‘Most-wanted’ Chilean arms dealer concealed ties to companies with help from Panama’s offshore industry

Carlos Cardoen sold cluster bombs to Saddam Hussein. Leaked documents detail how an elite firm chose to stick with the notorious former arms merchant

By Brenda Medina, Alberto Arellano Jordan and Francisca Skoknic


September 14, 2022

Chilean businessman Carlos Cardoen arriving for a hearing at court in Santiago, Chile, in 2019. The U.S. requested Cardoen’s extradition after accusing him of violating an embargo by selling weapons to Iraq between 1984 and 1988.

By March 2006, Carlos Cardoen had been on Interpol’s most-wanted list for more than a decade.

The Chilean tycoon was indicted by a federal grand jury in Miami in 1993, charged with illegally importing a metal called zirconium from the United States to make cluster bombs sold to Saddam Hussein’s regime in Iraq. Soon after, Interpol, the international law enforcement agency, issued a “red notice” — its highest-level warning — requesting that law enforcement authorities worldwide arrest Cardoen if he entered their jurisdictions, and hold him for possible extradition to the U.S.  Cardoen’s company had also built weapons for the Chilean military during Augusto Pinochet’s dictatorship, as widely reported since at least the early 1990s.

Cardoen’s very public legal problems didn’t prevent Arias, Fàbrega & Fàbrega, a prominent Panamanian law firm and offshore service provider, from representing his offshore companies for years after Interpol issued the red notice, leaked documents show. The law firm, known as ARIFA, set up shell companies and a private interest foundation on Cardoen’s behalf and provided stand-in directors to keep his ties to the entities secret.

The newly leaked documents provide unusual detail on ARIFA’s closed-door deliberations over whether Cardoen represented a liability for the firm and what to do about it. In 2006, after several months of back and forth, and against the recommendation of one of its attorneys, the firm decided to keep working for the politically-connected businessman.

In 2010, ARIFA severed its ties with the Cardoen offshore companies described in the leak. Cardoen soon found another Panamanian lawyer, Rolando Candanedo, to become the registered agent for the businesses.

Vetting potential and existing clients is supposed to be a top priority for lawyers and financial agents who set up companies in tax and secrecy havens. They are legally required to consider whether the services they provide could aid and abet crimes like fraud, tax evasion and money laundering.

But, as the International Consortium of Investigative Journalists documented in the 2021 Pandora Papers probe and other investigations, offshore service providers frequently err on the side of keeping risky clients, who are often very wealthy people seeking anonymity.

The publication of the Pandora Papers investigation prompted a leak of more than 86,000 records from ARIFA and additional documents from another offshore provider, Amicorp. ICIJ explored those records with Latin American partners, including Convoca in Peru, La Nación and El DiarioAr in Argentina, and CIPER and LaBot in Chile.

The ARIFA files, mostly created between the early 1990s and 2013, contain information on contracts, financial deals and legal opinions.

The newly leaked documents show that by 2006 ARIFA was aware of the controversy surrounding Cardoen and notified him of its intention to cut ties and stop providing the services of registered agent and stand-in directors to one of his companies in Panama, Farkit Trading Corp. In explaining the decision, the firm said it had learned of Cardoen’s involvement in the arms industry — that his company “is or was engaged in the production and sale of weapons of war.”

Cardoen’s representatives pushed to reverse the decision, an internal memo shows. Three months later, an executive at Empresas Cardoen, an umbrella company for his varied business interests — including mining and wineries — responded that Cardoen had been out of the arms industry for more than a decade. A different executive added that a prestigious Chilean law firm, where the country’s then-justice minister worked as a partner, was representing Cardoen in his efforts to fight the U.S. indictment.

At least one ARIFA attorney, LeRoy Watson, urged the firm to stick with its decision to cut ties with Cardoen, the documents show. “The firm should resign unilaterally from all positions,” he said, according to a memo drafted by the firm after the fact.

A Chilean corporate attorney warned ARIFA that Cardoen posed a reputational risk. Cardoen is “not the best name to mention as a client, given that the origin of his fortune is the fabrication of weapons,” Francisco Javier Illanes wrote in an email, according to the firm’s memo.

The warnings went unheeded. In June 2006, the firm told Cardoen’s representatives that it had “reconsidered its decision” to cut ties “in light of information” sent the day before — referring to a confidential memo, not included in the leak, that provided information about Cardoen’s legal dispute with the United States.

