Profits of War: Inside the Secret U.S.-Israeli Arms Network

"Science," the Greek word for knowledge, when appended to the word "political," creates what seems like an oxymoron. For who could claim to know politics? More complicated than any game, most people who play it become addicts and die without understanding what they were addicted to. The rest of us suffer under their malpractice as our "leaders." A truer case of the blind leading the blind could not be found. Plumb the depths of confusion here.

Re: Profits of War: Inside the Secret U.S.-Israeli Arms Netw

Postby admin » Tue Jun 09, 2015 3:38 am

7. The First Billion

THE REPUBLICANS RENEGED on the deal to release all Iranian monies frozen in the U.S., and I was among the first to hear of Tehran's anger through my long-time friend Sayeed Mehdi Kashani.

He rang me from Vienna in late January 1981. "We were swindled out of the prisoners," he complained. "The Americans have let a lot of our money go, but they're sitting on $11 billion of Iranian government funds in the Chase Manhattan Bank."

"Hold on," I said. "How can you be swindled out of something you had no right to?"

We both laughed. But then he said, "I hope you Israelis will keep your word. We need that equipment."

"We promised to help, and we will. Don't put us in the same bed as the Americans. A decision about the subject was made at the highest levels of the Israeli government."

At the beginning of February 1981, I flew to Vienna for an arms-supply conference with Kashani and Omshei. In the wake of the hostages being freed and the money being paid to the "students," the Iranians were eager to get down to the serious business of arms supply.

Acting on instructions from the Joint Committee for Iran-Israel Relations, I put a proposal to the two Iranians on what we could sell them from our stockpiles. They could receive existing F-4 electronics and spare parts; 300,000 122mm artillery shells; 51mm mortars and rockets to be carried by infantry soldiers; 100,000 Kalashnikov AK-47s with ammunition; and air-to-surface missiles. They also wanted engines for their British-made Chieftain tanks. In stock, Israel had 1,000 German- made engines that would fit the tanks. This is where we were to make our greatest profit. The engines were worth between $30,000 and $40,000 each. We offered them to the Iranians at the outrageous take-it-or-leave-it price of $450,000 each.

They were also interested in buying fighter aircraft which we could not sell to them at the time, but we offered them ten old C-130 Hercules aircraft for $12 million each. Their national airline, Iran Air, which was flying 747s and 707s, was also in desperate straits, I was told. The 747s were already grounded for lack of spare parts because the U.S. embargo against Iran covered even commercial engines. The embargo had not been lifted, but now, to boost the airline, the Iranians were not only looking for spare parts for the old fleet but hoping to buy British Tristars.

I added up the bill. The grand total was one billion dollars, give or take a million. Israel's profit -- 50 percent. The slush fund looked like it was going to do very well.

The Iranians screwed up their faces at the price. They knew Israel was ripping them off. But they had little choice. They said they would take the offer back to Tehran. "But you must come to Tehran, too," said Kashani. "The Defense Ministry will certainly want to talk to you about the details."

***

My first trip to post-revolutionary Tehran took place in late February 1981. Some colleagues were worried because there were extremist factions in the country who despised the Israelis. I felt there wouldn't be any problem because I had been told that Ayatollah Ali Reza Hashemi of the Supreme Council had assured my safe passage. Besides, Ari Ben-Menashe was to change his identity.

Wearing an English-made suit, with a borrowed Rolex watch on my wrist, I arrived at Vienna airport under the guise of Canadian businessman William Grace. Immigrants to Canada had their origins in numerous countries, and there was nothing to connect me with my true identity or to suggest that I was an Israeli ... no nametags on my clothes, no Israeli-made socks or shoes, and definitely no Ari Ben-Menashe passport or credit cards. "William Grace's" Canadian passport had been prepared for me by Mossad. I carried no luggage.

As arranged with the Iranians, I booked an Austrian Airlines flight that was due to leave Vienna for London at the same time that an Iran Air flight was due to depart for Tehran. Accompanied by a Mossad agent who was playing the part of my traveling companion, I collected my boarding pass and went through to the transit area. Vienna had been specially chosen -- it was an airport where incoming and outgoing transit passengers mingled.

Omshei was waiting for me. I gave my companion my used ticket and the boarding pass, along with my passport. From Omshei I collected a boarding card for the Iran Air flight. He also gave me Iranian travel papers identifying me as William Grace, which would see me safely through immigration in Tehran. We couldn't risk any officials tipping off the radicals that an Israeli -- even under Canadian guise -- had arrived in Tehran. On the other hand, it had been easy enough for Omshei to obtain a boarding pass for me -- after all, Iran Air was the government airline. We had put a complete smokescreen over the movements of Ari Ben-Menashe, alias William Grace.

Omshei was delighted that I was on the way to Tehran. He and the Supreme Council felt that it would not be long now before they had their weapons, as long, he said, as a minor obstacle could be overcome. He didn't tell me what it was.

As we approached Tehran, all the women passengers, who were on the left side of the 707, started wiping off their lipstick and bringing out their body-shrouding chadors. Some headed toward the toilet clutching dark stockings. Goodbye Western decadence for the time being.

My travel documents weren't necessary. Waiting on the tarmac when the plane landed was a Ministry of Defense car. It took us straight out, bypassing customs and immigration. I was driven to the former Hilton Hotel where a suite had been reserved for me. I had an early night. I didn't want to risk walking around the streets of Tehran.

Accompanied by Kashani and Omshei, I was driven the following morning to the Office for Purchase of Military Equipment in the Ministry of Defense building. Eight men sat around a conference table. The air was thick with smoke.

I made my presentation, outlining the equipment on offer.

"It's far too much money," snapped one of the officials. This was obviously the "minor problem" Omshei had warned me about.

"But we're taking an enormous risk," I protested. "The problems for Israel are immense, as I'm sure you all understand."

"The charges are outrageous."

However, the officials agreed to present the Israeli bill to the Supreme Council. They also asked about the logistics of getting the equipment to Tehran. I suggested that they get over their first hurdle and obtain the Supreme Council's ratification of the deal. I was asked to wait another couple of days.

On the way back to the hotel, Omshei said he would pick me up at 5:00 P.M. for dinner, but at about 3:30 he called and said a very important issue had arisen. The commander of the air force wanted to see me right away. We met in the hotel restaurant. "Iran has a particular problem with the Iraqis," said the commander. "On the outskirts of Baghdad they have installed a nuclear reactor. It's worrying us."

I knew all about the reactor, referred to as Tammuz 17. For some months in 1979, when relations with Iran were on hold, I'd worked on the Signals Intelligence exchange desk of the External Relations Department. Part of my job had been to review and disseminate KH-11 satellite intelligence about Tammuz 17 that came from the U.S. as a result of the Camp David agreement. The reactor had been given to Iraq by the French to start bomb-grade metal enrichment, and, according to Israeli intelligence, the Iraqis were well on the way to setting it up for military purposes.

"We've tried to hit it twice -- once in September and then again a week ago -- and we've failed," the commander told me.

"What do you want from Israel?"

"Intelligence -- technical information about that reactor. We know you've been collecting data about it. We're well aware of Mossad's activities in France to try to stop the building of this reactor because you're obviously as worried about it as we are. We need all you can give us."

I started taking notes. The commander bit into his food. "We believe that sometime by the end of this year, around November or December, it's going to be activated, and any bombing of the site after that will be a nuclear disaster. It must be taken out before the end of this year."

He gave me the name of an official at the Iranian Embassy in Paris to whom information could be passed. "Remember," said the commander, "that by helping us, you will also be helping Israel, the Middle East, and the rest of the world. If Iraq gets the nuclear bomb, God help us all."

He didn't have to emphasize his concerns to me. We knew that Saddam Hussein was desperate for Middle East supremacy, and he was already stockpiling deadly chemicals and working furiously on his own nuclear bomb.

Early the next morning, Omshei and Kashani came for breakfast and told me that in the afternoon we would be meeting the chief of the air force again. Omshei suggested that in the meantime we take a ride around Tehran. He had an old grey Citroen. We drove through the teeming streets, where shrouded women hurried by with shopping baskets, to the northern suburb of Shemran, where we stopped for the delicious ice cream I remembered fondly from my childhood. I've tasted ice cream all around the world, and the Iranian product seemed to me second to none.

As we drove further north, the car's radiator boiled over. Omshei was petrified. Here he was with a broken-down car at the side of the road with an undercover Israeli intelligence official whose presence, if discovered, would have outraged the masses, and he was responsible for my safety. He loved his car, and he was worried about me. He didn't want to leave it, or me, alone. Trucks rumbled by as Omshei paced up and down, considering what for him was apparently a maddening situation.

"All we need is a carload of radicals to pull up and start asking questions and we're both in trouble," he repeated again and again during the next 15 minutes.

Finally I persuaded him to accompany me on foot to a shop that had a telephone. He called the Defense Ministry. Two hours later, with Omshei now in a state of absolute panic, a tow truck arrived. We then took a taxi to the hotel. I was left in no doubt that the Iranians in power were extremely concerned about my safety -- and that of their cars.

During the afternoon meeting with the air force commander, he asked for air and satellite photos of the Iraqi reactor building and neighboring structures. The next morning, I was told, I would be seeing Ayatollah Hashemi, as well as the new defense minister and Hojjat El-Islam Karrubi -- the man who had attended the top-secret meeting with George Bush in Paris four months earlier.

The three men were all smiles when I bade them good morning in a small room in the Parliament building. It was all systems go, they announced. The Supreme Council had given their assent to pay Israel the fortune being asked for the military equipment.

"How would you like the payments made?" asked Karrubi.

"Please put your one billion dollars in a numbered account in Austria."

"Just like that?" asked the defense minister. "Can we trust you?"

"You can trust us. But it must be cash. Letters of credit are troublesome."

"We'd prefer to pay you cash on delivery."

I smiled and shook my head. "We can't deliver until we get the money," I explained. "We have to buy the materiel from the industries."

The defense minister laughed and clapped his hands together in mock applause. "You Israelis have an answer for everything," he said. But he promised that in four days Omshei would call me in Israel and give me the account numbers and the withdrawal codes for the money.

"You understand that we have no other choice but to pay this high price," said Karrubi. "But I hope you will look into the air force request concerning the reactor."

It was agreed that included in their $1 billion would be insurance, war risk coverage, and transportation costs. Now came the question of logistics. I proposed that Israel should charter cargo aircraft from an Argentinean company that would fly to Tel Aviv. These would then be loaded with the weaponry and equipment and flown to Tehran, but only after the pilots had given a flight plan to the Tel Aviv tower that would indicate they were flying to Portugal. Over Cyprus they would change the flight plan and give the Cyprus tower a new routing -- to Tehran. The secrecy of the missions would be so high that even Israel's own flight controllers could not know the destination of the cargo planes.

I returned to Israel, using the same trick at the Vienna airport as before, only this time in reverse. In the transit lounge, I was met by a Mossad man who gave me back my passport. I handed it in to immigration and walked out into the main terminal, where I checked in for a flight to Tel Aviv.

The money from the Iranians was paid almost immediately. It was placed in five different numbered accounts, each holding $200 million, in the Girozentrale Bank in Vienna.

Military Intelligence Director Sagi was delighted that the deal had been completed. He instructed the deputy director general of the Ministry of Defense to start getting the equipment together. It was decided that all the materiel would be put in a warehouse in a military hangar at Ben-Gurion International Airport. The logistics people at IDF/MI arranged for the charter flights and for insurance with Lloyd's of London. They would pay high insurance rates for agricultural and "other" equipment flying from Portugal to Tehran. The coverage was 110 percent and applied only from the time the aircraft were over Cyprus to when they landed in Tehran. This hid the contents and the takeoff point.

***

While the mechanics of the airlifts were being sorted out, Sagi, deciding to act on the Iranian request for information on the Iraqi reactor, ordered a photo reconnaissance flight. It was a dangerous proposition. If anything went wrong, Israel risked detection and could be accused of taking sides with the Iranians.

Four days later we were studying the aerial photos. They were excellent, clearly identifying the location and the buildings. Copies were made for the Iranians and sent to the Israeli military attache in Paris. He, in turn, handed them over to STEN -- our code name for Iranian Military Intelligence -- through Simon Gabbay, the Israeli contact with the Iranians in Paris. But a question arose. Did we really want to risk leaving the attack on the reactor to the Iranians? They'd already tried to destroy it and failed. Yet it would be in Israel's interests for the complex to be destroyed. There was one simple answer, and it came straight from Prime Minister Begin's office: We would do the job ourselves.

Israel Aircraft Industries set to work building a number of piercing bombs, with a sharp nose that could tear through a building's exterior a fraction of a second before exploding. It would also be a "smart" bomb, designed to lock onto a homing device inside the reactor. Mossad was in charge of planting this device, at first a seemingly impossible task, but money opened many doors. For the right kind of fee, some people, including French technicians working in the nuclear reactor in Iraq, would be more than happy to plant a homing device on Israel's behalf. And when you are a trusted employee, it's not so difficult to bypass security.

There was one loose end to tie up. Israeli jets would need landing rights in Iran should they be crippled in a dogfight or start to run low on fuel. To obtain this kind of permission meant further delicate negotiations with the Iranians.

With the help of Omshei, Kashani, and the commander of the Iranian Air Force, a meeting was arranged in mid-March 1981 between President Abol Hassan Bani-Sadr of Iran, who was also commander-in-chief of the Iranian forces, and Professor Moshe Arens, Israel's ambassador to the United States and a close confidant of Prime Minister Begin.

The meeting took place in southern France. Arens flew in on Pan Am direct from Kennedy Airport to Nice. Bani-Sadr flew by private plane from Tehran to Paris and down to the south. The two men met for six hours in their hotel, and the date for the attack on the reactor was fixed: June 7. The air force base designated for landing rights was just south of Tabriz in northern Iran.

The pilot chosen by the Israeli Air Force to lead the strike team was Col. Yoram Eitan, son of Lt. Gen. Rafael Eitan, chief of the general staff of the Israeli Defense Forces (no relation to Rafi Eitan in intelligence). Israel built a dummy reactor in the Negev Desert to practice the strike. On the morning of May 4, a Sunday, one of the rehearsing planes came down, killing the pilot instantly. The news was broken to Gen. Eitan. He'd lost his son.

The lead pilot chosen in his place was Yair Shamir, also a colonel in the air force and the son of the man who was to become prime minister, Yitzhak Shamir. Three days before the planned raid, the Mossad network in Baghdad informed headquarters that the homing device had been put in place.

At 5:30 P.M. on June 7, 1981, six F-15 jets carrying the bombs and eight F-16 escorts took off from Ramat David Airfield and headed east. Six bombs were dropped. Two failed to explode, but that didn't matter -- only one direct hit was necessary. The reactor was destroyed. There were no signs of enemy aircraft, no dogfights. It was not necessary to land in Iran. On the return flight the jubilant pilots were met over Jordan by refueling aircraft, but refueling was also not necessary. The operation had been perfect in every respect.

Israeli intelligence had recommended to the prime minister and the government not to admit publicly that Israel was responsible for the attack, in order to give Saddam Hussein an out. Without such a public admission, he would not have been forced to commit himself publicly to retaliation. But Menachem Begin, who had scheduled early elections for June 30, made the announcement because he believed it would stand him in good stead with the Israeli public. The Iranians were, of course, ecstatic. The commander of the Iranian Air Force was connected to Begin through a Paris operator and personally thanked him. For diplomatic purposes, President Bani-Sadr issued a loosely worded condemnation saying Israel had violated the sovereignty of another nation. He kept the lid on his private jubilation.

***

Meanwhile, the weapons flights from Ben-Gurion Airport to Tehran, which had started in early March 1981, were going well, even though at the start we had come up against an enormous logistical problem -- how to transport the bulky shells. Finally it was decided to ship them by freighter directly from the Port of Ashdod in Israel to Bandar Abbas in southern Iran. The rest of the equipment went by air. Between March and August some 40 Argentinean-registered cargo flights left Tel Aviv.

At the end of June we heard from the KGB. The Soviet Union's security and intelligence service, through its representative in Israel, presented a formal letter of inquiry to the chief of staff of the director of Military Intelligence, originating from the Directorate of Foreign Relations of the KGB. The letter demanded explanations from Israel about flights originating in Tel Aviv and flying close to the Turkish-Soviet border and down to Tehran. Sagi's chief of staff handed the letter to me, and I presented it to the Joint IDF/MI-Mossad Committee for Israel-Iran Relations. I believed that an explanation should be given to the Soviets. However, Israeli arrogance came into play. The prevailing opinion, without consulting the Prime Minister's Office, was to answer the letter by stating that the government of Israel does not discuss its foreign and security policies. The Soviets were basically told to get lost.

It was an abrupt, stupid answer. Signed by the chief of External Relations of IDF/MI, it was handed to the Soviet representative in Israel in the first week of July. On July 18 the Soviet reply came back. One of the cargo planes was downed, killing the three Argentinean crew members. F-4 parts were scattered all along the Armenian-Turkish border. So the Soviets found out what was on the planes.

The Soviets took great pride in announcing to the world that the plane had been carrying American weapons systems to Iran. Israel denied all knowledge of this. The flights continued, but this time further below the border, after Robert Gates had made sure there would be no Turkish objections. By mid-August 1981, this stage of the shiploads and flights was completed.
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Re: Profits of War: Inside the Secret U.S.-Israeli Arms Netw

Postby admin » Tue Jun 09, 2015 3:39 am

8. The Ora Group

MY RELATIONSHIP WITH Freddie, although intermittent, remained warm and loving. Despite the rapidly changing events in Iran which kept me busy, she was always in my thoughts. She had given birth to a little girl we'd decided to call Herut. The first time I saw my daughter at the Lisbon hotel Freddie had checked into, I wept with happiness. But I didn't know where our future lay.

With Herut in the care of a nanny in Managua, we had continued to meet throughout 1980 in Portugal whenever we could arrange a date. My schedule was hectic, and Freddie didn't like traveling with the baby, so by mid-1981 she announced that she'd had enough.

"I love you, Ari. I want to be nearer to you," she said during one of our strolls through Lisbon. "I've decided to give up my job and come and live here in Portugal."

I was thrilled. It would certainly make life easier for both of us. My shuttling between Israel, Europe, the U.S., and Iran didn't take me very near Nicaragua. Lisbon, on the other hand, was centrally located in all my travels -- I would meet the Iranians there because Portugal still had diplomatic relations with Iran -- and Freddie felt comfortable there because she had many friends. "Great," I said. "Now we'll be able to see each other more often." "That's a laugh," she said. Her brow furrowed. Something more was wrong.

"Ari," she said, "I want you to leave your job. It's dangerous work, and we just don't get to see you enough."

I knew I couldn't do that. I was excited about the work my colleagues and I were doing for Israel and was feeling very self- important. Besides, what was there for me to do in Portugal?

Despite her disappointment at my reaction, Freddie gave up her job in Managua and moved to Lisbon, where, with the baby in the care of a nanny she brought with her, she started working for the Portuguese national airline, TAP, as a public relations officer. Freddie didn't really approve of my work and continued to press me to leave it, but she agreed to put me in touch with the president of TAP. That meeting eventually resulted in the Israeli government chartering planes out of Portugal to carry weapons to Iran. Suffice it to say, this was not exactly what Freddie had envisioned as the fruits of our relationship when she moved to Portugal.

***

By March 1981, the Joint Committee had set up the necessary mechanisms for handling the secret sales of weapons to Iran that had been promised in the October Paris agreements. A number of trading companies with various names made the contacts with the Iranians and with weapons manufacturers and arms brokers, found out what weapons were needed, arranged the logistics of the shipments, and set up the discreet transfer of millions upon millions of dollars.

Israel was operating under a general agreement of cooperation that Prime Minister Begin had secretly reached in principle with William Casey in August 1980. The details of the weapons sales to Iran had been worked out in December 1980, and David Kimche, the senior member of the Joint Committee, was dealing directly with the CIA's Robert Gates on their implementation. In early 1981, Gates gave the go-ahead for unsophisticated weapons to go to Iran. The arrangements for these sales were handled by the Joint Committee in meetings north of Tel Aviv, with the cooperation of the CIA.

But Gates refused at this early time to allow the sale of sophisticated U.S. electronic equipment to Iran. Our friends in Tehran were desperate to have this materiel for their air force and air and ground defenses, and Israel, of course, wanted to help them as much as possible in their war against Iraq. The Iraqis were still bogged down in southern Iran, neither advancing nor retreating. The Joint Committee felt that Iran could do with more sophisticated weapons -- for a price, of course. So the Joint Committee sent two of its members -- Rafi Eitan and me, both using aliases to New York to start an undercover operation that would acquire the technology the Americans balked at and sell it to Iran.

The New York office was on John Street, in the Wall Street area. Out of it we built a team of about 50 people, many of them small arms brokers who shopped for electronic equipment from U.S. companies and arranged for delivery to Iran. All sales had to be accompanied by end-user certificates, which stipulated that the equipment was going to Israel, that Israel had licensed the broker to buy it, and that it would not be resold to any other country. These certificates were necessary under U.S. law. We had empty pads of such certificates that we would fill out and then send duplicates to the Israeli Ministry of Defense to keep on file in case anyone ever bothered to check.

The electronic equipment, which was not particularly bulky, was usually flown by the IDF's weekly Boeing 707 flight from New York to Tel Aviv, or by El Al cargo. From Tel Aviv, Argentinean charters would carry it to Tehran. If the volume was too great, then we would charter other planes, usually from TAP in Portugal or Guinness Peat in Ireland, to make the Tel Aviv-Tehran run.

Eitan oversaw the whole operation, and I personally spent a lot of my time shuttling back and forth between Tel Aviv and New York, stopping often in Portugal and meeting the Iranians there to receive their latest requests for equipment.

Initially, our overhead was paid for through the Joint Committee's operating budget, which was separate from Mossad's and the IDF/MI's. The Joint Committee became self-sufficient as the slush-fund profits, both from our undercover New York operation and from other sales that were tacitly approved by the Americans, rapidly grew. Since the transactions went through a number of trading companies, we needed a flagship to hold the slush fund. When the Joint Committee was trying to decide what to call this mother company, the name "Ora" came to my mind. Ora means "light" in Hebrew, but I actually was thinking of a young woman who worked in my office in Tel Aviv, with whom I had a bond that wasn't quite love but was more than friendship. Thus was born the Ora Group, which was to handle billions of dollars in the next few years.

The John Street operation was running very smoothly, with electronics ostensibly heading off to Israel, but finding their way to Iran, until one of the employees in the office, a Swiss woman, caught on to what was happening. She spilled the beans to Leslie M. Gelb, who was working out of the Washington bureau of the New York Times. She told him how the office she worked for, which on the face of it was involved in the vague business of imports and exports, kept changing its name and appeared to be sending lots of electronic material to Israel, although there were people in the office speaking Farsi all the time. That was quite true -- Hushang Lavi, who was working with us, and I frequently spoke Farsi.

On March 9, 1982, a New York Times "news analysis" by Gelb blithely noted that, "Israel has been secretly supplying American-made arms to Iran." We quickly learned that Gelb had a source in our own office. Rafi Eitan, with his reputation for ruthlessness, set the dogs loose.

The dogs in this case were a group of South African intelligence heavies, whose job was to ensure the safe transfer of arms from anywhere in the world to South Africa. They were a wild bunch, and because of Israel's friendship with South Africa, it was an accepted arrangement to ask for favors. As Eitan and I made our hurried exit from the United States, the dogs bit.

To this day, I don't know how they did it, but the Swiss woman who blew the operation suddenly found herself being bundled on a cargo plane loaded with arms, bound for Pretoria. Although Eitan was all for killing her, the rest of the committee, including me, said no. Instead, the terror-stricken woman was given a very severe lecture on the realities of life and dispatched to Europe from South Africa. With the journalist's major source silenced, the office closed down, and not a word from either the U.S. or Israeli government, there was nothing left for any other newspaper to follow up on.

***

The blowing of the John Street operation was exactly the kind of thing the Israelis had been worried about from the start of the arms sales in 1981. We were well aware that if there were a mistake and the whole trade were exposed, the U.S. could turn around and point the finger at Israel, bringing world condemnation. Whenever U.S. officials were caught red-handed doing something illegal, they usually lied like crazy and accused everyone else. None of us could forget Watergate. And this was bigger than Watergate.

We took two precautions. The first involved Defense Minister Ariel Sharon, who had been appointed to that position earlier in 1981. He was a great supporter of the weapons sales to Iran, and he decided to try to lobby the U.S. government into reaching strategic agreements with Israel. As it turned out, the two American officials used in lobbying for these agreements were CIA Director William Casey's deputy, Robert Gates, and Robert McFarlane, who at that point was on the National Security Council.

Sharon had been a prominent general but was thrown out of the military in 1970 as the result of an interview he gave to Playboy magazine criticizing then-Prime Minister Golda Meir. He came back on the scene in the 1973 war when, as a reserves general, he saved the day on the Egyptian front. He stayed on in the military for a few more years, until the Labor Party decided not to appoint him chief of the general staff. Disgruntled, Sharon then left the military altogether. However, he still had political ambitions. In the 1977 election he ran for the Knesset as head of a political party called Shlom Zion (Peace to Zion). As soon as his party won two seats in the Knesset, he joined the Likud Party coalition, and became minister for agriculture. In 1981 he had been elevated to the position of defense minister.

But in the interim, between 1975 and 1977, Sharon was a private citizen who was trying to build a fortune dealing in arms in Central America. He had a network of people working with him there, one being the disgraced Mossad agent Mike Harari, who had just left Israel because of his failure in the "Moroccan Waiter Affair," where the wrong man was shot dead in Lillehammer, Norway, during an attempted hit on Ahmed Salame, a Palestinian who had been involved in the massacre of Israeli athletes at the 1972 Olympic Games in Munich. Harari was a close associate of Panama's military intelligence chief, Manuel Noriega.

Sharon's network had been able to provide military equipment from Israel to various Central American countries, including El Salvador, Guatemala, Panama, Costa Rica, and even Mexico. This was never official Israeli government policy, and it was frowned upon by the cabinet itself, but Sharon was too wild a goose for anybody to handle. So Sharon's private network bought their weapons from Israeli government factories and got their export licenses from the Israeli government. Gates had developed a professional interest in the arms network that Sharon and his former intelligence cowboys were operating in Central America. By 1981, Sharon and Harari were running what Harari described as more of a CIA network than an Israeli operation -- and were filling their private bank accounts at the same time.

It was in 1981 that they started supplying a secret army in Central America, the contras, who were trying to destabilize and eventually bring about the downfall of the Sandinista government of Nicaragua, which had come to power in 1979. The contras did not have any money -- Congress was not then willing to fund them -- and desperately needed cash to buy their arms.

Sharon, with all his power, could not force the prime minister or the leaders of the Israeli intelligence community to pay for weapons from the slush fund that had grown out of the Iran arms sales. So, with the backing of Gates and the CIA, some members of the group created their own fund. They did this, according to Harari, by transporting cocaine from South America to the United States via Central America. A major player was Manuel Noriega, who had known George Bush since he had been the CIA chief in the mid-1970s. Hundreds of tons of cocaine poured into the United States, and another handy slush fund was created.

Because of the close relationship between Gates and Sharon and the special relationship between Robert McFarlane and Rafi Eitan, the strategic U.S./Israeli agreement sought by Sharon was reached. The signing of the strategic agreement by Sharon and the U.S. was made public, but the contents were kept secret and are still not available through any Freedom of Information Act requests.

However, one part of it was that any U.S. arms sold to Israel involving technology that was 20 years old or more could be resold at the discretion of the Israeli government. The agreement was very loosely worded -- it could be interpreted to mean that Israel was allowed to resell brand-new American weapons as long as the technology behind them was at least 20 years old.

This was our first ploy to overcome American denials, if any. If Israel were discovered to be selling arms to the Iranians, we would simply brandish the agreement the Americans had signed ... with its gaping loophole.

Our second protection involved the money from the arms sales -- when letters of credit or cash were paid to us to purchase U.S. arms, we simply and quite blatantly ran the sums through U.S. banks.

A letter of credit from the Iranian government would be issued to an Israeli "front" company by a European-based Iranian company through the London or Paris branch of Iran's Bank Melli. It would be endorsed by the National Westminster Bank in England, and we would then ask for it to be transferred to an American bank. Favorites were the Chicago-Tokyo Bank in Chicago, the Chemical Bank in New York, Bank One in Ohio, and the Valley National Bank of Arizona. Then the banks would have to explain these letters of credit, in U.S. dollars, to the U.S. Treasury if they were to accept them. According to U.S. Treasury regulations, letters of credit for sums in excess of $10,000 had to be approved by Treasury.

Since the sales were a U.S.-sanctioned operation, the CIA would have to ensure that Treasury issued an acceptance. Once the letter of credit was approved, it was moved back again to Europe. Except for the John Street operations in 1981 -82, this was to be the way almost all the American-supplied arms sales to Iran were handled from late 1981 until late 1987.

***

The Soviet shootdown in July 1981 of the Argentinean cargo aircraft carrying weapons to Tehran convinced us that we needed a smokescreen to conceal the movement of the massive amounts of weapons we were shipping.

The smokescreen involved the Israelis making deals with a number of private arms brokers and businesspeople throughout Europe. Their companies would be used as a cover for our own operations. The dealers would purchase equipment from around the world and sell it on our behalf to the Iranians. The money would come to us from Iran, and we would open letters of credit to the dealers -- after we had raked off our profit.

One of the arms brokers we dealt with was John Hortrich, an American businessman living in southern France. Like many others we were to employ, he had a murky background but was perfect for the job. He had grown up in Connecticut and gone to medical school, but dropped out. He joined the Marine Special Forces, making it only to the rank of sergeant, and served in Korea as a medic. On his release from the military, he started working as a salesman for Revlon in New York. There he met another, younger, cosmetics salesman, Richard J. Brenneke, with whom he was to keep in contact for many years and who was to figure in the arms-to-Iran story.

Hortrich, according to his own account, was very unhappy working for Revlon. He wanted out. After he married a Cornell graduate, he and his bride decided to settle in the Virgin Islands, where he opened a liquor business, selling to Europe, the United States, and South America. He eventually became the biggest alcohol wholesaler in the Caribbean.

One day in the mid-I970s while on a visit to southern France, he fell madly in love with the young half-French, half- Portuguese proprietor of the small hotel, the Mas Bellevue, where he stayed. Hortrich returned to the Virgin Islands and put a proposition to his wife: that they liquidate the business and go and live in the south of France. With a total of $11 million, they arrived in Nice, and Hortrich decided to go back into business -- with an office in St. Tropez at the hotel Mas Bellevue.

While setting up the office, Hortrich met a prominent French businessman, Bernard Velliot, who was connected to French intelligence. They decided to go into the oil and arms business together, even though Hortrich had no experience in such matters. Velliot introduced Hortrich to various crude-oil and arms brokers and a number of stockbrokers and bankers in Europe. In 1979 Hortrich made a terrible mistake and invested $7 million in cocoa futures. He lost the lot. And since he had set up home in St. Tropez, he had made no money in spite of a lot of bragging. In 1980, he mortgaged his home to Banque Worms in Geneva, and banker Jacques Mathenet, a long-time friend, lent him $300,000.

Meanwhile, the Iranians were holding out their hands to everyone for weapons because the main arms sales to Iran had not begun yet. Some of these requests reached Hortrich's ears through Bernard Velliot. Hortrich managed to contact an Israeli arms dealer, Yitzhak Frank, who was working out of London and was well connected to the Israeli intelligence community. Hortrich asked Frank if he could get hold of F-4s to sell to Iran. As a result of these inquiries, I called Hortrich and decided he was worth trying to recruit into our service. He had a couple of good qualifications -- he was dabbling in arms, and he was desperate for money.

After meeting Hortrich in Nice, I decided we were going to "pick him up" -- our phrase for taking someone on. He was to be used in smokescreen operations as an information and disinformation person, but not in any direct sales negotiations. Whenever we needed someone to enter a deal and screw it up, or someone to leak information in the United States, or make various contacts around the world, he would do it. With the new name we had given him -- John de Laroque -- he was one of the few outsiders we recruited who would not be duped.

With de Laroque in place, we were ready to put up our smokescreen. The idea was to use sleight-of-hand all around Europe to obscure our operations. Arms traders were duped into setting up deals with the Iranians, not realizing that before negotiations ended, everything would fall apart. What we did was create a bogus international arms market in which it seemed that just about every broker and every country was trading with Iran. In hotel lobbies, on park benches, in private homes there were fantastic proposals between hopeful arms dealers and "desperate" Iranians. Telexed lists circled the globe with orders for aircraft, missiles, tanks, bombs, and artillery, accompanied by figures with more digits than telephone numbers. Of course, the deals couldn't be allowed to go too far. As soon as it looked as though an arrangement was drawing embarrassingly close to completion, John de Laroque -- the former John Hortrich -- would step in and put a wrench in the works, and it would be back to square one. To keep the dealers keen, Israel would pay their traveling expenses, though it was well worth the payout to hide the real deals that were going on between Israel and Iran.

***

After the John Street operation had been compromised and we had hastily left the U.S., the Joint Committee decided we should move to Montreal. But after several months there, we found it too out-of-the-way to do our work efficiently, so we moved again -- this time to London.

There the operations resumed smoothly. Matters were helped considerably by the fact that by this time the U.S. had decided it would cooperate in selling American electronic equipment to Iran. Thus, our separate undercover operation was no longer needed, and the Joint Committee was reunited.

My life was divided between Israel, Europe, and the U.S., with side trips to various other parts of the world. I didn't have much time for Freddie and our daughter, Herut, who were living in Portugal.

My job for the time being mostly consisted of shopping for weapons and equipment, handling money, and handling our agents. The others in the Joint Committee in Tel Aviv were in charge of setting up the business structures -- a complex job indeed.

The way the Joint Committee was set up, profits from our arms sales were not funneled back to the budget or the Finance Ministry, where they would have to come under parliamentary supervision. Instead, the idea was that the operating budget of the Joint Committee would be taken from the profits of the arms sales under the supervision of the Mossad comptroller. The profits ballooned almost immediately into a huge extra-budgetary slush fund.

Disbursements were requested from the Mossad comptroller through either of two channels. One was on behalf of the heads of the intelligence community -- the chief of Mossad or the boss of IDF/MI; the other was directly from the Prime Minister's Office, through the first cabinet secretary, Aryeh Naor, or the counterterrorism adviser, Rafi Eitan. The comptroller would then issue the disbursement orders.

In order to have deniability, the people appointed as fronts for these extra-budgetary funds were the signatories for the cut-out companies that were set up in Europe and other parts of the world. These accounts were owned, theoretically, by these companies.

I had been selected as one of three signatories, and the arrangement was that if money had to be released, two out of the three had to sign. Too many signatories would have confused the process; only one would have created difficulties should he or she unexpectedly become incapacitated or die. According to the rules set by the committee, aside from full committee meetings, these three people were not to be in the same place at the same time. Powers of attorney were given by myself and the two others to remaining members of the committee to be used in case of death or other eventualities. Two of us physically had to be at the bank unless two had given full powers of attorney to the bank officer, or to a single member of the selected three.

To avoid placing all the golden eggs in one basket, 200 bank accounts were opened in 27 reputable banks around the world, but at any given time only about a quarter of these accounts were active. Accountants in Vienna, London, Sydney, New York, and Tel Aviv had the power to shift these monies from account to account once every few months, but they had no power to draw money. This was a safeguard to ensure that funds did not go astray and end up in an account that nobody else knew about -- it was insurance against the individual accountants, who were changed within their firm from time to time. Anyone on the track of the money would have trouble keeping up.

By 1983 the slush fund was running like a well-oiled machine. Once a year the 200 numbered accounts in Europe would be changed, and the names of the paper companies would be altered. The only name that was never changed was that of the holding group, Ora.

The unwritten rule we operated under was that Israel would not go directly to the arms manufacturers or the weapons industries. Whenever we deemed it necessary to buy American equipment from the United States, either from the manufacturers or from stocks held by the U.S. military, we would approach the designated CIA people. They in turn would purchase the arms and place them at the ready for our collection in warehouses. These were usually at Marana, a CIA airbase near Tucson, Arizona. The first batch of weapons was flown out of there in October 1981. If, on the other hand, we were buying U.S. materiel from NATO stocks in Europe, the hand-over would be at Liege, Belgium. Israel would fly in chartered cargo planes to pick up the materiel, and then the aircraft would return to Tel Aviv. From there they would either fly directly to Tehran or to a second country before carrying the weapons on to Iran. Sometimes a third country would be used. In 1983, for example, to cover our tracks -- and as a lesson learned from the downing of one of our planes -- aircraft loaded with arms landed in Western Australia, en route to Tehran, with the permission of the Australian Security Intelligence Organization, which knew what was on board.

Other favorite countries used in the smokescreen were Guatemala, Peru, Kenya, Paraguay, and South Africa. If Paraguay was used, the planes flew on to South Africa -- the same route normally taken by the CIA when shipping arms to South Africa. So Paraguayan officials who were aware of the South African trade assumed that an aircraft landing in Asuncion and filled with weapons was on its way to South Africa, when in fact its final destination was Iran.

