Washington Report on Middle East Affairs, March 1987, pages 10-11

WHAT THEY SAID

These are excerpts of the Senate Select Committee on Intelligence's preliminary report on the sale of arms to Iran, issued January 29, 1987

The Committee's inquiry suggests that the Iran initiative originated as a result of the confluence of several factors, including...Israel's strong and continuing interest in furthering contacts with Iran; (and) efforts on the part of private parties, including international arms dealers and others....

According to documents and testimony received by the Committee, Israel had a strong interest in promoting contacts with Iran and reportedly had permitted arms transfers to Iran as a means of furthering their interests. A series of intelligence studies written in 1984 and 1985 described Israel's interests in Iran. These studies also reported Israeli shipments of non-US arms to Iran as well as the use of Israeli middlemen as early as 1982 to arrange private deals involving US arms.

(Former National Security Advisor Robert) McFarlane...testified that if he had known that the Israelis had previously shipped arms to Iran it would have made him less responsive to later Israeli proposals to resume shipments. However, in his first cable to (Secretary of State George) Shultz in the matter, he stated that it was obvious that the Israeli channel to Iran had existed for some time....

Michael Ledeen, a professor at Georgetown University (sic), and a part-time NSC consultant beginning in February 1985, appears to have played a key role in the initial contacts between the US and Israel vis-a-vis Iran....According to testimony by McFarlane, Ledeen appraised McFarlane of a forthcoming trip Ledeen planned to Israel and asked whether he was interested in knowing whether Israel had any Iran contacts. McFarlane testified that he responded affirmatively. McFarlane stated that he was aware that Ledeen was a friend of Israeli Prime Minister Peres....According to Ledeen, he traveled to Israel on 4-5 May 1985, and discussed the situation in Iran with Prime Minister Peres. Peres referred Ledeen to a retired Israeli intelligence official who agreed with Ledeen that both countries needed to work together to improve their knowledge of Iran....

Secretary of State Shultz learned of Ledeen's activities and, in a message dated 5 June, complained to McFarlane that Ledeen's contact with Israel bypassed the Department of State. Shultz noted that Israel's agenda regarding Iran "is not the same as ours" and that an intelligence relationship with Israel concerning Iran "could seriously skew our own perception and analysis of the Iranian scene. He added that we "are interested to know what Israel thinks about Iran, but we should treat it as having a bias built in," and concluded that this initiative "contains the seeds of....serious error unless straightened out quickly." McFarlane responded in a cable of June 7 that Ledeen had been acting "on his own hook." With regard to the Iran initiative, McFarlane stated "I am turning it off entirely," but added "I am not convinced that that is wise."...

According to testimony of McFarlane, on July 3, 1985, David Kimche, Director General of Israel's Foreign Ministry and a former intelligence officer, contacted McFarlane and reported to him that Israel had succeeded in establishing a dialogue with Iran. Kimche stated that as a result of growing concerns with Soviet pressures, Iranian officials had asked Israel to determine whether the US would be interested in opening up political talks with Iran....Although there was no specific Iranian request for arms, Kimche admitted to the possibility that the Iranians might raise the arms issue in the future.

In a cable from McFarlane to Shultz on July 14, 1985, McFarlane stated that the proposal had also been raised several weeks earlier by Peres to Ledeen. In the cable, McFarlane said he had instructed Ledeen to say he did not favor such a process. McFarlane also reported that Kimche, on instructions from Peres, had come to inquire about the US disinclination to pursue the initiative and ask McFarlane to take up the proposal with appropriate authorities. Then, on July 14, a "private emissary" from Prime Minister Peres came to press the point....

Meanwhile, according to testimony by Ledeen, in early July he was called by Kimche who said a friend, Al Schwimmer, was coming to Washington and wanted to talk to Ledeen. Ledeen testified that he met with Schwimmer in early July....According to Ledeen he reported his meeting with Schwimmer to McFarlane. Ledeen told McFarlane he was going to Israel on vacation from mid-July to mid-August, and would, if McFarlane thought it appropriate, meet Ghorbanifar. Ledeen testified that McFarlane agreed.

According to documents received by the Committee, Kimche phoned McFarlane on July 30 to request an August meeting. According to testimony by Shultz, Kimche and McFarlane met at the beginning of August 1985, at which (time) Kimche indicated that the Iranians not only wanted "a dialogue with America" but also wanted arms from the US and TOW anti-tank missiles from Israel. In return the Iranians could produce hostages.

On August 8, 1985, at a meeting of the National Security Planning Group in the White House residence, McFarlane, with Poindexter, briefed the President, the Vice President, Shultz, Weinberger, Regan and Casey on the Kimche proposal to permit the sale of TOWs to Iran through Israel. There is a divergence of views as to whether approval was granted for the Israelis to ship arms to Iran either at that meeting or subsequent to it. There is also conflicting testimony on which of the participants supported the proposal, although opposition to the plan by Shultz and Weinberger is clear....

