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Iran’s Efforts to Buy Embargoed Arms Revealed in Italian Case

Court documents in an Italian guns-running case highlight how Iranian buyers seek embargoed military goods, and how difficult it is for the trade to be stemmed.

Italian anti-terrorist prosecutor Armando Spataro, pictured right, arrives for a Mar. 3, 2010, press conference announcing the arrests of Italians and Iranians suspected to have trafficked arms to Iran. (Giuseppe Cacace/Getty Images/AFP)
MILAN – The Italian businessman sounded worried on the wiretap.

Alessandro Bon was a politically connected entrepreneur and former sales representative for Beretta, the Italian gun manufacturer. But behind that facade, he was leading a ring of Italian arms dealers and Iranian spies who were illegally selling ammunition, helicopters and other military hardware to Iran, according to Italian court documents obtained by ProPublica.

As investigators listened in October, Bon gave one of his associates bad news: Some German sniper scopes they had sold to Iran had surfaced among Taliban militants fighting NATO troops in Afghanistan.

"You want to know where they found two of the sniper scopes, between you and me?" Bon said, according to a transcript of the call. "In Afghanistan … They fired on German soldiers with two of the sniper scopes and the serial numbers were traced … and the [German] police are investigating because they were in the hands of the Taliban … I wonder what the hell they were doing in Afghanistan."

Bon didn’t know it, but he had problems closer to home. His alleged clandestine business had already caught the eye of Italian authorities, who in March arrested him, four other Italians and two alleged Iranian intelligence officials. Two more Iranians remain fugitives. All nine are charged with violating international embargoes barring sales of arms and military technology to Iran. All have denied wrongdoing.

The case has been reported in Italy, but transcripts of wiretaps, in court documents obtained by ProPublica, offer a rare inside look at Iran's aggressive global campaign to buy prohibited deadly goods. Using layers of front companies and smuggling pipelines run by Iran’s increasingly powerful security forces, Iranian buyers prowl black markets in search of suppliers ready to take a risk for a profit, according to investigators and Western intelligence officials interviewed for this article.

U.S.-led international sanctions haven’t stopped the illicit sales, experts say, because European countries have longtime commercial ties to Iran and aren’t inclined to crack down, particularly in the current economic slump. Italy alone did more than $9 billion worth of legitimate trade with Iran in 2008.

Iran’s foreign minister, Manoucher Mottaki, rejected the charges against the four Iranians and denounced the arrests as politically motivated (John MacDougall/AFP/Getty Images file photo).Most countries "do not devote significant resources to investigating or prosecuting export control violations," wrote Michael Jacobson, a fellow at the Washington Institute for Near East Policy, in an article published by the think tank last year. A "public prosecutor has stated that his country has only uncovered ‘the tip of the iceberg’ of the black market activity involving Iran’s nuclear program." Jacobson continued, " the European Union is not in a position to oversee the shortcomings of its member states in this area."

The Milan arms ring operated undetected for at least three years, authorities say, allegedly moving – or trying to move – sniper scopes, various types of munitions, explosive chemicals, helicopters, parachutes, helmets and scuba gear worth millions of dollars. The cast of characters includes a political boss known as a "bulwark of Christ," an Iranian journalist turned accused spy and a fast-talking lawyer with an alleged audacious plan to set up a covert Iranian base in Italy.

Emanuele Ottolenghi, a Brussels-based senior fellow for the Foundation for Defense of Democracies, said the Milan prosecution stands out because it is unusual for European authorities to dismantle an Iranian arms procurement network.

"It is infinitely easier for Iran to break the rules than it is for law enforcement and the judiciary to put together a case," said Ottolenghi, author of "Under a Mushroom Cloud: Europe, Iran and The Bomb. "

The Italian suspects had experience in the Middle East arms market and links to Italy’s political and corporate elite. They saw no reason to stop doing business despite a European Union ban on military trade with Iran in 2006 and a United Nations ban in 2007, investigators say.

