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4 Victoria Street, London. The address was an impressive one, but curious affairs were conducted behind the smoked glass doors of the seven-storey building, which housed the European headquarters of the National Iranian Oil Company. With Westminster Abbey across the street, and Scotland Yard not far away, the Iranians at NIOC House could feel comfortable commanding their multi-billion dollar organization - whose primary aim was not just the sale of Iranian oil, but the purchase of American-made arms for the Iranian armed forces.
The Logistics Support Centre of the Islamic Republic of Iran Air Force moved into the NIOC offices early in the war, along with the Technical Supply Office of the Iranian Navy, from their more modest quarters at 15 Young Street, by Kensington Gardens. They had chosen to set up in Great Britain because of the extensive network of Iranian business contacts there, and to benefit London's well-known banking, shipping and insurance facilities. And also, to procure through direct factory orders hundreds of millions of dollars worth of engines, spare parts and munitions for the 890 British-built Chieftain tanks and 250 Scorpion armored cars in the inventory of the Iranian Army at the start of the war.
But the most important reason concerned the complacency of the legal apparatus. Unlike the US, there existed no broad conspiracy laws in Great Britain, making indictments against suspected arms smugglers nearly impossible. Great Britain had simply never outlawed the negotiation, sale or shipment of spare parts to Iran, even if the sale and export of offensive military equipment to both belligerents was against the law. This situation was partially corrected in September 1987,when the British government announced its intention to close the Iranian buying office. Still, there was no crackdown on British traders and companies selling weapons to Iran.
The early attempts of the London buying office to directly procure American equipment on the European market met with little success (1). But as the need became more urgent in the early months of the war, the Iranians stepped up their efforts, unleashing a thousand agents and hangers-on, crooks and confidence men, to roam the palaces and caravansaries of the world in search of black market American goods.
At times, their efforts met with comic results, as when one shipment of F-5 fighters parts was intercepted in January 1984 by customs agents working at Chicago's O'Hare airport, on its way to the London and Tehran. The US agents, curious to know the final destination of the crate, replaced its contents with 52 pounds of Love Me Tender Chunks dog food. Iranians from the London buying office discovered the switch just as they were about to forward the crate onto Tehran from London's Heathrow airport. The confiscated parts had been worth $12,500.
On another occasion, F-4 parts were intercepted and replaced with 1,128 pounds of sand, gravel and concrete. This crate arrived in London on October 31, 1984 "a little trick or treat gift for the ayatollah" (2).
If London was the major center through which the Iranian orders flowed, the agents set up shop everywhere from Bonn to Paris, from London to Monte Carlo, from Strasburg to Tel Aviv - and made vital contacts in places much farther flung around the globe, such as Ankora, Seoul, Tai'pei, Montevideo, Buenos Aires, Sao Paulo, Tripoli, Washington, San Diego, and Orlando, Florida - and Tehran itself.
Sooner or later, however, they all wound up in the bar of the President Hotel, overlooking Geneva's Lac Leman. Fantastic shopping lists would be pulled out of crumpled envelopes, and contracts in the hundreds of millions of dollars be bandied about as if they involved little more than the transfer of frozen chickens. Buyer and seller greeted each other with mutual suspicion. Their primary concern, far more than making deliveries to Iran, was to ensure discreet transfers from one Swiss bank account to another. And of course, each wanted his own bank transfer first.
As in London, the operations of the Iranian buying network were an open secret in Switzerland. As long as the "gentlemen" at the President behaved themselves, the Swiss had no intention of interfering with the lucrative trade. Banking operations were secret, no merchandise was exchanged; and besides, Switzerland was not party to the US-led alliance which had declared the arms embargo in the first place (known as "Operation Staunch" once the Irangate scandal broke). As time went by, Swiss arms-makers would claim their own share of the action, selling air defense radars, guns and small planes, while the bankers hoped for the worst and rubbed their hands in glee. Unlike the rest of Western Europe, and the United States, unclaimed deposits in Switzerland became the property of the bank (and not the government) after a certain grace period. Some Swiss banks have been known to have incurred losses of $250 million in a single quarter and still show a profit for this reason (3).
Tehran: Council of War
In the first days of the war a Supreme Defense Council was established, regrouping the President of Iran, the chiefs of staff, and a number of religious authorities. From the very start, the factional disputes then pitting Bani Sadr against his Prime Minister, Ali Radjai, and the professional army against the Revolutionary Guards, would spill over into SDC sessions, complicating the day-to-day conduct of the war (4).
The same factional infighting would have other, more diverting results. For the Supreme Defense Council was also responsible for all military procurements. Each faction sent its own representatives abroad to comb the international arms market, for the type of equipment used by the units that constituted its particular power base. Mohsen Rafic Doust, for example, as "Minister" of the Revolutionary Guards, specialized in the procurement of Soviet equipment, and personally toured Syria, Libya, North Korea and even China in search of it. General Valiollah Fallahi, on the other hand - the acting Chief of the Joint Staff at the start of the war - supervised the hunt for American spares, along with Air Force General Fakhouri. These two perished when their Army C-130 crashed mysteriously in September 1981 on a return trip from the war front
Sometimes the SDC members would simply act on their own. Contracts would be signed with a certain broker because of a secret kick-back arrangement, while the equipment purchased was not necessarily compatible with existing inventory, and in some cases did not work at all. In other cases, an "unpalatable" source would be selected at the initiative of the professional officers, because none other was available.
In the spring of 1981, for instance, Bani Sadr learned through one of his advisors in Paris that someone inside the SDC was buying Air Force spare parts from Israel (5). When the report was confirmed by the London Buying Office, the irate President convened the Supreme Defense Council. General Fakhouri and Defense Minister Chamran nonchalantly admitted that the Israeli arms pipeline had been functioning for some time, primarily for Iran's F-4 fleet, and agreed to cut it off if supplies became available from other sources, such as Taiwan, Singapore and South Korea. But the Israeli deliveries only stopped in appearance, as the July 1981 crash of the Argentine plane revealed.
Further complicating the scene were individual initiatives by the hordes of "official Iranian government representatives" and their unofficial assistants. They could be found in every city in the world studding the arms constellation. Elaborate deals would be negotiated right down to the details of inspection, shipment and bank transfer, with only the most peripheral knowledge of the Supreme Defense Council. These deals often began with an arms broker who had 'made a contact with a contact who knew someone in Tehran' - all of whom hoped to become millionaires overnight. "The biggest problem was finding a valid partner," one arms broker said privately. "We went to Madrid, London, Geneva, and Buenos Aires, and all we ever found were middle men with little or no contact with Iran."
