A fragile cease-fire had led to presidential elections, duly won by Dos Santos. The defeated candidate, Unita leader Jonas Savimbi had cried foul. He tore up the 1991 Bicesse peace agreement and war resumed.

The resumption of the war came at a critical moment for the ruling Movement for the People's Liberation of Angola (MPLA), which had operated as a single party since independence in 1975.

The economy was in a downturn, the military morale was low and the government armoury was largely depleted. On top of that, most of the Cuban soldiers who had fought alongside the MPLA troops had left the country in the wake of the Bicesse Peace Agreement.

The major headache for Luanda was that the Bicesse Peace Accord included a United Nations ban on arms sales to both sides. It was lifted in October 1992 by Russia, the United Kingdom and partially by United States - but France continued to prohibit the sale of arms to both sides in the civil war.

Enter the French-Brazilian entrepreneur extraordinary - Pierre Falcone and his partner, the Israeli-Russian businessman Arkadi Gaydamak. They came to make an offer which they knew Luanda could not refuse.

Between 1993 and 1997 they arranged the supply of Russian made weapons (including combat helicopters) by the Slovak ZTS-Osos company in an arms for oil deal worth an estimated $600m.

Eyebrows were beginning to be raised.

The deal was worth one third the 1994 Angolan national budget. Angola's human development indicators (literacy, infant mortality etc) were then and remain, among the lowest in the world. In addition, most of the arms supply took place after the Luanda government and the UNITA rebels had signed the Lusaka Peace Agreement of November 1994.

Jonas Savimbi used these arms procurements and others from the UK, China, Russia and Brazil as pretext for refusing to demobilise his army. He also claimed that Luanda had not fulfiled its part of the demobilisation condition. The Lusaka Peace accord was effectively dead.

The war recommenced in full fury in late 1998. The UN, which had launched a much publicised campaign against 'conflict-diamonds' sold by the UNITA rebels to finance their war effort, ignored the role of oil in financing the Angolan army.

Angola was not ZTS-Osos' only African client. Cameroonian officials confirmed French media reports in early 2001 that it had also imported weapons from the Slovak company in 1994, during a border conflict with Nigeria. But the same Cameroonian sources claim there was nothing illegal about the deal, also mediated by Pierre Falcone.

In Angola's case, the situation was different. Falcone is a French citizen and his oil-backed operations aimed at facilitating the purchase of weapons for Angola were made with the financial support of the French bank, Paribas. For both these reasons, he should have asked for the French Defence and Foreign Affairs Ministries for permission before going ahead with the deals. That he did not is why the French ordered his arrest last December and held him at the La Sante prison in Paris

The French judiciary has other charges against the French-Brazilian jet-setter.

He was also involved at the time with the French government's security equipment export company Sofremi, which was under the Former Minister of Interior, Charles Pasqua.

 

Ministry searched

Authorities are currently examining charges that Sofremi was involved in the arms for Angola dealings, and are also investigating allegations that Falcone helped Luanda to acquire sophisticated, unlicensed French-made surveillance systems. Africa Confidential, the London based newsletter, reported that this equipment enabled the Angolan military to track down the coordinates of Savimbi's satellite phone. On one occasion, an attempt was made to guide a MIG fighter on a mission to kill the UNITA leader.

To make matters worse, Falcone failed to declare the proceeds from the deals to the French tax authorities, and still owes them about $160m in unpaid taxes according to French press reports.

In another twist to the plot, French investigators began looking for Looking for links between the Falcone case and a $1.8m transfer from Falcone's company, Brenco International, to the late Francois Mitterrand's son, Jean-Christophe, who between 1986 and 1992 acted as his father's adviser for African Affairs.

Jean-Christophe Mitterrand was jailed by examining magistrates for two weeks in late December and early January, and later released on bail. He faces charges that he received the cash for using his influence and contacts to help Falcone secure the Angolan contracts. While he admits that he did receive the money, paid into a Swiss bank account, he denies any link with the arms deals.

The French courts are also investigating a $200,000 transfer by Brenco to a company owned by the former chairman of the European Bank for the Reconstruction and Development for Eastern Europe Eastern Europe, Jacques Attali.

