Officemate also said it had cooperated with Customs investigators.

The Customs investigator disagreed with State Department officials, who asserted that illegal trade in American arms was small.

Customs investigators managed to trace the Federal Express shipments to Singapore, and then to Dubai.

The informer said a large amount of cocaine was being shipped into the country packed in caustic chemicals, the Customs investigator said.

But the informer did not give any names or locations of warehouses where the drug shipment might be stored, the Customs investigator said.

'We suspected that they were dodging VAT and we have since alerted Customs investigators.'

Jordanian and Iraqi embassy officials told Customs investigators that Iraq had paid for the guns as a 'gift for Jordan'.

The 'perfect crime' began to go wrong, he added, only when Customs investigators checked Inca's books - and a Lloyd's syndicate sued for fraud.

Customs investigators would not identify the software executives under suspicion except to say that they were all experts in programming or Internet communications.

"If they did, it was a set-up," said a veteran Customs investigator.