The nadir of corruption was reached in November 1984, when Colonel Azzizi was deposed as Chief Procurements officer after a prolonged stay in West Germany - ostensibly to undergo treatment for stomach cancer. Azzizi was well-known to the black marketeers as the signatory of those lapidary requisition forms, whose dubious English was only matched by the extravagance of their price, which included a share for one and all. The mark-up for parts and radar components reached 1000%. Big ticket items, such as the American M-48A5 main battle tank, reached Iran at more than three times the price paid the original seller. The rest went into the pockets of a score of intermediaries, and into the numbered Swiss accounts of the mullahs (6). Azzizi was also known for requiring arms dealers to provide him with multi-million dollar performance bonds, which he some occasionally forgot to remit after they delivered the equipment. At least fourteen complaints of this nature were lodged against him in the International Court in the Hague before his "retirement" in November 1984.
How to buy arms on the black market
The American arms embargo, decreed in the dark hours following the storming of the US Embassy, created a special situation for a country at war, 95% of whose military hardware was of US origin. It forced the Iranians to turn to the black market, with the resulting increase in risk, cost and delay. As a side effect, it created opportunities for covert American diplomacy, the full extent of which has yet to be known.Indeed, as late as October 1987, Soviet officials were conceding in private that they still believed that a U.S. return to Iran. remained "a major American goal" despite repeated armed clashes between U.S. and Iranian forces in the Gulf (7).
After seven weeks of intense fighting, Iran needed parts for its F-4s, F-5s, and F-14s. It needed spares for its 800-strong helicopter fleet. It needed munitions for the American-built howitzers and field guns. It needed missiles, radar components, night-vision equipment. Later, it would need whole tanks, helicopters, aircraft and, starting in 1983, special clothing to protect its human waves from Iraqi gas attacks. And since the US had cut off the supply lines, there was only one way to go. The Iranians had to find other countries and industries capable of filling their needs. And in most cases, they could not make a direct approach.
No matter how complex the array of front companies and untraceable third parties, there is always a buyer and a seller in any black market arms deal, and a host of shady, opportunistic, and sometimes crooked figures in between.
As a rule, neither buyer nor seller wants to expose himself until the deal is on the verge of completion: the seller, because he doesn't want word to get around he is dealing with Iran (in the case of many European companies, this risked jeopardizing their lucrative business in the Arab world and eventually their good relations with the US); the buyer, because he wants to remain in control of all commissions and stay alive, all the while skirting the numerous US agencies tasked with stopping the flow of arms to Iran.
So the intermediaries play a major role in the whole process, which goes from the basic step of identifying another agent who is a potential source, evaluating his contacts with the buyer or seller, to the negocation and the delivery itself.
The RRC Company of Stamford, Conn.
Mohamad Balanian-Hashemi was the president of a large construction company when the Islamic Revolution broke out. Like many Iranian businessmen, he sent his family abroad and sought to liquidate his own holdings before joining them in exile.
Upon his arrival in the US, he set up R.R.C. Co. Inc. in Stamford, Connecticut. According to an affidavit made available to the author, Hashemi described RRC as "an import-export company ... (which) originally dealt in commodities such as rice and sugar, construction machinery parts and Oriental rugs" (8).
However, at the end of 1980, he was approached by a middle man "on behalf of the Iranian Air Force (IRIAF) and asked if I could purchase certain goods... During the course of a series of meetings in Spain and London the deal started to take shape."
What transpired was in fact a long series of deals whereby RRC would use its American office to purchase aircraft parts from various suppliers throughout the United States, which it would then ship to Tehran through London, Frankfort, Zurich or other stopover points while "ownership" of the consignments changed hands.
Most of the billing was handled by RRC's London office, located at 360-366 Oxford Street. Hashemi explained: "the IRIAF would not open Letters of Credit in favour of a company in the United States of America."
But the IRIAF's London office chief, Colonel Mohamad T. Bagheri, soon "insisted that if the goods were to be supplied through Europe then the transactions should be effected through a European company." So along with another partner, Mrs. Shahin Zobdheh Asadi, Hashemi purchased a British company with the improbable name of Zoomer Fly Limited that would act as RRC's official contact with the IRIAF. Later, he set up International Aircraft Parts Ltd. registered in Anguila, British West Indies, as an additional purchasing entity and tax shelter. Each shipment to Iran, loaded onto commercial aircraft of Iran Air, Swiss Air, and Flying Tigers, was accompanied by official documents certifying it to be of American origin.
Mohamad Balanian-Hashemi gave this rather ingenuous explanation for the proliferation of intermediaries:
"The IRIAF (Islamic Republic of Iran Air Force) felt that they could not go directly to suppliers in Western countries both for political and economic reasons. It must be noted that prior to the Islamic Revolution in 1978, Iran was one of the largest, if not the best, customer of hundreds of large, medium-sized and small companies in Western Europe and the U.S.A. The majority of those companies supplied goods on credit to both Government and private organizations in Iran. However, immediately after the Revolution the new Government annulled those contracts and did not pay the sums due. Since that time, it has been very difficult for companies in Iran and particularly also Government Institutions to deal on the same basis as before. Accordingly, IRIAF wanted to buy the goods through an intermediary."
The documents show that Hashemi, his brother Cyrus Reza, and one of Mrs Asadi's friends, Carlos Vieira De Mello, together purchased millions of dollars worth of Air Force parts from various suppliers in the United States, including gyroscopes, wing assemblies, new and overhauled engines (shipped as "tractor parts"), F-4 tires, mechanical subassemblies for Bell 214 helicopters, and several curious items such as seven copies of "The International Countermeasures Handbook" and microfiche updates of USAF, US Navy, and US Army parts lists.
RRC's operations apparently ceased late in 1981, due to haggling among the partners over how to split the profits. Hashemi's brother Cyrus was later involved in the Damavand Project (see Chapter 11), and died mysteriously in London in September 1986.
Smuggling American Style
To clear shipments of major American equipment to Iran, the seller needs what is called an EndUseCertificate, delivered by the purchasing country. The EUC is theoretically scrutinized by the Defense Security Assistance Agency and the State Department's Bureau for Political-Military Affairs, then passed over to the Commerce Department for the final Export License. Military sales abroad of more than $25 million must be directly approved by Congress, as must the retransfer to a third country of American equipment by the initial foreign purchaser. However, due to the high volume of such sales, the review process has become a standard bureaucratic procedure: Congress is given 30 days in which to oppose the sale. No reply simply means the transfer has been allowed to go through (9).
Since Iran can not directly request to purchase F-4 fighters - or major component parts - because of the 1979 arms embargo, it must purchase an EUC from a front country. A typical EUC, shown to the author by a US Embassy official in Europe, reads as follows:
CERTIFICACION DE USO FINAL
END USE CERTIFICATE
A QUIEN CORRESPONDA
Por la presente, certificamos que el material indentificado a continuacion:23 Aircraft Type F.4.E with improved Fire Control, US Standard USAF.-, objeto de nuestra Carta de Intencion con numero de referencia JEMFA No. 130/83, de fecha 22 de Setiembre de 1.983, adquiridos y recibidos por nuestro pais sera destinado a garantizar la Defensa y la Seguridad de nuestro territorio contra toda beligerancia extranjera.-
El lugar de asentamiento de este material sera la Ciudad de Asuncion del Paraguay.-
(Signed)
Alexanjandro Fretes Davalos
General de Division
Jefe de EM de la FF.AA.