Attali admitted that the money had been transferred to his company, ACA, but said the money was used to finance a study on micro-credit projects in Angola, as requested by President Dos Santos.

But three months later, in March, the French juges d'instruction charged Attali with peddling influence and concealing illegally obtained funds. The prosecution believes that Attali arranged a meeting between Falcone's lawyer, Alain Guilloux and French Foreign Minister, Hubert Vedrine. The motive, allegedly, was to ask Vedrine to persuade the Finance Ministry to soft pedal soft pedal on Falcone's tax evasion charges. Several letters from Guilloux to Vedrine were uncovered by police.

Attali was detained for a few hours on 8 March and released on bail the same day.

The latest but probably not the final episode in this investigation of the French connection occurred on 11 and 27 March when the French Foreign Ministry headquarters were searched by an investigating team after a letter from the Angolan President, Jose Eduardo Dos Santos to Vedrine was uncovered. The contents of the letter had not been made public at the time we went to press.

 

Dos Santos angered

The story which has been grabbing headlines in the French press since late 2000 has irritated Angola's Dos Santos, who has himself become a target of the French judicial investigations. In February the French authorities examined Dos Santos' accounts in several banks based in Monaco. Outraged, the Angolan President reacted angrily when receiving credentials from the new French ambassador in Luanda, Alain Richard.

These developments, complained Dos Santos during his speech, amounted to a campaign of defamation which harm Angola's reputation. Beyond that, Dos Santos paid an official tribute to Falcone, whose intervention, he said "helped preserve democracy and rule of law in Angola".

The Angolan President made it clear that, in his opinion, prosecutions against Falcone were not justified since the weapons were not made in France and did not even transit through the French territory. To substantiate that, Dos Santos confirmed that the weapons were bought direct from the Slovak ZTS Osos company.

Falcone's actions were interpreted by the Angolan government as a "confidence and friendship gesture from France", said the Angolan President. This was why the Angolan government allowed "a spectacular rise of the cooperation with France in the oil, economy and finance areas", explained Dos Santos. He told the French ambassador "friendship is like a plant which dries up if it is not watered regularly". That statement was interpreted by Le Figaro, the Parisian conservative daily, as a warning that further media noise about the case and further investigations by the French authorities could be detrimental to French interests in Angola.

The problem is that there is little the French government can do to stop the Justice Ministry from investigating the case, although the French authorities would certainly be delighted if the judges showed a little less zeal. They feel squeezed between the press revelations on the one hand, and on the other hand the embarrassment caused by Dos Santos' statement that Falcone acted with the blessing of the French authorities (both the Socialists and the Right) at the time of the arms deals (1993 to 1997).

Now, Dos Santos himself is in trouble at home. Late in February, the non armed opposition in Luanda asked for a parliamentary enquiry into the scandal. This is unlikely to take place since the government party retains a solid majority. But Dos Santos implicitly admitted that there was a problem, since he found it necessary to require the Defence Minister, Kundi Paihama, to provide explanations before the National Assembly.

 

Hillary's campaign  

Angolagate has also spreads its tentacles across the Atlantic. In a report titled Crude Awakening, the British NGO Global Witness had asserted that "the financing of a $50m contract for the supply of East European weapons from the Czech Osos Praha Company and the Slovak joint stock company ZTS was arranged in 1993 by the Russian-Israeli businessman Arkadi Gaydamak and by his French-Brazilian partner Pierre Falcone, run through the Swiss oil-trading company Glencore founded by Marc Rich". That was a year before Rich sold his shares in Glencore. At the time, neither Glencore nor Marc Rich denied the Global Witness report.

Gaydamak is currently on the run - the French having issued an international arrest warrant for him.

So far, neither Glencore or Marc Rich have been accused of violating Swiss or French laws, but the conclusion one may draw from the Global Witness report is that Marc Rich might have contributed to the Angolan government's war effort. Should the US Justice Department find a connection between his ex-wife singer Denise Rich, and her donation to Hillary Clinton's New York senate campaign being linked to Bill Clinton's decision to pardon Marc Rich over a purported $48m tax fraud, that would be more than embarrassing for the former First Lady.

