Multimedia Mania/abacus-multimedia-mania.iso/dp/0107/01076.txt

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$Unique_ID{bob01076}
$Pretitle{}
$Title{Iran-Contra Affair: The Report
Chapter 22D  Section 3:  Expenditures}
$Subtitle{}
$Author{Various}
$Affiliation{}
$Subject{north
secord
enterprise
robinette
million
system
paid
security
expenses
told
see
tables
}
$Date{1987}
$Log{See Table 5*0107601.tab
}
Title:       Iran-Contra Affair: The Report
Author:      Various
Date:        1987

Chapter 22D  Section 3:  Expenditures

     All told, the Enterprise spent almost $35.8 million - out of the nearly
$48 million it took in - on covert operations.

[See Table 5: Enterprise Expenditures]

     When asked about the cash balances, North testified that Casey wanted the
Enterprise to become a self-sustaining operation so that "there [would] always
be something there which you could reach out and grab . . . at a moment's
notice."  But North also said that he was surprised by the size of the
balance, adding, "I am not willing at this point to accuse anybody."  He also
acknowledged that he had been told in September 1986 - even though the cash
balances were then approximately $5.3 million - about a shortage of money
available for the Second Channel Iranian initiative.

     Throughout 1985 and the first half of 1986, Enterprise cash surpluses,
including the Reserves, were increasing.  They reached their height in May
1986.  As of May 1, 1986, the funds in the accounts of the collecting
companies, treasury companies, operating companies (collectively the
"Enterprise companies") and the Reserves, contained approximately $10.8
million.

     In October 1986, at the same time New York businessman Roy Furmark was
threatening to expose the initiative if the Iran arms financiers were not
paid, the Enterprise companies and the Reserves still had a total cash balance
in the vicinity of $6.1 million.

Central American Expenditures

     In the beginning, the Enterprise simply sold arms to the Contras.  Its
Contra arms-brokering operation - complete with an offshore company and an
offshore account - was only the first stage for the full-service covert
organization that, according to North, Casey envisioned.

     From December 1984 through July 1985, Calero transferred $11.3 million to
Secord.  Secord used the money to provide five arms shipments, described by
Secord as Phases I through IV (one of the five shipments was a supplement to a
previous one).  Secord spent a total of $9.4 million for the arms he sold to
Calero, including transportation costs; however, the total cost - including
commissions for Secord, Hakim, and Clines - exceeded $11.3 million; the
shortfall was made up with other Enterprise funds, including donations from
the private fundraising network.

     From February until May 1986, the Enterprise purchased approximately $3.1
million of military equipment from Defex, a Portuguese arms supplier. It
delivered some of the arms, paid for largely by the Iranian weapon sales and
third-country contributions, in three airlifts which took place in March,
April, and May 1986 (described by Secord as phases V through VII). Additional
arms purchased during the same period (the "stranded shipment") never reached
the Contras.

     In addition, the Enterprise spent approximately $5.9 million for air
resupply operations, which had been planned by North, Secord, Clines, and
Quintero in July 1985.  It acquired an air force, purchasing two C123 cargo
aircraft, two Caribou aircraft, and three Maule aircraft.

     More than $1.5 million (out of the $5.9 million) was transferred by the
Enterprise to various vendors through Amalgamated Commercial Enterprises
(ACE), a Panamanian company established by Richard Gadd to pay for the
Caribous, air crews and other expenses associated with the resupply operation.
According to Gadd, he was originally told by Secord that he, Gadd, would own
the aircraft through ACE, but Secord later changed his mind and the Enterprise
retained ownership through its ]Udall Corporation.

     Operating the airplanes was expensive: the Enterprise paid Corporate Air
Services a total of $437,688, directly and indirectly, for the crews used in
the resupply operation.  Southern Air Transport received approximately $2
million for aircraft spare parts, fuel, and other services in connection with
the resupply operation.  Eagle Aviation Services and Technology, Inc. (EAST),
another Gadd company, received $657,804 for providing other air services.