Republica del Paraguay
When contacted, the General whose signature appeared on the bottom declined any knowledge of the document, which was in fact purchased through a French dealer in Buenos Aires for $100,000. However, the US diplomat - perfectly aware that the document was not only a fake, but risible, since Paraguay had never purchased a jet fighter in its entire history - wrote letters of introduction on official stationary for the broker's agent, to present to DSAA officials in a country known to have used F-4s for sale. In the letter, he emphasized that the broker's "representation of the Government of Paraguay is a completely legitimate operation" and requested that his colleagues give "assistance in advising him... (and) any other information that is releasable to him about the F-4s, such as condition of aircraft, overall operation, etc." In return, the diplomat was promised a fat commission if the sale went through.
Initially conceived as a guarantee of bona fides, the end-user certificate in fact serves as a shield for many US aid recipients, anxious for the hard currency they could gain from selling US equipment in stock. If the news of a sale to Iran ever leaked out, they could simply present the EUC to the US State Department and insist they were unaware any other final purchaser was involved. Otherwise, few countries with American equipment to sell - except those which have changed alliance since procuring the equipment, such as Ethiopia or Vietnam - will consent to discuss resale. Most are in a political position to request more modern equipment, often for free, and so can not afford the risk of American reprisals (10).
The End Use Certificate is provided for a flat fee by one of the many intermediaries, who purchase it locally or simply forge it. Access to a convincing EUC is an important argument for brokers trying to bridge the gap between buyer and seller. Some countries are no longer credible as end-users, because of the willingness of local officials to forge the certificates, or the country's notorious financial status. These include Turkey, Spain, Portugal, Brazil, and more recently, Thailand and Pakistan.
Here a broker, there a broker
Often, as many as twenty different brokers will form the chain between buyer and seller, each protecting their "sources" - the next link in the chain - for fear they will be cut out of the deal. In such a situation, it becomes difficult to evaluate who really has the goods, and who really represents the buyer - the Iranians. Many large deals fell through because of this.
As negotiations proceed, the buyer wants to see the equipment he is being sold, and inspect it to ascertain its condition. But the seller's agent, too, has his demands: in particular, he wants to see an Evidence of Funds (a banking document which states that money has been blocked to complete a specific deal) before he begins to reveal his sources. Failure to produce an Evidence of Funds indicates that the buying broker is not serious, or may be working for one of a number of intelligence agencies hoping to break up the smuggling ring; or, more simply, that he hopes to secure a larger commission by contacting the selling country directly and cutting half a dozen agents out of the deal. Caution is the basic watchword.
US customs officials estimated that smuggling operations have filled only about 10% of Iran's arms needs since the war began. Still, as one official told the LosAngelesTimes in 1985, "it's like drugs - more gets through than gets stopped."
Like drugs, too, the US effort to curtail black market operations intensified ten-fold in 1983-84. It became common practice to use telex intercepts, undercover agents and sting operations to discover arms smuggling rings. The number of indictments on counts of violating the US arms embargo on Iran rose vertiginously from a single case in 1981, to fourteen separate indictments, involving 54 arrests, in the 12 months from September 1984 to August 1985.
Among those indicted were:
- Brian Lewy, a West German freight forwarder whose Intransco Transport and Speditions of Frankfort, West Germany was charged with illegally shipping munitions to Iran. Lewy was also charged with having illegally used the telephones of the State Department's diplomatic courier office in Washington to conduct his arms smuggling business;
- William R. Fowler, a Chicago insurance broker, recruited in London while conferring with associates on how to cover a $650,000 underwriting loss, for conspiracy to violate US export laws over a 20 month period;
- George L. Veto, also of Chicago, and two British businessmen, Howard O. Freckelton and Gerald H. McDevitt. The three were indicted with Fowler along with a London-based Israeli, David R. Sofaer, for trying to export everything from warship parts to night vision equipment, as well as radar, helicopter, and aircraft spares. The British government has refused to extradite them. The role of the Israeli, apparently the broker in direct contact with the buyer, remains obscure;
- Frank Agustin, of San Diego, for shipping stolen F-14 parts and Phoenix missiles to Iran via a London trading company. Agustin was working with a London-based Iranian, Saeid Asefi Inanlou, and was accused of ordering parts for the Iranians from USAF and US Navy inventories, using local agents and 11-digit DoD computer stock codes (11).
- Amir Masoud Motamedi, a 27-year old Iranian-American, whose Boustan Corp was used as a front operation for shipping spare parts for F-4, F-5, F-14, A-4 attack aircraft, the C-130 transport, and the P-3 Orion naval surveillance and anti-submarine warfare aircraft via London. Before opening Boustan Corp, a mail box address operated out of his living room in Los Angeles, Motamedi posed as a legitimate arms broker for the government of Canada, under the pseudonym "Fred Coffey," and placed his orders from a computerized list of USAF parts numbers. An estimated $10 million in Air Force spares passed through Motamedi's hands before he was arrested in 1985.
- Cyrus Reza Hashemi, a 49-year old Iranian from Stamford, Connecticut, and US businessman Stephen Kiley, 38, of Swannscott, Mass, for illegally exporting field communications wire, rafts and engines for naval use, night vision sniperscopes, radar equipment, aircraft and helicopter parts. They also tried to obtain automatic weapons, rocket launchers, and missiles. A former US Justice Department official, J. Stanley Pottiger, was being invested in connection with the case. They apparently worked through Cyrus Davari, 44, formerly the chief Iranian naval procurements officer in the London bureau, and Colonel Mohamad T. Bagheri, in charge of the Air Force operation. As President of the First Gulf Bank and Trust located at 9 West 57th Street in New York, Cyrus Reza Hashemi received at least 20,000 pounds sterling in commissions from his brother's Zoomer Fly Limited in 1981, for services rendered in establishing banking procedures for the black market deals with the IRIAF. He was later offered a deal by US Customs officials who promised to drop charges against him and his brother, if he agreed to inform them of other black market arms deals in the works;
- Benjamin Kashefi, also known as Mirmajid Kafehi, of La Jolla, Ca, for exporting munitions to Iran. Kashefi was charged with having shipped spares parts for Iran's M-60 tanks without a State Department EUC.
- Paul Sjeklocha, also known as Prof Paul S. Cutter, of San Jose, Ca, for conspiring to deliver $139.65 million of American military equipment to Iran, including the most up-to-date conventional missiles in USAF and Navy inventory. Sjeklocha was arrested in August, 1985 along with five others in a vast - and often burlesque - FBI sting operation. His case will be discussed in more detail in Chapter 7 (12).
Rafsanjani, Tatatabai, and the Shelter Companies
If London and Geneva remained vital financial and communications centers for the arms brokers, the Iranians used other capitols as well. Trading companies were set up in France, Great Britain, Switzerland, West Germany, Austria, Spain and Belgium. Others were established in Israel and the US. Their purpose was twofold: to provide at least superficial cover for the Iranians, and to shelter the immense sums of money illegally passing hands.
