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In the shadow of the craggy mountains overlooking the road between Kabul and the eastern city of Jalalabad, a specially trained unit of police conducted a nearly perfect ambush of a drug dealer.

Officers surrounded Sayyed Jan's vehicle so quickly that his two bodyguards never had a chance to fire their weapons, and he was caught moving at least 183 kilograms of pure heroin.

But the Counternarcotics Police of Afghanistan realized they had a problem when they discovered that Mr. Jan's powerful friends included their own boss. The drug dealer was carrying a signed letter of protection from General Mohammed Daud Daud, the deputy minister of interior responsible for counternarcotics, widely considered Afghanistan's most powerful anti-drug czar.

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That document, along with other papers and interviews with well-placed sources, show that Gen. Daud has safeguarded shipments of illegal opiates even as he commands thousands of officers sworn to fight the trade. Some accuse the deputy minister of taking a major cut of dealers' profits, ranking him among the biggest players in Afghanistan's $3-billion (U.S.) drug industry.

Reached by telephone this week, Gen. Daud angrily denied involvement in drug corruption. "Your information is completely defective and deficient, and shameful for the prestige of journalism," he said.

The Globe and Mail's investigation of Gen. Daud highlights the wider implications of drug cartels operating inside the Kabul administration. It's a toxic triangle of alliances, as corrupt officials work with drug traffickers who, in turn, help the Taliban.

Some international officials still say the corruption is limited to isolated bureaucrats who supplement their meagre salaries with graft. But a growing number of informed observers now agree with U.S. Secretary of State Hillary Clinton's recent description of Afghanistan as a "narco-state," saying they are concerned about networks of corrupt officials taking over parts of government – in effect, running branches of the state for illegal gain.

This is a problem for Canada and other North Atlantic Treaty Organization countries, not only because Afghanistan supplies most of the heroin on their own streets, officials say, and not only because such large-scale corruption wastes the money and lives spent in support of the Kabul government.

More importantly, the routes used to export heroin also bring guns and ammunition into the country, giving firepower to those killing Canadian soldiers. The drug barons inside the Afghan administration are believed to be cutting deals across enemy lines, supplying cash and weapons to the rising insurgency.

THE WOLF AS SHEPHERD

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One of the most notorious departments in Kabul is the anti-drug section of the Ministry of Interior, the Counternarcotics Police of Afghanistan.

Gen. Daud has been responsible for the CNPA since his presidential appointment as deputy minister for Counternarcotics in 2004, and the force has grown to an estimated 3,000 drug officers across the country. But the documents and case studies gathered by The Globe and Mail paint a disturbing portrait of his role in the industry.

"You have chosen a wolf as your shepherd," said an Afghan police officer who worked with Gen. Daud.

The officer spoke on condition of anonymity, as did all other Western and Afghan officials who provided details about drug corruption.

Talking about narcotics can be dangerous in Kabul; in December, an outspoken judge who handled drug cases was dragged out of his house by masked men and executed with a gunshot to the head.

One of the few people who has discussed Gen. Daud's dealings on the record is Lieutenant Nyamatullah Nyamat, then serving as head of the counternarcotics police in Kunduz province. He gave an interview to the Los Angeles Times accusing Gen. Daud of running a drug business in northern Afghanistan and protecting other dealers; shortly after the article was published in 2005, Lt. Nyamat disappeared. Two sources familiar with the incident said British advisers to the CNPA scrambled to ensure the lieutenant's safety, holding a meeting in which Gen. Daud admitted ordering his arrest. (Gen. Daud now denies this.) The lieutenant was eventually released unharmed, and reassigned to a less active post in central Afghanistan.

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The Kabul government has often emphasized the lack of firm evidence against its top members; Ms. Clinton's "narco-state" reference was angrily rejected by government officials earlier this year. Gen. Daud's boss, Interior Minister Mohammad Hanif Atmar, specifically defended the counternarcotics force during an interview last month at his elegant offices in Kabul. When asked whether he still has confidence in the CNPA, Mr. Atmar nodded vigorously.

"Absolutely, absolutely," he said. "That's not to say some people may not be honest in their jobs, but this is an ongoing battle in every country, every nation, with every police force. By and large they are actually doing the right job with honesty and integrity."

Mr. Atmar's appointment to the Interior Ministry last fall was greeted with optimism among foreign diplomats, who hoped the well-regarded administrator would clean up corruption among the police. The minister says he has attempted to purge the senior ranks, removing 10 police generals and charging some of them with drug corruption in the few months since he took office.

Powerful figures in the ministry such as Gen. Daud remain untouched, but the minister said he can only take action with proof of wrongdoing.

"One unfortunate thing is that much of this is based on speculation," Mr. Atmar said. "Give me the evidence, and hold me accountable for action on that evidence."

THE DRUG RUNNER

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The strongest paper trail connecting Gen. Daud with drug dealing comes from the arrest of Sayyed Jan, the infamous trafficker, on June 19, 2005.

Officials disagree about how much heroin Mr. Jan was carrying: one source said 183 kilograms, another said 192, and Gen. Daud himself said it was 250.

Sources also disagree about whether the dealer was wearing a CNPA uniform when arrested, but either way it appears he was operating with Gen. Daud's blessings until he was undeniably caught smuggling. A letter from Gen. Daud to the governor of Helmand province, dated March 15, 2005, introduces Mr. Jan as a "respected Haji," meaning a Muslim who has made the pilgrimage to Mecca, and urges the provincial administration to assist Mr. Jan. The letter was signed with a flourish by Gen. Daud. The governor seems to have obeyed the counternarcotics chief, as investigators found two other letters written the same month, one from the governor telling the police chief to allow safe passage for Mr. Jan and another from the police chief repeating the instruction to his men.

