From Chile To Miami, Miami To Baghdad

The world of private weapons dealers is riddled with intrigue, creative finance and betrayal

To Nasser Beydoun, it looked like easy money. So the Lebanese-born food exporter turned arms dealer--following a perfectly legal course of business. Beydoun, who lives in Coral Springs, Fla., spent two and a half years trying to sell cluster bombs to Saddam Hussein's military during the Iran-Iraq War. It was, he says, "an opportunity I took a chance on."

And lost--or so he alleges. In a civil suit aimed at Carlos Cardoen, 48, the head of Industrias Cardoen S.A., a major Chilean arms producer, Beydoun claims that while he was paid $5.3 million, he is still owed $30.6 million in commissions on $467 million worth of Cardoen weapons he sold to Iraq. (Cardoen has filed three affidavits in support of motions to dismiss him as a defendant.) Whatever the outcome, the complaint offers a glimpse into the world of private arms dealers. It is a world of mostly small arms like machine guns, bombs and light artillery. And while it accounts for only a small proportion of the arms trade's total money volume, it is responsible for much of the intrigue.

Beydoun's story begins in 1982. While negotiating a cigarette shipment to Panama, he ran into a former Cardoen employee who mentioned that the company was trying to export cluster bombs. Such weapons contain up to 400 bomblets that explode near the ground, scattering shrapnel and incendiary fragments over an area as large as 10 football fields. Beydoun, who had made friends in the Iraqi government through his food-service business, says he got in touch with Carlos Cardoen in Miami. "He is a very charming guy," Beydoun says of the Chilean. "I considered him a friend."

So did Gen. Augusto Pinochet's government. After a 1977 U.S. law prohibited arm sales to Chile, Pinochet turned to local entrepreneurs. Among them was Cardoen, a U.S.- educated engineer who owned a mining-explosives company. With low-interest government loans and the technological know-how of more sophisticated arms makers, he developed a cluster bomb, adding a few deadly touches of his own that he later patented. He sold the bombs for about $7,000 each; the equivalent French weapon went for $26,000.

His big break was the Iran-Iraq War. Saddam needed a weapon against the Iranian human waves. But, according to Beydoun, Cardoen lacked contacts outside Chile. Beydoun boasted that his sources could pry open the right military doors; he became Cardoen's sole agent in July 1982. Over the next several months he shuttled between Miami and Baghdad. "It was many, many trips until I got my first break," says Beydoun--a February 1984 order by the Iraqi Air Force for 3,000 500-pound cluster bombs at $7,230 apiece.

The first shipments of ordnance, says Beydoun, were made by plane. An Iraqi Airways jet would land in Santiago and pick up the bombs. Baghdad couldn't get enough: between February 1984 and May 1985, Beydoun claims, he sold nearly $260 million worth of bombs, technology and machinery, much of it shipped from the port of Iquique in Chile. Payments, Beydoun says, were initially made via letters of credit and direct transfers of funds to various Cardoen bank accounts, including one in Grand Cayman Island. In mid-1984 Baghdad hit on a creative method of payment: oil for bombs. Iraqi crude, shipped through Jordan, was sold to a U.S. Petroleum wholesaler, who then paid Cardoen in dollars.

Cardoen so admired his new client that he hung a photo of Saddam in his office. To Beydoun, who had cracked the lucrative contracts, he showed the back door. Cardoen, alleged Beydoun, had no further use for him--and tried to force him out, first by slashing his commissions from 7.7 to 3 percent, then by persuading the Iraqi government to deny him entry visas.

Beydoun's suit may not be Cardoen's last visit to the courts. Since October he has been the subject of a federal investigation in Miami. The purpose of the inquiry, says a Customs official, is to determine whether Cardoen shipped arms, chemicals and molds for impellers, used in bomb fuses, to Iraq after Saddam's invasion of Kuwait. "We have a very active investigation of Cardoen underway," says U.S. Customs Commissioner Carol Hallett. So far no charges have been made. Cardoen denies selling any arms to Iraq since its cease-fire with Iran in 1988.

In 1989 Cardoen approached Bell Helicopter Textron, Inc., of Ft. Worth, Texas, to purchase 100 civilian Longrangers. When he mentioned his plan to modify them into low-cost attack birds, the company declined to sell him the copters--fearful, says a spokesman, of an Iraqi destination. Last week Customs agents in Dallas seized a prototype of the Cardoen 206L-III helicopter--outfitted with five "hardened" points suitable for attaching gun units, rocket pods and other weaponry.

Now Cardoen is working hard at respectability. He has diversified into agriculture, banking, mining, even blue jeans. He runs a foundation that gives books to children on Easter Island. Never mind that in September he tested a new fuel-air explosive in the Atacama Desert. Cardoen, say his friends, has his eye on the presidency. How does that square with his profession? As he said recently on TV, "Moral responsibility lies in the person who uses weapons, not in the one who manufactures them."

This sale of cluster bombs to Iraq was legal, but it involved some odd routes.

In 1982 Nasser Beydoun, a Lebanese-born food exporter living in Florida, learned of Industrias Cardoen's desire to export its major product--cluster bombs. Beydoun had contacts in Iraq and offered to represent Cardoen in the Middle East.

By July 1982 he had signed a contract with Cardoen, assuming responsibility for pushing weapons sales in Iraq, Saudi Arabia and Lebanon.

Beydoun spent the next several months networking and pitching the cluster bomb to Saddam's military, which signed a letter of intent in March 1983 to buy 5,000 Cardoen bombs, subject to satisfactory testing.

In February 1984, the Iraqi Air Force contracted to buy 3,000 500-pound cluster bombs, at $7,230 each.

Soon thereafter, Cardoen started shipping the bombs to Saddam, first in jets furnished by Iraqi Airways, later in ships.

Payments were made to various Cardoen accounts, including a bank in Grand Cayman Island. Then Iraq sold oil to a U.S. wholesaler who, in turn, paid cash to Cardoen.

In July 1985 Iraq's State Organization for Technical Industries bought 4,000 cluster bombs for $23.9 million and purchased $17.5 million worth of technology and machinery. 8. Last October Beydoun filed suit against Cardoen in Miami, claiming the manufacturer owed him $30.6 million in sales commissions.