Hundreds of Iranian officers, government officials and businessmen were involved in these shelter companies. And so were the top mullahs. Those with direct financial interests included Prime Minister Ali Radjai, Ayatollah Mohammad Beheshti (who died in a bomb explosion in July 1981), Speaker of Parliament Hashemi Rafsanjani, Ahmad Khomeini (the Ayatollah's son) and his brother-in-law Sadegh Tabatabai. Rafsanjani was said to have amassed one of the largest personal fortunes in Iran, through war-time arms transactions, which he "washed" through a brother's carpet import-export business in Gent, Belgium.
One of the most curious - and most active - front companies was in reality an entire network, run by Sadegh Tabatabai and the Ayatollah's son Ahmad. It was called the International Trading Center, and it was based in Frankfort, West Germany, where Tabatabai had solid connections.
From the very start of the war, Tabatabai played a discreet, and highly lucrative role in the black market arms trade. On December 6, 1980 he flew to Tel Aviv with an Iranian Jew by the name of Youssof Azar, to get the stalled Israeli-Iranian arms pipeline back into working order. The results of that trip would be revealed to the world when the mysterious Canadair of the Transporte Aero Rioplateuse crashed in the Soviet Union in 1981 during a shuttle flight from Tel Aviv to Tehran. It had been carrying spare parts for Iran's M48 tanks.
In January 1983, Tabatabai was arrested with 1.8 kilograms of opium at Dusseldorf airport, while travelling on a diplomatic passport. He was released within days on the personal intervention of his friend Hans Dietrich Genscher, the West German foreign minister. Following this incident, Genscher was increasingly used as a go-between by those in Iran who still hoped to patch up relations with Europe and the United States, such as Rafsanjani and Sadegh Tabatabai, who had officially been named Vice Prime Minister of Islamic Republic. The Frankfort airport, conveniently close to the offices of the International Trading Center, was often used by B747 cargo jets of Iran Air as a loading point for missiles, ammunition and spare parts purchased through the black market in Europe and Israel, while Bonn became a center for financial transactions (13).
Officially, the International Trading Center was in the import-export business - as was its subsidiary, KTA, based in London and run by an Armenian named Galustian (KTA was extensively used by the IRIAF for shipping and warehousing, and had one of its offices in the same building as the Logistics Center). To cover the traffic from the eyes of West German customs officials, who sometimes required cash bribes, damaged weapons assemblies being returned for repair were marked "Iranian caviar," while across the long wooden crates sealed in Tel Aviv was written... "frozen Israeli chickens!" For this was the legitimate business of the ITC.
One $50 million shipment of aircraft spare parts, negotiated in London late in 1984 by a Lebanese named Kalanjian, left Israel labelled as olive oil, peanut oil, butter, and chickens - and later cleared customs as "Dutch products". According to former Prime Minister, Shahpour Bakhtiar, from the very start of the war the Israelis were buying US weapons and spare parts "on the open market" and selling them to Iran through third countries.(14).
Other trading companies used to shelter black market arms deals include:
- the Swiss-based Draekot Holding and Financial Co, run by Hans Albert Kunz;
- the Commerce International Group, an import-export concern based in Brussels;
- Sati Co., of Zug, Switzerland, which had proven connections to the Euro-right underworld and to gangster Stephano Della Chiaie, arrested in 1987 by the Italian police for his role in the 1980 bombing of the Boulogne train station. He was seen on several occasions conferring with Tabatabai in the President Hotel in Geneva;
- Intercontinental Desalination Equipment, run by a former Israeli military attache in Tehran, Yacoub Nimrodi, who could achieve international reknown in November 1986 for his role in the Irangate deals;
- Kendal Holding, of Monrovia (Liberia), and JCS International, of Bermuda, both of which belong to the Frydel family, domiciled at Herzlia Beach (Israel).
The trading companies were convenient because they allowed the Iranians to benefit from all the advantages of a legitimate commercial organization. While ostensibly doing business in caviar, carpets or industrial equipment, they would send epic telexes, issue performance bonds, establish fabulous letters of credit, arrange bank transfers, contact shipping companies and take out insurance contracts with Lloyd's of London. The Iranians, such as Tabatabai and Rafsanjani, could hide behind the anonymity of the front company, and receive their commissions discreetly in numbered Swiss accounts once the letters of credit were broken out.
When a major deal came close to being signed, Tabatabai or Rafsanjani (or Rafsanjani's son) would come to the President Hotel in Geneva... and so would all twenty-or-so brokers involved in the various stages of the deal. But so compartmented was black market trading, so multiple the layers of intermediaries and front companies, lawyers and banks, that Tabatabai could be talking to his personal representative in one room, while in the next, the seller's agent would be pacing the floor, waiting for the Iranians to show up.
CIA Cobras
The diversity of black market deals concluded or discussed in 1984 alone is impressive.
In one proposed deal, an Indonesian-American, Charles Miseroy St. Claire, desperately phoned partners in California on October 24, 1984 from a hotel room in Frankfurt, where he had been discussing the sale of 12 Bell AH-1G (1S) Huey Cobra helicopter gunships with a French broker who claimed to have contacts with members of Iran's Supreme Defence Council. The French broker, Jean-Louis Gantzer, later told the NewYorkTimes that he had arranged a $18 million sale of Soviet SAM-7 anti-aircraft missiles to Iran in December 1986 (15).
St. Claire's plan was to purchase a fake EUC for Portugal, and arrange banking in Switzerland, using the Californians to obtain a $2.5 million performance bond. However, his primary fear was that the man he believed "controlled" the helicopters - a certain Neil Evans, of Salt Lake City - might no longer be able to obtain the "political clearances" freeing them for export. St. Claire said Evans was "working for the Agency" and may have been connected to the Nugan Hand Bank scandal in Australia, used as a cover by many former Agency heavyweights for "freelance" intelligence operations.
The Cobras were from a secret CIA inventory of 29 units, which had been crated up and mothballed in 1977 for export to areas of special interest, where it was necessary to avoid Congressional accounting. Arms brokers familiar with the deal told the author that the same helicopters had been offered for sale previously by several different dealers, including a Lebanese Shiite and a Franco-Syrian working out of a Panamanian front company. So many brokers claimed to have "exclusive rights" to sell them, the Cobras became one of the legends of the Great Iranian arms extravaganza.
But they were not entirely mythical. In fact, the Cobras were sitting in a hanger on the military side of Frankfurt airport through most of 1984-85, before they were shipped back to the United States for modernization. The grapevine had it that if you slipped the guard a $100 bill he'd let you look into the hangar to see the crates, and for another $100, dig out a Xerox of the first page of the log books. This is how the arms brokers bought their "bona fides."
Nato gas masks
Another deal, following Iraq's use of chemical weapons in March 1984, set the Iranian agents hastily scouring the world market for gas masks and protective clothing.
