ST. TROPEZ, France — The international arms bazaar, operated from the back streets and grand boulevards of Paris, London, Geneva and even this sleepy corner of the Cote d'Azur, is a shadowy world of secrets and intrigue, of fanciful rumors and--sometimes--incredible truths.
This is the world that knew long before the American or Iranian publics that the White House and Tehran were engaged in clandestine foreign policy initiatives involving trades in arms and hostages.
And it was from this Mediterranean village resort that a self-proclaimed "retired oil trader" passed along a report late last December to an Oregon associate that newly appointed national security adviser John M. Poindexter had approved the sale of anti-tank missiles to Iran via Israel, news that wasn't publicly known until nearly a year later.
Exploiting such inside information, the denizens of this world planned, plotted and schemed to profit from the secrets that would later shock America.
This is a story about some of those schemes and some of the characters behind them. It is based on federal court records, private documents obtained by The Times and interviews conducted in Europe and the United States with the participants.
It was November, 1985, when Cyrus Hashemi, a wealthy London-based cousin of Iran Parliament Speaker Hashemi Rafsanjani, asked his lawyer to try to locate arms dealers willing to ship U.S.-made weapons and military supplies to Iran in defiance of a longstanding U.S. ban on such trade.
Attorney Samuel Evans, an American living in London who represented both Hashemi and Saudi businessman Adnan Khashoggi, sought contacts in the arms bazaar and was told that not only were weapons available but that some Frenchmen were negotiating with the United States to sanction such sales in exchange for renewed, low-level diplomatic relations between the two countries.
One of those Frenchmen was John de Larocque, 57, a St. Tropez oil trader with links to European and Middle Eastern intelligence sources, who was introduced to Hashemi by Evans.
De Larocque at the time was engaged in a determined campaign to alert U.S. officials that some of his Iranian military contacts were interested in trading military supplies for discussions about normalizing relations--and possibly helping assist in the release of hostages.
Richard J. Brenneke, a De Larocque associate in Oregon, had passed detailed memoranda to officials of the U.S. Department of Defense relaying this interest and adding that Iran was willing to trade Soviet intelligence information and a highly sought Soviet-made tank as well. In December, De Larocque awaited a response from the United States.
Already the closing days of 1985 had been busy among international arms traders and the fringe intelligence operatives who swarm about them like flies at a fruit stand.
Word of Israeli weapons shipments to Iran was rippling through the sensitive marketplace.
And in Geneva, a long-established arms merchant was offered 30 fighter-jets and other equipment for $500 million. Another trader investigated, found out the planes were owned by the California Air National Guard, and shrugged off the offer as another attempt by con men "trying to sell the Brooklyn Bridge."
As usual in this shadowy world, it was hard to separate the fairy tales from the facts.
Hashemi, a fugitive from a U.S. arms-smuggling indictment pending in New York and no stranger to the arms bazaar himself, arranged to meet with an international group of businessmen in Paris to discuss the possibility of an American-approved arms deal with Iran. Among those who attended was another associate of De Larocque--Bernard Veillot of Paris.
According to court records in New York and subsequent interviews with Brenneke and De Larocque, Veillot was a middleman in earlier efforts to bring U.S. and Iranian officials together in 1984.
That effort, code-named "Project Condor-Demavend," for a mountain outside Tehran, ended in failure in October, 1985, they said, because of Iran's reported reluctance to deal with the CIA.
At the Paris meeting in December, Veillot told Evans and Hashemi--without naming the earlier project--about De Larocque's attempt to resurrect Condor-Demavend. And Veillot later told them that Vice President George Bush was considering the proposal.
Hashemi, apparently seeing an opportunity to curry leniency in his pending criminal case, contacted the U.S. Customs Service and the Justice Department through a New York attorney. He asked whether there was any truth to the claim that U.S. policy toward Iran arms trading might be changing. If not, he offered to serve as a double agent and allow Customs agents to witness the arms transaction that he had initiated through Evans in Europe.
U.S. officials told Hashemi what they later repeated in a federal court in New York, that any claim that the United States would sanction sales of arms to Iran was "a fairy tale" and they assigned agents to work with him.