U.S. PLUGGED INTO WEAPONS NETWORK

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00965R000302100001-8
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 2
• Document Creation Date: December 22, 2016
• Document Release Date: September 25, 2012
• Sequence Number: 1
• Publication Date: November 23, 1986
• Content Type: OPEN SOURCE

Declassified and Approved For Release 2012/09/25: CIA-RDP90-00965R000302100001-8
SEC o ' 1
23 November 1986
U.S. plugged into weapons network
S By Douglas Frantz
and James O'Shea
Chicago Tribune
WASHINGTON-The Reagan
administration, in its efforts to in-
fluence events in post-revolutionary
Iran, tapped into a shadowy interna-
tional network of arms dealers and
smugglers created to funnel weapons
to the regime of Ayatollah Ruhollah
Khomeini.
Since the U.S. embargo on arms
shipments to Iran in 1980, this net-
work has delivered billions of dollars
worth of American weapons to
Tehran and played an essential role
in prolonging Iran's war with Iraq,
now in its seventh year.
Congressional investigators exami-
ning President Reagan's possible use
of this network have been told that
the Central Intelligence Agency set
up a secret Swiss bank account to
receive $12 million in payments
from Iran for weapons.
This raises the question of how
long the CIA has been involved in
covert arms shipments to Iran. In-
vestigators also want information on
the agency's involvement in two
shipments by Israel in 1985.
These developments appear to
blur the distinction between arms
deals negotiated by the smugglers on
behalf of the U.S. government and
deals the smugglers undertook for
themselves.
Court records, government docu-
ments and interviews have
uncovered many elements of the in-
ternational arms network and pro-
duced evidence contradicting gov-
ernment assertions that the U.S. did
not sanction earlier arms shipments.
The network is so extensive that
federal prosecutors have initiated
twice as many cases involving ship-
ments to Iran as they have involving
illegal exports to the Soviet Union.
Yet the network continues to
thrive. Law enforcement sources
said the U.S. Customs Service in
New York is investigating 15 sepa-
rate schemes involving attempts to
ship weapons to Iran and a major
indictment is expected soon on
the West Coast.
"If it turns out Iran is our
friend, we're going to have a lot of
trouble sorting out the good guys
from the bad guys," one law en-
t'orcement official said.
There is evidence the CIA and
Israel played a role in covert arms
deals with Iran long before the of-
This is another report in an oc-
casional series of articles exami-
ning international weapons traf-
ficking.
tidal, clandestine Reagan adminis-
tration effort began 18 months
ago.
One intelligence source said the
CIA could have been involved in
arms deals with Iran since the be-
ginning of the Reagan administra-
tion in 1981.
A White House official con-
firmed Friday that Israel consis-
tently has supplied Iran with
weapons since shortly after
Khomeini came to power in 1979.
The flow of arms continued, the
official said, despite protests by
the U.S. State Department and an
Israeli pledge to halt the shipments
in 1982.
Israeli officials have said they
never have shipped weapons to
Iran without U.S. approval. But
the White House source said Israel
has sent arms to Iran over the
years without American agree-
ment, including two deliveries in
August and September of 1985
that, the source said, Reagan did
not know about in advance.
But when the second shipment
led to the release of American hos-
tage Rev. Benjamin Weir, the U.S.
embraced the Israeli actions and
Reagan later approved a secret
directive that led the White House
directly into the arms network
supplying Iran.
The roots of the Iranian net-
work-and, in a sense, of the con-
troversy embroiling Reagan-lie in
the weapons the U.S. provided
Iran under the shah in the 1970s
when his country was a U.S. ally
and served as a vital buffer against
Soviet penetration of the oil-rich
Persian Gulf.
That arsenal contained some of
America's most sophisticated
weapons, including F-14 jet fight-
ers, Hawk antiaircraft missile bat-
teries, TOW antitank missiles and
advanced radar systems. Iranians
were trained at U.S. military bases
to use and maintain the weapons,
and even today, experts say 95
percent of Iran's air force weapon.
ry is American-made.
But the grueling war with Iraq
has depleted Iran's arms reserves
and spawned an international
black market in American spare
Parts and weapons, including all of
the weapons sold to Iran with the
approval of the Reagan adminis-
tration.
Administration officials have ac-
knowledged selling TOW missiles
and Hawk missile parts to Iran.
Details remain sketchy about
precisely how the administration
got its arms into Iran, but govern-
ment officials have acknowledged
that CIA agents were used and
contacts were arranged through an
expatriate Iranian arms dealer in
Europe.
It also has been confirmed that
the U.S. approached another
Iranian expatriate, Cyrus Hashemi,
about negotiating arms deals.
Through him, the official and un-
official arms operations merged.
Hashemi left Iran in the 1960s
to live in Europe and the U.S., but
he maintained important contacts
with Iranian military and political
figures. Several sources confirmed
that in 1980, he was contacted by
CIA agents desperate to open pri-
vate channels of communication
with political figures in Tehran,
where 52 Americans were being
held hostage by Khomeini's Revo-
lutionary Guards.
The extent of Hashemi's work
on behalf of the CIA is unknown
and the agency is fighting to avoid
having its files on him released as
part of an arms-smuggling case in
federal court in New York.
What is known is that, while he
was negotiating with Iran on be-
half of the CIA, Hashemi and two
of his brothers also were involved
in an attempt to smuggle arms to
Iran.
A former government official fa-
miliar with that effort said the
Hashemis may have been working
the arms deal with CIA involve-
ment. One brother, Jamshid, told
a London television network that
the American government allowed
his brother to ship materiel to
Iran.