Aware they could not directly purchase the equipment in the United States, since the notoreity of the poison gas attacks made phoney end use certificates impossible, they tried to purchase NATO-standard equipment through agents in Paris, London, Greece, including American military officers, former diplomats, and a high-ranking Greek royal court official.
The following telex, sent from California to a US government official in the Paris embassy, was made available to the author on condition the source remained anonymous. Dated April 23, 1984 and marked "urgent," it begins as follows:
"Gasmasks: firm offer out of England only, since no one here buys the Turkey EUC, ok. Our commission of 10 percent not included in this price. An immediate letter of credit can start the deal, with an immediate visit by supplier's London agent and our man there.
Gasmask to your specification M17A/1STP and also filter M/13/STP. These are of new production and manufactured to full US Army and NATO NBC standard. We have 15,000 units available for delivery within 7 days of acceptable L/C or bank guarantee and then upto 15,000 per week thereafter. Our price for quantity of 200,000 units is US dollars 47.25 nett, CIF European seaport.
For your information we can also supply NBC protective clothing to US military standard, prices for 200,000 are as follows
Gloves with fingers USD 2.42
Suit, shirt with headcover and trousers USD 29.81
Personal protection mantle USD 9.80
Protective boots USD 14.85
And finally powder and injection for treatment of chemical burns, again for quantities of 200,000
Decontamination powder, composition S102-59 percent. AL 203-19 percent, PH-8, each lot experimentally tested against mustard gas. Supplied in plastic spray bottles containing 120 grammes of powder for individual protection. Unit price is US dollars 3.50 European seaport delivery 200,000 after 25 working days from date of opening L/C, then 200,000 per month thereafter.
Atrpone injection, 2 mg produced in accordance with American Defence Medical Purchase Description No. 1 including latest modification. Unit price USD 4.00 European seaport. Delivery 100,000 after 25 working days from date of opening L/C then 150,000 per month.
British journalists touring the front in late 1984 found Atrpone syringes in the kits of dead Iranian soldiers. Since then, Western newsmen invited by Iran to visit the southern front have systematically been issued NBC protective gear, as are most Iranian soldiers.
Australian C-130s
The story of John J. Ford III, originally a San Fransisco lawyer, is a series of amusing twists and turns spanning five continents that illustrates just how chaotic the Great Iranian Arms bazaar could become.
Since 1982, Ford had been working in an official capacity as an agent for the government of Australia, charged with selling used aviation equipment the RAAF intended to retire from service. To this end, he set up Ford and Vlahos Australia - Defence Equipment Logistics, with mailing addresses in Canberra, Melbourne (c/o RAAF Base Laverton), and San Fransisco, and made contacts with arms brokers throughout the world.
Ford's first assignment was to get rid of ten ageing C-130A military transports, dating from the late 1950s and rotting away in the salt-laden air of Australian air bases.
The very nature of his product narrowed the choice of clientele, excluding not only major industrial countries but those developing countries which could rely on hefty military assistance programs and thus hope to buy newer (and more expensive) aircraft. Australian aviation experts, such as Frank Cranston of the Canberra Times, ridiculed the very idea of putting the aircraft on the market, saying that money and time could be saved by immediately selling them as scrap metal.
But Ford persevered, making contacts left and right. And finally, one of them paid off.
Late in 1983, following the French Operation Manta in Chad, the United States was seeking ways to aid the regime of Hissen Habre, without upsetting the sensibilities of the French. US military experts quickly identified a crying need in Chad for military transport aircraft capable of landing on short, makeshift airstrips - just about the only type that existed in that desert country. But the project was plagued with budgetary problems: the US couldn't afford to give Habre one of Lockheed's new C-130H, which sold for $28 million, when their total military aid to Chad, granted as a lump sum following the Libyan invasion in July 1983, only amounted to $25 million (16). And the French could not afford to purchase the C-130H themselves.
Ford heard about the project and found the US Colonel in charge of organizing US military cooperation with the French. The two agreed something needed to be done, and fast, to help Habre get his troops to the north when and where he needed them, to stop the Libyan invasion. So Ford proposed one of the ageing Australian Hercs, at the rockbottom price of $2.8 million. The US agreed, paid the ferrying costs from Australia to France and on to Chad, where a French crew maintained the aircraft through many months of loyal and vital service.
The Colonel, in turn, expressed an interest in continuing to assist Ford in marketing his aircraft though his own personal contacts; and this is how Ford first met various Iranian agents.
Word of mouth travels fast on the black market. Ford, as a legitimate broker for a legitimate government, was a tempting source for black market brokers. Unlike so many other brokers, he stayed openly in first class hotels, had plenty of cash, and carried around loose leaf binders with full color photographs, charts, and technical data on his wares.
Ford asked the US Colonel to test the waters in the Pentagon, and by June 1984 the reply was in: the aircraft could be exported to Iran on condition they be "demilitarized" first, meaning that all military-associated avionics gear, including radar and navigational packages, be removed.
By August, Ford had talked to a half dozen brokers claiming to represent Iran, before settling on a man who presented himself as a former Iranian Ambassador to South Korean by the name of Daryouch Kalantari. The two signed a Protocol Agreement in Paris on September 9, 1984 for the sale of six of Ford's Hercs, at a unit price of $4 million - almost double the initial price. The condition of the sale were as follows:
1) The "Buyer" accepts the purchase of six C130 A Hercules Aircraft ex RAAF according to specifications furnished.
1.a - The purchase is subjected to inspection.
b - The aircrafts in flying condition have been maintained by the RAAF in accordance to their standards.
2) The aircrafts will be delivered to TEHRAN with a technical stopover in PERPIGNAN, France.
2.a - At the request of the "Buyer," the avionics changes and painting will be accomplished (at the cost of "Buyer").
2.b - The technical stopover in PERPIGNAN will take place three weeks after the down payment = the first 50% of total price..
2.c - A list of detailed pieces (ie, spare parts - author's note: this contract was based on an English document, translated into French, renegotiated, then hastily translated back into English) will be at the "Buyer's" disposition after the down payment = first payment. (The detailed pieces will be furnished at 50% of catalogue price.).
3) Financial procedure:
3.a - Unit price to TEHRAN is $4 million.
3.b - The down payment (50% of the totality) occurs with the signature of the agreement.
3.c - The first payment of 50% of the global price deposited and blocked at La Banque Credit Suisse in GENEVA to the profit of the "Seller" after the positive advice of the Iranian technician in Australia. (Depending of the conformity of the specifications).
3.d - The "Buyer" engages himself by the Banque Credit Suisse to deal by the said banque, the reimbursement to the Iranian Government the deposit of 50% minus 2% retained for banking costs.
3.e - The second payment should be guaranteed by letter of credit irrevocable, transferable and transmissible by the same bank. The letter of credit will be liberated continuing (ie, upon) the landing of each aircraft in TEHERAN. (Author's note: this was how commissions were deposited discretely into the appropriate accounts. In the initial version, the L/C was opened with the fir
st payment, whereas the aircraft were delivered at Perpignan, leaving full responsibility for ferrying them safely to Tehran up to the buyer).
