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Lateline Business -

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(generated from captions) to go into the pool. With that

dreadful Saturday on their

minds some brought their minds some brought their pets.

Of the thousands that live in

the Yarra Valley, hundreds are

here, many thought to be

staying with family and friends

elsewhere in Melbourne. In

Warburton, in the heart of the Warburton, in the heart of

Yarra Valley, some are sick of

weeks of warnings. As the winds

hit in the early afternoon,

they decided to stay put,

taking official warnings with

suppose they are just some scepticism. Well, I

suppose they are just being

cautious because of what

happened a couple of weeks

ago. Despite an avalanche of

officials warning to leave

before people see flames,

son-in-law are happy to wait

and see what happens. What will

you do if - some are happy to

wait and see whapsz. What

wait and see whapsz. What will

you go if you see firelism you go if you see firelism and

I see fire at the top of the

hill, probably, yeah, depends

on which way the wind is

blowing, if it's blowing this

way and like it is now. We are

gone. It's a very different

situation to Black Saturday,

now in the Yarra Valley,

there's one, two, three of the

firefighting choppers on the

ground here, and another is a

short distance away. Over short distance away. Over here

there are dozens of earth

movers and other heavy

equipment that can be used to

create a fire break, they are

waiting to see if the fire jump

out of the containment lines,

it's only when and if it

happens all of this will be put

into action. If we get through

today, there'll be good, let's

be happy about that. Let's

realise there is still work to

be done, we are still a state

at risk. Let us not be

complacent. Across Melbourne

trees came council and trees came council and the

State Emergency Services

answered hundreds of calls

thought Victoria. In the

Dandenongs, Kathy Emery was

sitting in her lounge. I heard

a big noise, it sounded like a

bang on the roof. I thought,

"What is that?", all the

plaster fell down around the

roof and it started falling on

top of me. I thought, "Oh, my

god". Authorities say the fire

season is not over yet. We have

done well to date. The message

from all of the authorities is

we have done well today, but

the worse is yet to come. The

next few hours is crucial.

Let's have a quick look at Let's have a quick look at the

national weather. Cool and

windy, light showers in

Canberra, Melbourne, Hobart and

Adelaide. A gusty

south-westerly change for

Sydney, afternoon showers in

Darwin, storms for Brisbane.

That's all for us, Lateline

Business coming up. If you'd

like to look back at tonight's

story or interview - look

story or interview - look back

at the interview with Pascal

Lamy, or review the stories or

transcripts, you can visit transcripts, you can visit the

web site

Here is Lateline Business with Here is Lateline Business

Ali Moore. Tonight, the Reserve

Bank takes a breather, but what

comes next. From a standing

start no-one picked, you know,

exactly when this would start

and therefore no-one could pick

when it's finished. There are

some who a year ago say the

worst is over, who no longer

have businesses. Mea culpa,

market regulators confess market regulators confess their

role in the ongoing chaos. We

could have done a better job in

respect of challenging

individual institutions we

supervise to think about their

business, and thinking in the

roundabout how they fit

together. First to the markets,

and despite Wall Street's

overnight plunge, Australian

shares regained much of their

early losses, encouraged by early losses, encouraged by the

Reserve Bank's decision not to

drop interest rates combined with stronger than expected

economic data, the All Ords

closing 1% lower, the ASX 200

dropping. The Nikkei was spared dropping. The Nikkei was

Wall Street's pain, ending down

half a percent. The sell-off

pronunsed in Hong Kong, Hang

Seng falling 2%, the FTSE

falls, it was down 1.5% a short

time ago. For his analysis of

today's decision by the Reserve

Bank to keep interest rates

unchanged I spoke to chief

interest rate strategist at interest rate strategist

Macquarie Bank, Rory Robertson. Should we take heart

from today's decision to keep

rates on hold, certainly that's

how the share market is reading

it. The Reserve Bank set off a

lot of noises over the past

month that it wanted to month that it wanted to pause,

it did. It probably was a bit

like me, had the wobbles at the

last minute with the latest

major leg down in global equity

markets, delivered the pause

that it hinted at. Policy, I

think will be on hold.