A few months later, ARIFA created for Cardoen two shell companies and a private interest foundation, a financial entity similar to a trust that offer protections beyond what shell companies typically provide.

In response to questions, a representative from Empresas Cardoen said that the companies in Panama are “very old structures” created in response to the 1993 Interpol red notice, which “made financial actions difficult” for it.

In a letter, ARIFA said it weighs several risk factors when vetting clients, including ties to political figures and their line of business. Citing “public records,” ARIFA said that by 2006, the focus of Cardoen’s businesses “was not in high-risk sectors.”

ARIFA said it follows “sound and conservative practices that we have consistently strived to follow for decades in managing client relations.” The firm said the officers and shareholders of the offshore companies it helped create had not been convicted or charged with crimes, such as money laundering and terrorism financing, that would have required it to monitor and report to authorities.

Read ARIFA’s full response to ICIJ

Read document

‘No one is an angel on Earth’

Founded more than a century ago, ARIFA is one of Panama’s most storied law firms. In 1932, one of its founders, Harmodio Arias Madrid, left the firm temporarily to serve as president of Panama. “The three ARIFA founders and subsequent partners have held numerous posts as public servants,” the firm says on its website.

For nearly a century, Panama has had a reputation as a haven for foreigners looking to use anonymous shell companies to hide assets and avoid taxes. ICIJ’s 2016 Panama Papers and other investigations revealed the role played by Panamanian law firms in providing offshore services to clients, who have included public officials, wealthy celebrities and criminals.

On its website, ARIFA boasts that its partners drafted legislation that created some of the most sought-after anonymous offshore vehicles.

The Panamanian government has revised laws and regulations to require more transparency from the offshore services industry — changes in line with tightening international standards on financial secrecy — though some advocates say that the new rules are poorly enforced.

Farkit Trading Corp. was incorporated in 1985, a time when the true owners of Panamanian companies could disguise their identity almost entirely, including from offshore services providers. In its letter to ICIJ, ARIFA said that their due diligence records don’t show a link between Cardoen and Farkit at the time of its incorporation. The next year, public records show, Farkit purchased land in Chile that was later transferred to a Chilean holding company linked to Cardoen.

At the time Farkit was created, Cardoen’s weapons company, Industrias Cardoen, made and sold weapons to Pinochet’s military government in Chile. It eventually employed more than 800 people with subsidiaries in Latin America and Europe.

Archival photo of Cardoen and Hussein shaking hands
An undated archival photo of Carlos Cardoen, left, shaking hands with Iraqi leader Saddam Hussein. Image: U.S. Commerce Department (via web.archive.org)

Perhaps Cardoen’s best-known product was a cluster bomb, which opens up mid-air to scatter explosives able to wreak destruction across an area the size of several football fields. Cardoen reportedly sold more than $200 million worth of cluster bombs to Iraq during its bloody war with Iran in the 1980s.

Cardoen, who earned a doctoral degree in metallurgical engineering from the University of Utah, patented his “safer and simpler cluster bomb” in the U.S. in 1988, according to public records. The bombs have been largely banned since 2008 under the international Convention on Cluster Munitions. Yet some of the most powerful countries, like the U.S., China and Russia, haven’t signed the convention.

According to a U.S. federal indictment, Cardoen conspired with an American company to illegally export 130 tons of zirconium to Chile and used the metal to make 24,000 cluster bombs that were sold to Saddam Hussein’s regime in Iraq, which was at war with Iran. Cardoen said he was made a scapegoat after Iraq invaded neighboring Kuwait, a U.S. ally, in August 1990.

The indictment triggered a legal battle that has lasted more than three decades and has prevented Cardoen from traveling outside Chile. With the criminal charges still pending and Interpol’s red notice in effect, Cardoen moved to diversify his holdings, expanding into tourism, wine production and real estate, and he eventually abandoned the arms business.

In the midst of his legal troubles, Cardoen opened a foundation to support Chilean cultural institutions.In 2005, Chile’s Ministry of Education awarded him the Gabriela Mistral Order of Educational and Cultural Merit, named for the Nobel Prize-winning poet and one of the nation’s highest honors.

