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How immigration is transforming our society.
The definition of “terrorist” has drifted far
from ground zero.
The return of the culture wars.
The Angolan war’s connection to suburban Arizona.
Market Magic's Empty Shell
Days of infamy and memory.
Let's review the tape.
Back Talk
The liberal media strike again.
Appall-o-Meter
Israel’s gravest danger is not the Palestinians.
Bush unilaterally junks the ABM accord.
Broken Trust
Washington gives Indians the runaround—again.
Mumia's death sentence is overturned, for now.
Coal Dust-up
Massey Energy, Inc. targeted by labor and greens.
In Person
Phil Radford: Last Call, Save the Ales.
BOOKS: Empire’s new clothes.
The Empty Theater
BOOKS: Joan Didion vs. the political class.
BOOKS: The Complete Works of Isaac Babel.
Ghost World
FILM: The Devil’s Backbone of the Spanish
Civil War.
|
December 22, 2001
The Arms Dealer Next Door
International billionaire, French prisoner, Angolan weapons
broker, Arizona Republican. Who is Pierre Falcone?
The key player in a huge scandal that has tarnished some of France’s best-known
politicians, Falcone is still expected to stand trial later this year for his
role in the sale of half a billion dollars worth of Eastern European weapons
to Angola. He obtained his release only after paying a $15 million bail, turning
over his passport to the court, and accepting severe restrictions on his movements
and activities. Falcone was initially charged with illegal arms dealing because he allegedly
brokered the Angola sales without authorization from the French government agency
that reviews weapons exports, but prosecutors later dropped that count due to
a legal technicality. He remains accused of bribing numerous prominent parties
to further his arms business—most notably Jean-Christophe Mitterand, son
of ex-President Francois Mitterand—and of failing to pay tens of millions
of dollars in taxes on profits from the Angola deals, legal or not. Though largely unreported, the man at the center of “Angolagate,”
as the French press has dubbed the scandal, has extensive American ties. Falcone’s
primary residence is a mammoth estate in Paradise Valley, Arizona, where he
and his wife, Sonia, a former Miss Bolivia International, are active in political
and community affairs. Falcone’s American activities range from advising
a major U.S. oil company to teaming with a Virginia-based arms dealer who has
worked for both the CIA and Saddam Hussein. What’s more, a floundering
health and beauty company run by Sonia Falcone made a controversial $100,000
donation to the Republican Party during the 2000 presidential campaign. Beyond Falcone’s own stake in the legal outcome, Angolagate has significant
geopolitical implications. Angola has emerged as one of the world’s leading
oil producers—it is now America’s ninth-largest supplier, ahead of
Kuwait and England and right behind Norway and Colombia—and is sitting
on enormous untapped reserves. But civil war and rampant corruption in Angola,
which serves as the backdrop to the Falcone affair, has kept the country isolated
on the international stage and its economy in shambles. “Angola is going
to remain a pariah as long as the government keeps cutting deals with people
like Falcone,” says a former State Department official who has closely
followed Angolagate. “It sends a terrible message to the rest of Africa,
because if Angola can’t make it with all of its energy resources, there’s
not much hope for the rest of the continent.”
Falcone was born in 1954 in Algeria, which was then under French rule. His
father, Pierre Sr., was the mayor of a town called Bou-Haroun-Alger, ran a fishing
fleet and, according to Le Monde, was involved in the arms trade. After the
Algerian Revolution of 1962, the family moved to France, where Falcone lived
until he was 22. Since then, he has traveled the world, building a business
empire that runs from advertising in China to oil in Africa. Falcone bought a home in Arizona in the ’80s and met Sonia Montero at
a 1990 Formula One auto race in Phoenix. They were married four years later
at a church outside of Paris. Hundreds of guests attended the wedding and reception—the
latter was held at the Chateau de Ferrieres, the 19th-century home of the Rothschilds—including
the groom’s good friend, Jean-Christophe Mitterand. The arms trade comprises a small, if notable, part of Falcone’s commercial
activities. In France, he served as a consultant to a government agency known
as SOFREMI, which exports military equipment under the auspices of the Interior
Ministry. In that capacity, he reportedly arranged sales to Africa and Latin
America. Through Arcadi Gaydamak—an immensely wealthy Russian émigré
businessman and his chief partner in Angola—Falcone also had good contacts
in Eastern Europe, which in the post-Cold War period has become a global weapons
bazaar. The deals that sparked the Angolagate scandal took place in 1993, when the
Angolan government of Eduardo dos Santos was under siege by the right-wing guerrilla
group known as UNITA, headed by Jonas Savimbi. During the Cold War, Angola could
count on the Soviet Union for weapons—UNITA had been backed by Presidents
Reagan and Bush, but was dumped by the Clinton administration—but its former
ally had disappeared from the map. Furthermore, arms purchases by the government
and UNITA remained prohibited under the 1991 Bicesse Accords negotiated in Portugal.
