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Full text of "Report of the congressional committees investigating the Iran- Contra Affair : with supplemental, minority, and additional views"

Y l.l/2:Serial 13766 

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100th Congress — 1st Session • January 6-December 22, 1987 



Senate Report 

No. 216 




IRAN-CONTRA INVESTIGATION 

APPENDIX B, VOLUME 25 
DEPOSITIONS 



United States Congressional Serial Set 

Serial Number 13766 



United States Government Printing Office 
Washington : 1989 



Union Calendar No. 277 
100th Congress, 1st Session 
S. Rept. No. 100-216 H. Rept. No. 100-433 



Report of the Congressional Committees Investigating the 

Iran-Contra Affair 

Appendix B: Volume 25 
Depositions 



Daniel K. Inouye, Chairman, 
Senate Select Committee 

Lee H. Hamilton, Chairman, 
House Select Committee 



U.S. Senate Select Committee U.S. House of Representatives 

On Secret Military Assistance to Iran Select Committee to Investigate 

And the Nicaraguan Opposition Covert Arms Transactions with Iran 

November 13, 1987. - Committed to the Committee of the Whole House 

on the State of the Union and ordered to be printed. 

November 17, 1987.— Ordered to be printed. 



Washington : 1988 



Bnited States ^tnate 

SELECT COMMITTEE ON SECRET MILITARY 

ASSISTANCE TO IRAN AND THE NICARAGUAN OPPOSITION 

WASHINGTON. DC 20510-6480 



March 1, 1988 

Honorable John C. Stennis 
President pro tempore 
United States Senate 
Washington, D.C. 

Dear Mr. President: 

We have the pleasure to transmit herewith, pursuant to 
Senate Resolution 23, Appendix B to the final Report of the 
Senate Select Committee on Secret Military Assistance to Iran 
and the Nicaraguan Opposition. We will submit such other volumes 
of Appendices to the Report as are authorized and as they become 
available. 



Sincerely, 




Warren B. Rudman V^^ 
Vice Chairman 



III 



U.S. HOUSE OF REPRESENTATIVES 

SELECT COMMITTEE TO INVESTIGATE 

COVERT ARMS TRANSACTIONS WITH IRAN 

UNITED STATES CAPITOL 

WASHINGTON. DC 206 IB 

(202) 22S-7B02 

March 1, 1988 



The Honorable Jim Wright 
Speaker of the House 
U. S. Capitol 
Washington, D. C. 20515 

Dear Mr . Speaker : 

Pursuant to the provisions of House Resolutions 12 and 
330 and House Concurrent Resolution 195, 100th Congress, 1st 
Session, I transmit herewith Appendix B to the Report of the 
Congressional Committees Investigating the Iran-Contra Affair , 
House Report No. 100-433, 100th Congress, 1st Session. 

Appendix B consists of the depositions taken by the 
Select Committees during the investigation. The contents of 
Appendix B have been declassified fq^-Yelease to the public. 




Lee H. Hamilton 
Chairman 



United States Senate 

Select Committee on Secret Military Assistance 
To Iran and the Nicaraguan Opposition 

Daniel K. Inouye, Hawaii, Chairman 
Warren Rudman, New Hampshire, Vice Chairman 

George J. Mitchell, Maine 

Sam Nunn, Georgia 
Paul S. Sarbanes, Maryland 
Howell T. Heflin, Alabama 
David L. Boren, Oklahoma 

James A. McClure, Idaho 

Orrin G. Hatch, Utah 

William S. Cohen, Maine 

Paul S. Trible, Jr., Virginia 



Arthur L. Liman 
Chief Counsel 

Mark A. Belnick Paul Barbadoro 

Executive Assistant Deputy Chief Counsel 

To the Chief Counsel 

Mary Jane Checchi 
Executive Director 

Lance I. Morgan 
Press Officer 



VI 



United States House of Representatives 

Select Committee to Investigate Covert Arms 
Transactions with Iran 

Lee H. Hamilton, Indiana, Chairman 
Dante B. Fascell, Florida, Vice Chairman 

Thomas S. Foley, Washington 

Peter W. Rodino, Jr., New Jersey 

Jack Brooks, Texas 

Louis Stokes, Ohio 

Les Aspin, Wisconsin 

Edward P. Boland, Massachusetts 

Ed Jenkins, Georgia 

Dick Cheney, Wyoming, Ranking Republican 

Wm. S. Broomfield, Michigan 

Henry J. Hyde, Illinois 

Jim Courter, New Jersey 

Bill McCollum, Florida 

Michael DeWine, Ohio 



John W. Nields, Jr. 
Chief Counsel 

W. Neil Eggleston 
Deputy Chief Counsel 

Kevin C. Miller 
Staff Director 



Thomas R. Smeeton 
Minority Staff Director 

George W. Van Cleve 
Chief Minority Counsel 

Richard J. Leon 
Deputy Chief Minority Counsel 



VII 



United States Senate 



Select Committee on Secret Military Assistance to 
Iran and the Nicaraguan Opposition 



Arthur L. Liman 
Chief Counsel 
Mark A. Belnick Paul Barbadoro 

Executive Assistant Deputy Chief Counsel 

to the Chief Counsel 

Mary Jane Checchi 
Executive Director 

Lance I. Morgan 
Press Officer 

Associate Counsels 



C. H. Albright, Jr. 
Daniel Finn 
C. H. Holmes 
James E. Kaplan 
Charles M. Ken- 
Joel P. Lisker 



W. T. McGough, Jr. 
Richard D. Parry 
John D. Saxon 
Terry A. Smiljanich 
Timothy C. Woodcock 



Committee Staff 



Assistant Counsels 



Legal Counsel 
Intelligence/Foreign 

Policy Analysts 
Investigators 



Press Assistant 
General Accounting 
Office Detailees 



Security Officer 
Security Assistants 



Chief Clerk 
Deputy Chief Clerk 



Steven D. Arkin* 
Isabel K. McGinty 
John R. Monsky 
Victoria F. Nourse 
Philip Bobbitt 
Rand H. Fishbein 
Thomas Polgar 
Lawrence R. 

Embrey, Sr. 
David E. Faulkner 
Henry J. Flynn 
Samuel Hirsch 
John J. Cronin 
Olga E. Johnson 
John C. Martin 
Melinda Suddes* 
Robert Wagner 
Louis H. Zanardi 
Benjamin C. 

Marshall 
Georgiana 

Badovinac 
David Carty 
Kim Lasater 
Scott R. Thompson 
Judith M. Keating* 
Scott R. Ferguson 



Staff Assistants 



Administrative Staff 



Secretaries 



Receptionist 
Computer Center 
Detailee 



John K. Appleby 
Ruth Balin 
Robert E. Esler 
Ken Foster* 
Martin H. Garvey 
Rachel D. Kaganoff* 
Craig L. Keller 
Hawley K. 

Manwarring 
Stephen G. Miller 
Jennie L. Pickford* 
Michael A. Raynor 
Joseph D. 

Smallwood* 
Kristin K. Trenholm 
Thomas E. Tremble 
Bruce Vaughn 
Laura J. Ison 
Hilary Phillips 
Winifred A. Williams* 
Nancy S. Durflinger 
Shari D. Jenifer 
Kathryn A. Momot 
Cindy Pearson 
Debra S. Sheffield* 
Ramona H. Green 
Preston Sweet 



VIII 



Committee Members' Designated Liaison 



Senator Inouye 
Senator Rudman 

Senator Mitchell 

Senator Nunn 

Senator Sarbanes 
Senator Heflin 



Peter Simons 
William V. Cowan 
Thomas C. Polgar 
Richard H. 
Arenberg 
Eleanore Hill 
Jeffrey H. Smith 
Frederick Millhiser 
Thomas J. Young 



Senator Boren 

Senator McClure 
Senator Hatch 

Senator Cohen 

Senator Trible 



Sven Holmes 
Blythe Thomas 
Jack Gerard 
Dee V. Benson 
James G. Phillips 
James Dykstra 
L. Britt Snider 
Richard Cullen 



Part Time* 



Assistant Counsel 
Hearings Coordinator 
Staff Assistants 



Interns 



Peter V. Letsou 
Joan M. Ansheles 
Edward P. 

Flaherty, Jr. 
Barbara H. Hummell 
David G. Wiencek 
Nona Balaban 
Edward E. 

Eldridge, III 
Elizabeth J. Glennie 
Stephen A. Higginson 
Laura T. Kunian 
Julia F. Kogan 
Catherine L. Udell 



Document Analyst 

Historian 

Volunteers 



Lyndal L. Shaneyfelt 
Edward L. Keenan 
Lewis Liman 
Catherine Roe 
Susan Walsh 



♦The staff member was not with the Select Committee when the Report was filed but had, during 
the life of the Committee, provided services. 



IX 



United States House of Representatives 



Select Committee to Investigate 
Covert Arms Transactions with Iran 



Majority Staff 



Special Deputy 

Chief Counsel 
Staff Counsels 



Press Liaison 
Chief Clerk 
Assistant Clerk 
Research Director 
Research Assistants 



John W. Nields, Jr. 
Chief Counsel 

W. Neil Eggleston 
Deputy Chief Counsel 

Kevin C. Miller 
Staff Director 



Charles Tiefer 

Kenneth M. Ballen 
Patrick J. Carome 
V. Thomas 

Fryman, Jr. 
Pamela J. 

Naughton 
Joseph P. Saba 
Robert J. Havel 
Ellen P. Rayner 
Debra M. Cabral 
Louis Fisher 
Christine C. 

Birmann 
Julius M. 

Genachowski 
Ruth D. Harvey 
James E. Rosenthal 



Systems 

Administrator 
Systems 

Programmer/ 

Analysts 
Executive Assistant 
Staff Assistants 



Catherine L. 

Zimmer 
Charles G. Ratcliff 
Stephen M. 

Rosenthal 
Elizabeth S. Wright 
Bonnie J. Brown 
Christina Kalbouss 
Sandra L. Koehler 
Jan L. Suter 
Katherine E. Urban 
Kristine Willie 
Mary K. Yount 



Minority Staff 



Associate Minority 

Counsel 
Assistant Minority' 

Counsel 
Minority Research 

Director 



Thomas R. Smeeton 
Minority Staff Director 

George W. Van Cleve 
Chief Minority Counsel 

Richard J. Leon 
Deputy Chief Minority Counsel 



Robert W. 
Genzman 
Kenneth R. Buck 

Bruce E. Fein 



Minority Staff 
Editor/Writer 

Minority Executive 
Assistant 

Minority Staff 
Assistant 



Michael J. Malbin 

Molly W. Tully 

Margaret A. 
Dillenburg 



Committee Staff 



Investigators 



Director of Security 



Robert A. 

Bermingham 
James J. Black 
Thomas N. 