4) Additional costs:
4.a - A sum of 7.5 - 10% will be added to the global total for obtaining the agreement (of the) builder's country. (Author's note: this slush fund was for purchase of EUC, US government approval to overfly US territory on the way to France, etc)
4.b - The responsibility of the 6 aircraft of (ie, en route from) Australia - TEHERAN by PERPIGAN is that of the "Seller".
4.c - The crew will be furnished by the "Seller" until the final destination. Between PERPIGANA and TEHERAN the "Seller" accepts the presence of the Iranian crew, depending on the political possibilities.
The evening of September 9, when the two men met at the Paris Hilton to sign the protocol, was the last time Ford would see Kalantari. Indeed, the Iranian simply disappeared - perhaps unable to convince his backers to show evidence of funds, or perhaps, more simply, victim of one of the many political turf battles raging back in Tehran.
New Zealand lamb
At the same time, Ford had other hopes for Iran, backed up by this most official letter from N.D. McRae, Deputy Chairman of the New Zealand Meat Producers Board. The letter, dated 29 August 1984, was addressed to Ford and to John Shivas, President of Ashburton Aviation Services Ltd, of Ashburton, NZ:
Gentlemen,
Authority to engage in countertrade for Lamb:
You are hereby authorized to negotiate with Islamic Republic of Iran for the delivery of aircraft and spare parts to New Zealand as approved by the appropriate New Zealand Government Authority, payment therefor to be in equivalent value of Halal slaughtered New Zealand lamb carcasses as normally supplied to Iran..."
What interested the New Zealanders were Iran's Orion P-3 anti-submarine and maritime patrol aircraft. Out of a total of six planes, five were believed to be inoperable for lack of maintenance. New Zealand was proposing to bring in their own crews and spare parts to make the planes airworthy, and then fly them out of the country. "The most beautiful part of it all," Ford said in an interview, "is that the higher the price the Iranians want, the happier the New Zealanders will be, since they have so much lamb they don't know what to do with it."
The Iranians already imported more than 92,000 tons of New Zealand lamb, a traditional staple of the Iranian diet, so the idea of trading with the Islamic Republic was not new to the gentlemen of the New Zealand meat board. Most amusing, however, was the fact that another of Ford's clients - the Royal Australian Air Force - had that very month managed to sell its ageing Orions back to Lockheed in exchange for newer equipment, a solution it apparently preferred to bartering them for lamb with neighboring New Zealand (17).
Ford's case is unique, for although he was forced to come into contact with the black market brokers, his entire operation was conducted with the knowledge and the approval of the Australian and New Zealand governments. Selling 28-year old C-130s with a legitimate EUC was not the same as smuggling brand new F-14 parts from USN inventory. As for buying back Iranian aircraft in exchange for lamb... if successful, Ford was likely to meet with wild hurrahs from the entire US foreign policy establishment. Finally a way had been found of making friends in Iran and discretely supporting them that in no way compromised the US public policy of a total arms embargo.
The Heydari Sting
As the protocols quoted above show, the Iranians became much more suspicious as the time went on of revealing their sources or intentions to the black marketeers. This was primarily the result of a few expensive mishaps, where a series of swindlers, opportunists, and downright crooks took advantage of inexperienced but generally patriotic Iranian agents abroad, anxious to serve their country in throes of war.
Metro UK Ltd opened its doors in the summer of 1981, in an old stone building not far from Buckingham Palace. Run by Mahmoud Sabahat, a retired Iranian Air Force General under orders from the new rulers of Tehran, Metro UK entered into a $52 million deal for TOW missiles with a Greek arms dealer. According to the September 4, 1985 edition of the LosAngelesTimes, the missile shipment "was to originate in the United States and be transferred to an Iranian ship in Belgium."
To conclude the deal, the Iranians sent an official from the central Markazi bank to London, to deposit $60 million in various accounts. Three Air Force colonels accompanied him. Their job was to inspect the missiles on the docks in Antwerp before $52 of the $60 million was transferred to the Greek.
What they discovered, when they opened the crates, were tons and tons of tin scraps... and not a single TOW missile. Metro UK stopped payment on the deal. But the Greek, who had come so close to paydirt that his hands were trembling, kidnapped Sabahat, the Bank Markazi official, an Iranian businessman and the three Iranian Colonels, and held them for ransom for seven days before the London police ended their ordeal.
A few days after the London adventure, con men in Zurich attempted a similar caper on a shipment of some fifty M-48 main battle tanks. The tanks were never shipped, and may never have existed; but the Iranians were out $45.9 million.
The most notorious of the black market stings was masterminded by a man named Ahmed Heydari, an arms merchant under the Shah who was imprisoned by the Revolutionary Government... and set free by Ayatollah Behesti in October 1980, to help reactivate the European/Israeli arms pipeline. In Paris, where he was later based, Heydari had the reputation as being the only man who had ever cheated Saudi arms billionaire Adnan Kashoggi and stayed alive to talk about it.
In February 1981, Heydari faked a purchase of Israeli arms worth $73.5 million he then proceeded to sell to Iran. With the help of a mistaken report from the Iranian Chargé d'Affaires in Madrid, stating that the non-existent weapons had been loaded aboard a ship bound for the Iranian port of Bandar Abbas, the Iranian Government released its letter of credit, payment was made, and Heydari once again found himself a rich man - if not for long. When the Iranians discovered the sting, they pursued him from one end of France to another, including a picturesque chase through the drawing rooms of the George-V hotel in Paris. In a related incident, which occurred in June 1984, Heydari told the press he had been kidnapped in the south of France by a "Syro-Iranian commando," whose members strangely resembled local mafioso. He claimed they had held him in a Palestinian camp - in the hills above Nice!
Heydari understood his countrymen's love of the baroque and their need for secrecy perhaps better than anyone yet operating on the black market, and was intent on beating them at their own game. Once Ayatollah Behesti freed him from prison, he contacted an old friend from the Shah's days, K. Minachi, who had been authorized by the Iranian Defense Ministry to set up a private company in Tehran for procuring weapons (and paying commissions) on the black market.
The company, called Interparts, sent Heydari to Paris, where he signed arms purchase agreements with a Lebanese dealer named Hamad Sarakbi, whose affluence had reached such proportions he was able to maintain two suites in the luxurious George V hotel on a permanent basis. Sarakbi's firm, Universal Oil Trade Inc, was said to be established in Athens, Greece. In fact, it had never existed.
To protect itself from potential swindlers, the Iranian government had set up a complex procedure for releasing the funds, that involved a pre-shipment inspection by its representative in Madrid, Ali Behnam. But Behnam, who spoke no English (the language used in all the documents), came to Paris unawares and signed the release forms on February 16, 1981 - without ever having seen the arms. When some $53 million of the total amount cleared their bank three days later, Heydari and Sarakbi disappeared. The Iranian government took them to court in France and eventually recouped most of the money, but not before Heydari had made a small fortune by investing it at going rates.
