IRANIAN OFFICIALS MAY HAVE GOTTEN KICKBACKS ON U.S. ARMS SALES VIA INFLATED-PRICE SCHEME

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00965R000605180008-7
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 2
• Document Creation Date: December 22, 2016
• Document Release Date: May 3, 2012
• Sequence Number: 8
• Publication Date: May 5, 1987
• Content Type: OPEN SOURCE

STAT
Declassified in Part - Sanitized Copy Approved for Release 2012/05/03: CIA-RDP90-00965R000605180008-7
A "ARTICLE APPEARED 5--March--1987
ON AN isa -
iranian officials May Have Gotten Kickbacks
_
On U.S. Arms Sales Via Inflated-Price Scheme
I/-
A
?/ And" WARD T. POUND
Staff Reportert of THE WALL STREET JOURNAL
WASHINGTON-Some of the missing
millions generated by the Iran arms sales
may have disappeared into the pockets of
Iranian officials, investigators now sus-
pect.
Independent counsel Lawrence Walsh is
pursuing evidence indicating that senior
Iranian officials agreed to pay inflated
prices for U.S.-made weapons in return for
substantial kickbacks, according to law-en-
forcement officials.
Investigators for Mr. Walsh believe that
a kickback scheme was an integral part of
the secret arms transactions since the
sales began in the summer of 1985, and
that it continued into 1986, according to
these officials. They said Mr. Walsh has
obtained information suggesting that, in
the early stages of the arms deals, Israeli
intermediaries were to kick back money to
senior Iranian officials.
Mr. Walsh declined to comment on the
disclosure. Officials said, however, that
Mr. Walsh and his team of attorneys and
Federal Bureau of Investigation agents are
delving into whether the powerful speaker
of Iran's parliament. Hashemi Rafsanjani,
or members of his family received any
money.
Furthermore, they said, the investiga-
tors want to determine whether any Amer-
ican officials knew of, or condoned, secret
payments to Mr. Rafsanjani or other offi-
cials in violation of U.S. anti-bribery or
fraud laws.
Question of Financial Benefits
The investigation also covers whether
Americans benefited financially from the
administration's secret arms sales to Iran
or from its efforts to aid the U.S.-backed
Nicaraguan Contra rebels, officials said.
But no evidence has yet emerged, either
from the independent counsel or in the re-
port released last week by the presiden-
tially appointed Tower Commission, point-
ing to kickbacks received by citizens.
The evidence of kickbacks to Iranians
opens a whole new chapter in the still-un-
folding scandal, and could be a key to the
persistent mystery of what happened to the
many millions of dollars that Iran funneled
through various intermediaries and bank
accounts to pay for weapons it bought from
the U.S. and Israel.
Both the Tower Commission and the
Senate r-
!1 igence committee said they
were unable to account for much of the
funds. which the Tower report indicated
may have totaled as much as $87 million.
Some of the money apparently was ear-
marked by White House aides for the Con-
tras, but they have denied receiving it.
Indications that Mr. Rafsanjani may
have profited from the U.S. arms deals
first emerged several weeks ago in an Ara-
bic newspaper, Ad Dastour, which is pub-
lished in London. All Nourizadeh, an exiled
Iranian journalist and an editor of the pub-
lication, reported that $6 million from the
arms sales was deposited in a bank ac-
count in Geneva controlled by Mr. Rafsan-
jani's son, Saed.
In addition, the San Francisco Exam-
iner reported yesterday that the Tower
Commission suspected that large payoffs
were made to Iranians. The newspaper
quoted former Secretary of State Edmund
Muskie, a commission member, saying
that an arms-industry source had told the
commission of the kickbacks, but that the
panel never found any proof.
It has been traditional in Iran for the
purchaser to pocket a commission of about
5% on arms sales and other transactions,
and businessmen still trading in Iran say
the custom hasn't died with the Islamic
revolution.
William Quandt, a Mideast expert at
Washington's Brookings Institution, said
the disclosures that Mr. Rafsanjani or
other top Iranian officials may have re-
ceived kickbacks on secret arms sales
probably won't endanger them politically.
"As long as they were milking the Israelis
and the Americans and they could claim
they put the money to a good cause like
the war with Iraq, I think they could get
away with it," said Mr. Quandt.
Role of Ghorbanifar
Earlier this week, The Wall Street Jour-
nal reported that criminal investigators
want to determine whether Manucher
Ghorbanifar, who acted as a conduit for
Iranian funds used to purchase $46.7 mil.
lion in U.S. arms, made kickbacks to Iran-
ian officials or siphoned off profits for him-
self or associates. His attorney, Stuart
Pierson, said, "When the time is appropri-
ate. we will respond to that assertion as
well as others."