Ciehanski 
William A. Davis, 

III 
Clark B. Hall 
Allan E. Hobron 
Roger L. Kreuzer 
Donald Remstein 
Jack W. Taylor 
Timothy E. Traylor 
Bobby E. Pope 



Security Officers 



Editor 

Deputy Editor 
Associate Editor 
Production Editor 
Hearing Editors 

Printing Clerk 



Rafael Luna, Jr. 
Theresa M. Martin 
Milagros Martinez 
Clayton C. Miller 
Angel R. Torres 
Joseph Foote 
Lisa L. Berger 
Nina Gray bill 
Mary J. Scroggins 
David L. White 
Stephen G. Regan 
G. R. Beckett 



Associate Staff 



Representative 
Hamilton 

Representative 
Fascell 

Representative 

Foley 
Representative 

Rodino 

Representative 

Brooks 
Representative 

Stokes 
Representative 

Aspin 



Michael H. 

Van Dusen 
Christopher Kojm 
R. Spencer Oliver 
Bert D. Hammond 
Victor Zangia 
Heather S. Foley 
Werner W. Brandt 
M. Elaine Mielke 
James J. 

Schweitzer 
William M. Jones 

Michael J. O'Neil 
Richard M. Giza 
Richard E. Clark 
Warren L. Nelson 



Representative 

Boland 
Representative 

Jenkins 
Representative 

Broomfield 
Representative 

Hyde 
Representative 

Courter 
Representative 

McCollum 
Representative 

DeWine 
General Counsel to 

the Clerk 



Michael W. Sheehy 

Robert H. Brink 

Steven K. Berry 
David S. Addington 
Diane S. Doman 

Dennis E. Teti 

Tina L. Westby 

Nicholas P. Wise 

Steven R. Ross 



XI 



Contents 

Volume 25 



Preface XXI 

Shackley, Theodore G 1 

Sigur, Gaston J 477 

Simpson, Major C 55 1 

Sinclair, Thomas C 857 

Singlaub, John K 909 



XIII 



Depositions 



Volume 1 



Airline Proprietary Project Officer. 
Alvarez, Francisco J. 
Allen, Charles. 
Arcos, Cresencio. 



Volume 2 



Volume 3 



Armitage, Richard. 
Artiano, Martin L. 
Associate DDO (CIA). 
Baker, James A., III. 
Barbules, Lt. Gen. Peter. 
Bamett, Ana. 
Bartlett, Linda June. 
Bastian, James H. 
Brady, Nicholas F. 
Brown, Arthur E., Jr. 



Byrne, Phyllis M. 
Calero, Adolfo. 
Castillo, Tomas ("W"). 
Cave, George W. 
C/CATF. 



Volume 4 

Channell, Carl R. 

Chapman, John R. (With Billy Ray Reyer). 

Chatham, Benjamin P. 

CIA Air Branch Chief. 

CIA Air Branch Deputy Chief. 

CIA Air Branch Subordinate. 

CIA Chief. 

CIA Conmiunicator. 

CIA Identity "A". 



XV 



Volume 5 

CIA Officer. 

Clagett, C. Thomas, Jr. 

Clark, Alfred (With Gregory Zink). 

Clarke, George. 

Clarridge, Dewey R. 

Cline, Ray S. 

C/NE. 

Cohen, Harold G. 

Volume 6 

Collier, George E. 

Cole, Gary. 

Communications Officer Headquarters, CIA. 

Conrad, Daniel L. 



Volume 7 



Cooper, Charles J. 
Coors, Joseph. 
Corbin, Joan. 
Corr, Edwin G. 
Coward, John C. 
Coy, Craig P. 
Crawford, Iain T.R. 



Crawford, Susan. 
Crowe, Adm. William J. 
Currier, Kevin W. 
DCM, Country 15. 
DEA Agent 1. 
DEA Agent 2. 
DEA Agent 3. 
deGraffenreid, Kenneth, 
de la Torre, Hugo. 
Deputy Chief "DC". 



Duemling, Robert W. 
DIA Major. 
Dietel, J. Edwin. 
Dowling, Father Thomas. 
Dutton, Robert C. 
Earl, Robert. 



Volume 8 



Volume 9 



XVI 



Farber, Jacob. 
Feldman, Jeffrey. 
Fischer, David C. 
Floor, Emanuel A. 
Former CIA Officer. 
Fraser, Donald. 
Fraser, Edie. 
Fuller, Craig L. 



Volume 10 



Volume 11 



Furmark, Roy. 

Gadd, Richard. 

Gaffhey, Henry. 

Gaffhey, Henry (With Glenn A. 

Galvin, Gen. John R. 

Gantt, Florence. 

Garwood, Ellen Clayton. 

Gast, Lt. Gen. Philip C. 

Gates, Robert M. 

Glanz, Anne. 



Rudd). 



Volume 12 



George, Clair. 
Godard, Ronald D. 
Godson, Roy S. 
Golden, William. 
Gomez, Francis D. 
Goodman, Adam. 
Gorman, Paul F. 
Graham, Daniel O. 
Gregg, Donald P. 
Gregorie, Richard D. 
Guillen, Adriana. 



Hakim, Albert. 



Hall, Wilma. 
Hasenfiis, Eugene. 
Hirtle, Jonathan J. 
Hooper, Bruce. 



Volume 13 



Volume 14 



XVII 



Hunt, Nelson Bunker. 
Ikle, Fred C. 
Jensen, D. Lowell. 
Juchniewicz, Edward S. 
Kagan, Robert W. 
Keel, Alton G. 
Kellner, Leon B. 
Kelly, John H. 
Kiszynski, George. 



Koch, Noel C. 
Kuykendall, Dan H. 
Langton, William G. 
Lawn, John C. 
Leachman, Chris J., Jr. 
Ledeen, Michael A. 



Leiwant, David O. 
Lilac, Robert H. 
Lincoln, Col. James B. 
Littledale, Krishna S. 
McDonald, John William. 
McFarlane, Robert C. 
McKay, Lt. Col. John C. 
McLaughlin, Jane E. 



McMahon, John N. 
McMahon, Stephen. 
McNeil, Frank. 
Makowka, Bernard. 
Marostica, Don. 
Marsh, John. 
Mason, Robert H. 



Meese, Edwin IIL 
Melton, Richard H. 
Merchant, Brian T. 
Meo, Philip H. 
Miller, Arthur J. 
Miller, Henry S. 
Miller, Johnathan. 



Volume 15 



Volume 16 



Volume 17 



Volume 18 



XVIII 



Miller, Richard R. 



Motley, Langhome A. 
Mulligan, David R 
Nagy, Alex G. 
Napier, Shirley A. 
Newington, Barbara. 
North, Oliver L. 
O'Boyle, William B. 
Osborne, Duncan. 
Owen, Robert W. 
Pena, Richard. 
Pickering, Thomas. 
Poindexter, John M. 



Posey, Thomas V. 
Powell, Gen. Colin L. 
Price, Charles H., II. 
Proprietary Manager. 
Proprietary Pilot. 
Radzimski, James R. 
Ramsey, John W. 
Ransom, David M. 



Volume 19 



Volume 20 



Volume 21 



Volume 22 



Raymond, Walter, Jr. 

Regan, Donald T. 

Reich, Otto J. 

Revell, Oliver B. 

Reyer, Billy Ray (See John Chapman). 

Reynolds, William B. 



Volume 23 



Richard, Mark M. 
Richardson, John, Jr. 
Robelo, Alfonso. 
Robinette, Glenn A. 
Rodriguez, Felix I. 
Roseman, David. 



XIX 



Rosenblatt, William. 

Royer, Larry. 

Rudd, Glenn A. 

Rudd, Glenn A. (See Henry Gaffney). 



Rugg, John J. 
Russo, Vincent M. 
Sanchez, Nestor. 
Scharf, Lawrence. 
Schweitzer, Robert L. 
Sciaroni, Bretton G. 
Secord, Richard V. 



Shackley, Theodore G. 
Sigur, Gaston J. 
Simpson, Major C. 
Sinclair, Thomas C. 
Singlaub, John K. 



Slease, Clyde H., IIL 
Smith, Clifton. 
Sofaer, Abraham D. 
Steele, Col. James J. 
Taft, William H., IV. 
Tashiro, Jack T. 
Teicher, Howard. 
Thompson, Paul. 
Tillman, Jacqueline. 



Volume 24 



Volume 25 



Volume 26 



Volume 27 



Thurman, Gen. Maxwell. 

Trott, Stephen S. 

Tull, James L. 

Vessey, John. 

Walker, William G. 

Watson, Samuel J., IIL 

Weinberger, Caspar. 

Weld, William. 

Wickham, John. 

Zink, Gregory (See Alfred Clark). 



XX 



Preface 



The House Select Committee to Investigate Covert Arms Transactions with Iran 
and the Senate Select Committee on Secret Military Assistance to Iran and the 
Nicaraguan Opposition, under authority contained in the resolutions establishing 
them (H. Res. 12 and S. Res. 23, respectively), deposed approximately 290 
individuals over the course of their 10-month joint investigation. 

The use of depositions enabled the Select Committees to take sworn responses 
to specific interrogatories, and thereby to obtain information under oath for the 
written record and develop lines of inquiry for the public hearings. 

Select Committees Members and staff counsel, including House minority 
counsel, determined who would be deposed, then sought subpoenas from the 
Chairmen of the Select Committees, when appropriate, to compel the individuals 
to appear in nonpublic sessions for questioning under oath. Many deponents 
received separate subpoenas ordering them to produce certain written documents. 

Members and staff traveled throughout the United States and abroad to meet 
with deponents. All depositions were stenographically reported or tape-recorded 
and later transcribed and duly authenticated. Deponents had the right to review 
their statements after transcription and to suggest factual and technical correc- 
tions to the Select Committees. 

At the depositions, deponents could assert their fifth amendment privilege 
to avoid self-incrimination by refusing to answer specific questions. They were 
also entitled to legal representation. Most Federal Government deponents were 
represented by lawyers from their agency; the majority of private individuals 
retained their own counsel. 

The Select Committees, after obtaining the requisite court orders, granted 
limited or "use" immunity to about 20 deponents. Such immunity means that, 
while a deposed individual could no longer invoke the fifth amendment to avoid 
answering a question, his or her compelled responses— or leads or collateral 
evidence based on those responses— could not be used in any subsequent criminal 
prosecution of that individual, except a prosecution for perjury, giving a false 
statement, or otherwise failing to comply with the court order. 

An executive branch Declassification Committee, located in the White House, 
assisted the Committee by reviewing each page of deposition transcript and some 
exhibits and identifying classified matter relating to national security. Some 
depositions were not reviewed or could not be declassified for security reasons. 

In addition, members of the House Select Committee staff corrected obvious 
typographical errors by hand and deleted personal and proprietary information 
not considered germane to the investigation. 

In these Depositions volumes, some of the deposition transcripts are follow- 
ed by exhibits. The exhibits— documentary evidence— were developed by Select 
Committees' staff in the course of the Select Committees' investigation or were 
provided by the deponent in response to a subpoena. In some cases, where the 
number of exhibits was very large, the House Select Committee staff chose for 
inclusion in the Depositions volumes selected documents. All of the original 



XXI 



exhibits are stored with the rest of the Select Committees' documents with the 
National Archives and Records Administration and are available for public in- 
spection subject to the respective rules of the House and Senate. 

