Zhirinovsky link in arms racket

From Andrew Gumbel in Rome

Vladimir Zhirinovsky, the Archbishop of Barcelona and the one- time grandmaster of Italy's illegal masonic lodge, P2, yesterday all found themselves implicated in an international racket in arms, drugs, nuclear materials and precious stones being investigated by magistrates near Naples.

Alfredo Ormanni, chief prosecutor in a case that is rapidly becoming stranger than fiction, placed a total of 31 people under formal investigation and issued a further 36 arrest warrants. The racket, which is believed to have grown out of arms trading to and from the former Yugoslavia, has already led to the arrests of Italian mafiosi, shady businessmen and a retired operative of the CIA.

Mr Zhirinovsky, the Russian ultra-nationalist who is standing as a candidate in the presidential election in two weeks' time, is suspected of involvement in the trade of nuclear materials, while the Archbishop of Barcelona, Ricardo Maria Carles, has been named by one witness as the channel through which some $65m was laundered through the Vatican Bank.

Archbishop Carles appeared to have cleared his name after being named in the affair late last year, but Mr Ormanni said yesterday that the investigation had reached a new phase in which prosecutors were learning more and more about the ring's far-reaching activities.

"We have been able to get much farther into just how arms and radioactive materials were being trafficked," he said. Arrest warrants abroad were being issued through both diplomatic channels and Interpol.

In Italy, a vast police operation included a search of the home of Licio Gelli, one of the shadiest figures in postwar Italy, who secretly manipulated many aspects of public life through his P2 organisation and has been implicated in right-wing terrorist bombings. In this case, Mr Gelli and his son Maurizio are suspected of money-laundering.

Most of the international suspects refused to comment on the case yesterday, with the exception of Archbishop Carles, who described the accusations against him as calumny.

The operation, code-named "Cheque to Cheque", is unravelling a far-reaching network in which weapons from Yugoslavia have been recycled across the globe via established drugs and other criminal trade routes. It has not been without its setbacks, however. Last summer, an Italian secret service agent involved in the investigation was found hanging by a dressing-gown cord in his bathroom.