CAIRO MINISTER 'DISMAYED' BY ARMS STORIES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00552R000605700005-0
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 1
• Document Creation Date: December 22, 2016
• Document Release Date: August 27, 2010
• Sequence Number: 5
• Publication Date: October 9, 1982
• Content Type: OPEN SOURCE

Sanitized Copy Approved for Release 2010/08/27: CIA-RDP90-00552R000605700005-0
ARTICLE
ON PAGE 9
C * M'** 'DiSM )T
airo imster ___a e
Stories
By Scott Armstrong.
W'uhlneton Post Brat! Writer
In the first official comment on recent pub-
lished reports on the transport of billions of dol.
lars worth of U.S. military equipment to Egypt,
Kamal Hassan All, Egypt's foreign minister, said
yesterday that Egyptian officials engaged in no
wrongdoing.
Describing himself as "deeply dismayed by
'what has been reported, in the press about
Egyptian officials, including myself," All, in a for-
mal statement issued by the Egyptian Embassy
here, challenged "any person or party to bring for-
ward any documents that would prove any of
these malicious lies."
All said that about a year ago, "the Egyptian
government carried out a thorough investigation
that proved that no wrongdoing or improper ac-
tion was committed by any Egyptian official or
authority," he said.
The U.S. Justice Department is investigating
the use of $51 million in U.S. funds paid to the
Egyptian American Transportation Service Co.
(EATSCo) of Falls Church to transport more than
$3 billion in military equipment that the United
State agreed to sell Egypt after the signing of the
1979 peace treaty between Egypt and Israel.
Investigators are focusing on $30 million in bills
submitted by the firm as fees owed to a middle-
man company that arranged for the ships to carry
the equipment overseas. These fees as well as
other transportation costs were paid from grants
and loans provided by the United States to Egypt
for arms purchases.
Prosecutors are trying to determine whether
the use of the middleman served to inflate the
bills submitted to Egypt by EATSCo and if so,
who profited.
A source close to EATSCo has said some of the
money listed on bills as due the middleman actually
went to EATSCo. Egyptian officials were aware of
this, the source said, and did not object to it, and
therefore the firm's procedures were proper.
Sources close to the investigation have said that
federal prosecutors have no allegations against
Egyptian officials. They are, however, attempting to
ascertain how EATSCo, which had no previous
shipping experience, secured a lucrative and ex-
clusive contract to handle all U.S. arms shipments
to Egypt.
The firm was founded in 1979 by Hussein K
Salem, who U.S. intelligence sources say is a for-
mer Egyptian military intelligence official and
close associate of Hassan All, and by Thomas S.
Clines, a former CIA official. Salem has previously
denied ever being an intelligence official.
Ali's statement noted that "Pentagon officials
have confirmed that the firm's charges average
less than those allowed in its contract."
The Pentagon has withheld public comment on
the case and has refused reporters' requests to
look at public records showing the rate at which,
items were shipped by EATSCo.
In his statement, - Ali said he has started "legal
proceedings against all those who tried without
any foundation to cast doubts on my name and
the names of other Egyptian officials."
Sanitized Copy Approved for Release 2010/08/27: CIA-RDP90-00552R000605700005-0