The 27 volumes of the Depositions appendix, totalling more than 30,000 pages, 
consist of photocopies of declassified, hand-corrected typewritten transcripts 
and declassified exhibits. Deponents appear in alphabetical order. 



XXII 



-'\ 



Publications of the Senate and House 
Select Committees 



Report of the Congressional Committees Investigating the Iran-Contra Affair, 
1 volume, 1987. 

Appendix A: Source Documents, 2 volumes, 1988. 
Appendix B: Depositions, 27 volumes, 1988. 
Appendix C: Chronology of Events, 1 volume, 1988. 
Appendix D: Testimonial Chronology, 3 volumes, 1988. 

All publications of the Select Committees are available from the U.S. 
Government Printing Office. 



XXIII 



TRANSCRIPT 
OF PROCEEDINGS 

UNITED STATES SENATE J\^)l^^^^^^^l^1 

SELECT COMMITTEE ON 

SECRET MILITARY ASSISTANCE TO 

IRAN AND THE NICARAGUAN OPPOSITION 

DEPOSITION OF THEODORE G. SHACKLEY 



Partially DeclassifieO/Rei.ased on 2^*^ 88 
onocr provisions of E !23si 
" Jonnsorugaticnal Saciiriiy Council 



V/^""^ 



Washington, D.C. 
Tuesday, September 15, 1987 



\ 



UNClASSinED 

ACE-FEDER.AL REPORTERS, I.\'C. 

Steiwtype Reporters 

444 North Capitoi Street 

Washington, D.C. 20001 

(202) 347-3700 
Nationwide Coverage 

800-336-6646 



82-736 0-88-2 



UNHASI^FIED 

UNITED STATES SENATE 

SELECT COMMITTEE ON 

SECRET MILITARY ASSISTANCE TO 

IRAN AND THE NICARAGUAN OPPOSITION 

DEPOSITION OF THEODORE G. SHACKLEY 

Washington, D.C. 

Tuesday, 

September 15, 1987 

Deposition of THEODORE G. SHACKLEY, called for 

examination at the offices of the Senate Select Committee, 

Suite 901, the Hart Senate Office Building, at 10:10 a.m. 

before DAVID L. HOFFMAN, a Notary Public within and for the 

District of Columbia, when were present on behalf of the 

respective parties: 

CAMERON HOLMES, Esq. 
Associate Counsel 
TIMOTHY WOODCOCK, Esq. 
United States Senate 

Select Committee on Secret 

Military Assistance to Iran 

and the Nicaraguan Opposition 



Partially Declassified/Released on "?'sJ-/^ < 
unoer provisions of E.O 12356 
by K Johnson. National Secuniy Council 



E-fED«AL IIEM)*TC«S. INC 



\Mmssim 



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JOSEPH P. SABA , Esq. 
Associate Majority Counsel 
ROBERT W. GENZMAN, Esq 
Associate Minority Counsel 

United States House of 

Representatives Select 

Ccnmittee to Investigate 

Covert Arms Transactions with Iran 

JACK MC KAY, Esq. 

Shaw, Pittman, Potts & Trowbridge 
2300 N Street, N.W. , 
Washington, D.C. 

On behalf of the Deponent 



'EMIAl •{POUTEDS. INC 



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CONTENTS 




WITNESS 




EXAMINATION 


Theodore 


G. Shackley 




by Mr. 


Holmes 


4, 171 


by Mr. 


Woodcock 


152 


by Mr. 


Saba 

EXHIBITS 


202 


SHACKLEY 


DEPOSITION EXHIBITS 


IDENTIFIED 


1 through 5 


4 


6 




29 


7 




40 



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LB.0£1.1.2.INGS 

(Shackley Deposition 
Exhibits 1-5 identified.) 
Whereupon, 

THEODORE G. SHACKLEY 
was called as a witness and, having been first duly sworn 
was examined and testified as follows: 
EXAMINATION 
BY MR. HOLMES: 
Q Would you please state your name for the record. 
A Theodore Shackley. 

Q I understand you have a statement you would like 
to make . 

A I would like to make a couple of points, as we 
start today's session. 

The first point that I would like to make is 
that I have furnished no advice, funds or equipment to the 
contras, and I have not sold them anything, and I am 
convinced the committee knows that to be a fact, based on 
your questioning of other witnesses. 

Secondly, on the topic of Iran, I have not been 
involved with the National Security Council or any other 



FCDCIU DtrOITdlS INC 



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agency of the U.S. Government, in order to arrange direct 
or indirect sales, -shipment or provision of arms to Iran. 

In my view, the committee also knows that to be 
fact, based on the investigations conducted to date. 

Thirdly, as you have undoubtedly read from my 
statements in the "Washington Post" and other places, I 
did have a meeting in November 1984 in Hamburg, Germany, 
with a Mr. Ghorbanifar. That meeting was attended by two 
other individuals. Emerging from that was a reference 
by Mr. Ghorbanifar, who was not known as an arms dealer 
at that time, but he had information on Americans in 
Lebanon. I took that information pertaining to the 
Americans in Lebanon, wrote a report, turned it into the 
State Department, to Ambassador Vernon Walters. I turned 
it into the State Depeurtment, because that is the agency 
of the U.S. Government that is responsible for Americans 
abroad who are in trouble. I subsequently heard from 
the Department through Mr. Montgomery, the Chief of the 
State INR, that they weren't interested in the data that 
I had furnished. That was in December 1984. I took no 
further action. 

In May of 1985, I was asked by Mr. Ledeen, 



e-fCKML DCraiTEII]. INC 



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ONWSIFIED 



who then was a consultant to the National Security Council, 
if I had any ideas on what could be done for the hostages in 
Lebanon. I told him I had none. 

I did tell him that I had previously written a 
paper which I turned in to the State Department. He asked 
me if he could see a copy of that paper, I would give him an 
update on whether that channel was still viable. 

I did both of those things. I turned them over 
to Mr. Ledeen, and I never heard anything further on that 
matter, until such time as the press started questioning me 
about my contacts with Mr. Ghorbanifar. 

Based on this sequence of events, my testimony 
to the Tower Commission and my discussions with Mr. Holmes 
and Mr. Polgar in February and March of 1987, I am perplexed 
as to why you have burdened me at this late date with a 
series of subpoenas so onerous in scope, they required me 
to spend over 215 hours of file searches and to make an 
appearance at today's session. 

Put most simply, the questions, from my point of 
view, are: Why are you doing this? And what do you want? 

These are not rhetorical questions born out of 
frustration and anger. The issue is one of fairness. 



UNClASSinED 



UimSSfflED 



.(-fCKIAl. •CraHTEIIS. INC 



In short, why is my hisiness being put in 
jeopardy, and why am I being harassed for having, in my view, 
quite properly, reported to the State Department, information 
obtained by chance on American hostages in Lebanon. And I'm 
concerned, because, as you know, I'm also involved in a 
lawsuit in Florida which has been brought against me for 
what I think are vicious political reasons, and I'm trying 
to understand what this assault is on me, for what reason. 

And Mr. Holmes, I would be specifically interested - 
in hearing your response to those questions, so I understand 
why you called me down here. ' 
Thank you. 

Q Mr. Shackley, unfortxinately , you have asked a 
question that is not appropriate for this forum for me to 
respond to. 

I can tell you that the committee has legitimate 
interests in the facts that you have in your mind and in your 
files, and we intend to get those facts in a way that will 
protect you within the rules of the coi^ttee from unauthorized 
or inappropriate disclosure of that information in doing so. 

A What does that mean? What are you saying, that you 
are not going to answer my question? 



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Q This is your deposition, Mr. Shackley; it's not 
my deposition. You're here to answer questions. 

A Why did you ask me to come down? 

Q The committee has information that you do have 
firsthand knowledge of a number of areas and events that 
do directly relate to this investigation. It is simply a 
misconception, if I understand your statement correctly, that 
a person who has not sold arms to Iran or supplied arms to the 
contras doesn't have relevant information. As you may know 
from following the hearings, most of the witnesses would fall ■ 
into neither of those categories. You are another witness. 
Whether you fall into either of those categories or not, 
simply doesn't mean that you don't have important information 
for us. 

Your concerns about the Florida lawsuit are 
recognized, as our any witnesses' concerns about unauthorized 
disclosure of information. I've discussed those things with 
your attorney. I notice that you'd stcunped everything that 
you've given us "Committee Sensitive," I presume, pursuant 
to those discussions. I can assure you that the rules of our 
committee, which we abide by religiously .protect you from 
unauthorized disclosures. 



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If you have additional concerns, for exeunple, in 
the area of the Fifth Amendment, I might mention at this point 
that it's not the intention of this committee to replace your 
Fifth Amendment privilege with any order of immunity for 
your testimony. I assume that your attorney will be vigilant 
in reminding you of those rights, if any such situation would 
come up, but you do not have a Fifth Amendment privilege to 
fail to disclose information, simply because it may lead to 
your financial liability in a lawsuit, which I express no 
opinion on one way or the other. You bring me the concern 
of a lawsuit, and that's my response. 

MR. MC KAY: We haven't raised any Fifth Amendment 
privilege questions. 

MR. HOLMES: I understand. I am just seeking to 
catalog all the reasons why he might not want to answer 
questions. That doesn't appear to be one of them. You have 
never asserted the Fifth Amendment befcre. 

THE WITNESS: No, I have not. 

BY MR. HOLMES: 
Q So what we are here to do today is to do what we 
had intended to do early in September, and that is to determine 
the completeness of the response to the various subpoenas that 



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have been served on you in your personal capacity and also as 
representative of various corporations. 

After we have done that and, obviously, since you 
have produced two boxes of records last yesterday afternoon, 
not leaving any time to examine them prior to your deposition 
this morning, catalog them and examine them and then determine 
whether or not we need to continue the deposition either this 
week- or to postpone it until perhaps early next week, in order 
to question you on the documents themselves, if that is 
necessary. 

I would like to know from you and your attorney 
what your schedules are in that regard, so we can aim at one 
or the other alternatives. 

A Well, toward the latter part of this week, I have 
some appointments that I have to keep, so I'm basically not 
available on Friday of this week. 

MR. MC KAY: I'm in depositions in New York and 
Mobile, Wednesday, Thursday and Friday. I'm here all next 
week. 

MR. HOLMES: So next Monday would be the best day 
to resume. 

MR. MC KAY: That's the best day for me, yes. 



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MR. HOLMES: Let's aim at that. 

BY MR. HOLMES: 
Q I'd like to have you glance at these Exhibits 1 
through 4 . 

(Documents handed to witness.) 

MR. HOLMES: They are subpoenas. For the record, 
I will read off what the subpoena is, so we can associate a 
number with a name. 

Exhibit No. 1 is to Theodore Shackley. 

Exhibit No. 2 is to API Distributors. 

Exhibit No. 3 is to System Services International. 

