Multimedia Mania/abacus-multimedia-mania.iso/dp/0101/01015.txt

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$Unique_ID{bob01015}
$Pretitle{}
$Title{Iran-Contra Affair: The Report
Chapter 2F   The Secord Group and Its Competition}
$Subtitle{}
$Author{Various}
$Affiliation{}
$Subject{secord
arms
north
singlaub
calero
dealer
weapons
european
secord's
prices}
$Date{1987}
$Log{}
Title:       Iran-Contra Affair: The Report
Author:      Various
Date:        1987

Chapter 2F   The Secord Group and Its Competition

     As humanitarian aid measures were debated in Congress, Secord's
Enterprise was continuing to procure weapons for the Contras.  By May, Secord
was using Thomas G. Clines, rather than the original broker.  Cline's source
was a European arms dealer.  Secord was also using Rafael Quintero to handle
the logistics of the arms deliveries in Central America.  As North put it,
Quintero was the "Secord man on [the] scene.  He coordinated the arms
reception in Central America, and "all of the liaison with the Contras and
with the local authorities." From Quintero, Secord would obtain the
information necessary to provide North with what North termed "views from on
[the] scene" in Central America.  Clines, Quintero, and Secord were to play an
increasingly large role in the Contra support structure as the summer
progressed.

     During May, Secord arranged through Clines for the third in a series of
arms transfers to the Contras.  This time, the shipment was to arrive by sea.
Periodically, Secord would call North with the latest update, as on May 8:
"Came out of mtg/in . . . now in Paris; - Tested every item; - ship arrived
4-5 hours ago; - 40,000 M-79 . . . ."  Later, on May 24, North recorded:
"Call from Dick; - Vessel needs shipping agent for receiving; - Need to do
long lead plan for Aug-Sep delivery; - need to make deposit for M-79 buy."  As
Secord testified, North "was in the information collection business" and "[h]e
wanted to know if I would provide him with details of any deliveries or deals
that were made, and I did so gladly."

     General Secord was not the only weapons dealer seeking the Contra account
during the summer of 1985.  For example, Ronald Martin, a Miami arms dealer,
was by May "setting up [a] munitions 'supermarket'" in Central America.  As
North testified:  "You had a very competitive environment down there.  Once
the U.S. Government withdrew in '84 from directly supporting the resistance,
you ended up with a lot of folks out there running a very cutthroat business."

     North discouraged Calero from dealing with some of Secord's competitors.
He testified that CIA Director Casey had suspicions that the arms warehouse
operation run by Martin was supported by U.S. funding that had been diverted
to Martin by a Central American country.  According to North, Casey told him
"that there shouldn't be any further transactions with that broker until such
time as he resolved or they were able to resolve where" the money to stockpile
"several millions of dollars worth of ordnance" had come from.

     Secord's other competitor for procuring arms for the Contras during the
spring of 1985 was General Singlaub.  As early as April, Singlaub had begun to
arrange for a major weapons purchase, after meeting at FDN base camps in March
with the FDN military commander, Enrique Bermudez.  The list of weapons
Singlaub drew up with Bermudez included AK-47 rifles, RPG-7 rocket launchers,
light machine guns, and SA-7 surface-to-air missiles.  Singlaub took the
weapons list to North, who made "some additions and subtractions."  North and
Singlaub "reach[ed] a clearcut statement of what we were going to buy."

     Sometime later that month, Singlaub introduced Calero to a European arms
dealer.  Calero was astonished at the low prices he had been quoted; "at least
in the case of the AK-47s that price was about half of what we had previously
had to pay."  (In part, this can be attributed to the fact that Singlaub did
not take a commission.)

     According to Singlaub, North later confirmed that the prices quoted by
the European arms dealer were lower than anything he had ever seen before.
Confronted with the price list, North "expressed some surprise, doubt, that
they could be purchased for that price."  But, he "made it quite clear that
was a very, very good price and a bargain.  We were getting twice as many
weapons for the same amount of money."  In his testimony, North maintained
that he checked Secord's prices against the prices of other dealers:  "[s]ome
were higher, some were lower."

