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Days of Meetings Brought Arms Sellers Together

December 18, 1986|WILLIAM C. REMPEL | Times Staff Writer

WASHINGTON — Adnan Khashoggi and Manucher Ghorbanifar, the international arms merchants who became central figures in secret U.S. weapons sales to Iran, formed their business alliance after four days of "wheeler-dealer meetings" in West Germany arranged by a longtime friend of CIA Director William J. Casey, according to sources familiar with the participants.

And within two months after Khashoggi and Ghorbanifar were introduced to each other last year by New York oil consultant Roy M. Furmark--recently revealed as a go-between for Casey and Khashoggi--the arms merchants brokered their first U.S.-sanctioned weapons deals involving American-made anti-tank missiles shipped to Iran from Israel.

There has been no indication that Casey knew about the meeting.

Hamburg Hotel

According to the sources, the meetings from June 14 to 17, 1985, at the Vier Jahreszeiten Hotel in Hamburg centered on discussions about opening up business dealings with Iran, possibly involving billions of dollars. The potential deals ranged from the sale of farm equipment and oil to the export of military equipment and arms.

Daylong negotiations took place in penthouse suites of the hotel overlooking Alster Lake and in Mercedes-Benz limousines en route to expensive dinners--with time out from the marathon sessions for side trips to a Persian rug sale and late-night bars with striptease shows.

"It was four days of fancy hotels, fancy women, sleazy bars and smoke-filled rooms," one associate of a participant said.

Account Disputed

Furmark, who said he had done business earlier with both Khashoggi and Ghorbanifar, told The Times that he recalled no discussions of arms sales during those meetings. However, his account was disputed by others familiar with the negotiations and by statements filed in federal court weeks before the Iran arms scandal broke.

Samuel Evans, an attorney for Khashoggi who also attended the meetings, said in a sworn statement that Khashoggi, Furmark and London-based Iranian businessman Cyrus Hashemi earlier had organized a joint venture called World Trade Group. The company's purposes were to trade petroleum from the National Iranian Oil Co., to distribute agricultural equipment to Iran and to "supply arms to Iran."

Valuable Link

Ghorbanifar was seen by the joint venture partners as a valuable link to key trading officials in Tehran, sources said. But their introduction to Ghorbanifar may not have worked out as well as planned for the World Trade partners.

According to sources and an examination of those court records in New York, the resulting Khashoggi-Ghorbanifar union appeared to be the outgrowth of an old-fashioned business double cross. Khashoggi almost immediately abandoned Hashemi in favor of dealing directly with Ghorbanifar, the better-connected Iranian middleman, in the covert arms supply effort.

And the now-deceased Hashemi, cut out of the sanctioned arms deals, secretly contacted the U.S. Justice Department and became a government informant in this country's biggest arms smuggling "sting" operation in history. Months later, the resulting U.S. Customs Service investigation led to arrests of 10 men, including Khashoggi's attorney and a retired Israeli general.

Concern About Iran

About the time of the Hamburg meetings in June, 1985, analysts at the CIA and at the White House National Security Council were reviewing U.S. policy toward Iran. Robert C. McFarlane, then President Reagan's national security adviser, reportedly was concerned that Iran might fall into Soviet orbit.

The concern of McFarlane--who the New York Times reported met in March, 1985, with Khashoggi--was reflected in an NSC memorandum a month later that raised the prospect of giving the Iranians "material aid" and "equipment" to soften their American opposition.

Associates of those who attended the Hamburg meetings said it was "common knowledge" in the international arms community that by June, 1985, the United States was interested in funneling arms to Iran through Israel.

Genesis of Alliance

And the meetings in Hamburg represent the genesis of a business alliance whose partners would serve as financial brokers for the earliest indirect, U.S.-sanctioned arms deals with Iran, the first two of which were sent through Israel.

According to accounts published in Israel, Khashoggi collected $250,000 in commissions from the first two arms transactions, valued at $5 million. An Israeli arms dealer got about $1 million to cover commissions and the costs of leasing a plane (about $250,000) to ship the first 100 anti-tank missiles to Tehran.

When a subsequent arms sale collapsed and tied up $10 million in investor funds, Furmark acted as a go-between, seeking help from Casey on Khashoggi's behalf. Furmark told The Times that he met Casey three times this fall. The New York businessman has known Casey and Khashoggi for about 20 years.

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