And Exhibit No. 4 is to TGS International, Ltd. 
Although I note it's got a typo. 

I assume that by producing TGS International 
dociiinents, you were, in good faith, attempting to ignore that 
typo. 

(Document handed to witness.) 

THE WITNESS: There were five. 

MR. MC KAY: There were five subpoenas. RAI, 
you don't have, which we did respond to. 

THE WITNESS: The gentlemem who came around and 
gave me subpoenas, gave me five. 



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BY MR. HOLMES: 
Q It is substantially identical to the others, 
except that it says RAI ; correct? 

A 

I think in some of the paragraphs , they were 
worded differently, but the substance of the materials, from 
looking at all these and trying to respond to it, they 
basically cover the same data. 

Q The only difference is, the personal subpoena is 
different than the corporate subpoenas; correct? 

MR. MC KAY: There is one difference, and I can't 
tell you which one. One of the subpoenas has different 
Paragraph 2. It's inconsequential, but one of them does not 
have the paragraph 2 that says "With regard to any activity 
undertaken personally or a consultant on materials required 
in No . 1 above . " 

That's missing. 

MR. HOLMES: Did that cause any difference in your 
compliance? 

MR. MC KAY: No. 

THE WITNESS: If you take these five documents 
that were delivered, we have made a good faith search of 
my files relative to the totality of the information that 



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seems to be conveyed, although the paragraphs are different, 
ij as Mr^ McKay has pointed out in one or two of these. 
BY MR. HOLMES: 
Q Okay. With regard to each corporation, I would 
like to ask you what your official capacity is in that 
corporation and what has led to your designation by the 
corporation as the corporate representative for production 
of documents . 

Start with API. 

MR. MC KAY: Let me just state for the record 
which corporations he is designated for. 

Those afe TGS International and RAI. 
We are not making any designation with respect to 
API or with respect to System Services International. 
BY MR. HOLMES: 
Q All right. Let's just start with API then. Since 
you are not the designee for API , could you explain to me 
what your role in API is? 

A I don't have any role in API. You selected these. 
You sent them to me. I don't know why you sent then to me. 
Q That's what I'm trying to discover. 
What do you know of API? 



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A When I retired in August of 1979, I worked for 
API Distributors. 

Q Who were the officers of the company at that time? 

A As far as I know, Mr. Thomas Clines — I don't 
really remember. I haven't done any work with them since, 
basically, 1980. 

Q When did you retire, what date? 

A I don't remember the exact date that I retired. 
It was the last day -- I think it was August 1979. 

Q And you went immediately to work for API? 

A I went to work primarily for API. That was the 
main area. 

Q Mr. Clines was? 

A The president and owner of that particular 
company . 

Q You had no equity? 

A I was not a stockholder in that company, and I 
was not an officer in that company. 

Q You were a consultant? 

A Well, I worked as sort of a consultant, employee, 

office manager, trying to get the company off the ground. 

in 
Q Did you ever have any interest /API to be described ^s 



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an interest in the equity of the company? 

A No. 

Q For example, did you ever loan them money? 
Did you ever loan them money? 

A No, I never lent it money, and they never lent me 
money . 

Q You never served on the board? 

A No, I did not. 

Q You were never an officer? 

A I was not. 

Q As to SSI, what is your relationship with SSI? 

A SSI was another one of the companies that was 
owned by Mr. Clines. It was, basically, an inactive 
company . 

Q You say it was inactive? 

Q Basically, inactive. In other words, it was 
designed, originally, to be a trading company, securities 
systems. But my recollection of that period of time, I 
don't really remember anything of significance happening 
in that particular company. 

Q You never received any money from it? 

A No. I don't recall receiving any money. Maybe 



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some expense funds for things that I did on their specific 
behalf, but I didn't see, as far as I can recall, no salary, 
no consultant fees. 

Q You did do things on its behalf then? 
A I think, yes. I had discussions with people to 
try to start various kinds of business activity, but it 
didn't go anywhere. 

Q With whom did you have discussions on its behalf? 
A I don't recall. For instance, there were things 
like we were trying to export rope to various countries. I 
think we tried to find sporting equipment manufactured 
overseas, and so forth, to be put into the U.S. market, but 
I don't have any real vivid recollection at this point in 
time. I mean, that stopped. I haven't been doing anything 
with that since 1980. This is 1987. I don't have any real 
Q So that would have been between August of '79 and 
sometime in 1980? 

A No. I retired in August. I started in 
September. So September of 1979 to probably somewhere in 
about June or July of 1980. There may have been some 
administrative items that I was concerned with later, maybe 
particularly with API trying to collect funds, and so forth, 



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for the company, but I don't recall any actions with SSI 
after, certainly, July of 1980. 

Q Who were the other officers, if any, of SSI? 

A I don't recall anybody except Mr. Clines. It 
was basically his company, and I don't have a list of the 
officers. 

Q Let ' s move on to RAI . 

What's your association with RAI? 

A It's a company that I started. 

Q When did you start it? 

A It's in the corporate records. You've asked for 
corporate documents. The corporate documents are in there. 
It's probably sometime in 1980. 

Q Who are the officers in RAI? 

A The officers are myself, Mr. Donald Jameson and 
my wife. Hazel Shackley. 

Q And the directors? 

A The directors are myself, Donald Jameson and a 
Mr. Ledbetter. 

Q Was there some corporate action that led to your 
designation to respond to the RAI subpoena, or did you just 
do that in your capacity as president? 



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A One of the subpoenas you gave me was for RAI. 

Q Correct. 

A I'm not sure I understand. 

Q When a corporation gets a subpoena, the corporation 
decides who to designate. RAI, apparently, since you're here 
for RAI, decided to designate you. 

A Yes. 

Q Who made that decision? 

A I did. 

Q That's all I wanted. 

A I didn't understand the question. 

Q You didn't consult with any other people? 

A No. 

AA Not really, no, because I got a barrel of these, 
and I just went to try to respond to them, to the best of 
my ability. 

Q What is the business of RAI? 

A RAI is essentially a risk analysis ccanpany. 

Q Does it have certain specialties? 

A We work primarily in the oil sector, not 
exclusively, but primarily. 

Q Does it work in any particular part of the world? 



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A It covers the oil producing countries of the world. 

Q Does that mean that it specializes in the Middle 
East? Does it also do work, say, in the North Sea? 

A Well, we monitor developments in the North Sea. 
For instance, we monitor what trends are, what production is, 
in that area, what fields are going to be worked over, and 
therefore, are being taken out of production, that has an 
effect on the market. 

Q Do you have a regular clientele, or do you place 
your product on the market in some other fashion? 

A I have primarily one client. 

Q What business is this client in? 

A Oil. 

Q I assume you're talking about spot purchase and 
sale? 

A It's a company that engages in oil trading, but 
it also has refinery interests. 

Q Where's their refinery? 

A Their refinery's in the United States. 

Q And this client purchases oil on the world market 
from various sources, I assume? 

A Yes. I'm trying to explain to you, the client is, 



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first and foremost, an oil trader. That is, buying and 
selling oil, not necessarily related to the spot market. 
In some arrangements, oil is purchased on the basis of 
contracts or marketing agreements that the client may have 
with producing states. 

That's one part of this business. 
The other part of this business is, he also has 
a refinery. Now the refinery may not be able to use the 
crude that he's trading in. Therefore, he's got to buy 
other crude for the refinery. And so, you know, it's a 
multidimensional problem. 

Q I understand. Is this the client that is based 
in the Bahamas? 

A The Bahamas? 

Q Yes. 

A No. 

Q Who is this client? 

A The client is Trans-World Oil. 

Q Is that sometimes known as TW Oil? 

A Yes. There are various corporate entities. 
I don't know how many corporate entities they have, but my 
main contract is with Trans-World Oil New York. 



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Q Is that sometimes — is there an affiliated 
company, that is known as Third World Oil also, TWI? 

A I do not know of a company called Third World Oil. 
There is a company that they have thafs called TW Oil. 

Q There's at least two entities that you are aware 
of. One is Trans World and the other is TWI? 

A Right. TW Oil. 

Q They're not different words for the same 
corporation ? 

A No, they're different corporations. The principal 
has a large holding company, and there's a chart I've seen, 
you know, of these various companies. For instance, I don't 
know if it's TW Oil or Trans-World Oil London, for example. 
There's a Trans-World Oil Paris. They have an office in 
Tokyo. They have an office in Singapore. But I don't know — 
I mean, to me, it's TW Oil. I haven't paid that much 
attention to whether it's incorporated in Japan as Trans-World 
Oil or TW Oil. 

I know of no cattpany that I'm associated with by the 
name of Third World Oil. I think that was one of the questions 
that you put to me. 



Right. Okay. 



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Is RAI engaged in any other business besides what 
you call risk analysis? 

A Well, as an adjunct to risk analysis, we do 
security work. We design security systems. We provide 
training for corporate security organizations. 

Q Is that also in the oil business? 

A Ye,, primarily. I don't recall having done a 
project for anybody who's not oil-related. 

Q Are there additional lines of work that RAI does? 

A The other thing that we're involved in is VIP 
protection. 

Q How does that business operate? 

A It's a problem of making an assessment of what kind 
of threat there is to a corporate executive or his family or. 
his property, then providing a security envelope that's 
response to that potential threat. That could include putting 
in a security system at an estate, having VIP bodyguard 
type individuals travel with the executive as they move about. 

Q E)o you actually provide the people to do that? 

A Yes, I do. Not in all cases, but — 

Q I assume that in providing that kind of individual, 
you have — what do you call it — a network, a group of 



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people you would call on for that kind of service? 

A Depending on what it is. For instance, if it's an 
individual who is going to manage one of these programs when 
it's established, I may go out and look in the market and 
do a talent search, till I find somebody who I believe is 
responsive and capable of doing that particular job. 

Q And you would keep records that would reflect past 
talent searches, in order to help you with possible future 
talent searches? 

A I have seme resumes, yes. I keep some resumes on 
file. 

Q Are there other businesses of RAI , other lines of 
work that you do? 

A No. It's all — you know. I should have brought 
you a copy of my article on risk analysis, because I do what is 
a full service company in risk analysis. Some people may say — 
and I have a situation where a client says, "I'm interested 
in acquiring some property. Please go out and take a look at 
that property." 

That may be property that the client wants to 
acquire for personal reasons. It may be property that they 
want to acquire for corporate reasons, but I've gone out and 



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found property, but that's all under the rubric of risk 
analysis. I don't want you coming back to me later and saying 
that I wasn't giving you a fulsome answer, but I am trying 
to show you what risk analysis is. It's trying to provide 
people with information relative to their busienss. 

Q Actually, what I was thinking of in the back of 
my min^ was, I thought that you had told me in a previous 
interview, you also sold oil drilling equipment through RAI . 

A Not under RAI. I think you've got that confused. 

Q I'm sorry. That was another corporation? 

A Yes. API was in the oil field equipment business 
and was attempting to sell primarily valves and flanges used 
in the oil industry. The primary market at that time was 
Mexico and the state enterprise known as Pemex. 

