Conspiracy charges against a retired Israeli general and 11 other international businessmen were dropped by federal prosecutors in New York on Wednesday, nearly three years after they were accused of being "brokers of death" for trying to negotiate a private $2.5-billion arms sale to Iran.
The case, scheduled for trial in March, had been entangled in the Iran-Contra scandal ever since the White House-sanctioned arms initiative with Iran was exposed in the fall of 1986, six months after 10 of the defendants were arrested in New York and Bermuda.
Key defendants in the New York prosecution, including Nico Minardos of Beverly Hills, were close associates of Saudi Arabian financier Adnan Khashoggi, a middleman in the secret U.S. arms-for-hostages deals. Minardos and others had said, both in unguarded remarks recorded by federal undercover agents and in subsequent court papers, that they expected White House and Israeli government approval for the arms sales.
'New Facts and Developments'
In an apparent reference to the White House arms initiative, prosecutors said in a written statement that "new facts and developments" that had emerged since the indictments were filed had strengthened the defense case.
Defendants along with Minardos were former Brig. Gen. Avraham Bar-Am, an Israeli war hero; Samuel Evans, a London-based American attorney for Khashoggi, and a group of Israeli, German and British businessmen.
Evans' attorney, Lawrence Bader, welcomed the decision to drop charges but said it came two years too late.
"Once the scope of the White House Iran arms deals was known and they compared what the White House was doing with what our clients were saying on those undercover tapes, they should have dropped the case," Bader said. "They don't know anything today that they didn't know two years ago."
Gives Giuliani's Motives
Attorney Ronald Kuby said the case was dropped because U.S. Atty. Rudolph W. Giuliani, whose Manhattan office was handling the prosecution, "realized he was not only going to lose a headline case, but he was going to drag the new Bush Administration through the muck of Contragate in the process."
The surprise decision to drop charges brought an abrupt end to the long-running and controversial case that began as an undercover sting investigation by the U.S. Customs Service in December, 1985.
The sting was masterminded by Iranian arms merchant Cyrus Hashemi, then a fugitive from a federal indictment on unrelated arms sales to Iran. Hashemi became a government informant, however, only after he tried--and failed--to become a paid middleman in the U.S.-sanctioned arms deals with Iran, CIA and congressional investigative records revealed.
Evidence of Resistance
Tape recordings made by Hashemi and undercover customs agents show that Minardos, Evans and others involved in the early stages of the case--which coincided with the period when President Reagan was being asked to sign an intelligence "finding" authorizing arms sales that were already occurring--resisted explicit suggestions by Hashemi that they engage in an illegal arms deal.
The tapes show what, in retrospect, was remarkable detail about what was going on secretly in the White House. For example, one of their associates says in December, 1985, that newly appointed National Security Adviser John M. Poindexter had approved the sale of TOW anti-tank missiles to Iran. He had.
Also, in January, 1986, the same associate was recorded saying that a paper was on the desk of Vice President George Bush awaiting his signature to approve secret arms sales to Iran. The next day, the finding was signed--not by Bush, but by Reagan.
The businessmen also knew that the arms deals were opposed by Secretary of State George P. Shultz and Defense Secretary Caspar W. Weinberger.
Federal prosecutors, however, said they found no evidence that the White House-sanctioned arms deals with Iran involved any of those charged in this case.
The much ballyhooed arrests of Bar-Am and the others was followed by a televised press conference in New York at which Giuliani and Customs Commissioner William von Raab said federal agents had prevented the "brokers of death" from selling arms to terrorists.
Prosecutors dismissed defense claims that the businessmen expected governmental approval of the deal. They called such claims "fantasies."
Hashemi, who had been promised that charges against him would be dropped in exchange for his help on the case, died suddenly of cancer three months later. Prosecutors said his death also hurt their case since he may have been able to refute defense claims that the businessmen proceeded with the deal believing it was, or would be, sanctioned.