Ultimately they'll be forced to

cut further simply because the

Australian economy already is

in recession and unemployment

will trend higher. The news

we'll get tomorrow is Australia's recession is

nowhere near as deep as the recessions in the US, United

Kingdom, Europe, all the

economies down by 1.5% in the

fourth quarter, Japan down by

3%. The economists can't

decide today whether GDP will

be up or down, I think the

range is up 0.5 for down 0.5

for QGDP in Australia. The

point was made we haven't seen

contractions in the Australian

company coming through loud and

clear in the other

economies. We haven't, if

monetary policy is on hold for

a little while, what's a little

while. As long as they tell a

convincing story that they

don't need to cut. Australia's

economy is in better shape than

the big economies offshore.

We'll see also that, the other We'll see also that, the

Central Banks have cut all the

way authorities 1% of zero

mainly because as they came

from 5 to 4, to 3 to 2% nothing

much happened. In Australia the much happened. In Australia

Reserve Bank's policy rate is

connected to something that

matters, as the policy rate

comes down 4 percentage points

mortgage rates have come down

almost 4 percentage points.

Business loan rates haven't

come down as far, they have

come down. The Reserve Bank

cut rates, and things that

matter, lending rates have come

down, that's why the Reserve

Bank had a choice of pausing in

a way the other Central Banks

like the Fed and the Bank of

England and the

England and the European

Central Bank, the bank of

Canada, those had really no

choice but to go down to 3 to 2

to 1 almost zeros, because as

they cut rates nothing much

changed, the lending rates

didn't come down much. In the

absence of further shocks in

this country could the Reserve

Bank sit on their hands for Bank sit on their hands for a

number of months. Possibly. My

guess is the economy will be

weak enough and Jobs market

will be poor enough that will be poor enough that the

Reserve Bank will be forced

over the next couple of

quarters to take the cash rate

to 2%. Over the next couple of

quarters, so by year end. By

year end. I think the decision

was cut now or cut later. was cut now or cut later. The

Reserve Bank chose to cut later

to support the economy, you

know, in the face of the

inevitable further bad news on

the jobs front. If we get to 2%

over the next couple of

quarters, when do you see the

cycle ending, when is the worst

over. We are going through the

global economy is shrinking in

a way it hasn't shrunk since

the 1930s. The global economy

hasn't put in a negative year

in 60-odd years, I think

ultimately what we see with the

global economy will be a global economy will be a shadow

of the great depression, it's a

bigger things but not like the

contraction of the global

economy will end up being a

shadow of what happened in the

1930s. Now it's bleak. It's not

clear when good stuff will

happen again. The major economy

shrank in the fourth quarter at

a dramatic pace. Looking at the

US data it shrank just US data it shrank just as aggressively in the aggressively in the first

quarter as in the fourth. The

hope is that the major

economies stop shrinking by

year's end. The trouble year's end. The trouble is

there are massive downward

pressure on global activity and

global activity and equity

prices now. You can't pick

it. I don't think anyone can

pick it. There's a new people

that pretend they forecast the

equity markets down 50-60%, a

few people pretend to forecast

the global economy shrinking

more dramatically than it has,

as the bad news unfolded it's

easy to imagine what might be

down the track, around the

corner, from a standing start

no-one picked exactly when this

would start, and therefore

no-one can pick when it's

finished. There are some of

those who a year ago say that

the worst is over, who no

longer have businesses. Rory

Robertson, thanks for talking

to us. You are welcome. While

Australian shares ended off

their lows, at one stage they

fell to levels not seen since

November 2003. At the same time

in Sydney some of the world's

leading financial regulators

were confessing they could have

done more to head off the

crisis by descimated share values, speaking at values, speaking at a

conference organised by the

Australian securities and

investment commission they

argued if they warned of impending disaster, nobody

would have listened. Just when

investors hoped the bottom

might be in sight tremors rumbled across global stock

markets, as the latest turmoil

unfolded some of the leading

market regulators were being

honest about their role in the

catastrophe Regularly, we are

like army generals. Mr Martin

Wheatley was joined by

Australia's corporate regulator, Tony regulator, Tony D'Alosio, Kathleen Casey, from Kathleen Casey, from the US Securities and Exchange