The question is whether or not the former US President, who justified his decision to pardon Rich for his 'positive role' in the Middle East peace process, can seriously ignore Marc Rich's role in Angolagate. After all, Bill Clinton, if he wanted to, could have easily accessed all intelligence reports about such an important and controversial player on the world's oil scene.

Even assuming that Clinton did not know, it will be even harder to convince those black voters who supported Mrs Clinton in New York that she and her husband were ignorant of Marc Rich's role as a top sanctions busters during the South Africa apartheid era. According to a book, Apartheid's Oil Secrets Revealed, from the Dutch-based anti-apartheid group Shipping Research Bureau, which monitored violations of the 1979 UN oil embargo, the Swiss-based trader chartered 149 our of the total 865 tankers spatted by the SRB calling at South African ports between 1979 and 1993.

Since oil was at the time the only strategic product which South Africa lacked, Rich can be considered as having been instrumental in supporting the apartheid state's war machine - unleashed against those who opposed this system both inside the country and in the frontline states. The SRB book provides evidence that Rich, who is Jewish and holds an Israeli passport, managed to sell crude from the Arab states of Saudi Arabia, Egypt, Iran, Oman, Qatar, United Arab Emirates and Brunei to South Africa, which had developed close military cooperation with Israel.

Rich also supplied crude from Nigeria, Gabon and the former Soviet Union, who were scrupulously supporting all antiapartheid resolutions at the UN. Rich, whose operations are afforded an entire chapter of the book, was from the mid 1980s South Africa's main coal trader, finding alternative markers to those of France and Denmark in Spain, China, Chile, Portugal and Turkey.

 

Mrs Falcones' Donations

The US Democratic parry do not have a monopoly on receiving funding from dubious characters connected with Angola's oil barons or the former apartheid regime. The Republicans came close to becoming a recipient when, last January, the Arizona Republic daily revealed that a Utah-based health company, Essante Corp, controlled by Falcone's wife Sonia Montero, a former Bolivian beauty queen, contributed $100,000 in campaign money to a Republican Parry committee just days after President Bush's election victory. However, the money was returned by Republican officials who became concerned after reporters from Newsweek asked them what they knew of Falcone's arms-dealing background.

Bush and the Republicans just managed to escape a scandal, but have failed to explain just why Mrs Falcone was quite so generous towards them. In fact, prior to this particular donation, US Federal Election Commission records show that Sonia had already contributed a modest $2,000 to the Arizona Republican Party and contributed the same amount to the Democratic National Committee in May 1999.

 

A Stranger in Paradise

One explanation for the mystery donations is provided by Simon Taylor of Global Witness. He told African Business that Falcone had plans to organise a meeting between George W Bush and President Jose Eduardo Dos Santos in the French-Brazilian businessman's $10.5m Scottsdale ranch located in Paradise Valley, the prestigious Arizona location.

In a radio broadcast on its Portuguese language service, the Voice of America reported that Falcone also tried to invite George W Bush to visit his ranch, which is described with some reason as 'a 1001 nights palace' by the French satyric weekly Le Canard Enchaine.

But a man called Justin Rose, whom the VOA described as the "Falcone family's spokesperson" rejected as "ridiculous and insane the allegations that the Falcones planned to influence the Bush administration's Angolan policy or sought United States support to obtain Pierre Falcone's release from a French prison.

With a projected output of 2mbd for 2005, equivalent to that of Kuwait or Nigeria, Angola is one of the world's most attractive places for the world's oil barons. The revenue from oil would go a long way towards improving the appaling living conditions of the majority of Angolans, but given the international web of crooked deals involved, it is unlikely that little more than a trickle will ever reach the people.

Angolagate comes at a very bad time for the Luanda government which has to foot a $2b bill (about one third of the GDP) to its creditors in 2001. Luanda needs to make a deal with the IMF to reschedule its $9.4bn foreign debt, half of which is in arrears.

The US, which imports 8% of its crude supplies from Angola, and France, whose companies are the main oil operators in the 'Kuwait of Africa', are also keen to see a deal being struck between the IMF and Angola. But they may find it difficult to explain why multilateral and bilateral donors should be so generous with a country led by a regime involved in such a major scandal.