The division of the spoils depended on the origins of the weapons and the costs involved in shifting them. Everyone did well out of the trade. The Americans made their profits by selling to us, we made our profits by selling to the Iranians, and the Iranians got their weapons -- although the price they had to pay was astronomical.

In the beginning, Israeli end-user certificates were given to the CIA for the weapons, but after mid-1982 the practice stopped. When we bought equipment from European countries, however, they would not release it without Israeli end-user certificates to cover themselves from their own parliaments -- even though they knew that the materiel was going to Iran. The countries involved were Austria, Belgium, and Sweden -- until that country's prime minister, Olof Palme, said no.

Britain was also involved, but Margaret Thatcher's government had a slightly different way of carrying these things out. Unknown to the British people, their government had been supplying military equipment to the South Africans for years. Mossad files are full of incidents of Liberian-registered ships leaving Southampton loaded with artillery shells and electronics for South African fighter aircraft. Prime Minister Thatcher allowed the use of the same channels to supply materiel for Iran. The equipment at first included spare parts for Chieftain tanks and later Marconi radar equipment and electronics for the American F-4 planes that the Iranians had.

***

With these arrangements in place and working well, and a huge disinformation campaign going on in Europe with arms dealers and would-be dealers, we also needed a network of trusted agents around the world to help keep the operation running. I had already found a good operator in the man we were now calling John de Laroque. There was one other major player in the network -- Nicholas Davies, the London Daily Mirror's foreign editor.

Davies had been recruited by Mossad in the 1970s. The connection had come through a former British Special Airborne Service (SAS) officer, Anthony Pearson, who ran a company called Strategic Intelligence Services. The firm, located in the mid-1970s at 55 Sutherland Street, London SW1, provided espionage services to Israel, among others.

Pearson was known for recruiting mercenaries out of Lafayette, Louisiana, and sending them to remote parts of the world. In southern Sudan in the early 1970s his men helped the Moslem government's troops in fighting against the Christian-Animist revolutionaries. In the Seychelles in November 1981, some of his men participated in an unsuccessful coup, getting only as far as the airport, where they were arrested for bringing in AK-47s in golf bags. According to Mossad files, Pearson also could arrange an assassination for $50,000 -- splitting the fee with the hit man, who would be recruited in Louisiana.

When I met him, Nick Davies was involved with the Pearson group, but not in its more exotic adventures. He simply took photographs and made reports on Arab nations while he was on overseas journalistic assignments and passed them on to Mossad. At the time, Davies was married to an Australian-born actress, Janet Fielding, who had starred in the Dr. Who television series. He was paying child support and alimony to his first wife, and he was also making substantial payments on old debts from an unsuccessful printing business he'd tried to set up in the 1970s. Israeli intelligence knew he was hungry for money, and suggested I meet him to sound him out for assignments in our arms-dealing operations.

We met for the first time in the lobby of London's Churchill Hotel in the first half of 1983. Pearson and an associate, a former colonel in the Jordanian Army named Mohammed Radi Abdullah, were also present. Davies struck me as just what we had in mind -- intelligent, well-traveled, and a charmer. In addition, he had a taste for the good life, which meant he'd always need money, and he was close to Robert Maxwell, who at that time did not yet own the Daily Mirror, but did have a relationship with Israeli intelligence.

At an opportune moment, I told Davies, "We're looking into you working for us on a full-time basis."

"Do you want me to leave my job at the Mirror?" he asked. The tone of his voice suggested that was the last thing he wanted to do.

"No," I said, "of course not." I didn't need to tell him that his job was a perfect cover.

"By the way," he said, "you know Mr. Maxwell is trying to buy the Mirror."

"Yes," I said, "I know." The whole of the Israeli intelligence community knew. And we were all hoping he would succeed.

Davies was interested but couldn't decide for sure whether he wanted to become involved in the arms game. Taking photographs for Mossad was one thing. Getting caught up in brokering massive amounts of weapons was something else. But his interest was such that he asked me to his house for lunch, where I met his slim and very attractive wife. He seemed anxious to please Janet, and I got the impression he was afraid of losing her. From a purely mercenary point of view this was good; it made him vulnerable.

I arranged a trip to Israel for him -- the Israeli military spokesman's office had a practice of inviting journalists from around the world on free trips to Tel Aviv. I went to his beach-side hotel in Tel Aviv, and we reached an agreement. He would cut off all other unofficial "business" relationships, including those with Pearson and Radi, and he would be used as a London office conduit for arms, our contact man for various Iranian and other deals. His home address would be used on stationery, and during the day his direct office phone number -- 822-3530 -- to which only he had access as the Daily Mirror's foreign editor, would be used by Israel's Iranian contacts. The Foreign Desk never had a truer definition.

After we officially signed him up, and it was agreed he would work in liaison with me, his financial worries ended. Over the years he was to receive more than $1.5 million on an official basis from Israel -- all of it coming from the slush fund -- but he was also able to rake off other amounts by making sure, for example, that contracts were drawn up with certain dealers. His earnings were paid to him, and he deposited them into bank accounts in the Grand Cayman, Belgium, and Luxembourg.

What he did with the money was none of our business, but we did know that his second wife, Janet Fielding, divorced him and sued for £50,000 and that he said he paid her off. The money he received enabled him to pay his debts to the banks, but he didn't spend his money in an obvious way. Following our advice, he kept his office car, a silver Ford Escort, provided by the Mirror. But he did buy a four-story house at 1 Trafalgar Avenue, in the Elephant and Castle area of London. The phone number -- 231-0115 -- was important, because the premises were used by us as an office.

It wasn't long before Davies was traveling the world for us -- to America, Europe, and Iran. And he was very good at what he did. We would phone him, sometimes two or three times a day, on the foreign editor's phone, mostly collect calls from pay phones, hundreds of calls that bypassed the Daily Mirror switchboard. When he answered, he would just say, "Nick Davies."

Davies was called in only if we needed to use our "London office." When a request came in from the Iranians, we would judge which country was best suited to provide the requested weapons and who was in the best position to talk in that country on our behalf. In Davies's case, he would call dealers or the supplier and introduce himself as a representative of the Ora Group, an Israeli company based in London. He would set up a meeting, usually for a weekend, and he would fly to the capital city concerned and set up the deal, arranging for the number of weapons to be supplied and how payment was to be made. The dealers or manufacturers he contacted would often call Israel, if they had any contacts, to verify that he was genuine. There was a memo in SIBAT, the Ministry of Defense's foreign sales office, that any questions about Davies and other key members of our arms network should be referred to me.

***

The sales and the smokescreens worked brilliantly. We became very good at setting up the deals, disguising them, and delivering the goods. There were deals going on all the time in the years from 1981 to 1987, far too many to enumerate. But the 1983 deal for TOW missiles serves as an excellent example of the kind of operation we were running.

The Iranians wanted to get hold of this weapon, an electronically guided anti-tank missile. The Iranians knew that the only way to stop the waves of Iraqi-operated Soviet tanks crossing the border was to get their hands on TOWs. Israel had 4,000 TOWs in stock, and they were getting old. Their power supplies were due to run out in two years, in 1985.

In late 1983 I traveled to Iran, using the same "boarding-card swap" as before, and met the speaker of the Iranian Parliament, Hojjat El-Islam Ali Akbar Hashemi Rafsanjani. We spent some time discussing the politics of the region. Then Rafsanjani got down to business, telling me quite frankly, "We are growing desperate. The Iraqi forces look like they're overrunning us. We must have weapons that can stop their tanks. You know what I'm talking about. We want your TOW missiles."

A deal was later struck with my old friend Sayeed Mehdi Kashani. Iran would get the 4,000 TOWs for $13,000 each, and they would be shipped from Israel direct to Bandar Abbas on a Liberian-registry ship. Kashani, however, asked for $800 extra to be charged on each TOW; bringing the total that Iran had to pay to $13,800 each. The added $800 per missile was to be paid into a separate account in Europe. Kashani insisted it was a special fund for the revolution, whatever that meant.

The Joint Committee decided on two moves before the sale went ahead: putting into action a big deception or disinformation campaign and obtaining explicit permission from the Americans for the sale, even though theoretically we had general permission to make such sales.

The explicit permission was given to a committee member over the phone by Gates, and it was taped in our office. The deception campaign we came up with worked like this:

We arranged for a French-registry, twin-engined Cessna to fly to Tel Aviv's Ben-Gurion Airport and cause a stir by trying to land without identifying itself or requesting permission from the control tower. Predictably the control tower took the necessary steps, and within minutes the unidentified aircraft found an Israeli fighter jet on each wingtip. This time the occupants had no hesitation in revealing who they were -- one was Kashani, the other a Frenchman, Jean-Paul Yves. They were permitted to land, but were instantly detained until the purpose of their flight could be determined. It was a weekend, and I was summoned from home to go to the airport to establish what they were doing in Israel. I held back a grin as I saw Kashani sitting in an office, his Philippine passport on the desk in front of him.

The prearranged plan for the two men to draw attention to themselves had worked. The two were eventually allowed into the country, but security men followed them to their hotel. The word quickly went around that two arms dealers, with $70 million to spend, had arrived in Tel Aviv in the hope of purchasing weapons from Israel for sale to Iran. It had been left to me to make sure that the right people heard about it.

I approached an Israeli arms dealer, a former lieutenant colonel in the Israeli military, Arieh Jacobson, who had been introduced to me by a former major, Israel Goldsmith. I told Jacobson that Israel had to do a secret deal with Kashani for the sale of 4,000 TOW missiles to Iran and that there could be a nice financial spinoff for whoever could arrange it.

Jacobson was very impressed by the proposition and was keen to get involved in the deal. He told me he would work on it with another arms dealer, former Brig. Gen. Abraham Bar David. With dreams of making a fat profit, they went to SIBAT, and supposedly secret discussions began. But word leaked out, and it wasn't long before half the world heard that two arms dealers were in Israel trying to negotiate the purchase of TOW missiles.

Kashani and Yves eventually left empty-handed. The world learned that Israel would have no part in selling TOWs to Iran, but it was also leaked that Bar David and Jacobson would be continuing their negotiations with the Iranians. Officially there had been no deal. In the eyes of the world the Israeli government had put its foot down.

No one, especially not Bar David or Jacobson, knew that the whole scenario had been one big smokescreen, because, while Kashani and the former Israeli officers were negotiating madly, and telexes were flying back and forth around the world, the TOW missiles were quietly shipped to Iran. It was a brilliant piece of deception that meant duping a number of our own people, and I know that when those involved learn for the first time how the wool was pulled over their eyes, they are not going to be at all happy. But everyone who deals with arms, officially or unofficially, can expect to be tripped up once in a while.

The payout arrangement for that first shipment, totaling $55,200,000, was designed to hide that massive sum. It was agreed that the money would be spread out through various branches of the Allied Irish Bank.

Under the agreement drawn up by Kashani and Omshei, we were not to touch the money until the TOWs reached Iran. In fact, our committee paid the Israeli Ministry of Defense only $3,000 for each missile -- a total payment of $12 million. Kashani's account received a total of $3,200,000. A further $800,000 was used for transport and insurance. The rest, $39,200,000, was profit for the slush fund.

As far as the world was concerned, Israel -- and the Americans -- had clean hands, but on the war front, the reality was that the Iranians were blasting the Iraqis with U.S.-made TOWs. Once they got through the first 4,000, another 4,000 were to come from NATO stocks in Europe, followed by a further 4,000 from the U.S., coming through Guatemala and Australia -- 12,000 TOWs in all up to 1987. These, we believed, eventually changed the face of the war.

* * *

Iran was so grateful for Israel's assistance that the committee was told, "Anything you want from us, you have only to ask." And there was something we, and the Americans, were very interested in getting our hands on. The battle tank most used by the Iraqis was a Soviet T-72. However, a number of the more advanced T-80s had already been sold to Iraq. The Soviets were, in fact, using the conflict to battle-test them, and these were what we wanted.

In 1985, the Iranians captured three T-80s, two riddled with holes, the third with damaged chains only. We told the Iranians we'd like to have that one. They happily obliged, and the tank was shipped to us from Bandar Abbas. We shared knowledge about the T-80 tank with the Americans at technical DIA and IDF/MI conferences, but we never revealed that we had actually got hold of a T-80. The Americans were told that the information came from two Jewish immigrants from the Soviet Union who had worked as engineers at the T-80 plant.

***

While our slush funds grew steadily, unusual overhead costs diminished the profits. True, we were selling weapons to the Iranians with a 50 percent to 400 percent mark-up on the exfactory price, but the actual cost of procuring and delivering them was high, too. There was a huge network of arms brokers to be paid, money to be handed over to those involved in "smokescreen" deals, bribes to be paid to politicians and civil servants, campaign "donations" to be made around the world, and other expenses. The "donations" sometimes cost more than the weapons themselves.

Contributions were even made from the slush fund, albeit indirectly, to U.S. politicians, including Democrats on the Iran-contra panel. This may be one reason that the full story behind the Iran-contra scandal never materialized. Even though Israel leaked details about some of Oliver North's activities, the Democrats, many of whom were well aware of what was going on, kept quiet about the huge flood of arms that had been running to Iran through Israel. Tel Aviv, not wanting its own arms deals with Tehran to be exposed, had paid them off through various, often convoluted, contributions to the American Israel Public Affairs Committee (AIPAC). I don't know who at AIPAC knew the ultimate source of these contributions, but it was clear someone did.

In Britain our committee passed money in the same fashion to the Jewish Reform Movement, confident that this money would be channeled to the Conservative Party. Because of the friendship with Britain, the Mossad European operations headquarters was moved in 1982 from Paris to London and set up in a building on Bayswater Road.

A further example of the very special friendship that Israel established with Britain came when the Falklands war erupted. Israel froze the sale of weapons to Argentina, despite existing contracts for Kfir aircraft. As a result, the British government, covertly but officially, reimbursed Israel for its losses on the contracts. Of course it was known throughout the intelligence community that Israel was also keeping British politicians happy through the Jewish Reform Movement's Torah Fund. The friendship soured, however, in 1988, when Margaret Thatcher supported the sale of military equipment for unconventional warfare to Iraq. It was particularly abhorrent for Israel that her son was involved in it.

Aside from the contributions being made in the United States and Britain, payments were being made all around the world, and those who received them kept their mouths shut -- even in faraway Australia. Australia was often used by the Joint Committee for "parking purposes," aircraft refurbishment, and stationing of slush-fund monies. In 1982 I first visited Australia to hire an accounting firm and open accounts in four major banks. Eventually monies deposited in Australian banks reached the amount of approximately $82 million U.S.

Starting in early 1986, 12 C-130 aircraft we had purchased from Vietnam were shipped to Western Australia for repairs and refurbishment. In 1987, while the Iran-contra hearings were going on in the U.S. Congress, some of the arms going to Iran were temporarily parked in Western Australia. Approximately 60 containers of artillery shells from North Korea were parked in Fremantle Port. Four thousand TOW missiles that went from the U.S. to Guatemala were shipped to Western Australia and held for approximately two months at a naval base on Stirling Island. Silkworm missiles purchased from China for Iran were also parked at Stirling Island for approximately two months.

In February 1987 a "contribution" was made to the West Australian Labor Party by our U.S. counterparts in the CIA. In gratitude for the use of Australian soil for the transfer of arms to Iran, Richard Babayan, a contract operative for the CIA, received a check for $6 million U.S. from Earl Brian, who was acting on behalf of Hadron, a CIA "cut-out." Babayan traveled to Perth and stayed at the home of Yosef Goldberg, an Australian businessman of Israeli origin who was well connected to Israeli intelligence and to the local Labor Party headed by Brian Burke, then premier of Western Australia. Babayan handed the check to Goldberg, who in turn gave it to Alan Bond in his role as the guardian of the John Curtin Foundation funds. This money was passed on by one of Robert Maxwell's companies in Australia to be held by the Pergamon Press Trust Fund in Moscow. Babayan later corroborated the details of this operation in a sworn affidavit.

Despite the high costs involved, profits were still made on the sales to Iran. At various times the fund reached peaks of more than $1 billion. At its height it stood at $1.8 billion, with money constantly coming in and going out -- a huge turnover that would have made a successful conventional enterprise very envious. The Likud leaders running the government intended to use the money for three main purposes.

The first was to finance activities of Yitzhak Shamir's faction of the Likud Party. Between 1984 and 1989 no less than $160 million was funneled to Shamir's faction, handled by the deputy minister in the Prime Minister's Office, Ehud Ulmart, who was very close to the prime minister. Other funds were contributed to the whole Likud Party, especially to its 1984 and 1988 election campaigns. That amount totaled about $90 million.

Second, the slush fund helped finance the intelligence community's "black" operations around the world. These included funding Israeli-controlled "Palestinian terrorists" who would commit crimes in the name of the Palestinian revolution but were actually pulling them off, usually unwittingly, as part of the Israeli propaganda machine.

A key player in some of these operations was the former Jordanian Army Col. Mohammed Radi Abdullah, the man who was with Pearson and Davies when I made our approach to Davies. Today in his early 50s, Radi was decorated by King Hussein of Jordan for his bravery in the 1967 Middle East war. However, his family fell out with the king because they were not willing to participate in the mass slaughter of Palestinians by the Jordanian Army in 1970. The family emigrated to London. The colonel married a woman related to Saddam Hussein and went about setting up a number of companies, including shipping offices in Cyprus and Sicily.

Radi became known as a businessman who championed Arab and Palestinian causes in Europe. But he missed his homeland and the days when he was lauded as a hero. He fell to the ways of the West, started drinking heavily and spent a fortune on gambling and women.

In the mid-1970s, to recoup his losses, Radi went to work for Pearson, who was supplying intelligence information to Israel. With Radi's unwitting help, Pearson began to acquire intelligence about Palestinian organizations in Europe. The way he did it was by selling arms to those organizations. An arms dealer named John Knight, who ran a company called Dynavest Limited, located at 8 Waterloo Place, London SWI, and another dealer who operated out of Sidem International Limited, Appleby House, 40 St. James Place, St. James Street, London SWI, acquired arms from Yugoslavia. They would sell them to Radi, who would in turn sell them to the Palestinian terrorist, Abu Nidal, and other Palestinian groups. Radi was unaware of Pearson's Israeli connection, as were the others involved.

While it may seem curious that Pearson, a man working with Mossad, was encouraging a Jordanian to sell weapons to Israel's enemies, it was actually all part of a very cunning plot. In doing business with these groups, Radi learned what they were going to use their weapons for and unsuspectingly passed the information on to Pearson. Pearson, in turn, passed on to Mossad the intelligence about the movements of the groups and the number of weapons they had.

Based on Radi's unwitting tips, over a two-month period 14 or 15 Palestinians were wiped out. Word went out among the Palestinian groups that Radi was working for Israeli intelligence and, fearing for his life, he took a trip to Baghdad and presented his case to Abu Nidal himself. Abu Nidal believed his story that he had been used -- which he had -- and put the word out that Radi was "clean." The blame was placed on Yasser Arafat's group -- Palestinian factions at that time were warring among themselves.

Radi went back to his drinking and womanizing, and the money he made selling arms for Pearson all drained away. At that very vulnerable point, in 1978, Pearson stepped in again and offered Radi a £200,000 loan. This time, Pearson made it quite clear to him that the money was coming from an Israeli source. The desperate Radi accepted the loan and was recruited to work for an antiterrorist group in Israel run by Rafi Eitan.

The group's methods were rather unconventional, one could say heinous, but it had operated successfully for years. An example is the case of the "Palestinian" attack on the cruise ship Achille Lauro in 1985. That was, in fact, an Israeli "black" propaganda operation to show what a deadly, cutthroat bunch the Palestinians were.

The operation worked like this: Eitan passed instructions to Radi that it was time for the Palestinians to make an attack and do something cruel, though no specifics were laid out. Radi passed orders on to Abu'l Abbas, who, to follow such orders, was receiving millions from Israeli intelligence officers posing as Sicilian dons. Abbas then gathered a team to attack the cruise ship. The team was told to make it bad, to show the world what lay in store for other unsuspecting citizens if Palestinian demands were not met. As the world knows, the group picked on an elderly American Jewish man in a wheelchair, killed him, and threw his body overboard. They made their point. But for Israel it was the best kind of anti-Palestinian propaganda.

In 1986, Radi was involved in another slush-fund black operation -- the well-documented attempt to blow up an El Al plane. Or at least what was publicly perceived to be an attempt. In fact, it was a cold, calculated plan conceived by Rafi Eitan to discredit the Syrians. At a secret meeting in Paris, Eitan told Radi that he wanted to implicate the Syrian Embassy in London in terrorism and have all the Syrian diplomats thrown out of England. Radi had a 35-year-old cousin, Nezar Hindawi, living in London, who had two things going for him -- he was friendly with the Syrian Air Force intelligence attache in London, and he had a problem with an Irish girlfriend who told him she was pregnant.

Radi went to his cousin and offered him $50,000. At the same time he told Hindawi that he wanted him to do some work on behalf of Palestine that would also rid him of his troublesome girlfriend.

"This money I'm offering you," Radi told Hindawi, "is from our Syrian brothers on behalf of the Palestinians. We want to blow up a Zionist plane. All you have to do is make sure the girl gets onto an El Al plane with explosives in her bag."

Radi arranged for his cousin to meet the Syrian intelligence officer, and Hindawi later came away with the clear impression that what he was doing was for the Arab cause. In accordance with his briefing, Hindawi told his 32-year-old girlfriend, Ann-Marie Murphy, a chambermaid at the Hilton Hotel on Park Lane, that he loved her and wanted to marry her. He was eager to introduce her, his future bride, to his old Palestinian parents who lived in an Arab village in Israel. He told her to go and visit them and receive their blessing. Then, when she arrived back in England, they would get married. Overjoyed, she agreed to go, not realizing that the address he gave her in Israel was bogus.

As far as Hindawi knew, the woman was going to be sacrificed. All he had to do was tell her that he wanted her to take a bag of gifts to his parents. But because he didn't want to risk her being stopped for having too much carry-on luggage, he would arrange for a "friend" who worked at the airport to pass her the bag when she entered the El Al departure lounge. She would pass through the regular Heathrow security checks and then be given the package containing the bomb.

Hindawi had been told that a Palestinian cleaner would pass the deadly package to Ann-Marie. In mid-April 1986, he kissed her goodbye and watched her walk through passport control to what he expected would be her death, along with that of all the other 400-plus passengers on board the El Al jumbo jet.

In the El Al departure lounge, an Israeli security man dressed in casual clothes -- the "Palestinian cleaner" -- passed the girl the parcel. She took it. But within seconds she was asked to submit to a search. The security people, who were in on Rafi Eitan's plan, could not afford any accidents. When the bag was opened, plastic explosives were found in a false bottom.

Ann-Marie was rushed off to be interrogated by British security. Sobbing, she told the story of the rat of a boyfriend. Police arrested Hindawi at the London Visitors Hotel, between Notting Hill and Earl's Court, after his brother convinced him to give himself up. He spilled the beans and told them that a Syrian intelligence officer had asked him to carry out the task. But Radi was not implicated. He was under MI-5 protection. As a result, Margaret Thatcher closed down the Syrian Embassy in London. Rafi Eitan had had his way, Hindawi was jailed for 45 years, and Ann-Marie went home to Ireland where she gave birth to a daughter.

These were the kinds of black operations our slush fund was financing.

***

The third and last main purpose for the slush-fund money was to finance the housing projects in the West Bank and Gaza Strip for Jewish settlers who had been taking over Palestinian land there. Since many members of the U.S. Congress saw these housing projects as a provocation that would impede peace in the Middle East, a lot of U.S. aid to Israel prohibited the use of the money for building in the West Bank. As part of the coalition, the Labor Party, keen to participate in a peace conference, was also against a government project for West Bank housing.

The answer, as far as Likud was concerned, was to draw on the slush fund. Tens of millions of dollars were used in the West Bank and the Gaza Strip to help build the foundations for new Jewish settlements and to buy the land from the Arabs. Although much land was simply confiscated and more taken through condemnation for government purposes, many Arabs, forbidden by the PLO to sell land to the Jews in the West Bank, nevertheless did so at inflated prices, even though they were putting their lives at risk should they be caught.

What they did was sell to various foreign Jewish front companies that were actually financed by the joint Committee. Many West Bank Arabs became wealthy selling their land, taking the money and emigrating to other countries. As far as Likud was concerned, it was money well spent, because it was encouraging the Arabs to emigrate, while leaving land for the Jews to move onto. Their houses would also be subsidized by the slush fund.

Whenever money was to be disbursed in a big way for the West Bank, the aid of Rabbi Menachem Schneerson, the Lubavicher Rebbe, whose court is in Brooklyn, New York, was enlisted. He gave his blessing, and through his financial institutions, large amounts of money were funneled to Drexel Burnham, the now bankrupt brokerage house where crooked stockbroker Michael Milken built his junk-bond fortune. At times, billions of dollars paid out by the Iranians for arms they were going to receive -- along with profits from earlier deals waiting to be disbursed -- were held at various interest rates by Drexel on behalf of our front companies after they were funneled through American banks. These large deposits added to Drexel's stature, and Drexel's share of the profits from these deposits helped it underwrite huge quantities of junk bonds.

As long as there were always large amounts on deposit, there was no problem. But in 1987, the committee and Schneerson parted ways. This happened partly because Schneerson's allegiance to the Likud Party was brought into question and partly because of the formation of the orthodox Shas Party, which was at odds with the Rebbe. Shas was controlled by an Iraqi- Jewish rabbi, Ovadia Yousef, who had been the Sephardic chief rabbi of Israel. The Likud Party always considered Yousef's support essential because he had a great following in Israel's Middle Eastern Jewish communities. Up to 1987, some of the profits made for the slush fund by Drexel were used to finance the Lubavicher yeshevot (colleges), but this was stopped, and that money went instead to the Shas yeshevot.

At the same time, the joint Committee was afraid that because the funds were being held in the U.S. at Drexel, they might be frozen, if and when the Israelis and the Americans found themselves at odds. For all these reasons, the committee decided to withdraw the funds from Drexel and from the Lubavicher court's control. This only added to Milken's growing troubles, and ultimately contributed to the fall of Drexel.

* * *

From March 1981 to the end of 1987 Iran spent the incredible sum of more than $82 billion on equipment sent from the United States, Israel, Europe, South America (especially Brazil and Argentina), and South Africa. The Iranians gratefully received it all -- old tanks, aircraft (including old French Mirages from Argentina, TOWs, electronics, radar systems, small arms, artillery, Hawk air-to-ground missiles, Chinese Silkworm missiles, North Korean Scud missiles, Katusha shells captured in Lebanon by Israel, cannons -- hundreds of thousands of tons of weaponry, whether it came straight from the factory or was the remnant of some long-dead war. Vast profits were made by the middlemen.

Iran, maintaining an army of approximately 800,000 men, faced a formidable Iraqi military force which was adding to its already well-equipped arsenal from the Soviet Union and France. Iraq was soaking up sophisticated weapons -- MiG fighters, SU fighters, and French Mirage 2000s. Like the Iranians, they too were spending a fortune. As arms suppliers, the Western world and the Soviet Union could rub their hands together in glee.

As someone has pointed out, if a question had been put to a computer about what needed to be done to: 1) get the Arabs off Israel's back; 2) part the Arabs from their money; 3) keep the Iranians contained, and part them from their money; 4) keep the oil flowing; 5) make sure the world recycled its old military equipment; 6) keep the Soviets happy; and 7) make a lot of arms dealers and defense contractors rich, it could not have come up with a better solution than the Iraq-Iran war.
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Re: Profits of War: Inside the Secret U.S.-Israeli Arms Netw

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9. Promis

DURING 1983 ISRAEL experienced a political upheaval that would ultimately change the lives of many around the world. It began with Prime Minister Menachem Begin's refusal to shake hands with German Chancellor Helmut Kohl. Three days before Kohl was due to arrive in Israel, Begin resigned. He wanted nothing to do with a nation that was associated with the deaths of so many Jews in the war.

"An interesting footnote to history is the revelation of the cozy relationships which developed between top Nazi officials and the founders of the Zionist terrorist network, Haganah and the Irgun Zvai Leumi, in the closing days of the Second World War. The Zionists were working to drive the British out of Palestine; the Nazis were also at war with England, which gave birth to the most curious political alliance of the twentieth century. One of the leading advocates of working with the Abwehr, German Intelligence, was one Yitzhak Shamir, now Premier of Israel. After the war, the Zionists employed many former Nazis to help set up their military opposition to the British. The leader in this alliance was the veteran of the old Stern Gang of terrorists, which was now the Irgun Zvai Leumi, none other than Menachem Begin. One of Begin's proteges was a young woman named Mathilde J., as she was known in terrorist circles. She was born in Switzerland after her father left Italy because of "poor economic conditions," no political ideology there. The present Mrs. Krim is described by Current Biography as a "geneticist" and a "philanthropist." She has been the resident biologist at the American Cancer Society for many years. In her younger days, she joined the Irgun Zvai Leumi, marrying a fellow terrorist in a show of solidarity. She soon became a favorite of Begin, and divorced her husband. It was Begin who was asked by a grinning Mike Wallace on the program "Sixty Minutes," "Did you really introduce terrorism into the politics of the Middle East?" Begin answered emphatically, "Not just the Middle East -- the whole world." He was referring to the worldwide terrorist operations of Mossad, the Israeli Intelligence group which is entirely financed by the CIA with American taxpayers' funds."

"Murder by Injection -- The Story of the Medical Conspiracy Against America," by Eustace Mullins


But it wasn't only Kohl's visit that brought about Begin's resignation. Begin believed that he personally had let down the nation over the Lebanese war. Former Defense Minister Ariel Sharon, he said, had disappointed him. Sharon's step-by-step invasion had dragged the cabinet deeper and deeper into the war and had brought about a national crisis in Israel and a public relations disaster abroad.

Then on September 16 and 17, 1982, came the massacres at Sabra and Shatila refugee camps in Beirut. Despite his well-known libel suit in New York, Sharon, it now seems clear, was aware in advance that something was going to happen. And he knew what would be the result if the Lebanese Christian militias -- the Phalangists -- were let into the camps. Pierre Gemayel, the father of murdered Bashir Gemayel, leader of the Christian forces and president-elect of Lebanon who had been killed in a huge bomb blast a number of days earlier, had sent a letter to Sharon, a close friend. Gemayel, who modeled his Phalangist movement on that of Generalissimo Francisco Franco's, wrote to tell him that he would take revenge for his son's death. Many Palestinians would die. The letter came to Ben-Gurion Airport one evening in a Phalangist diplomatic pouch, which was brought to their Jerusalem office. A courier rushed the letter to the ERD duty officer, who opened it and made a number of copies. He called Sagi's office and reached Hebroni, who was duty officer that night. The original was sent by pneumatic tube to Hebroni, who read it and called Sagi at home. Hebroni made copies for the office and had the original delivered by hand to Sharon's office, where it was placed on his desk.

The evening after the letter arrived, I was walking down the street in Tel Aviv with a colleague who, like me, was aware of the letter's contents. At the time, I was about to leave for England and Ireland to oversee the movement of more weapons to Iran.

"This guy's talking about a massacre," said my friend. "It won't happen. Don't you think we would prevent something like that?"

Sharon's face flashed through my mind. I knew what a wild card he was. "No," I said, "I don't."

Three days later Israeli troops let the Phalangist forces into Sabra and Shatila. I had already arrived in London, and it was the Jewish New Year when the shocking news of the massacre flashed around the world. The next day I saw the pictures on TV in my Belfast hotel room. I wanted to vomit. The massacre could have been prevented.

A commission of inquiry headed by Supreme Court Justice Yitzhak Kahan found that while the Israeli government was not involved, it was warned in advance that a tragedy like that could happen and took no action to prevent it. Worse, it had sealed off the area as a military operations zone, preventing the Palestinians from escaping. Although the full report of the commission remains highly classified, many of us in ERD saw it; the members clearly believed that Sharon had seen the warning letter.

As a result of the inquiry, three months after the massacre, my boss, Maj. Gen. Sagi, was thrown out of office. Sharon was forced to resign as defense minister, to be replaced by Moshe Arens, the Israeli ambassador to the United States. But interestingly, Sagi's chief of staff, Moshe Hebroni, was allowed to spend three months as head of branch in the External Relations Department -- time enough to wipe out any stray documentation that might implicate him and his boss in the massacres.

When the new prime minister, Likud's Yitzhak Shamir, took office in 1983, he immediately cleaned house, especially in the intelligence community, of which he had been a member for many years. Several members of the Joint Committee were forced out, including senior member David Kimche. This shakeup left Rafi Eitan essentially running the Joint Committee.

Eitan and Shamir had been close for years. Both were tough Mossad veterans who had resigned from the intelligence service in the early 1970s when they realized they were not going to get any top jobs under Labor Party rule. When Likud finally came to power, Begin decided to use Eitan, a man with considerable backbone, to give substance to the largely powerless job of counterterrorism adviser.

A generally honest man, Eitan, like many of his generation, saw the world in black and white, never grey. He was supremely committed to Israel's survival and to stamping out terrorists with no pity whatsoever. While he despised the PLO and wanted nothing more than to exterminate them, he, along with Shamir, had opposed the Camp David agreements because he felt they left the Palestinian issue unresolved. A pragmatist, he was convinced there would be no real peace until a solution to that problem was found.

With Shamir as prime minister and Eitan running the Joint Committee, our efforts to arm Iran against Iraq did not abate. If anything, we were even more aggressive. At the same time, Eitan maintained his obsessive interest in wiping out terrorism.

One of Eitan's pet projects was an anti-terrorist scheme involving a sinister, Big Brother-like computer program named Promis. It was through Eitan that I became involved in it. This was not Joint Committee work, per se, but many of the same people who worked on our arms-to-Iran operation worked on Promis also. The most prominent of these was British media baron Robert Maxwell, who made a fortune out of it. Through some of his companies, the Israelis and the Americans were eventually able to tap into the secrets of numerous intelligence networks around the world -- including Britain, Canada, Australia, and many others -- and set into motion the arrest, torture, and murder of thousands of innocent people in the name of "antiterrorism."

The frightening story of the Promis program begins in the United States in the late 1960s when communications expert William Hamilton, who had spent time in Vietnam during the war setting up listening posts to monitor the communist forces, was assigned to a research and development unit of the U.S. National Security Agency. Fluent in Vietnamese, Hamilton helped create a computerized Vietnamese-English dictionary for the intelligence agency. While working there, Hamilton also started work on an extremely sophisticated database program that could interface with data banks in other computers. By the early 1970s, he was well on the way with his research and realized he had a keg of dynamite in his hands.

The program he was developing would have the ability to track the movements of vast numbers of people around the world. Dissidents or citizens who needed to be kept under watch would be hard put to move freely again without Big Brother keeping an eye on their activities.

When Hamilton saw that the program he was building had so much potential, he resigned from the National Security Agency and took over a non-profit corporation called Inslaw, established to develop a software program for legal purposes. The Inslaw program would be able to cross-check various court actions and, through cross-referencing, find a common denominator. For example, if a wanted person moved to a new state and established a new identity before being arrested, the program would search out aspects of his life and cases he had been involved in and match them up. Hamilton put his knowledge to use in Inslaw, and when his bosses at NSA found out, they were not at all happy. Their argument was that as an employee of the agency, he had no right to take knowledge gleaned there to another organization.

By 1981 Hamilton came up with an enhanced program. What he had actually done was given birth to a monster. Inslaw was turned into a profit-making organization, and Hamilton copyrighted his enhanced version.

Believing that Inslaw was invaluable for law-enforcement agencies, Hamilton sent Promis to the Justice Department in 1981, offering them leasing rights; the more they used it, the more profit Inslaw would make. The Hamilton program was sent to the NSA for study, but in time, through arrangements made with Attorney General Edwin Meese III, Hamilton got his program back. The Justice Department declined to lease the program from Inslaw, and, it soon transpired, they were using "their own" Promis. So was the NSA. [1]

The US. government had its own plans for Promis. Some American officials thought the Israelis might be able to sell it to intelligence agencies around the world, so in 1982, Earl Brian approached Rafi Eitan. After studying the program, Eitan had a brilliant idea.

He called me in to see him. "We can use this program to stamp out terrorism by keeping track of everyone," he said. "But not only that. We can find out what our enemies know, too." I stared at him for a moment. Suddenly I realized what he was talking about. "Ben zona ata tso dekl" -- Son of a bitch, you're right! I exclaimed. All we had to do was "bug" the program when it was sold to our enemies.

It would work like this: A nation's spy organization would buy Promis and have it installed in its computers at headquarters. Using a modem, the spy network would then tap into the computers of such services as the telephone company, the water board, other utility commissions, credit card companies, etc. Promis would then search for specific information. For example, if a person suddenly started using more water and more electricity and making more phone calls than usual, it might be suspected he had guests staying with him. Promis would then start searching for the records of his friends and associates, and if it was found that one had stopped using electricity and water, it might be assumed, based on other records stored in Promis, that the missing person was staying with the subject of the investigation. This would be enough to have him watched if, for example, he had been involved in previous conspiracies. Promis would search through its records and produce details of those conspiracies, even though the person might have been operating under a different name in the past -- the program was sophisticated enough to find a detail that would reveal his true identity.

