Multimedia Mania/abacus-multimedia-mania.iso/dp/0104/01042.txt

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$Unique_ID{bob01042}
$Pretitle{}
$Title{Iran-Contra Affair: The Report
Chapter 10C  Aftermath of the HAWK Flight}
$Subtitle{}
$Author{Various}
$Affiliation{}
$Subject{israeli
finding
november
iran
million
sporkin
ghorbanifar
cia
hawks
intermediary}
$Date{1987}
$Log{}
Title:       Iran-Contra Affair: The Report
Author:      Various
Date:        1987

Chapter 10C  Aftermath of the HAWK Flight

The Failure Sinks In

     On November 25, with the Americans still entertaining the hope that one
or more hostages might be released, senior White House and CIA officials were
informed about the weekend's activities.  Poindexter told the President at his
regular 9:30 a.m. briefing that a shipment of arms to Iran had just taken
place.

     At 7 a.m. that morning at CIA headquarters, Edward Juchniewicz told
McMahon that Secord and "those guys" at the NSC had "used our proprietary to
send over some oil supplies" to Iran.  McMahon's reaction was anger:

I said goddamn it, I told you not to get involved.  And he [Juchniewicz] said,
we're not involved.  They came to us and we said no.  And they asked if we
knew the name of a secure airline and we gave them the name of our
proprietary.  I said, for Christ's sake, we can't do that without a Finding.

McMahon said that at the time he accepted Juchniewicz's report that the cargo
had been oil-drilling equipment:  "[M]y focus was that we had done something
wrong . . . and I didn't care what was on that airplane."  McMahon's view was
that any use of the CIA airline proprietary at the direction of CIA but
without a Presidential Finding was illegal.

     Shortly after talking to Juchniewicz, McMahon went to Deputy Director for
Operations Clair George's office where several staffers were discussing the
weekend's activities.  McMahon told them "that they weren't going to do
anything more until we got a Finding."  That same morning, North sent word to
Schwimmer that the operation was to be put on hold.

     McMahon also moved quickly to contact CIA General Counsel Stanley Sporkin
on the matter of the airline proprietary's activity.  McMahon testified that
"during the day I called Sporkin several times and I told him that I wanted a
Finding and I wanted it retroactive to cover that flight."  Sporkin recalled
that McMahon simply asked him to look into the legal aspects of the activity,
but did not declare that a Finding was necessary.

     Late in the day, two officers from the Operations Directorate, an air
branch officer and his group chief, were directed to brief Sporkin on the
proprietary's flight.  The CIA officials most involved in the operation -
Clarridge, Allen, and the chief of the air branch - were not selected to do
the briefing.  At Sporkin's request, his deputy, J. Edwin Dietel, sat in on
the briefing.

     The participants' accounts of the briefing of Sporkin differed
significantly.  The air branch subordinate officer said that the meeting
lasted about 45 minutes and that he and his superior explained to the lawyers
that the airline proprietary - acting at the direction of the NSC staff and
with the approval of Juchniewicz - had moved some cargo from Israel to Iran.
He testified that as of November 25, he knew nothing about the cargo other
than its weight and dimensions and that that was the only information about
the cargo that was discussed at the briefing.  He recalled that the lawyers
exhibited no curiosity about the nature of the cargo and that there was no
mention that the cargo was either oil-drilling equipment or military
equipment.  He also testified that nothing was said to indicate that the
proprietary's flight was related to an effort to free hostages.

     The CIA group chief said he did not even know of the activity being
scrutinized until that morning.  He stated in an interview that he and the
subordinate explained that a CIA proprietary plane, acting in a strictly
commercial capacity, had carried "commercial cargo" into Iran.  The subject of
weapons being aboard the plane did not arise, he said.  He added that at this
point he understood that the cargo might have been farm equipment and that the
shipment was not part of an NSC staff operation.

     Notwithstanding these divergent accounts from officials of the Operations
Directorate, it is clear that the briefers told Sporkin that missiles had been
transported, and the shipment was part of an effort to free the hostages.
Sporkin testified:  "What they told me indicated an involvement in a shipment
of arms to Iran."  Sporkin's deputy, Deitel, specifically recalled that the
briefers said the cargo was missiles.  Sporkin testified that the briefers
probably specified the exact type of missiles being shipped.

     During the briefing, Sporkin tentatively concluded that a covert action
Finding was necessary to authorize the previous activity.  He stated that
there should be no more flights to move the rest of the cargo in Israel until
the matter could be looked into further.  After the briefers left, two senior
staff attorneys, whom Sporkin had enlisted earlier and who were waiting for
the briefing to end, were called into the room.  Sporkin related to them that
a shipment of "military equipment or missiles" from Israel to Iran had just
occurred and that more flights were contemplated.