     David Walker, a British expert in guerrilla warfare recruited by North,
received $113,000 for his services on May 5, 1986.  Secord noted that during
the July meeting in Miami it was decided that the resistance needed "to get
into some of the urban areas."  North testified that in 1985, he authorized
Walker to perform military operations "in Managua and elsewhere in an effort
to improve the> perception that the Nicaraguan resistance could operate
anywhere that it so desired."  Later, Walker provided two technicians to help
carry out a military operation in Nicaragua.  Secord and Hakim testified that
in 1986 Walker provided air crews for the resupply operation.

     The Enterprise acquired land for an airstrip in Costa Rica for a down
payment of $125,000 and a purchase money mortgage of $4,875,000.  A Central
American contractor who constructed the airfield, received payments totaling
$192,233 from February through July 1986.

     The Enterprise disbursed funds to a number of Contra leaders.  It paid
$50,000, $155,000, and $59,500, respectively, to three Contra leaders, and
$400,000 to Calero and his broker for food supplies and other expenses. North
may have had even more complex plans for payments to the Contras.

The Mideast:  Expenditures for the Iran Operations

     The Enterprise was involved in every NSC-connected shipment of weapons to
Iran from November 1985 on.  The net surplus generated by these transactions
for the benefit of the Enterprise was $16.1 million.

     The first transaction, the Israeli November 1985 HAWK shipment, generated
a net surplus of $850,317.  The transaction began when an Israeli intermediary
deposited $1,000,000 into the Lake Resources account on November 20, 1985.
Eighty Israeli-owned HAWKs were to be transported by the Enterprise to Iran in
four separate shipments.  Only 18 HAWKs were delivered, however, before the
Iranians terminated the transaction.  The Enterprise incurred charter expenses
of $127,700 for the delivery of the 18 HAWKs, and $21,983 for a private jet
for Secord.  This left the Enterprise with $850,317. According to Secord, the
Israelis told North that the extra money could be used for "whatever purpose
we wanted."  After discussing the matter with North, Secord agreed to use the
money for the Contras and testified that he did so.

     The Enterprise's role in the next transaction - the sale of the 1,000
TOWs in February - was mare active.  The Enterprise was the "commercial
cut-out" for the CIA, receiving the money for the missiles from Ghorbanifar,
paying the CIA for them, and delivering them to Iran.  The net surplus from
this transaction was approximately $5.5 million.  As it did with the Calero
arms sales, the Enterprise received payment to cover the cost of the arms
before the arms were purchased.  Between February 7 and 18, 1986, Khashoggi
(who was financing Ghorbanifar) transferred a total of $10 million to the Lake
Resources account for the shipment.  On February 10 and 11, Secord directed a
total payment of $3.7 million to the CIA for the TOWs.  In addition, payments
totaling $484,000 were made to Southern Air for the delivery of missiles from
the United States to Israel; one payment of $185,000 was made to the Israeli
Ministry of Defense to transport the TOWs from Israel to Iran; another payment
of $100,000 was made to the Israeli Ministry of Defense for other related
activities; aid $31,500 was paid to an Israeli bank for miscellaneous
expenses.

     The Enterprise's role was the same in the third transaction - the
deliveries of the HAWK replacement parts to Iran in May and August 1986, and
the shipment of TOWs to Israel to replenish the TOWs scold to Iran in
September 1985.  The net surplus from this transaction was approximately $8.3
million.