This information might also be of interest to Israel, which is where the trap door would come into play. By dialing into the central computer of any foreign intelligence agency using Promis, an Israeli agent with a modem need only type in certain secret code words to gain access. Then he could ask for information on the person and get it all on his computer screen.

According to computer experts I have spoken to in Israel, the trap door is undetectable. Nations receiving Promis might wonder if there was any trickery by Israel, but they would not be able to find anything -- especially as it was experts provided by Israel who installed the program.

Rafi Eitan did not want to risk having a trap door developed in Israel. Word might leak back that the Israelis had been bugging software and then handing it out to others. He didn't even suggest that the NSA develop the trap door because he had a great sense of national pride. As far as he was concerned, it was Israel's idea and would remain so. Yet it still had to be kept secret. Eitan decided it would be best if a computer whiz could be found outside the country.

I knew just the man for the job. Yehuda Ben-Hanan ran a small computer company of his own called Software and Engineering Consultants, based in Chatsworth, California. I had grown up with him, but I didn't want him to know that I was scouting him for a possible job. I had to sound him out, to find out if he was a blabbermouth.

When I called on him, I told him I was in California on holiday and had decided to look him up. We chatted about our days as kids, and he introduced me to his wife, a Brazilian Jew. I decided he was right for the job -- he was not conspiracy- minded, and it was unlikely his suspicions would be aroused. Five days after I left, he was approached by an Israeli man who hired him to build an external access to a program. Yehuda wasn't told what the program was all about. He was simply given blueprints and set about his work for a $5,000 fee.

With the trap door in place, Rafi Eitan selected Jordan as the nation on which it would be tested. Earl Brian made the sale through his company, Hadron. Brian accurately represented it as a program that would help stamp out the Palestinian dissidents who had long been a thorn in the side of King Hussein. A team of Hadron computer experts went to Amman and began setting up Promis software for Jordanian military intelligence. They also hooked it up with the various computers that had already been sold to Jordan by IBM in the late 1970s. These computers were linked to the water company, the telephone company, and every other public utility.

The Hadron team did one more thing. They hooked the Promis program to a small computer attached to a telephone line in an apartment in Amman. That apartment was occupied by a businessman who had close connections with Mossad. From his home, he was able to dial up various public services, as well as the military, and use Promis to find out everything about everybody -- as well as to tap into Jordan's military secrets. Because of his business as an importer-exporter, he often had an excuse to fly to Vienna. He would take the New York-bound Aliya Royal Jordanian Airlines flight from Amman and get off in Vienna. There, he would pass computer disks loaded with information to a Mossad contact.

So what Israel and the Americans learned was that the system was workable. The two countries also found out that the Jordanians had a tracking system of their own which was being used against Palestinian movements. Israel and the U.S. were laughing. The Jordanians tracked the Palestinians, our man tapped into their information, and we knew as much about the whereabouts of one terrorist or another as the Jordanians did.

The Americans came up with the idea of selling this valuable program to governments and their intelligence networks all over the world. But first they had to produce their own version of Promis with the secret trap door. The Americans handed a copy of their program to Wackenhut, a Florida-based company that worked for the U.S. intelligence community. The company also had a computer development unit located on the Cabazon Indian Reservation in southern California. The Indian reservation was used by Wackenhut, which was contracted by the technical services division of the CIA, for developing special equipment such as special-purpose electronics, anti-terrorist devices, etc., as well as hallucinogenic drugs. It was done on an Indian reservation because there was no state jurisdiction and the federal authorities who would have jurisdiction turned a blind eye to the operation.

It was here that the trap door was built into the U.S. version of Promis, based on Israeli information.

The CIA group that was to use Promis had not handed the program back to the NSA to have the trap door fitted by them for the simple reason that they didn't want the NSA to know about it -- interagency competition was fierce. Only this small CIA group, headed by Robert Gates -- who was to become head of the Central Intelligence Agency in October 1991 -- was in on the secret. So we now had a small group in Israel and a small group in the U.S. that knew about the trap door.

The next step for both Israel and the United States was to find a neutral company through which the doctored Promis program could be sold. It was agreed that the head of the company had to be a man who could be trusted to keep intelligence secrets, who had contacts with both Western and East Bloc countries and who had a respected businessman's image. The man they came up with was Robert Maxwell.

***

Robert Maxwell, whose body now lies in Judaism's most revered burial ground on the Mount of Olives overlooking Jerusalem's walled city, formed his ties with Israel in the early 1960s when a meeting was arranged for him with Yitzhak Shamir, who was then in Mossad operations in Europe. Shamir's was an important role, soliciting information from all the European-based agencies employed by Mossad. The rendezvous with Maxwell was arranged through the Mapam (United Workers) Party in Israel, which was part of the labor movement and had close connections with Maxwell's leftwing colleagues in the British Labor Party.

The two men were brought together by Aviezer Ya'ari, a kibbutz member and one of the ideological leaders of Mapam. Uppermost in Ya'ari's mind was making contact with the Soviets, so it was a natural move to put Shamir in touch with Maxwell, who had intelligence links with the Soviets beginning in World War II. Shamir's past as a Stern Gang terrorist appeared to make this an unlikely pairing, but Mossad was keen to make any connections it could with the KGB, and the belief in Tel Aviv was that Maxwell, for all his pride in faithfully serving in the British Army, remained on good terms with "friends" in the East Bloc.

Maxwell, who had been elected a British Labor MP in 1964, and Shamir shared an antipathy for the Americans, and were to become friends of heart and spirit.

Rafi Eitan knew of Maxwell's long association with Shamir and with Israel, so he suggested that the British mogul would be the perfect front for selling Promis. The approach to Maxwell, on Israeli prompting, was made in 1984 by Sen. John Tower, an old friend of the publisher's, who was close to the then vice president, George Bush -- in fact, many years before, Tower had helped Bush get into Congress. Always interested in military and intelligence affairs, Tower had served as chair of the Senate Armed Services Committee. According to Maxwell, when Bush was head of the CIA in 1976, Tower approached Maxwell to connect him and Bush secretly on a person-to-person basis with various Soviet intelligence people. When Maxwell delivered, Tower became his friend for life. With the relationship strengthening over the years, Tower subsequently was appointed a director of Maxwell's Macmillan publishing company in the U.S.

Tower's approach to Maxwell to use his network of companies to market Promis was made on behalf of the CIA group headed by Gates. But it was Rafi Eitan who mapped out the workings of Promis for Maxwell at a discreet meeting between the two men in Paris in 1984. I do not know whether Maxwell was made aware of the trap door and how Israel and the U.S. could use this to gain external access to the computers of whatever agencies were using the program. But Maxwell would have been made perfectly aware of the general uses of Promis and how intelligence services could keep tabs on anyone about whom they had cause to be suspicious.

Maxwell agreed he was in a perfect position to market Promis for the Americans and the Israelis. After all, his Berlitz language schools were located all around the world. All he needed to do was set up or buy computer companies through Berlitz Holdings. This would distance him personally from the massive spy project.

A perfect company for Maxwell to take over already existed. Israeli-owned, Degem was a computer business located in Israel, Guatemala, and Transkei, the Bantustan "homeland" controlled by South Africa. The Transkei connection is particularly interesting.

Menachem Begin, Israel's prime minister from 1977 to 1983, had a long-time friend, Yaacov Meridor, who was running various businesses with South Africa through Transkei. A minister without portfolio in Begin's government, he was raking in a fortune in commissions from whatever country wanted to beat the boycott on South Africa by dealing through Transkei. Everything had to go through Meridor or a company he owned. One of these companies was Degem, which was actually controlled by Israel's military intelligence and was providing computer services to the South Africans and to Guatemala.

Poor Meridor became unstuck -- and opened the door for Maxwell -- when he was caught up in a huge scandal. Along with a Texan, Joe Peeples, and a Romanian expatriate who claimed to be an energy professor, Meridor drew up a blueprint for using the sun as a source of energy to generate vast amounts of electricity. Although this was theoretically feasible, the Meridor blueprint went far beyond the realm of possibility. However, he and his pals succeeded in selling the idea to the wealthy Hunt brothers of Texas for $2 million. For this price, the Hunts were told they had the rights to sell the scheme in the U.S. Meanwhile, Meridor decided that he would seek a huge loan from the Israeli Treasury, but he slipped up badly. He went on TV and told the nation that he was working on a solar energy system with which Israel would never have to use oil or coal for electricity again. All he needed was a little financial backing.

Expecting the money to come pouring in, Meridor was stopped in his tracks when a scientist from the Weizman Institute went on TV three days later and declared the whole thing a fraud. Joe Peeples, who was not able to give the $2 million back to the Hunts, was jailed for fraud. The Romanian, who had not received any of the money, went free. Meridor lost his job as a cabinet minister -- and his credibility. His Transkei operations were another casualty. And then along came Maxwell who, knowing exactly what he was buying it for, sank his money into Degem.

After the initial success with Promis against the Jordanians, and following Maxwell's agreement to buy into Degem, Promis was put to use in the most horrible way in a number of countries. One egregious example was Guatemala. Pesach Ben-Or, a representative for Eagle, a well-connected Israeli arms-dealing company, had been helping the military regime there set up a computer tracking system to fight the leftist insurgency. But it proved to be inadequate.

In 1984 Israeli intelligence came to an arrangement with the man who was calling himself El Jefe de la Nacion -- the Chief of the Nation -- General Oscar Mejia Victores. He agreed to allow a warehouse to be used for storing weapons coming secretly out of the U.S. en route to Iran and to allow planes carrying arms from Poland to the Sandinista government in Nicaragua to fly over Guatemala and even land there on occasions. The Israelis, with a wink and a nod from the Americans, had been selling certain arms from Poland to the Sandinistas in their fight against the contras. Of course, there were other factions in the U.S. and Israel -- including the Oliver North group -- who supplied weapons to the contras.

The price Israel had to pay for this agreement was that the Eagle company, run by Pesach Ben-Or in Guatemala and his associate Mike Harari in Panama, and overseen by Ariel Sharon, would continue selling weapons to the Guatemalan government. On top of that, Israel would install a very sophisticated computer program that would help the military stamp out insurgents. The Mossad chief in Israel, Nachum Admoni, told Sharon not to interfere with the computer program, and in turn the intelligence community would not interrupt Eagle's unofficial sale of arms to the Guatemalan military. It was a case of everyone scratching everyone else's back.

In setting up Promis in Guatemala, Israel employed the services of Manfred Herrmann, a German expatriate in his 60s, who owned an automobile spare-parts company in Guatemala City known as Sedra. It was agreed that Herrmann would represent Israel's arms-running company, Ora, in Guatemala, while his partner, Baldur K. Kleine, would be the representative in Maitland, Florida, from where he would coordinate all our activities in Central America. Shortly after Maxwell took over Degem, Rafi Eitan asked Earl Brian to meet Kleine in Maitland and give him Promis with the trap door in place.

After Kleine passed the program over to Herrmann, I also provided Herrmann with the Israeli version. If the Americans were going to tap into Guatemala, so were we. Because we were running arms through the country, it was in our interests to keep a general watch on things. However, we soon realized that Guatemala just did not have the computer equipment or skilled operators necessary. For Promis to work, everything in the water company and the electric company had to be computerized. Not only that, lists of identification numbers would have to be updated and a new census conducted. With so much information then available and with suspicious characters going into a central computer, Israel and the U.S. would be able to break in to the central system and learn everything the Guatemalan government knew.

Israel turned to Honeywell, the Israeli franchise of which was owned by Medan Computers Ltd. All the technicians working for Medan were military intelligence reservists and experts on computers. Those at the top were made aware of the Promis program, although they did not know about the trap door. When Medan pointed out that their computers would not be suitable, we arranged for them to act as brokers for IBM equipment in Guatemala.

In that same year, 1984, Guatemala was swept up in a campaign led by El Jefe himself to bring the nation into the computer age. TV, radio, and newspapers lauded the move. Computers, it was said, would give jobs to everybody. Common people would no longer have to live in the Dark Ages. Photographs were produced, showing lines of young women sitting behind computers. It was compelling stuff. Every soldier in the army, many of whom could hardly read or write, was taught to use a keyboard. Maxwell's Degem, through Herrmann's Sedra company, moved into offices, railway stations, and airports, and even set up terminals at the most remote roadblocks.

The venture, from the intelligence point of view, was a major success. Suspected dissidents couldn't move anywhere without Big Brother watching them. Even if they traveled under a false name, various characteristics, such as height, hair color, age, were fed into roadside terminals and Promis searched through its database looking for a common denominator. It would be able to tell an army commander that a certain dissident who was in the north three days before had caught a train, then a bus, stayed at a friend's house, and was now on the road under a different name. That's how frightening the system was. By late 1985 virtually all dissidents -- and an unknown number of unidentified innocents -- had been rounded up. In a country whose rulers had no patience for such people, 20,000 government opponents either died or disappeared.

And how was it all funded? In 1985 Guatemala started to be used heavily as a drug transit point to the United States from South America. Mejia, the Chief of the Nation, was, in fact, a much bigger drug boss than Noriega. Massive amounts of drugs were shipped into the United States, and part of the revenue went back to Guatemala to help finance the Promis operation. This would all have been impossible without the wink and the nod that the CIA gave.

In Transkei, Degem was of immense help to the white South African regime. Promis was trap-doored because the Israelis were interested in a number of people in South Africa. Promis, in effect, was a killing machine used against black revolutionary groups, including the African National Congress. Almost 12,000 activists were affected by the beginning of 1986 -- picked up, disappeared, or maimed in "black-on-black" violence. "Kushi kills Kushi" became a well-known term in Israeli intelligence circles with Chief Gatsha Buthelesi's black death squads doing the dirty work.

It was a simple operation: As a result of Maxwell buying Degem, Promis was installed in the Transkei. It pulled in information on dissidents, and death lists were drawn up and handed over to Buthelesi and his group, who went out on the rampage to finish them off.

At one point a planned strike by black miners was stopped when Promis was used to find the instigators. They all disappeared as Promis tracked them down through their required identity passes. Of course the South African security network just loved it. The computer, which had become their ally, had links to the computer in the military compound in Pretoria, and although it was the Israeli version that was being used, the information went straight to the American Embassy for one very simple reason. The embassy has a common wall with the military compound, so it was nothing to string a wire between the two establishments.

The hypocrisy of it all was that Robert Maxwell was officially against any relations with racist South Africa, and his Daily Mirror, which he had bought in 1984 for £113 million, had championed one-man, one-vote, regardless of race. Yet under cover of his Degem company he was actually helping the South African government in a way they had never been helped before. If he had said no to Israel, no doubt some other company would have been used to get Promis going, but at least Maxwell's conscience would have been clear.

***

Promis was sold all over the world. With their respective intelligence connections, Earl Brian's Hadron and Maxwell's Degem engaged in friendly competition, wiring the world for intelligence purposes. The Americans, through Hadron, sold Promis to a number of countries, including Britain, Australia, South Korea, Iraq, and Canada. Many of the secrets of those nations' intelligence agencies were read through the Promis trap door by the Americans. Moreover, the CIA was making a fortune hawking Promis software. Up to 1989 they had made at least $40 million from that venture alone.

The Israelis, through Degem, sold Promis to the East Bloc and other countries, including Brazil, Chile, Colombia, and Nicaragua. An abridged version of Promis, including the trap door, was also sold by Degem to Credit Suisse in 1985. The Likud Party, which had control over Israel's intelligence network, was very interested in knowing which Israelis might have opened accounts there. After finding out who had lodged rake-off money there, the party could approach the individuals and ask for a "donation" -- or threaten exposure.

Maxwell's Degem even sold Promis to the Soviet Union in the late 1980s. The path had been cleared for Degem to get into the Soviet Union -- in 1986 and 1987, a computer company, TransCapital Corporation, of Norwalk, Connecticut, had been allowed to export high-tech IBM computers to the Soviet Union, even though there was a general ban on selling such equipment to the East Bloc. But the CIA's Robert Gates had lifted the barriers. When the Soviets expressed a desire to have Promis, Degem technicians fitted it to the IBM computers, complete with the tell-all trap door. In early 1991, before the coup against Mikhail Gorbachev, Soviet military intelligence, GRU, was still using Promis. So whether he knew about the trap door or not, Maxwell gave the Americans a direct line into Soviet military intelligence.

I believe that one of the reasons I was arrested in 1989 on a trumped-up arms charge was that I, on behalf of the Israeli government, threatened to expose what the Americans were doing with Promis if they continued their support of chemical weapons being supplied to Saddam Hussein's Iraq.

Leigh Ratiner, the attorney who was representing Inslaw and the Hamiltons on behalf of his Washington firm, Dickstein and Shapiro, also had something strange happen to him when he began to find out about the real use of Promis. Suddenly, he was called in by his senior partners and told they wanted him to leave the case and the firm, and they started negotiating his severance agreement. Ratiner received $120,000 a year for five years, provided he agreed not to practice law during that period. Ratiner, who was always puzzled by the abrupt dismissal from a firm he had been with for ten years, assumed that the Inslaw case was the reason, but was not sure why. Some time after his dismissal, he saw a memo from his old firm's files which reported that, a week before he was called on the carpet, an assistant attorney general had been talking to one of the firm's partners and had advised that they ought to get rid of Ratiner. That was all Ratiner learned.

He did not know what I knew. A few weeks before Ratiner's dismissal I had seen a cable that came in to the Joint Committee from the United States. It requested that a $600,000 transfer from the CIA-Israeli slush fund be made to Earl Brian's firm, Hadron. The money, the cable said, was to be transferred by Brian to Leonard Garment's law firm, Dickstein and Shapiro, to be used to get one of the Inslaw lawyers, Leigh Ratiner, off the case. Ratiner, it seems, was removed for doing too good a job for Inslaw.

_______________

Notes:

1. Hamilton and his wife Nancy sued the Justice Department, charging that Justice stole the enhanced Promis program from Inslaw and gave it to NSA. Justice claimed it did get a program from Inslaw but returned it unused. NSA said it developed its own enhanced program and gave it to other intelligence agencies, but not to the Justice Department. Since the stalling by the Justice Department had thrown Inslaw into bankruptcy proceedings, the Hamiltons pursued their legal remedies in Bankruptcy Court. The lower courts upheld their claims against the Justice Department, but an appellate court ruled that Bankruptcy Court was the incorrect venue for such claims, requiring them to refile the suit in District Court. A congressional investigation into the matter has also been slowly proceeding.
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Re: Profits of War: Inside the Secret U.S.-Israeli Arms Netw

Postby admin » Tue Jun 09, 2015 3:40 am

10. The East Bloc

WHILE THE MARKETING of Promis continued as a parallel operation through the mid-1980s, the Joint Committee's main work of selling arms to Iran was also growing. We were combing the world for arms to buy and resell to meet Iran's needs, and it wasn't always easy to find them. Once Yitzhak Shamir became Israel's prime minister in 1983, however, we were able to expand into an unexpected but cooperative new market -- the East Bloc countries. And strangely enough, Robert Maxwell played an important role in this too.

To understand how this turn of events occurred, you have to know something about Yitzhak Shamir.

Unlike Menachem Begin and his Labor Party predecessors, Shamir bears a special hatred for the United States and everything it stands for. Before he became foreign minister in 1981, Shamir had visited the US. only once, for three days. His ardent anti-American feelings stemmed from his conviction that the US. was partially responsible for the massacre of the Jews by the Nazis in the Second World War. Shamir believes that if the US. had sacrificed British interests in the Middle East and reached some type of accord with Hitler on the region, the Jews in Europe would have been allowed to move from the concentration camps to Palestine, and Hitler could have solved the "Jewish problem" without exterminating the Jews.

Despite his reputation as a rightwinger with capitalist leanings, it was Shamir who first tried to open a line of communication between Israel and the East Bloc. The seeds of this radical policy change were sown in the early 1980s when, as foreign minister, Shamir met his Bulgarian counterpart at the United Nations. The introduction was arranged by Shamir's old friend, Robert Maxwell. The Bulgarian quickly learned that Shamir's wife was originally from Sofia and that she longed to visit there again. A visa was arranged for her, and when she returned to Israel, she filled her husband's ear with all the wonderful things her hosts had done for her. When Shamir became prime minister in 1983, he decided he was going to open the East Bloc to Israel and try to wean his country away from its complete dependency on the U.S. The latter was to prove an impossible task.

But after Shamir assumed control, there was greater openness from the Likud Party toward the East Bloc, whereas the socialist Labor Party remained completely closed on the subject. With the door ajar, opportunities presented themselves for a whole new trade-in arms.

Viktor Chebrikov, head of the KGB, gave his personal blessing to the new venture in 1984. He simply saw the merits in the issue. The Soviets' interest was to keep the Iran-Iraq war going, to arm the Iraqis, and to make inroads into Arab money. But to maintain the conflict, Chebrikov realized it was also important to supply the Iranians. He saw that former Soviet policy was lopsided, and he believed much could be gained by starting a relationship with Israel.

Although the Soviets traditionally backed the Arabs, they had by this time started to open up to more imaginative policies. They figured that they could not be known to be selling arms to Iran, because they were already selling to the Iraqis, but, like the United States, they believed that a third country could be used. Poland was ideal. It would help Poland's financial situation, which was in a shambles, and there were merits in having a balanced Middle East policy with a tilt toward Israel because the Soviets thought there should always be a threat to the Saudi oilfields. So Viktor Chebrikov gave the okay to the Polish minister of foreign trade to deal with Israel on the sale of arms to Iran.

It was about this time that I met an Austrian, Dr. Dieter Rabus, who was the son-in-law of the director of a Polish factory that made T-72 tank engines. Rabus knew Robert Maxwell, and the two men helped open doors for Israel to start business deals with the Poles. They made the necessary arrangements, Maxwell even speaking to the Polish defense minister, Gen. Wojciech Jaruzelski; and on our instructions Nick Davies flew to Warsaw, without a visa, early in 1984.

His lengthy discussion with a representative of Cenzin, an office in the Ministry of Foreign Trade that deals with the export of arms, took place at the airport. The two men met in the VIP room, where Davies spent three hours arranging for me to visit.

In mid-1984 I made my first trip to Poland, flying through Vienna. On arrival, I was met at the aircraft's steps by a major in the Polish Intelligence Service, the UB. I had no visa, and I immediately explained I wanted no Polish stamps on my passport. We certainly couldn't afford to broadcast to any official who might see my passport in another country that Israel now had links with Poland. Unlike other arrivals, I was not searched; nor did I have to slip my passport under a one-way mirror and wait. I was given an immigration card with stamps on it, and it was tucked into my passport.

These were among Poland's darkest days. The Solidarity movement had been crushed -- temporarily, as it turned out -- and soldiers were all over the airport. The aura of poverty overwhelmed me as the stretch diesel Mercedes swept through the capital's bleak, grey streets. The limousine drew up at the Victoria Intercontinental, by all reports the best hotel in town. As I checked in, the major hovered anxiously. It had been suggested to me that I drop the occasional "tip" to anyone who was helpful, but how much do you give a UB officer? Do you give him money at all?

I tucked a $20 bill into his hand. He almost fainted. I thought he was going to kiss the ground at my feet. He strode away, beaming.

The Polish spooks were none too subtle. In the wall of my room beside the bed was a small hole through which I could see the lens of a probing camera. I didn't worry about that so much as the lens that was aimed at the toilet seat. I covered that lens with paper.

My host for dinner that evening was a general who was head of military production in the Ministry of Defense. We went to one of the few restaurants available for foreigners. The food was supposedly French style, but I found the deep-fried fare inedible. The general didn't seem too worried -- within ten minutes he was in a happy mood from the slivovitz he had downed.

The bill came to the equivalent of $4. I was about to pay when the general held up a hand of protest.

"No, no," he said. "Do you have a $1 bill?"

I peeled off a note for him, and he strode off through a side door. When he returned, he explained that the manager had been more than happy to make the bill disappear on receipt of $1 -- his salary was only $10 a month.

Poland's education system and medical services were good, but it remained a run-down, impoverished society in which everyone was screwing everyone else, morally and physically. Foreign men never had it so good. You asked a local woman a simple question in a foreign language, somehow making yourself understood on how to get to a certain place and she'd cling to you all the way, regarding you as a potential meal ticket. I didn't involve myself -- with lenses peeping into my hotel room, I wasn't going to risk being compromised.

One day, during my discussions with various defense officials, I became desperate for some fruit. I was told that the only place I might find some was at the black market. The general took me. Even though my visit to Poland was sanctioned, I assumed we were being followed. The black market was a place where desperate Poles sold everything they owned. Anything that was new, such as mink hats or TV sets, had probably been stolen from the factory, I was told. Caviar was on sale -- smuggled out of the Soviet Union by people who had worked there. Suddenly amid the chaos I found a woman who was selling oranges, a dozen of them, smuggled in from Spain by her husband. With the help of the general, she asked me if I wanted half an orange or a whole one. I said I'd take the lot and gave her $5. I'd made a friend for life.

If you knew the right people, you could make a fortune through the unofficial money exchange. The problem for most visitors was that there was a restriction in using the black market. You declared what you had in dollars when you entered the country, and you declared how much was left when you departed. If you'd officially changed only a relatively small amount of dollars, officials assumed you'd bought zlotys on the black market -- and you were in trouble.

The official exchange was 200 zlotys to the dollar. The unofficial black-market rate was about 1,100 zlotys to the dollar. The general got me a special dispensation card allowing me to pay for everything in zlotys. He also worked out a private deal with me. He would buy dollars from me for 1,000 zlotys each. He would then sell them on the unofficial market for 1,100, making himself a nice little profit. I, on the other hand, had that dispensation card, available only to the ruling elite. It meant that, unlike other foreigners, I could buy airline tickets and pay hotel bills with zlotys. And because airline tickets were subsidized by the government -- no matter what the airline -- I could, for example, buy an Austrian airline ticket from Warsaw to Vienna, on to New York, and back to Vienna and Warsaw for $250. And with the right to pay in zlotys, the black-market exchange rate made the airline ticket even cheaper -- a round trip for less than $50!

After my introductory trip to Poland, when I established warm relations with a number of officials and expressed interest in purchasing Soviet-made Katusha shells from them, I returned to Warsaw in the bitterly cold winter of December 1984. As the snow floated down, my hosts greeted me eagerly, and I was left in no doubt that my earlier negotiations had borne fruit. The Poles said they would like to show me the factory that made Kalashnikov AK-47 assault rifles as a prelude to striking a deal. They weren't Katushas, which is what we would have liked, but there was no doubt the Iranians could use the rifles. The Iranians were happy to take anything that went bang.

The factory was in the city of Radom, some 80 kilometers from Warsaw. I thought the journey from the hotel might take an hour and a half. My friend the general, his bodyguard, and the driver of the Mercedes laughed when I mentioned this. I soon found out why. First the diesel fuel in the motor, which had frozen solid in the sub-zero temperature, had to be thawed with a small gas burner placed under the engine. Then we had to travel very slowly along a road that was thick with snow. And, of course, there were police checkpoints.

"Is there a kiosk or a restaurant on the way so I can buy some cigarettes?" I asked.

Once more they burst into laughter. "Where do you think you are -- America?" the general asked.

The journey took four hours. Radom was a rail junction with smoke billowing from tall factory chimneys. Everything was grey, even the snow. At the munitions factory, we were taken to the top floor where the offices were located. I was received by an enormous fat man, who was introduced to me as the manager and who also happened to be the local Communist Party boss. He spoke no English but managed "Welcome, welcome, welcome ... "

I presented him with the three bottles of Johnny Walker whiskey that I had brought, and he led us to a large room, which he explained through a translator was his "gift room." It was full of shelves packed with whiskey.

"These are gifts from our friends," he said. "But there is nothing here from Russia. The Russians don't bring anything worth keeping."

Onto the side of my bottles he stuck a label on which he had written "Israel." Other packages had labels in Polish reading Germany, France, Libya, and Syria. Those packages revealed a lot. You could see from the boss's gift room who was doing business with him.

He brought out four bottles of slivovitz -- potent plum brandy -- and led us to the dining room for lunch. The driver and the bodyguard had to wait in the outside lobby. A table had been prepared -- a grand feast of meats and seafood that would have fed ten Polish families for a week. I sat next to the English-speaking production manager, facing the manager and the general.

Within 15 minutes the general and his Party companion had managed to drain two of the bottles. Meanwhile I talked to the production manager, a soft-spoken, sensible man. He told me about the factory. Many of the residents of Radom worked on the premises, which produced typewriters, sewing machines, and Kalashnikovs. He ordered a woman assistant, who was hovering to make sure our table requirements were met, to bring out a typewriter. A few minutes later a bright yellow manual contraption was placed in front of me.

"Do you make an updated model of these?" I asked, thinking he was showing me an antique.

"Nothing is fresher than this one," the production manager proudly replied. "This has come straight off the production line. These are very popular all over Poland."

When I asked him about word processors, he said they were no good because they were too unreliable. Polish typewriters were the best. Everybody bought them. Nobody was interested in other models, it seemed, and I soon found out why. No others were available.

"Take it," he said, pushing the machine toward me through the plates of food. "This is our gift to you." I didn't have to ask whether the sewing machines were electric, and later I saw the foot-pedal versions the factory produced.

We finally got around to talking about Kalashnikovs. A sample was ordered, and we cut a deal then and there for 100,000. I knocked them down from $95 to $81.50 each. It was a bargain -- spanking new weapons with a cleaning kit and two empty magazines. They were the cheapest Kalashnikovs ever bought.

The factory had to get the go-ahead from Cenzin, the arms export department. But I was assured that as long as they had a sale and there was money coming in from which officials could take their personal cuts, the price at which they were sold was irrelevant.

At about 3:00 P.M., with the deal in the bag and the fat man and the general standing up shouting "L'chaim Israel" -- Long life to Israel -- I decided it was time to go, even if I was being told over and again that Israel and Poland were now blood relatives. The Poles have a long tradition of anti-Semitism, but that seemed to have been forgotten for the time being. They couldn't do enough for me -- even ordering the last of the anti-freeze at the local fire station to be delivered to the factory so it could be poured into the Mercedes to prevent any problems "for our beloved guest" on the return journey.

"What if there's a fire?" I asked.

"If there's a fire," said the production manager, "those irresponsible residents will be thrown into jail for being careless when the fire station was out of anti-freeze."

With the fluid in the car, a "Radom Industries" tie around my neck, a "Radom Industries" photo album under my arm, and the yellow typewriter on my lap, we headed off for Warsaw. I must be jinxed when traveling in other people's cars. Some 30 kilometers along the road, we broke down. It may have been because the Mercedes wasn't used to anti-freeze, but whatever the reason, we found ourselves immobile on the snow-packed road. For the well-sloshed general, there was no problem.

He drunkenly waved down the first car he saw, flashed his ID, told the astonished driver that this was a military emergency, and ordered him to drive us to Warsaw. We left the bodyguard and the driver with the Mercedes ... and the yellow typewriter.

"It's all yours," I whispered to the delighted bodyguard. There was no doubt he would soon be down at the black market selling it.

The driver of the commandeered car was paid well -- I gave him $20, and the general gave him a note to show to the police check points on his return journey to explain what he was doing in Warsaw with Radom registration plates.

Anything could be bought. Even the woman in the phone room at the hotel. There was only one international line available for the whole premises, and I ensured I had it plugged through to my room during the night by paying the woman $5. I told her there would be another payment in the morning if she didn't disconnect me. She came to my room before breakfast, promised that I could have the international line every night, then lay on the bed. She knew about the camera, but didn't seem to care. I knew about the camera and did care. I thanked her for her services, made her another payment for the phone, and ushered her out.

The hotel security officer approached me later and said: "You know the phones are tapped."

"Yes!" I said, "I know."

"For $10 I can arrange to give you the tapes of the phone."

"Look, here's $10 for nothing. I know what I said. I don't need the tapes."

Back in Israel, the Joint Committee decided we needed to put up another smokescreen to cover our dealings with Poland. None of us had any doubts that my visits to Warsaw had been monitored by various intelligence agencies. With the cooperation of the Poles, I pulled in my unfortunate dupe, Arieh Jacobson, and explained that Israel was hoping to buy Katusha shells from Poland to sell to the Iranians. Believing that he would make a fortune, he traveled back and forth to Poland and Vienna, meeting various Poles and Iranians and trying to hammer out a deal. John de Laroque also got arms dealer Richard Brenneke running around on the same kind of futile errands. And all the time, of course, the real negotiations were going on right under everyone's noses.

We continued to purchase Kalashnikovs. But Iran was now desperate for Katusha shells. Although they do not cause much physical damage, they wreak enormous psychological havoc with their terrifying whistling noise. The launchers can be used from the back of a truck, and can be reloaded every minute with 40 shells, which are all fired at once. We estimated that the Iranians had some 1,700 launchers, while the Iraqis had more than 2,000. Clearly, there was an endless need for Katusha shells.

While Israel was running low on supplies, we knew the Poles had Soviet Katusha shells to sell -- but they had only 50,000. We were eventually able to strike a deal in which the Poles sold them to us for $800 each, and we sold them on to Iran for $1,100, including transport fees from Poland to Yugoslavia.

Such inventive deals led Rabus, the Austrian, to call Katusha shells "the dollar machine," a term that was picked up and used frequently in Israeli intelligence. When I first heard it, I must confess I was a bit taken aback. I had originally gone into arms dealing with a political purpose in mind -- stopping Iraq -- but several years later, I saw that it had indeed become a big moneymaking proposition, "a dollar machine," and the original goal had been obscured.

***

While the arms sales were running smoothly, there was chaos on the Israeli political front. The 1984 elections had ended with neither of the two major parties, Labor or Likud, able to establish a government with a majority in the Knesset. Both parties started jockeying for support from the small religious parties on the one hand and the leftist parties on the other. But the leaders, Yitzhak Shamir in Likud and Shimon Peres in Labor, soon realized that these small groups had no loyalties -- they were shifting back and forth to see what they could get. So Shamir and Peres met and came up with a bizarre coalition agreement.

The basic term of the agreement was that the major portfolios would be divided up. For the next four years, Defense would go to the Labor Party and Finance and Housing would go to Likud. But the portfolios of prime minister and foreign minister would be shared by Peres and Shamir, with a swap after the first two years. Peres would be prime minister until 1986, and during those two years Shamir would be deputy prime minister and foreign minister. Then they would switch roles, with Shamir becoming prime minister and Peres stepping into the role of deputy prime minister and taking on the foreign minister's portfolio for two years.

The biggest mistake the Labor Party made was in thinking they were doing themselves a favor by allowing Finance to go to Likud. At the time, inflation was running wild and Labor was glad to be rid of the headache. But by giving up Finance and Housing, Labor was handing over the two biggest portfolios to Likud.

Calling itself the National Unity Government, the new coalition brought in other parties. These had no bargaining power, but two of them that got portfolios were orthodox parties -- Shas and Mafdal -- whose allegiance was more to Likud than Labor. So the balance of this coalition agreement was in favor of Likud.

There was one other vital factor to be considered. Even though the Defense Ministry was under the control of Yitzhak Rabin, a rival of Peres's within Labor, the intelligence community of Israel was controlled by Likud through various funding arrangements. The key people in the intelligence community had all been changed after Begin took over in 1977. They were now all Likud loyalists, and there was no way they were going to be removed, because the Likud was still in the coalition. So an extremely difficult situation had arisen for Peres, the Labor Party leader. While he had achieved his desperate ambition to become prime minister, even if it was to be for only the next two years, he was taking control of an intelligence community that had no allegiance to him.

The coalition was strange on another level: On the main issues of foreign policy and peace negotiations with the Arabs, the parties were deadlocked. They agreed not to agree.

The level of trust between the two parties was very low. The Joint Committee was, of course, also still controlled by Likud appointees. With the Labor Party of Shimon Peres in power, we had a genuine fear that the Americans or Peres's office were trying to find out where the slush fund bank accounts were held. With this in mind, the director of Military Intelligence at the time, Ehud Barak, instructed the committee to enlist the help of two very influential men -- Robert Maxwell and Viktor Chebrikov, chairman of the KGB.

Arrangements were made for me to meet them in London in the spring of 1985. The meeting was held in Maxwell's office at the Daily Mirror. Maxwell had been cooperating with our arms business for more than a year by then, allowing his businesses to launder money for us and winking as his foreign editor, Nick Davies, carried out assignments for us. But Maxwell never got directly involved in the details of the arms deals. Mostly, his function was to open contact to the East Bloc for us. And that's exactly what he did in this case. For a KGB leader to slip secretly into a British newspaper publisher's office might seem a fanciful notion, but it was achieved with great success. At the time, President Gorbachev was on very friendly terms with Prime Minister Margaret Thatcher, so it was acceptable for Chebrikov to be in Britain.

The meeting was arranged for 8:30 A.M. -- at least an hour before the main editorial staff started arriving. Chebrikov was driven into the ground-level garage at the Mirror building and took an elevator straight to Maxwell's floor. If Chebrikov had been spotted, Maxwell had an explanation ready. He would have instantly admitted the meeting and pointed out that he was backing the new thinking in the Soviet Union. He would say, quite rightly, that he was behind social democracy in the Soviet Union because that was the example the British Labor Party had set.