Commission, Malaysia's

regulatory chief Serena Anwar,

Greg Tanzer, and on video from

London by the Chief London by the Chief Executive

of the UK Financial Services

Authority Hector Sants. We

could have ton a better job in

respect of challenging the

individual nugs institutions

that we supervise to think

about their own business models

and how the risks fit

together. The big surprise of the global financial crisis has

been the destruction of the

best and most respected best and most respected names

in the financial industry. in the financial industry. Like Hector Sants, Martin Wheatley

believes regulators were

looking in the wrong

areas. What we failed, all of

us collectedively failed to see

the root of the problem was

from within the regulated

sector, two, three years ago we

talked as regulators saying talked as regulators saying the

biggest fear we face is from

the unregulated sector, a hedge

fund or group of hedge funds

taking down the people requiring liquidity to

them. Banks were making record

profits before the subprime

crisis, the share market was at

record high, the global economy

was booming, an environment in

which it was difficult for

regulators to be heard. People

appreciated if the regulator

stopped the party, I think stopped the party, I think your

Central Bank Governor used the

phrase take away the punch

bowl, there's no question that

society as a whole enjoys a

credit boom. We perceive risks,

certain issues that need to be

addressed it's challenging to

do so absent a crisis. In

response to a collapse of

companies like Enron, companies like Enron, the

United States introduced a

script ive Sarbanes Oxley Act

to toughen up reporting

standards, ASIC chairman Tony

D'Alosio believes if a similar

approach is adopted to the

financial crisis it will

inhibit financial growth.

inhibit financial growth. The

experience of Sarbanes Oxley

should inform the debate and

the appreciation of what the

consequences can be it, you

know, policy approaches aren't

carefully considered. A

challenge for regulators is

resisting the influence of

rested interest who lobby hard

to protect their own patch. I

feel strongly rules have to be

applied across the board

irrespective of whether irrespective of whether the

institution is big or small,

and the think we need to be

very much more vigilant in

terms of these Olympicibility

of such rules and to avoid such

reg - Mr Speaker ability of

rules and avoid regulatory capture. The regulators at the

ASIC conference added to the

gloom with the prediction that

the next crisis will be

different and they may not see

it before they arrive. To the

movers on the market. Sino Gold

giving up yesterday's rapid

advance, falling 8.5%.

Financial services company AMP

fell 6% after announcing it

will raise around $300 million

through a notes issue, plunging

yesterday to a 10-year yesterday to a 10-year low,

Macquarie Group bounced back

with a 10% rise, Asciano told

the stock exchange it had no

idea why its share idea why its share price

rocketed 42% higher. On currency:

As we reported last night,

the US Government has had to rescue American International

Group for the third time in

five months, the troubled

insurance giant shocked the

market by unveiling a record

quarterly loss of $98 billion,

billions more of taxpayers

dollars are pumped into AIG to

stave off the unthinkable,

allowing it to fail would

fledden the world financial

system. From Washington North

American correspondent Mark

Simkin reports. Investors hit

the panic button, the Dow

plunging 300, crashing through

the 7,000 barrier for the first

time in a decade. People are losing faith in the financial

centre and the Government's

ability to save it. What

bothers traders, there's no

real plan. You just can't throe

money at them. It hasn't

worked, doesn't seem like it's

going to work. The sell-off

began after an insurance

company set an unenviable

record, AIg losing $98 billion,

more than $1 billion a day. The

worse quarterly loss. The depth

of issues at AIG is far greater

than I thought, the the economy is capital markets are far

worse. It's a hat-trick,

trifecta. The Government agreed

to pump 50 million into the

ailing giant, their fourth

emergency injection. It's

received $300 billion taxpayer dollars. The Treasury

Department and others felt the

systematic risk of systematic risk of doing

nothing was simply unacceptable. AIG is connected

to almost every financial

institution in the world. institution in the world. It

operates in 130 countries ,

including Australia. It's

effectively one of the bricks

at the very bottom of the financial pyramid. If you

pulled that away the whole

financial services structure

would collapse. The Obama

Administration won't rule out

spending more money trying to

rescue AIG, and will do all it

can to prevent an economic

catastrophe, once their shares

traded above $100, know thor

worth 46 cent. Some see

glimmers of hope on the horizon, Professor Edward

Leamer is a director of the

UCLA forecaster, of the first

to warn of the housing bubble.

He's a research associate at

the National bureau of economic

research, the body declaring

America had tipped into

recession. Professor Edward

Leamer is a visiting Fellow at

the United States Study Centre

in Sydney. Professor Edward

Leamer, welcome to Lateline

Business. If we start with the

insurance giant AIG, the

numbers are extraordinary, a

Government rescue worth more

than $150 billion, 96 billion

lost in a single quarter, for

those of us struggling with

this reality, where has this reality, where has the

money gone. That's part of the

problem, no-one can figure it

out. It's causing great

uncertainy, that's translating

into a weak stock market.

