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Senate Report Calls Iranian Middleman in Arms Sales A ‘Suspect Character’

February 1, 1987

WASHINGTON (AP) _ The Iranian middleman in sale of U.S. arms to Tehran has been accused of having links with drug dealers, working with the shah’s secret police and giving Washington dubious intelligence on terrorists, according to knowledgeable sources and a Senate committee report.

As early as 1984, the year before the arms deals began, the CIA circulated a memorandum describing Iranian businessman Manucher Ghorbanifar as a ″known fabricator″ and ″suspect character,″ said a report issued last week by the Senate Select Committee on Intelligence.

One Iranian emigre source said the CIA decided Ghorbanifar was unreliable, in part because he was a source of reports in 1981 that Libya had dispatched hit teams to the United States to attack President Reagan and other officials. The information was later discredited, and intelligence sources said that Ghorbanifar repeatedly failed CIA lie detector tests.

Other Iranian exiles, who cooperated closely with SAVAK, the secret police of Shah Mohammed Reza Pahlavi before he was overthrown in 1979, said that Ghorbanifar worked in London with SAVAK under his own name and the pseudonym ″Souzani.″ The exiles, who held senior positions in the shah’s government, spoke on condition of anonymity.

After the revolution, Ghobanifar had ties with MOSSAD, the Israeli intelligence service, and developed commercial links with the revolutionary regime of Ayatollah Ruhollah Khomeini, said the sources.

They said that in 1981, Ghorbanifar supplied the Khomeini regime with information that helped thwart a coup attempt by Air Force officers who were followers of Shahpour Bakhtiar, one of the shah’s last prime ministers, forced into exile after the revolution.

The government foiled the coup and executed about 130 officers.

In his book, ″Reign of the Ayatollahs,″ historian Shaul Bakhash says that the coup plotters had lax security, and advance word of it apparently leaked to the authorities from several sources.

U.S. intelligence sources said they were aware of the reports from the Iranian emigres, and had sifted through them in determining that Ghorbanifar’s credentials were questionable.

Despite CIA misgivings, National Security Council staff member Lt. Col. Oliver North and NSC consultant Michael Ledeen expressed confidence in Ghorbanifar when the arms deals began in 1985, the report said.

North was fired from the NSC last November and identified as the central player in the deal that sent U.S. arms to Iran and some of the proceeds to help Nicaraguan rebels.

The Senate report, and some of the lawmakers who compiled it, have implied that the failure of the Iran initiative policy came in large part because the White House placed too much reliance on inexperienced policy-makers and too little on foreign policy veterans.

Statements by Robert McFarlane, who stepped down as White House national security adviser in December 1985, suggest a wider failure of communication within the administration. McFarlane, in an interview published Saturday in The New York Times, said he was not informed of CIA reservations about Ghorbanifar before the shipments began.

In another breach of procedure, North arranged to give Ghorbanifar U.S. ″intelligence samples″ in January 1986, despite warnings from John McMahon, the deputy CIA chief, that such information could give Iran a battlefield advantage over Iraq, the committee report said.

Concern over Ghorbanifar’s motives finally led the White House to drop him in 1986, after evidence suggested that he was pocketing excessive profits from the arms sales, the Senate report said.

Ghorbanifar’s past is as murky as the world he lived in, dealing in arms and intelligence, and associating with drug smugglers, according to the available information.

In an interview with ABC-TV last Dec. 11, Saudi arms dealer Adnan Khashoggi identified Ghorbanifar as chief of European intelligence for Iranian Prime Minister Mir Hussein Mousavi. On the same program, Ghorbanifar described himself as a private businessman with ″no connection with the government.″

White House officials at first agreed to deal with Ghorbanifar because they received assurances from David Kimche, then director general of the Israeli Foreign Ministry, and Israeli arms dealers Al Schwimmer and Yaacov Nimrodi, the Senate report said.

Ledeen said he was aware of CIA distrust of Ghorbanifar, and that ″I had profound reservations about him at first. But he proved out″ by opening a channel to Iranian leaders. ″He behaved reliably.″

″He is a private businessman who is a friend of many powerful people in Iran,″ Ledeen said in an interview Friday.

Ghorbanifar, in his December interview with ABC, said that ″nobody made a profit″ on the deal, which he described as ″only a drop in the sea.″ But the Senate report suggests otherwise.

Two CIA officials told the committee that by August 1986, they had become ″more upset″ over Ghorbanifar’s handling of money from the arms sales.

″Ghorbanifar admitted to trying for a profit of 60 percent on top of the base price, but it would have taken a margin of at last five times that to explain the figures that the CIA officials now understood to be involved,″ the report said.

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