At the ceremony, Chile’s then-Education Minister Sergio Bitar explained the award saying, “Men may do some things for a living and then do others. We must also consider the good that people do, beyond the discussions that people might have on the issue of wars and weapons.”

He added, “Besides, no one is an angel on Earth.”

How Bauchi Healthcare workers connive with drug vendors to divert, sell medicines distributed by Government, NGOs

September 16, 2022

A drug store owner, Chuku who get drugs from healthcare workers.

By Usman Babaji

Bauchi State government and a host of non-governmental organisations have for years been distributing both free and subsidised drugs across its healthcare centres to support the less privileged. But the generosity is thwarted by a syndicate of corrupt and selfish healthcare workers who connive with drug vendors to shortchange the Sa’adu Zungur’ talakawas.

Over eight months after the death of his wife, Ado Musa sheds tears on his cheek whenever he recalls what he described as Rahina Abdullahi’s painful exit.

He said Rahina, a mother of four, passed away on December 15, 2021, during childbirth at a Primary Healthcare Centre (PHC) Zwal in Tafawa Balewa Local Government of the State. The 40-year-old man said his late wife, who died of complications, was taken to the Centre when she was six months into the pregnancy.

According to Ado Musa, Rahina complained of an abnormal headache before that fateful day. “We took her to the centre with the expectation of getting enough treatment”, however, he said they ended up with what he described as “willful tragedy”.

“Unfortunately, no medical tools to get her diagnosed and no drugs to sustain her treatment.” He said she died about 12 hours later on the way to move her to another hospital.

He argued that before Rahina was taken to another hospital, drugs that were administered to her were bought outside the centre at a high price, “and no free drugs at all,” he attested.

As a pregnant woman, Rahina is entitled to subsidised drugs, including malaria drugs, which WikkiTimes understand would have ameliorate her ailments. But unfortunately, the drugs constituted part of what the corrupt healthcare personnel divert and sell to vendors.

Substantiating, Ado Musa claim, A’isha Abubakar recalled how her daughter fell sick and was taken to PHC Burgel-Dass, in Dass Local Government. “Her situation became more adverse, and we had to take her to Dass General Hospital where they again diagnosed her with high-level malaria”.

 A’isha Abdullahi
A’isha Abdullahi

A’isha added that a similar incident happened to them when she went to Lere PHC in Tafawa Balewa where her grandson was again hospitalized. “Let me tell you that they have not diagnosed her but they kept treating typhoid until when we moved to General hospital Dass, two weeks later”.

Musa, A’isha, and many other residents have one type of pathetic story or another to tell you concerning their ordeals in most of the PHCs because of the shortage of one type of drug or another.

Staff sell drugs to medicine stores owners, decline unknown clients

Chuku Emeka’s shop in Zwal, a community in Tafawa Balewa is a popular destination for diverted drugs. The shop owner has admitted that on several occasions, he has been a beneficiary of the diverted drugs where he buys them cheaply from healthcare workers and sells them at exorbitant prices to unsuspecting members of the public.

He told WikkiTimes that the health workers sell the drugs to only clients they know, presumably to avoid being tracked and punished.

Chuku told this medium that a staff of a healthcare facility brought ten tins of Mectizan (ivermectin) for him to buy whenever the drugs are distributed to healthcare facilities.

“One of them used to sell these drugs to me. He recently brought about ten tins of  Mectizan I told him I did not have money. But they hardly sell it to unknown persons”, he remarked.

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Emeka said while a tin of Mectizan is sold at N4,000 in the market, the corrupt healthcare workers sell it to vendors at N1,000 or N1,500. “When it is distributed to them, they can collect N1,000 or N1500 (per tin), while in the market, a tin is sold at N4,000 now”, he confessed.

Visual comparison of the prices of mectizan (tin) in PHC vs Markets
Visual comparison of the prices of Mectizan (tin) in PHC vs Markets

A nearby owner of Animal Drugs shop located about ten meters away from Zwal military checkpoint also told this medium that the activities of drugs diversion among healthcare workers in the area are known to many people.

He told this medium that he has one that supplies for him to sell, “Let me call if we can get some. He sells them (mectizan) when he has.”

Satellite map showing coordinates between military checkpoint and animal drugs centre
Satellite map showing coordinates between military checkpoint and animal drugs centre

After his phone call, the drug provider asked him to go home and take the mectizan out, WikkiTimes learnt. “How much do you want to buy each tin?” He inquired as he came back.  He placed N3,000 for each tin, however, we settled at N2,500.

