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A Mysterious death
Rumors that major Swedish armaments companies had been smuggling high-technology weaponry and ammunition to Iran for nearly ten years erupted into a full-blown scandal on January 15, 1987, when a top-ranking military official responsible for granting arms export licenses fell mysteriously to his death in front of a Stockholm subway train.
Half an hour before his death the official, Rear Admiral Carl-Erik Algernon, received a visitor: Anders Carlberg, the recenty-appointed President of Nobel Industries AB. Carlberg was furious: a company audit he had ordered after the rumors first surfaced confirmed that for nearly ten years a Nobel subsidiary, AB Bofors, had illegally sold weapons to Iran, Bahrein, Dubai, Libya and Oman. Carlberg had been brought in to the Companyb to wipe the slate clean. Already, he had cancelled $80 million in orders from suspect foreign clients. But now, Carlberg said, Bofors officials were telling him that Algernon had known about the smuggling from the very start.
One of the loopholes in Sweden's arms export law - and the one many Swedish officials believe Carlberg called to Algernon's memory on the day he died - concerns prior knowledge by the government of illegal diversion. If Algernon, as Chief of the Kriegsmaterielinspectorat (KMI), had known Bofors was intending to ship weapons to an illegal destination and failed to act, then Bofors could not be accused of a crime.
Swedish officials are divided as to the real cause of Algernon's death. Some point to his honor as a career officer to suggest that he could "never accept to become the scapegoat" in the Bofors case. But co-workers who saw Algernon earlier that day say categorically he did not commit suicide (1). The Swedish Government has suggested that Algernon was negligent and that he simply failed to suspect foul play. However, before taking over the War Materiel Inspectorate job, Algernon headed Swedish military intelligence - not a position for a "blue-eyed" innocent. He fell to his death six days before he was scheduled to give evidence on Bofors to the Police.
Adding to the malaise created by yet another unsolved murder - after the Palme assassination of February 28, 1986 - was the sudden, unexplained retraction of two eye-witnesses. Initially, they told the police they had seen someone push Algernon onto the subway tracks. Two days later, they said they may have been mistaken.
Algernon's death set off a political crisis in Sweden that was the closest any European country came to Irangate. The usually cautious Swedish media pressed the case, three official investigations came to a head, and every day brought its share of new revelations.
The crux of the matter was a seris of questions similar to those of the Irangate investigations in Washington: who in the Government knew of the illegal arms exports, when did they find out, and what if anything did they do to stop them?
The Singapore connection
Sweden has the false reputation of having some of the toughest arms export control laws in the world. In fact, just the opposite is the case. Swedish law, for instance, leaves the door wide open for defense companies to market their weapons abroad without government approval - an activity outlawed in even such an "immoral" country as France. Worse, from the point of view of keeping arms exports under control, Swedish companies may even sign contracts with foreign governments and accept down payments before informing the War Materiel Inspectorat or applying for export licenses. This is precisely what happened with Bahrein and Iran.
Martin Ardbo, who was forced to resign as Bofors President in March 1987 for his involvement in the illegal deals, says it all began in 1978. After years of trying, he finally pulled off his first Middle Eastern sale. He was especially pleased because the country - Bahrein - was light years removed from the Arab-Israeli conflict, and therefore should make it through the KMI. He desperately needed to expand export sales because the Swedish government had cut off development funds for the RBS-70 missile a few years back, leaving Bofors to pick up the tab.
But when Ardbo applied for the export license, the Government turned it down. Although Bahrein was not at war, it still belonged to a "zone of conflict."
So Ardbo paid a visit to Algernon's predecessor as War Materiel Inspector, Bengt Rosenius, to "discuss how we could solve the problem of the Government's refusal" (2). Faced with the fait accompli of the Bahrein contract - default on which would have damaged Bofors' reputation as a reliable partner in other parts of the world - Ardbo says Rosenius agreed to play ball. Bofors should make it look as if the missiles were really going to a legal purchaser in Singapore. Rosenius would get a new export license approved, and the missiles would be shipped. Once in Singapore, they could be quietly re-exported.