The Hunt Begins

A member of Italy's Finance Police shows one of the confiscated pieces of optical equipment.  (Giuseppe Cacace/Getty Images/AFP)The network’s troubles started in June when the suspects strayed into the sights of two top law enforcement agencies: a Milan unit of the Financial Guard, the Italian police force that investigates customs and tax-related crimes, and a prosecutors’ office with a tradition of pursuing corruption and terrorism cases.

The prosecutor in the case, Armando Spataro, led a historic investigation that ended in November with the conviction of two dozen CIA officials, in absentia, for the abduction of an Egyptian cleric here in 2003. Spataro’s prosecution also helped topple high-ranking officials of Italy’s foreign spy agency, worsening tensions with the administration of Prime Minister Silvio Berlusconi, a frequent critic of Italy’s independent-minded prosecutors.

The lead about the arms trafficking scheme came from Romanian customs officials, who were embroiled in a court fight with Bon, the Italian entrepreneur, over a shipment of 200 German sniper scopes. The merchandise had been confiscated in 2008 at the Bucharest airport en route to Iran.

Bon, 43, went into business on his own about five years ago after working in exports for Beretta, the firearms giant. He lives in Monza, a prosperous, politically conservative town near Milan.

According to an investigative report in an arrest warrant, Bon and an associate had sent the sniper scopes to a Romanian front company to mask the final destination: Iran. Investigators found an e-mail from Bon with instructions to the Romanian shipping agent: "You will find attached the bill for the Consignee in Teheran. THE BILL MUST NOT ACCOMPANY THE MERCHANDISE!!!"

The Financial Guard began wiretapping Bon and his associates, enlisting the help of Italy’s domestic intelligence agency and police in other countries to trace the web of smuggling routes.

Within weeks, investigators had reason to believe that the Italian arms dealers were hatching brazen multimillion-dollar deals with Iranian spies.

The Iranian Connection

The Financial Guard identified the main arms buyer as Bakhtiyari Homayoun, a suspected Iranian intelligence official who shuttled between Europe and Tehran.

Homayoun, 46, ran a front company in Tehran that was one of several Iranian firms operating as a government procurement network, according to the investigative report. A hard-nosed negotiator, he chewed out his Italian partners when they pestered him about debts or failed to deliver the goods.

In early August, Homayoun pressured Bon to free the blocked sniper scope shipment in Bucharest and get it to Iran. The Iranian complained that he was feeling heat from higher-ups to close the deal, according to a wiretap transcript.

"This is coming from the minister’s office, I can’t do anything," Homayoun told Bon in English. "You know that the minister changes next week. Everything will be different next week, so they want to finish everything before leaving their posts."

Homayoun’s shopping list offers insight into the goals of Iran’s procurement networks and its ties to Islamic militants. Western intelligence officials say many of the munitions, explosives and other arms he ordered were probably intended not for the conventional military, but rather for proxy forces that are believed to be supported by Iran: the Iraqi insurgency, Hezbollah in Lebanon and Hamas in the Gaza Strip. U.S. military chiefs also have accused Iran of providing military assistance to the Taliban.

Financial Guard officers are investigating the clues about how sniper scopes ended up in the Taliban’s arsenal. They are also pursuing leads that some of the 1,000 sniper scopes Homayoun bought, paying up to $2,600 each, may have reached insurgents in Iraq. According to the investigative report and Italian officials, British troops discovered the same kind of scopes in Iraqi militant hideouts in Basra in 2006 and 2007.

The Investigation Widens

The wiretaps of the calls between Homayoun and Bon soon opened an unexpected door into a dark side of Italian politics.

On Aug. 22, Bon complained that an Italian associate had jeopardized the group’s relationship with a mysterious political protector by failing to cough up a kickback.

"Every six months he has to pay a politician in Italy and he has not paid him yet," Bon explained, according to the investigative report. "And I need the support of this politician, so send me the money and I will put aside the money for the politician."