     Khashoggi financed the May transaction for Ghorbanifar, transferring $15
million to the Lake Resources account on May 14 and 16, 1986, for the HAWK
parts.  On May 15 and 16, the Israeli Ministry of Defense transferred a total
of $1,685,000 to the Lake Resources account for the TOWs.  After Khashoggi's
first payment was received, Secord directed the Enterprise to pay $6.5 million
to the CIA to cover the cost of the HAWK spare parts and the TOWs. In order to
pay for the delivery of the HAWK parts, the TOWs, and McFarlane's trip to
Iran, the Enterprise paid $667,000 to Southern Air and $447,250 to the Israeli
Ministry of Defense.  Dutton received $40,000 to cover the cost of the crew
and other expenses on the Israel-to-Iran leg of the mission. Secord also
appears to have received $260,000 which was apparently related to the Iran
transactions.

     Finally, the Enterprise paid $205,015 for expenses of chartering
corporate aircraft for Secord and North in connection with their negotiations
with the Iranians.

     The fourth and final transaction consisted of the shipment of 500 TOWs
from U.S. stocks to Iran through the Second Channel.  The net surplus was $1.4
million.  The Second Channel advanced $3.6 million to Hyde Park Square on
October 29, 1986, for the TOWs.  Hyde Park, in turn, paid the CIA $2,037,000
for the missiles and incurred other expenses aggregating $161,240.

Worldwide Projects

     The Enterprise's expenditures were not limited to Central America and the
Middle East.  In May 1986, North directed Secord to purchase a ship for other
covert operations.  Accordingly, the Enterprise spent $743,409 on the purchase
and operation of a Danish vessel named the Erria.

     North directed a project with DEA agents to try to free certain hostages
which contemplated paying bribes and, indirectly, a $2 million ransom to their
captors.  North turned to businessman and philanthropist H. Ross Perot, who
agreed to provide $2 million for the project.  In addition, North called upon
the Enterprise which paid $30,150 to the DEA agents for their expenses.

     At North's request, the Enterprise paid $100,000 for radios supplied to a
political party of a foreign nation.  Another project involved an attempted
propaganda effort in a foreign country.  North disclosed to the Committees in
an executive session that a number of other projects were in the planning
stages.

The North Residence Security System

     Another Enterprise expense was a home security system, which cost
approximately $16,000, for the residence of Oliver North.  As early as
September 1985, North reported harassment which he attributed to anti-Contra
demonstrators, including damage to part of the fence around his home and one
of his cars.  In the spring of 1986, the press reported that Abu Nidal, the
international terrorist and assassin, had placed North on his "hit" list. When
the FBI advised North that it was not authorized to provide protection, North
made a request to Poindexter for assistance.  Poindexter did not follow up on
the matter.  According to the Marine Corps, North did not request protection
for his home from the Corps, an option that was available to him. North told
Secord about the problem and Secord offered to help.

     Secord asked Glenn Robinette, an ex-CIA officer with experience in
electronic surveillance and security, for assistance.  Secord had hired
Robinette in late March to do investigative work related to the Avirgan and
Honey lawsuit, at a fee of $4,000 a month plus expenses.  Robinette examined
the North residence and met first with Mrs. North, then with North and Secord.
Robinette proposed a security system designed primarily to provide protection
from trespassers, not terrorists, at a cost of $8,500.  According to
Robinette, North responded to the effect, "Please try to keep it along those
lines.  Remember, I am a poor lieutenant colonel."

     Robinette paid the installers of the system, which included a remote
control electronic gate, approximately $13,900-$6,000 in May and roughly
$7,900 on July 10th when the installation of the system was complete.  At the
time of each payment, Robinette reported to Secord, rather than North, for
reimbursement because he was "working for Secord."  Secord reimbursed
Robinette for his time and expenses with $7,000 in cash and a $9,000 check
drawn by Zucker from Enterprise funds and mailed to Robinette at Secord's
request.

     On August 6, 1986, at a meeting in the White House, North told Members of
the House Permanent Select Committee on Intelligence, who were inquiring about
his involvement with the Contras, that he had installed, at his own expense, a
security system to protect his family from anti-Contra demonstrators.