     Part of the explanation for the difference between Secord's prices and
those of Singlaub's dealer was Secord's profit margin - a margin of which
Calero was unaware.  Secord testified that his markup on all Contra shipments
"averaged out almost exactly 20 percent."  In fact, the actual commission
charged on the cost of arms averaged 38 percent.

     In Secord's own words:

By the way, this was a strict commercial kind of transaction.  There was
nothing spooky about it.  It was just a normal brokering deal.  The prices
were marked up in the process, different markups for different line items
depending upon the size, but between 20 and 30 percent was the markup which is
quite low in the arms business.

     Secord candidly admitted that he was to make a profit:

     Q:  I take it from what you are saying that you were to make a profit on
these arms transactions?

     A:  Yes . . . .  It was intended that the profits generated would be
shared by Hakim, myself and, of course, the arms dealer.

     Calero testified he was unaware that Secord was earning money off the
arms sales.  He believed that Secord was supplying the weapons at cost.  "My
understanding, right from the beginning, was that he was not making a profit,"
Calero recalled.  North, on the other hand, testified that it was his
understanding from his conversations with Casey in 1984 that those running the
off-the-shelf covert entities were entitled to fair compensation:  "The
arrangement that I made with General Secord starting in 1984 recognized that
those who were supporting our effort were certainly deserving of just and fair
and reasonable compensation."

Calero Tries Singlaub

     In early May, Calero and Singlaub met with Secord in North's office to
discuss procuring SA-7 missiles.  Although Singlaub's price was lower than
Secord's, North and Calero decided that Secord should supply the missiles
because Secord was prepared to provide training and Singlaub was not.

     Sometime in mid-May, Calero placed an order for weapons - other than
SA-7's - through Singlaub's dealer.  Calero "preferred" dealing with Singlaub,
rather than Secord, because not only was Singlaub a closer personal friend,
but also his prices were lower.  Singlaub told Calero that he believed Secord
was making a profit.  Secord, on the other hand, told Calero that Singlaub
would be unable to deliver:  "The price was so, you know, so low that he
thought he [Singlaub] couldn't make, he couldn't do it.  Yes, he [Secord] told
me that, yes."

     North's notes reflect an unsuccessful attempt to persuade Calero not to
deal with Singlaub via the European arms dealer.  On May 17, Secord met with
North and discussed pending weapons transactions, including Martin's munitions
supermarket and the "Singlaub deal w/A.C; - [European arms dealer] . . . .
- 10K AK47s; - procuring items from USSR . . ."  An hour and 20 minutes later,
North spoke to Calero and noted, "will stop move w/[European arms dealer]."
But despite Calero's apparent decision to stop the Singlaub deal, Secord
informed North on May 20 that it "[s]ounded like Calero was going to have to
go through with [the European arms dealer] purchase."

     North appears to attribute to Director Casey his reluctance to procure
arms through the European dealer.  According to North, Casey warned him of "a
transaction of some five to six million dollars from a broker who he was
concerned had also been involved in reverse technology transfer to the Eastern
Bloc, and he told me to do everything possible to discourage further
purchases."  Although North did not name the dealer, his reference to a
"transaction of some five to six million dollars" points to the European arms
dealer.  The arms dealer denied to the Committees any involvement in reverse
technology transfers.

     The purchase that Singlaub arranged did in fact go forward after Owen, at
North's request, confirmed the list with Calero.  The arms arrived in Central
America on July 8, 1985.

     This was the last shipment Calero was to order from Singlaub or any arms
dealer other than Secord.  The Singlaub shipment had nearly exhausted the
funds in Calero's own accounts.  Calero told North in May, "[I] have enough to
cover this [shipment] but [it] will leave nothing."  Thereafter, money raised
by North and Secord was given directly to Secord, who then provided the
Contras with arms.  Calero testified he was "never given a reason" why his
"authority to have cash directly sent to [him] to make those purchases in the
future was taken away."