A relative of Mr. Jan described him as a hard-working young trafficker from the southern province of Helmand who got started as a teenager during the Taliban regime, guarding small caches of opium in the desert. Mr. Jan founded his own drug business in 2001, his relative said, and the operation thrived under the new government as he bought protection for his refineries and transportation routes.

One of the dealer's biggest protectors was Gen. Daud, his relative said, describing a conversation in which Mr. Jan confided that he paid the deputy minister $50,000 (U.S.) for permission to run a single convoy through his zone of control. When speaking about the counternarcotics chief, the trafficker used a Pashto word that means "boss."

Another source confirmed that Gen. Daud received payments from Mr. Jan, but suggested they were based on 50 per cent commission on his drug profits.

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That relationship seems to have broken down when a CNPA unit, apparently acting without Gen. Daud's knowledge, caught the trafficker with a vehicle full of heroin. Gen. Daud initially attempted to set Mr. Jan free from prison, but then reversed himself and declared his support for the prosecution.

In a complicated series of legal manoeuvrings, however, the young trafficker was transferred to a prison in Helmand where sources say a local official accepted a bribe of 1.8 million Pakistani rupees, worth about $28,000Ö Canadian dollars, to set him free. The dealer is now believed to be continuing his work outside of Afghanistan.

When confronted with this information, Gen. Daud said he cannot be held responsible for Mr. Jan escaping prosecution because it falls outside his jurisdiction. He denied taking money from Mr. Jan or any other dealer.

"Sayyed Jan fled from jail, but God willing we are chasing him to arrest him again and put him back in jail," the counternarcotics chief said.

Another arrest caught Gen. Daud by surprise in the summer of 2005. His own men, again apparently working without the direct supervision of the counternarcotics chief, captured a fuel tanker packed with an estimated 700 kilograms of raw opium on the outskirts of Kabul. The driver, Noor Mohammed, asked for permission to make a phone call; he dialled a number, and shortly afterward Gen. Daud's personal bodyguards rushed to the scene, brandishing their weapons and demanding the CNPA officers leave.

A tense standoff followed, then confusion as the CNPA bodyguards realized they were pointing their guns at fellow CNPA officers. Two Afghan officials who described the scene said they eventually settled the dispute by agreeing to take the tanker back to CNPA headquarters, and it's not known what eventually happened to the drugs. But those involved saw the incident as a clear example of Gen. Daud trying to protect some shipments.

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"This is nonsense," Gen. Daud said, suggesting that drug dealers spread unfounded rumours to undermine his work.

Such anecdotes have spread widely, in fact, in Kabul's community of Western officials. But some take a sanguine view of reported corruption, especially when the reports concern a figure so prominent as Gen. Daud.

THE FORMER WARLORD

Born in 1969 to a family from the northern province of Takhar, Gen. Daud joined the anti-Soviet resistance as a teenager and became part of the famed militia of Ahmad Shah Massoud, the so-called Lion of the Panjshir.

After the assassination of Massoud no honorific needed in 2001, Gen. Daud worked with U.S. forces overthrowing the Taliban regime and was rewarded with control over a broad territory in the north.

As the country held its first presidential elections in 2004, however, Western officials became increasingly concerned that warlords such as Gen. Daud and their private armies would not fit into their plans for a heavily centralized government. Like other warlords, Gen. Daud was invited to accept a senior appointment in Kabul in hopes that he could be drawn away from his regional power base and integrated into the new regime.

This strategy worked, in some respects; officials say Gen. Daud no longer ranks among the country's biggest militia commanders, though he could still mobilize 4,000 to 6,000 armed men within 48 hours if necessary. He remains popular in his home province, where Western officials have been amused to hear villagers reciting poems in his honour.

Gen. Daud's supporters point out that many senior figures in the Kabul administration are implicated in drug corruption, and pushing them out of their jobs won't solve the problem. They emphasize that Gen. Daud appears to be reducing his involvement in the drug trade as he reaches middle age; his second wife is a U.S. citizen, and some speculate that he might try to clean up his business and eventually settle in the United States.

"Dealing with these characters is a slow process," a senior Western official said. "You can't judge them based on the past. You have to think about what they can do for this country in the future."

Others disagree, seeing the problem of corruption in more urgent terms.

"Fighting corruption and official involvement in drug trafficking in Afghanistan is as critical a challenge to rebuilding the country as defeating the Taliban," veteran ABC news correspondent Gretchen Peters writes in her forthcoming book Seeds of Terror, based on five years of field research along the Afghan-Pakistan border.

The need for such reform becomes clearer as drug investigators find traffickers involved with another kind of contraband: weapons.

Two Western officials closely monitoring the problem said about 50 to 70 per cent of weapons that supply the insurgency arrive in the country by road, facilitated by corrupt figures in the Afghan government – a statistic that shatters the image of Taliban hauling shipments of guns and ammunition through snowy mountain passes, as usually portrayed by NATO leaders; instead, many insurgents apparently find it more convenient to buy supplies from corrupt authorities.

The profits are huge: a Kalashnikov rifle purchased for $100 or $150 in Tajikistan can be smuggled to the battlefields of southern Afghanistan and sold for $400. The fact that the same rifle might be used to kill a Canadian soldier – or the corrupt Afghan official who sold it – has not diminished the trade.

"This government is not working for us," said the relative of Mr. Jan, the trafficker, expressing his disgust with the business. "We hate the drugs. But this government is addicted to money."

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