There was one other person present at that meeting -- Mossad Director Nachum Admoni. Our purpose was to ask for assurances from Maxwell and Chebrikov that large amounts of the slush fund could be banked behind what was still known then as the Iron Curtain. Tucked away in the East Bloc, in the Soviet Union and Hungary, we knew it would be safe, as long as we could get hold of it when necessary. This was why we needed Maxwell, with his connections in the communist countries, and why we needed Chebrikov, with the power he wielded. I had no fear that the Soviets would snap up the funds -- Chebrikov's involvement was as good as receiving a government guarantee.

Maxwell, via his Berlitz Language School, was to be the conduit for moving the money -- the company was teaching languages in the East Bloc under various government institutional names. Chebrikov was happy to receive the money and become its guardian, because it meant hard currency in the bank until such time that Israel decided to pull it out. It was agreed that $450 million would be transferred from Credit Suisse to the Bank of Budapest in Hungary. A firm of accountants in London, who had control over the money on Israel's behalf, would arrange for the transfers. In addition to using Berlitz as a conduit, Israel also used a company called TransWorld, located in Canada -- which sold Promis -- to funnel money to the East Bloc.

It was agreed that the Bank of Budapest would disperse the $450 million to other banks in the East Bloc, and just to be safe we asked for a Soviet government guarantee. If anything went wrong, the Soviet government would make good the money in U.S. dollars, not rubles.

Maxwell was going to do well out of the arrangements. He received a flat fee of $8 million. In addition, whenever one of his companies was involved in transferring arms money, he would receive two percent of the gross. It was to bring him many millions of dollars.

The meeting in Maxwell's office lasted for about an hour. It was an important gathering because it marked a milestone in the relationship we had with the Soviet Union and its satellites. Before we parted, Chebrikov, who was also a member of the Soviet Politburo, gave Admoni a letter to be passed to the Israeli deputy prime minister at the time, Yitzhak Shamir. The contents are not known to me.

A few months later Chebrikov's relationship with Israel got closer in a most unexpected way. In late 1985 the Israelis stole almost a whole MiG-29, which had been standing dismantled in crates in the port of Gdansk in Poland. A Polish general, who had been involved in the Iran arms sales, had been paid to make sure that the plane, due to be shipped to Syria, was actually flown to Israel on a Soviet transport plane that had been used by the Poles for the Iranian arms. So Israel found itself in possession of the secrets of the most sophisticated Soviet MiG fighter to date.

One of the general's juniors found out about the missing crate, and it was reported to the Soviet Union. A furious Mikhail Gorbachev dispatched Chebrikov to Israel in February 1986.

The KGB chief met with Yitzhak Shamir, then deputy prime minister and foreign minister, and it was agreed that the aircraft parts would be flown back to the Soviet Union, that relations between Israel, Poland, and the Soviet Union would continue, and that nothing of the episode would be made public. The Polish general, meanwhile, was given political asylum in the U.S. following the intervention of the chief of Mossad, in return for the Americans receiving photos and details of the plane.

It was while Chebrikov was in Israel that the cordial relations between him and Shamir were cemented. Chebrikov paid only a courtesy call on Prime Minister Peres -- he was not too keen on talking to the Labor Party because he felt they were being controlled by the U.S.

The KGB chief found common ground between Soviet interests and the Likud Party, particularly when he realized the strength of Shamir's anti-American attitude.

As a result of the Chebrikov meeting in Maxwell's office and Shamir's new friendship with the KGB man, things started moving very fast with the communist bloc -- Poland, North Korea, Vietnam, and others -- in terms of arms purchases and money transfers. On receipt of their weapons, the Iranians continued to hand out a fortune, which Israel quickly moved to the East, using Maxwell's companies.

It worked like this: The Iranian Bank Melli would issue a letter of credit on behalf of one of Israel's arms companies -- they were all run under our mother company, Ora -- and we would ask the foreign transfers department of the National Westminster Bank in London to guarantee it. We would deposit it in a Western European bank until cashing day came along, and the money would then be sent to the East Bloc. Direct cash payments moved faster, of course, going immediately through Maxwell's companies. If Israel acted on behalf of the Americans, selling their weapons to Iran, the money was paid into a CIA account at the International Bank of Luxembourg. When extra funds were needed by Shamir for Likud Party purposes, Maxwell's companies were used to bring the money out again. It would go to bank accounts in Luxembourg and Geneva, payable to Likud.

***

With all the new financial arrangements neatly in place, and with Israel's relationship with Warsaw cemented, we received a request from GeoMiliTech, a Washington-based CIA "cutout," or front company, run by former Gen. John Singlaub and his friend, Barbara Studley. GMT had an office on Weizman Street, Tel Aviv, run by Ron Harel, who presented himself as a former fighter pilot colonel in the Israeli air force, although in reality he was a former helicopter navigator.

By phone, the Joint Committee checked with Robert Gates if it was okay for us to deal with GMT. He told us he would be happy for that to happen. What GMT wanted was East Bloc weapons for the contras, who were fighting the Sandinistas in Nicaragua.

When the Poles heard their weapons were needed for a rightwing guerrilla group, they were very hesitant -- but then came back and agreed to sell us anything we wanted as long as it was in stock. There was one condition: that they, in return, receive U.S. equipment requested by the Soviets -- two General Electric engines of the type fitted in U.S. tanks. I didn't know how the U.S. was going to react to that, but put the Polish request to Ron Harel. America's response did not take long: the CIA was in agreement.

On May 15, 1985, Nick Davies drew up the list of weapons the contras wanted. It was:

5,000 AK-47 M-70 automatic rifles totaling $1,050,000; 50,000 spare magazines for the rifles totaling $450,000; 5 million rounds of 7.62mm ammunition, $550,000; 200 60mm mortars (commando type), $310,000; 5,000 60mm mortar shells, $185,000; 100 81mm mortars, $525,000; 2,000 81mm mortar shells, $104,000; 1,000 anti-personnel mines, $68,000. Total cost to GMT: $3,242,000, which included a tidy profit for us. (For example, the AK-47s we sold for $225 had each cost us only $81.50.)

The Poles, of course, did not want to be identified as the suppliers and said they would provide arms that were either unmarked or of Yugoslav origin. We found out later from our contacts that GMT actually got $5 million for the deal and that their books showed that $5 million had been paid to Ora. In fact, we had been paid "only" $3,242,000. It would be interesting to know what happened to the difference.

For the Iranians that year, 1985, we bought from the Poles a large number of RPG (rocket-propelled grenade) launchers, RPG-7 rockets, AK-47 ammunition, SAM-7 anti-aircraft missiles, 60mm mortars, 81mm mortars, and naval materiel. The Iranians continued to insist on Katusha rockets, but the Poles and the Yugoslavs couldn't supply more than 50,000. The Iranians pointed out that North Korea produced Katusha rockets and that perhaps Israel could get them from there. Israel's relations with that country were non-existent, but I worked on a simple philosophy: There was always a way.

I told my Polish contacts at a meeting in mid-1985: "You broker for us with the North Koreans, and we'll buy."

Cenzin called the North Korean military attache to their office to meet me. He refused. He had no authority, he said, to meet with Israelis. He did finally come to the Cenzin building, but insisted on sitting in a separate office while my Polish contacts ran back and forth relaying messages from me. He continued to refuse to see me, and I decided enough was enough. I got up, acted insulted, and told the Poles I was going back to my hotel.

"But what about the North Korean?" I was asked.

"Fuck him," I replied. "And tell him what I said. Oh, please also relay to him that I'm sitting on a billion dollars, which is probably larger than the annual North Korean budget."

Two hours later the Poles came to pick me up. The attache, they said, had telexed P'yongyang and he was now permitted to meet me face to face. I insisted I would only meet him in my hotel room.

The attache, a slightly built, serious-faced man in his mid-40s who spoke Korean and Polish, arrived with a Polish-English translator. While mouthing niceties, he made his political points: "We have nothing against Jewish people, except for the fact they suppress Palestinian rights. Americans we don't like. The atrocities committed by Americans in my country are unbelievable. My parents were both killed by American bombs."

When he was a young boy, the attache and many other parentless children had been evacuated to an orphanage in Poland during the Korean War. He'd spent most of his childhood in that institution. Between his reminiscing, we talked rockets -- Katusha rockets. North Korea could let us have 200,000, but he conceded that the only person with the authority to close the deal was the North Korean defense minister. And no, it wasn't possible for me to talk to him by phone -- everything had to be done by telex. I insisted I meet the defense minister personally.

The attache chuckled. "He cannot come to Poland. And we cannot let an Israeli citizen visit Korea. It has never been allowed."

"OK, but if you want a deal, he and I have to meet."

"Not possible on your Israeli passport."

The Poles offered to give me a Polish passport, which would get me into North Korea. I rejected this. Traveling to North Korea would mean flying over the Soviet Union, and if anything went wrong, I wanted the protection of my own country. After more telexing, I was told the defense minister might be able to come to Poland to see me at a later date. I pointed out that was too far off, and I told the attache, "We'll remain friends -- but I don't think we can do business."

I made plans to return to Israel. There were no more deals I could strike with the Poles -- we'd wiped them out of everything. But at 10:00 P.M. my Cenzin contact showed up at the hotel.

"Ari," he said, "I have good news for you. You can go to North Korea."

I was told that the North Koreans had issued a visa for me. The Soviets had already been contacted by the Poles, and the Soviet Embassy in Warsaw had issued a one-month transit visa to fly over the Soviet Union to P'yongyang. We had to leave in the morning. We would fly from Warsaw to Moscow and then fly on to Chabarovsk, in the eastern Soviet Union, in time to connect with the once-a-week flight to P'yongyang.

I hadn't been given permission by my superiors to go to North Korea, but I felt the deal was so important that I had to make an "executive decision." I phoned a Mossad contact in Vienna and asked him to tell the committee my travel plans.

My Cenzin friend and I flew with the Polish airline LOT from Warsaw to Moscow. The Aeroflot flight to Chabarovsk left two hours late, and then the plane made an unscheduled stop somewhere in the middle of the Soviet Union. When we finally touched down at the tiny airport at Chabarovsk, we were too late to make the onward connection. The plane to P'yongyang had gone. And that left us with a few big problems.

For a start, my Polish companion was terrified.

"What are we going to do?" he asked me, an Israeli who had never been to this part of the world before. "The people who live in this region are uneducated barbarians. We'll be murdered in our sleep."

"Don't worry," I said, staring around the bleak airfield at the soldiers on guard duty. "We probably won't be able to find anywhere to sleep anyway." Although we were into summer, a chilly wind swept across the runway.

A second problem was money. I had only U.S. dollars and zlotys. The Pole had only zlotys. We went into the stark terminal building. Rosy-cheeked people with Mongolian features stared at us as if we were visitors from another planet.

"Is there a telephone here?" I asked.

But of course there wasn't. However, with the help of an airport official we found a telex machine and, with some difficulty, managed to punch out a message to the Pole's office.

Within two hours we had an answer back. A Cenzin official who received the message acted promptly and contacted the North Koreans. They in turn sent a message back to Warsaw asking the Poles to inform us that a plane would be sent from P'yongyang the following day to pick us up. Things were looking brighter.

We had also found out that there was an Intourist hotel in town. For a pack of Marlboros, one of the airport officials drove us into the center, a sprawling cluster of drab concrete buildings.

The matronly woman at the hotel reception desk waved away the $100 I offered and physically turned away at the sight of the zlotys. Then I produced a Parker ballpoint pen, indicating it was for her. She fell in love with it and used it to sign us in, a single room for each of us, with food included.

Later, as we stood in my room discussing how we would spend the next few hours, there was a knock on the door. A burly man entered, a Muscovite who spoke perfect English. He shook hands and introduced himself as the chief of district security -- in other words, the local KGB boss. He wanted to know how an Israeli had got this far and had managed to get a visa to North Korea.

That evening he took us out on the town, which wasn't much to see, unless you liked watching people drink vodka. I wasn't sad to say farewell to Chabarovsk the following morning as I boarded the North Korean military plane that arrived exactly on time.

The North Korean defense minister himself came to the P'yongyang airport to meet us after the two-hour flight. He was proud to welcome us to his very modern city, a relief after the drabness of Chabarovsk.

I cut a deal for 200,000 Katusha shells. Israel would deposit the money in U.S. dollars in a numbered bank account in Austria -- the North Koreans were not willing to be paid through East Bloc banks. And then the shipping would start from P'yongyang direct to Iran. The charge would be $600 each, and for shipping to Bandar Abbas there would be an additional $15 a shell, insurance included. More shells could be provided, he said, but it would take some months.

In the meantime, I asked the defense minister if he could arrange for me to go to Vietnam to buy more. After three days a visa to Vietnam had been arranged. I said I would put it to use in about six weeks or so after I'd returned to Israel.

A month later, I went back to Poland, picked up a visa to travel through the Soviet Union, and flew from Moscow to Hanoi. On my shopping list were not only Katushas but a number of American C-130 Hercules cargo planes -- war booty left by the South Vietnamese army after the war. I spent two weeks in Ho Chi Minh City, setting up the purchase of 400,000 Katusha shells and a number of SAM-7s, payment to be coordinated through the Vietnamese Embassy in Warsaw.

On inquiring about the C-130s, I was taken to a military airfield outside Ho Chi Minh City. The huge aircraft sat there, sad, silent relics of a war that had brought so much death and devastation. I clinched a deal to buy 85 of the planes, but I did not have the technical know-how to choose the best ones. In December, a team of experts from the Israeli Air Force and Israel Aircraft Industries was flown to Warsaw and then, with a Polish representative, traveled to Vietnam. They spent a month in Ho Chi Minh City checking over the aircraft and arranging for their shipment.

With their wings, engines, and propellers dismantled, the aircraft were shipped to various countries for repairs. As a safeguard, the crews of the Liberian vessels involved were changed in mid-ocean, so that when they arrived at their destination they were unable to tell anyone where the vessel had originated. Twelve of the aircraft ended up in the care of North West Industries in Canada; others went to Western Australia; still more were shipped to Israel. It was a massive operation, but Iran got its planes. The Vietnamese had sold them to us for $200,000 each. It cost us $2 million each to fix them up. We sold them to Iran for $12 million each.

The Americans didn't get a cent, even though originally these were their aircraft. According to the Geneva Convention, any military equipment you capture is yours, so the Vietnamese were free to sell them to whomever they wished. The Americans could not believe how Israel had had the gall to go to Vietnam, buy U.S. made planes, repair them, and sell them for a fortune.

In times of war, sometimes you win, sometimes you lose. And sometimes after the event you go on losing.

***

While I was traveling through Poland and across the Soviet Union in 1985, an interesting situation was developing on another front. Israel and Nicaragua were engaged in undercover contact on the possibility of reopening diplomatic relations. These secret talks with the Sandinista government had actually begun three years earlier.

In 1982, the Nicaraguan government had reached a tentative agreement with Israel under which they would cut ties with the PLO and the Israelis would help the Sandinistas in the U.S. Congress -- Israel would act as a go-between with the Sandinistas and the Democrats. But this plan did not come to fruition. Ariel Sharon, then defense minister, was involved with a group of businesspeople in Central America, who were supplying arms to the contras in their efforts to overthrow the Sandinista government.

Just before the announcement of the renewal of diplomatic ties between Israel and the Sandinistas, Sharon decided to take a private holiday on the border between Nicaragua and Honduras, close to the contra camps. A more unlikely holiday spot I could not imagine. Sharon's actions, of course, sabotaged the exchange of ambassadors between Israel and Nicaragua. The Sandinistas didn't realize that although Sharon was a government minister, he was also an independent entity as far as his relationship with the contras was concerned. The question must be asked whether he took his holiday at the suggestion of the CIA, which was supporting the narco-terrorists in their push to overthrow the Nicaraguan government.

Now, three years later, as a result of our dealings in Warsaw, the Poles, who were in contact with the Sandinistas and who had technical advisers in Managua, came up with an interesting proposal. They suggested that Israel should balance the struggle by supplying the Sandinistas as well -- without U.S. involvement.

The Sandinistas needed an air force, and they had no money to set one up. Israel was very interested in the Polish idea, and so Tel Aviv proposed that, even though official diplomatic relations with Managua were cool, a number of Soviet-built MiG-23s be purchased in Angola, with the Poles acting as brokers. The Soviets couldn't sell the Nicaraguans any planes because the U.S. had threatened to invade the Central American country if they did.

But now Israel was planning to go behind America's back. The proposal was that we spend $28 million from the slush fund to buy the Sandinistas eight used MiG-23s held by the Angolans. The Poles would maintain them. There was a lot of interest in this deal, but despite the fact that they had initiated it, suddenly the Poles changed their minds, suspecting that the Israelis were trying to set the Sandinistas up. If the MiGs arrived in Nicaragua while the war fever against the Sandinistas was heating up in Washington, we would be giving the U.S. government the excuse needed to invade, the Poles believed.

"We suspect Israel is acting as a U.S. lackey," I was told by one of my Polish contacts. The deal fell through. Fortunately, it did not damage our overall relationship with Poland.

***

In December 1985, I was on one of my frequent trips to Poland. I had just spent some time with Freddie and Herut, but now they had gone for a visit to her family in Nicaragua. As I lay in bed trying to sleep in a freezing cold hotel room in Warsaw, the phone rang. I reached out into the darkness and grabbed the handset. The caller's chilling, final words haunt me still.

"They're dead, Ari ... Freddie and Herut are dead."

I have experienced much in my life. I have taken the bad with the good. But I cannot clearly describe how I felt then ... in that midnight moment something in me died too.

I sat up in the darkness. Sweat poured from my body. I knew even then that it was not an accident.

She was traveling to visit a friend, I was told, a woman doctor who was working in a number of newly established clinics in the villages of Nicaragua. The car Freddie was driving had been hit by a stolen truck in a head-on collision. The driver had escaped in another car and was never found.

There was a funeral in Nicaragua. I didn't go. I was too shattered by loss and guilt. I had never spent enough time with either of them.

It is painful for me even today to think of Freddie and Herut. At the time, I was in shock. I knew no other way to escape from it than to throw myself into my work.

***

Because I was the junior member of the committee, I was the gofer who had to physically search the world for aircraft and weapons that could be bought by Israel and sold to Tehran. Other committee members did their work by phone and telex. The summer before Freddie's and Herut's deaths, in August 1985, we had learned that the Ethiopian government of Mengistu Haile Mariam had a number of old F-4 and F-5 U.S. jets that were grounded because of their poor condition. Even though relations with Israel had been cut in 1978 as Mengistu leaned toward the Soviets, Israel had remained in contact with Addis Ababa.

After back-channel lobbying and help from the Poles, I was told that an audience had been arranged for me with Chairman Mengistu himself. I traveled to Addis Ababa with an Israeli Air Force expert, and we were invited to inspect the aircraft before we saw the Ethiopian leader.

We were driven to a steamy airfield outside the capital where 12 forlorn F-4s were parked, their bodies rusting, engines dead, tires rotted.

"I don't fancy going up in one of those," I told my companion. He kicked one of the wheels. Flakes of rust fell away. "Let's see," he said. "Our people are very good."

Mengistu, who had risen up through the military, greeted us warmly. A thin, handsome man in his late 40s, he struck me as an intellectual who honestly believed in his Marxist revolution. His country was poverty-stricken, he conceded, "but when the revolution is on track, everything will be all right."

We got down to discussing the planes right away.

"You are welcome to the F-4s," he said. "The price is $250,000 each."

He added that the money should be paid in advance to a Swiss bank account.

I told him I would get back to him. As we were about to leave, he mentioned there were 19 F-5 aircraft for sale, too. My colleague and I went back to the airfield and inspected the planes. This time he shook his head.

"No hope whatsoever," he said. "But, with a lot of work, the F-4s can be fixed."

On our return to Tel Aviv I contacted the Iranians. They weren't willing to buy the jets until after Israel had refurbished them. But the Israeli government wasn't going to fix them up without an Iranian commitment to buy. We had reached a stalemate ... until the Poles came up with a solution. They would find a financier for the planes. I traveled back to Warsaw, where I was introduced to Hans Kopp, a Swiss businessman and the husband of the Swiss minister of justice.

Over dinner, I asked him, "Isn't there going to be a problem for you? According to Swiss law, there must be no financing for arms because you're a neutral country."

He laughed. "Don't worry about it, my friend. It's a grey area. The financing will come through 'paper' companies."

While still in Warsaw, I called one of my Iranian contacts, Dr. Omshei. I extracted a commitment from him that if the Ethiopian F-4s were to be repaired to a reasonable condition, the Iranians would accept them. The Poles then arranged a three-sided meeting between Mengistu, Kopp, and myself. With the Swiss financier, I flew back to Addis Ababa. We negotiated Mengistu down to $150,000 a plane.

He continued to talk about the hopes he had for his revolution.

"It doesn't look too good at the moment," I told him.

He shrugged. "There is a price to pay for every revolution," he said.

Mengistu gave me a secret bank account number in Switzerland, and I flew back to Tel Aviv. There, arrangements were made for a logistics team to travel to Ethiopia, truck the planes to the port of Asmara and then move them to Israel for refurbishing. It was a big logistics problem, but as my earlier companion had said, our people were very good.

The 12 planes were going to cost a total of $1,800,000, and we were happy to be using a middleman's money, because we were sensitive that, even though the aircraft were more than 20 years old, the Americans might still get upset. Using someone foreign was perfect.

What we decided was this: Hans Kopp would "paper out" -- document a false trail -- $1.8 million to a French aircraft broker, SFAIR, which had offices in Paris and at Marseille airport. The man the deal was papered through was Daniel J. Cohen, technical manager of SFAIR at Marseille. (Coincidentally, Dan Cohen was the alias Gates often used.) We asked him to put the money into a special account at Banque Worms in Geneva. In the documentation, the deal looked like it was concluded with SFAIR. In fact, the money moved secretly onward to Mengistu's account, which was handled by General Trust Company, with offices at Badener Strasse 21, in Zurich.

Before the money was deposited, Israel reached an agreement that Kopp would actually be paid $250,000 for each plane -- meaning he was making $100,000 on each. But without him, the deal might not have gone through, particularly as the export to Iran was going to be run through him.

Everyone realized that it could be a year before the aircraft were in a fit state to be sent to Tehran. Apart from the financial side, there was still a lot of groundwork to be covered.

As soon as the money was deposited with GTC, Israel, in coordination with the Ethiopian Embassy in Italy, sent an Air Force logistics team to Addis Ababa. During the transit of the F-4s to Asmara, we reached a deal with the Iranians that the refurbished versions, with new engines, would be sold to them for $4 million each.

While all this was going on, another fantastic smokescreen was started up to disguise the true negotiations. John de Laroque paid the expenses of arms dealer Richard Brenneke to fly from Portland, Oregon, to Europe, where he became involved in looking for financing for 19 F-5s from Ethiopia. Intelligence agents from other nations watched carefully, unaware that a real deal had already been struck. To add to our good fortune, Brenneke bragged to a U.S.-based correspondent for the Swiss magazine SonntagsBlick that he was involved in buying the planes through Hans Kopp's office.

The magazine gave the story prominence. Kopp immediately sued the publication because the reality was that he had done no deals with Brenneke and had no intention of doing so. He'd already finished his work. Kopp pursued the suit as a show because of the position his wife held.

Apart from those who were duped, everyone did well. Iran had a new supply of aircraft, Kopp made his profits, the Poles got brokering fees, Mengistu boosted his bank account, and the Israeli slush fund ballooned. The Israel-Iran Joint Committee paid $1 million per plane to Israel Aircraft Industries for the refurbishing, and that, along with other costs, including the purchase, brought the outlay on each aircraft to $1.5 million. But we sold them to the Iranians for $4 million each. Our profits were deposited in the bank accounts we set up around the world.

Once again, the Americans didn't get a penny out of it. The jets were over 20 years old, and under the strategic agreement that had been signed with Israel we had every right to buy and re-sell them.
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Re: Profits of War: Inside the Secret U.S.-Israeli Arms Netw

Postby admin » Tue Jun 09, 2015 3:40 am

11. The Second Channel

THE JOINT COMMITTEE'S work had thrived, but the political chaos in Israel in 1984 and the bizarre coalition forged by Labor and Likud to govern the country were to have profound consequences for us -- and for the world. By 1985, with Labor's Shimon Peres as the new prime minister, the foundations for a major political scandal in the United States -- the Iran-Contra affair -- were being laid down.

While pundits looked in vain to Peres to carry out domestic reform or initiate peace talks with the Arabs, one of his most important acts early in his tenure went virtually unnoticed. This was his appointment of a former TV newsman, Amiram Nir, as counterterrorism adviser.

A ruggedly handsome man, Nir was originally a military officer in the tank corps and had lost an eye in a training accident. He now had a glass eye, but, unlike the famous former Defense Minister Moshe Dayan, he didn't wear a patch. After his release from the army, he became a TV reporter specializing in defense matters. He met and married one of the wealthiest women in Israel, Judy Moses, the daughter of the owner of the biggest newspaper chain in Israel, Yediot Ahronot. It seemed, however, that Nir was in competition with his wife, and he tried to prove himself independent of her and her wealth. His public image was good, and he was so charismatic that people hung on his every word when he appeared on television.

As the 1981 elections approached, Nir fully expected Labor to defeat Likud. He resigned from his TV job and went to work for Shimon Peres as a public relations adviser. The Labor Party lost the election, so Nir found himself without a job. He certainly didn't want to work for his wife's newspaper; and if truth be told, his wife's family didn't want him there either. Feeling that he should give Nir something, Peres offered him a position as chief of staff for the chairman of the Labor Party. So Nir ended up working for Peres as a gofer. After the high public profile he'd enjoyed, it wasn't too satisfying, but it was a job.

In 1984, when Peres became prime minister for the agreed two-year period, he appointed Nir as his counterterrorism adviser. Rafi Eitan, who had used the same position to develop his U.S. spy network during the Begin years, continued his spy network from his office at LAKAM, the scientific intelligence agency he now headed. When Nir, in 1984, entered the counterterrorism office, he was faced with starting from scratch because he was going to get no help from Eitan. But Nir found documents relating to the network that Eitan had created in the U.S. -- and to the Joint Committee's arms sales to Iran.

Peres and Nir found themselves in a very tough spot. The Likud-controlled intelligence community would not work with them. Moreover, the Labor Party had no real power over finances. The Finance Ministry was now Likud-run. So was LAKAM, whose huge slush fund had once financed Labor projects but was now controlled by Eitan. And support for the Labor Party among the overseas Jewish communities was virtually nonexistent. If any money was to be collected, it would be for Israel and not for the Labor Party now.

But early in 1985, Shimon Peres, who still had almost two years to run as prime minister, came up with a solution to his dilemma. He saw the profit potential that the Iran arms sales had, and he wanted a piece of the action. So he decided to take away the authority for the arms sales to Iran from the intelligence community and the Joint IDF/MI-Mossad Committee for Iran-Israel Relations and give it to people close to him.

When he found out that there was no way the intelligence community or the deputy prime minister, Yitzhak Shamir, would agree to such an arrangement, Peres came up with a completely new plan: Open a competing arms channel. This way, he believed, he could bring in a fortune for his own people and also kill off the intelligence-community channel, despite its connections with the powerful Robert Gates. The operation, he decided, would be run by Nir.

Nir was ill-prepared for such an assignment. He had no experience in intelligence or business. In way over his head, he set about finding support for the new operation. Among the people he talked to was an American-Israeli businessman, Al Schwimmer, a former Israel Aircraft Industries official who had a number of contacts in the arms world. He had been brought from the United States to Israel by Peres at the height of the Labor Party's power in the late 1960s.

Nir also talked to Yaacov Nimrodi, one of the richest men in Israel. An Iraqi Jew and a former Israeli military attache to Iran, he had established the first official government-run arms channel between Israel and Iran in the early 1960s. In 1967, after the Middle East war, he came back to Tel Aviv and made presentations to the chief of the General Staff of the Israel Defense Forces. He wanted to be military governor of the West Bank, which had just been captured, and work as a bridge for peace between the Palestinians and Israel. Being of Middle Eastern background, he said he understood the Arabs. When the IDF general staff said they were not ready to appoint him, he told them that if he did not get the job he was going to leave the army and become a millionaire. They all laughed about it and told him, "Go and become a millionaire."

He surprised them all. As soon as his resignation from the military went into effect, he returned to Tehran. Because of the friendship he developed with the Shah, Nimrodi reached an agreement that any arms coming to Iran from Israel would have to be brokered by him -- with a built-in commission. He also developed other business interests in Iran, and today his wealth is estimated at $2 billion. However, after the Iranian revolution in 1979, he found himself with a lot of money but no interesting work. Nimrodi's allegiances were never really defined. Even though he was a sort of Labor Party man, over the years he had contributed to both parties. And he had a special liking for Ariel Sharon, who had been his military commander when he was a young officer in the IDF.

The main players developing the competing arms channel -- Amiram Nir, Al Schwimmer, and Yaacov Nimrodi -- decided early in 1985 that they needed US. support. Nir, who had found out about Robert McFarlane's special relationship with Rafi Eitan, decided that McFarlane was the man to talk to. He was, after all, national security adviser to the president.

Nir and the others were well aware that the Israeli intelligence community's arms operations from the East Bloc, the U.S., and most of the world were going at full speed. Even the defense minister, Yitzhak Rabin, a Labor Party man, was not trying to impede us because he had no interest in helping Peres.

Still, Nir flew to Washington and met McFarlane. Over a private lunch in a restaurant in the Sheraton Hotel in downtown Washington, Nir told McFarlane to cooperate with his new channel and not the established network -- or else. McFarlane read the message. He was being threatened with exposure.

Having little choice, the president's man put Nir in touch with two other people in the National Security Council. Their names were Oliver North and John Poindexter.

***

Marine Lt. Col. Oliver North and Deputy National Security Adviser Rear Adm. John Poindexter agreed with Robert McFarlane, their boss at the National Security Council, that running a second arms channel was a brilliant idea. And they decided that if they could get it up and running, they'd do all they could to squelch the Israeli Joint Committee operation.

In their initial discussions after meeting Nir in 1985, McFarlane and North agreed that President Reagan was not the man to approach directly about the project. They didn't think much of his ability to comprehend their plans. Instead, they went to the head of the CIA, William J. Casey.

Since his stroke in 1981, Casey had been cut out of the daily workings of the CIA by Vice President Bush and Robert Gates, who by this time was effectively running the CIA. Vice President Bush was in charge of the political oversight of the U.S. intelligence agencies as part of an agreement reached in 1980 between the presidential campaigns of Reagan and Bush to unite. In an effort to regain some of his stature, Casey was now more than willing to go along with a second channel.

So Nir, North, and Poindexter had Casey on their side, but how would Vice President Bush respond? As they anticipated, he turned a blind eye. The CIA-Israeli intelligence network had proved its efficiency and was making money for the CIA budget, and on the face of it an opposition channel might lead to complications. But as we learned later from Nir, who met three times with the vice president, Bush was looking at the wider Middle East picture. By tacitly ignoring the second operation, he was placating Israeli Prime Minister Shimon Peres, who had thought up the idea. It was very important, Bush realized, to maintain a friendship with Peres and his Labor Party if the Americans were to impose their Middle East peace plan.

The U.S. proposal was to convene a conference among Israel, Jordan, Iraq, Egypt, and the Palestinians -- though not the PLO, which was not recognized by Israel -- with the U.S. taking the chair. The Arabs were insisting on an "international conference," which was their way of getting the Soviet Union to join in, too. But this plan, which envisioned some type of solution for the Palestinians in the West Bank, was being thwarted by Shamir and Likud.

Shamir hated the U.S. trying to take territory away from Israel. Under no circumstances would he agree to establish an independent Palestinian state in the West Bank and Gaza Strip. He saw Jordan as the Palestinian state, and he believed King Hussein, who was a close friend of Peres and an ally of the United States, did not represent anyone in Jordan but himself and a few Bedouins, the majority of Jordan's population being Palestinian.

Also, Shamir would not trust anything Saddam Hussein said and certainly would not accept the Iraqi leader as a partner in peace negotiations. Shamir saw Saddam Hussein emerging as the leader of the Arab world and a major threat to Israel's interests.

That view of Saddam Hussein was not unjustified. Since 1981 it had been accepted wisdom in the Reagan administration that Saddam Hussein was the man to fill the vacuum in the Middle East after the ousting of the Shah. The Americans saw him as a strong leader who could protect American interests and the vast oil fields, and even though he was closely connected with the Soviets they felt he could be "pulled over."

To woo Hussein, the U.S. State Department in 1982 took Iraq off its list of "terrorist countries" -- whatever that meant. One year later the weapons trade embargo against Baghdad, imposed in the 1970s because Hussein was said to have provided refuge to Palestinian terrorists, was dropped. President Reagan signed a secret presidential directive (not a finding) to enable export of arms to Iraq. A number of high-level Republicans started visiting Iraq, and in 1984 diplomatic relations between the U.S. and Iraq, which had been cut during the Middle East war of 1967, were resumed. After an exchange of ambassadors, a number of U.S. businessmen began flying to Baghdad, and they helped ensure that Saudi money continued flowing for the war effort against Iran. The Americans also felt it was not wise to end the Iraq-Iran war until they had Hussein completely in their pocket.

In order to give full force to the peace initiative, the U.S. government twisted Saddam Hussein's arm in early 1985, and he publicly announced that under the right circumstances he was willing to join the Camp David process and make peace with Israel. This, he said, would be contingent on Israel stopping its support for Iran and agreeing to the establishment of a Palestinian state.

Peres found this an acceptable framework and continued to support the idea of a peace conference. But Shamir was insistent. He said no. Effectively the leader of half of Israel's government, he was able to block the initiative.

The United States decided to force Likud's hand by turning Iraq into a major threat to Israel. The rationale for this was twofold: first, to make Iraq strong enough to repel the Iranians and keep the "moderate" Western Arab, Saddam Hussein, in power; and second, to create a viable counterweight to Israel in the Middle East, thus forcing Israel to the negotiating table. But in reality, the only way this could be done was to send Saddam Hussein missile technology and chemical weapons and perhaps give a wink and nod to his receiving some nuclear technology.

This U.S. policy started in 1985, but it had to be under cover for the simple reason that Israel had many friends in Congress, and the Jewish community in the United States would never have gone along with it.

Shimon Peres actively tried to further the new U.S. policy, remaining at odds with the other half of the Israeli government, which tried to block it. While publicly mouthing words of peace, Peres had privately agreed to participate in the American doublegame of arming both the Iranians and the Iraqis. He encouraged his close friend and associate, Geneva-based Israeli businessman Bruce Rappaport, to buy military equipment from Israel, such as used M-16 rifles and I22mm shells, and divert it to Iraq.

Rappaport also participated in another very strange deal involving Iraq: The Iraqis were keen to construct an oil pipeline from their oilfields in northern Iraq to the Port of Aqaba in Jordan. They wanted to build it in that area because they were effectively blocked by the Iranians in the Persian Gulf. They might have put the pipeline along the Syrian border, but Syrian President Hafez El Assad was Saddam Hussein's blood enemy due to historical differences, and Syria was, strangely enough, an ally of Iran, which put it in bed with the Likud Party. The Turks had common borders with both Iraq and Iran and wanted to stay neutral, so they wouldn't help the Iraqis either.

That left Jordan's Port of Aqaba as the only effective outlet to the sea. There was, however, one big problem. Aqaba is only about two miles from the Israeli port of Eilat, and any pipeline coming down from Iraq to Aqaba has to be built, at least partially, along the Israeli border. It would be unacceptable to the Israelis, who didn't want Iraq to have an economic boost.

But Saddam Hussein made a smart move. He contracted the pipeline out to the Saudi Bechtel Corporation, a subsidiary of Bechtel, the U.S. conglomerate. This was no coincidence. U.S. Secretary of State George Shultz and Defense Secretary Caspar Weinberger were both former executives of Bechtel. Attorney General Edwin Meese III had been an attorney for Bechtel and was a very close friend of the Saudi ambassador to the United States, Prince Bandar. And George Bush's family, including his brother -- Prescott Bush, Jr., who would later also sell arms to China during the Tienanmen Square protests -- had oil interests in the Middle East.

The Saudi Bechtel Corporation approached Attorney General Meese, who was also a good friend of Bruce Rappaport, although it is not clear how they met. (Israeli intelligence speculated that Adnan Kashoggi, the broker for anything and everything, introduced them.) Saudi Bechtel Corporation's problem was twofold. It could not get war-risk insurance for the pipeline construction because it was too close to Israel. Moreover, it thought it would never have a chance to get both halves of the Israeli government to agree to such a project.

In mid-1985, Meese summoned Rappaport and offered a payment to Peres so that he would guarantee the pipeline. The Meese proposal was this: Against a "comfort letter" from Peres stating that Israel would guarantee not to bomb the pipeline, disrupt the construction activities, or disrupt the flow of oil, he would pay Peres $40 million, to be deposited in Switzerland through Rappaport's account, held by Inter-Maritime, Rappaport's umbrella company for his various businesses. The comfort letter was needed for the Overseas Private Investment Corporation, an umbrella insurance company in the U.S., which would issue war-risk insurance at a price.