According to testimony from a senior CIA analyst, in early September, 1985, Ledeen provided him with information on Iranian-sponsored terrorism and on Ghorbanifar. According to this analyst, this was the first time Ledeen had identified Ghorbanifar by name to the CIA. According to testimony by Ledeen, the subject of Ghorbanifar's bona fides first came up in September, 1985. However, Shultz testified that he saw an intelligence report on July 16, 1985, two days after he cabled McFarlane from Geneva, which indicated that Ghorbanifar was a "talented fabricator."...

According to documents received by the Committee, the shipment of 508 TOWs left Israel on August 30, 1985, transited a third country and arrived in Iran on September 13....According to McFarlane, there was no official contact between the US and Israel regarding the shipment. On September 15, 1985, the Reverend Benjamin Weir was released from his captivity in Lebanon...

It should be noted that the Committee also received testimony inconsistent with this description of events. Secretary of Defense Weinberger testified in response to a specific question that he knew nothing about any connection between the release of Weir and Israeli arms sales to Iran. Regan testified that McFarlane told the President—in his presence—that the Israelis, "damn them," had sold 500 TOWs to the Iranians without US knowledge. Regan further testified that he, the President, McFarlane, and Poindexter decided to "ignore" the incident except to "let the Israelis know of our displeasure" and "keep the channel open." According to Regan's testimony, this shipment of arms to Iran was not sanctioned by the US government....

After the first shipment of TOWs, Ledeen continued to be active. He held meetings in the Fall of 1985 with Kimche, Schwimmer, Ghorbanifar, and (Israeli arms dealer Yaacov) Nimrodi....Ledeen testified that he briefed McFarlane on these meetings....Ledeen said McFarlane had a "bad feeling" about the program and was going to stop it....

On December 7, the President met with Shultz, Weinberger, McMahon representing Casey, McFarlane, and Poindexter to discuss the Iran initiative. Most participants who testified before the Committee believe there was a consensus at this discussion that McFarlane would inform the Iranians in London that the US would not trade arms for hostages. Shultz and Weinberger both testified that they left the meeting believing that the arms component of the contacts with elements in Iran was over....

McFarlane testified that prior to meeting the Iranians in London, he and North met with Kimche, who urged the US to be more patient and permit the Iranians to demonstrate their bona fides. According to McFarlane, he told Kimche his mission was "to close down" the operation. He and North then met with Kimche, Nimrodi, and Ghorbanifar, to whom McFarlane made "emphatically" clear that the US would engage in no more arms transfers. According to McFarlane, Ghorbanifar argued strongly for continued US arms transfers, and McFarlane came away convinced the US should not "do business" with Ghorbanifar. On McFarlane's return, he reported to the President and others on his London meeting. According to Casey's written account of the meeting, McFarlane recommended that the US not pursue a relationship with the Iranians through Ghorbanifar, of whom he did not have a good impression, but that we should work through others. Casey's memo said that "everyone" supported this idea, though it stated that the President "argued mildly" for letting the Israelis go ahead without any US commitment except to replace arms they might ship. The memo indicated the President was concerned for the fate of the hostages if we stopped the discussions, and stated that Casey told the President that the contacts could be justified later as trying to influence events in Iran....

Ledeen: Ghorbanifar Useful

Ledeen testified that, at Ghorbanifar's request, they met during a private trip by Ledeen to Europe....According to Ledeen, when he returned to the United States in late December 1985, he briefed DCI Casey and other CIA officials about his conversations with Ghorbanifar. He said he stressed to them that Ghorbanifar was a useful channel in gaining a political opening to elements in Iran, and that with proper precautions we should keep working with him. Subsequent to this discussion, Casey asked him to arrange for Ghorbanifar to submit to the CIA polygraph. Ledeen contacted Ghorbanifar abroad and obtained his agreement to the polygraph, which was administered in mid-January....According to evidence received by the Committee, the polygraph indicated deception by Ghorbanifar on virtually all questions....

In early January 1986 Prime Minister Peres sent Amiram Nir, Terrorism Advisor to the Israeli Prime Minister, as an emissary to meet the President about the Iran initiative. According to evidence received by the Committee, Nir urged the President and Poindexter to reconsider the transfer of arms to Iran for the release of the hostages....

Shultz, Weinberger Oppose Arms Sale

On January 7 the President met in the Oval office with the Vice President, Shultz, Weinberger, Casey, Meese, and Poindexter to discuss the Iran program. According to participants who testified, two officials—Shultz and Weinberger—argued strongly against providing arms to Iran. According to these participants, the President wished to keep the channel open, and left unresolved the issue of providing arms to Iran....

