Mauritius Rejects Application From Arms Dealer's Associates MOSCOW - Two former business associates of Viktor Bout, the convicted Russian arms dealer now in federal prison in the United States, have been blocked by the government of Mauritius from setting up an aviation company that could have been used for smuggling guns, according to the government and a private American arms investigation group. In a report scheduled for release on Wednesday, the group, Conflict Awareness Project, says that Mr. Bout's former lieutenants Sergei Denisenko and Andrei Kosolapov had applied for an air operation certificate in Mauritius for their company, Island Air Systems. The certificate would have enabled the firm to bypass United Nations weapons embargoes and move weapons through Iran, Sudan and the Democratic Republic of Congo. Mr. Denisenko, who acknowledged that he had worked with Mr. Bout in the past, said he had divested his share in Island Air Systems after accusations of fraud led to a falling-out with his former business partners. "When I saw what was happening, I gave up my shares in the company and left," he said. I don't like to play games when people lie to one another. Mr. Kosolapov said by telephone that he was a director for Island Air Systems, but that the company had legally applied for the certificate to charter regional flights out of Mauritius, an island nation, and was not engaged in weapons trafficking. "Everything that I have done has been correct and perfectly legal," he said. In a letter provided to The New York Times by the Conflict Awareness Project, the Mauritian ambassador to the United Nations wrote that the country had denied Island Air Systems" application for the certificate in July and that Mauritius "will not allow its territory or its institutions to be used for illicit purposes." However, the official said, a continuing internal investigation has not proved that Island Air Systems would use the certificate to move weapons. If true, the report said, the allegations could implicate companies and individuals based in the United States, Finland, Australia and South Africa, which were linked to Island Air Systems through financing deals or contracts to provide aircraft and flight crews to the company. Mr. Denisenko is on a government watch list, which precludes American companies from business dealings with him. The Conflict Awareness Project also said the men tried to obtain aircraft through Iran in violation of both American and United Nations sanctions. The report's authors, citing an interview with Mr. Kosolapov, also accused the Russian authorities of knowing about the purported scheme. Both Mr. Kosolapov and Mr. Denisenko hold Russian passports, and the group's lead investigator, Kathi Lynn Austin, said Mr. Kosolapov told her that Russian officials had "authorized their activities." The Russian Foreign Ministry has lobbied against the decision in April by a Manhattan federal court judge to sentence Mr. Bout, also a Russian citizen, to 25 years in prison, calling it "biased" and the result of a "political order." C. J. Chivers contributed reporting from Antakya, Turkey.