The politician is identified in a prosecutor’s report and by investigators as Pier Gianni Prosperini, 64, a powerful boss in the Lombardy region. Prosperini is also suspected of brokering arms deals with Eritrea, which like Iran has been accused of supporting Islamic extremist groups, according to the prosecutor’s report.

The burly Prosperini leads a far-right, anti-immigrant party. Campaign posters depict him in medieval warrior’s attire defending a castle, sword in hand and crucifix on chest. They describe him as a "bulwark of Christ" and "scourge of Islamic terrorism and criminality."

Prosperini denies being involved in arms trafficking, according to his lawyer, Ettore Traini.

"We have heard that a politician is mentioned in the investigative documents related to Iran, but we do not know that it is him," Traini said in an interview. "We have not been formally notified of those allegations because the investigation remains secret."

A few weeks after the political lead emerged, the investigation changed directions again. Investigators listened in disbelief as their wiretaps detected another apparent Iranian spy – this one a veteran television correspondent based in Rome.

Acquaintances describe the correspondent, Hamid Masoumi, as a quiet, polite 50-year-old. He has lived in Italy since 1993, speaks fluent Italian and moved in influential Roman circles.

German sniper scopes were among the arms confiscated by the Italian police. The wiretaps exposed Masoumi as a "high-ranking operative of the Iranian secret intelligence services," according to the investigative report. As part of his covert activities, he sometimes presented himself as an employee of Iran’s national airline and often operated out of the Iranian embassy, according to the report. He also denied the accusations,

The senior investigator in the case told ProPublica that Masoumi co-founded the front company in Romania with one of Bon’s associates. The company officially dealt in telecommunications equipment, but it completed only one transaction, the investigator said: the export of the 200 Schmidt & Bender sniper scopes that were blocked at the Bucharest airport.

"Why is Masoumi, a TV journalist, involved in a Romanian front company?" the senior investigator said. "How does the Iranian government explain that?"

Following instructions from an Iranian embassy official in Rome recorded during wiretapped calls, Masoumi also spied on critics of Iran, prosecutors allege. He grilled an Italian journalist who had contributed to a book about Iran’s opposition movement, asking if any Iranian exiles were among the authors, according to the investigative report.

"Are there any Iranians involved?" Masoumi demanded during a phone conversation in September. "Are there any Iranian names?"

Masoumi’s intrigues enabled him to "soften" Italian news coverage of the Iranian regime’s violent repression of the opposition, according to the prosecutor’s report. Intercepted communications with Italian journalists show that Masoumi promised them visas to Iran and access to officials if they would tone down negative reports about Iran, the prosecutor’s report says.

The Talkative Son

As investigators pored over hours of phone calls and e-mails, a picture emerged of a group that was simultaneously sophisticated and undisciplined.

The suspects bickered over money and muscled each other out of deals. The Italians called the Iranians "penguins" behind their backs, apparently referring to their taste for black and white outfits. The Italians discussed apparent criminal activity at length with friends, wives and mothers.

In Monza, Bon kept his mother well informed, though she has not been charged. He spilled the beans about the intercepted shipment in Bucharest during a wiretapped call in October: "Mamma, the merchandise was going directly to Iran."

Bon seemed well aware of laws against military sales to Iran, according to the investigative report. On Oct. 8, he e-mailed a company in Taiwan inquiring about micro-cameras, miniature recording devices and other spy-gear. He claimed his client was an "Italian anti-terrorist intelligence unit," according to an intercept transcript

A representative of the company wrote back asking if the spy-gear was really for the Italian police. She explained that she had just received an identical request from a broker for the Iranian government.

The transcript says Bon responded indignantly: "I really don’t know what Iran is doing since this nation is under embargo by our nation and most Western nations. Our company works only with the Italian police and armed forces."

Bon promptly contacted a second Taiwanese company about the same products and forwarded the data to Homayoun in Tehran, according to the investigative report.

Bon’s lawyer, Nadia Germana, disputes the charges.

"His version differs greatly from the allegations by the prosecution," Germana told ProPublica. "He looks forward to explaining his point of view. There is a question of interpretation about what constitutes military arms."