Shamir, in a very stormy cabinet meeting in 1985, called Peres a traitor and threatened to leave the coalition. The pipeline deal was called off. Some time later, Rafi Eitan found out about the deal and leaked it to the Israeli press. The American press later picked up the story.

Against this background, it is not difficult to understand why George Bush agreed to look the other way as the Nir-North second-channel arms operation got under way. Any hopes of getting a peace conference off the ground lay with Peres, the second channel's sponsor.

The new operation was stepping into a busy arena. The movement of weapons in 1985 was quite fantastic. There were:

1) The original CIA-Joint Committee operations, overseen by Robert Gates and backed by the Likud Party, sending weapons to Iran;

2) The illegal Sharon-Gates sales to the contras;

3) The Soviet and French conventional weapons sales to Iraq;

4) The channeling of unconventional chemical and nuclear weapons systems to Iraq through West Germany, South Africa, and Chile -- all with U.S. support.

5) Now, finally, came the Amiram Nir-Oliver North channel for sales to Iran and sales to the contras.

As they set up the second channel, the Nir people found an Iranian businessman who was also a CIA agent, Manuchehr Ghorbanifar, who had close ties to the prime minister of Iran, Mir Hossein Mousavi. However, the North group still did not have the necessary contacts with top Iranian officials in the Supreme Council and the Supreme Defense Council to carry out the arms sales. Realizing they were going to need all the help they could get, North and Nir also got in touch with Michael Ledeen, a Jewish part-time consultant to the U.S. National Security Council, who was known for his loyalties both to his bosses in the National Security Council and to the Peres people.

With a number of supporters behind them, North and Nir next set about trying to wreck the original channel and destroy Likud's credibility in the United States. According to Nir, they came up with the idea of leaking to the FBI details of the old spy network Rafi Eitan had set up in the United States. The North group was careful not to implicate any high-level Americans involved, but they did reveal that Jonathan Pollard, a junior civilian analyst with the U.S. Navy, was a paid spy for Tel Aviv. Also exposed with the young dupe were Pollard's wife, Anne Henderson-Pollard, who was working with him, and an Israeli Air Force officer, Col. Aviem Sella, a nuclear targeting expert.

The reason no one higher was exposed was obvious. One of the top officials working with Pollard was a man referred to in the subsequent hearings, in which Pollard pled guilty, as Mr. X -- actually Robert McFarlane, who was now playing such an important role in setting up North's second channel. McFarlane, in fact, had been providing computer access codes of intelligence reports to Rafi Eitan in Israel, according to Eitan. Sitting in Tel Aviv, Eitan would request computer access codes for certain items he was interested in. A LAKAM representative in Washington, a woman named Iris, would pass the request to McFarlane. He would then give her back the specified access codes. She would give the codes to Pollard, who was working for the navy. Pollard would call up the information on the computer, print it on paper, then take the papers out of the office for the night. He would photocopy them, give the copies to Iris, then return the originals to the office the next day. The purpose of all the to-ing and fro-ing was to distance McFarlane from Pollard, who, in all likelihood, had no idea himself that McFarlane was a middleman.

In this way, Israel received more than a million pieces of paper -- on reconnaissance satellite data, U.S. aircraft, Soviet aircraft, spare parts listed in secret catalogs (something the Joint Committee was interested in), and just about anything else documented in the U.S. intelligence community. As part of the cooperation agreement the Joint Committee had with the Soviets to sell arms to the Iranians from the East Bloc, we provided some of the Pollard papers to the KGB, but their source was sanitized. This was authorized by Shamir himself. [1]

When the Likud Party and the Israeli intelligence community learned of the second channel's leaking of the Pollard story, they were furious. A decision was made to try to nip the newcomers in the bud.

When damaging information has to be spread, it is rarely done by a direct phone call to a leading official. In this case, in a casual chat between Maj. Gen. Ehud Barak, director of Military Intelligence, and his colleagues in the United States, the word was dropped that McFarlane was working for Rafi Eitan. As expected, the information reached the ears of National Security Agency boss Gen. William Odom. Determined to get to the bottom of the affair, he approached McFarlane's secretary at the National Security Council. Her name was Wilma Hall, and she happened to be the mother of Fawn Hall, Oliver North's secretary.

With Wilma's help, by taping a phone conversation between McFarlane and Eitan, Gen. Odom proved to his own satisfaction at the end of 1985 that McFarlane was an Israeli mole, working for Rafi Eitan. The general, according to Nir as well as Eitan, took up the issue directly with the vice president. Bush was left in no doubt that it would be extremely damaging to the administration were a spy in the White House to be exposed. McFarlane was forced to resign from the National Security Council at the end of 1985, and the issue was put under wraps.

The disgrace did not curtail McFarlane's arrangements with the Nir-Oliver North operation. He simply continued to work out of his home. But Israeli intelligence -- with a little help from the Iranian defense minister -- was determined that the second channel should fail. In 1985 and 1986 there were various factions in the ruling Supreme Council of Iran, and the main divisions came down almost on a personal level. Defense Minister Mohammed Jalali and Speaker of the Majlis Ali Akbar Hashemi Rafsanjani were working with the Israeli Joint Committee; on the other hand, the minister for the Revolutionary Guards Rafiqdoust was aligned with Prime Minister Mir Hossein Mousavi, who tried to open the second channel. Both factions were willing to deal with any country that was selling arms to them in their fight against, as Ayatollah Khomeini called him, "the heretic from the west," Saddam Hussein.

Late in 1985 the Joint Committee made an approach to Rafsanjani, the man ultimately responsible for the purchase of arms for the military. He told us not to worry. Iran would be loyal to the people it had learned to trust.

"Sadly, the prime minister, Mousavi, who is joining hands with the new group, is not from my faction," Rafsanjani told us. "I cannot immediately dismiss this issue. I will have to handle it my way. But I can assure you that there will be no sales to Iran through these new people."

During the first few months of 1986, the Joint Committee learned of furious negotiations to arrange a trip to Tehran by the North group. I was asked to call Rafsanjani and find out what was happening.

"Trust us," he said. "Don't worry. I'll make them look like monkeys."

* * *

By April 1986 the Nir-North operation had not made the hoped-for inroads into the arms trade. Oliver North was furious, and he began an all-out attack on his competition.

According to our informant, North dreamed up a fantastic plot intended to bring about the ruin of just about everyone involved on the Israeli side of the still-active original channel. North's motives were twofold. Not only did he want revenge, but he also wanted to gain kudos by helping to show the world how the U.S. government was quashing the activities of arms dealers by arresting them and sending them to jail. Rumors were flying around at this time suggesting that the U.S. was selling arms to Iran, and North believed that public arrests would divert attention from his country while at the same time earning respect for himself.

North's idea was that the U.S. Customs Service commissioner's strategic unit, which worked out of the World Trade Center in Manhattan, would carry out a sting against the Israelis. The men who would oversee the operation were infamous Customs agents named King and Romeo. And waiting in the wings to prosecute would be the U.S. attorney for the Southern District of New York, Rudolph Giuliani.

One other character was to be brought into play -- Cyrus Hashemi, one of the three brothers who in 1980 had President Carter believing they had enough influence in Iran to bring about the release of the hostages in the U.S. Embassy. After the Reagan administration took office in 1981 and the hostages had been released, U.S. Customs started investigating the Hashemi brothers. Finally, in 1984, they were indicted under the Arms Export Control Act for the illegal sale of weapons to Iran. Cyrus and his brother Jamshid were tipped off and were able to get out of the U.S. before they were apprehended, but their younger brother, Reza, was arrested. In a way, he became a hostage. His elder brothers had to come to terms with the situation and start negotiating. They asked to be represented by Elliot Richardson, who had been Richard Nixon's attorney general until he refused to fire the independent Watergate prosecutor, Archibald Cox.

Richardson, a straightforward lawyer, dropped the Hashemi brothers when they decided to sign an agreement with Customs to become informants against the Iranian exile community in Europe and the United States. He was unwilling to involve himself in agreements that involved the U.S. Customs Service. The Hashemis then hired a lawyer who was willing to do the bidding of Customs.

With Cyrus locked into a deal with Customs, and North on his path of revenge against Israeli intelligence, King and Romeo contacted Hashemi and contrived an illegal frame-up. Cyrus was to be the bait and the trap. He allowed his phone to be tapped and himself to be wired. Next, the Customs men got the Chemical Bank in New York to falsely confirm that Cyrus Hashemi had $1 billion in the bank, in his name.

The plan was for Cyrus to "sting" on tape as many people as possible who were connected with Israeli intelligence arms sales to Iran. He was to tell them that he had a billion dollars of Iranian money to spend and was eager to purchase weapons. All he needed was for his "victim" to talk in positive terms about obtaining arms, and the U.S. authorities would be able to move in and make an arrest. I was to discover later that I was one of his main targets -- along with other members of the committee.

The Israeli intelligence community, through Rafi Eitan's contacts, found out that the Hashemi sting was about to take place. Director of Military Intelligence Ehud Barak decided to throw in the "dumbest" arms-dealing ex-general we could find as bait. That was retired Brig. Gen. Avraham Bar Am. Unwitting, the general made contact with Cyrus Hashemi, who fell for the bait, believing he was delivering an Israeli general to the U.S. Customs Service.

Also working with Gen. Bar Am were two Jerusalem-based businessmen, the Eisenbergs (father and son) and a British lawyer, Samuel M. Evans, who had worked for arms dealer Adnan Kashoggi. Kashoggi, incidentally, was a friend of Prime Minister Peres and had been involved in the Nir-North operation. Evans had fallen out with Kashoggi over money before the sting, so the lawyer started representing Gen. Bar Am and the Eisenbergs for their "arms deal."

John de Laroque was also on Hashemi's hit list, but John knew about the sting, and his job was to talk to Hashemi on the phone to try to find out what was happening.

There were others on Cyrus's list, but they were not real players in the Iran arms sales; they were simply opportunists who had tried to do business with Iran. Cyrus's net had indeed been cast far and wide.

Some of the people Hashemi met and secretly recorded were also captured on videotape by Romeo. Many, uncertain about Cyrus's intentions, checked with the Chemical Bank and found there was a billion dollars in his name. With this assurance, Cyrus's targets told him they were prepared to do business. He proposed to meet them all in April 1986 in New York to sign a deal for the supply of a billion dollars' worth of arms to Iran. He also asked them to supply him with false end-user certificates.

Some of the victims came to New York and were immediately arrested, but others were not willing to sign any deals in the U.S., and Bermuda was finally agreed on as the place. Cyrus was able to lure Gen. Bar Am, the Eisenbergs, and others to Bermuda.

After Cyrus spoke to John de Laroque several times, de Laroque and his "Israeli superior" were invited to meet him and the others in Bermuda. We knew it was a sting, but we decided that I would go to Bermuda with Rafi Eitan (who was traveling under an assumed name because of the Pollard affair) to have a showdown with Hashemi. We flew to Miami, and, out of instinct, I called de Laroque at his home in southern France from the airport.

"Ari, thank God you rang," he said. "I've been calling around everywhere trying to get you. Don't go to Bermuda. You will be arrested."

Grateful for the warning, Rafi flew back to Israel, and I flew to Jamaica, stayed there for three days, and then traveled on to Peru to oversee the movement of weapons that had been removed from the U.S. and parked there.

The group that arrived in Bermuda was immediately arrested on the grounds that they were arms dealers, and had made false representations to the government regarding the purpose of their visit. They were not charged by the Bermuda authorities with any crime, and were held for deportation, not extradition.. When a deportation order was brought against them, and the authorities tried to put them on a plane to New York, a lawyer was able to step in and demand they be allowed to get onto a plane of their choice.

Even though a court hearing was scheduled, they were hustled, against Bermudan law, onto a plane to New York. Upon arrival at Kennedy Airport, they were all arrested by Customs officials, charged with illegal arms sales to Iran, and thrown into the Metropolitan Correctional Center in New York. On the day of their arrest, April 22, 1986, Giuliani and Customs Chief William von Raab gave joint TV interviews telling the world how the Customs Service, together with the Southern District of New York, had been successful in arresting a huge ring of terrorists -- "Merchants of Death" was how they were described -- who were about to sell arms worth a billion dollars to Iran. Yet it was Giuliani, von Raab, Oliver North, and their associates who had created the crime, and now they were supposedly going to bring their captives to justice.

After completing my assignment in Peru, I flew back to Israel and became engaged in urgent discussions about the group who had been entrapped. Even though Gen. Bar Am was bait, we had to get him released and destroy the Nir-North channel.

***

The next month, the North group's long-sought meeting in Tehran was finally go. North, McFarlane, Nir, and others arrived in Tehran from Tel Aviv on May 25, 1986. According to Rafsanjani's account, they were disguised as Irish technicians, wearing jumpsuits and toting a Bible and a cake. They were flying with 97 U.S.-made TOW missiles and a pallet of Hawk missile spare parts on their chartered aircraft, which was registered in France. They were all detained, and, after about a day -- during which no substantive discussions took place -- the "Irishmen" were thrown out of Iran, but not before the military equipment was removed from the plane. As Rafsanjani, supported by Defense Minister Jalali, had promised, they had been made to look like "monkeys." [2]

There was more to come that would completely kill off the North-Nir group's aspirations. At first they had high hopes of getting the ball rolling because, on direct orders from Prime Minister Peres, 160 U.S.-made advanced Hawk surface-to-air missiles were to be shipped to Tehran. As these were direct prime ministerial orders, the intelligence community and the Defense Ministry could not refuse. But there were other plans afoot.

Crates of outdated Hawk 1 missiles instead of the advanced Hawks ordered by the Iranian prime minister were assembled, and an Israeli Air Force logistics officer was given a large box containing plastic stickers. On the orders of the intelligence network, he set to work. The crates of missiles were then loaded onto the chartered ship, and it sailed away to Bandar Abbas.

In Iran there was mayhem in the Prime Minister's Office when the crates were unloaded. Not only were the missiles completely out of date, but each one carried a large sticker in the shape of the Star of David. The Iranians working with the Nir-North group refused to accept them, then found out that they had even lost their money because the letter of credit had already been released.

While this incident effectively killed off the Iran end of the second channel, North also ran into problems with his plans for supplying the contras. His attempts to get his own line into Central America got off to a bad start when Amiram Nir arranged a meeting for him with Defense Minister Rabin. Unfortunately for North, Rabin had no sympathy for Prime Minister Peres and his people, and unceremoniously and disrespectfully threw North out of his office when the contras were mentioned.

Every move North tried to make in setting up his second channel was thwarted. There was, for another example, the case of a mysterious $10 million contribution made to his group by the man reputed to be the richest person in the world -- the Sultan of Brunei. The money was wired to Peres associate Bruce Rappaport, who was North's banker. Our committee had someone in Nir's camp, and when we leaked the story, North denied it, claiming it was a bank error and the money had simply gone to the wrong account. This was a lie, but of course by now a number of people knew that the Sultan was supporting Oliver North.

***

Battle lines had been drawn. North had interfered; he had been stopped; both sides had taken revenge. Now Likud loyalists who had been targeted by North were ready to escalate the battle.

The Joint Committee decided to make the Oliver North operation public in the United States. We did not envisage the ensuing scandal; our purpose was only to bring about the release of the captured people and to destroy North. Of course, those who had been arrested and were not connected to Israeli intelligence would also reap the benefits of anything we were about to do.

My first move was to call a Middle East correspondent of Time magazine, Raji Samghabadi. Of Iranian origin, he had been hired in the early 1970s by Keyhan International, an English-language daily newspaper in Tehran. While working there, he had also been a secret member of the pro-Soviet party, Tudeh. He was very unhappy working for Keyhan International because all the media in Tehran were blatantly controlled by the Shah's secret police, the SAVAK. In the late 1970s, he was hired as a stringer for Time by the magazine's Tehran correspondent at the time, Bruce van Voorst, who had been a CIA officer working in Addis Ababa and then Tehran.

Not long after Raji was hired, the revolution occurred in Iran, and he was arrested by the Mullahs for being a CIA spy and a Tudeh member. Given the two organizations' politics, this was something of a contradiction. Some days later, through connections he had in high places, he was released and got out of Tehran as fast as he could. He resurfaced in New York, where Time obtained for him political asylum status and a green card, enabling him to work in the U.S. Later he became an American citizen, and Time, happy with his work, hired him as a Middle East correspondent.

I had met Samghabadi in 1985, through a woman I knew from my school days and with whom he was now having an affair. He was a very attractive man with a lot of fire in him. Married with two children, he had fallen in love with Rosie Nimrodi (a distant relative of Yaacov Nimrodi), an Iraqi Jew who was working in New York for the Council on Economic Priorities, a think tank. Samghabadi eventually left his wife for Rosie, but they never got married.

In May 1986, I met Raji on more than one occasion and gave him in detail the full Oliver North-Nir story. He was astonished. It was the scoop of the year -- of the decade. He agreed that the level of proof I had given him was more than enough to get the story printed in Time. In the meantime, Rosie introduced me to another journalist, Newsday's Middle East correspondent based in Cairo, Timothy Phelps. He visited me several times at an apartment in Jerusalem, where I gave him details about the Oliver North story. Rosie Nimrodi had typed notes of the North story from me as well. And she gave them out to other journalists, including a New York Times reporter, Stephen Engelberg, who expressed interest. However, Military Intelligence Director Ehud Barak's office told me to avoid him, so I did. I still do not know why Barak decided not to leak the story to the New York Times.

I was, of course, trying to get out this information on instructions from the Joint Committee. We were hoping that after the story exploded in the U.S., Giuliani would release our people. But one day Samghabadi called me with bad news: "Sorry, Ari," he said, "Time is not going to print the story. It's been vetoed by the editor-in-chief, Henry Grunwald himself. The reasons must be clear to you." He laughed. "People say the media in the U.S. is not controlled."

Newsday did not print the story either.

Determined to destroy the Customs Service's case against those trapped in the Bermuda sting, we decided to target the government's chief witness, Cyrus Hashemi. Since pulling off the sting, the Iranian had been traveling back and forth between his apartments in Manhattan and London.

I flew to London and, using a number provided by John de Laroque, called Hashemi's apartment. He agreed to meet me in Lindy's, a busy cafe in Regent Street. I had chosen the location because it would be difficult to tape in the noisy atmosphere.

We ordered coffee. I didn't pull punches. I might be accused of interfering with witnesses, but I felt it was justified after the way the lives of the accused had been disrupted.

"Mr. Hashemi," I said, "if you testify against these people in a U.S. court, the Israeli and the world's press will come down heavily on you. You'll be seen as the rat that you are. Your name will go down in history for the dirty tricks you have pulled."

"You can't frighten me," he said. But I could see he was frightened.

I threw one more punch. "If you testify, you are going to wish you had never been born. And don't think your American friends are going to protect you once they've finished with you."

Having dealt out the heavy warning, I followed it up with a softener. "If, on the other hand, you don't testify, and you stay here in England, my government will look after you financially."

It was a very worried and confused Cyrus Hashemi who made his way back to his apartment. He did not realize that from that point on, he was placed under surveillance and his phones were tapped by Mossad in London.

My flight to London had not been in vain. Cyrus called the office of the U.S. attorney for the Southern District of New York and told them that he didn't care what they were going to do to him, he wasn't going to testify.

By a strange coincidence, several days later Mr. Hashemi was found dead in his London apartment. But because he had been under Israeli surveillance, we knew who had been the last person to leave Cyrus's apartment before he was found dead -- Joe King, one of the Customs officers working out of the strategic unit based in the World Trade Center in Manhattan. Cyrus Hashemi's death was explained as a sudden case of virulent leukemia.

A very fast autopsy had taken place -- in the presence of a U.S. Customs official. The only thing that was unusual, according to Israeli intelligence reports, was the discovery on Cyrus's elbow joint of needle punctures.

Also in the possession of Mossad's London branch were tapes of Cyrus's phone calls to the Southern District of New York, including conversations with Assistant U.S. Attorney Robert Hamel. It was clear from these recordings that Cyrus had had a falling out with his controllers. We were left with the conclusion that someone had decided it was better for Cyrus to become the victim of a mysterious death than for him to be at the center of a public scandal by announcing that he was not going to testify.

Leukemia, of course, develops over years and is not a sudden disease. And Cyrus had appeared in the best of health -- only a few days before his death he had played an active game of tennis in London.

_______________

Notes:

1. The Americans and others claimed later that I had passed to the Soviets some of the papers stolen by Pollard, but the truth of the matter was that Yitzhak Shamir himself directly authorized that some Israeli intelligence gleaned from the United States as early as 1984 and 1985 be handed to the Soviet Union on request as a way of improving the atmosphere between Israel and the East Bloc. The Americans were eventually satisfied that the spy had been found with the arrest in late 1987 of Shabtai Kalmanowitch, an Israeli businessman who had migrated to Israel from Riga as a young man. Kalmanowitch was convicted of espionage by an Israeli court.

2. In later investigations, members of the U.S. delegation described varying versions of the visit. Most versions described it as lasting two or three days; some said the meetings were not at the airport, but at a hotel. They all agreed, however, that Hajjat El-Islam Rafsanjani was exceedingly uncooperative. None of these reports mentions the TOW missiles. Some of them say the plane was not French, but from St. Lucia Airways. The MI/ERD records report what I have stated.
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Re: Profits of War: Inside the Secret U.S.-Israeli Arms Netw

Postby admin » Tue Jun 09, 2015 3:43 am

12. Coverup

THE SUMMONS TO Mossad Director Nachum Admoni's office was urgent. There had been a flurry of activity in Israel at the end of July 1986 with the visit of Vice President George Bush, and I knew that the call from the director's chief of staff had to have some connection with that.

Nachum Admoni was a very intelligent, soft-spoken man who could have passed more easily for an accountant than for the head of a vast killing machine. Politically, he did not identify with either of the two factions in the government. He was the first Mossad chief to be appointed from the bureaucracy, as opposed to the military. He got the job because the man in line to take over the post, Gen. Yekutiel Adam, was assassinated by his own people.

After being selected by Prime Minister Menachem Begin in 1981, Adam lost a number of top-secret documents when he left his briefcase behind in a Los Angeles gas station. Fortunately, it was handed over to the Los Angeles police, but there was a huge internal row about the affair. The Mossad people tried unsuccessfully to use it to stop his appointment.

On his return to Israel from the U.S., Gen. Adam went on an inspection tour of Lebanon, where he was taken to an empty building that commanded a good view of southern Lebanon. As he stood on the terrace peering through his binoculars, the building received a direct hit from Israeli artillery, instantly killing him and several Israeli officers with him. While some believed it was a mistake, according to Rafi Eitan it was an inside job. The old guard in Mossad were afraid of him because he had already told people in the Prime Minister's Office that he would make a clean sweep of the intelligence network.

With him gone, Begin appointed a professional Mossad man, a bureaucrat, who would slowly take away much of Mossad's power and move it to Military Intelligence. Begin had been inspired to do this following the intelligence failures of the October 1973 war against the Egyptians and the Syrians. Admoni turned out to be all that was expected of him. He ran a tight ship, even though his powers were less than those of my boss, the director of the Israel Defense Forces/Military Intelligence. However, on the subject of arms to Iran, the IDF/MI director and the Mossad chief had equal power.

Now, as I sat before Admoni, the seriousness in his face confirmed my hunch that this was important.

"Ari, what I'm about to tell you is of the highest secrecy," he said. "In short, Vice President George Bush wants a full briefing on the intelligence network's arms sales. He has asked to meet the people involved in these sales."

"So he wants to see me." It was a statement rather than a question.

"During his visit here," continued Admoni, "Vice President Bush has received a direct plea from Deputy Prime Minister Shamir to stop the second arms channel to Iran. You and the others who have been involved with the original channel have it running smoothly. Mr. Shamir doesn't like the idea of another group getting involved and possibly exposing the whole thing and he's told Mr. Bush this.

"Mr. Bush has also been asked to try to stop the so-called peace initiative and has been informed of our concern about the U.S. relationship with Iraq. Robert Gates has already been told of our grave concerns about chemical sales to Iraq from Chile. Mr. Bush now wants to hear everything. As this is your field and you are able to answer any questions he might raise, I want you to brief him in detail on the arms sales to date."

"If he's going to listen to what I have to say about the original arms channel, he should also be told in detail about the Nir-North channel," I said.

Admoni nodded. "Mr. Nir will also be briefing Vice President Bush. As I said, he wants to be fully appraised of everything." I was aware that whatever I had to present to Vice President Bush was likely to fall on deaf ears. Shamir, who was poised to take over as prime minister under the coalition government, had already told the vice president that the Likud Party would not accept a U.S. peace initiative and that it would come up with a peace plan of its own.

As I listened to Admoni's briefing, it became clear that Yitzhak Shamir himself had given instructions to the Mossad chief. We talked for three hours, at the end of which, recalling our unsuccessful efforts to expose the Nir-North channel to the media, Admoni laughed and said, "One day Bush is going to hang me by the balls because of what we are doing."

George Bush was staying at the King David Hotel in Jerusalem. Being located in the center of the old city, the King David presented enormous security problems. Even logistically it proved a nightmare getting the convoy of limousines surrounding the vice president of the United States in and out of the hotel every day. So the Hilton was chosen for his briefings because it was on the edge of the city just off Highway One from Tel Aviv.

David Kimche, now director general of the Foreign Ministry and Bush's escort, was waiting for me when I arrived at the Hilton. Kimche, the former chief of Tevel, the Mossad's counterpart of the External Relations Department of the IDF/MI, and one of the original members of the Joint Israel-Iran Committee, had been informed by Admoni about my presentation to Bush. He took me up to one of the higher floors, to a suite that had been converted into a conference room.

Greeting the Secret Service men in the corridor, we went into the room. George Bush, sitting at an oblong table, was being briefed on other subjects. At his invitation, I sat at the table with my briefcase. Kimche remained. Also present was an Israeli stenographer from Mossad, while Bush was accompanied by two aides who were also supported by a stenographer.

Bush may or may not have guessed that the Israelis had also decided to videotape the briefing secretly.

Kimche explained that I was the "man on Iran" and that I would be giving a full briefing about the joint activity of the Israeli intelligence community and the Robert Gates team.

As Vice President Bush listened in complete silence, I started briefing him in detail from 1981. I told him how we had arranged for weapons to flow to Iran from various parts of the world, including from the U.S. and Israel, and I gave him a history of the war between Iran and Iraq, giving an opinion on who was winning. I also told him about the changes that had taken place within Iran.

Much of what I told the vice president I knew he was already familiar with. He was simply hearing it again from the Israeli side. He made no comment as I talked on. But there was to be a sting in my briefing. I had been fully instructed by Admoni on what to raise. My words were along these lines: "Mr. Vice President, the United States is holding an Israeli general in one of its jails on an arms charge. We believe he and his colleagues should be released."

Bush lifted his eyes and stared at me for a moment. I assumed he was fully aware of the arrest of Gen. Bar Am in the Bermuda sting. Whatever the case, he made no comment.

"There is also the question of Iraq," I continued. "The CIA is behind a program to supply Iraq with weapons. Israel is not happy about this."

The vice president shifted uncomfortably, but again said nothing. It was obvious that he had not expected this from an official who had been sent merely to brief him, not to make veiled demands.

"Finally, Mr. Vice President," I went on, "there is the peace conference. The intelligence community is not happy about influence being given to Saddam Hussein, nor about the current proposal to have a Palestinian entity in the West Bank and Gaza Strip."

Bush was looking irritated. I knew my time was up. If I pushed further, he would actually ask me to leave, which would have meant I had exceeded my instructions. I had been told to drop in those points and then back off.

I put my papers back into my briefcase and rose when he did. Two hours had passed. He remained extremely polite and thanked me for the briefing. But I could see he was not happy.

I went directly back to Admoni's office in Tel Aviv.

"How did it go?" he asked.

A picture flashed into my mind of the stern-faced, rigid vice president with whom I had been sitting earlier.

"If you had stuck him with a knife," I said, "he wouldn't have bled."

***

After the deaths of Freddie and Herut, my personal life was in shambles. Lonely and confused, I turned to Ora Ben-Shalom, a woman I'd known since we'd worked together at ERD in 1979. And of course, hers was the name I'd thought of when we decided to call our slush fund holding company the Ora Group.

Ora, a very attractive, tall brunette, had been born in the United States. Her mother, a Canadian Jew, had met Ora's father, an Austrian Jew, when he was working as a cantor in a synagogue in Ontario. Her mother later won a position in the Israeli Government Tourist Office in Chicago, where Ora was born, but her father had problems finding a job there. The family moved to Texas, where Ora's father briefly worked as a cantor, but they then decided to start life anew in Israel when Ora was 12. They changed their family name from Friedman to Ben-Shalom.

The whole family was religiously observant and also ultra-rightwing politically. Ora's older sister joined the army and married, and when Ora finished high school, she too went into the army. She was fluent in English, Spanish, and Hebrew, so she joined the External Relations Department as a first lieutenant. And that's when we met. She was 19.

We had a special friendship and even went out once or twice, but I had met Freddie by then, so nothing came of it. Ora left the ERD in 1980 to work for Mossad and was eventually appointed to a prestigious position in public relations at the Hilton International in Jerusalem. But she remained a Mossad "operative," which meant she could be called in for special jobs.

Although we'd kept in touch over the years, it wasn't until after Freddie's death that I walked into her waiting arms. In late 1986 she started traveling with me on various business trips to Europe, and soon thereafter we began living together in Jerusalem.

***

Even after Cyrus Hashemi's death, the Oliver North story did not surface in Time magazine. And the Bermuda sting prisoners, with the exception of lawyer Sam Evans, remained in New York's Metropolitan Correctional Center.

During one of my trips to Tehran to arrange more arms sales, I told Hojjat El-Islam Rafsanjani about our efforts to expose the Nir-North network. He told me, "We will do all we can to help you. But first, you try again. If you don't succeed, we'll help."

But nothing appeared in the pages of Time, despite further contact with Raji Samghabadi. Finally, after a direct telephone call to Rafsanjani in Iran, he told me, "We'll get it moving for you."

On November 3, 1986, a small Lebanese paper, Al Shiraa, published an article detailing Oliver North's secret deals with Iran. After the story appeared, Gen. Bar Am and the Israeli arms dealers were released from the Metropolitan Correctional Center on bail.

"'Okay,' said Donleavy, putting the pad away in his briefcase. 'You're all set. Now here's the national emergency.'

He produced a Mattel Speak 'n' Spell toy computer, and Coleman sat down slowly.

'What the fuck is this? Some kind of joke?'

'No joke, buddy.' Donleavy was deadly serious. 'I want you to take this out to Tony Asmar.'

'Come on, Bill. Are you kidding me? I'm risking my marriage for this?'

'Remember a year ago?' Donleavy said. 'When you pulled the plug on CBN and the Contra deal? Well, this is it. The bottom line. This is where you get to wrap the whole thing up.'

'With that?'

'Yep.' He patted the toy. 'You got a little something extra in there.'

'Great.' Coleman weighed it in his hand suspiciously. 'It's not going to blow up on me, is it?'

'Nothing like that. We put in an extra chip, that's all. When you sit down with Tony, punch in your code word, he'll punch in his, and you'll retrieve the data we loaded in. He'll know what to do with it.'

'Oh, God. Suppose I forget the code word. You know what I'm like with those things.'

'You won't forget this one. You're from the South. What's the Southern slang word for peanut?'

'You mean, goober?'

Donleavy beamed.

Next day, Coleman flew to Heathrow with the camera equipment and the Mattel Speak 'n' Spell, arriving on the morning of 6 September. From there, he took a direct flight to Larnaca, Cyprus, and after four hours' sleep, caught the midnight ferry to Jounieh. Asmar's fiancee, Giselle, Mary-Claude's sister, met him off the boat, and as it was now Sunday, they joined the family for lunch at their house in Sarba.

On Monday, 8 September, Coleman got to work with Asmar in his office at Karintina. After testing the video equipment, they sent Asmar's volunteer cameramen off to start shooting the locations Control had specified in the western sectors of Beirut, places where, Coleman assumed, the hostages were being held. They then put the Speak 'n' Spell on Asmar's desk, set it up in accordance with the maker's instructions, and punched in their code words.

Out poured a detailed account of visits made by Robert McFarlane and Lt-Col. Oliver North to Iran, traveling on Irish passports, to organize the sale of TOW missiles and launchers to the Iranian government in exchange for the release of American hostages; details of money transfers and bank accounts, with dates and places -- most of it based on incidents and conversations that could only have been known to the Iranian or American negotiators.

'My God,' said Coleman. He had known North was seriously out of favour at the Pentagon, but here was another glimpse into the pit. 'What are you supposed to do with this stuff?'

Asmar looked at him soberly, and Coleman did not press the point.

He left Beirut with the camera equipment and videotapes on 11 September, arriving back in Cyprus on the 12th. Next day, he flew to Heathrow, and after an overnight stop in London, traveled on to Montreal, and from there, as Thomas Leavy, to Baltimore Washington International airport, where he checked in, as instructed, at the Ramada Inn. Donleavy, accompanied this time by another agent, arrived there early next morning, the 15th, for a full day's debriefing, and that night Coleman headed south for Alabama to rejoin Mary-Claude at the Lake Martin cottage.

On the 23rd, he began his postgraduate studies as a teaching assistant at Auburn University, and on 2 October, also on schedule, Mary-Claude presented him with a daughter, Sarah.

Meanwhile, one of Asmar's operatives had delivered the Speak 'n' Spell material to a relative who worked for Al Shiraa, Beirut's pro-Syrian Arabic-language news magazine. When the story ran on 3 November, it was picked up at once by the Western media, touching off an international scandal of such embarrassing proportions that President Reagan was forced to act. On 25 November 1986, he fired North, accepted the resignation of Rear-Admiral John Poindexter, McFarlane's successor as National Security Adviser, and spent the rest of his administration trying to dodge the political fallout from Irangate.

'Most people assumed it was the Iranians who blew the whistle on North, McFarlane and Poindexter,' Coleman says. 'Some even said it was the Russians who leaked the story after the failure of the Reykjavik summit. But it wasn't. It was the Pentagon. It was the DIA. It was me, with my little Speak 'n' Spell.'

-- Trail of the Octopus: From Beirut to Lockerbie -- Inside the DIA, by Donald Goddard with Lester K. Coleman


"I will not hold anybody in jail for doing what U.S. government officials are doing," declared Judge Leonard Sand, the federal judge sitting on the case. In time, the charges were dropped.

The Oliver North story fell on fertile ground in the U.S. On October 5, 1986, a plane carrying equipment to the contras had been shot down over Nicaragua, and Eugene Hasenfus had been captured alive. Documents found in the wreckage implicated the CIA. Embarrassing questions were being asked. After the Lebanese article appeared, the U.S. press could hardly avoid the issue. As a result of the publicity, the Iran-contra scandal exploded. President Reagan, who may or may not have known anything about what was going on in his own White House National Security Council, ordered a presidential commission of inquiry, to be headed by none other than former Sen. John Tower, whose then aide, Robert McFarlane, had played such an important role in the arms-for-hostages negotiations in 1980. Unknown to the American public, Tower had a great deal of inside knowledge about the weapons trade with Iran.

The commission of inquiry was to investigate only the years 1984 to 1986. The conclusions Tower reached were nothing but a coverup. He declared that some people in the National Security Council, interested in the release of hostages in Lebanon, had tried to make a deal with the Iranians, selling them 97 TOW missiles and some Hawk missiles -- and that was it. Granted, the second channel had not succeeded, so there wasn't much to discover about it. But Tower knew perfectly well that there was an ongoing original arms channel. Yet the Tower Commission made no mention of it. George Bush later rewarded Tower for his loyalty by nominating him for defense secretary, but he was never confirmed by Congress.

Understandably, the Democrats were not satisfied with the Tower inquiry and pressed for hearings in Congress. And well they should have. In February 1987, while Tower was investigating a minor part of the sales to Iran, the Joint Israel-Iran Committee, together with Robert Gates, ran the biggest-ever arms supply operation to Iran. The official inquiry was better than any smokescreen we, with all our skills at such things, could have dreamed up.

Under the noses of the American people, 4,000 TOW missiles were flown out of Marana Base in Arizona to Guatemala and were shipped through Australia, where they were temporarily parked in the western part of that country. But there was a great deal more on the move. Apart from the TOWs, radar and electronic materiel, and Hawk surface-to-air missiles from the U.S., this is what was sent to Iran -- while Congress and the rest of the world remained ignorant:

• From Israel: 128 U.S. tanks; 200,000 Israeli-made Katusha rockets said to have been "captured" from the PLO in Lebanon; 122mm artillery shells; 105mm artillery shells; 61mm rockets; 51mm rockets; air-to-air missiles; small arms; tens of millions of rounds of ammunition.
• Poland and Bulgaria: 8,000 SAM-7 surface-to-air missiles; 100,000 AK-47s; millions of rounds of ammunition.
• China: Silkworm sea-to-sea missiles; armored cars; amphibious personnel carriers. China helped Iran because the Iraqis weren't happy with Chinese light tanks -- which suited Beijing because Saddam Hussein had developed a reputation as an unreliable business partner.
• North Korea and Vietnam: artillery shells; self-propelled rockets.
• Sweden: 105mm artillery barrels.
• Belgium: Air-to-air missiles.

