U.S. PLUGGED INTO WEAPONS NETWORK

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00965R000504880007-3
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 2
• Document Creation Date: December 22, 2016
• Document Release Date: February 8, 2012
• Sequence Number: 7
• Publication Date: November 23, 1986
• Content Type: OPEN SOURCE

Declassified and Approved For Release 2012/02/08 :CIA-RDP90-009658000504880007-3
~SEu"= oN I
23 November 1986
U.S. plugged into weapons network
~ 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
IChometm.
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 $ t 2 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. drd
not sanction earlier arms shipments.
The network is so extenstve that
federal prosecutors have initiated
twice as many cases involving ship-
ments to Iran as they have involving
illegal exports to the Sovret Union.
Yet the network continues to
thrive. Law enforcement sources
said the U.S. Customs Service in
tiew York is investigating l5 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-
forcement 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-
nin~ international weapons traf-
ficking.
hctal, ctanaestme 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-
t~on in 1981.
A White House officia! 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 otfcials 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-Ge in
the weapons the U.S. provided
[ran under the shah in the 1970s
when his country was a U.S. ally
and served as a vital bufTer 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, ex erts 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-
traUOn.
Adm~nistrapon 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
E Itma~Iso has been confirmed that
the U.S. approached another
Iranian expatriate, Cyrus Hashemi,
about negotiating arms deals.
Through loin, 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 Qn-
vate channels of communicaUOn
with political figures in Tehran,
where 52 Americans were being
held hostage by IChomeini'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-sinuggl~rig case in
federal court in New 1~ork.
What is known is that, while he
was negotiating with Intn on be-
half of the CIA, Hashemi and two
of his brothers also were involved
in an attempt to smuggle anus 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 2012/02/08 :CIA-RDP90-009658000504880007-3
 Declassified and Approved For Release 2012/02/08 :CIA-RDP90-009658000504880007-3
skid Hasherru fled 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 Wed m London,
out of reach of U.S. law. But his
legal troubbes eventually led to a
scheme that exposed details of
what federal authonUes 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
IChashoggi, 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 yeah, 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 $ot anywhere and
the men parted rn 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 bo-
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 wen 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 unfiiend-
ly nation, such as Iran.
But Hashemi told the par-
ticipants that they could buy end-
user certificates from a U.S. ally tapes conversations in which De
willing to say it was the final de- la Roque said the U.S. was on the
stinaUon. verge of changing its policy toward
In turn, the sellers kept insisting Iran and that htgh-ranking U.S. of-
that Hashemi post a x300 million ficials had approved the arms deal.
letter of credit to prove that he Lorna Schofield, the prosecutor,
had the support of the Iranian rejected the defense contentions
government and allow the deal to and said the government intends
go forward. to continue the prosecution.
Some of the American arms, in- Sometime when he was working
eluding tanks, TOW missiles and with the Customs Service ,
Hawk missile parts, were to be Hashemi resumed contacts with
sent by ship from Israeli surplus the CIA, according to government
stocks to an Iranian port. A num- sources and his former lawyer, El-
ber of airplanes involved were to liott Richardson, attorney general
be flown from Israel to an airport under President Richard Nixon.
in Turkey, where they would be Richardson confirmed that he
picked up by Iranian pilots. arranged a contact between
But last April, as Bar-Am and Hashemi and U.S. officials in-
Evans arrived in Bermuda for firr- volved in the effort to open nego-
they negotiations, they were arrest- nations with Iran within the last
ed and jailed. Eventually, l3 men yam,
from 5 countries were indicted by Other sources said the CIA tried
a federal grand jury in New York to use Hashemi in an attempt to
on charges of conspiring to violate establish communications with
U.S. law by shipping arms to Iran leaders of some of the factions
using illegal documents. The trial fighting for control in Tehran. The
is set for next February. sources said they did not know
In pretrial hearings, defense at- whether he had been successful.
torneys have maintained their Hashemi's real role may never
clients thought the deal had been be known.
approved by Israel and the U.S. The CIA is objecting to defense
They said such vast quantities of efforts to obtain its files on
arms could not have been moved Hashemi. A law enforcement
to Iran from Israel without U.S. source familiar ~~ the files said
government approval, they detail extensive contacts be-
In one taped conversation, tween the agency and Hashemi.
Evans said he had gone to Israel ~ Hashemi ~~ July 21 in Lon-
and defense officials had told him don. The official autopsy results,
they approved of the deal. which have not been released,
Two Israeli businessmen in- show he succumbed to leukemia
volved in the proposed deal were complicated by a stroke, a govern-
told by registered arms dealers in merit official familiar with the re-
Israel that Israel often shipped port said,
weapons to Iran with tacit approv- But Hashemi's friends and rela-
al of the U.S. government, accord- fives said he had passed a physical
ing tq Jonathan Marks, a defense examination six months earlier
attorney. ~ and had played a vi orous game of
The lawyers also have pointed to tennis three days before his death.
Declassified and Approved For Release 2012/02/08 :CIA-RDP90-009658000504880007-3