Bon’s 39-year-old girlfriend, Danila Maffei, allegedly helped send four shipments of sniper scopes to Iran through Switzerland, according to the investigative report. Swiss authorities didn’t notice anything amiss until the Iranians tried to return some of the merchandise via Switzerland in August 2007, saying it was defective. Swiss officials confiscated the shipment.

The Big Lawyer

The case gathered momentum in December when Masoumi, the Iranian journalist in Rome, organized an Italian suspect’s trip to Tehran for a sit-down about lucrative deals.

Masoumi described Raffaele Rossi Patriarca as a "big lawyer from Italy" with "big clients" during calls to a Tehran associate, who worked with the Iranian foreign ministry and secret services to prepare the visit, according to the investigative report.

Patriarca, a prominent 45-year-old lawyer based in Turin, comes off as brash in the recorded conversations. During a call home from Tehran on Dec. 8, the lawyer bragged that he had just met with a "highly decorated Iranian general" about a $20 million sale of nine helicopters, according to a wiretap transcript.

 The wiretaps show he also discussed offering the Iranian brass a 747 cargo jet, fuses for munitions and explosive chemicals – and that he outlined a startling proposal to create a secret Iranian operations base on Italian soil.

"I will present them with what I think will make it easier to manage all their requirements," he said. "The acquisition of a company in Italy … with a certificate of incorporation and bank account … with a building in an airport … with two hangers that have direct access to the roadside … .the possibility of converting conference rooms and creating sleeping quarters … If they have a minimum of entrepreneurial vision … they’ll hit the jackpot, a total bingo."

Patriarca denies wrongdoing. His lawyer says the trip to Iran didn’t involve banned military equipment.

Patriarca’s aggressiveness aggravated Iranians and Italians alike, but he made things happen, according to the investigative report. At one point he took two Iranian suspects to Norway in a determined hunt to rent them a helicopter, reminding them to conceal the fact that the Iranian government was the true client, according to the investigative report.

In a more vulnerable moment, though, the lawyer checked to make sure his ventures had the blessing of apparently influential figures in the Italian capital, according to a wiretap transcript.

"Listen, is everything set with Rome?" he asked another suspect as he prepared to leave for Tehran. "It’s not that I want to disrespect anyone … it’s just for my peace of mind and the peace of mind of those I leave at home … I’m leaving a wife and two kids at home."

The vaguely mentioned power players in Rome have not yet been identified, investigators say.

The Downfall

A week after the lawyer’s trip to Tehran, the ring suffered a major blow.

Prosperini, the political boss whom the Italians allegedly paid for protection, was arrested in a separate corruption scandal involving government contracts. Prosperini has agreed to a plea bargain in that case. He has not been charged with arms trafficking, but is still under investigation for suspected links to the Milan ring.

The politician’s downfall stunned the accused Italian traffickers, who prosecutors suspect are involved in Prosperini’s alleged arms deals with Eritrea. Bon, his mother and others expressed "very grave concern" about the arrests during phone calls, according to the prosecutor’s report.

"I don’t know what the hell to do," Bon said on Jan. 13, according to a wiretap transcript. "I’m also anxious."

Over the next few weeks, the phone conversations grew tense. The quarrels with the Iranians got worse. Patriarca’s relentless deal-making alarmed the others, according to the investigative report.

"Raffaele called me yesterday, he told me he’s coming up to see you with a squad of penguins," or Iranians, an agitated Bon told an Italian suspect in a wiretapped call. "I told him if you want to go to jail that’s your damn problem … I’m terrified around him, I swear."

The suspect told Bon: "What worries me is the day … that they fit him with new bracelets," meaning handcuffs.

Less than two months later, seven of the nine suspects were in handcuffs.

The Italians have all denied any wrongdoing, and Iran’s foreign minister, Manoucher Mottaki, has rejected the charges against the four Iranians. He denounced the arrests as an "immature and politically motivated" attack by the Italian government.

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