 


The man who carried millions in a shopping bag

by Yossi Melman

Ha´aretz, November 20, 2008

 

An escaped criminal from France who worked as a money courier for business tycoon Arcadi Gaydamak is hiding in Israel, Haaretz has learned. Gaydamak and his former business partner, Angolan Pierre Falcone, are currently embroiled in the so-called "Angolagate" controversy, currently being tried in Paris.

The escaped criminal has been named as 79-year-old Samuel Mandelsaft, who upon arriving in Israel in 2001 Hebraized his name to Shmuel Shaked. Mandelsaft fled France that year after a judge there opened an investigation into the Angolagate affair, a hugely publicized trial involving $790 million of arms sales to Angola during the country's civil war in the 1990s, and a colorful cast of characters including Jean-Christophe Mitterand, son of former French president Francois Mitterand.

In August 2005, France issued an international arrest warrant for Mandelsaft and asked Israel to extradite him. Israel refused the request, citing that the allegations against him did not require Mandelsaft's extradition. The suspects linked to Angolagate - Gaydamak, Falcone, Mitterand, former French interior minister Charles Pasqua and a number of other prominent political figures - are suspected of taking bribes, breach of trust, fraud and illegal weapons trafficking with the African country.

Gaydamak, for whom France has also issued an international arrest warrant, did not appear in court for fear of being arrested, unlike the other suspects.

A hearing held at the Paris court two weeks ago exposed Mandelsaft as a money courier for Brenco, a company owned by Gaydamak and Falcone. "He (Mandelsaft) was an elderly retired gentleman, tired, sick and unhealthy. He complained a lot," Isabelle Delubac, Falcone's former secretary, told the court two weeks ago.

She said Mandelsaft would arrive at her boss's office with plastic bags full of money, earning him the nickname "Plastic Bertrand" after the Belgian pop singer of the 1980s. Delubac said she would remove the money from the bags at Falcone's instruction, and place it in envelopes to bribe Angolan officials and French public figures.

Very few details are known about Mandelsaft, other than his birth in Poland in 1929. He worked in a variety of jobs before being employed by Falcone and Gaydamak, under whom he habitually exchanged French francs to dollars at an undisclosed location on Paris' Champs Elysees Boulevard, then deposited the dollars into a Swiss bank account under his own name.

Israel Police declined comment on the matter, and the Justice Ministry said it does not, as a rule, comment on issues of extradition.

 

 


 

Secret Services Veterans not Beware of Gaydamak

AIA - Axis Information & Analysis, 14.07.2008

 

Former chief of Mossad, Dani Yatom, sounds a bitter criticism of the Israeli Government, and makes quite flattering comments about the Russian-origin billionaire Arcady Gaydamak. Police file against this businessman, as many facts show, does not impress other ex-heads of Israeli special services as well...

“I performed all relevant check-ups in order to learn what kind of person he is, and got permissions from all relevant bodies, in Israel and abroad. Till this day I keep documents that confirm that this person is absolutely clean”, Dani Yatom, former head of Israeli intelligence service, told Maariv daily last weekend, speaking of precautionary steps he had taken before establishing business relations with the Russian-origin businessman Arcady Gaydamak.

On July 2, Yatom resigned from the parliamentary faction of Avoda political party, after making a statement about finishing his political career. He sounded bitter criticism towards the Government of the Prime Minister Ehud Olmert, which “turned its own survival into ideology”. Last month, the Prime Minister managed to save his coalition due to the last-minute decision of Avoda leader, Ehud Barak, not to quit it.

“I leave the Parliament voluntarily, not because of some investigation or scandal following illegal financing (of political activity), but because I came to a conclusion that I cannot be a part of the place that drifted to a political prostitution”, Yatom told Maariv explaining his decision. Indeed, during five years of his parliamentary activity Yatom was not involved in any row, and was not suspected of any illegal action. This fact distinguished him from the majority of “people’s representatives”. And the latter were often criticizing the former intelligence chief for his excessive fidelity to principles and straightforwardness that don’t fit Israeli political reality.