The same process, citing Unicorn International in Singapore as the "legal" purchaser of the equipment, was used again and again for arms exports whose real destination was Bahrein, Dubai, Oman, Libya - and especially, Iran (3).
A long history of suspicion
Successive Swedish governments had suspected Bofors of foul play for years, but failed to turn up enough evidence for a crack down.
In November 1980, reports in defense magazines alleged that 304 RBS-70 missiles had reached Dubai and Bahrein. Then Minister of Foreign Trade, Staffnor Burensten-Linder, went to Bofors headquarters to audit the company's books. When he found all the proper export licenses and shipping documents made out for Singapore, he dropped the affair.
Shortly after elections returned Olof Palme to power, information surfaced that Bofors was trying to sell explosives to Libya through Yugoslavia. So just before Christmas 1981, the new War Materiel Inspector, Rear Admiral Algernon, was sent to Karlskoga with a lawyer. Ardbo agreed to sign an affadavit disclaiming any illegal activity, and the matter was dropped. "It was a lie," Ardbo now admits. "We had to protect Rosenius."
Evidence of foul play mounted as the months went by, and still the Swedish government stood by - or conspired to hide the truth from the public eye:
•In May 1984 a disgruntled Bofors employee quit the company, and turned over a suitcase crammed with documents to researchers at the Swedish Peace and Arbitration Society (SPAS). The new evidence documented at least other five illegal deals;
•In October 1984, Swedish Customs launched its investigation into the munitions cartel, in which Bofors played a major role;
•Public Prosecutor Stig L. Age announced in August 1985 that Bofors weapons exported to Singapore had been diverted to Bahrein and Dubai (Dubai was a well-known transshipment point for re-export to Iran). Bofors Director, Claes-Ulrik Winberg, was forced to resign his position as head of Sweden's business association, and later from Bofors; arms deliveries to Singapore were suspended for three months;
•In December 1985, Swedish Customs intercepted a 26 ton shipload of Nobel gunpowder en route to Rostock, East Germany, where it was to be packed into munitions for Iran.
"The Government knew about the illegal deliveries in the spring of 1985 at the latest," Swedish Customs officials said. "The real question is, did the Government stop Swedish weapons from reaching Iran or not? The evidence indicates that they did not."
A special Parliamentary Commission investigated the question of government involvement for five months, but claiming it lacked documentary evidence, abandoned the effort in May 1987. Vice Chairman Anders Bjork explained: "Rosenius is dead. Algernon is dead. Palme is dead. Our investigation has been hampered by these deaths. Now we may never know the truth."
A dangerous customer
Gunners from Bahrein were trained in Sweden on the RBS-70 in 1983. Iranian artillery men went through Bofors training courses in Karlskoga in 1985. "It is rather curious they were there," said one member of the Parliamentary Commission. "This was apparently a marketing effort. The company clearly wanted to export" (4).
The Bofors RBS-70 "Rayrider" is one of the best anti-aircraft missiles on the market today. Two men operate the launcher, which can be man-carried or mounted on vehicles such as jeeps or armored personnel carriers. Its mobility allows it to be brought up right to the front lines, where it can fire at targets within a 5 km radius, and up to 3 km high. As of June 1985, Ardbo said it had entered operational service in eight countries, including Singapore, where it was mounted on a British armored vehicle. And Bofors was certainly hoping for more. "It's as good as the Stinger, at half the cost," Ardbo boasted (5). Arms experts were skeptical about the price, which they estimated at an expensive $41,500 per missile.
But price was no object for Iran. In the spring 1985 an Iranian military delegation travelled to Karlskoga and bought 400 RBS-70 missiles and ten launchers for $58 million. "That's about five times the normal price," says SPAS researcher, Hendrik Westander. Half of the shipment reached Iran in July 1985 (6).