Q What period of time was this oil equipment business 
being conducted by API? 

A My involvement was when I started in September 
of 1979 until, basically, I stopped in July of 1980, although 
I think after July of 1980, there may have been still some 
bills that we were pursuing to get collected. I remember 
a long hassle with the Pemex office in Paris. It took a 
long time to get paid. That's one of the reasons why that was 



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a successful business. 

I'll go back to API, so that you can understand 
this. The valve and flange business, there was a large 
market in Mexico, when the Mexican oil industry was 
expanding, all right? But the way the Mexican oil industry 
was run^ what we did on these valve and flange orders, a 
small company like API would generally only be in a situation 
to obtain contracts under $1 million. 

The other thing was, Pemex was using a computer 
system to take off of everybody's bid list what might be 
considered your loss leader, all right? So your smallest 
profit item on your list would be picked up by Pemex. If 
I had found a producer, let's say, in Italy or somewhere, who 
could make it for a dollar cheaper, that was one problem. 
Two, you couldn't get the vol'jme. Three, Pemex was notoriously 
slow in paying. In other words, they never paid on delivery. 
And the fourth dilemma was that at that time, the dollar-peso 
ratio was declining. So, in other words, you were losing 
money the longer your money was out, because the peso was 
being devalued. So when you took this conglomerate of these 
things, despite the fact that you could sell, you couldn't 
make any money, and it took me that long to figure that out. 



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Now, you know, you might have found it out quicker, 
but that's how long it took me to figure it out from 
September 1979 to, roughly, July, but there were some loose 
ends that had to be cleaned up after that, and I think I did 
clean those up after that, although I was not involved. 

Q What other people were involved in the Pemex oil 
business that you're aware of? 

MR. MC KAY: You mean with him, with respect to 
API or just in general in the world? 

MR. HOLMES: Let's start with API and go from 
there . 

THE WITNESS: Other people that were involved. 
There's a gentleman by the name of Richard Finney. 
BY MR. HOLMES: 
Q Anybody else? 

A Yes. Ricardo Chavez. He was in Mexico. 
Q Were they operating for API in their Pemex 
dealings? 

A Yes. And the other individual involved was 
Quintero. 

Q Rafael Quintero? 
A Right . 



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Q How were they capitalized? 

MR. MC KAY: I'm sorry. How was who capitalized? 
BY MR. HOLMES: 

Q How were these people capitalized in their dealings 
with Pemex for API? 

A You're going to have to state that question some 
other way, because I'm not sure what you're asking. 

Q Do you know anything about where they got their 
money to do any of these deals? 

A API had some funds. Mr. Clines had put funds into 
the company. When you issued what was, in effect, a bid 
in response to a request for a proposal, Pemex periodically 
would put out requests for equipment, a bid. Once you got 
on the Pemex list, you automatically got a receipt of whatever 
they were looking for at a particular point in time. So, 
let's say, once every month, once every six weeks, once 
every eight weeks, depending on what their needs were and 
what their forecast needs were, Pemex would issue a request 
for proposal. You would then see what they were looking for, 
and you had a deadline within which to bid. 

So then you would go out to your suppliers and get 
bids from them, and they put the package together, and if you 



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actually had to buy, then you had to provide the funds, and 
you got the award. 

Q And the f winds that Messrs. Finney , Chavez and 
Quinterc' would rely on in making those bids were API funds? 

A Were API funds. 

Q Was there any subsidiary or budget unit of API 
that was designated as the profit center for this particular 
operation? 

A No. 

Q It was an activity of API? 

A This was API; yes. 

Q Are you aware of any loans that were ever made 
to Finney, Chavez or Quintero in relation to the Mexican 
oil industry? 

A I'm not aware of any loans that were made to 
Mr. Finney, and I'm not aware of any for Chavez and 
Quintero, but I would have have less knowledge of that. 

Q Did you ever arrange connections or contacts 
for Quintero, whereby he was supposed to get a loan for 
his activities? 

A I have no memory of anything like that. 

Q Have we gotten to the bottom of the well on 



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RAI's business activities. 

A As far as I know. 

MR. HOLMES: Now you produced a handsome box of 
records to us in response to the RAI subpoena. 

I am going to ask the court reporter to make this 
entire box Exhibit No. 6. 

(Shackley Deposition Exhibit 6 
identified.) 
BY MR. HOLMES: 
Q Mr. Shackley, I'm showing you what's marked now 
as Exhibit No. 6, the box. Let me ask you, just in general, 
if you have subdivided these folders which you have provided 
into subdivisions, in accordance with the subpoena. 

Is that the significance of this one here that 
says '! Appendix 1, Paragraph 3"? 

A That's a division, to the best of our knowledge, 
in response to this, because in some of these areas, they 
overlap. That's the way we felt we were responding. 

Q So would it be fair for me to infer from that 
that you personally have gone through the records of RAI 
and that what is in Exhibit No. 6, the box, is everything 
that, in your opinion, responded to each of these sections 



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of the subpoena? 

A No. That's not correct. 

Q Let's hone that down, because I understand from 
the letter, which is Exhibit No. 5, that there are some 
rough edges, and that's what I want to get at now. 

A First of all, I had a search made of RAI files 
by one of my employees in response to that list. 

Q Who was that en^loyee? 
Mrs. Keating. 
You did not make a search personally of the RAI 



A 

Q 
files? 

A I did not go through each file. I gave her the 
list. She's the one who works with the files on a daily 
basis. I then looked at the material which she produced, 
provided, checked it against my memory to see if there's 
anything I could think of that was not there. And that's the 
way the work was put together. 

Q So it would net be accurate to see that you only 
want on what Mrs. Keating produced, because you also 
inventoried your own memory to make sure that her production 
was complete? 

A And on the financial material, and so forth. 



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Mrs. Shackley, my daughter also went through this. You know, 
I'm a small company. I'm a family-oriented company. My wife 
works, my daughter also works there. They also went through 
corporate records, financial activity, which is what they 
deal with on a regular day-to-day basis. For instance, like 
there, our W-2s attached there. I didn't go to the W-2 files 
for the various years and pulled them out, personally. That 
was done by Mrs. Shackley. The computer run and the financial 
statement, I think, was done by my daughter. 

Q Let me break down what we ' re talking about into 
littler bits as to what's in the box. It's your testimony 
that you don't remember, having cotpared your memory with each 
paragraph of the subpoena, anything that should have or 
would have been in ^K^ files that is not brought forward into 
this box. Exhibit 6? 

A I guess I'm not making myself clear. 

MR. MC KAY: The other caveat obviously is, it's 
not in my letter. 

MR. HOLMES: That's the next caveat, okay? 
BY MR. HOLMES: 

Q The next caveat is that, as you have stated 



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through your attorney in what is Exhibit 5, the letter, 
there are certain categories of things that you have not 
placed in the box, pursuant to some concerns that you and 
your attorney have; is that accurate? 
A That's correct. 

Q Let's get to those categories, so that we can 
complete that issue here. Then we'll simply duplicate it. 
We'll duplicate it for TGS, I assume. Well, let me ask this 
question now, so that we can do it all at once. 

You followed the same procedures and exhibited 
the same concerns with TGS? 

A Yes, but different people were involved. In 
other words, the file search was made by a different person. 
There's a main file search. On that one, the financial 
records and stuff were done primarily by Mrs. Shackley. 

I reviewed that material that was provided' 
looked against the subpoena, tried to see if there was 
anything I thought had been missing that I could think of. 

MR. MC KAY: One second. 

(Counsel conferred with witness.) 

THE WITNESS: I'm trying to convey to you that 
a lot of this material, you know, stacks were brought in. 



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and someone would say, "Hey, look, here's a file. Like 
on the Kuwait project. "When did we do this project." 
On TGS, you know, we excluded certain categories of projects 
that were discussed with you. 

BY MR. HOLMES: 
Q Now I want to get into what's excluded, so that 
the record will accurately reflect what's here and what's 
not here, so that we'll have that information. 

Could you go into that now, for the purposes of . 
— I'll ask you which is easier for you. Would it be 
easier for you to deal with it with RAI and TGS together 
or separately? 

A I think we have to deal with that separately, 
because the issues are different. 

Q Let's start with RAI and tell me about what's 
Hot here pursuant to the subpoena. 

MR. MC KAY: Let me just state that we tried in 
the attachment to the letter to detail what's not here. 
I think the best thing he can do is to go back to the 
letter and tell you what's there, because we worked in 
trying to list everything here. I don't know the purpose 
of trying to get it from his memory, because you may not 



mmm 



35 



UNOUmED 



34 



get as accurate a list. 

MR. HOLMES: Thanks. Maybe it would save time. 
BY MR. HOLMES: 
Q Mr. Shackley, you're looking at what's marked 
Exhibit No. 5, the letter and its attachment. Have you 
seen that letter and its attacheroent before? 
A Yes. 

Q It was prepared by you and with your knowledge? 
A Yes. 

Q And it's accurate and describes truly what you 
did and what you included and what you didn't include? 
A That's correct. 

Q Fine. We don't have to go through it orally. 
Does that letter — I didn't recall whether 
it split out RAI and TGS. 

A It deals with — here, for instance, it deals 
with both of them. 

(A pause. ) 

I can't find what I'm looking for. Where's the 
paragraph here? No. 

(Counsel conferred with witness.) 

MR. MC KAY: The question is whether the 



\immm 



36 



UNeiASSIFIED 



35 



letter or the attachment treats both companies. 

THE WITNESS: The answer is yes, we're trying to 
respond for both companies. 
BY MR. HOLMES: 

Q At once? 

A Right. In the same letter. 

Q Let ' s move on then to TGS . 

Could you describe your business at TGS and your 
affiliation with it? 

A TGS is primarily a logistics problem-solving 
company . 

Q Could you explain to me what that means? 

A We have done several things. We have been 
involved with modular storage equipment. We have a 
relationship with the Stanley Vidmer Company, which makes 
modular storage equipment. The rule of thumb, basically, is 
if you take a warehouse and you have open shelving in it, 
you can reduce the floor space in that warehouse by 50 
percent by going from open storage shelving to modular 
storage shelving. That's the kind of thing that we have been 
working on as our primary activity. 

Q What other activities does the organization 



UNei^SlfKD 



37 



mtmB 



36 



have? ^ 

A We have worked on local construction in the 
Washington Metropolitan Area, primarily, home remodeling 
kind of activities. I think we remodeled one small 
warehouse also, in the course of this activity. 

Q Do you do that with your own employees, or is 
that subcontracted to other contractors? 

A We have done that, basically, with our own 
employees, but we have closed that out. 

When we were doing that — let me answer you/- 
question. When we were doing that, we were doing it, 
basically, with our own employees, but we have closed that 
activity out. 

Q How many homes did you remodel? 

A I don't know. I would have to go look at the 
records. I think we did that around here for maybe about 

a year. 

Q Approximately how many homes? 