Desperate, dos Santos contacted Jean-Bernard Curial, a friend and member of
the French Socialist Party, to see if Paris would arm his regime. Curial was dubious about the prospects. France was then in a period of political
“cohabitation” with Socialist Francois Mitterand (who died in 1996)
holding the presidency, but day-to-day governing was carried out by conservative
Prime Minister Eduardo Balladur. Several key members of Balladur’s government,
including the minister of defense, traditionally had been close to UNITA. Curial
turned for advice to Jean-Christophe Mitterand, who had built up a network of
contacts in Africa while serving as his father’s chief adviser and, despite
having resigned his post the previous year, remained well-connected at the presidential
palace. He suggested to Curial that his friend Falcone might be able to offer
assistance to dos Santos through less formal channels.
Thanks to their sensitive role in Angola, Falcone and Gaydamak became intimate
cronies of dos Santos, whose systematic pilfering of the state treasury has
made him by some accounts one of the world’s 50 richest men. (On December
12, Reuters reported that $1.5 billion of the $3.5 billion that Angola earned
in 2000 from oil exports was unaccounted for.) The two men were given a stake
in virtually every key sector of the Angolan economy, from food to diamonds
to oil. In 1999, the government picked Falcon Oil Holdings, a Falcone-owned
firm registered in Panama, as a minority partner to ExxonMobil on a huge offshore
site. Beyond these economic privileges, Falcone and Gaydamak gained a remarkable
degree of political influence in Angola. According to Gaydamak—a wanted
man in France who now resides in Israel, where I reached him on his cell phone—both
he and Falcone were granted Angolan citizenship and diplomatic passports, served
as advisers to the government and were named employees of the Ministry of Foreign
Affairs. Indeed, Falcone was so well-connected in Angola that before his arrest
he had become a door-opener for companies hoping to do business there. In June
2000, top officials from Phillips Petroleum, which has been seeking to expand
in Angola, made the pilgrimage from corporate headquarters in Bartlesville,
Oklahoma to Arizona to seek Falcone’s counsel and assistance. (Phillips
declined to discuss the meeting.) The first vague details of Angolagate came to light five years ago when a highly
regarded insider newsletter called La Lettre du Continent broke the story. French
judicial officials later found that Brenco International, a Falcone firm involved
in the Angola arms transfers, subsequently made payments to a number of his
associates. Jean-Christophe Mitterand, who has been out on bail since early
last year but remains under investigation, acknowledges receiving $1.8 million
into his numbered Swiss bank account four years ago, but says that the money
was for consulting work unrelated to Angolan arms sales. There’s surely an element of hypocrisy in the French government’s
prosecution of Falcone, for it’s clear that key officials viewed his arms
transfers to Angola as serving French foreign policy objectives and approved
of the deals. France depends on Africa for most of its petroleum needs, but
traditional suppliers like Gabon and Cameroon have declining reserves. Angola—set
to become one of the world’s major petroleum exporters in the next 20 years—has
not traditionally had strong ties to France, but in recent years it has become
an increasingly important source of its oil, and French energy companies have
been awarded major contracts by the dos Santos regime. “There is a relationship
between Falcone selling the weapons and the improved relationship between France
and Angola,” says Sharon Coutoux of Survie, a Paris-based human rights
group. Falcone, too, has suggested that the French government endorsed his activities.
In a 14-page letter to investigators, he denied paying off any government officials,
saying his role in the Angolan arms sales was limited to selling the oil that
paid for the weapons. The greatest indignity of all, he wrote, is that the French
are the primary beneficiary of his activities. His work with SOFREMI enabled
Paris to “penetrate delicate and complex markets” abroad, while his
role in Angola helped France win favor with an energy-rich regime that “the
entire world is interested in courting.” The accusations against him, Falcone
said, are as “unjust as the charge of witchcraft [was] in the Middle Ages.”
Falcone’s name is also familiar within the narrow world of international
arms dealers. Sarkis Soghanalian, whose 40-year career in the arms business
began when he armed Christian militias in Lebanon at the request of the CIA,
says he met Falcone several times in Paris, where both had offices off the Champs-Elysées.
Through Mark Geragos, his American attorney (whose other clients include Rep.