Despite legal proceedings against him and an attempt to freeze his assets, Heydari continued to operate openly in France. Later, he joined forces with the arms sales operation of the Baron Empain, Air Materiel, alleged to have worked black market deals between Israel and Iran through Portugese middleman Angelo Caldas and his firm, X-TRA.
One reason for Heydari's continued affluence - let alone, his physical well-being! - may have been his links to the French Intelligence services.
French intelligence
Late in September 1980, Ahmad Heydari "sponsored" a pair of French businessmen who came to Tehran at the invitation of Transportation and Communications Minister, a certain Mr Kalantari (probably a relation to the Daryouch Kalantari mentioned above). When the war broke out five days after their arrival, they were asked to stay on by the Iranian government, at which point they offered the services of SICAM company "which claimed to have a munitions export license and to operate under the sponsorship of Colonel Claude Jambel of the Direction de la Surveillance du Territoire (the French counter-espionage service), as well as to benefit from prestigious relationships, with the (French) Prime Minister, General Jeannou Lacaze, Military Governor of Paris, and General Robert Caillaux" (18). The two Frenchmen, Yves de Loreilhe and Jacques Montanes, wasted no time in contracting new business. On October 5, their company in Paris, the SETI, invoiced the Iranian Army for 50 Scorpion light tank engines and 18 Chieftain engines. On October 24, four different pallets were unloaded at Tehran's Mehabad Airport for a total value of $868,711. The shipment contained communications batteries from Spain, an M-60 engine from Italy, M-60 spares from Italy, and 250 F-4 spare tires from Israel. The Frenchmen had big hopes for more, and in telexes back to Paris praised the Iranian leadership for their "pro-French feelings." Particularly warm was their description of the crucial role played by their sponsor, Ahmed Heydari, in "preparing privileged relations between France and Iran... (that could include) the repair by French companies of damaged or destroyed oil installations, and a contract for reorganizing the Iranian national railroads under the direction of the S.N.C.F."
On October 18, 1980, they received the following telex from their Paris office, which they were to transmit to Ali Reza Moayeri (19):
"General Robert Caillaux, upon the request of General Lacaze, Military Governor of Paris, is prepared to receive a phone call from you (ie, Moayeri) to authenticate Colonel Jambel of the Services of Territorial Defence. Colonel Jambel has served and serves as intermediary for the government of our country in the current negotiations. Colonel Jambel can certify to you that the SETI company is persona grata with our government and has its confidence. Monday, the line of conduct to be followed will be determined by the highest authorities and an official telephone contact established. So we request that you telephone immediately to General Caillaux at 73 9- --, his week-end residence."
Jambel was to arrange delivery via the SICAM of an unspecified quantity of military engines, "by October 27, 1980 at the latest". Did the French believe the war would only last a matter of weeks, and thus that a few clandestine arms deliveries to the Khomeini government in times of need would be paid off by fat trading contracts later on? Did their Iraqi friends finally convince them of the contrary? At any rate, Jambel never came up with the goods, and Montanes was held hostage by the Iranians until March 1981 - when SETI managed to ship some $3,420,085 worth of military equipment to Iran from various sources, including Israel. Regretfully, but without further comment, De Loreilhe transmitted the French refusal to sell more weapons to the President of the Islamic Republic, and left the country.
As the last offer of arms made under the Carter Administration, and President Reagan's 1985-86 Iran "initiative," it was one more attempt to trade Western arms for political influence in Tehran. And just as the other attempts, it failed (20).
Ethiopian F-5s
One of the more cruelly ironic twists of the black market underworld was an effort to purchase advanced fighter aircraft from one of the poorest countries in the world, whose generals were strapped for cash - not to buy food for the starving, but to pay off military debts to the USSR. Information made available to the author by arms brokers in Europe suggests that the Ethiopian F-5s sold to Iran were purchased by an Israeli middleman working out of London as part of a deal to help release the Falashas.
Under Emperor Haile Selassie, Christian Ethiopia was one of the United States' best allies in the region. A non-Arab State, it was also an important Israeli friend. Before the Ogaden conflict in the late 1970s, when Ethiopia hurriedly switched alliances and joined the Soviet camp, the United States had supplied Ethiopia with advanced military equipment to Ethiopia, including nineteen F-5s. The last of the F-5s, in the most modern version then available, were delivered to Ethiopia in 1974. Ten years later, the Iranians had located them, and were seeking to purchase them on the black market (21).
Arms brokers in France said they had been contacted by officials in the US State Department, once word got out that the Iranians wanted the planes. The plan was to repurchase all nineteen F-5s for $7 million cash and resell them for scrap - anything, to deny them to Iran. As a sweetener, the US Government promised to allow Ethiopia to buy less strategic military equipment otherwise embargoed, especially transport aircraft to deliver food supplies to famine victims.
But Israeli middlemen beat the Frenchmen to the punch. In June 1985, they convinced the Chief of the Ethiopian Air Force, General Fontabelle, to sell them four of the planes for a whopping $68 million, using a British shell company set up for the deal. The London office of the National Iran Oil Company (NIOC) paid for the planes. They considered it "their contribution to the war effort," brokers said.
It was a frustrating moment for the US officials who had tried to block the sale. Since Ethiopia was not an ally, they had no leverage to convince it to respect US laws forbidding the transfer of US weapons to third counties without explicit approval.
There was one consolation: when the aircraft arrived in Iran they were in such poor condition the Iranian Air Force refused to accept them, let alone purchase the remaining fifteen. Despite a scant 497.5 hours average on the airframes (very low indeed), the aircraft had been poorly maintained while in service and then stored carelessly for several years. Iran's own F-5s were more airworthy than the Ethiopian fighters.
Smuggling around the world
Whether through black market pipelines or legitimate enterprises, all these arms deals ultimately came back to the Supreme Defence Council, where rivalry among the mollahs, the Army, and the Revolutionary Guards continued. Each group pushed its own pet project, vying for funds and commissions in a free for all of greed and corruption that often brought the arms purchasing process to a standstill.
One arms dealer told the author how he waited for months on end to get all twenty-one signatures needed for final approval of his contract. In the end his deal fell through, he said, "because the mullahs couldn't agree on who would get what cut."
Despite the US effort to stop unauthorized arms sales to Iran, which intensified in 1983 and continued until Special Ambassador Richard Fairbanks left the State Department in August 1985 (22), many deals still went through that will probably never be fully verified, but which left their traces here and there like so many tantalizing clues to some vast international puzzle.