A I have no idea. I really couldn't just dredge 
it out of my memory. It's in the files. But it's putting 
in patios, porches, enclosing opened garages to closed 
garages, upgrading. I have no idea. It's a very modest 



UNerariED 



38 



uNeassifiED 



37 



number. 

Q And each one of those homes would be reflected 
in the TGS file? 

A The volume of business would be reflected; yes. 
Q But not the owner of the home? 
A No. 

Q No invoices? 

A I don't think an individual breakdown; no. j 
The individual invoices for each individual job that we 
did is not in that, I don't think. I don't recall it. i 

MR. MC KAY: The only way it would be there is 
if it related to one of the named individuals, because 
there wouldn't be anything that asked for TGS's. As I 
read the subpoena, it is a description of his line of 
business. If there was anybody on the list, or the 
named individuals for whom there was any work, that would hav« 
been produced. I don't think it was. 
(A pause. ) 

MR. HOLMES: I read Attachment a to read 
"Provision of any service." Remodeling is a service. 
THE WITNESS: Well, it's reflected in our 
financial reports, and so forth, but not breakdown by 



wsmm 



lINCUSSmED 



38 



any individual project. "Enclose the garage at 1011-5th 
Street" or something like that. 

MR. HOLMES : I interpret the subpoena to 
require that kind of invoice or whatever you call it, a 
contract. 

MR. MC KAY: If you interpreted the subpoena 
that way, that would mean every document that the company 
ever, because its business is providing services. It would! 
be every business deal the corporation ever had. I 

MR. HOLMES: I'm only talking about a very j 
modest number of homes. 

MR. MC KAY: You gave us a list of 50 or 60 
individuals, and we responded with respect to those. 
I assume that those are the individuals that the committee 
is concerned with, and not that Mary Smith had her garage 

enclosed by TGS at some point. I didn't interpret it to • 

I 
mean every service provided by anybody or to anybody, and 

we have not produced every garage contract or whatever. ; 

In fact, we haven't produced any of those contracts, \ 

because I did not interpret it that way. If there was 

anything for any of the 50 or 60 nauned individuals or 50 

or 60 named companies, that has been produced. 



UNCUSSIRED 



40 



UNCUWD 



39 ! 



BY MR. HOLMES: 

Q Do any of these modifications involve electronics? 

A No. 

Q You're talking strictly nonelectronic? 

A I mean — look, if you put in -- in .some place, ' 

I think we may have put in a garage door. Is that electronic,' 

because you have a door that electrically raises, you know? | 

No. I think we did put in some doors in the course of these 

— making these modifications. i 

I 
Q All right. 

A I mean, if you're asking, did that include i 
installation with these modifications in these houses of 
security systems — is that what you're saying? 

Q That was what was on my mind, yes. 

A No. We did not put in any security systems. 

Q Other than the modular storage and local [ 

I 
construction, does TGS engage in other lines of business? 

A Yes. At times we have been involved in food '■ 

I 
brokerage. j 

Q From whom to whom? 

A We bought food, as an example, 

Q Have you ever brokered food originating in Iran? 



UKCUSSIHED 



41 



HHtuasw 



40 



A No, I have not brokered any food. We have had 
some correspondence, and the files are in there, with two 
Iranian entities. One was on Iranian caviar, and nothing ever 
came of that. We couldn't find a market for it. And the other 
one was an exchange of telex correspondence in an attempt to 
see if food supplies, various canned foods and so forth, could 
be produced and sent to Iran. Nothing came of that. 

Q What were the approximate dates of these two 
potential — 

A Can I look at the files? I mean, they're in the 

files . 

Q Sure. 

MR. HOLMES: At this point, why don't we mark the 
second box. Exhibit No. 7. 

(Shackley Deposition Exhibit 7 
identified. ) 
THE WITNESS: There's a file in here called 
GTC, Government Trading Corporation. 
BY MR. HOLMES: 
Q That relates to food brokerage; is that right? 
A Yes. This was GTC, Government Trading 
Corporation. There was a telex sent. 



wmm^ 



42 




41 



Q What is GTC? 

A It's called — 

Q I'm asking you — 

A -- Government Trading Corporation. 
■ Q It's a corporation? 

A It's an Iranian corporation. It's what I 
understand to be Government Trading Corporation. That's their 
initials. 

Q Is it a government corporation, or is it a 
group of Iranians calling themselves GTC? 

A They buy for the Iranian government. As far as 
I know, it's a governmental trading company, an Iranian 
governmental trading company. 

Q Who are the principals of GTC? 

A I have no idea. 

Q Who did you deal with? 

A One of my associates, Mr. Monaga, sent a telex 
here to the managing director of the company. I'll spell 
his name for you. M-o-v-a-h-e-di-z-a-d-e-h. 

Q And nothing came of this? 

A No; nothing came of it. 

Q Are there other lines of business that TGS is 




T 



/P 



43 



\immm 



42 



I engaged in? 

I 

if A Okay. The food brokerage. I've covered those with 
I you; right? 

I All right. We have looked at various items that 

ll 

are connected with logistics problem-solving. We have looked 

at trying to get furniture requirements to Saudi Arabia, as 
an example, for large projects. I think there's corres- 
pondence in here on several such attempts, transactions. 

At various times we've looked at various kinds of . 
airplane transactions. 

Q Do any of those airplane transactions that you've 
looked at, whether you've completed or not, involve either 
a military style airplane or a transport style airplane? 

A No. Well, I don't know. What do you consider 
a 747? We tried to look for 747s in the United States that 
would be bought by an Italian company for use in China. 

Q For use as transport planes in China? ' "■•, 

A I don't know. The Chinese had not made up their 
mind how they wanted them configured. They were looking 
at various configurations. In other words, that was one 
thing that caused the deal not to go anywhere. The Chinese 
were looking at one configuration to have the airplane 



UNCUSSIHEO 



44 



WBmm 



43 



passenger. Another configuration was to split the airplane, 
to have it passenger and cargo. Another configuration was 
to make the airplane completely cargo. Let's say, at some 
point in time, which I think is prior to the time of the 
subpoena, I think we may have looked at other airplanes, the 
Buffalo airplane out of Canada. 

Q Is that Buffalo related to the Caravan? 

A It's that type of an airplane. It's probably a 
civilian version of something like the C-123, C-130. 

Q Who were the principals involved in that potential 
deal? 

A Let's see, I think that was — I think that might 
have been Honduras. I'd have to check the files. 

Q They were the buyer, I assume? 

A Yes. They were the buyer. 

Q And you were dealing with a manufacturer in Canada? 

A Yes. The manufacturer. I've forgotten the name of 
the company who makes those. 

1 DeHavilland makes the Ccuribou. 

A This was DeHavilland. It's the Scune company, 
deHavilland, because one of the people went up to talk to than. 

Q Why did deHavilland need somebody to broker a sale. 



UNOIAMED 



45 



wmM 



44 



since they're the manufacturer? 

A You know, a lot depends on the market, some of 
these markets, where they are only selling lone / off (airplane , 
they're not pursuing those markets. They're looking, you 
know, they're concentrating on the market where they can sell 
four, five, six airplanes. If you come in with sort of a 
one-off arrangement to the manufacturer, they frequently 
are interested. 

So you're looking for that unusual opportunity 
or opening. 

Q When was this discussion or series of discussions? 

A That was prior to 1982 but I don't remember whether 
that was in '81 or '80. I would have to go into the files. 
I'm so tired of looking at files. I've been working on this 
so long, you know, that, frankly, I'm exhausted, and I'm 
having trouble recalling some of these. 

Q Let's get away from files a little bit then. 

We have before us in Exhibits 6 and 7, the records 
of TGS and RAI responsive to the subpoena, with the exception 
of records described in Exhibit No. 5, the letter; is that 
right? 

A Yes. 



UNiLASSIRED 



46 



BHHtHSSJmO 



45 



MR. MC KAY: That's correct. 

BY MR. HOLMES: 
Q Now I'd like to know whether you, Mr. Shackley, 
personally, have access to records, in addition to those in 
6 and 7 , other that what ' s described in 5 , that would be 
responsive to your personal subpoena. 

MR. MC KAY: The subpoena to Mr. Shackley asked 
him to produce, with regard to API, SSI, TGS and Research 
Associates International, all materials relating to. 

Are you asking him if he has documents regarding 
those four entities, that are not produced? 

(Document handed to counsel.) 

MR. HOLMES: That's certainly subsumed in my 
question, but you'll notice that's only one category out of 
a total of five categories. Category number 3 is very 
inclusive, because it includes the appendix. So those 
qualifications only apply to category nximber one out of five. 
If you would like to answer one category at a time, I'll 
take his answer like that. 

MR. MC KAY: Let us confirm that. 
(Counsel conferred with witness.) 

MR. MC KAY: Why don't you take it a category at a 



\iimmh 



47 



wismm 



46 



time, and he'll tell you what he did. 
BY MR. HOLMES: 
Q Okay, Mr. Shackley, you're looking at the Shackley 
su±)poena . I guess it's Exhibit No. 1. 

Now, with regard to subpart number 1 on Attachment 
A, you've just answered that you don't have anything else in 
your personal capacity that relates to that category, other 
than what's either in these two boxes in front of us or 
excepted from the boxes by the letter. 

A Yeah. You're looking at one, API Distributor 
System Services. 

Q Just so that we're clear on this, you have said 
that the reason that you haven't produced anything with 
regard to API or SSI is that you have no obligation to do so, 
not being an officer or affiliated with those corporations. 
MR. MC KAY: We didn't interpret it that narrowly. 
BY MR. HOLMES: 
Q But if you had records belonging to or relating to 
those companies in your files, they would be called for 
under this subpoena in your personal capacity. You 
understand — 

A Well, let me try to answer this another way. The 



BNe^Bsm 



48 



w&mm 



47 



records of those companies I do not have. 

Q That's what I wanted to know. 

A So we can boil that down, I think, to the essential, 
I don 't have the records of those companies. Those records, 
the last I know of them, were in Mr. Clines' possession. 

Q Before we go further on the description of 
compliance with the subpoena, get a little bit into what 
"have" means. You understand that "have" includes have 
access to or control over through any agent, attorney, your' 
wife, friend, a safe deposit box, a storage facility of any 
kind. 

A Uh-huh. 

Q Anything like that, any control like that would 
still be sufficient control for you to be obliged to 
produce it. 

You understand that? 

A I understand that. 

Q I just didn't want to be talking past you on this 
and you know, I haven't got it. Good. 

A Let me just make sure that you understand what 
I'm saying. The last time I saw those records, the corporate 



mmm 



49 



UNeUSSIHED 



48 



records of API Distributors, you know. Systems Services 
International, they were in Mr. dines' possession. They 
I were given to him. They were his records. They belonged 
to a corporation that he owned. 

Q When was the last time that you saw those records? 
A I would say I moved up to ray current office location 
in, I think, in January of 1982, and thafs sometime prior 
to 1981, would have been the last time that I would have seen 
any of those records . 