Gary Condit), Soghanalian said that he and Falcone shared a mutual client, Mobutu
Sese Seko, the former dictator of Zaire (now the Democratic Republic of the
Congo). According to Soghanalian, Falcone brokered diamonds-for-weapons deals
on behalf of Mobutu and was intimate with the dictator and his entourage. Among Falcone’s closest contacts in the arms business is Stephen “Satch”
Baumgart, who operates out of Reston, Virginia. A former Naval officer, Baumgart
has been involved in the murkier fringes of the weapons trade since the ’70s,
when he brokered sales to American allies such as Mobutu and Ferdinand Marcos
in the Philippines—all apparently with a wink and a nod from U.S. intelligence.
“A CIA agent would drop by our office and Baumgart would brief him about
his overseas travels, particularly about his contacts in the Arab world,”
recalls Gerhard Bauch, a one-time German intelligence officer who worked for
Baumgart. “They knew about everything we did.” During the mid-’80s, Baumgart—who did not return phone calls seeking
comment—helped supply Saddam Hussein, who was then seen by the Reagan administration
as a bulwark against the Ayatollah Khomeini in Iran. A prominent European arms
broker who knows both Falcone and Baumgart says the two men first teamed up
in the ’80s and worked together until at least a few years ago. This source
says that Falcone and Baumgart had interests in Angola, among other places.
(Gaydamak also confirms that Falcone and “Mr. Satch” worked together,
though he denied knowing details of their business dealings.)
One of the nation’s wealthiest communities, Paradise Valley is solidly
conservative. The local government levies no property taxes, and services such
as water and fire protection have been privatized. I received a tour of the
town from Kathy Smith of Hague Partners, which sold $103 million worth of property
here last year. As we drove along Lincoln Road in Smith’s cream-colored
Cadillac, we passed one of the town’s few commercial properties, the newly
renovated Applewood pet resort, where residents board their pets when they’re
on vacation. A suite for a dog, which includes a bed and cable TV, goes for
$38 a night, but extras—a fitness walk, “pupsicles,” a swim in
the resort’s bone-shaped pool, topped off with a blow dry—can raise
that rate quite a bit higher.
Far atop Mummy Mountain, Smith pointed to the estate of Leona Helmsley, which
has been on the market for several years without attracting a buyer, despite
a price cut from $24 million to $14 million. Smith used a magnetic card to pass
through the gates of the El Maro neighborhood, where Chicago Bulls owner Jerry
Reinsdorf erected a private playground for his grandchildren on a two-acre lot
adjacent to his summer home. Just before his arrest, Falcone bought a new $10.6
million estate not far from the El Maro section—the most expensive home
purchase in state history, according to the Arizona Republic. A post-sale real
estate listing speaks in hushed tones of the property’s paneled library,
theater, swimming pool, tennis courts, seven bedrooms and 11 bathrooms, and
reveals that the Falcones don’t have a mortgage on the property. It was
purchased outright by SPEP, a Turk and Caicos Island trust controlled by Pierre. As members of the area’s upper crust, the Falcones occasionally pop up
in local society pages. Based on nuggets that ran after Falcone’s arrest,
their standing has not been tarnished by his legal difficulties. In the April
2001 issue of Arizona Trends, a magazine filled with ads for Feng Shui consultants,
plastic surgeons, anti-aging treatments and day spas, then-publisher Danny Medina
recounted his lunch with Sonia Falcone: “She was perfectly stunning with
a great personality and rich, rich, rich. Oy! You should have seen the square
cut diamond on her hand!” In May, Scottsdale Life, a glossy freebie sent to selected area homes with
an assessed value of $250,000 or more, featured a cover story on the Falcones’
new estate. It spoke of bedroom suites that “bear the imprimatur of Sonia’s
exquisite taste,” of the Vera Wang evening gowns hanging in her 1,100-square-foot
closet, and of her devotion to family and friends. (“And, yes, it does
help to have a butler, cook, domestic help, chauffeurs and an army of nannies
to help out.”) Like many Paradise Valley residents, the Falcones are regulars on the local
black-tie charity circuit and contribute generously to organizations such as
the American Heart Association, Phoenix Children’s Memorial Center and
the Kids in a Korner Foundation. During my stay in Arizona, Sonia attended a
fundraiser for the American Cancer Society at Marriott’s Camelback Inn
resort. After dining on pinenut-crusted filet of beef and wild-mushroom risotto,
attendees bid at auction on donated items such as a week at the Hacienda del
Mar in Cabo San Lucas, a variety of golfing packages and diamond jewelry. Sonia, who declined to be interviewed for this story, was accompanied to the
fundraiser by Jason Rose, a Phoenix PR man and Republican political consultant
whom she has retained to tell her husband’s side of the Angolagate story.
The son of a prominent area family, Rose is a rising star in GOP circles. He
knows the Falcones from local social and political circles (“They’re
cool people who you’d like to have a drink with”) and argues that
Pierre is the victim of a French legal system that deems people “guilty
until proven innocent.”