`Because he was an important
figure in the hostage situation and
because of that, they were letting
him export these articles to Iran ,'
Jamshid Hashemi told Thames
TV.
Internal CIA documents on the
Hashemis obtained by The Trib-
une are heavily censored, but they
show the CIA was aware the
brothers were shipping goods to
Iran in 1980.
The brothers were indicted in
1984 on charges of conspiring to
ship military goods to Iran, but
Cyrus Hashemi was abroad at the
time and thus not arrested. Jam-
Declassified and Approved For Release 2012/09/25: CIA-RDP90-00965R000302100001-8
 Declassified and Approved For Release 2012/09/25: CIA-RDP90-00965R000302100001-8
shid Hashemi tied to London after
being tipped by the CIA, accord-
ing to a law enforcement source
and a nongovernment source. A
third brother eventually pleaded
guilty and went to prison.
Cyrus Hashemi lived in London,
out of reach of U.S. law. But his
legal troubles eventually led to a
scheme that exposed details of
what federal authorities describe as
the way the international arms
network functions-a world of
high-powered contacts, phony doc-
uments and multimillion-dollar
deals.
It began when Hashemi contact-
ed Samuel Evans, a London law-
yer he had met through an earlier
business deal with Adrian
Khashoggi, a Saudi Arabian whose
worldwide business interests have
earned him the reputation as the
world's richest man.
According to Evans, Khashoggi's
lawyer for 10 years, the Saudi Ara-
bian and Hashemi intended to
trade oil from the Iranian national
petroleum company and supply
arms to Iran. But Evans said the
project never got anywhere and
the men parted in August, 1985.
Soon after, Evans said, Hashemi
approached him with a plan to sell
arms to Iran and Evans contacted
people familiar with the arms busi-
ness.
Over the next few months,
Evans served as the middleman
between Hashemi and three sepa-
rate groups of arms dealers that
promised to supply $2.5 billion
worth of American weapons for
Iran. That transaction would mean
millions in commissions for each
participant.
The groups included a retired
Israeli general, Abraham Bar-Am,
and an expatriate American living
in France, John de la Roque.
Unknown to Evans and the
others, Hashemi had gone to the
U.S. Customs Service and had be-
come an informant in an attempt
to win leniency on his previous in-
dictment.
Hashemi's two partners in the
deal actually were Customs agents,
and conversations between the
participants were recorded secret-
ly.
The transcripts show that
Hashemi was an expert on the
arms market. A U.S. ally, for ex-
ample, cannot legally tranfer
American arms to a third country
without a document called an
"end-user certificate." The certifi-
cate designates the final destina-
tion of the arms and ensures that
they won't be sent to an unfriend-
ly nation, such as Iran.
But Hashemi told the par-
ticipants that they could buy end-
user certificates from a U.S. any
willing to say it was the final de-
stination.
In turn, the sellers kept insisting
that Hashemi post a $300 million
letter of credit to prove that he
had the support of the Iranian
government and allow the deal to
go forward.
Some of the American arms, in-
cluding tanks, TOW missiles and
Hawk missile parts, were to be
sent by ship from Israeli surplus
stocks to an Iranian port. A num-
ber of airplanes involved were to
be flown from Israel to an airport
in Turkey, where they would be
picked up by Iranian pilots.
But last April, as Bar-Am and
Evans arrived in Bermuda for fur-
ther negotiations, they were arrest-
ed and jailed. Eventually, 13 men
from 5 countries were indicted by
a federal grand jury in New York
on charges of conspiring to violate
U.S. law by shipping arms to Iran
using illegal documents. The trial
is set for next February.
In pretrial hearings, defense at-
torneys have maintained their
clients thought the deal had been
approved by Israel and the U.S.
They said such vast quantities of
arms could not have been moved
to Iran from Israel without U.S.
government approval.
In one taped conversation,
Evans said he had gone to Israel
and defense officials had told him
they approved of the deal.
Two Israeli businessmen in-
volved in the proposed deal were
told by registered arms dealers in
Israel that Israel often shipped
weapons to Iran with tacit approv-
al of the U.S. government, accord-
ing to Jonathan Marks, a defense
attorney.
The lawyers also have pointed to
taped conversations in which De
la Roque said the U.S. was on the
verge of changing its policy toward
Iran and that high-ranking U.S. of-
ficials had approved the arms deal.
Lorna Schofield, the prosecutor,
rejected the defense contentions
and said the government intends
to continue the prosecution.
Sometime when he was working
with the Customs Service,
Hashemi resumed contacts with
the CIA, according to government
sources and his former lawyer, El-
liott Richardson, attorney general
under President Richard Nixon.
Richardson confirmed that he
arranged a contact between
Hashemi and U.S. officials in-
volved in the effort to open nego-
tiations with Iran within the last
year.
Other sources said the CIA tried
to use Hashemi in an attempt to
establish communications with
leaders of some of the factions
fighting for control in Tehran. The
sources said they did not know
whether he had been successful.
Hashemi's real role may never
be known.
The CIA is objecting to defense
efforts to obtain its files on
Hashemi. A law enforcement
source familiar with the files said
they detail extensive contacts be-
tween the agency and Hashemi.
Hashemi died July 21 in Lon-
don. The official autopsy results,
which have not been released,
show he succumbed to leukemia
complicated by a stroke, a govern-
ment official familiar with the re-
port said.
But Hashemi's friends and rela-
tives said he had passed a physical
examination six months earlier
and had played a vigorous game of
tennis three days before his death.
Declassified and Approved For Release 2012/09/25: CIA-RDP90-00965R000302100001-8