“We buy each tin at N3,500 to N4,000 in the market, just because this one is a distributed one that is why we are selling it at this price”.

He confirmed that he abets the staff to make money from the drugs distributed by mostly NGOs to support the lives of the vulnerable groups in the community.

Saleh Zwal (as displayed by truecaller App), a staff in Zwal Primary Healthcare centre in Tafawa Balewa also confirmed that healthcare workers at the facility were in the habit of selling drugs distributed to support indigent patients.

Saleh said although that is the practice, they are, however, taking precautions as to who their customer could be, predictably to avoid what he described as “risk involved in the business.”

“It is risky, that’s why we are taking precautions, but I assure you, you will get it”.

He regretted that the centre had been short of free drugs for some months, which led to the pause of the deal for some time.

Saleh explained that more free drugs would be supplied to the centre in the subsequent month and assured WikkiTimes that they would sell out part of the drugs. “I’m sure by next month you will get the mectizan – they will distribute it soon”, he confirmed.

At Lere, a medicine shop attendant told WikkiTimes to contact one Sa’idu (a healthcare worker in Lere PHC), who he said sells drugs distributed to the centre.

When contacted, Sa’idu did not deny the involvement of the centre in that scandalous business. He said the malarial diagnostic tools popularly called Rapid Diagnostic Test (RDT) were available, but “unfortunately, the store attendant is out”. He told this medium that when the attendant is back, RDT will be ready for sale.

Bala Mararaba, a staff in PHC Mararaban Katagum, a suburb of the Bauchi metropolis told WikkiTimes that some staff in the centre were in the habit of selling drugs distributed to the healthcare centres.

On request for RDT from Bala, he replied, “When they provide it, I will call you so that you come and buy. How many boxes do you need?”

Four days later, Bala phoned back, “they are available now; how many boxes do you need, because other people have booked for it already, let it not finish”.

Inside a black bag, Bala clinched the two boxes. “There are 25 sachets in each box,” he explained. With two boxes of RDT, the health worker pocketed N4,000.

RDT Purchased from Bala
RDT Purchased from Bala

“We sell them for more than that amount to our clients, just because we are doing it for the first time with you. He promised that if Albendazole tabs (tin) or Mectizan are distributed, “we will make the same deal as well”.

 Bala PHC Mararaba
Bala PHC Mararaba

Just two weeks later, Bala called WikkiTimes’ reporter to tell him the availability of another twenty-five boxes of RDT ready to be sold out. He asked the reporter if he needed them. “We need money for 25 boxes. Come and see the sample, is not like the ones you bought previously”.

After presenting one box as a sample, the healthcare worker explained that he was not alone involved in that scandalous business. He mentioned one other staff; Sirajo.

“Sirajo also knows about this deal. He is the one that gave me this sample to present to you. Others are there in the office, I am taking them out to the market if you are not ready, and all of them would be bought (by clients). There is a big bag I would carry them inside, I just want people to go out first”, he disclosed.

About four days later, WikkiTimes contacted Sirajo to confirm whether Bala’s claim that he was also involved in the shoddy business of selling subsidized drugs distributed to support patients. Sirajo confirmed his involvement, explaining that the requested products (RDT) were not available at the time but assured the reporter that whenever they are distributed, they will sell them out.

“We don’t have it now, but if you can wait until the government supplies it, you will get it. We don’t have it now; just be patient and wait”, he assured.

Just like Liman Katagum Healthcare centre in Bauchi Local Government area, the same shoddy deal was evident in Burgel,-Dass LGA of the state. Sources told WikkiTimes that whenever the products are distributed to the centres, some facility staff will surreptitiously sell the drugs and leave innocent patients to buy them whenever they need them.

Drugs vendors connive with distributors

Adamu Sulai (real name concealed because he feared being sacked by his superiors for granting an interview), a medicine store helper, told WikkiTimes how this deal flourished between the staff and their clients. “Now, as they (drug dealers) realise that they are being hunted, they connive with some of the voracious distributors to supply them with the products in bulk.

