Detective story that linked £1m Pinochet cash to BAE

[Monkey see Monkey Do]

Augusto Pinochet, the 89-year-old former strongman of Chile and alleged torturer and murderer, has frequently slipped his pursuers, pleading ill health or relying on protectors at home in the Chilean military. But now an unexpected nemesis is pursuing him, in the shape of his tax returns.

The dogged pursuit of his multimillion dollar fortune by a Chilean judge, Sergio Muñoz, culminated last month in the arrest of General Pinochet's wife and son in Santiago. The hunt has unearthed a sophisticated array of bank accounts and offshore hiding places. It has also left Britain's biggest arms company, BAE, facing many questions in what may prove one of the biggest scandals to hit an already scandal-prone company.

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The Chilean legal documents, based on US banking records, list secret payments by BAE to what are said to be front companies and middlemen for Gen Pinochet. They total $2,098,841 (more than £1m). The payments began in 1997, and the latest were recorded last year. A final $189,940 payment went into an alleged front company on June 30 last year. Many of the recent payments were not recorded in the name of BAE, but in that of Red Diamond Trading, an entity registered in the financial "black hole" of the British Virgin Islands. The company was set up in 1998 by a discreet subdivision of BAE at its Farnborough HQ. It has the uninformative title of HQ Marketing Services.

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Why would BAE pay Gen Pinochet all this money in so secret a fashion? The Chilean media accuse him of taking bribes for delivering arms sales, and there are two big arms deals in which BAE has been involved in recent years. One was the Rayo rocket system.

BAE wined and dined Gen Pinochet on visits throughout the 1990s, and in 1994 the Chilean military, of which Gen Pinochet remained commander in chief after he stepped down as president, agreed to set up a joint venture to produce the weapon. The Rayo fires a salvo of 24 high-explosive rockets at a time, at distances of up to 30 miles. The Chilean army is reported to have spent $60m on the project before pulling out of it in 2003, five years after Gen Pinochet retired as commander in chief to assume a new title as senator for life.

http://www.guardian.co.uk/uk_news/story/0,3604,1570094,00.html