Yatom also differed from the majority of Israeli politicians due to the fact that he did not attack the Russian-origin billionaire, Arcady Gaydamak, who has developed a broad philanthropic activity in Israel. “We hurry to blame Gaydamak; he makes some of us angry, because he reveals the shameful deeds of our Government. But he did the thing, which wasn’t done by the authorities”, Yatom told in November 2006, in the interview to NRG on-line edition. At that period, the Prime Minister and the Minister of Defense accused Gaydamak of having populist motives while evacuating civilians from the southern and the northern regions of the country that were under rocket attacks.

Dani Yatom was elected to the Parliament in 2003, after 35 years of a brilliant career in defense forces and secret services. He spent almost a decade in one of the most elite units of Israeli Army - General Staff Reconnaissance Unit (Sayeret Matkal). Later on, Yatom occupied a number of posts in the Army, one of which was – chief of Israeli Army Planning Branch, and was the Commander of Israeli Central Command. In 1993-96, he filled one of the major positions in the system of State security, being a Military Secretary of Israeli Prime Minister Yitzhak Rabin, who also headed the Ministry of Defense. Yatom actually coordinated between the Prime Minister on the one hand, and the army and secret services on the other.

In 1996-97, he headed Israeli foreign intelligence Mossad. Yatom paid special attention to the technical re-equipment of this secret service. Nor lesser effort was made by him to restore Mossad’s former positions in Africa, and the most prominent success was attained in Congo and in relations with South Africa. However, just one failure was enough to end Yatom’s brilliant career. At the and of 1997, Mossad’s servicemen didn’t succeed to carry out the liquidation of one of Hamas Palestinian Islamist organization leaders, Khaled Mashal. Moreover, the men were seized by Mashal’s bodyguards and then passed to the Jordanian counterintelligence. This led to a grave crisis in relations between Amman and Jerusalem. Yatom took the whole responsibility for the incident, and resigned from his post in February 1998.

In August of the same year, former head of Mossad founded a security consulting company, Strategic Consulting Group (SCG). His main companion was Avi Dagan, former Deputy Director of Caesarea special operations unit of Mossad, and in 1993-96 – the head of Mossad’s Tzomet branch that runs agents. For one year Dagan served in the Counterterrorism Staff of the National Security Council, after which he resigned and started his business career. At the end of 1999, former officer of military intelligence and ex-commander of Jerusalem District Police, Arie Amit, was appointed SCG’s Director General.

In January 2000, Maariv mentioned that Yatom and his companions set themselves a number of very tough rules: “not to sell arms; not to consult any private bodies; to get a permission of the Ministry of Defense for any deal to-be-signed”. Citing Yatom’s confidants, Maariv wrote: “They got dozens of commercial proposals concerning arms sales, but they rejected all of them”.

In December 2005, Yatom told Globs economic edition that before concluding a partnership contract with Gaydamak, he made all relevant inquiries in the Police, General Security Service (SHABAK), and even in Mossad. Yatom tried to find out, whether these bodies possess any information indicating Gaydamak’s links with any foreign intelligence or making him a criminal suspect. “All of them told that he was absolutely clean, giving me ‘a green light’”, Yatom told Globs. “They performed a thorough check of his past”, one of the SCG’s confidants told Maariv daily six years earlier. Moreover, the same source claimed that “Gaydamak never tried to use Yatom’s and Dagan’s ties in the highest ranks of Israeli administration”. And during the last weekend Yatom told of his former partner: “In those several months that we were working together he fulfilled all his obligations, till the last point, and I never found him out in a lie”.

In spite of the publications that are quite frequent in Israeli mass media, citing police sources that make different allegations about Gaydamak, Yatom is not the only one out of former chiefs of Israeli special services that does not hide his ties with the billionaire. For instance, ex-chief of the General Security Service (SHABAK), Amy Ayalon, now – one of the key figures in Avoda party, met with Gaydamak for several times during the last years. It was done in an absolutely open manner, usually – in the Parliament. Ex-head of the National Security Council, Major General in reserve Giora Eiland made it even further. Last month he accepted Gaydamak’s offer to head a group of experts, which is to formulate a program for his political party, Social Justice, in what concerns the issues of foreign policy and security. These examples only demonstrate that the police investigations against the billionaire, who openly declared his political aspirations, don’t really impress the former chiefs of Israeli special services.

 

 




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