Investors want the stuff

cleaned up. You think AIG has

been treated for a long period

of time, the haemorrhaging of

cash will end, yet you have

more and more, a steps that

it's never going to end. The

credit default swaps are said

to be 60 or 70 trillion market.

There's no telling what the

liabilities are that the US

taxpayers are going to suffer

from, that's distressing. We

want to know when will this

thing end. Nobody knows. Before

we get to that question which

you say nobody knows, it

doesn't stop us asking the

question. You say it worries

the market, the do you falling

through the 7,000 paint barrier

- Dow falling through the 7,000 point barrier after the point barrier after the news,

do you think we are in more dangerous territory than we've

been in to date I am not sure anything fundamentally will

change, we are getting more

distressed over the steps that the Central Government the Central Government didn't

have control or understanding

about what the basic problems

are. Another issue was that

Geithner came and was supposed

to provide his insight and

wisdom, all he said is, "I'll

give you a plan in a couple of

weeks", This is the new

secretary to give the market

detail He's been involved or

studying this issue for nearly

a year. You would have thought

he had it under chrome. I think

we had the recession, the

terrible in the second afl of

the years because Ben Bernanke,

and Paulson gave evidence that

they didn't know what the

trouble was, they never told

us, other than a toilet

metaphor, about the system

being clogged exactly what the

problem was, how big it problem was, how big it was,

how much the taxpayers how much the taxpayers would

know and when it will be over.

We need to know that. That goes

back to the point that no-one

knows what will happen, on Lateline, the head of Lateline, the head of the World

Trade Organisation, Pascal Lamy

said we are not halfway through

the financial system clean-up

just this week the head of just this week the head of one

of the big international banks

made a comment that it made a comment that it looks

like we are at half-time having

the orange break, we probably

have two years to go. When do

you think the bad news will

end. I really think the problem

is fundamentally a Main Street

problem not Wall Street. The

reason we have terrible issues

is because home prices are

falling, and defaults and

delink hissies are on the rise.

If we get the housing prices

stabilised. The reason we don't

know how much the mortgage

securities are worse, we don't

know how bad the housing market

will become. We think the US

housing market is likely to

turn around, there's evidence

of improvement, self-healing in

the summer last year, when

sales rates started popping up

again. We had all the problem

with Liaman, bankruptcy and a

TARP plan scaring consumers,

sales of homes and cars

plummeting, in January and

February, we see sales

occur. What is driving that

given the mass of unemployment,

5,000-6,000 people losing their

jobs each month, given the bad

news, what is driving

news, what is driving this. Investments are seeing

great buys, banks are dumping

ronts at any price, bringing in

investors, a lot of people

losing their jobs are not losing their jobs are not the

ones buying homes, they are at

the lower end of the totem poll

not the top. A lot may have

qualified for homes under the

old regime, they won't qualify

any more. The unemployment rate

as disastrous as it is for the

lower paid younger workers, it

may not have as big an may not have as big an impact

on the housing market. If the

housing market picks up in the

second part of this year, does

it drive a recovery over what

time frame. It's quick, a

typical thing happens in the

US, the order of problems,

recessions are homes first,

cars, within a couple

cars, within a couple of quarters at most, and then the

business spending on equipment

and software and last business

structures, offices and

factories, homes, car, first

and foremost. When I come and foremost. When I come out

of the recession, the same

thing, first thing that turns

around is homes, then cars.