Q All right. While we're on that, while that subject 
is on the table, let me clarify another aspect of subpoenas. 
If you have, in the broad sense, records when a subpoena is 
served and you divest yourself of control of documents after 
the subpoena is served, that doesn't avoid your obligation to 
produce those records. 

You understand that, I'm sure. 
A Yes. 
Q I just didn't want to miss that possibility. 

All right. With regard to subpart number 2 of your 
personal subpoena. Exhibit 1, do you have any such documents, 
in the broad sease of "have," we just discussed? 

MR. MC KAY: That we haven't produced or that are not 



fWMJSiWffl 



50 



UNCUSSIHED 



49 



covered by the letter. 

MR. HOLMES: Certainly. 

THE WITNESS: No. I think we've covered 
everything, as far as I can see. I don't really even know 
what you're saying here. In other words, on 2 , do I have 
any documents on — I may have a newspaper clipping or 
something. I don't know. 

MR. .MC KAY: He's asking about personal files.' 

THE WITNESS: Personal files? No. 

BY MR. HOLMES: 
Q The reason this comes up, Mr. Shackley, is that 
you've come forward in response to five subpoenas with two 
boxes of records, each box identified to a particular 
corporation. 

A Uh-huh. 

Q As to the other two corporations, you say, no 
proper service really. You're asking the wrong guy. 

MR. MC KAY: I don't think we're saying that at 
all. We're saying he doesn't have any documents. That's 
what my letter says. 

MR. HOLMES: That's those two corporations. 
Then we have these two corporations. Exhibit 6 and 7. And 



UNGlASSinED 



51 



UNCkASSIFIED 



50 



what I'm pointing out is, that you have a totally 
independent personal obligation under your personal subpoena 
to produce any documents, whether it has to do with these 
corporations or not, or in your capacity as a corporate 
officer or not, simply because you have control of documents 
described by the subpoena. I am confident that you 
understood that, but I'm making it clear that I'm asking 
for documents under the personal subpoena now and not under 
either or any of the four corporate subpoenas. 

THE WITNESS: I told you I don't have the 
documents. 

BY MR. HOLMES: 
Q Let me reask the question. 
A Am I missing something? 
Q That's what I'm trying to find out. 
A I'm not following you, because, for instance, I 
don't have any files. I've told you I don't have any files 
for API. I don't have any for SSI. The files that are 
pertinent in relationship to these subpoenas that deal with 
our RAI, TGS and my business with those companies have been 
produced. ~ 

Q And if we assume that to be the case, which we 



UltlSJlSfaFIED 



52 



WKUSSW 



51 



do at this point, the same inquiry is, do you have, in any 
personal capacity or any control whatsoever over any 
documents described in 2 through 5 of your personal 
subpoena, which are not limited to those four corporations 
named? 

A No, I don't. Citizens Held Hostage. Everything 
that's Citizens Held Hostage is in the RAI files. Going down 
this thing, I don't have any Assistance to Nicaragua. I've 
told you that. 

Q Not exactly, Mr. Shackley. And I don't want to 
be inordinately technical, but if I understand what you're 
saying, it's not exactly what the subpoena asks you for. 
You have said in your opening statement that you didn't 
supply anything to Nicaragua, but that's not what this 
subpoena asks for. It asks for any documents relating to 
anybody's doing any of these things, you or anybody else 
in the world. 

A I don't have anything on anybody doing anything 
in Nicaragua, which are documents. 

MR. MC KAY: That's not produced? 

THE WITNESS: That's not produced. 

I've written a book on guerrilla warfare. Maybe 



UNCLASSIFIED 



53 



UNDlASSinED 



52 



I've got some newspaper clippings, but that's not applicable. 

BY MR. HOLMES: 
Q Well, it would be applicable, but I'm willing to 
concede that your book and your newspaper clippings are not 
something that we want. 

MR. MC KAY: He's asking — for instance, I 
suppose if you had a letter at home in your files relating 
to selling food to Iran, because it's one of the countries. 

THE WITNESS: No, I don't. 

MR. MC KAY: He's asking if you have anything, 
just because it's not in the corporate files — he's trying 
to make sure that we produced anything in your personal 
files . 

THE WITNESS: I have nothing on this attachment 1. 
I have nothing on any of these people. I have nothing on 
any of these corporations. I told him that I corresponded 
with CIA on clearing articles that I published. I think 
I've published some articles since 1982, which stated that 
— you know, I don't have it. 

BY MR. HOLMES: 
Q In particular, drawing your attention to 
subsection 3, it's your testimony that you've gone down the 



ONeiiSSIFIED 



54 



uNEiissra 



53 



whole appendix in its various parts, and you have nothing 
relating to any of those individuals of entities, other 
than what's in these boxes. 

It just strikes me — 

MR. MC KAY: You've got a time frame, first of 
all. 

BY MR. HOLMES: 
Q Yes. Within the time frame. 
A January 1982. For instance, on the lawsuit — 

MR. MC KAY: That's described in the letter. 

THE WITNESS: That's in the letter. 

MR. MC KAY: But again, he's asking if it's not 
in a file back at TGS or RAI that's a corporate file, have 
you got a document in some other file that's about <» I Wfc 
*»* or any of these people? 

THE WITNESS: No, I don't have a file on A wron N e ar 
or any of these people, any of these entities. 
BY MR. HOLMES: 
Q Or any of these entities? Any of these people 
or entities described in the appendix at all? 
A No. 
Q You have a remarkably file-free life. 



UNCUtSSIFIED 



55 



UNDIJISMD 



54 



A Why would I have it? 

MR. MC KAY: On the contrary, he's got lots of 
i; files. That was one of the problems. 
BY MR. HOLMES: 
Q Let me explore with you, apart from the subpoena 
production, your relationship with some individuals that 
have importance to our investigation. 

I will clarify for you that when I ask questions 
apart from the subpoena, I am not limiting my question to 
1982 or any wording in the subpoena. We're just talking 
strictly the question of — the question you hear is the 
question I'm asking, unfiltered through the subpoenas. 

MR. MC KAY: I would interpose an objection at 
the time it comes up. I don't even want to know why the 
committee is interested back to '82, but if we are going to 
go back into the '70s, I really have a serious relevance 
question about what it has to do with what the committee's 
investigating . 

MR. HOLMES: If there's a problem with a 
particular question, let me know. It seems perfectly 
clear to me, for example, if I ask about a relationship 
with Secord, and it predates 1982, then that's relevant. 



mmxB 



UNIS^SIFe 



55 



MR. MC KAY: We'll take care of it when it comes 
up. 

BY MR. HOLMES: 

Q I'd like to begin, Mr. Shackley, by asking you 
about your past dealings with various principals in the 
investigation. I'd like to start with Mr. Hakim, Albert 
Hakim. 

Have you met Mr . Hakim? 

A Yes. I've met Mr. Hakim. 

Q When did you first meet him? 

A I don't remember. It was when I was still in 
the Agency. 

Q What were the circumstances of your meeting? 

A Let's see. If I'm not mistaken, Ed Wilson 
introduced me to him. 

Q Where? 

A In a Washington restaurant. 

Q What was the occasion? 

A HakiiB was introduced to me as an individual who 
was knowledgeable about current developments in Iran. 

Q What time period are we taking about? 

A I don't remember what year that was. It could be 



UNimFIED 



57 



wimsm 



56 



MR. MC KAY: I don't want you to guess. Before 
1979, obviously. 

THE WITNESS: We're talking back a long period of 
time. It could have been -- 
BY MR. HOLMES: 
Q Maybe if you could place the events that he was 
supposed to be knowledgeable about. 

A It was the conditions in Iran. 
Q The imminent fall of the Shah, perhaps? 
A No. Let me just see what it was. 
(A pause.) 

No. Maybe 1976, 1977. Somewhere in that period, 
but I can't really pin it down, and look — 

Q If you need to qualify an answer like that, that's 
no problem at all. 

A I can't pin it dovm. 

Q I just want to know whether we're talking aOsout 
1965. 

A No, no. I can't pin it down. But I'm sure, if 
you're interested, you can find the records and names. 
Q Was anybody else present at the meeting? 
A I don't recall at this time. I mean, I remember 



IINIMfHED 



58 



wmms 



57 



meeting Hakim. I remember having lunch with him. I remember 
writing up a report on it. 

Q Your meeting was reported to the CIA, then? 

A Yes. 

Q Through what channels would that have occurred? 

A I don't know, the CIA. I came back, I wrote a 
memorandum and put it, you know, the normal distribution 
mechanism. I probably sent it to the Geographic Area 
Division for them to look at and to take any action that's 
appropriate. 

Q Were you recommending any action? 

A No. I reported what had been told to me and 
what I recall of the sequence of events. The people in 
Iran carae back and said they weren't interested. They had 
better contacts, and that was the end of it. 

Q Weren't interested in what? 

A Weren't interested in his contacts, the contacts 
that he had in Iran. 

Q The idea was that Hakim would be willing to 
supply information to the OIA on developments in Iran? 

A No. I met him. He talked about his 
circumstances in Iran. I asked him who he knew, what 



UNClASSinED 



59 



UNCUSSWD 



58 



kind of business he was in, and so forth. I simply took 
note of all of that and tried to access what utility that 
could be. I put it into the Geographic Area Component. 
They came back in a short period of time and said they 
weren't interested, and that's where it dropped. 

Q I'm still missing what they weren't interested in. 
They weren't interested in knowing anything that Hakim 
knew? 

A No. They weren't interested in pursuing it, in . 
other words . 

Q "Pursuing it" would mean developing Hakim as 
a reporting source? 

A Or getting him to introduce them to a particular 
individual that he might have known in Iran, so they could 
develop that individual. 

In other words, they simply felt that they had 
that sector covered, and I simply let it drop. 

Q What relationship did Wilson have with Hakim at 
that time? 

A They were in some sort of business together. 

Q Do you know what business it was? 

A No. I know they were in business or had done 



UNCLASSIFIED 



60 




[| 



59 



some business, but I don't recall. I know Hakim has said 



:i since then, I've heard him say, you know, I can't pji it down, 
what year, what date, but I know that he sued Wilson over 
something in this dispute that they had. So I know they were 
in business together. 

Q In your recommendations, did you recommend any 
particular person or type of individual to try and operate 
through developing Hakim's information? 

A I have no recollection of that. 

All I recall is a meeting, writing it up, turning 
it in. Nothing came of it. I accepted the judgments that 
were exercised by the people at that time. They said they 
weren't interested in pursuing it, and I let it drop. 

Q Had you known of Hakim before? 

A No. 

Q You never heard his ncime? 

A No. I think probably the way this occurred was, 
you know — "I'd like you to meet an interesting guy or have 
lunch with an interesting guy who has something to do with 
Iran. Why don't you come around and talk to him?" 

Q And since that time, when was your next contact 
with Hakim or Hakim's name? 



UNCIASSra 



61 



UNCIASSIFIED 



60 



A I don't have — sometime probably in 1980, after 
I I retired, is when I next remember seeing him or meeting him. 
I Q You haven't hea^ of him in the meantime? 