Israel became very good at copying weapons and alleging that they had been captured in Lebanon, while the reality was they had come out of Tel Aviv factories. As for the Silkworm sea-to-sea missiles from China, they were brokered for Israel by Saul Eisenberg, who is not related to the Eisenbergs arrested in the Bermuda sting.

One of the richest men in the world, Eisenberg at present runs his private arms-dealing operation from an office building at 4 Weizman Street, Tel Aviv -- the same block on which the CIA "cutout" company, GeoMiliTech, was housed. Eisenberg was able to sell Chinese weapons because he was married to a South Korean woman who had connections with Mao Zedong and Zhou Enlai back in the 1950s. Because of his strong links, all Israel's business relations with China have to be conducted through him. When a member of the Joint Committee asked him to broker weapons for Iran, he readily agreed and even helped arrange for "parking" temporarily in a third country -- Australia. Once again, although certain government officials in Western Australia and members of the Australian Security Intelligence Organization knew about the operation, the general public was kept in the dark.

***

On July 3 and 4, 1987, I participated in two highly secret meetings with Iran's defense minister, Col. Mohammed Jalali, and Robert Gates. The colonel had first flown to Guatemala to settle payments to the Mejia government, because much of the materiel that had been moved out of Arizona had been flown by cargo plane for parking there.

Then Col. Jalali flew to Kansas City and made his way to the Americana Hotel where Gates was staying discreetly. Ora and I were booked into the Vista International, just across the street. On the evening of July 3, I made my way to the lobby of my hotel and met with Gates and Jalali. Away from rooms that might be bugged, hotel lobbies were safe for private discussion, providing nobody recognized the participants.

"What I would like," said Col. Jalali, "is an assurance that despite the Iran-contra scandal, the sales to my country will continue. "

"As far as Israel is concerned, they will continue," I said.

We both looked toward Gates. He smiled. "I see no problem with that."

We talked about logistics and the scandal that had put Oliver North in the hot seat. Then we agreed to meet again the following morning.

This time I visited the others in the lobby of the Americana. Once again, on this day that celebrates American independence, Col. Jalali sought and received assurances that the U.S. would continue to supply Iran with weapons.

"But I must ask you, Mr. Gates," he said, "why the United States supports the supply of chemical weapons to Iraq. We know Saddam Hussein is getting them from Chile. Why do you help us, but also help our enemy?"

Gates made no admissions or denials. Nor, as we said our goodbyes, did he make any promises.

Following my meetings with Gates and Jalali, Ora and I flew from Kansas City to Phoenix, rented a car and went on a ten- day driving holiday to California. For Ora, it wasn't much of a holiday; she had trouble ungluing me from the fascinating scenes on TV as the congressional hearings into the Iran-contra affair unfolded. Everyone was riveted to their screens. For me, it was highly entertaining to watch official after official lying through his teeth or pleading complete ignorance.

All America was gripped by a confusing spectacle that never seemed to go anywhere or result in anything substantive. Several years later, in 1991, I discussed the events of 1987 with Spencer Oliver, the chief counsel for the House Foreign Relations Committee, who had been involved in the Iran-contra hearings.

"Didn't you know they were all lying?" I asked.

"Yes," he said, "we knew it was a coverup. But at the time the Democratic congressmen and senators were very weak, and also 'for the good of the nation' we did not want to start a scandal that would bring down the president. We did not want to hear the 'I-word' -- impeachment."

"To lie to the nation is for the good of the nation?"

"No. But the Democrats did not have the backbone to do what they had to do. They all knew that the witnesses were lying or telling half-truths. Everybody knew it was a cover-up, but not many knew the real truth. Casey was sick and dying. Gates and Bush were untouchable. To get them, we had to bring down the whole administration. We weren't ready for it. The Democrats didn't have any strong leadership. The only thing we did manage later, when Casey died and Robert Gates's nomination was put forward in 1987, was to force the nomination to be withdrawn."

There was a clue to the future, perhaps, in Robert McFarlane's suicide attempt during the congressional hearings. He overdosed on pills, I suspect, because he was afraid his role with the Israelis would surface. But no one was able to connect his attempt to kill himself with a national scandal that went far beyond the wildest imagination. All that happened, of course, was the decision by an independent prosecutor, Judge Lawrence Walsh, to put North, McFarlane, and Poindexter on trial. They were convicted of lying to Congress, but none of them went to jail. Later, North's conviction was thrown out. So, for the time being, the truth was buried. America was to continue living under the Big Lie.

***

One day in August 1987, a month after Ora and I had returned to Jerusalem from our trip to the U.S., I was replaying the messages on our answering machine. Ora was out, and I was puzzled to hear the familiar voice of the CIA station chief in Tel Aviv asking her why she hadn't "made the interview on time."

Despite our alliance, it was, of course, not unusual for Israel and the U.S. to spy on each other. And these were particularly sensitive times. What was Ora up to?

I said nothing to her, but I was determined to get to the bottom of the matter. She was put under surveillance, and it was discovered she was meeting various CIA people based in Tel Aviv.

Ora was ordered by SHABAK, Israel's internal security agency, to go to an apartment in Jerusalem for interrogation. There she admitted she was friendly with the Americans. They were talking to her about me, what I knew about Iran-contra, how I fit into the overall picture, and who had leaked the Iran-contra story to the press. Whatever her motives, she wasn't getting paid.

Later, when I confronted her, she told me the same story, emphasizing that she didn't tell the Americans much. I was stunned. I didn't know what to make of it. But I knew I could no longer trust Ora. And the Americans? What were they up to? When the Joint Committee discussed the situation, we concluded the only way the Americans could apply effective damage control was to use someone like Ora, who was close to one of the principals in the affair, to find out exactly what our role in the Iran-contra leak was and what we might do next.

When Ora's liaisons with the Americans were exposed, all her ties with Mossad were terminated. Beyond that, the SHABAK wanted to throw the book at her. It was an opportunity to prosecute and make a show out of how the U.S. was spying on Israel. And of course they had every legitimate reason to do so. She had met with another country's intelligence unit, and even though America was officially an ally of Israel, secrets were secrets.

Despite the top brass's anger, I didn't want to see Ora going down for it. I no longer trusted her, but I'd always liked her and didn't want her hurt -- and, more pragmatically, she knew too much.

I came up with a scheme. I told my superiors that I would personally take charge of the situation and that she would no longer pose a threat to Israeli security. As proof of my intentions, I told them she was pregnant and that we planned to marry. As the weeks went by, we were able to show that she really was pregnant.

Ora was eager to marry me, and now that she was expecting our child, I believed it was time I committed myself. It would certainly keep Ora out of trouble with the government. We fixed a wedding date -- March 13, 1988.

While Ora was out of trouble, I found myself up to my neck in it. The reverberations from the leaking of the Iran-contra story had rocked the Israeli government. Determined to cause some damage to those involved in the long-standing original arms operation to Iran, the Labor Party, which remained in the coalition, was demanding heads. In September 1987, mine rolled, along with those of three other members of the Joint IDF/MI-Mossad Committee for Iran-Israel Relations. We were told: "You no longer have a job."

But we had expected this. The signs had all been there. As I had been in the thick of the arms trade, I realized that, with the pressure on Shamir, I would be one of the first to go.

So Mossad head Nachum Admoni and I had decided before the crunch came to set some of the funds aside for our futures. We had given the government our best, shoring up the State of Israel during the terms of three prime ministers, but we believed we needed insurance against whatever might lie ahead. We weren't sure what our job prospects would be after doing work that both the Americans and the Israelis now wanted to forget ever happened. There was also a genuine risk of arrest or death -- we had the examples of Gen. Bar Am, the Eisenbergs, and Cyrus Hashemi to ponder. The slush fund money had been made illegally, against all international conventions, and, as it would in time be shown in a U.S. court, neither the Israelis nor the Americans wanted to admit to owning it. So it was agreed that we would take out our insurance and let the arguments come later. We made a number of payoffs and then transferred a very large sum to South America.

What Shamir thought about our actions, I don't know. But he would have understood that, despite what had happened to me, I would not leak details about my work -- at least, at that time.

Now the burden was off my shoulders. I flew to London to spend a few days enjoying myself. I had a feeling of relief -- even more than that, of euphoria. I felt all-powerful. God only knew what lay ahead. I decided the best thing was to blow with the wind. It's the way I'd played it from the very beginning.
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Re: Profits of War: Inside the Secret U.S.-Israeli Arms Netw

Postby admin » Tue Jun 09, 2015 3:43 am

BOOK TWO: BLOOD MONEY

13. Nuclear Nation


FOLLOWING MY SUDDEN dismissal from the Joint Committee, I had plenty of money, but no job. And I get restless without a job. My plan was to go to the United States, look for work, then settle down with Ora and the soon-to-be-born baby and start life afresh.

I made a number of exploratory trips to the U.S. and Britain in late 1987. But in November, when I arrived back in Israel, out of the blue I was offered a job at the highest level -- as a special intelligence consultant to the Prime Minister's Office. There were a couple of reasons for the job offer, I concluded. I had, after all, done Shamir a great favor by leaking the Iran-contra story, which helped destroy the competing arms network and hurt his old adversary, Shimon Peres. I was also still one of the guardians of the funds. And Shamir wanted access to them.

I told Shamir's spokesman and unofficial national security adviser, Avi Pazner, that I would be happy to accept the post, but I did not want to get involved in any missions that would interrupt the wedding Ora and I were looking forward to. However, they were eager for me to get started, and shortly after taking on my new position, I was called in to meet Shamir. I was to be briefed by two scientists, he told me, and should read some top-secret files as background. Then I would be asked to undertake a secret mission that was vital to Israel's nuclear program.

At the time, I knew next to nothing about Israel's nuclear program. My only experience with it was the so-called "Vanunu affair" in 1986.

Mordecai Vanunu was a former cab driver who had been talking his head off to a church group in Sydney, Australia's red- light district, King's Cross, claiming that he had worked as a technician at a nuclear facility near Dimona, Israel.

When the Israeli intelligence community got wind of this, they immediately checked into Vanunu's background and found it was true. Born in Morocco to a rightwing Jewish family that had migrated to Israel in the early 1960s, he had grown up in Beersheba before being drafted. He was stationed in Dimona and trained as a technician. After his military service, he stayed on. While a Civilian, he also started studying philosophy at the University of the Negev in Beersheba and began sympathizing with the Palestinian cause. He aligned himself with North African Jews who had migrated to Israel and told his pals how horrified he was that Israel had so much nuclear firepower. From his work he had a very good idea what Israel had.

Deciding he had had enough of life in Israel, he sold his Beersheba apartment, left his job and the university, and took off with a knapsack on his back. He headed for Thailand and Nepal, where he converted to Buddhism. He stayed free at Buddhist monasteries, although in his knapsack he had a lot of cash from the sale of his apartment. He also had something far more valuable -- photographs and undeveloped film of the inside of the Israeli nuclear facility.

In their checks on Vanunu, Israeli intelligence found out that while in Nepal he had contacted the Soviet Embassy in Katmandu and, in the name of socialism, communism, and world peace, offered them the photographs. He was actually flown to Moscow from Nepal with copies, having left the originals in the monastery. He met with the KGB, handed over the photos, and was then debriefed. Although he had been given vague promises by the person who met him in Nepal, all Vanunu got out of his liaison with the Soviets was a ticket back to Katmandu.

After that trip he lost confidence in the Soviet system. Confused and feeling betrayed, he picked up his knapsack from the monastery and flew to Australia, having arranged a visa while he was in Israel. He hung around until his visa ran out and, now short of money, decided to stay on illegally. He found a place to live in King's Cross, where he joined a church prayer group.

Vanunu found many among the flock who were keen to hear him preach about the evils of nuclear power. He even brought out some of his top-secret photos and handed them around the prayer group. Encouraged by the wide-eyed response, he converted from Buddhism to Christianity and found a job as a part-time taxi driver.

Among the faithful in the prayer group was a Colombian, Oscar Guerrero. A freelance journalist, he had fallen on hard times and had taken up house painting and listening to Bible readings. When Guerrero saw the photographs, he told Vanunu that the two of them could spread "the word" by getting the photographs published -- for a fee.

First, Guerrero approached the Sydney Morning Herald, but the photographs were rejected on the grounds that Guerrero seemed a suspicious character. However, his approach was passed on to the internal intelligence service, the Australian Security Intelligence Organization, then to the external service, the Australian Security Intelligence Service, which mentioned it to Israel. Now Tel Aviv realized it had a problem. And, there were no easy answers.

Guerrero tried The Age newspaper in Melbourne, not realizing it was in the same group as the Sydney Morning Herald. Rejected again, he decided to try the London papers. He put together all the money he had, borrowed from Vanunu's dwindling reserves, and bought himself a ticket for Heathrow Airport. In an astonishing stroke of bad luck, one of the newspaper executives he approached was none other than my associate, full-blown Israeli agent Nicholas Davies, foreign editor of the Daily Mirror.

Davies stalled him by telling him that the newspaper needed to bring in an expert to check out his claims. He then called me in Israel, and I sought advice from my superiors. Prime Minister Peres issued an order that Vanunu be stopped at any price and the traitor brought back to Israel. Although the intelligence community suggested that the uproar would eventually die down, Peres raged that he wanted him caught and brought back to be taught a lesson.

The same evening I flew to London. The next afternoon, posing as a journalist who was an expert on nuclear and military issues, I met with Guerrero and Nick Davies. I insisted I needed copies of the photos before the newspaper could decide whether it was going to buy the story. Guerrero handed over three samples. "Look at them," he said. "If you think they're good, I'll give you the lot."

That same evening the pictures were sent to Israel. The word came back that they were real and that I had to try to discredit Vanunu and his friend. Meanwhile Nick Davies, as ordered by his publisher Robert Maxwell, put together the framework of a disinformation story, to be used later with copies of the photographs, declaring that the Sunday Mirror had looked into the pictures and the men trying to sell them and that it was all a con job. To back up the story, Vanunu's wanderings were detailed.

It was at that point that we discovered that Guerrero had already struck a deal with the Sunday Times on an earlier trip to London. The Times was planning to fly Vanunu to London, interview him at length, and publish his story in detail. The arrangement was that after the story had been printed, Vanunu would get £250,000 advance on a book about Israel's nuclear capability that he would write with one of the newspaper's staff. Guerrero's cut would be 10 percent. He had approached the Mirror because he believed he was being cut out of the Sunday Times deal.

Vanunu flew to London and was put up in various hotel rooms. We realized at this stage that the story could not be stopped, although the Sunday Times was still a long way from printing anything. I contacted my superiors, and Prime Minister Peres himself decided to throw the full weight of Mossad at Vanunu.

The Mossad station chief in London tipped off MI-5 that Israel had a security problem -- on British soil. The British intelligence agency agreed to try to help Israel track down Vanunu but warned the Israelis not to do anything that was likely to cause a political or diplomatic incident on British soil. Sunday Times journalists were followed, but none led their "shadows" to Vanunu's hotel.

Finally Nick Davies telephoned a journalist friend, the editor of a Sunday paper, and actually found out the name of the hotel where Vanunu was staying. Davies passed it on to me, and I relayed it to my superiors in Israel. Now, with Mossad fully aware of Vanunu's whereabouts, a plan was put into action, but without the knowledge of Mossad Director Nachum Admoni. The manner in which Vanunu was kidnapped has been well documented, except for one fascinating aspect -- the true identity of the beautiful siren who lured him to his fate.

Vanunu met "Cindy Hanin Bentov" one evening while walking through Leicester Square. They started chatting, and she suggested they go to a pub for a drink. She met him two or three times in between the interviews he was giving to the Sunday Times, and during one of their dates she told him about an apartment she had in Rome. She invited him to come with her for a visit. The offer was too tempting to refuse.

Vanunu told the Sunday Times he was going away for a long weekend. When he arrived at the Rome apartment, three Mossad agents were waiting. He was grabbed, given a knockout injection and pushed into a large crate. Then the crate was taken to an Israeli ship and loaded on as diplomatic cargo, which meant the authorities could not inspect the container.

Once the ship was on its way, he was brought out of the crate, handcuffed, and taken to a guarded cabin. As soon as the vessel arrived in Ashdod in Israel, a colonel in the police presented him with a formal arrest warrant on security grounds. Even though an Israeli Air Force 707 could have flown Vanunu from Britain's Stansted Airport to Tel Aviv, Mossad had been asked by MI-5 not to kidnap him on British soil because this would have embarrassed Prime Minister Margaret Thatcher.

When Vanunu did not show up in London after his weekend away with Cindy, the Sunday Times decided to run with what it had, along with the photos, on October 5, 1986. The Sunday Mirror already had run its disinformation piece, but it did not have much effect.

The Vanunu revelations in the Sunday Times caused a world outcry -- and there was more to follow when he was brought to court and everyone asked how he had been taken back to Israel. He was able to give the world a clue, even though he had been held in solitary confinement. On one of his trips to court in a police van, he pressed the palm of his hand against the van's window. On it, he had written the number of the flight on which he had flown to Rome.

Certain members of the intelligence community approached Deputy Prime Minister Shamir, concerned that Peres might be using the Vanunu affair to blow open the Iran-Israel-Maxwell operations. Shamir wanted Vanunu killed, but it was too late.

Vanunu was sentenced behind closed doors to 18 years in jail for espionage and treason. The Sunday Times was happy because it got its story without having to pay a penny. And I heard all the fine details from "Cindy," with whom, it happened, I had worked at an earlier period.

***

The Vanunu affair in no way prepared me for what I was to learn from the two scientists who briefed me and the files I read in the Prime Minister's Office in preparation for my secret mission. Together, they gave me an overview of the history and scope of Israel's nuclear program. A summary of what I was able to digest follows. I do not present this without a great deal of thought. I do it because I feel it's best for the world to know all it can about secret weapons of mass destruction in every country.

The father of Israel's nuclear program in the mid-1950s was the then young Shimon Peres, who was director general of the Ministry of Defense under David Ben-Gurion, the state's first prime minister and defense minister. Peres believed that if Israel was to survive, it had to have a deterrent against the Arab countries, and the ultimate deterrent would be nuclear weapons. With this in mind, Peres flew to France in 1956 for a meeting with President Charles de Gaulle. His mission: to get a nuclear reactor for Israel.

De Gaulle, a good friend of Ben-Gurion's from their days in exile during World War II, quickly authorized the sale to Israel of a weapons-grade nuclear reactor with the technology for the development of a nuclear bomb. [1]

Israel's first nuclear reactor was set up on the Mediterranean coast in Nahal Sorek in the Yavne area. It was used for research with enriched uranium, which was imported from France. The idea was to see if a nuclear project could be handled with Israeli know-how -- and the aid of Jewish scientists brought in from the U.S.

After the initial research yielded positive results, Minister Without Portfolio Yisrael Galili, a leftwing powerbroker who directed the intelligence and security services, took upon himself with Ben-Gurion's blessing the cabinet-level supervision of the program. After tasting success in Yavne, within six to eight months he pushed through another nuclear plant in the Negev Desert near Dimona, some 40 miles northeast of Beersheba.

In a memorable speech after the groundbreaking for the super-secret Dimona nuclear plant, the usually subdued Galili stood up in a Mapai Party meeting and, with his chest proudly pushed out, declared, "The third temple is being built!"

This astonished other cabinet members, who at the time did not know what he was talking about. Galili continued by saying that the revival of Israel as a moral leader of the world was at hand and dared any of Israel's neighbors to attack.

Although the French had not given Israel the know-how, they realized Israel would create its own nuclear program and possibly achieve significant technological advances. Hence, the initial agreement that Tel Aviv would share information with Paris.

The prototype of a crude atomic device comparable to the Nagasaki bomb was developed by the early 1960s, and the first test was conducted in a joint Israeli-French operation in the Pacific off New Caledonia in 1963. With a French naval ship doing the monitoring, the relatively low-yield bomb was dropped from a French Air Force plane. The Americans and British thought it was a French test.

After the successful drop, Mapai Party leaders were so ecstatic that Finance Minister Pinchas Sapir announced at a convention that Israel's military power was equal to that of France.

The sharing of Israeli know-how, French equipment, and French money continued until the outbreak of the 1967 war, when the French accused Israel of starting the conflict. Israel didn't see it that way. It saw Egyptian President Nasser starting tensions by blocking the Tiran Straits, the waterway to the Israeli port of Eilat, for his own internal political reasons and to position himself better in the Arab world.

The Israeli government under Prime Minister Levi Eshkol had reconstituted into a wide coalition government in which even the rightwing "Begin party" -- then known as the Gahal Party -- was included. Moshe Dayan, the hero of the 1956 Suez campaign, became defense minister. Basically, all of Israel's war heroes were in power, and with a depression sweeping the country in 1967, they were all itching for a war to solve the economic problems. Nasser's actions were the excuse they wanted, and they hit the Arabs hard.

The war was one of the costliest, politically, that Israel ever had, even though the result was seen as a glorious victory with the Sinai, the Golan Heights, and the West Bank falling into Israeli hands -- a total land mass that was three times the size of the nation. Upset at Israel for resorting to war rather than attempting quiet diplomacy, de Gaulle slapped a military embargo on the state. He was also eyeing Arab oil. The row between the two governments meant that the nuclear cooperation came to a complete halt.

France wasn't the only nation to sever relations. All the East Bloc countries, other than Romania, cut ties as a result of the war. These countries had previously seen Israel, the home of the kibbutz, as a semi-socialist country and not as a military aggressor. Israel also tarnished its international image by refusing to sign a U.N. agreement not to test nuclear weapons, an agreement that it has not signed even today.

Israel found itself in a difficult position. France and the East Bloc had washed their hands of the nation, and military relations with the US. were not close. There were two very good reasons. First, in 1957 Mossad had plotted the bombing of the U.S. Embassy in Cairo to cast blame on Egyptian radicals and to force a break in relations between the U.S. and Egypt. The Israeli agents were caught, straining relations between the two countries. Then, in 1967, the U.S.S. Liberty, a "listening ship," was sailing off the coast of Egypt, when it was bombed by Israeli Mirage jets, killing 34 crew members, further distancing Israel from the U.S.

Out in the cold, Israel started to look for new friends with whom it could develop its nuclear capabilities. South Africa was waiting.

The door to working side by side with the South Africans had in fact already been opened by Shimon Peres as part of his early plan to give Israel a nuclear deterrent. By 1959, there had been military cooperation between the two countries, with South Africa selling uranium to Israel, mined in South-West Africa, now Namibia.

The first shipment flown up from the south in 1959 was the seed of commercial El Al flights to South Africa and South African Airways flights to Israel. The crates of uranium came through as agricultural equipment, but later the whole nuclear trade with South Africa was carried out under the guise of machinery and parts to be used for the water pipeline being built from the Sea of Galilee to the south. Under the cover of TAHAL, the government water corporation, tons of uranium were shifted, and the underground silos that were being built were also said to be for the water corporation. The reactor was the one I have mentioned in the Negev Desert, but there were also missile silos in the north built under the name of TAHAL Waterworks.

South Africa, of course, expected something in return for its cooperation. When Shimon Peres became the first Israeli official to visit South Africa in 1959, he promised the sale of arms from Israel Military Industries and a share of technology.

The first Indian Ocean nuclear testing on Israel's behalf took place in 1968 when a crude bomb with low radioactive fallout was dropped. The test was to see if the detonator mechanism worked. During that same year, South Africa and Israel signed a nuclear cooperation agreement. Israel would train South African scientists and share knowledge with them, and the South Africans would finance some of Israel's nuclear program and provide it with testing grounds in the Indian Ocean. Although Israel now had the Sinai, it was impossible to test bigger bombs there. And to test low-radiation small bombs underground was very expensive.

When South African financing started in 1968, the U.S. Congress began pressing Israel for details of its nuclear program and demanded to inspect its nuclear installations. The Israeli government, with Moshe Dayan as defense minister, caved in and agreed to show the Dimona establishment to American inspectors. Israel continued to insist its nuclear program was for peaceful purposes, like electricity. The French kept quiet. Having provided the reactor, they were not keen to incriminate themselves.

Prior to the arrival of the inspectors, the Israelis built a false control room inside the nuclear reactor building, with false panels and measuring devices. When the Americans examined it, they were fooled -- or they wanted to be fooled. The team saw a low-level thermal output incapable of military-grade chemical reprocessing. They reported that Israel did not have the technology or the know-how to develop bombs and that CIA reports of cooperation with the South Africans were wrong.

Testing continued with the aid of French scientists who had been working with Israel before the embargo and had now stayed on as private citizens, enticed by big salaries.

Between 1968 and 1973, 13 bombs were built, each with a destructive power that was three times that of the weapons that wiped out Nagasaki and Hiroshima. In spite of the difficulties, some tests were carried out in underground tunnels in the Sinai; the others were in the Indian Ocean. And if anyone questioned whether Israel would ever be willing to use its nuclear capability, the answer came in 1973 during the October War with the Egyptians and the Syrians. The Syrians penetrated the Golan Heights, and there was fear they would get close to Tiberias. So Moshe Dayan ordered the arming of all 13 nuclear bombs and put 24 B-52 bombers on standby. The U.S. had sold the old planes to Israel, not realizing what Israel needed them for. (Israel had not completed its missile delivery systems at the time and needed the B-52s for bomb drops.) Following the arming of the bombs, the Soviets and the Americans were warned to keep the Arabs at bay -- or else.

In response to this action, the Soviets targeted Tel Aviv, Haifa, Beersheba, and the port of Ashdod with nuclear missiles (though not Jerusalem). An alarmed President Richard Nixon announced an all-out military alert around the world and put U.S. forces on combat readiness. As it turned out, the stalemate was overcome, because a week into the war Israel reversed the Syrian advance.

Up until the 1973 war, Israel had enjoyed good relations with the black African nations. They had seen Israel as the underdog fighting the Arabs -- a situation that black Africans could identify with because they had their own conflicts with the northern Moslems. But the war brought this bond to an end. The black nations claimed that in crossing the Suez Canal, considered to be the line between Asia and Africa, Israel had actually invaded Africa. Slowly but surely, most black African countries cut relations, eventually spurred on by Libya's President Muammar Qaddafi, who promised monetary rewards to African nations that agreed to wave goodbye to Israel. As it turned out, the Libyan leader never paid.

However, to counteract the move by the black nations, the South Africans, who had diplomatic relations with Israel at a consular level, quietly proposed to Israel an exchange of ambassadors. Within months, in 1974, this was implemented by the Labor government of Yitzhak Rabin.

After that, Israeli-South African relations developed rapidly. Israeli scientists helped the South Africans develop their own bomb. Curiously, some of the French scientists who were working in the late 1960s in Israel but left when the 1967 embargo was announced, met up with their former Israeli colleagues in South Africa. They started working side by side again in Capetown.

The tests proceeded so well that by 1976 Israel had a missile delivery system that was capable of hitting the Soviet Union. A year later, when Prime Minister Yitzhak Rabin was handing over office to the newly elected Menachem Begin, one of Begin's first orders was to target a number of southern Soviet cities, including Yerevan in Armenia and Baku in Azerbaijan.

Begin, conscious in his own twisted way of human rights, was unhappy about the relationship with South Africa, a country he regarded as a pariah. He found himself in a moral dilemma. While he felt that Israel had enough money and know-how to proceed alone with the nuclear program, he realized the need to maintain supplies of uranium from South Africa. Defense and military analysts also urged that the relationship continue.

Unwilling to involve himself personally, in 1978 Begin dispatched his first defense minister, Ezer Weizman, to Pretoria to meet Prime Minister P.W. Botha, who was also defense minister at the time. Even though Begin's intentions were to downgrade the relationship, Botha pushed for a wartime alliance between the two governments as the price for continuing nuclear tests. And to Begin's dismay, Weizman agreed with Botha.

After Weizman returned to Israel and reported back to Begin, the prime minister, who was never fully in control of Weizman, relented. It took two years to work out the military cooperation agreement. It was drawn up in the special assistance branch of the External Relations Department of the Israel Defense Forces/Military Intelligence. It was referred to as SIMWA, an acronym for the SADF-IDF Mutual Wartime Agreement, drawn up between the South African Defense Force and the Israel Defense Forces. The Israeli version was prepared by the branch head, Lt. Col. Shimon Lavee. The provisions of the agreement were that if either of the two countries was at war or in military operations and there was a shortage of materiel, it could request supplies from the other country, which would provide it from its own stockpiles. Another provision of the agreement was that there would be an annual meeting of the deputy chiefs of general staff, to take place alternately in Israel and South Africa.

Between 1978 and 1979 the Israelis sold to South Africa 175mm artillery that could carry small nuclear devices. More than money was involved. Not only did the South Africans agree to invest in Israel's nuclear program, they also decided to give Israel a free hand to carry out tests in the Indian Ocean without South African supervision. In 1979 Israel carried out a number of such tests, one of which was detected by satellite because its big flash occurred during a break in the otherwise cloudy weather. The South Africans rightly denied it was theirs. To this day, the Israeli government has refused to comment on this test. It did, however, issue a blanket denial of Seymour Hersh's book, The Samson Option, which asserts that the 1979 flash was, in fact, an Israeli atomic device. By 1979, Israel had approximately 200 very advanced atomic bombs and nuclear artillery-175mm artillery shells. It also had missile delivery systems that were not all that developed but were capable of reaching the Soviet Union and Baghdad.

The go-ahead for Israel to develop a hydrogen bomb for testing was given in 1980 by the director general of the Defense Ministry, Mordechai Tsippori. By 1981, Israel had the H-bomb, having tested it in the Indian Ocean. In that year, the count was more than 300 atomic bombs stored in silos -- the structures had again been built by TAHAL, the water company -- and more than 50 hydrogen bombs. The fleet of B-52 bombers had also increased somewhat.

A tactical atom bomb program had also started, under Defense Minister Ariel Sharon. Israeli scientists designed a low-yield, low-radiation atom bomb, very effective for the battlefield. But the supplies from South Africa of the necessary metals and related chemicals were only enough for experiments. The South Africans said they would provide more, as long as Israel promised to sell them this bomb.

However, between 1985 and 1988, Israeli-South African relations deteriorated. In part, this was because of the gradual renewal of relations between Israel and the black African states. More importantly, it was because South Africa began to sell conventional equipment and missile technology to Iraq. In 1988, Israel pointed out that the Iran-Iraq war had stopped, so there was no need to help the Iraqis, but all requests fell on deaf ears in Pretoria. This rebuff brought about a complete breakdown in Israeli-South African military relations.

The immediate result was that Israel had no place to get the vital minerals and chemicals it needed to move its tactical bomb into mass production. Three critical, and rare, minerals -- uranium, titanium, and molybdenum -- and two even rarer chemical compounds -- heavy water (deuterium oxide) and tritium -- could, as it happened, be found in Peru. [2] So my first assignment for the Prime Minister's Office was to travel to Peru to try to arrange their purchase.

_______________

Notes:

1. Ironically, in the mid-1970s the French were to sell a reactor to Israel's enemy, Iraq.

2. Heavy water and tritium are usually produced in a laboratory; they can be found in nature, I was told, in areas containing certain radioactive ores. Norway is also known for this phenomenon.
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Re: Profits of War: Inside the Secret U.S.-Israeli Arms Netw

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14. The Revolutionary

MY WEDDING TO Ora took place on March 13, 1988, as scheduled -- much to Ora's relief -- and ten days after our honeymoon in the Blue Nile area, I was ready to fly on my first mission for the prime minister. It was filled with risks. The minerals could only be found in an area in Peru that was in the hands of a group known as the Shining Path, which had a formidable reputation as a Maoist terrorist group that dealt in drugs.

As I flew from New York to Peru, I wondered just what lay in store for "Professor Ari Ben-Menashe." My credentials had gone ahead of me. I was going to apply for a position to teach about the Middle East at the University of San Cristobal de Huamanga at Ayacucho. It was an important "target." Many years earlier, Abimael Guzman Reynoso, founder of the Shining Path, had been a professor of philosophy on its faculty. Although Guzman had been "underground" since 1970, most of the professors at San Cristobal University were members of Shining Path. And most of those who weren't belonged to the Communist Party of Peru.

Guzman was legendary, considered by his followers to be the fourth sword of Marxism after Marx, Lenin, and Stalin. In 1980 he had proclaimed the armed struggle against the capitalist government in Lima, and since then the Shining Path had grown into a powerful force. As a result, the whole department (region) of Ayacucho had been declared under martial law by Peruvian President Alan Garcia.

From Lima I took a plane to Ayacucho. The aircraft was filled with women in bright Inca clothing clutching live chickens and old men with boxes tied up with string. But the passenger who sat next to me was a distinguished-looking, well-built man in his late 40s who asked me in English who I was and what I was doing flying to Ayacucho, a military zone closed to foreigners.

He continued to press me, asking if I'd been accepted at the university -- in fact I had had no response to the application I'd sent -- and whether I had a license from the military government. I told him I was going to talk to the officer who was head of military operations in Ayacucho, Col. Rafael Cordova, in the hope that he would help me stay in the region.

"Well, that's most interesting," said my traveling companion. "Because I am Col. Cordova."

I couldn't be sure whether he was or not, but I told him I was from Israel and would like to teach at the university and write a paper about Shining Path.

By the time the plane landed, I was convinced that the man I had hoped to meet was sitting right next to me, and that this was no coincidence. He agreed to talk to me further after our arrival. When the plane touched down at a small airfield on a mountain plateau, it was immediately surrounded by soldiers. Apart from the airport and the town of Ayacucho itself, the whole region was controlled by Shining Path. The government was taking no chances of losing a plane to the movement.

The secret police were carefully checking IDs, but Col. Cordova told them to take only my passport details and let me through. He wanted to talk to me some more. I took a taxi to the Thrista Hotel -- a holdover from the days when visitors were allowed in the region -- and arranged for the colonel to see me later. I realized that whatever calls I made from the rather pleasant room they had given me would be recorded. So I phoned Ora and asked her to call my "doctors" and tell them I had arrived in Ayacucho.

I then made my way to the university, where I asked to see the rector. His secretary went into an inner office, then returned and asked me to wait for 20 minutes. She started chatting to me about how she represented Amnesty International, but suddenly changed tack and started talking about the visitors Ayacucho had had.

"Many of them are intelligence officers trying to find out what the Shining Path is doing," she said matter-of-factly. "They never find out much."

"Nobody tells them anything?"

"No, not that. They just get killed."

The rector welcomed me warmly, and, on presenting my academic credentials again, I explained I would like to teach and write a paper about the Shining Path. He said he saw no problem, except that I would have to obtain a permit from the military.

"I'll be honest with you," he said. "We don't like them. But they have to approve of your being here. If you stay without their permission, they'll take you away and we'll all be in trouble."

I asked why he was ready to accept me so quickly.

He shrugged. "I see your papers and you can prove yourself. If you are good at giving lectures, you can stay; if not, you can leave. If you're an intelligence officer, from the CIA, from Israel's -- whatever the hell their name is -- that's none of my business."

I was given a letter of appointment, and it was agreed I'd start teaching the following morning. My interviews for the day were not over, of course. Late in the afternoon, Col. Cordova arrived at the hotel. He came straight to the point. "If you're an intelligence officer trying to penetrate the Shining Path, don't bother. The Peruvian military has its own intelligence. We don't need help, whoever you may or may not represent."

I realized that what I had to say next could have resulted in my being shot. I knew he carried a gun under his suit jacket, and I was to find out later just how capable he was of using it. But I had been briefed on what to say back in Israel.

"Colonel Cordova, please excuse me, but I am going to tell you one thing. I am going to stay whether you like it or not."

His reaction was a loud belly laugh. "Oh yes?" he said. "Perhaps you'd like to explain."

"Let me remind you about the three Stingers."

His face hardened. You could feel the atmosphere change.

"We have information," I said, "that you personally got three Stinger missiles off an Aeroflot plane in Lima and sold them to the Shining Path. A lot of people in Israel know about this. And I want to stay here."

He glared at me. "Are you trying to blackmail me?"

"No, colonel. I'm just telling you how much we know about you. And you had better make sure I am kept happy and alive. All I want to do is teach at this university, and I promise you there will be no subversive activity against the Peruvian government or military."

"You're very persistent. By the way, how did you know about the Stingers?"

I wasn't going to tell him that. In fact, we had found out as a result of a "friendly discussion" between Israel's second secretary to Lima and the Soviet Embassy's commercial attache.

It soon became clear to me that the colonel was going to give me a permit after all. In fact, he was going to get it within the hour. He picked up the phone, asked the operator to connect him with a number, and rattled off instructions.

After he left, I went for a stroll around the town, which was dominated by the university, although it is said there are more than 40 churches there. Tourists fascinated by the Incas used to flock here up to 1980, when people started getting killed. After 1985 it was officially closed to tourism, which explained why so many of the 25,000 population stared at me, an obvious stranger.