Second or third quarter homes

start to improve. To a large

extent stimulate which monetary

policy, and cars another

quarter. Are you quarter. Are you forecasting

good times by December this

year. It's not going to be year. It's not going to be as

good as that, the housing

market we don't think is

positioned to have the bounce

back V-shape recovery that is

normal. The reason is there's

price er-rogues occurring in the many parts of the United

States. Does it mean you do

come out of recession, it's a

gradual slow recovering or you

lop along in the recession

mode. V is the normal shake, it

lasts three-quarters, lose a

couple of million, second you

get them back, the whole is

over in two years. Not this

time. No, this started in 2006

when the housing market peaked

at the end of 2005. Two years

of housing problems, then a

problem in automobiles, you get

the sense it's much stretched

in time. We think the recovery

will be stretched in time too

this time. The second half will

be flat, not exceptional

growth, not the big negatives,

in 2010 we'll feel better by

comparison. Professor Edward

Leamer, you forecast economic

psychles, are you feeling optimistic. I forecast before,

the way you do that is by

looking at the way the current

data looks, take a good look

and find things historically

that are similar. Well, this is

so unusual, there's nothing

similar, we are really giving

you hunches and hopes this

time. The most important thing

we need to realise is US grose

at 3% per year for 40 years, we

don't think that trend has been

changed by the financial

crisis, 10 years from now we'll

be on the growth path the same

as we've been for 40

years. Let's hope your hunches

and hopes are right and it

doesn't take 10 years, thank

you very much for talking you very much for talking to

Lateline Business. Thank you

for having me. Professor Edward

Leamer is not the only one

seeing glimmers of home in the

longer terms, one of

Australia's leading deal maker

says a recovery may arriving

soon e and is looking to the US

get the world out of the

current mess. Neal Woolrich

reports. John Wyllie has been a

key architect in some.

Australia's biggest mergers and

acquisitions, despite gloom in

business circles, he says good

times lie around the

corner. It's not the 1930s, or

Japan in the 1990s, after the

bust in asset prices and

banking system, it's not as

Johnstone or ud in Johnstone or ud in the The

Financial Review, the 1930s

revisited with a mix of high

inflation and low growth. John

Wyllie told the Melbourne

symposium there are symposium there are several

reasons for optimism, among

them a boost that china and other economies can provide to

distressed western nations and

dynamism of United States. John

Whiley says new companies are

springing up in merging

industries in the US Is that

is happening underneath the

negativity about the American

Ki, it's happening in the new

sectors like renewable energy,

there's a good chance

there's a good chance contrary

to the conventional wisdom to the conventional wisdom it

could be the American economy

leading the world economy out

of recession. Global equity

markets may be fairly priced at

the moment so share prices

could fall some way if the

global economy worsens, that

may see superannuation

investors condition their

flight to safety The high point

was October, I hope it was the

high point, when 80 million out

of $100 million was switched to

capital guaranteed. This trend

plateaued, it's around 40

million per month, we are

watching it carefully. David

Atkins says rising unemployment

is a concern. See bus call

calculates if the unemployment

rate reaches 9% in the

constructions strip it could

reduce funds inflows by a

month. Pressure is mounting on

superannuation funds to provide

stimulus to the economy. If we

have two investment

opportunities with equal merit,

one with the advantage of

stimulating jobs, we'll stimulating jobs, we'll invest

in the option with the better

employment outcome.

Superannuation investors are

anxious as they enter a second

year of substantial negative

reasons. Fund managers are

urged to manage expectations

and make products easy to understand. If you can't

clearly define and describe the

product and then put it in

writing on no more than two

pams of A4 you'll one into

trouble. The supermarket shelf

of investment products I think

will look barer as we go

forward, The Victorian

Treasurer John lenders

acknowledges the head winds the

finance sector is facing, but

says Victoria has a reputation

for low-cost fund managers and

hopes it can be exported in the

distressed market as overseas

investors continue their flight

to safety. The Government's

official commodity forecaster says commodity exports will

fall for the first time in six

years, the bureau of agricultural and resource

economics expecting resources

to total $152 billion, a drop

of 17%. Unsurprisingly the

mining sector will feel the

most pain, with earnings tipped

to fall by a quarter. But the

news is better for farmers,

despite the global slow down agricultural exports are

expected to rise over the next

two years. A look at the

business diary. Top billing to the release of the national

accounts including the December

quarter GDP. Much especially

paid to a speech by the Reserve

Bank's Assistant Governor for

Economics Malcolm Edey. The

European Central Bank European Central Bank President Jean-Claude Trichet giving a

public address, in keeping with

the Federal banking scheme Ben

Bernanke to appear before Bernanke to appear before the

US Senate Budget Committee. A

look at what's making news in

the business sections of

papers, The Sun looking at the

bright side of interest rates

staying on homed. The Australian warns businesses

could face rising rates from

the banks, the Sydney Morning

Herald reports that Rio tinto

is unlikely to modify the

Chinalco deal to placate

investors, and The Australian

says Billabong CEO Matthew

Perrin filed for bankruptcy.

That's all for tonight. As I

leave you the FTSE down 1.4%,

52 points, the Dow is up 10

points, that's the Dow futures.

I'm Ali Moore, goodnight.