The Tower Commission disclosed that
Mr. Ghorbanifar received an additional $40
million from Iran. and investigators sus-
pect that sum went to arms purchases as
well. But the report said the commission
wasn't able to determine how that money
was used.
According to a draft re rt reared for
the Senate Intelligence Committee
year, investigators suspected that Mr.
Thor ani ar may have received $1 million
for "overhead" charges related to two
weals deliveries in February 1986.
The Tower report suggested that Cen-
tral Intelligence Agency and National Se-
curity Council aides Questioned the trust-
worthiness of Mr. Ghorbanifar. For in-
stance, the report includes a December
1985 computer message from NSC aide t
Col. Oliver North to his boss, Adm. John
Poindexter, in which the colonel com
olaine that 'bur greatest liability
throughout has been lack of operational
control over transactions with Ghorbani-
far. "
Col. North was fired and Adm. Poin-
dexter resigned following disclosures that
profits from the Iranian arms sales were
diverted to the Contras.
Activities of Hakim
The Intelligence Committee's final re-
port also raised questions about the activi-
ties of Albert Hakim, an Iranian-born Jew
and naturalized U.S. citizen who was a
central character in both the Iranian arms
shipments and the resupply operation to
help the Contras.
The report said that the Central Intelli-
gence Agency in early 1986 "was con-
cerned over Hakim's possible private in-
terests in arms deals with Iran." During
the shah's regime, Mr. Hakim arranged
to funnel millions of dollars in payoffs to
Iranian military officials, according to his
own sworn testimony in a Connecticut civil
case and Justice Department records.
Mr. Hakim, who has declined to com-
ment on his involvement in the Iran-Contra
affair, couldn't be reached.
CIA Memo
Criminal investigators also are follow.
ing up on a CIA memo, cited in the Tower
Commission's report, which said Mr. Ghor-
bamtar.
""used around $200,000 ... to sup-
port (his)political contacts inside Iran."
The CIA attributed that information
to Mi-
cfiael Ledeen, a former NSC consultant
an riend of Mr. Ghorbanifar. who en-
couraged the U.S. to use the Iranian as an
intermediary to Tehran. Mr. Ledeen said
in an interview that he didn't recall giving
such information to the CIA.
The commission's report also referred
to a note written by Col. North indicating
that Mr. Ledeen was to receive $50 per
missile delivered to the Iranians in Febru-
ary 1986. Mr. Ledeen denied in the inter-
view that he ever received any of the pro-
ceeds from the shipments, and asserted
that, from "the earliest conversations I
had with the Israelis," it was decided that
"no commissions were to be paid to any-
body ?
'ofrtinued
Declassified in Part - Sanitized Copy Approved for Release 2012/05/03: CIA-RDP90-00965R000605180008-7
 Declassified in Part - Sanitized Copy Approved for Release 2012/05/03: CIA-RDP90-00965R000605180008-7
Mr. Ghorbanifar hasn't been inter-
viewed by criminal investigators, but a
person familiar with his meeting with the
Tower Commission last January said. he
made some general comments that could
be taken to suggest that payoffs were
made.
Israeli government officials and arms
dealers have maintained that the contro-
versial arms sales, which began with U.S.
approval of an Israeli shipment of TOW
anti-tank missiles in August 1985, weren't
designed to bring profits to Israelis. At
least two Israeli arms dealers, Yaacov
Nimrodi and Adolph Schwimmer, were in-
volved in the initial shipments. U.S. crimi-
nal investigators want to determine to
whether Messrs. Nimrodi and Schwimmer
profited from their participation in the
sales.
The Tower Commission report includes
a memo written by Col. North to one of his
superiors recounting a conversation in
which Mr. Ghorbanifar "told me that he
had paid $10,000 apiece" for some TOWS,
"and pocketed $500 for each one deliv-
ered''-or 5% of the total price. In the
memo, Col. North also expressed suspi-
cions that either "Schwimmer pocketed"
some monies on the same transaction, or
"there was a kickback" to Iranian offi-
cials.
Meanwhile, attorneys familiar with the
Iran-Contra criminal investigation said
that the independent counsel's office has
asked for tax returns of Col. North and a
close associate, Richard Secord, a retired
Air Force major general who served as
Col. North's right-hand man in both the
Iran and Contra operations.
Messrs. North and Secord, invoking
their Fifth Amendment right against self-
incrimination, declined to testify when
they were summoned to appear before con-
gressional committees.
Declassified in Part - Sanitized Copy Approved for Release 2012/05/03: CIA-RDP90-00965R000605180008-7