Waiting for me under my door when I returned was my license to stay. I had hardly started reading it when I had a visitor, a police officer who told me that he knew I was a very important professor from Israel and was to be given the highest protection. In order for that to be effective, I was told I had to phone the police every day and tell them where I was. I told him he would not have to worry -- I'd be at the university if they wanted me.

***

My first lecture, in English, at the university went well. I spoke about the economic and social structure of the Israeli kibbutz, with which the students were able to identify because they were supporters of commune-style living. I was approached after the lecture by a man called Roberto, who was head of the English department. But he was more, which he readily disclosed -- he was a member of the national leadership of El Sendero Luminoso, the Shining Path.

"Aren't you afraid the military will pick you up?" I asked.

He shook his head. According to Peruvian law, membership in any organization was permitted unless the person was found carrying a gun or carrying out subversive activity. Members of Shining Path were followed, but at the same time there was "an understanding" between the organization and the military.

Roberto invited me to his home for lunch, where he explained that Shining Path had its own ideas about the way Peru would be after it took over. There would be a free market, but it would be based on a kibbutz-like commune, not the individual. It would also be based on the culture of the Incas, who had lived communally before the Spaniards came. If Shining Path had any ideological alignment, it was with the Albanian government, which had cut ties with the Soviet Union after Stalin died.

I asked Roberto if I could meet the movement's founder.

"You can't. The chairman is no longer alive."

But shortly afterwards, he confessed Guzman was alive. He said there were immense difficulties in getting me to see him, among them the problem of being tailed by the military.

He agreed to do what he could in return for a favor from me.

"Look," he said, tugging at his thinning locks, "I'm losing my hair. There's a medication in England that can help. Can you get it for me?"

I said I would try. This was becoming a very personal friendship -- which was perfect.

That evening I had another visit from Col. Cordova, who said he wanted to chat. While he was still there, Roberto arrived with a man who introduced himself as Marcus, an English teacher and a member of the Communist Party.

I gestured from the colonel to the new arrivals. "I assume you guys know each other?"

Roberto stared at Cordova with disgust. "Yes," he said, "this is the man who murders peasants."

Cordova rose and held out a hand, but the gesture was not returned. I spent several minutes breaking the ice, saying how nice it was that it had taken an Israeli to bring them together. I ordered coffee, but Cordova remained ill at ease. He said he had to leave and as he made his way out, Roberto called, "Don't kill any more peasants."

The colonel threw him a false smile. "We try to protect them from you guys."

Several days later, after I had given more lectures, I flew to Lima and called Nick Davies in London. He thought I was mad when I asked him to send a bottle of the hair lotion Roberto had requested, but I knew how important it was for public relations. Davies mentioned that a magazine photographer we knew was currently in Lima staying with a journalist named Barbara Durr. He told me to check on her through Israel -- I might find her useful.

I found out through Tel Aviv that she was a stringer working in Peru for the Financial Times of London. That evening, after calling the photographer, Peter Jordan, I had dinner with him and Durr. I explained I was teaching at Ayacucho, and he mentioned to her that I had worked for Israeli intelligence until I was fired the year before. She seemed fascinated, and the three of us chatted on for hours. She was clearly a very smart woman, and I knew she might be useful to me sometime.

***

Back in Ayacucho, Roberto told me, "You have your wish."

The date and time was set for me to go to his home. Several days later, as instructed, I went to his home, where I was led to a van and asked to get in the back. There were no windows. I sat there, crashing around, as the vehicle hit pothole after pothole. At one stage we stopped at the back of a house where I was asked to climb into another van, also closed. It was two hours before we came to a halt.

I was led into a farmhouse, which was guarded by a number of men clutching Kalashnikovs. In the living room a balding man who looked like a college professor stepped forward. In his '50s, he was of average height, somewhat chubby, and was wearing a sports jacket with an open shirt and no tie. He did not smile as he introduced himself as Abimael Guzman.

"For a dead man, you seem very much alive," I said.

He laughed. It was the laugh of a confident, charismatic man. In his eyes was a calm, sharp look. Guzman was clearly very intelligent -- and suspicious. "Who are you? CIA? Mossad? KGB? Whoever you are, you are lucky to have come so far and still remained alive."

I told him the truth -- that I was a special consultant on intelligence with the Israeli Prime Minister's Office and that I would like to conduct business with him.

Guzman shook his head, bemused. "You come to Ayacucho, Roberto sees you with Cordova the murderer, and now you tell me you are an intelligence officer from Israel. We were informed by our contacts in Sweden, and they are looking into your identity. And you know that if you don't check out, we're going to kill you."

Despite the Shining Path's violent reputation, I wasn't frightened. Guzman had delivered the warning with a twinkle in his eye. I didn't take it seriously. To tell the truth, I was enjoying myself. After years of big-money Iranian arms deals, this was fun. I'd read books, of course, about heroic revolutionaries like Fidel Castro, Che Guevara, and Ho Chi Minh. But here I was, seeing a revolution firsthand at the grassroots level. It was a rare opportunity.

Guzman ordered coffee and talked in a friendly manner about his background. He surprised me right away by saying he had Jewish blood. He was the son of an Inca maid in a household of affluent German Jews who had emigrated to Peru from Europe in the 1920s. She was impregnated by the husband, who did not have any children by his wife. When the wife found out about the pregnancy, the maid was driven out.

Guzman's father died before he was born, and his mother died in childbirth. His Inca grandmother then took him to his father's widow, and she agreed to raise him. She sent him to university in Sweden, but once his studies were over, he felt compelled to return to Peru. He began teaching his own philosophy, a mixture of Inca and kibbutz ideology.

I left the initial meeting impressed by Guzman. He had a magnetic personality and was very well-educated and thoughtful. While he had a tendency to launch into passionate, self-righteous diatribes, he also had a sense of humor.

I spent the night at the farmhouse and was taken back to Ayacucho the next day. After a week of teaching, I made a short trip to Lima. On my return to Ayacucho, I was taken back to Guzman's house, again going through the elaborate security precautions.

"You check out," Guzman said. "What do you want with us?"

I told him about the purpose of my mission -- to secure the purchase of certain minerals and compounds that we believed they had previously supplied to the French through a broker in Lima named Richtmeyer. I explained that the substances were needed for Israel's nuclear development program, to be used for a tactical battlefield weapon. Coupled with a peace treaty, it would be the best defense Israel could have.

Guzman eyed me skeptically. "What's in it for the Shining Path?" he asked.

"Money, so you can help the Andean peasants."

"You have the right answers -- but what about arms?"

I shook my head. "Not possible. Peru is a friendly country. Israel won't supply your people with arms. But with the right amount of money, you can purchase them somewhere else."

He told me they wanted $10 million for starters. After the money was deposited in a bank account in Geneva, we could get down to serious discussion. However, he still questioned whether I was trying to set him up.

From Lima, I called Shamir's adviser, Avi Pazner, to tell him that everything was going well. I gave him a bank account number that had been passed to me, and Pazner told me that the money would be deposited. The plan was that four Cessnas would be placed on standby in Colombia to fly to an airfield in Peru that Guzman would later designate. These planes would fly out quantities of the substances to Venezuela. Colombia had been chosen as the starting point because if the planes were detected, the Peruvians would think they were on a cocaine run; many small planes flew coca leaves from Peru to Colombia.

Next I called Barbara Durr. I asked if she'd like to interview Guzman. She was very excited at the prospect of such a scoop being dropped into her lap, but I had an ulterior motive. I wanted her to interview Guzman to provide public proof to my superiors that we were talking to the right man, given the rumors that he was supposed to be dead. They wouldn't be too happy about laying out $10 million for a dead man.

Shortly after my call to Durr, I realized I was being tailed -- and not by the Peruvians. I talked to Nick Davies's photographer friend, Peter Jordan, and he told me that Durr had tipped off the Cubans about my contact with Shining Path. At the time, I found out, the Cubans were advising the Peruvian government in its campaign against the Shining Path. I didn't like being tailed, and I didn't like Barbara Durr going behind my back. I decided to call in the aid of the Israeli ambassador. A quick solution to the problem was found. The chief of the antiterrorism police would arrange for her to be arrested for being in touch with the Shining Path, and then we would get her out of police hands. When she was freed, she would be grateful and more than willing to help us any way she could.

At least getting her arrested might make her think twice about passing on information to the Cubans. While Durr was at police headquarters, and British and U.S. Embassy representatives along with foreign journalist association officials were demanding her release, I called on the police antiterrorism chief. He told me he didn't know what the scheme was, but he had been asked to let her go when I arrived. So she was freed, and I made sure that everyone knew who had secured her release.

That evening I called at her house, and she thanked me profusely. I then had to leave to meet Col. Cordova, who was visiting Lima. But he could spare me no time. He said he had to fly back to Ayacucho immediately because five of his officers had been killed in a Shining Path ambush.

"I'm going to teach those people a lesson," he raged. "I'm going to destroy them all."

''Are you crazy?" I asked. "You can't punish a whole village. What did they do?"

But he wouldn't listen. I raced back to Barbara Durr's house and begged her to call CBS radio, for which she also worked. I told her to get a story on the air about the ambush and that the colonel was planning to massacre a village in revenge. I reasoned that if it was broadcast, it might stop his actions. But CBS told her on the phone that if he didn't carry out the massacre, the story would be regarded as alarmist. It was never broadcast. Within days, I read in El Diario, the Peruvian newspaper associated with Shining Path, that dozens of innocent villagers had been slaughtered.

This incident shook me up. Because I was so close to it, ironically, it had more impact on me than the mass killing of the Iran-Iraq war, for which I bore a direct share of responsibility. I realized I needed a break, so in early April 1988 I flew back to Israel for about a week. Ora, heavy with child, was a wonderful, welcoming sight.

***

While I was in Israel, further preparations were made for transporting the strategic materials from Peru. We arranged for the Israeli intelligence logistics man to fly first to Colombia to hire the planes and then on to Venezuela to line up the airfields. The aircraft would be twin-engine Cessna Citations -- passenger planes -- with the seats taken out. Colombian drug dealers used them all the time without interference from the Peruvian government because this was one of the country's main sources of foreign currency, even if it did sometimes fall into the hands of Shining Path or the peasants.

We also planned to have an Israeli liner in port in Venezuela to pick up the substances after their arrival from Peru. Venezuela would give us no trouble -- the country's intelligence network had a close relationship with Israel.

When I arrived back in Lima in mid-April, Barbara was waiting for me at the airport, as arranged by phone. I told her that the Israelis, who had saved her from going to jail, would like her to do something for them. In fact, it wasn't all that tough a job -- she merely had to travel with me to Ayacucho because I needed the protection of a journalist. Things wouldn't get too hot with a newspaper representative around.

Barbara agreed to fly with me to Ayacucho. On our landing, the police greeted me, now a frequent visitor, but they stopped her. I told them that she was traveling with me, and they let her through. We took a cab to the hotel, and at exactly noon the Shining Path attacked the police station, leaving six officers dead. They announced afterwards through leaflets dropped in the square that this was their revenge for the village massacre and that there would be more vengeance killings in the future.

That evening, leaving Barbara in the hotel, I started walking to Roberto's house. He had asked me to be there at 8:00 P.M. Suddenly gunfire broke out. Amid shouts and screams from all directions, I threw myself down flat. Then, during a lull, I ran on to Roberto's house. I was furious and asked why he had wanted me to visit him when he knew my life would be at risk.

"We can't tell you about our operations in advance," he said.

This had been some operation. The Shining Path had taken over the police station altogether and had freed every one of the prisoners held there.

Suddenly all the power went off. In the darkness Roberto told me it was time to visit Guzman. When I pointed out that there would be a military presence everywhere, he said with a smile that it would take them two hours to get organized. His smile broadened when I handed him a package I had brought -- the prescription hair restorer Nick Davies had finally managed to get hold of in London through a balding friend.

After traveling in two vans to Guzman's place, I told the Shining Path founder the truth: that I'd like him to give an interview to a newspaper reporter, explaining there were rumors that he was dead, that I was being duped, and that I had arranged for my government to "give away" $10 million.

"I can't give an interview to a foreign capitalist newspaper," he said.

"But don't you want the rest of your money? I need some kind of proof that you are alive."

"Don't your bosses believe you?"

I told him they believed me, but the interview would help. Eventually, after a discussion about our thinning locks -- these fellows really had a thing about their hair -- he agreed to give an interview to El Diario.

Meanwhile he asked me for a few favors. He wanted the Israelis to buy a chain of five small newspapers -- the Ocho Group -- on the movement's behalf, and he also asked for medical equipment to be brought on the Cessnas that were coming in from Colombia. The equipment would be offloaded, and 200 kilograms of each of the substances would be put on board. It was then that he gave me the location of the airfields in Peru where the Cessnas could land. So the meeting ended on a satisfactory note.

Later I was told by phone that Guzman had a very close friend, Cynthia McNamara, a U.S. citizen, who was in jail in Lima, accused of taking part in a Shining Path attack. Cynthia, I learned, was a former hippie in her early 40s who had visited Ecuador collecting Indian art pieces and later traveled to Peru. In Ayacucho she had fallen in love with a handsome doctor named Enrico. She had also met Guzman and had struck up a good friendship with him. Then she had been jailed. What Guzman wanted now was for me to do something for her, perhaps through the Israeli ambassador. I made no promises.

With the landing strips now designated, the following Friday was arranged for the pickup of the minerals. The only problem I had was getting back to Lima yet again in order to phone the logistics man in Caracas to tell him what had been arranged. I also needed a good excuse to get away from the university. I had been away quite a bit -- and I had, after all, been taken on as a teacher.

Barbara provided the excuse. I told the university that my friend had sprained her ankle badly and I had to travel with her to Lima so she could get medical attention. We arrived in the capital a couple of days before the scheduled pickup and I made my call from a safe phone at the embassy. Then I phoned Roberto to confirm the arrangements.

"How are you going to manage taking the stuff off the ship in Israel?" he asked.

"That's our problem," I replied. "You just make sure it's delivered."

It was all trust. If one thing went wrong, the whole operation would collapse. I waited on tenterhooks at the Country Club Hotel in Lima, where I was staying. Finally I received word that the planes had arrived in Venezuela with the substances. It had all gone like clockwork.

The following Monday, while waiting for the flight back to Ayacucho, I saw the smiling face of Guzman peering out from the front page of the newspaper. As with the delivery of the strategic materials, he had also kept this part of the deal.

I bought a number of copies to take to Ayacucho with me -- as we were traveling on an early flight from Lima, these would be the first he would see. There was also good news for him about his friend Cynthia. Barbara had learned that only three days earlier McNamara had been released from jail.

My guilty conscience about taking so much time off from the university was relieved later that morning when we arrived back in Ayacucho. As we were traveling by cab from the airport to the hotel, gunfire burst out and the driver swerved into the curb. We threw ourselves flat against the seats. But the bullets weren't meant for us. At a roadblock ahead, soldiers had seen a machine gun in a car occupied by students, there had been an angry confrontation, shots were fired, and three students were shot dead. It was later announced that an indefinite strike had been called at the university. So I was out of a job ... if it was ever really a job in the first place.

My other work, of course, had to continue. More of the chemicals had to be bought, which meant further negotiations with Guzman. At his place, the discussions became tense. He tried to get a fortune from the Israeli government by asking for a house in a nice part of Lima, the newspaper chain, and $28 million. He backed up his demands by pointing out that, according to a physics professor at the university, with these substances, Israel was going to be invincible.

"It's worth paying up," Guzman said. "Your government is nothing but an arm of American imperialism anyway. That money is American, and we want it for the Peruvian people."

Sensing that I was about to argue again about his demands, he cut in, "You're a hard-nosed Jew." Then he paused before adding, "I didn't mean to insult you. I'm part Jewish myself. But above all else we're human beings. We are all one. We are all equal," he corrected himself.

He also introduced me to more of the philosophy of the movement he had founded. He had some interesting thoughts on equality, referring to Lenin and the relationship between men and women.

"As a result of Lenin, the Soviets frowned on marriage and encouraged sexuality. When Stalin took over in the '30s, countless numbers of homeless children were roaming around Soviet cities, without any family nucleus. So Stalin announced that the family was to be a socialist institution to protect its women. This is how our Soviet friends manipulated everything. We here in the Shining Path see that the real way is eternal love between one man and one woman forever. All right, if it doesn't work, you are allowed to divorce, but it is not something to be encouraged."

Apparently, in Guzman's idiosyncratic philosophy, communal living did not extend to sex.

"What is the big deal about sex?" he asked rhetorically. "I believe it should be one child per couple. Look at the homeless kids in Lima. It's horrible that their only hope is to be sold to foreign couples who can't have children of their own."

But how, I asked, was he really going to solve the problem? It was all right to talk about it, but what about practicalities?

He smiled softly. "We will start our calendar in Peru from the year zero. At that time everyone in Lima will leave for communes, and Lima as we know it will be erased from the surface of the earth -- it's such a horrible city anyway with its slums, no good water, no drainage systems."

I found this fascinating. These were similar to the naive, idealistic thoughts I had had when I was a teenager. Bring everybody back to one level and start again.

We returned to our negotiations. It was agreed that for a further payment of $18 million -- bringing the total, with the earlier $10 million, to $28 million -- Israel would receive another 300 kilograms of each of the substances.
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Re: Profits of War: Inside the Secret U.S.-Israeli Arms Netw

Postby admin » Tue Jun 09, 2015 3:45 am

15. The Judge

HAPPY WITH MY progress, I flew to London in early June 1988. I asked Barbara to join me because I was aware that anywhere along the way things could go wrong and I might need a witness. My sudden diversion to London had been on Prime Minister Shamir's instructions. Iran's defense minister, Col. Jalali, had requested a meeting with me. The last time I'd seen him had been with Robert Gates in Kansas City when the defense minister had sought assurances that arms to Iran would continue, despite the exposure of the Iran-contra affair. Since then, however, Israel had decided to stop the flow of arms to Iran because the war with Iraq had reached an uneasy ceasefire. Now Jalali wanted to start up another channel.

Accompanied by Barbara, I caught a taxi to a large house in Belgravia. London policemen stood on duty at the gates. Iranian security men patrolled the grounds. It was, in fact, a house owned by Col. Jalali. He was waiting, his face anxious. I introduced him to Barbara as "my friend Hussein," the pseudonym he used in London.

He led us into the lounge where other guests were assembled -- Jalali's wife, Mina; Jalali's aide and his wife; John de Laroque; and a German arms dealer, Werner Kruger, who was working with the Israelis. After pleasantries were exchanged, Col. Jalali and I went out to the garden and got down to business. He expressed dismay that the Iraqis were growing in strength -- thanks to the Americans. The U.S. was supporting the manufacture of unconventional weapons and chemicals in Chile, which were then being flown to Baghdad.

"If Saddam Hussein doesn't attack us again," said Jalali, "he'll turn his attention to Saudi Arabia or Kuwait."

Jalali handed me an official letter from the Defense Ministry of the Islamic Republic and asked me to pass it on to the prime minister. In essence, it pointed out Tehran's concerns about Iraq's supply of chemicals. But I had a request to put to him. We needed Iran's help in securing the freedom of three Israeli soldiers being held in Lebanon.

"We'll be glad to help," said Jalali, "but we'll have to take the arrangement further. I'm going to have to show the Revolutionary Guard that we have got something out of Israel in return -- even though we're already asking for your help in stopping the chemical supplies to Iraq."

"What do you have in mind?" I asked.

"We need three C-130s, and we'll pay for them, of course. I'll tell the radical mullahs that we're getting one plane for each soldier. You get us these planes, and we'll get the soldiers out."

The business end of our meeting concluded, we strolled over to the barbeque, where meats were cooking. Later, as a farewell gesture, each guest was given a gift box of pistachio nuts.

***

I arranged to meet Barbara in Lima and then flew by myself to Israel. In El Al's first-class lounge at Heathrow Airport I met by coincidence Gen. David Ivry, director general of Israel's Ministry of Defense. He was basically a Labor Party man, but I nevertheless mentioned to him the question of the C-130s because he would learn of the Iranian request anyway. He was not very encouraging.

"You realize, of course, that Prime Minister Shamir will not be able to arrange this on his own," he said. "He will need the support of the Labor Party in the coalition, too, because of the complete shut-down of all arms to Iran."

At Shamir's office the following day, I gave his adviser, Avi Pazner, a full briefing on the arrangements with Guzman. I was told the extra $18 million would be paid into the Swiss bank account and money would be authorized for the purchase of the newspaper chain and a house for the Shining Path in Lima.

However, I felt I should discuss the issue of the C-130s with the prime minister himself. Pazner arranged it.

"Israel owes you a lot," Shamir told me when I entered his office, accompanied by Pazner. Directing me to the guest sofa, the prime minister sat behind his desk, his tiny body lost in a huge leather chair, his large head appearing out of proportion. The office was expensively decorated with stylish leather furniture and a coffee table at which Shamir entertained his guests. On his desk was a small Israeli flag, while on the wall were pictures of David Stern and Vladimir Jabotinski, who founded the militant Zionist Revisionist movement which had such an important role to play in the establishment of the State of Israel; and Theodor Herzl, founder of the political form of Zionism and more popularly known as the socialist father.

I told Shamir in detail about the Peruvian situation, and he was happy about how little money had been spent.

"We were expecting to spend $50 million up to this point," he said. "You have my blessing to continue to do whatever is necessary. And I appreciate the time you are giving up when your wife is expecting a baby at any moment."

I then produced the letter from the Iranians and pointed out the verbal request for C-130s. Shamir read the letter asking Israel to help with more arms and to try to stop the chemical weapons from Chile, then placed it carefully back on his desk.

"I'm not going to answer this officially," he said. "We have an agreement with the United States not to continue to supply arms to Iran at this point." I was aware of this. Earlier that year, after the Iran-Iraq war came to an uneasy halt, Robert Gates, representing the U.S., and Avi Pazner, representing Israel, had reached a secret agreement that neither country would supply the Iranians. It also said that the U.S. would try to stop the chemical weapons going to Iraq. But as I was to learn, neither country abided by the agreement. "Please tell your Iranian contact that I have received the letter and it is being considered," said Shamir.

I wondered whether this meant he was turning down the request for the C-130s. If that were the case, the soldiers would have to remain in enemy hands in Lebanon.

He appeared to read my thoughts. "Regarding those C-l30s," said the prime minister, "go ahead and make the arrangements. You have my blessing in this affair."

I had to return to Peru, but I was determined to spend some time with Ora. It was June, and although it was very hot, those days together were magical. We traveled to the Dead Sea, and as she stood on the shores and looked out across the water, she looked fabulous, glowing. Then we went north to the Sea of Galilee, where we spent the night. I put my hand on her stomach and felt our baby kicking. And back in Jerusalem, after an ultrasound test, they told us we were going to have a girl. I was over the moon.

But something was on Ora's mind. I asked her what the problem was.

"Who is Barbara?" she wanted to know.

My heart leaped. There was good reason for Ora to be suspicious. What had begun as insurance for me had become a friendship and had now drifted into something more intimate. "How do you know about her?"

"Every time I've called you in Peru she's answered the phone."

"She's around because of work," I said. "An American journalist working for a prominent British newspaper. She provides protection for me -- insurance." I felt like a louse as I said it. But Ora accepted my explanation -- or so I thought at the time.

Five days later I took the Lufthansa flight from Tel Aviv to Frankfurt. Col. Jalali's aide, a soft-spoken man with a small goatee, was waiting for me in the lobby of the airport hotel. Over dinner, I explained that the letter requesting more arms had been passed on to the prime minister and would be considered in the cabinet. In the meantime, I said, we were ready to move on the C-130s.

"How much are you asking?" he wanted to know.

I'd been given no briefing on the price of the aircraft. I plucked a figure out of the air, based on my previous experience of Hercules sales: $12 million each.

"You want $36 million and the soldiers for three C-130s?"

"No, we want $36 million for the planes. But we also want the soldiers back." Israel would not be put into a position where it could be seen to be giving arms for hostages' release. Other governments might do that, but it was not our policy -- at least not publicly.

I gave him two bank-account numbers with the request that $18 million go into each. The payment would take about ten days. He promised to do his best to get the soldiers freed.

"Are you also interested," he asked, "in getting any American hostages freed?"

"That's not Israel's business. But if you can manage to get some released, we'd be happy."

I returned to Peru in early July, and did some house-hunting on behalf of the Shining Path. I found a fantastic mansion with a pool and nine servants. I made no commitments to the man who showed me around, Enrique, who was selling the property for his mother. The family also owned the Ocho newspaper chain, which was perfect. I would have to speak to Guzman, of course, and I wondered what he might make of the house and all its trappings.

Enrique suggested that I meet a friend of his, who turned out to be the Peruvian minister of finance. He wanted to know why I was investing in Peru in such an unstable political situation.

"The market is low," I said. "And one day it will go up."

"That's reasonable thinking," he said thoughtfully. "But under a Sendero government, it will be worthless."

I flew to Ayacucho, and, that evening I went to see Guzman, who told me that arrangements had been made for a Peruvian businessman to receive the house and the newspaper chain once Israel had paid for them. And he had good news for me. I could call my logistics man and tell him that Friday had been set for the next airlift of the materials. That was only four days away. If I traveled back to Lima to make a safe call to Israel, they would not have much notice. I decided to chance a call from the Ayacucho hotel.

From my room, I asked the operator to connect me to Jerusalem. When Ora answered, I told her to call Avi Pazner and simply tell him it was the same plan for this coming Friday. Then I hung up. Half an hour later I received a call from the logistics man in Caracas. He just asked whether it was Friday; I confirmed it, and hung up again. I had to take as few chances as possible.

I went back to Lima and, on July 12 and 13, made all the arrangements for the purchase of the house and the newspapers -- $400,000 for the house and $2 million for the newspapers. I need not have bothered. The Shining Path leadership changed its mind, deciding that to base some of its key people in Lima at this stage would be too dangerous. In the volatile political atmosphere they would be easy targets for the military.

With this shipment on its way, I planned to leave Peru. But the Israeli scientists, evidently considering that they might not get another opportunity to stockpile the necessary substances, had decided they wanted another 500 kilograms. I was instructed to get it in the works before I left. I phoned Roberto and told him I needed another shipment right away. This was arranged, again following the now familiar routine.

***

With this final shipment on its way to Israel, I flew back to Jerusalem -- in time for the birth of my daughter Shira on July 22, 1988. I remained with Ora through the birth at Hadassah Hospital. I was overwhelmed. Right then, Lima, the Shining Path, Col. Cordova, and Barbara all seemed a long way away. I felt I had left the dangers of Peru behind me. The mission had been successful, and Israel could continue its bomb program.

Two days after Shira's birth, I was shocked to hear my next orders. There had been a miscalculation. The scientists had blundered. They decided they needed another 50 kilograms of one of the metals, and I had to return to Peru to make the arrangements.

I returned to Lima in early August. I had phoned Barbara and she met me at the airport. Roberto had also been told I was coming back, and had flown to Lima. We all met in the lobby of the Caesar Hotel and then strolled down the street. I explained why I was back.

"I'll help you," said Roberto. "I'll relay the message back to Ayacucho and let you know."

"Roberto, I don't want to hang around too long. It's getting dangerous for me here, and besides, I have a new-born daughter back in Israel. I'd like to know very quickly."

He promised to discuss the new request with "the boss" in Ayacucho first thing in the morning.

After Roberto left, Barbara told me that the U.S. consul general, Donna Hamilton, wanted to speak to me. I went to her office immediately. A very gracious woman, she told me that she needed my help. Cynthia McNamara, the American woman, had been rearrested on August 2, because a judge in Cangallo, a small village in the Andes some 40 kilometers from Ayacucho, wanted her extradited to his jurisdiction. It was a district controlled by the Shining Path, with a heavy Peruvian military presence only inside the village, and the only way she could get there safely would be with a military escort. The consulate had tried to get a court order in Lima that would effectively detain McNamara in the capital, but it was not looking good.

The charge against her was that she had been involved in smuggling medical goods to the Shining Path. When a truck containing medical supplies had been stopped for inspection, three people had been shot dead. Among the attackers, it was said, was a foreign woman fitting her description, although there was no real evidence it was McNamara.

"This judge drinks quite a bit," said Hamilton. "If someone can get to him and talk him out of this...."

I knew what she was asking. Because I was able to travel in areas occupied by the Shining Path and also able to get a permit from the military to go on their base, where the judge's office was located, I was one of the few people who could do the job. I said I would see what I could do.

The following morning, over a late breakfast with Enrique, with whom I had become quite friendly, I mentioned I was planning to travel to Cangallo to see the judge. He shook his head.

"If the Sendero don't get you, the military will. And if they don't get you, you're still up against the village thieves, who will be after you for your shirt and your shoes. You should ask your professor friend to give you protection. It's his people who might end up attacking you."

"I don't really want to do that," I said. "I'm neutral in this war. I have nothing to do with either side."

I realized that Enrique was testing me to find out if I was a Shining Path sympathizer.

Accompanied by Barbara, I flew to Ayacucho where, after giving it much thought, I asked Roberto for safe passage to meet the judge. He assured me he would take care of things.

The following morning I asked a cab driver to take Barbara and me to Cangallo.

"You're mad," he said and drove away.

The fourth attempt to find a driver worked. I waved a $100 bill in front of him. There was no real road, he explained, and he would have to take spare tires and gas cans. Later that morning Barbara and I left for ... well, who knew what?

It was a painstakingly slow drive along a very bad dirt road with rocky outcrops protruding from the sparse vegetation. Occasionally we were stopped by groups of Shining Path members who let us proceed after looking at me. Somehow word had gone ahead that we were on our way. I had Roberto to thank for this.

By six in the evening, we reached a bridge at the entrance to the village. On the far side of the bridge was a military post. Soldiers stared in amazement at the taxi rumbling along toward them. They raised their rifles as we approached. This time I produced a letter I had obtained in Lima from Col. Cordova, who had agreed to assist.

The judge, I had been told, could be found at the military barracks, but when we arrived there and introduced ourselves to the commander, we were told the judge would not be back until the morning.

"He's investigating a massacre," said the commander, a captain. A few more casual questions elicited the information that the judge was looking into the massacre I had tried to stop Col. Cordova from committing earlier that year.

We found a small pension in the village and treated ourselves to one room and the driver to another. We dined on rice and beans by candlelight, because there was no electricity.

In the morning we met the judge in his office. When I explained I had come on behalf of Cynthia McNamara, and he found out I was not a lawyer, he declared, "I can't talk to you." Then he thought about it a moment and added: "Actually, you can act on her behalf because, under Peruvian law, anyone can defend someone else in court."

The judge, a good-looking, informally dressed man in his mid-30s, explained that McNamara was wanted in his court for subversive activity -- aiding and abetting terrorism. He seemed very agitated, walking back and forth. He made a few phone calls, and shortly afterward a group of antiterrorist police arrived. He relaxed then and got out McNamara's file. As I glanced at the police, I wondered if he felt I had come to threaten him.

"A pretty girl," he said looking at her photo. "I would have liked to meet her, but they took her to court in Lima. I don't want to try her again; that might be double jeopardy. And I think the evidence is inconclusive. I'll rescind my order."

I was surprised at the quick decision and asked him if I could carry the papers documenting his decision. I was also interested in finding out more about the massacre, and as I started asking, I put three bottles of Johnny Walker I had brought with me on the table.

He looked taken aback, but I insisted they were for him as a friend. Then I pressed a little harder on the massacre, and he told me how he had been taken to the scene by the police -- not the military -- where he had been shown some 90 bodies in a mass grave. The military had blamed the Sendero; the peasants said it was the military.

"Sir," I said, "I'd like to give you a sworn statement about this massacre. I can tell you who was behind it."

I told him about Cordova's plans to get revenge for the death of his soldiers and how I had tried to prevent the tragedy by getting Barbara to send a radio report on his intentions. After my statement had been signed -- and witnessed by two of the police -- the judge said, "Rafael [Cordova] is my friend, but my friends can also make mistakes. Some peasants have also identified him, and for the past two days he has been in Lima. We have found some women who were witnesses to the killing of their husbands, and we've taken them back to Ayacucho in a helicopter. It's terrible that such a thing has happened in my jurisdiction. Whoever is responsible will be brought to justice -- the Sendero people, Rafael, whoever. I will see to it that justice is done."

By signing the statement, of course, I was putting myself at odds with Col. Cordova. "I wonder if we're going to live long enough to make it back to Lima," said Barbara.

As a start, we made it back to Ayacucho. I had to present the judge's rescinding papers to the court there, but it was five in the evening and everyone had gone home. So I found out where the clerk of the court lived and took the documents around to his house. He refused to accept the package, saying it could only be sent by legal mail.

I told him I'd be back in half an hour and went off in search of Marcus, the Communist Party member. I gave him $300 and asked him to spread it around to the clerk of the court and the president of the tribunal. It wasn't long before Marcus returned with the message that the senior president of the court would see me at his house immediately.

There I was told by the judge that at first he had thought it was illegal to meet someone after court hours, but he had consulted his books and discovered that in an emergency situation a good citizen can carry papers. Once they had passed through his hands, however, they had to be signed by two other judges and then sent to Lima. After further discussion, he agreed to call the prosecutor and the clerk of the court together right then. An hour later we were ready to proceed with a hearing into the case against Cynthia McNamara in the judge's living room.

The prosecutor said the case against her was strong -- two peasants had seen her with the group, but they didn't have any names. Acting as McNamara's lawyer, I said the judge in Cangallo had looked into the case and had found no evidence against her and that I agreed with his findings.

The tribunal president thought about things for a short time, then declared, "I accept the motion put by Miss McNamara's lawyer, good citizen Ben-Menashe. The case is dismissed."

Even so, as it happened, the Ayacucho prosecutor tried to bring additional charges against McNamara, and she was held in jail another ten days. The night of August 22, she was released, and, the next day, she left the country for Ireland.

Back in Lima a few days after my successful debut as a defense attorney, I was awaiting word from Roberto on the final shipment. There was soon shocking news: The newspapers were filled with a story about what was described as a Sendero attack on a military base near Cangallo, in which a judge was killed. It was the same judge I had met just a few days earlier and to whom I had described Cordova's role in the village massacre. I had no doubt who was really responsible for his murder.

Within 24 hours all hell broke loose. In the wake of more stories about the investigation into the massacre and the gradual turn of suspicion toward the military, Peruvian radio reported that two military helicopters in the Ayacucho area had been brought down by Stinger missiles. Twenty military personnel had died. It was clear to me that these were the Stingers Cordova had sold to the Shining Path. They, in turn, had used them to shoot down the colonel's helicopters. He should, of course, have foreseen that.

News of the Shining Path attack had broken shortly before Barbara and I were due to have dinner with Col. Cordova. It was an appointment I was determined to keep. We met in a fancy restaurant in Lima.

"There's a lot of news about," I told him. "And I have my thoughts on a few things." I didn't have to explain.

"Whatever you may think or hear, I am working in the interests of my nation."

"Yes, I'm sure," I said.

"Whatever I do is for the good of the people, so they will learn who is in authority. We want to build bridges and roads for these poor peasants, but if they go wild and become lawless we sometimes have to use force. Once they behave, we can start helping them. I'm sure you understand how we work. You guys kill Palestinians, don't you?"

"I don't accept your argument."

Our meal continued in this fashion. It was obvious he wanted to leave, but he was determined to have the last word. "What we do is not your business. Keep yourself out of it. In fact, I think it is time you both left the country. Guests are always welcome in Peru, of course, but I think it is becoming dangerous for you. These Sendero people are very angry at you."

"Oh?"

He didn't explain that, but it wasn't hard to imagine that whatever force might be used against me would be blamed on the Shining Path. Still, we had the Stinger deal on him, Barbara was with me, and anyone who killed us would have to face the wrath of the Israeli government. I was willing to take my chances.

I wanted to leave Peru, but I had to complete my work first. The next morning, Roberto called. As promised, there would be no problem in supplying the metal, but it would take three or four weeks. Although the same aircraft and airstrips would be used, it was important that our logistics man be in place in Caracas, because the phone call would come in at the last minute. I made the necessary reports.

My work in Peru was now over. I had just one more errand to perform before returning to Israel for a full briefing on my next assignment. I flew to London, where I met with Nick Davies to discuss the deal we had set up with the Iranians involving the three C-130s, an arrangement that had the full blessing of Prime Minister Shamir.

The Iranians had paid the requested $36 million into two accounts in the Cayman Islands, but it was necessary to brief Davies on the Israeli conditions. He was to tell the Iranian buyers that even though the money had been paid in advance, the planes would not leave Israel until they could assure us that our three soldiers would be released from Lebanon.

Happy that everything was in place, I returned to Israel. My experiences in Peru were to prove to be invaluable in helping me cope with the ordeals that lay ahead.
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Re: Profits of War: Inside the Secret U.S.-Israeli Arms Netw

Postby admin » Tue Jun 09, 2015 3:45 am

16. Never Again

PRIME MINISTER YITZHAK SHAMIR marched swiftly through the corridors of his office complex, two aides hurrying to keep up. For a small, elderly man with a seemingly frail body, he was now bursting with angry energy as he made his way to the suite in which he had called his crisis conference. It was mid-August 1988, and Israel was at its most vulnerable.

