AUSTRIAN ARMS SALES TO IRAN ALLEGED

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00965R000706940075-7
• Release Decision: RIFPUB
• Original Classification: U
• Document Page Count: 1
• Document Creation Date: December 22, 2016
• Document Release Date: December 15, 2011
• Sequence Number: 75
• Publication Date: February 28, 1986
• Content Type: OPEN SOURCE

Declassified and Approved For Release 2011/12/15 :CIA-RDP90-009658000706940075-7
WASHINGTON POST
28 February 1986
1ACK ANDERSON and DALE VAN ATTA
Austrian Arms Sales to Iran Alleged
he largest industrial concern in Austria, the
T state-owned Voest-Alpine conglomerate, is
under investigation by its government for
engaging in improper transactions that may include
illegal arms sales to [ran.
An Austrian official told us there have been
"heavy political discussions" in the last year about
the operations of Vcest-Alpine and its subsidiaries.
These discussions evolved into an investigation of
whether the companies were "engaged in deals
which they were not supposed to do," he said,
including possible illegal arms transactions.
The Voest-Alpine group hasn't made a profit
since 1976, sustaining heavy losses from its
steel-making operation and poor oil investments.
Austrian citizens have lost millions as the
government poured money into Vcest-Alpine.
Sources said it was this situation that may have
led company officials to enter into secret
negotiations with Eran. By the treaty that ended
Allied occupation after World War [I, Austria is
permanently neutral; the sale of arms to a nation at
war is a violation of Austrian law.
Over the past year, the Austrian government has
become concerned at the sizable quantities of
Austrian-made weapons that have been showing up
on the [ranian side of the stalemated Persian Gulf
war. The amount seemed to be more than would
normally reach the Eranians through the black
market or unscrupulous arms dealers. .
Our intelli ence sources includin some inside
[ran sa that a rtial ex lanation fort e
appearance of Austrtan-made arms to t e t eater of
war is back-door deals made with Austrian firms,
inc u m t e cest- me rou,~
e have a copy o a five-page, "memorandum of
understanding" between Vcest-Alpine and the
Islamic Republic of Iran, signed Feb. 14, 1985. The
contract, which ends today, was a barter deal: Iran
was obligated to provide $1 billion worth of crude
oil in exchange for certain manufactured goods and
raw materials.
An annex to the contract lists the goods only
generally: $550 million worth of "Various
Equipment and Materials," $150 million worth of
"Various Products Including Spare Parts" and $100
million in "Pharmaceuticals."
But included in the "Various Equipment"
category, according to information coming from
Iran, were military items, among them some
155mm howitzers made by Noricum, a
Voest-Alpine company.
Our sources say the final hitch in the
billion-dollar deal was over the commission. "There
was a fight over the percentage of the commission
on these weapons," said a source close to the
negotiations. The price of the arms had been jacked
up as much as 35 percent to allow for payment of
the commissions, the source said.
Once the commission was agreed on, the
transaction was sealed. Since the Austrians could
not legally ship arms to combatant Iran, our
sources said, the "end-user" certificates, indicating
the weapons' ultimate destination, were
presu~i~ably written to show a different country.
The weapons were to be shipped by way of
neighboring Yugoslavia.
Declassified and Approved For Release 2011/12/15 :CIA-RDP90-009658000706940075-7