Doubts over FBI arrest of Hendon's 'Arthur Daley'

Intelligence experts question sting that led to arrest of British man for selling missile to 'terrorists'

"Affable", "an Arthur Daley", "never interested in politics", "sell anything he could put his hands on", "Mr Average", "quiet".

Hemant Lakhani, the 68-year-old British man arrested last week for allegedly smuggling an anti-aircraft missile into the United States, was portrayed to the American public via the nation's TV screens as a US-baiting, politically motivated international arms dealer.

But the picture of him pieced together by The Independent on Sunday reveals a bumbling rogue caught up in an elaborate sting.

People who knew him during his time in Hendon, in north London, where he had lived since the early Eighties, describe him as an ordinary, middle-class man with connections to Britain's Hindu community. Others called him an "idiot".

The 18-month security services stake-out of Mr Lakhani - during which his phone calls and movements were monitored by the FBI, and which ended with his arrest in New Jersey on Tuesday - has been hailed as a triumph of co-operation between the FBI, Russia's FSB and British intelligence.

Yet the apparent ease with which Mr Lakhani was so comprehensively compromised, and for so long, points to an intelligence "triumph" that is more Carry On than John le Carré.

Mr Lakhani is alleged to have paid about £50,000 for the missile, buying it from what he believed were rogue elements with connections to the Russian arms industry, saying he could lay his hands on another 50. Apparently arriving in the US by ship, this "missile", or something akin to one, found its way to a warehouse in Baltimore, Maryland. It was watched by security services until collected by Mr Lakhani.

Mr Lakhani has been charged with "attempting to provide material support for terrorism", though the name of Air Force One - the US President's jet - began to be mentioned in news bulletins within hours of his arrest.

Last week, a senior intelligence expert and associate of Mr Lakhani, who was born in Bombay, presented a picture of a man who had no political leanings. Instead, he was desperate to solve his financial problems following a string of bankruptcy orders in the UK. Mr Lakhani, believing he was talking to terrorists interested in buying the missile, allegedly made his now infamous observation that Americans were "bastards" and praised the 11 September attacks.

During some of the huge number of phone calls monitored for months by the FBI, Mr Lakhani is alleged to have talked freely with his "clients" about the technical prowess of the Igla S missile, as if he were reading aloud from a brochure.

Indeed, in May last year he allegedly faxed a brochure for the missile to his "clients". Clearly, the security services would have known for at least a year that Mr Lakhani was operating outside his usual environment and with such brazen incompetence that it must have occurred to the security services that perhaps they were being had.

In one of the most bizarre episodes in this strange tale, the businessman is alleged to have simply "turned up" in Moscow this spring and, according to one account, later literally "doorstepped" an arms factory in the Krasnoyarsk region, in eastern Siberia, to see if it had anything to sell him.

But Bahukutumbi Raman, India's leading expert on counter-terrorism and a former officer of the Research and Analysis Wing - India's equivalent of MI6 - told the IoS that he had his doubts over the alleged nature and extent of Mr Lakhani's activities.

Speaking from Delhi last week, Mr Raman dismissed FBI claims that Mr Lakhani was an arms dealer willing to sell to terrorists, and said he believed that the failed businessman had been set up.

The Indian security service, the Central Bureau of Investigation, is believed to be looking into Mr Lakhani's background and contacts.

"He is definitely not a terrorist," said Mr Raman, who now works as an intelligence consultant. "He had been going through a lot of financial difficulties. It's not a genuine case of terrorism - I think he was set up."

The missile that Mr Lakhani is alleged to have tried to smuggle into the US could easily bring down a jet airliner. However, Mr Raman said that the weapon was not difficult to obtain over the internet.

The case has been further muddied. Tom Mangold, the BBC journalist who broke the news of Mr Lakhani's arrest last week, is suing Newsweek after the US magazine claimed his scoop had ruined the FBI's attempts to penetrate al-Qa'ida. The magazine claimed that officials in the US Justice Department believed the report had scotched plans to get Mr Lakhani to work for them.

In Britain, the shock over Mr Lakhani's arrest and alleged arms-dealing activities has given way to disbelief.

"I believe he had been going from bad to worse in business," says C B Patel, the London-based publisher of Asian Voice and Gujarat Samachar newspapers, who has known Mr Lakhani for 30 years. "The guy would never say Americans are bastards - I believe he was trying to impress his contacts," he added.

Mr Patel sees extreme financial desperation, not politically motivated opportunism, as the cause of Mr Lakhani's problems. "There is a huge sense of shame in the Hindu community if you are declared bankrupt, and he must have been in dire need of money," Mr Patel said.

"He would sell anything he could put his hands on," says Mr Lakhani's former accountant, Rajni Shah, who likened him to the Arthur Daley TV character.