Bofors had traded with Iran semi-legally in the early 1970s. It sold anti-aircraft guns, ammunition, and explosives to the Shah in 1973-75, and shortly before 1978 completed work on a dual-use fertilizer and explosives factory in Isfahan. The Iraqis destroyed the munitions plant early in the war, and Swedish officials said it would take a year to rebuild.
The first confirmed appearance of the RBS-70 on the battlefields of the Gulf occured during the January-February offensives in 1987. US officials and European intelligence sources said the Swedish missile was responsible for "a good portion of the 42-45 aircraft the Iraqis lost" on ground support and attack missions in the East of Basra region. Iran integrated the Swedish missile into a revamped air defense network, and deployed it with front line units, where the Iraqis were least expecting it. The RBS-70 was a medium-range missile that filled the gap between Iran's long-range American-built HAWKs and the shoulder-fired SAM-7s it bought from China.
The Iranians liked the Swedish missile. And they wanted more.
Iranian revenge?
And this is where the Swedish saga takes a dark twist. According to the New York Times, Prime Minister Olof Palme was angered by the Bofors sales and blocked shipment of the additional 200 RBS-70 missiles the Iranians had ordered (7). Subsequent reports said he called back two ships carrying Bofors howitzers on their way to Iran in November 1985, one off St Helena's island and the other off the coast of Mozambique.
On February 4, 1986 an Iranian commercial delegation arrived in Stockholm to discuss bilateral trade issues. According to some reports, the Iranians also came to collect their missiles. A Bofors spokesman later admitted that the company was "under pressure from Iran." The missiles were never delivered, and twenty-four days later, Palme was murdered. The French newsweekly L'Express believes that as the 7th anniversary of the Islamic Revolution approached in February, "the order was given to "punish" Palme for having broken his word" (8).
It wouldn't be the first time Iran had been accused of murdering top-ranking European officials who stood in the way of its arms procurement effort. In July 1985, one of Austrian Chancellor Bruno Kreisky's top advisors, Herbert Amry, collapsed unexpectedly at a Viennese cocktail party and died on the spot. Some believed Amry was poisoned for having discovered that Iran was trying to buy GH Noricum howitzers from the Austrian firm Noricum, and attempting to block the sale (9).
A similar assassination occured in France in January 1985. The head of the Arms Export Directorate, General RenéAudran, was gunned down in front of his house in the Paris suburbs after having refused to approve French arms sales to Iran. French intelligence sources said that Audran had been sent to Tehran three times on offical mission in 1984 to discuss arms sales with Revolutionary Guards leader, Mohsen Rafic Doust. When the Iranian requests were turned down, Doust decided to "make Audran pay" (10).
Palme's secret diplomacy
Palme had long been engaged in a complex diplomatic initiative toward Iran, to establish ties with the new leadership and help them win international recognition for their Revolution.
Almost immediately after the fall of the Shah in 1979, Palme began courting the mullahs. Before he returned to power in 1982, he headed a team of UN mediators attempting to bring the Gulf War to a halt. Between 1980-1982, he visited Iran five times. During these trips he forged close personal ties with Iran's new leaders, Swedish officials said.
Soon after he returned to power Palme concluded a large-scale oil deal with Iran, despite Sweden's historic shift away from its traditional Middle East suppliers in favor of North Sea oil. Trade officials said the Iranians urged the deal on Palme in 1983 as a means of balancing trade between the two countries. And although adverse publicity eventually killed that particular oil deal, trade figures show that Sweden concluded other deals for Iranian oil worth $176 million over the next three years, at a time when oil imports from all other Middle Eastern suppliers had dopped to zero.
The oil deals were significant because they were politically motivated. And despite Palme's stated attitude of "neutrality" toward both belligerants in the Gulf war, no similar gesture was made toward Iraq. Indeed, Swedish oil purchases from Iraq over the same three year period were a mere $5.75 million.
