The business was guns.
The place was a yacht club in Lima. And the gracious host of the lunch last year, according to the man who says he was the guest of honor, was the all-powerful chief of Peru's intelligence service, Vladimiro Montesinos.
Montesinos oozed charm, says Sarkis Soghanalian, a rotund arms trafficker and occasional U.S. intelligence informant known as "The Merchant of Death." The spy chief wined and dined his guest, Soghanalian said, thanking him for brokering Peru's purchase from Jordan of 50,000 AK-47 assault rifles.
If that account is true, Soghanalian was understandably astounded in August when Montesinos accused him of belonging to a smuggling ring that had airdropped 10,000 AK-47s to Colombian guerrillas. Montesinos and Peruvian President Alberto Fujimori announced with great fanfare that the intelligence service had broken up the gun-running scheme involving, Soghanalian said, the rifles in the Jordanian deal that Montesinos himself had organized.
"The weapons I sold went to the Peruvian government," he said in an interview in Los Angeles. "None went to the Colombian side. If any illegality occurred, it was on the side of the Peruvians."
Soghanalian's allegations of an elaborate double-cross by Montesinos raise new questions about U.S. intelligence and law enforcement agencies' close ties to the spy chief, who was ousted in September and is now a fugitive.
As accusations about Montesinos piled up over the years, U.S. officials had repeated an insistent defense: Montesinos was a staunch ally in the fight against drugs and guerrillas, the top U.S. targets in the region.
It would therefore be embarrassing if he was involved in the smuggling of guns to the leftist Revolutionary Armed Forces of Colombia, or FARC, which is deeply involved in the drug trade. Especially at a time when Washington was preparing the high-budget anti-drug package known as Plan Colombia.
U.S. officials have said they were aware of the deal and initially raised no objections, thinking that it was a sale to the Peruvian military. When it was learned that the arms were ending up in Colombia, U.S. officials say, they alerted Peru. But they have said little about Montesinos' role.
"Arms-dealing with the FARC has always been an interest of ours and will continue to be," a U.S. official said. "Are we going to look [in Peru]? You can presume we will look at everything."
Suspects in Lima Also Tell of Betrayal
U.S. intelligence and federal law enforcement agents have asked to debrief Soghanalian, according to his lawyer in Los Angeles, Mark Geragos. Peruvian authorities also want to question him. The arms dealer's account of betrayal is echoed by suspects, some of them former Peruvian soldiers, who have been arrested in Lima, the Peruvian capital. The alleged ringleader accused Montesinos of recruiting him to set up the deal and claimed that the suspects were tortured to prevent them from implicating the spy chief.
"Montesinos was definitely involved in this deal," said Peruvian lawmaker Luis Iberico, whose investigations of corruption were key to Montesinos' downfall. "It is absurd to think that people like [the accused ex-soldiers] would not be commanded by Montesinos."
There have been previous allegations that Montesinos and military commanders did business with drug lords and gunrunners, despite their successes in coca eradication and other anti-drug operations, according to Peruvian critics.
"It was easy to organize something like this, lay the blame on underlings if necessary and even say you broke it up," said award-winning journalist Gustavo Gorriti, who has investigated Montesinos since the 1980s. "He has done it before. If there is any emblematic case, this could be it."
Montesinos has not responded to the allegations. Fujimori defended the official version at first but has not commented since the fall of Montesinos.
Some experts find it hard to believe that Montesinos aided the FARC and risked alienating his allies at the CIA. They theorize that the episode was a sting gone awry or a rogue operation by high-ranking Peruvian military officers.
"My guess is that Montesinos was aware of it but not part of it," said a former U.S. Embassy official. "He had plenty of ways to make money."
The case is so packed with intrigue that it may never be fully clarified. But Soghanalian adds a key piece to the puzzle: He is a veteran of the global underworld of guns, spies and gangsters in which Montesinos moved.
A Long History of Gunrunning
Soghanalian resembles an Armenian version of Sydney Greenstreet, the portly British character actor who played globe-trotting rogues in "Casablanca" and other films.
Soghanalian, 71, was born in Turkey to Armenian parents and married a U.S. citizen. He is a Lebanese citizen and owns homes and businesses in Miami, Paris and Amman, the Jordanian capital.