     Sporkin then dictated a draft Finding that authorized the CIA to assist
in "efforts being made by private parties" to obtain the release of hostages
through the provision of "certain foreign materiel and munitions" to the
Government of Iran.  The draft stated that Congress would not be notified of
the operation "until such time as [the President] may direct otherwise" and
that the Finding "ratifies all actions taken by U.S. Government officials in
furtherance of this effort."  Sporkin directed one of the lawyers, Bernard
Makowka, to stay late and work on the Finding.  Later that night, Sporkin
informed McMahon "that a Finding would be required, not so much from the
airlift standpoint, but from our involvement in influencing foreign government
officials to assist the mission."  Sporkin and his deputies met on the morning
of November 26, and worked up a final draft of the Finding.  In its entirety,
the Finding stated:

Finding Pursuant to Section 662 of The Foreign Assistance Act of 1961, As
Amended, Concerning Operations Undertaken by the Central intelligence Agency
in Foreign Countries, Other Than Those intended Solely for the Purpose of
Intelligence Collection.

I have been briefed on the efforts being made by private parties to obtain the
release of Americans held hostage in the Middle East, and hereby find that the
following operations in foreign countries (including all support necessary to
such operations) are important to the national security of the United States.
Because of the extreme sensitivity of these operations, in the exercise of the
President's constitutional authorities, I direct the Director of Central
Intelligence not to brief the Congress of the United States, as provided for
in Section 501 of the National Security Act of 1947, as amended, until such
time as I may direct otherwise.

Scope:  Hostage Rescue - Middle East

Description

The provision of assistance by the Central Intelligence Agency to private
parties in their attempt to obtain the release of Americans held hostage in
the Middle East.  Such assistance is to include the provision of
transportation, communications, and other necessary support.  As part of these
efforts certain foreign materiel and munitions may be provided to the
Government of Iran which is taking steps to facilitate the release of the
American hostages.

All prior actions taken by U.S. Government officials in furtherance of this
effort are hereby ratified.

The draft Finding referred to no objective of opening a diplomatic channel
with Iran.  Yet, this was the justification for the arms deals that the
Administration offered after they were exposed in November 1986.  Rather, the
Finding depicted a straight swap of arms for hostages.

     Sporkin sent the proposed Finding to Casey on November 26.  That morning,
Clair George phoned North to tell him that Sporkin had determined a Finding
was necessary.  Later that day, after Casey called McFarlane and Regan "to
ascertain that indeed this had Presidential approval and to get assurances
that a Finding would be so signed," Casey, who agreed a Finding was needed,
delivered the text to Poindexter.  Poindexter did not immediately present it
to the President.  Over the next several days, Casey, McMahon, and George made
repeated inquiries to Poindexter and other "NSC personnel" and "continuously
receive[d] reassurances of the President's intent to sign the Finding."

The President Renews His Approval

     On the day the CIA sent the proposed Finding to the White House, November
26, the President authorized continuing the arms-for-hostages transaction.
North's notes indicate that he was so informed by Poindexter at an hour-long
meeting:

0940-1050.  Mtg w/JMP.  RR directed op[eration] to proceed.  If Israelis want
to provide diff model, then we will replenish.  We will exercise mgt over
movmt if yr side cannot do.  Must have one of our people in on all activities.

     Later that day, North related to an Israeli official that the Americans
wanted to carry on even if the supply of additional arms was needed and even
if the weapons had to come from the United States.  But events not within the
control of the American side prevented immediate progress in accord with the
renewed authorization of the President.

The Iranians Feel Cheated

     After midnight on November 26, Allen learned that officials in Iran were
upset that the wrong model of HAWKs had been delivered.  The Iranians also
complained through Ghorbanifar that the missiles had Israeli markings, which
"the Iranians took to be a prov[o]cation."

     On November 25 or 26, Ghorbanifar, "on the very edge of hysteria," called
NSC consultant Michael Ledeen, and said "the most horrible thing had happened.
. . . . [T]hese missiles had arrived and they were the wrong missile."
Ghorbanifar gave Ledeen an urgent message from the Prime Minister of Iran for
President Reagan:  "We have done everything we said we were going to do, and
you are now cheating us, and you must act quickly to remedy this situation."
Ledeen conveyed this to Poindexter.

     At this point, North dispatched Secord to Israel.  During meetings with
Kimche and Schwimmer, Secord quickly deduced the source of Iran's displeasure:
according to him, Schwimmer and Nimrodi had promised Ghorbanifar that the
missiles being provided could shoot down high-flying Soviet reconnaissance
planes and Iraqi bombers.  The I-HAWK missiles that were provided, like all
HAWKs, had no such capability.  The Iranians were insisting that "these
embarrassing missiles" be removed from Tehran.