Meanwhile, Iran became a major market for Swedish products, with civilian exports to Iran topping the $500 million mark in 1984. "Our foreign policy and Palme's good name helped establish this disproportionately large Iranian trade," a trade official said (11).
It was a secret to none that Palme saw himself as an international statesman, perhaps the only one capable of bringing the endless butchery of the Gulf war to a halt. It is also clear he used trade incentives to woo the Iranian leadership into taking his advice. Government investigators who had reviewed more than 7000 pages of documents on the smuggling cases said that Palme knew about other arms deliveries to Iran "and did nothing to stop them." It would appear Palme carried his secrets to the grave.
The 'Sacred Principle'
The Swedes see themselves as one of the last rightful purveyors of morality in the modern world. Sweden sparked the European groundswell against the US involvement in Vietnam in the early 1970s, and was the first arms producer in the world to voluntarily restrict her own arms exports. Swedes find it inconceivable that their politicians might lie. Even in official circles, distrust is an uncommon phenomenon.
The facts now emerging from the Bofors case have gone a long way toward shattering this public image, profoundly shaking Sweden's faith in herself. All the while they were proclaiming their moral ascendancy, Swedish businessmen and officials did not hesitate to bend the rules they themselves had made.
Exactly how many RBS-70 missiles made their way to Iran remains unclear. In addition to the 200 missiles sold to Iran in 1985, Sweden's Foreign Minister told Parliament in March 1987 that 714 RBS-70 missiles had been delivered to the Unicorn International trading company in Singapore, and many were subsequently re-exported. Carl-Johann Åberg, who as Undersecretary for Foreign Trade oversees arms exports, noted that companies such as Bofors can skirt the entire regulatory process and sell weapons anywhere in the world through subsidiaries and licensees abroad "and we have no control over that." By 1983, when the practise was stopped, Bofors had granted production licenses to companies in sixteen different countries (12).
Some of the most energetic supporters of Swedish arms sales were in the trade unions and in the Social Democratic party. The reason? Bofors and other major defense contractors exported more than 50% of all the weapons they produced. Jobs were more important than morals.
Olof Palme himself was probably the most effective arms salesman of all. He singlehandedly convinced Indian Prime Minister Rajiv Ghandi in 1986 to buy Bofors field howitzers worth $1.3 billion - Sweden's single largest arms export order ever. A year later, Swedish Radio discovered bank documents that showed how it was done: by paying bribes of more than 200 million kronor into the numbered Swiss bank accounts of top Indian officials. These revelations in May 1986 dealt yet another blow to Swedish innocence, by unveiling the dirty underside of public morality.
Today many Swedes have begun to take a harder look at the whole dynamic of arms sales, and of how they might affect Sweden's role in the world. One thing that has emerged from the Bofors affair is the close linkage between arms exports and Swedish neutrality, held up as a 'sacred principle' by Swedes on Left and Right alike.
Palme and others realized that for Sweden to remain neutral it vitally needed a healthy arms industry. And to maintain production runs, and make the cost of national Defense to the Swedish taxpayer acceptable, the political price was weapons exports. "The big plus from foreign sales," a SIPRI researcher said, "is that they keep production lines open free of charge. Without the Iranian (and other black market) orders, the Swedish government would have to increase its own orders or begin buying many of its own weapons abroad. And that would definitely have a negative effect on Swedish neutrality."
Some politicians feel it would be less hypocritical to abandon arms export restrictions. "Swedes must understand that countries are buying weapons to use them, not to keep them on the shelf," said Anders Bjork. But the Social Democratic government of Ingvar Carlsson prefered to maintain the pretence of Swedish morality and announced token changes in the arms export laws in April 1987.
With Palme's assassination, the mysterious death of War Materiel Inspector Algernon and that of his predecessor, the truth about Swedish arms deliveries to Iran may never be known. However, one thing is certain: the Bofors affair marks the end of the Palme myth. Sweden has irrevocably lost her innocence.
