The Best of the Bureau/The_Best_of_the_Bureau_Bureau_Development_Inc._1992.iso/dp/0108/01080.txt

Text File | 1992-08-07 | 8KB | 149 lines

$Unique_ID{bob01080}
$Pretitle{}
$Title{Iran-Contra Affair: The Report
Chapter 22H  Section 7:  Brunei Contribution}
$Subtitle{}
$Author{Various}
$Affiliation{}
$Subject{abrams
account
brunei
secretary
north
department
number
state
funds
swiss}
$Date{1987}
$Log{}
Title:       Iran-Contra Affair: The Report
Author:      Various
Date:        1987

Chapter 22H  Section 7:  Brunei Contribution

     If not for a typographical error, the Enterprise would have received an
additional $10 million generated by U.S. Government efforts: the misdirected
contribution from the Sultan of Brunei.

     In December 1985, Congress amended Boland to provide explicitly that
solicitation by the State Department of humanitarian aid for the Contras from
third countries was not precluded.  Solicitation of lethal assistance was not
addressed. The National Security Planning Group decided to pursue such
third-country funding at a meeting with the President on May 16, 1986. These
funds would bridge the gap until the anticipated resumption of U.S. aid in the
fall.

     The Administration estimated that the earliest that aid could be made
available to the Contras through the normal appropriations channels was August
or September 1986.  In the face of continued House opposition and the
likelihood of a filibuster in the Senate, Secretary Shultz advocated seeking
aid from third countries as the course of least resistance.  He believed that
it was highly improbable that Congress would support a reprogramming of some
money from the Department of Defense for non-military aid to the Contras and
he argued that it would be desirable to approach other countries.  Secretary
Shultz was asked to draw up a list of possible donors.

     In discussions at the State Department following the National Security
Planning Group meeting, Secretary Shultz ruled out any countries receiving
U.S. aid or whose political relationship with the United States was otherwise
delicate.  The Secretary's criteria eliminated all the obvious candidates,
including nations in the Middle East.  In early June, Assistant Secretary
Elliott Abrams recommended he Sultanate of Brunei - a tiny, oil-rich nation on
the northwest coast of Borneo - and the Department agreed.  Abrams described
how the selection was made:

Take a list of countries in the world and exclude those with insufficient
resources to make a humanitarian contribution.  Exclude further those which
are right-wing dictatorships, or which are, if you will, on the other side,
allied with the Soviet Union.  Then exclude those . . . over which we can be
said to have some leverage.  You are left essentially with oil producers.
Then look for non-Arab - since I had been to Ambassador Murphy already,
non-Middle East non-Arab oil producers.  Venezuela, I thought, would not do
this.  You are down to Brunei.

     Since Secretary Shultz planned to travel to Asia in June 1986, Abrams was
tasked with getting an appropriate account number in the event of a successful
solicitation of Brunei for a contribution to the Contras.  Abrams approached
North, who, with Poindexter's concurrence, gave Abrams the number of the
Enterprise's Lake Resources account in Switzerland.  Abrams was not told that
this was an account controlled by North, Hakim, and Secord for disbursing
lethal (not humanitarian) aid to the Contras.

     But either North or his secretary made a mistake.  In writing down the
account number or in typing it, North or his secretary apparently inverted the
first two digits, so that the correct account number at Credit Suisse,
386-430-22-1, became 368-430-22-1.  North gave Abrams a typed card containing
the erroneous number and Abrams gave it to the Secretary of State.  The
Secretary of State was informed by Abrams that the account belonged to the
Contras; Abrams said he had received that information from North.

     The State Department then decided that Brunei would not be approached
during the Secretary's June trip, although the Secretary carried with him to
Asia the card containing the wrong number.

     On August 5, Secretary Shultz directed Abrams to make contact with
Brunei.  Around this time, Abrams obtained a second account number from the
Chief of the CIA Central American Task Force. Abrams could not explain why he
asked for this second account number.  But once he obtained it, he had the
problem of deciding which account to use, the one provided by the CIA or
North.  Charles Hill, Secretary Shultz's Executive Assistant, recommended that
Abrams use the number from North because it probably was cleaner.  Ironically,
the account Abrams received from the CIA was a Contra account established
specifically to receive the expected contribution.  Had that account been
used, the Contras would have received an additional $10 million.

     Abrams, carrying North's account number and using the cover name "Mr.
Kenilworth," met with an official of Brunei in London on August 9, 1986, and
successfully solicited a $10 million contribution for humanitarian aid.
Abrams gave the Bruneian official the Swiss account number from North.

     On September 15, Brunei confirmed to the State Department that
"arrangements have been consummated."  But North advised Abrams three days
later that no funds had been received.  The State Department went back to
Brunei and was told that transferring the funds would require the U.S. to
"wait for a short while before this transaction is completed."

     By November, the funds still had not arrived in the Lake Resources
account.  This remained true as of November 25, when the Attorney General
announced discovery of the diversion.  On December 1, Secretary Shultz
instructed Charles Hill to brief the State Department's Legal Adviser, Abraham
Sofaer, on the circumstances surrounding the solicitation.  According to
Sofaer, this was the first time he learned about the Brunei contribution.

     When he was informed of the Brunei contribution, Sofaer directed the U.S.
Ambassador to advise the Brunei Government that if the funds were still under
its control, they should be frozen. But on December 4, 1986, Brunei informed
the State Department that it had sent the funds to the designated account in
August and could not withdraw the transfer.  Sofaer testified that on December
4, he received the approval of officials at the Justice Department and the
White House to approach the Swiss Ambassador in Washington with a request that
all accounts related to Lake Resources and Oliver North be frozen.
Simultaneously, he ordered a cable sent to the U.S. Ambassador in Switzerland
instructing that the same request be made.  The request became effective the
following morning.  The problem, however, was that nobody in Washington - not
even Oliver North - knew where the Brunei funds had gone.  A diplomatic coup
had become a diplomatic fiasco.  The fiasco continued into 1987.

     With the assistance of Swiss authorities aided by the State Department,
the Committees determined that the Brunei funds had ended up in the Credit
Suisse account of a person described by the Swiss as a wealthy Swiss
businessman involved in the shipping business who alleged that the $10 million
flowed into his account in connection with a shipping transaction.  The
account-holder had withdrawn the $10 million transfer shortly after it arrived
at Credit Suisse and placed it in a certificate of deposit at another Swiss
bank in Geneva, where it had been collecting interest.

     In May 1987, the matter was placed in the hands of a Swiss Magistrate,
who, with the Committees' encouragement, froze the certificate of deposit.
The Government of Brunei was notified by the State Department and asserted its
claim.  The Committees understand that, as of this writing, the $10 million
has been returned to Brunei, but the interest remains frozen.

     Swiss authorities have declined to reveal the identity of the individual
who received the funds.  The Committees were assured by the Swiss Magistrate,
however, that the individual is neither a principal