•An Israeli arms dealer, who claimed he had sold "whole warehouses of F4 parts to Iran" up until late 1983, but who was later blocked by the US arms embargo, said large quantities of Israeli-made 155 mm ammunition and guns were being shipped to Argentina in September and October 1984, en route for Iran;
•A Dutch arms dealer, working through contacts in the Belgian Air Force, acquired and shipped 10 refurbished jet engines for Iran's F-4 Phantoms, at $750,000 apiece;
•In October 1984, a 747 cargo of Iran Air full took off from Frankfurt airport with a full load of TOW missiles, procured (some say stolen) from NATO forces;
•Using a French agent in Seoul, a Consul of Luxembourg and former armaments advisor to French President Georges Pompidou, Iran attempted to procure military transport aircraft via South Korea, in a complex arms-for-oil barter;
•An American arms dealer, using international shell companies, "arranged" the delivery of 100 Harpoon missiles, to arm Iran's F-14s in late 1984.
In 1984-85, the US Customs tracked arms dealers in the United States and Europe with increasingly effectiveness, blocking some shipments and making numerous arrests. Iran soon realized the limits of the black market, and began to turn with mounting frequency to Eastern block countries such as North Korea, which in 1985 accounted for more than 40% of Iran's arms purchases.
Still, some US dealers held out hopes of instant money, and illusions of turning themselves into political superheroes overnight.
We shall tell the story of one such group of would be smugglers in a later chapter.
============ NOTES ============
1. Baltimore Sun, November 19, 1979; Newsweek, December 31, 1979; Aviation Week, January 28, February 18, and April 14, 1980.
2. Both mishaps were recounted in "Even in a Deadly Cat-and-Mouse Game, Wags can be found," Los Angeles Times, Sunday August 4, 1985.
3. The most notable cases of this type involved the Nazi war chests, and the numbered accounts of various African dictators who fell victims to revolutions in their countries.
4. William F. Hickman, "Ravaged and Reborn," Brookings Institute, 1982, p 22-26.
5. Interview with the author, December 14, 1985.
6. Interviews with black market arms brokers, some of whom requested to remain anonymous. The radar tube requisition form read as follows:
"Further to our verbal negotiations on 9-19-84, would you please deliver two brand new and genuien (sic) of VA145E tubes to our assigned freight forwarder at your earliers convenience... It is understood that the sum of $294000 U.S. dallors (sic) will be paid to you within..." The same tubes could be obtained by authorized buyers for $30,000 a piece. Cf "Billion-Dollar Iran Arms Search Spans U.S., Globe," The Los Angeles Times, Sunday August 4, 1985.
7.See Le Monde Diplomatique, October 1987.
8. The author wishes to express personal thanks to Bill Dowell at Time magazine in Paris for his help on this section, as well as Jacques-Marie Bourget of Paris Match.
9. As we shall see later, it is precisely the sales which fall below the legal limit requiring Congressional approval which tend to go through. Arms dealers boast that US officials can be bought off in the Defense and State Departments "to turn the other eye when the EUCs pass across their desk..." The loopholes in the export control process were tightened by new legislation primarily aimed at Iran, proposed by the Reagan Administration in September 1984.
10. One notable exception was Israel, which we shall treat in detail in a separate chapter.
11. This effort has continued into 1987, according to Iraqi military sources and US satellite photos, which documented an 80% increase in the number of Iranian F-14s in 1986. The F-14 has never been exported to any other country besides Iran, although US defense industry sources said in June 1987 that Israeli companies had been ordering F-14 parts from the US "just to have them in stock."
12. On the individuals mentioned here cf LA Times, August 4 and September 4, 1985, the New York Times, July 19 and August 23, 1984, and The Wall Street Journal, March 28, 1984, etc. For other accounts of the Sjeklocha case see The Washington Post, August 21, 1985, Time Magazine, August 12, 1985 (p 18), and the Los Angeles Times, September 4, 1985. The author has relied heavily on confidential sources, including arms brokers who spoke solely on the condition they not be identified, for much of the information in this and the following chapters.
13. An early published account of Tabatabai's business dealings with Israel can be found in "Comment Israel Arme Khomeiny," Magazine Hebdo, No.48, August 10, 1984. An Iranian opposition group, the People's Mujahidin, showed a copy of Tabatabai's passport during a press conference in Washington on December 1, 1986, with an Israeli entry stamp for 1980. Tabatabai was one of the Iranians of the "second channel" opened by General Richard Secord in late 1986.
14. Interview with the author.
15. John Tagliabue, "Soviet Reportedly Sold Arms to Iran," InternationalHerald Tribune, May 28, 1987. St. Claire was later arrested with Sjeklocha in an FBI sting we will discuss in a separate chapter. Gantzer would also tell the French daily Le Matin de Paris (issues dated October 7,8, and19/1987) that he was offering arms to the Iranians at the behest of the French government in exchange... for French hostages being held in Lebanon.
On the Nugan Hand Bank, see The Crimes of Patriots, by Jonathan Kwitny, W.W. Norton, New York, 1987.
16. The US supported Habre during his exile in Sudan and his long march back to power in 1982, and considered him the best bet against Libyan expansion southward into Africa. During the July 1983 attack against the northern town of Faya Largeau by former Chadian President Goukouni Weddeye, the United States officials personally showed satellite photos to French President Mitterrand which revealed the Libyan involvement. Up until then, the French had been reluctant to intervene.
17. Six of the Australian Orions were transferred by Lockheed to Portugal in an FMS deal - a transaction which sent shivers down the spines of the private trading community, which feared they would be edged out by direct government-to-government deals even in the used equipment market.
18. Comments drawn from a deposition by Yves de Loreilhe and Jacques Montanes , the two Frenchmen in question.
19. Moayeri was named Iranian Charge d'Affaires to Paris in 1984 and Vice Premier in 1986, when he was put in charge of negotiating the hostage crisis with French Prime Minister Jacques Chirac.
20. For documents concerning the Heydari sting, and the misadventures of SETI, I am indebted to Pierre Salinger and the files of ABC News in Paris.
21. The US deliveries to Ethiopia were as follows: eleven F-5A single seat fighters (Northrup serial number 65-10505, 65-10509, 65-10511, 66-9197, 66-9191, 67-21215, 67-21216, 67-22548, 68-9052, 68-9059, 71-260); one F-5A reconnaissance version (71-261), three F-5B double seat trainers (65-10584, 65-8447, 68-9093), and four F-5E single seat upgraded fighters, such as those sold the Shah (74-01521, 74-01524, 74-01525, 74-01526. The first number of each group denotes the year of manufacture). It was this last group the Israeli middlemen sold to Iran. They had previously been registered in the Ethiopian Air Force as 426, 429, 430 and 431 respectively. After Ethiopia shifted alliances in 1979, it managed to keep some of the F-4s flying with parts supplied by Vietnam. By 1983, however, the aircraft were virtually grounded, and Ethiopia tried to sell them to the West German German aircraft manufacturer Dornier, in exchange for Do-228 aircraft, a 15-seat regional transport plan. See also Jacques de Lestapis, MilitaryPowers:TheLeagueof ArabStates,VolumeII , Paris, 1987, pp 120.
22. The first directly US-sponsored deliveries from Israel to Iran occured soon after Fairbanks left. The Tower Commission Report set the delivery dates as August 30 and September 14, 1985.