----------------NOTES--------------
1. Some of the material this chapter appeared, in substantially different form, in the International Herald Tribune, June 3, 1987, and The Nation July 13, 1987. Reporting is based on interviews with Swedish Customs authorities, government officials, members of the Parliament, the Swedish Peace and Arbitration Society, SIPRI, foreign diplomats, and a review of documents seized during by Customs during the course of their three-year investigation. The author also wishes to thank Ingemarie Froman at TV2 (Rapport), and Bo Andersson and Bjarna Stenquist at DagensNyheter for their assistance and guidance.
2. L'Expressen, March 31, 1987.
3. The SIPRI study, Arms Production in the Third World, (Taylor & Francis, London and Philadelphia, 1986) notes that Unicorn International has agreements with a number of foreign arms producers "to export covertly to customers not approved by their respective governments" (pp 72). These companies include Bofors, Ferranti (UK), General Dynamics (US), and the Italian aircraft manufacturer, SIAI-Marchetti.
4. Interview with Bertil Fiskesje, April 21, 1987.
5. Interview with the author, June 8, 1985, Paris.
6. L'Express, 21-27 November 1986; International Herald Tribune, March 6, 1987, and interviews. Bofors was quoting prices of 250,000 SwK/missile, and 1,250,000 SwK/launcher, or roughly $41,500 and $208,000 respectively, in 1982. A further 900 missiles were re-exported from Singapore to Bahrein and Dubai, Westander alleged, and some of these probably ended up in Iran.
7. Richard Reeves, New York Times Magazine, March 1, 1987. Reeves quotes "sources in the French Foreign Ministry," but may in fact may have been referring to the 21-27 November 1986 issue of L'Express, which printed an identical story four months earlier, albeit with less effect.
8. Ibid.
9. Pascal Krop, "Les Secrets des ventes d'armes a l'Iran," L'Evenement du Jeudi , 19-25 February 1987. Krop has published several books on the French secret service. The GH N-45 155mm howitzer was an earlier version of the South African G-5, which Iraq had begun to receive at that time. See Chapter 3., and Chapter 7.
10. Newsweek, March 9, 1987; Charles Villeneuve and Jean-Pierre Pierret, L'Histoire Secrete du Terrorisme , Paris, 1987; and personal sources.
11. Sweden's trade with Iran fell off sharply after the Revolution, only to make a spectacular rebound once Palme returned to power.
Swedish imports from Iran Swedish exports to Iran
(in millions of Swedish Kronor)
1976: 1,170 647
1978: 1,283 1,012
1980: 638 798
1981: 32 998
1982: 1,190 1,293
1983: 1,093 3,232
1984: 404 3,885
1985: 153 1,630
1986: 502 844
Oil accounted for 99% of Sweden's imports from Iran. Deliveries fluctuated because of the revolution, and shot up in 1982 as a result of "extensive barter contracts," trade officials explained. By 1984, Iran was Sweden's 12th largest export market, but dropped to 34th place by 1986 "because the Iranians had run out of money." The big 1983-84 deals were mostly road-building equipment and trucks. Major Swedish exporters to Iran were ASEA (electrical equipment, paper and board), Volvo and Saab-Scania. A governent-owned trading company, SUKAB, now handles barter deals.
By contrast, Swedish trade with Iraq was erratic. Noticeably absent, however, were substantial Swedish oil imports.
Swedish imports from Iraq Swedish exports to Iraq
(millions of SwK)
1982: 1.0 2,961
1983: 1.0 997
1984: 0.5 874
1985: 35.0 1,086
1986: 1.0 624
(Source: Swedish Trade Ministry.)
12. Interview with the author, April 24, 1987. Singapore and Pakistan are the two most likely foreign producers of the RBS-70. Bofors has had licensing agreements with both countries since the 1960s.