Money Flows Back and Forth

     In advance of the HAWK shipment, on November 22, Iran made two transfers
- one of $24.72 million, the other of $20 million - to bank accounts in
Switzerland to which Ghorbanifar had access.  Iran apparently understood that
the larger transfer was its purchase price for 80 HAWKs, at a unit cost of
approximately $300,000.

     On November 22, Ghorbanifar transferred to an Israeli intermediary's
account $18 million and $6 million.  According to an Israeli intermediary, the
$18 million was the purchase price paid by Ghorbanifar for 80 HAWKs and the $6
million was to be held in trust by the Israeli intermediary at Ghorbanifar's
request.  Later, it was to be paid back to Ghorbanifar, with Ghorbanifar
intending to keep $1 million for himself and use the remainder for payments to
certain Iranians.  North was aware of the $18 million deposit.  On November
20, he wrote in his notebook:  "18 M Deposited Covers 80H 225K."

     Around the time that the Israeli intermediary received these funds from
Ghorbanifar, he transferred $l million to Lake Resources on North's demand. On
November 22, the Israeli intermediary paid the Israeli Ministry of Defense
$11.2 million for the 80 HAWKs at a price of $140,000 peer missile.  Thus, the
Israeli intermediary had received from Ghorbanifar $11.8 million more than his
total payments to Israel and Lake Resources.  According to the Israeli
intermediary as reported in the Israeli Financial Chronology, $6 million of
this residual was held in trust by the Israeli intermediary for Ghorbanifar
and the remaining $5.8 million was to cover shipping and other expenses for
the rest of the operation.  The Chronology indicates that Ledeen and North
agreed with the Israeli intermediary that this money be kept in the Israeli
intermediary's account for these purposes.

     Israel intended to purchase replacement HAWKs with the sum received from
the Israeli intermediary.  It was doubtful whether the amount received -
$140,000 per missile - would be enough to purchase replacements at standard
U.S. prices.  On November 19, North and the head of the Israeli Procurement
Mission in New York discussed replenishment, and North's notes of the
conversation refer to a price of "$220K/230K each for Hawks."  However,
Poindexter had instructed North, and North had told the Israelis, "that we
will sell them [Israel]" replacement HAWKs "at a price that they can meet."

     When the HAWK deal collapsed in late November, the Israelis and
Ghorbanifar reversed the flow of funds.  On November 27, the Israeli Ministry
of Defense returned $8.17 million to the Israeli intermediary.  This was $3.03
million less than the Israelis had paid to the Ministry of Defense.  The
difference, according to the Israeli Chronology, represented the prorated
charge for the 18 missiles delivered to Iran at $140,000 per item and a
deduction of $510,000 for expenses incurred by the Ministry of Defense in the
HAWK transaction and in previous transactions.

     Also on November 27, the Israeli intermediary transferred to Ghorbanifar
the sum of $18.6 million.  This represented a prorated refund of Iran's
purchase price for the 62 HAWKs that had not been delivered.  Thus, at the end
of November 1985, the Israelis held more than $5 million in residuals from the
failed transaction, most of which was repaid to Ghorbanifar by the Israeli
intermediary and to the Israeli Ministry of Defense after Iran returned 17
HAWKs to Israel in early 1986.

Conclusion

     The shipment of HAWKs to Iran was bad policy, badly planned and badly
executed.  In contradiction to its frequently emphasized public policy
concerning the Iran-Iraq war and nations that support terrorism, the United
States had approved the sale of arms to Iran.  The United States had agreed to
a sequential release of hostages following successive deliveries of weapons;
thereafter, this departure from policy became the norm.  This precedent,
established in November 1985, gave the Iranians reason to believe that the
United States would retreat in the future from its demand for the release of
hostages prior to any weapons shipments.

     The planning and execution of the operation were also flawed.  By the
time the U.S. Government became directly involved, official disclaimers by
unwitting State Department officials had already complicated the foreign
relations aspect of the project.  And the mission itself jeopardized the
security of the CIA airline proprietary's operation.

     Finally, the cover story that was used by certain NSC and CIA officials
in November 1986 was first employed in November 1985 for purposes of
operational security.  The President, Secretary Shultz, McFarlane, Poindexter,
North, and various CIA officials, however, were fully aware in November 1985
that Israel was shipping HAWKs to Iran - not oil drilling equipment - with
U.S. approval and assistance to obtain the release of the American hostages.