Infuriated by the chemical weapons, missiles, and nuclear technology going to Iraq from the West, Shamir decided to appoint a task force of intelligence officers to bring a halt to this supply. Shamir's chief adviser, Avi Pazner, headed the task force, which included two people from Military Intelligence research to provide background, two from Mossad operations to give operational support, and me, representing the Prime Minister's Office. Shamir wanted the matter handled directly out of his office because it involved Chile and the U.S., both friendly countries, and was therefore quite sensitive. I was to carry out whatever plan was decided upon. Shamir and Pazner were present for only parts of this August 1988 meeting. The rest of us were there the entire time.

The big worry was Iraq. The U.S. was not only refusing to listen to our concern, but was actually helping Saddam Hussein build his arsenal of unconventional weapons. Chemicals and the artillery cups to contain them were pouring in from Chile and South Africa, and Israel felt helpless to stop the flow. But it was clear that something had to be done.

On all our minds was Cardoen Industries, an arms production company with its main offices in Santiago, Chile. The owner, with 99 percent of the shares, was Carlos Cardoen. He had relinquished the other one percent to his new (and second) wife.

As we sat around a conference table in the prime minister's suite of offices, we were briefed on Cardoen's background. He came from an upper-class Chilean family of Italian descent. In his early 20s, after attending university in the U.S. -- where he received a degree as a mining engineer -- he returned to Santiago immediately after General Augusto Pinochet's 1973 coup d'etat to work for the government-owned Chilean Mining Corporation. As part of his job, he had to procure explosives for mining purposes, which turned out to be a lucrative business for him personally. Israeli intelligence officers established that various companies approached Cardoen to sell him their dynamite, and offered him commissions if he would buy it. So at a very early age, Cardoen found out what it meant to receive kickbacks.

He struck up a friendship with the mining corporation's chief engineer and turned it to his advantage. He resigned and started working as a private contractor after receiving assurances that all blasting equipment used by the Chilean Mining Corporation would be bought through him. His success as a dynamite broker set him thinking on a grander scale, and he decided to try brokering small arms. This time it wasn't such smooth sailing.

In 1979 Carlos Cardoen traveled to Israel and applied for a license to sell Israeli arms in South America. He made his approach to SIBAT, the Foreign Defense Sales Office of the Israeli Ministry of Defense. In theory, anyone exporting Israeli arms had to be issued a special license through this office.

SIBAT published a slick English-language brochure with color photographs on glossy paper detailing all Israel's weaponry that was for sale, whether it be a handgun or a tank. Having made a selection, a foreign country's agent would apply to SIBAT for an export license. The applicant would fill out a form and attach to it an end-user certificate from the buyer.

SIBAT's head, the deputy director general of the Ministry of Defense, in charge of foreign sales, would prepare a file on every application received, and his staff would then investigate if this material was available for sale, whether it was politically acceptable to sell, if the end-user certificate was for real, and if the broker was honest and trustworthy. This file would then be handed to the director general of the Ministry of Defense, who, in turn, would present it for final approval to a ministerial committee that would sit once a week, comprising the prime minister, foreign minister, defense minister, and finance minister. If they approved the application, it would go back to SIBAT, and the export license would be issued. Sometimes conditions would be imposed. This, then, was the official, formal way of buying arms from Israel.

SIBAT was also responsible for issuing broker licenses to former Israeli military personnel or others who wished to open arms-dealing companies in Israel with foreign branches. It could also issue licenses to foreign arms brokers, certifying that Israel recognized the licensee as a legitimate arms broker who could apply to Israel for weapons on someone else's behalf. It was this last type of license that Cardoen asked for when he showed up in Israel in 1979. As a reference, he presented a license issued to him by the Chilean Ministry of Defense.

In 1979, at the time of Cardoen's visit to Israel, ERD -- in charge of relations between Israeli Military Intelligence and foreign services -- was asked by SIBAT to check out Cardoen with the Chilean military attache in Israel. I had met Cardoen on that occasion. He struck me as an ambitious person who had had some education. But he didn't seem to be worried about scruples or to care particularly about the politics involved. A mercenary type, he wanted to become rich at a very young age -- and he was certainly on the way with a big office in Santiago and confidence to match.

This time, though, his confidence was temporarily shattered. Israel turned down his request. He was an unknown factor who couldn't show any experience, except that he had bought dynamite.

At the time he did not have any established political connections in Chile to our knowledge. If he'd had such connections, he would certainly have had a better chance. We later learned he had been walking around with one of SIBAT's catalogs in Chile, promising people he could get them anything that was illustrated. But Israel dealt only with professionals, with applications from known former generals, for example, who had connections with politicians. There was no way this young, unknown Chilean was going to get a license -- particularly as there was a suspicion that brokers like him had connections with Israel's enemies.

After being rejected, Cardoen flew directly from Israel to South Africa. There he obtained a brokering license from the government weapons manufacturer, South African Arms Corporation (ARMSCOR) -- but only after he sought help from the Chilean ambassador to South Africa, an acquaintance of his father's. He returned to Chile with this license, and with the aid of more of his father's connections, he obtained loans from Chilean banks. He then started work as an arms producer and broker. But how this part of his life generally worked was very hazy to us.

At our August 1988 meeting, Prime Minister Shamir listened carefully. "Confidence this Cardoen certainly has," remarked the prime minister, "but subtlety he lacks."

The rest of the briefing, which Shamir and Pazner only caught parts of, covered how Cardoen got involved in selling arms to Iraq and bringing us up-to-date on present developments. Sometime in 1982, according to Israeli intelligence, Cardoen was introduced through a person in ARMSCOR to the Iraqi deputy chief of the General Staff for Procurement in Baghdad. By early 1985 Cardoen was selling arms to Iraq.

He was doing this with the help of ARMSCOR and with the support of certain people connected with the US. government. One of them was Alan Sanders, who had links to the CIA. Sanders's cover was ITICO -- Integrated Technologies International Co. Cardoen, whose primary, and probably only, customer was Iraq, had been receiving the technology for cluster bombs from Sanders in the form of blueprints. In spite of a U.N. arms embargo against Chile, Cardoen, together with Chilean Military Industries, was producing these clusterbombs with a covert U.S. license. Israel wanted to get its hands on those bombs.

In late 1985, I had traveled to the United States on assignment and approached Alan Sanders. I told him I wanted to buy cluster bombs for Israel. Although we had been receiving them from South Africa, Israel wanted an additional arsenal of cluster bombs, especially the Chilean ones that were made with the latest U.S. technology. But we also wanted to establish if it was even possible for us to obtain them. I was well aware that at the time the sale of cluster bombs to Israel was prohibited by the U.S. -- a fact Sanders made clear to me. However, he drove me to the Virginia office of arms dealer Richard Babayan, an Armenian-Iranian CIA contract agent who had close contacts with Cardoen. Babayan, coincidentally, had also been a schoolmate of mine at the American Community School in Tehran 20 years before. Babayan explained to me that Cardoen would sell the cluster bombs to Israel, which told me everything I wanted to know.

"Cardoen," said Sanders, "will sell the bombs to anyone who pays him."

A few weeks later, an Israeli diplomatic crate was sent to New York from Santiago, and then loaded onto one of our regular military Boeing 707 flights to Tel Aviv. If we could get cluster bombs that easily, God knows what Iraq was getting from Cardoen.

During that year of enlightenment, 1985, Robert Gates, the CIA's deputy director for intelligence, was approached by Nachum Admoni, director of Mossad, regarding U.S. support for Cardoen. Admoni pointed out to Gates that the Israelis were very concerned about the support of Iraq, especially through Chile and South Africa. Cardoen by this time owned two plants for the manufacture of chemical weapons in Santiago. He operated a cluster bomb factory in cooperation with Chile's military and had a third chemical weapons plant in Paraguay. In addition, he was building a chemical weapons plant outside Baghdad.

The artillery cups, or shells, for Cardoen's Santiago-produced chemical weapons came from West Germany, procured for him by an Egyptian living in the U.S., Ihsan Barbouti. Barbouti had earlier provided equipment for chemical weapons to Libya and was known to the Israelis for arranging for former Nazi scientists to work on missile technology in Egypt in the 1950s. By the late 1950s, all these scientists had been eliminated by Mossad. But Barbouti escaped with his life by faking his death. In the early 1980s he resurfaced in the U.S. Some time after his involvement in providing chemicals to Libya, according to Israeli intelligence, he cut a deal with the CIA and started working on its behalf with Arab countries, basing himself in Texas and Florida.

During the August 1988 meeting we were reminded of how Cardoen would send the chemicals manufactured in Santiago and Paraguay, along with the German-made cups imported through Barbouti, to Baghdad by Iraqi Airways 747 cargo planes. The crates containing the chemicals and cups were openly visible on the tarmac at Santiago airport, with labels making it quite clear that they were for shipment to Iraq. Cardoen was using U.S. banks such as the Valley National Bank in Arizona to help finance his sales. He was also using a factory in Boca Raton, Florida, to get some raw materials for his chemical manufacturing. We also knew that while Alan Sanders had provided blueprints for cluster bombs to Cardoen, the Gamma Corporation in the U.S., a CIA cut-out, had sold the fuses for the cluster bombs to Cardoen.

By late 1986 Israel was expressing great concern about the arms shipments to Iraq, with Prime Minister Shamir threatening to go to Congress. So Robert Gates, now deputy director of the CIA, called a meeting in Santiago, the sole aim of which was to calm the Israelis. I described the gathering, which took place in my room at the Carrera Hotel, to the others at our August 1988 briefing at the Prime Minister's Office.

The participants at the secret meeting in Santiago were: Carlos Cardoen; Robert Gates; Sen. John Tower; Gen. Pieter Van Der Westhuizen, who had been chief of South African Military Intelligence, along with a representative of ARMSCOR; Gen. Rodolfo Stange, chief of the Chilean Carabineros (paramilitary police); and me. The representatives of Chile and South Africa produced a printed sheet identifying those weapons and other equipment that they admitted they had sold to Iraq. The list included artillery pieces, armored cars, tires, spare parts for military aircraft, and munitions, rockets, hand grenades, and firearms -- but nothing unconventional.

At the gathering Gates was quite clear. The United States, he said, wanted to maintain the channel of arms to Iraq. It had to try to pull Iraq into its sphere of influence through the sale of conventional but not sophisticated weaponry. Israel was being paranoid, he said, and he gave his assurance that Israel would not be hurt. It was also understood that the Israelis would continue to supply the Iranians, and the South Africans would supply the Iraqis, to Israel's dismay.

It was quite obvious to me that this meeting had been called basically to pull the wool over Israel's eyes. As was expected, Cardoen continued to supply the wherewithal for chemical weapons and the cluster bombs to Iraq. It was a continuing source of concern for Israel, and it led to frustration with the U.S. for not putting a stop to it. During 1987 Israel repeatedly asked the Chilean government to step in and halt the sales. Our pleas to President Pinochet went unheeded, as did several to the U.S.

All this added up to a frightening situation for Israel. Our most powerful enemy, Iraq, was being systematically built up with weapons of mass destruction by our so-called friends. And we were supposed to go along simply because Robert Gates had given us his word that it would be okay.

Yitzhak Shamir was not about to sacrifice the security of Israel on anyone's word, let alone that of an American CIA official. And so, the conclusion of our August 1988 meeting was that Israel had to take the matter into its own hands. I was instructed to go to Chile, contact Carlos Cardoen directly, and offer him a carrot. If he didn't go for that, I would make it clear what came next.

***

I arrived in Chile in September 1988. Soaring office buildings towered over old church spires as the airport taxi took me to the apartment that Barbara, who had obtained a transfer from her newspaper, had rented.

The contrast between the haves and the have-nots was extreme. There were middle-class neighborhoods with their well- appointed homes in the northern suburbs, and then there were the slums, well hidden behind trees and walls, so that visitors traveling from the airport to the northern suburbs wouldn't notice them and would gain a completely wrong impression. A visiting journalist once described Chile as floating away from South America and taking on a European feeling -- he was one of the many who have been fooled.

I remembered Chile well enough from my 1986 trip to meet with Gates and the others to know that you could sit in an open-air restaurant in the northern suburbs and watch kids going through the trash cans of the wealthy. I also remembered that there weren't too many Native Americans. The European settlers had solved the "Indian problem" by killing them; later Chile became one of the first "democracies" in South America. That "kill-off-the-opposition-and-then-we-can-have-a-democracy" theory applies even today.

In this atmosphere of paradox, I had arrived to try to stop one of the most feared regimes in South America from continuing its deadly chemical trade with Iraq. Thousands had died mysteriously in Chile because they had stepped out of line. My only weapons were words. I knew they had to be used carefully.

My first appointment was with Gen. Rodolfo Stange, the head of President Pinochet's Carabineros.

The police headquarters was a well-protected cement office block with barred windows. I was taken to the top floor and stepped out of the elevator to face a glass door, above which a security camera peered down at me. After walking along a red-carpeted hall and being led through several offices, I was shown into an enormous wood-paneled room with Persian carpets and windows that looked out over the city. An imposing figure stepped forward to greet me. Middle-aged, balding, and dressed in a green uniform with bars that signified his various roles in the junta, Gen. Stange had not changed since I'd last met him in the Carrera Hotel two years earlier. All that had changed was the increased number of disappearances and deaths linked to his name.

"Welcome back to Chile, Mr. Ben-Menashe," he said in good English. "I hope you have a wonderful stay here. Are you booked into the Carrera Hotel?"

"No, I've rented an apartment. I'll be around for a while."

There was a moment of stunned silence. His face reflected deep concern. He tried to cover it up.

"Aha -- so you will be our guest for a while. Of course, you are welcome. The weather is warming up, and I hope you enjoy Chile very much. I trust we will be able to see each other. Regard this as your second home."

He said how much he had enjoyed a visit to Israel, recalling in particular Jerusalem and Bethlehem.

"I'm sure the Israeli Embassy and your ambassador are aware of your being here?"

"General, I'm here on a confidential basis, directly empowered by the prime minister of Israel to inform you of his views about certain issues."

He frowned. "I can understand now why you are here. Do you have diplomatic accreditation to Chile?"

"No, sir, I carry my private passport as well as a diplomatic passport describing me as a roving ambassador for the Prime Minister's Office."

"It doesn't matter. Please don't regard what I asked as an impolite question. I was merely wondering about the status of your stay. I wondered whether you would be temporarily taking your current ambassador's place."

"Sir, are there any objections to my status here?"

"No, no, do not misunderstand me. You are most welcome. Everything you need will be made available to you by my office -- security, protection, transportation, you only have to name it. And of course you are welcome to stay for as long as you like. This is your home. It's not Jerusalem, but I hope it will be a good substitute."

He told me he understood I was tired and ushered me into an adjoining private reception lounge. He offered me food, and when I told him I was a vegetarian, he said, "Yes, of course, I remember."

Joined by the general's chief of staff, we were attended by uniformed, black-tie waiters. I started out by telling him what he already knew, reminding him of the meeting we had had in 1986 and emphasizing the danger that the sale of unconventional weaponry to Iraq posed to Israel. I also made it clear that we were perfectly aware that the United States government was backing the Chilean effort.

As I talked, going over in detail everything that he already knew about U.S. policy and why Iraq would be a watershed from the Israeli point of view, a secretary took stenographic notes. I told him that I had brought with me a letter from Prime Minister Shamir, addressed to President Pinochet, containing a personal plea to stop the trade with Iraq. Stange politely told me that "El Presidente" had a lot of problems and was extremely busy. A meeting arranged for me at 10 A.M. the following day, when the letter was to be handed over, had been canceled. But it was always possible to call his chief of staff, said Stange, and then the letter would be passed on.

I stifled my disappointment. There was nothing I could do. However, there were some pertinent questions I wanted to ask about the forthcoming plebiscite in which Pinochet hoped to gain support to remain president until 1997.

"General," I asked, "what are your feelings about the plebiscite? According to the constitution, if President Pinochet loses, there'll be elections. Do you think he'll run again?"

"Of course, we'll all be pleased if he does run. But at the same time we think it's time for a fresh candidate."

"General, are you a candidate?"

He looked at me for a moment, then smiled. "If Chile needs me as a candidate, I will stand. I will do anything for the motherland. I want to prevent unwanted political forces from taking over."

Seeing him in his uniform, and hearing of his ambitions, I was reminded of the films about Nazi generals I used to see as a kid. I explained that Israeli intelligence had tracked anthrax, mustard gas, and chemical weapons being shipped from Chile to Iraq. I even pointed out that as my plane was landing at the airport just a few hours earlier, I had noticed two Iraqi 747s sitting on the tarmac.

"But of course," he said. "We do have trade with the Arab world."

"You know and I know what is happening. It has to be stopped at any price. If it means Israel going to the U.S. Congress to stop it, if it means using our intelligence services to stop it, believe me, we will."

His jaw dropped. The most feared man in the country was not used to being threatened.

"I cannot control Cardoen and the Americans," he said. "He is a private person and the Americans are ... the Americans."

"General, you have to put a stop to this trade from your country. I'm sure you do not want to take responsibility for any Jewish children being gassed by your equipment."

He was really taken aback. He drew heavily on the fat cigar he had lit and took a drink. In the middle of our discussion, there was a phone call, picked up by his chief of staff.

"General," he said, "the president's chief secretary is here to pick up the letter."

I asked at that time if I could call my apartment to explain I would be late. Stange nodded toward the phone. I called Barbara and, making sure the general heard what I said, told her that despite his very busy schedule, Gen. Stange had been gracious enough to spare me his time.

When I hung up, he asked in a friendly tone, "You are here with a friend, or your wife?"

I told him she was the British Financial Times correspondent in Chile. I was with a journalist representing a very important newspaper which was not American. This of course was another veiled threat. He looked like I was sticking pins into him slowly. He took another sip of whiskey.

Pinochet's chief secretary entered the room, wearing a light brown tweed jacket with a white shirt, a dark brown tie, and dark brown trousers. With his dark brown shoes and dark brown belt thrown in, he definitely lacked color.

Looking at my options, I really had no choice but to hand over the letter. It was in a large white envelope embossed in the left-hand corner with the emblem of the State of Israel, the Menorah. Under the emblem in blue were the words: Prime Minister's Office. I opened my briefcase and handed it over. The secretary assured me it would be on the president's desk almost immediately. I told him that any response must not be made through the embassy, but through me. If I was not available, I said, the person to contact was Avi Pazner in Israel, who was aware of the situation.

As I prepared to leave, Gen. Stange invited me to his house for dinner the next day. But his chief of staff pointed out he had another appointment. "Cancel it!" he ordered.

Turning to me, he said, "I'll send a car to pick you up. And please relay my apologies to the prime minister of Israel on behalf of President Pinochet that he was too busy to see you, but I'm sure I'll be able to make it up." He added, "If there's anything you need, just say it, and it will be yours."

He offered me a lift home. I climbed into the back of a green military car with an official driver and the general's chief of staff -- both in uniform -- and I was taken back to the apartment on Calle Luz in the affluent suburb called Las Condes.

Barbara had bought a VCR. There was also a housekeeper who came with the apartment, with her own living quarters beyond the kitchen. I stayed up late that night watching a movie. In the middle of the night, when I had just fallen asleep, I received a phone call from Israel. It was 9:00 A.M. in Jerusalem. Avi Pazner wanted to know how things had gone.

I told him I had made progress, but the meeting with the president had been canceled. He told me to go to the embassy in the morning to talk on a secure phone. Arrangements would be made.

I overslept, and the second secretary at the embassy, who is also the Mossad representative in Santiago, called to say the safe phone system was at my disposal. I strolled to the embassy, which was close by. On reaching Pazner, I told him I had been invited to dinner at Stange's house. I pointed out I had not yet made my presence known to Cardoen.

"Be careful," said Pazner. "I don't have to remind you that you're on thin ice. But remember this is one of the most important missions you've ever had -- far more important than Peru."

I told him I would wait for some of the dust to settle before I called Cardoen. We were both sure that the arms broker would already have heard I was in town.

People have the impression that the life of a spy or any kind of government undercover agent is filled with glamour. I was playing diplomat on a confidential mission, but I'd certainly seen no glamour here. In fact, I couldn't help thinking about what I was doing in Santiago at all. I'd left my wife and newborn child behind, I was living with another woman, and I had a number of difficult confrontations ahead of me. Peru had been interesting; Santiago was oppressive. I called Ora and heard her say how much she missed me. And she wanted to know if I was still with "that woman" -- she wasn't sure about the relationship. And if truth be told, neither was I.

Stange sent a car for me at 5:45 that evening. On the way to the general's house, accompanied by his chief of staff, I noticed something interesting -- an Israeli Uzi beside the driver. We reached a street blocked by the Carabineros, but they waved us on. At the end of the road a huge house could be seen beyond its spike-topped metal gates. The guards let us through, and there was Gen. Stange waiting at the door, dressed in blue trousers and an open white shirt with rolled-up sleeves. I felt overdressed in my blue suit and maroon tie. My host was hardly dressed for formal dinner.

He introduced me to his wife, an attractive woman with a pleasant smile. Servants scurried around as he led me into the elegant sitting room. A large painting of the general and his wife, their faces close together, dominated one wall. "By the way, Mr. Ben-Menashe," said Stange, "I have three guests I'd like you to meet."

Into the room walked a good-looking, dark-haired man in his late 30s dressed in a blue suit, white shirt, and striped tie. His wife was simply beautiful, tall and slim, with black hair and green eyes, and elegantly dressed in a light grey skirt which came to just below her knees with a slit in the side. I recognized him immediately and guessed who the woman was: Mr. and Mrs. Carlos Cardoen.

We exchanged greetings, and then the third guest stepped forward. A touch on the plump side, she was nevertheless very attractive, with short dark hair and big eyes. She was introduced to me as Mrs. Isabel Bianchi, the wife of an air force colonel who had formerly been the chief of the Chilean U.N. contingent in the Golan Heights between Israel and Syria, and she spoke Hebrew. Her husband, it was pointed out, was now commander of Chile's air force base in Antarctica. A long way away.

It seemed that an interesting night lay ahead of me. We chatted about the coming plebiscite, and my hosts and fellow guests discussed how Pinochet wanted to stay in power for the rest of his life. But throughout the conversation I kept glancing at Cardoen. He had a smug look on his face. The unwritten message from Stange was quite clear. By inviting Cardoen to his house, the general was telling Israel: "I know this guy. He's my friend. See, he even comes to have dinner with me."

It was obvious the whole thing had been staged, but there were other aspects of the conversation over dinner that revealed their true feelings about Pinochet. They referred to him not as El Presidente, but as "the old man." Stange repeated several times that Pinochet was trying to work out ways he could remain president. I had no doubt that Stange would be happy to step into his shoes.

Once in a while a woman dressed in a business suit came into the dining room and called Stange away to take a phone call. One other person was getting a lot of attention from a woman, too. It was obvious that Isabel had been brought along as a match for me, and she was putting on a good show with her eyes and her smile.

Cardoen said, "Ari, I understand you are here as our guest for a while."

"Yes -- I have no immediate plans to leave."

He laughed. "Of course. Are you free tomorrow morning? Come to my office at 10:00 A.M. I'm sure you know where it is."

At 9:00 P.M., the general stood, apologized, and said he had to go to a very urgent meeting with the president over the security situation. "The president likes to have such meetings at night," he said.

Cardoen offered to drive me back, because the chief of staff had to stay with the general. It was all being played very smoothly. I sat in the back of his Mercedes 230E with Isabel. On the way back into town, Cardoen asked, "Do you know Santiago?"

"Sure, I've been here before. You remember we met in my hotel room at the Carrera."

"Yes, of course, but ... "

Isabel interrupted, "Would you like me to show you around town?"

"Why not?" I said.

"We can do it this evening."

She asked Cardoen to take her back to her place, but I said I had a rental car and I would drive. So they drove me back to the apartment parking lot. At the car, after bidding goodnight to Cardoen and his wife, I took off my tie and jacket and rolled up my sleeves in the style of Gen. Stange and asked Isabel where we were going.

"Vina del Mar, it's only two hours' drive away."

It was now 9:30. "Sure," I said, "let's go."

We took the highway heading west, chatting about the political scene and places she had visited in Israel. As we entered a long tunnel, illuminated with orange lighting, I suddenly felt a hand on my knee.

"I like you Ari," she said. Then she added in Hebrew: "Bo na'aseh ahava -- Come, let's make love. I've always admired Israeli men."

I drove on toward Vina del Mar, the playground of the rich. As we descended into the town the locals call the "pearl of the Pacific," I asked, "What about your husband?"

"If he catches you, he'll kill you. Then me. But don't forget, he's in Antarctica right now."

We pulled up at a hotel and went into the lobby for ice cream. Then we took a slow drive along the shore. It was a beautiful place. Little wonder President Pinochet's summer palace was located here. Shortly after midnight I suggested we return. I was playing it straight down the line. Isabel had other thoughts.

"Look," she said, "my husband isn't here, my two daughters are with my parents. Why don't we stay here for the night in a hotel?"

But I insisted. I could not afford to be sidetracked. She wasn't smiling as I turned the car around and took the Santiago road.

''Ari,'' she said, "I really like you. But I must say something. I don't believe you're safe. You're playing a dangerous game here. The ones who get hurt are the soldiers, not the generals. You're a soldier for 'General' Shamir. You really think you are going to stop these guys? How do you think you're going to do it?"

I knew that what I said was going to go straight back to Cardoen and Stange. I pulled no punches.

"If we have to kill every single one of them, we will. My life is not important. The State of Israel and its survival are."

"What about the Americans?" she asked. "They are supporting this business, you know."

"That's for my superiors."

It was two in the morning when we arrived at her house. I asked her how to get back to my place. She said she would drive her car and I could follow her.

"But first I want to change my clothes." We went into her home, and she brought out a tray of baklava. "There's a Palestinian here who makes it," she said with a grin. "I'm sure you don't mind who the cook is."

"No," I said, "I don't mind."

Isabel changed into jeans and a T-shirt. It was obvious she wasn't wearing a bra. Printed on the T-shirt was: "My parents went to Jerusalem, and all I got was this lousy T-shirt."

She came over to me and put her arms around me. I was physically attracted to her, but by now jet lag had caught up with me, and I was desperately tired. I extricated myself.

"You're a very attractive woman," I said, "but I have to go to bed -- alone!"

I followed her Mercedes back to the apartment, where I put my head through her window and kissed her goodnight. She handed me a business card. It read: Isabel Bianchi, analyst, Cardoen Industries.

***

The headquarters of Cardoen Industries were in a tall building adjacent to the Sheraton San Cristobal Hotel in a pleasant residential district on Avenida Santa Maria. Private security guards in the lobby checked my identity before I took the elevator up to another reception area.

A secretary led me to Cardoen's office, and the first things that struck me, more than the suave owner who greeted me, were the two large framed photos above his head -- one of President Pinochet, the other of Saddam Hussein. Cardoen showed me a seat and offered me tea and cakes.

Dressed in a conservative suit and tie, he appeared nervous, unlike the confident man I had met the night before. He got down to business immediately.

"I understand you Israelis have a contract out against me."

No wonder he was nervous. "No, that's not true. At least not at the moment. On the other hand, we do have a contract for you."

Before he could say anything, I added, "You have violated prior agreements with us. May I remind you of our 1986 meeting, when I was assured that there would be nothing for Israel to worry about. Since then, right up to now, you've been playing with fire. Not only do we know that you are supplying chemical weapons to Iraq, we are also aware you are providing a financial umbrella for various people to deal with Iraq."

Cardoen was well aware that I was talking about scientists working with Ihsan Barbouti, who were providing technology for nuclear devices to Iraq, and Gerald Bull, a Canadian scientist and aeronautical engineer who was working on a "super gun" for Iraq, artillery that could shoot payloads as far as you wanted with no need for missiles.

Cardoen stared at me, flabbergasted that I was hitting him so hard. His fists were tight. I repeated: "The Israeli state will not stand by while Jewish children are gassed."

The Chilean breathed deeply, then stood up and paced the room. "First of all," he said, "your information is not accurate. Second, Saddam Hussein wants peace in the Middle East. Third, you are the guys that have nuclear weapons in the Middle East; nobody else does. And I'm certain that Israel will use them first if war comes."

"You can bet your ass Israel will use them if any of your gas hits us. Iraq will be wiped out. And, Mr. Cardoen, so will you."

He turned on me angrily. "If you're threatening me like this, I don't want to talk to you."

"If you want to cut the conversation short, fine. But you may be interested in what else I have to say."

He shrugged. "Go ahead. But let's talk sense. You must remember that I'm executing U.S. policy. You know that. In fact, you must know that I have the backing of many Western governments."

I asked him for proof. To name a few names.

He was thoughtful for a few moments. Then he said, "Look, you must understand we are working for peace in the Middle East." Suddenly he started talking as a peace-loving soul who was arming the Iraqis and serving the Iraqi people against the evil Israelis who were out to get them.

"Cut the shit," I said and tossed a handful of pages to him. "Read this."

There were no letterheads, no signatures, nothing to identify who had written it.

He sat back and took a few minutes to study it. The carrot was dangling there before his eyes. While he read the papers, I asked him, "Where's the john?" I had absolutely no respect for this man.

When I stood to go to the toilet, I made sure I left my custom-made armored briefcase open on his desk. Inside, clear for him to see, was a map of Paraguay with a large arrow pointing to a big red dot where Cardoen had his main chemical plant. When I returned, he said nothing.

I explained that the papers I had handed him described a contract under which he could open a factory in Chile and produce Uzis, Galil assault rifles, artillery shells, and 51mm mortars under license from Israel Military Industries, and he would be licensed to sell those materials exclusively all through South America. We would even help finance the operation to help him set up the factories. He would also be a broker for all Israeli military equipment in South America. We were offering him millions of dollars on a plate, just to change his style of business.

"How times change," he said. "Remember how I once came to Israel begging for a license. And now this!"

I stared hard at him. "Don't push your luck too far, Mr. Cardoen."

"You realize," he said, "that I need a permit from the Chilean government -- but I also think this is a set-up because you guys are not going to abide by an agreement like this."

"Get your permit, do whatever you like. But I'm warning you that you have two weeks to think about it. You can tell your bosses in Washington, in Baghdad, and everywhere else that we're not just going to sit around and twiddle our thumbs on this business while Saddam Hussein does what he wants. You can also remind your bosses in the U.S. that we know the first thing he's going to do is turn on Saudi Arabia and the Emirates."

It wasn't the first time that this warning had been given -- Col. Jalali, the Iranian defense minister, had made it clear to Gates in Kansas City in July 1987 that these were Saddam Hussein's plans.

Our conversation was over. Before I left I broke the ice by asking, "By the way, where is Isabel?"

He laughed. "I'll tell your wife. But sure, she's around. I'll give her as many days off as possible if it will make your stay in Chile happier -- for her too. She's a nice girl, but she's having problems with her husband."

He called her in. She was all smiles and seemed unperturbed that I had turned down her advances the night before. "Lunch," I said, "is served at the Sheraton at 12 o'clock."

She laughed and said, "I'll come down with you now."

Cardoen showed us to the door: "You two love birds run along. I have to make a living." Despite his jocularity, I read the underlying concern on his face. You don't dismiss a clear warning from Israeli intelligence.

***

Over lunch of Greek salad and pasta at poolside, I held her hand and told her, "If only to teach people a lesson, if he doesn't stop his trade within two weeks and accept our proposal, we're going to kill him."

We were sitting under a sun umbrella. Tourists were lying on their recliners sipping pina coladas. They were part of another world.

Her eyes were filled with alarm. "Ari," she said, "are you guys fucking crazy?"

"No. We mean everything we say. How do you want us to play things? You want me to do nothing more than put a sticker on my briefcase saying 'Never Again'?"

"They'll kill you, Ari. These guys are dangerous. Very, very dangerous. If I were you, I'd leave Chile while you can. On the next flight. They're all killers even when people are nice to them. And you haven't been very nice at all."

I had not arrived in Chile with any weapons. I wasn't a Mossad hit-man. My only safeguard was the knowledge that it wasn't going to be easy for them to make me "disappear." I was there on official business. Were I to vanish, all hell would break loose. But of course "accidents" could happen.

I smiled at her and finished my lunch.

***

That afternoon I called Lufthansa and asked if there was a flight to Europe the next day. I told Barbara I was leaving for a while, but gave no explanations. When that plane left the next day, I wasn't on it. Instead, I got on a LAN-Chile flight to Madrid, then took an El Al plane to Israel.

I spent the weekend in Jerusalem. There was a flurry of activity. Israeli intelligence contacted a very well-connected Israeli arms dealer who lived in the same Brussels apartment building as Gerald Bull and asked him if he could help arrange a meeting between a representative of the Israeli Prime Minister's Office and Bull. The message quickly came back. Bull was excited about the proposed meeting. He obviously did not know what was in store for him. All stops were out. Israel was determined to end the trade to Iraq at all costs.

I flew to Brussels from Tel Aviv and was met at the airport by heavy Israeli security -- four armed men. That was very heavy. But then, Europe was a killing ground. In Chile they couldn't afford to do anything to me. It was different here. There could be any number of suspects.

That evening I called Bull from the hotel and told him I was the government official who had come to meet him. I had a guest staying with me -- one of the security men. The three others remained in the car outside. It was arranged that Bull should come over right away and talk with me.

Bull, I knew from my briefing, was a scientist who wanted to prove his theory that with the use of a "supergun," artillery could shoot payloads remarkable distances, depending on a number of variables. The more fuel you put in, the farther the shell went. With the correct calculations, you could fire the shell anywhere and get it to land on target.

In 1981, Bull had gone to Israel hoping to sell his project. He approached Israel Military Industries, where technicians listened to his theory and concluded that it would work. But they were interested in missile technology, not artillery.

In 1983, Mark Thatcher, the son of British Prime Minister Margaret Thatcher, introduced Bull to Gene Pieter Van Der Westhuizen, chief of South African Military Intelligence, who in turn took him to ARMSCOR. ARMSCOR actually contracted this artillery project out with him. But on one of his trips back to where he was residing in the United States, Bull was arrested by the US. attorney for the Southern District of New York and the U.S. Customs Service for violating the Munitions Export Act. The charge: the export of military technology to an embargoed country -- South Africa. This, at a time when the U.S. was secretly shipping arms to South Africa.

After plea bargaining, Bull spent about six months in a federal jail before he was released as a convicted felon. He left the United States a disgruntled man and set up shop in Brussels. He also intended to maintain his relationship with South Africa, but when he returned on a visit, he found the reception cooler because of his arrest. What the South Africans did for him, though, was introduce him to the Iraqi deputy chief of the General Staff for Procurement -- the man who buys weapons. Bull was commissioned to develop his supergun for Iraq, but was paid through Carlos Cardoen's financial network. Which is why I was now in a Brussels hotel room facing Bull.

An informal, burly, middle-aged man with sandy hair, Bull made himself comfortable in an armchair and started talking about his supergun project. Despite his determination to trade with Iraq, I honestly liked this man. He wasn't in it for money or personal ambition or ideology. He simply wanted to prove to himself that his gun would work. "And it will work," he insisted.

"Mr. Bull," I said, "it probably will work, but what about the people who will die?"

"People have been dying for centuries for one reason or another. But this gun will be for Iraq's defense. With it, nobody would dare attack them. And that surely is a step toward peace."

"Mr. Bull, are you sure that the Iraqis only want to defend themselves? Can you tell me who is going to attack them?"

"Of course. The Americans. And you Israelis have already attacked them. You hit Baghdad in the 1967 war, and you hit Iraqi facilities in 1981."

"We blew up their nuclear plant."

"Yes, you blew up their facility, while at the time you had your own atomic bombs. You have delivery systems. If I can strike a balance of terror, there will be peace in the Middle East. And it will work."

Despite his opposing stance, I felt he wasn't really on anybody's side. "Mr. Bull, please stop," I said. "We will pay you for any breach of contract that will arise with the Iraqis."

"What do you mean?"

"We know you have reached a special deal with the Iraqis." I opened my briefcase and showed him a map. "Here is the plot of land they gave you in western Iraq to experiment."

He was aghast. "You sons of bitches have been following me."

I asked him if I could invite him to dinner in the room. He looked at the security man. "Not with this bozo around."

We dined alone. I again emphasized that if he let go, Israel would reimburse him for his financial losses.

"Will I be allowed to develop my gun somewhere else?"

"No. Absolutely not."

He drank his white wine. I asked how he had become connected with Iraq and Carlos Cardoen.

"Through my visits to South Africa. By the way, the South Africans, the Chileans, and I have a mutual friend in Mark Thatcher. I'd suggest that you guys don't muck around with me, or the British prime minister is going to get upset."

"Fine," I said. "But you still haven't told me who introduced you to Cardoen."

"I thought I had," he said. "I'm telling you it was Mark Thatcher."

We ate in silence. But I wasn't going to let up. "You know," I said, "the Israelis have a terrible reputation. They don't take too kindly to people who want to gas their population."

"Oh," he remarked, "you're pulling one of those on me. I had that in the States. You Jews are trying to guilt-trip everybody."

At that point, I said: "Mr. Bull, your time is up. Thank you for coming."

He had had his warning.
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