. THEME MUSIC March 2008. A Russian plane powers down to land at Bangkok airport in Thailand. On board is one of the most dangerous men in the world. He's a guy that's supplied arms to insurgencies and terrorists and drug traffickers around the globe

that have resulted in the deaths of millions. For 20 years he has worked quietly, building an international arms trafficking empire without equal. This is a man who has been able to violate the laws of more countries than any of us could ever consider. Then, last year, he was carefully lured into the open by an operation based entirely on an elaborate sting. We didn't have any surveillance on him per se. We knew that he knew of counter-surveillance techniques and if he saw one person that didn't seem right, it was over. Tonight, from the BBC's This World program, Tom Mangold reveals an extraordinary story of undercover agents, covert surveillance, and a dramatic manhunt - all to bring down a vast international arms empire that dealt in death, destruction and human misery.

TOM MANGOLD: The decade of the '90s and Africa is burning. The images can hardly convey the full horror.

The kinds of wars that we saw in Africa in the late 1990s - children with their arms cut off, extraordinary levels of rape, devastation of economies. It was a terribly destabilising and ugly period. Despite UN arms embargoes, the continent remained brimful with weapons of every kind. But where were they coming from? How were they delivered and who were the traffickers? Gradually, intelligence reports began to throw up one name. I kept reading about Viktor Bout moving arms from Uganda.

into Angola. Viktor Bout moving arms into Liberia. Viktor Bout's name kept coming up

and it was a matter of connecting the dots. When I joined the Foreign Office in 1999 I was shown intelligence, and saw Bout's name leaping out of the SIS reports, the GCHQ reports, as the really principal baddie. He knew what he was doing. He had some of the most deadly weapons that Africa has had visited upon it. Viktor Anatolyevich Bout, Russian. Date of birth - probably 10th January 1967. Holder of probably five passports, and this, for years, was the only picture of him. Bout emerged from the chaos of Russia in the early 1990s. As communism collapsed, the country's assets were put up for sale.

It was a time when a bright young man could become very rich very quickly. A 25-year-old Bout bought disused cargo planes. And in a country awash with surplus weapons from the Cold War, he also found a more profitable way to make money. I was put in touch with a man who knew Bout during this period and even shared an office with him. Gary Busch saw for himself the golden opportunity for a middleman with just the right connections. The Russian army was being moved out of all the bases in Czechoslovakia and Hungry and Poland

and they had massive amounts of equipment and they're selling it, they're doing anything to raise money because when they closed the bases there's no money to bring them home and nothing to live on. So along comes Viktor Bout and says, "Ah ha."

No, along comes the government of Russia

and picks Viktor Bout and says, "Ah ha."

Bout bought weapons on an industrial scale.

When he started, he was doing transport and then he started doing other things and the temptation took him over the edge

where he no longer made a moral discernment between what was acceptable as business what was acceptable in terms of a general ethos. His sales catalogue of death offered the deadly IGLA -

a state of the art, portable point-and-press ground-to-air missile almost guaranteed to bring down an airliner. What he did was make sure that tribal wars or ethnic wars or civil wars lasted longer, killed more people, created more destruction and profited him at the same time. How about a nice, cheap, little-used, Hind helicopter gunship an horrendously efficient people-killer? Or tanks and armoured vehicles? And endless, murderous loads of rocket-propelled grenades. I've seen little babies in Sierra Leone and Angola with their arms chopped off,

their eyes gouged out, by the very forces that Bout was arming. Bout created a global one-stop killing shop including not only sales, but maintenance, dodgy paperwork, guaranteed delivery. The franchise from hell that brought high tech warfare to a Third World continent. STREET MARKET SOUNDS One of the first men to grasp the sheer scale of Bout's activities was a UN arms investigator whose heart belongs to Africa. Belgian Johan Peleman. Tough and tenacious. My business was research on arms trafficking and always his aircraft started popping up on our radar screen. Peleman's job soon became a mission as he crossed Africa, painstakingly gathering evidence of Bout's arms dealing and sanction-busting activities. This involved the unglamorous and tedious business of tracing aircraft flight patterns and linking them to ownership documents and cargo manifests. So everything starts with the sighting of an aircraft, either physically or in the books in some aviation logbook. Then you have to trace it back to see who it belongs to. The tail number of the plane, the first two digits - in this case,9 Quebec" - tell you that it's registered in Congo, so Congolese aviation authorities should hold documentation on this aircraft. Working day and night, Peleman uncovered what became known as the Togo Scam' involving so-called, "End user certificates." These are formal documents meant to ensure arms are only exported to legitimate, approved purchasers - usually governments.