Sonia Falcone was also a donor to the Bush campaign, and pictures of her with
the president and first lady, snapped at political functions in Arizona, hang
in her home. During the summer of 2000, Bundgaard invited Sonia to join a small
local entourage that greeted then candidate Bush at the Phoenix airport when
he flew in for a campaign event. Most of Sonia’s political contributions
came from the coffers of Essante, her Utah-based health and beauty firm. The
company gave $20,000 to the Republican Party in May 2000 and another $80,000
in November. Sonia Falcone has insisted that her husband had no connection to
Essante and that the company’s political contributions came out of corporate
profits. She made the donations, she says, to increase Latino awareness in the
Republican Party. (The GOP returned the contributions following Pierre’s
detention—“to avoid the appearance of impropriety,” in the words
of a statement issued by the Republican National Committee.) Yet Essante was incorporated in Delaware on April 6, 1994 with Sonia as its
founding president and one of two directors—the other was Pierre Falcone.
He no longer holds that title, but the firm’s accountant until just recently
was Henry Guderley, who fills the same position for the London offices of Brenco
International. More significantly, Essante, which has been losing money for
the past seven years, has no profits from which to make political contributions.
Essante publicist Lee Solters—a legendary Hollywood PR agent whose clients
have included everyone from Frank Sinatra and Barbra Streisand to Pia Zadora
and Kato Kaelin—says Essante spent its first six years, and $6 million,
developing its product line. Sales only began in earnest last September, after
Essante threw a three-day launch party at the Paris Hotel in Las Vegas. So who’s been footing the bill? A source familiar with the company says
Pierre has always provided the money for Essante. “The company has come
a long way with Pierre’s generosity, but after a few years he’d like
to see some profit,” this person says. “It rubs him the wrong way,
but out of love for his wife he’s done it with a smile on his face.” It’s possible that Essante’s political contributions were spurred
by nothing more than Sonia’s open desire to be a player in state and national
politics. Even after her husband’s arrest, she remains active on the Arizona
scene and close to several state officials. Last June, Bundgaard accompanied
her and several other friends to Washington for a gala affair at the Ritz-Carlton
honoring Sharon Stone. A few months later, Sonia appeared at a campaign function
for Matt Salmon, an Arizona congressman who’s running for governor on the
GOP ticket. She called him a “true conservative” and said she planned
to help his campaign “any way I can.” But one of the American officials I interviewed suspects that Pierre may have
been thinking about Angola’s interests when his wife sent $100,000 to the
GOP. As the official noted, businessmen who operate in Angola are expected to
support its government back home, and Luanda is eager to cement ties to Washington,
which during the Clinton years became its chief international ally and biggest
source of foreign investment. Furthermore, dos Santos has reason to be jittery
about the policies of George W. Bush, whose father’s supported UNITA. In
February 2000, just weeks after Bush’s inauguration and a few months after
Essante sent its final payment to the RNC, two major lobby shops in Washington—Patton
Boggs and Daniel J. Edelman— signed contracts that called for them to work
to improve U.S.-Angola ties. Of course, only Falcone himself can offer a full explanation of why his money
went to the Bush campaign. Given his current circumstances, chances are he won’t
be talking anytime soon. Ken Silverstein is a Washington-based reporter who frequently writes about the arms trade. His latest book, Private Warriors, a look at the post-Cold War arms trade, was just released in paperback. |
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In These Times is committed to remaining fiercely independent, but we need your help. Donate now to make sure we can continue providing the original reporting, deep investigation, and strategic analysis needed in this moment. We're proud to be in this together.
n December 1, billionaire businessman Pierre Falcone walked out of the Fleury-Merogis
prison near Paris after a judge opted not to prolong his provisional detention.
Despite having spent a full year behind bars, it’s doubtful that Falcone
felt a great sense of relief that day.
hen I first heard about Pierre Falcone—and his beautiful Bolivian wife,
vast wealth and jet-setting lifestyle—I imagined a dapper, handsome man
straight out of a John Le Carré novel. It came as something of a surprise
when I first saw his picture, which revealed him to be a plump, balding man
who looked more like an upscale insurance salesman than a covert operator.
n November 1993, Falcone and Gaydamak helped arrange the sale to Angola of
$47 million in small arms. A second deal for $563 million worth of weapons,
including tanks and helicopters, got underway early the following year. The
supplier in both cases was ZTS-OSOS, a Slovakian company that rounded up the
weapons from Russia, Bulgaria and Ukraine. The Angolans paid for the weapons
with oil, which Falcone and Gaydamak sold with the help of Glencore—a company
owned by Marc Rich, the fugitive financier who would later receive a controversial
pardon from Bill Clinton during his last days as president.