“For instance, my Oga (his boss who owns the shop) has a friend who works in the ministry, he supplies him with these types of drugs. But for fear of being tracked, they change the cartons of the distributed ones and put them into conventional drugs cartons; for instance, TUYIL cartons (a Pharmaceutical company’s brand name) so that everyone will assume that it is just a TUYIL product”.

He said the government stopped distributing some of the drugs free of charge because of the activities of the health staff. “There were astimin, polydirin, for sickle cell patients all were given free before, that’s how our Oga made money”.

Sulai argued that most of the controlled drugs are sold in most of the pharmaceutical shops in the state but not to every buyer due to precautions they are taking.

He, however, noted that the Pharmaceutical Council of Nigeria PCN is the most active supervising body. They warn, arrest, and prosecute the erring members, “that’s why we are extra careful”.

Drugs diversion existed for years in most centres

Fa’izu Idrees, a facility -in-charge of one of the PHCs, explained that the illegal diversion of drugs by healthcare workers has remained the norm in the state for many years. “Most PHCs in the state are known for selling out health items distributed by governments and NGOs, only a few are excluded”.

According to him, that was why the supply was suspended to the state. “Some of these controlled drugs stopped being provided to the state after they discovered that the drugs provided were sold by the health staff because the theft was alarming. The dealers now resorted to buying them from Kano and Gombe. These states still get them and few in the state”.

He recalled that upon his resumption as the facility-In-Charge, he often detected a reduction in the products he signed in after he left.

“But when I requested for clarification, they told me that, that was how they have been doing for long, why do I want to stop them from what they were doing for years”, he noted.

He also predicted that some of the PHCs will soon start selling out mosquito nets as soon as they are distributed in the centres for pregnant women and babies.

WikkiTimes’ findings also revealed that the health workers selling the drugs do not only mislead patients regarding their treatment but also provide the diverted drugs to others for abuse, harming not only the patients but also aiding the proliferation of illicit drugs as well as drug abuse.

Diverted and sold drugs aid abuse, addiction among youths

A drug addict popularly known as Abdul in the Mararaba community told WikkiTimes that getting controlled drugs was easier for him and many of his cohorts. “Unless if you don’t have money, but if you do, no kinds of drugs that wouldn’t be sold to you. We get them from our regular customers; vendors, medicine store attendants as well as health staff”, he authoritatively revealed.

WikkiTimes’ findings also documented how some drug addicts in the state find it easy to access controlled drugs.

Our investigation found that the shortage of medical drugs in the health centres was also responsible for deteriorating patients’ situation, compelling them to undue pain and misery.

The drugs known to be exclusive to healthcare centres in markets are sold in most pharmaceutical points at high costs.

This also leads to the infiltration of fake, adulterated and substandard products getting to the final consumer at a high cost.

This medium also found that the availability of controlled drugs in shops, courtesy of corrupt health care workers, has revamped drug abuse in the state.

The establishment of the National Policy for Controlled Medicines (NPCM) In 2017 by the Federal Government was to provide and maintain a healthcare system that allows for increased availability and accessibility to affordable medical needs of the patients across all the health centres across the country.

Similarly, the introduction of the Drugs Revolving Scheme in 2016 in some states was also to assure the availability and affordability of quality drugs in health facilities. It was also to thwart leakages and corruption in the procurement, distribution, and prescription of drugs to the harmless end-users suffering from one type of pain or another evidently subverted by a corrupt system.

Agency Discovers culprits, recovers over N2.5 million

A doctor, Rilwanu Mohammed, the Chairman of Bauchi State Primary Healthcare Development Agency (BASPHCDA), confirmed the activities of illegal diversion of drugs by healthcare workers in the state.

He said the agency had discovered seven centres in the state that were involved in the illegality but stressed that “they were penalized accordingly”.

Rilwanu admitted that the agency’s failure to routinely monitor the facilities at the 349 centres across the state has aided the practice.

He, however, argued that it was impossible for the agency to monitor all the facilities. “We can’t be monitoring the delivery across the state, but we have set up a committee that goes all over the centres to monitor the implementation of the distribution policy. We are supposed to go round monthly, but we don’t have the capacity to be doing that every month”, he said.

Mohammed pointed out that the Bauchi State Drugs and Medical Consumables Management Agency DMMA is responsible for monitoring the delivery of the drugs. “They are mandated to monitor the delivery because they are pharmacists while we are medical. But they are incapacitated to be going to 349 centres monthly”.