The Department of Defense insisted that the sale of arms by the Defense Department to a foreign country, be it Iran or Israel, could not be hidden from Congress under the law. This argument applied not only to future direct or indirect sales to Iran, but also to the replenishment of Israel's TOW stocks, which had to be done under this program because Israel could not afford the replacement cost for the TOWs. The solution was to have DOD sell the arms to the CIA under the Economy Act, an approach that CIA General Counsel (Stanley) Sporkin had urged on legal grounds despite the Agency's desire not to be involved....

(F)ull-scale implementation of the January 17 Finding began immediately. LTC North flew to London to brief and negotiate with Ghorbanifar who was told what the United States was prepared to do as a sign of good faith and interest in a long-term relationship....

According to documents received by the Committee, North's "notional timeline" for the Iran arms sale program provided for a funding mechanism in which Iranian funds would be put into an "Israeli account" in Switzerland and then transferred to an account in the same bank that was controlled by Secord.

In the period of March through May, 1986, all efforts in the Iran arms sale program were directed at arranging a high-level meeting between US and Iranian officials.

The CIA officer brought on as an interpreter was briefed on the program just before leaving for Europe. His testimony indicated that he was told this was an NSC operation., with CIA providing required support. The CIA officer had known of Ghorbanifar in past years, and testimony indicates that he was horrified when he learned that this was the channel being used by the US government.

Nir Helping Ghorbanifar Financially

According to a CIA official, Nir, with whom Ghorbanifar also spoke, said Iran's proposals were still unacceptable; Nir worried that Ghorbanifar might be losing credibility with the Iranians and urged US officials to work more closely with Ghorbanifar. Ghorbanifar had been ill and was also having money problems, which he pressed the US government to help solve. Nir indicated that he and his associates were helping out Ghorbanifar financially....

Attached to (an) April 4 memorandum were draft "terms of reference" for use by McFarlane in a high-level meeting with Iranian officials. Testimony and a retrospective memorandum for the record indicate that North and Howard Teischer of the NSC staff prepared the draft in late March...

Immediately after the Europe meeting in early May, US officials moved to get ready for a trip to Tehran.

Director Casey has testified that on May 15, the President approved the McFarlane mission to Tehran.

The McFarlane delegation traveled from the United States to Iran via Europe and Israel on May 23-25.

McFarlane's delegation included LTC North, Howard Teischer (North's formal superior on the NSC staff), the CIA officer who served as an interpreter, and others, including US communicators.

Teischer and the CIA officer testified that North brought the cake, and the CIA officer remembered the Bible as well.

Teischer later testified that he took detailed notes on the meeting, and the interpreter later wrote a memorandum on the meetings.

Casey argued that Ghorbanifar, while uncontrollable, "appears to respond generally to Nir's direction." Nir and Israeli officials would continue to work for the release of American hostages, Casey said, because their reputations were on the line and because the program was consonant with Israeli interests.

Bush Briefed by Nir

On the same day, Vice President Bush was given a briefing in Jerusalem by Mr. Nir. The Vice President attended the meeting at the suggestion of LTC North. According to a memorandum dated a week later by an official who was present at the briefing, Nir indicated he was briefing the Vice President at the request of Prime Minister Peres. He conceded the problems encountered in the program, but argued that the Iranians with whom they were dealing were ones who could "deliver."...

Two CIA officials testified that they became more upset over Ghorbanifar's situation as they tried to understand the financing of this program and could not make sense of it. Ghorbanifar admitted to trying for a profit of 60 percent on top of the base price, but it would have taken a margin at least five times that to explain the figures that the CIA officials now understood to be involved.

In mid-September, the visit of Israeli Prime Minister Peres and other officials to Washington prompted lower-level meetings with Nir, followed by briefings of the President and Poindexter for their meetings with Peres and Nir respectively. North's paper for Poindexter's use in briefing the President noted that the Israelis were nervous about US intentions regarding the Iran program. The memorandum recommended that the President note his appreciation of the Israeli role and indicate our intentions to continue to coordinate closely with Israel vis-a-vis Iran. Ledeen attempted to see Secretary Shultz around this time to discuss the program, as he would again in October, but Shultz testified that he declined to meet with Ledeen....

At a meeting in late October, the Iranians produced a check for $4 million to pay for 500 TOWs. Of this amount, the CIA received $2.037 million on October 28, and on October 29 500 TOW missiles were shipped from Israel to Iran.

According to testimony received by the Committee, the October 29 shipment of arms from Israel to Iran—for which the Israelis received 500 TOWs in reimbursement on November 6—marked the end of the US-Iranian arms deals. On November 3, the Lebanese newspaper Al Shiraa reported that the United States had been supplying arms to Iran and stated that McFarlane had visited Tehran earlier in the year to meet with Iranian officials.