     North testified that a bill never came for the security system and that
he assumed that "an accommodation was worked between Mr. Robinette and General
Secord to make a gift out of [the] security System."  Secord, in an interview,
denied that he made the gift or approved it.  From Secord's viewpoint, there
was a misunderstanding:  Robinette asked for his expenses and Secord never
realized that those expenses were for the security system rather than for
investigative work.  Robinette testified as follows:

     Q:  When you went to General Secord to seek reimbursement [for the final
payment to the security company], you told him what you were seeking
reimbursement for, didn't you?

     A:  Yes, sir.

     Q:  He knew he was paying you for the security system, didn't he?

     A:  That would be my understanding, sir.  I usually told him what I was
asking to be paid for.

     Q:  There is no question about it, is there?

     A:  No, sir, there is no question about it.

     In December 1986, North realized that the gift of the security system
"just didn't look right."  By that time, North had been named in the Justice
Department application for the appointment of an Independent Counsel.  North
called Robinette and asked him to send a bill.  Since the system had already
been paid for, Robinette assumed that North wanted to make it appear that he
(North) had actually paid the bill.  Robinette, who told Secord that he was
going to send North a bill, sent North two back-dated bills of payment due,
dated months earlier but actually written and delivered at the same time in
December 1986.

     North, in turn, wrote two back-dated letters, designed to fit with
Robinette's bills, which told a false story about financial arrangements
relating to the security system.  In the first, dated May 18, 1986, but
written in December 1986, North stated that it was his understanding that he
could pay for the system either through 24 monthly installments or by making
his house a demonstration unit.  North concluded the letter by informing
Robinette that he was selecting the second option.  In the second letter,
dated October 1, 1986, but also written in December, North apologized for the
delay in responding to the first and second notices and reminded Robinette
that he wished to pay for the system by making his home available as a
demonstration unit.  In his testimony, North stated that he typed at least one
of the letters on a demonstration typewriter in a typewriter store, rather
than using a home typewriter.

     On the morning of March 16, 1987, as Robinette went out to get his
morning paper, he was interviewed by a reporter about the driveway gate which
was part of the North security system.  Robinette stated that he installed the
gate for North at no charge, hoping that North "might steer business his way"
and that he would be able to put in gates for North's neighbors.  Later in the
day, North called Robinette, asking to meet with him on the following day at
his lawyer's office, and requesting that Robinette bring copies of the
back-dated letters.

     Robinette gave the letters to North's attorneys, but did not say they
were spurious.  Robinette then went to see Secord who, upon learning that
Robinette had sent North a bill for the security system, stated, "You did the
right thing."  That same afternoon Robinette received a call from North's
attorney, who told him not to protect North, and to "tell the truth, tell the
truth, tell the truth."  He also advised Robinette to get an attorney.
Robinette did so.  Later, after receiving immunity, he related the
above-described events to the Independent Counsel and the Committees.

     North testified that in fabricating the letters in December 1986, "I did
probably the grossest misjudgment that I have made in my life."  He added that
he had acted, in accepting the system, to protect his family and told the
Committees, "If it was General Secord who paid the bill . . . you guys ought
to write him a check, because the Government should have done it to begin
with."  North offered no explanation as to why he also created the false
record, other than that the gift "just didn't look right."

Unexplained Cash Expenditures

     The CSF ledgers record expenditures of approximately $902,110 during the
period from March 1985 to October 1986 without identifying their specific
purpose.  Two transactions accounted for the bulk of these funds.  The first
involved a $260,000 cash disbursement on May 21, 1986.  In the second
transaction, $310,000 was withdrawn from the Hyde Park account on July 18,
1986.  The ledgers state that in both cases, the funds were "in transit," but
where they went is unknown.  In addition, the Enterprise transferred $152,200
to an account called Codelis.  Finally, Hakim, Secord, and Clines received
cash totaling $179,610 from various Enterprise accounts; these transactions
were listed as "business expenses," and were in amounts of up to $50,000 each.