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Documents Give Inside Look Into Arms Deals : Seized Papers, Tapes Tell of U.S. Sting Operation That Uncovered Scheme to Sell Weapons to Iran

November 29, 1985|WILLIAM C. REMPEL and GAYLORD SHAW | Times Staff Writers

Deane said he repeatedly advised VanBacker that he would need proper export documents before attempting any international sales. "I must have emphasized that so many times that he figured I wasn't the kind he wanted," Deane said.

Anderson said that he could not recall asking Sheffey to help VanBacker.

'No Recollection'

"John Sheffey is an honest, upright great guy . . . and if he said I called him, I wouldn't deny it," Anderson said. But he added: "I have no recollection of it."

In the summer of 1983, with VanBacker adamantly opposed to introducing Raffa or Angell to Anderson, the agents moved ahead with the arms deal. With the help of Air Force logistics specialists who catalogued the equipment and parts required to wage a 30-day desert war, they put together a 51-page shopping list of weapons, spare parts and military equipment.

VanBacker and Harvey, who received the list from Raffa at the same Grand Hyatt lunch where they reviewed the map with 40 red stars, later broke it down into product types--from explosives to heavy combat equipment and aircraft parts. Then they contacted selected dealers and suppliers for price quotations. No one dealer was to know how large the total order was, they agreed in recorded conversations.

To fill the fabricated $2-billion Iran order, VanBacker and Harvey sought suppliers for such items as Cobra helicopters in Florida, tanks in California and M-16 rifles in Connecticut. VanBacker booked a flight to London to search for spare parts for F-4 jet fighters. Inquiries for price quotes also went out to Gray, Berg and McLeod, among many others.

Sidestepping U.S. Rules

To ship the weapons to Iran, the arms suppliers would have to circumvent the requirement that the export of all items on the U.S. Munitions List--everything from missiles to tank parts--must receive government approval even for shipment to friendly nations. Licenses are granted only when the recipient government certifies that it will not re-export the arms without U.S. authorization. And Iran is among countries banned from receiving virtually any U.S. weapons and technology.

VanBacker proposed to bribe foreign officials to sign certificates falsely claiming that shipments were intended for their country. In various recorded conversations, VanBacker said he could get a phony certificate from Liberia in exchange for a Mercedes Benz--or from Saudi Arabia, but the price would be too high.

At one point VanBacker and Harvey considered using a contact in Brazil, a plan that was scrapped when the contact's business partner, U.S. millionaire George M. Perry, was found murdered in upstate New York, his body floating in Lake Tiorati. State investigators said Perry's Brazilian business partner had been engaged in a $1-billion arms deal in Europe with a nephew of the ayatollah, a deal that had collapsed six months earlier.

Harvey ruled out using England, saying: "They're too starchy." Both men agreed that their preference would be to get the phony documents from Egypt where the "commission" could be 8% to 12% of the total shipment price.

Use of Bribes

Besides phony export documents, other schemes were under consideration by the arms merchants. They could circumvent U.S. export controls, they said, by hiring a ship's captain willing to detour to Iran in mid-voyage. Whatever plans were employed, VanBacker emphasized, it would require "baksheesh"--bribes--paid in advance to foreign officials.

As negotiations neared the crucial moment--when the $10 million would be handed over to VanBacker and Harvey as down payment on the $2-billion order--Angell expressed doubts to the arms dealers about the plan's details. VanBacker and Harvey eagerly offered assurances about the reliability of their plan and the people who would support it--"our family," Harvey liked to call his associates.

Among others in the "family," according to VanBacker, was CIA Director William J. Casey. In conversations recorded by government agents and later discussed in court, VanBacker said, for instance, that he had a "close relationship" with Casey, and "I can go down to Casey's office and talk with him all day long." A CIA spokesman who checked with Casey said: "He has never heard of Mr. VanBacker."

Angell testified that VanBacker also showed him his address book containing handwritten entries for Deane, whom he described as one of his "associates" who "could help out in various aspects" of the arms deal. In a conversation recorded by agents after the arms merchants examined the $10 million, VanBacker added: "Gen. Deane doesn't work for nothing." Deane called VanBacker's assertions "a goddamned lie."

None of the records seized from VanBacker's office revealed evidence of any business dealings with Casey or Deane.

Talks of Fizzled Deals

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