A I don't recall any, you know, conversations about 
him. He certainly was not on any kind of thing that I was 
concerned about. I just don't have any memory of him. I 
remember meeting him once. I have no memory of the man until 
after I retired. 

Q What is your next memory of him? 

A My next memory of him is after I retired. As I 
recall, he called me up in Washington and said he was in 
town and would like to get together. 

Q Did you meet with him? 

A Yes, I did. 

Q Was anybody else there? 

A I don't recall. 

Q That was like another restaurant type meeting? 

A Yes. It was just a matter of getting acquainted. 
"I understand you're retired. What are you doing?" 

Q Did he tell you what kind of businesses he was 
involved with? 

A I think at that time, he was primarily interested 



Mmm 



62 



yNI^SSIHED 



61 



in the electronics business. 

Q Did he tell you what his electronics business 
might have that might be of interest to you? 

A I don't recall at that time that coming up, 
because I had a brief meeting, and this is many years ago. 
I don't recall that. At some later point, yes, I knew he had 
a company called Stanford Technology. I don't think that 
came up at this thing. I don't remember that. 

Q I don't want to presume something in the meeting 
that wasn't there, but it seems like if the guy was going 
to call you to get acquainted, you would come away from 
the meeting with some idea of what it was that he thought 
would be of mutual benefit to you too. 

A He's a guy who likes to be in touch with a lot 
of people. He's always looking at business opportunities, 
and you know, I told him what I was doing at that particular 
time. I was concentrating on the oil field equipment 
business, API Distributors, looking at the Mexican market. 

Q Would it be fair that your assessment of the 
meeting was that you were simply exchanging knowledge of 
each other's whereabouts and abilities for future possible 
reference? 



mmssm 



68 



WMVB 



62 



A I don't think it was for any future possible 
'I reference. It was just get acquainted, what are you doing? 
And what are you up to? That's all. I can't read anything 
else into it. I don't have any other memory of it. I just 
remember, meeting him and having a chat with him. 
Q When did you next hear of him? 

A I next heard of him after — sometime after the 
Iran-Iraq War broke out. The Iran-Iraq War started in 
September 1980. 

Q So your second meeting with him would have been 
after September of '79 and before September of '80? 

A Probably somewhere in that time frame.. I remember 
sort of meeting him and then again after the Iran-Iraq War 
broke out. 

Q How did this meeting occur? 

A I think he was in Washington and simply called me 
up on the telephone. That's my memory of it. 
Q And there was a meeting? 
A Yes, there was a meeting. 
Q Who else was present? 

A I don't recall anybody else being present. 
Q What was the purpose of this meeting? 



UNIUSSIFIED 



64 



uneu^sfiti) 



63 



A He was interested in the Iran-Iraq War. 

Q What was his interest? 

A His interest was essentially in monitoring 
developments in that war. 

Like a lot of people. When the war started in 
September 1980, it was believed that it was going to be a 
very short war. A lot of people were out monitoring 
developments in the war, particularly monitoring what was 
happening to industrial activity in Iran. 

Q Meaning the degree of destruction of the 
industrial base? 

A Right. One thing, as an example, that a lot of 
people were interested in, I remember Hakim was also 
interested in it, was the Abadan Refinery. The thought at 
that time was, that if the war was short and you could 
figure out how much damage was done, you could go in 
quickly and put together a proposal for the repair of that 
refinery and put it back into operation. And as I was 
working in oil field equipment-related areas and activities, 
and we were talking about the war and the oil business, I 
was also, at this point in time, pretty well convinced that 
the oil-field equipment wasn't going to go anywhere. I was 



liHomm 



65 



mmm 



630U 



going to go off and do something. I primarily had made up 
my mind I was going to work in the risk analysis arena. 
So that is the kind of conversation we had. 
Q At this point, I gather, your mutual benefit 
is sort of more clear, since you are in the oil equipment 
business, and he's thinking about the sale of oil equipment 
to Iran, after the war is over. 

Was that the gist of the conversation? 
A No. I think you're trying to read into all of 
these, you know, much more than there is. People meet. 
They simply discuss things, and it doesn't necessarily have to 
be any future content to one of these discussions. I mean, 
there's not a commitment. I'll meet you for lunch today, and 
we're going to do a deal six months from now. 

Q Oh, well, no. I didn't mean to imply a 
commitment or anything like that. It's just that you would i)e- 
an obvious guy to get together with, now that he's thinking 
about the Ahadan refinery. 

A Well, he was interested in monitoring the war and 
that aspect of it. 

Q Did he want you to do anything in particular in 
relation to monitoring, like provide what you were thinking 



UNCMFIED 



66 



wmim 



64 



of getting involved with, risk analysis? 

A No. I don't think at that particular point in 
time, but somewhere after the war had been on for a while, 
and I had gone ahead and gotten into the risk analysis 
business, I did talk to Hakim about monitoring the war for 
him, and I did enter into a relationship with him, where 
I did provide him with reports on the war and on general 
tends in the Middle East. 

Q When did that begin, approximately? 

A Maybe 19 — let's see. The war started in 1980. 
It was probably sometime in 1981, the best I can recall. 

Q Was there a contract memorializing that under- 
standing, or did you simply begin selling the risk analysis 
services? 

A I think we had discussions of various art forms 
under which we could cooperate, but what we finally worked 
out was that I was paid a retainer, so much per month. I 
think there are some invoices in the files. 

Q That would be the retainer, plus office expenses, 
plus travel expenses, plus secretarial? 

A Well, no. It was essentially a retainer fee. If 
I traveled, you know, I was reimbursed for -travel expenses. 



UNCIASSIRED 



67 



mmm 



65 



Q All right. And I recall seeing soine invoices 
like that that had flat rate for secretarial, office, 
overhead type of thing. 

A That's another item. I also worked with him and 
provided office space for an individual that he was also 
using the monitor the war. Mr. Razmara. He was paying 
Mr. Razmara a retainer, and I was billing him for the 
secretarial services, office space and other things that were 
being used by Mr. Razmara. 

Q Let's work back from Razmara. 

Was Razmara a person that you knew first or Hakim 
knew first? 

A That I don't know. I don't know the answer to 
that question. 

Q Did Razmara ccxne to you as a person that Hakim 
wanted to help monitor the situation, or was he somebody that 
was already on your staff, and Hakim said, well, I'll pay 
you, and I'll pay Razmara? 

A No. I knew Mr. Razmara and Mr. Hakim knew 
Mr. Razmara. Which came first, the chicken or the egg, I 
don't know. I met Mr. Razmara after he became an exile in 
the United States. I had seen him once or twice. 




\\u 



68 



wmw 



66 



Q I assume that was shortly after the fall of the 
Shah? 

A Yes. That would have to be, I don't know, maybe 
'81, '82. I can't put any dates on it any closer than that. 
That's the first time I recall meeting him here in the States. 

Q I'm sorry. I asked the question inartfully. That 
got us a little bit off-base. 

Just tell me how it came to pass that you and 
Razmara were both sitting in office space in Rcjglyn working. 
for Hakim as consultants on the war. 

A Well, as I told you, I met Razmara here in 
Washington. He was looking for a job. I think he did some 
analytical work for me. I probably paid him a minor retainer 
of some sort. 

Q That was before he was working for Hakim? 

A Then Hakim and Razmara got together somehow. I 
don't know how they got together, maybe through some other 
friends. I simply can't recall. I don't know. If you're 
interested in pursuing it. Call in Razmara and call in 
Hakim. I don't know. 

Then Hakim was interested in covering that war and 
was interested in some of Mr. Razmara 's contacts in the 



MIISSW 



69 



MWED 



67 



i! 



Middle East looking for business, and he came to me with a 
proposal. "How about providing office space, secretarial 
space, and so forth, for Mr. Razmara?" 
That's what I did. 

Q That's what I wanted to know. It was Hakim that 
brought Razmara together with you for this opportunity? 

A No. We were already in touch, but that's my 
best recollection that he came up with some sort of a 
proposal. 

Q Were you and Razmara supposed to be working 
independently of each other on the project, getting paid 
separately? 

A Mr. Razmara was getting paid through me. In other 
words, I was doing it as an accommodation. Hakim was paying 
me the retainer that I was on. He was paying me for the 
invoices I was billing him for. Mr. Razmara ' s secretarial 
things, and so forth. And then I paid Mr. Razmara. 

Q I see. Did Razmara do any other work for you, 
in addition to the Hakim work? 

A No. But we exchanged — I mean, it's like a 
cross rep. He might make a call to somebody to talk to 
somebody about Iran or the Iraq War. I had some 




70 



IJNWKD 



68 



information. We poouLed our information. We discussed it, 
and this was probably a synthesis of the two that ended up 
in a product. 

Mr. Razmara's English, spoken English, is very 
good. He's a graduate of a U.S. university. He doesn't 
write English all that well. He would write reports. We 
would edit them for them and put them into English. 

Q All right. How long did this relationship with 
Hakim continue as regards to yourself? 

A There are invoices in billings there. You can 
check the file. I think maybe 198 2, somewhere in that 
period. Although maybe we didn't get our last payments from 
him until 1983. 

Q It ended in '82 or '83 then? 

A Yes. I would say probably December of '82, but we 
may have still had correspondence with him. He was a slow 
payer. I mean, you know, it just took him a long time to pay 
his bills, and I think maybe I had correspondence with him 
running through 1983 on that. 

Q What was the reason for your discontinuation of 
that relationship? 

A Basically, because it was clear that the war was 



mM!^^ 



71 




69 



going t* go on, you know, for a long period of time, and his 
original concept and interest in business stemming from that 
war just wasn't realistic. 

Q So he was the one who decided that it was just 
not economically a good idea? 

A Well, I think I also said, you know, look, this 
is not going to be a short-term war. By then it was pretty 
clear that the war was going to be a long war. You know, I 
think I told you this story once before, so I'm going to 
bore you with the story. People say they are either hunters 
or farmers in the business world. A farmer is somebody like 
me who plows the furrows and gets a minor retainer for doing 
something. A hunter is the guy who goes out and looks at 
one big project. He may chase the big project for three 
years before he brings it in. 

Mr. Hakim is a hunter; I'm a farmer. 
I can see that this big project at Abadan wasn't 
going anywhere. Every day Abadan was being more and more 
destroyed. So I said, "Look, Albert, this isn't going 
anywhere . " 

Q This field is barren for now and come back later? 
A It was just not going anywhere. 



IMW 



72 



mmm 



70 



Q All right. And he discontinued his payments to 
Razmara around the same time, I take it? 

A Yes. As far as I can remember; yes. 

Q Did Razmara remain with you? 

A Yes. Razmara has remained with ite, aid we've had 
different kinds of relationships. For instance, he is a 
shareholder in TGS International. 

Q When did he become a shareholder? 

A In this documents. Look it up. I mean, I don't 
remember all these dates. 

Q Sure. I just wanted to know whether it was 
before or after. 

A It was after, at some point when we were involved 
in operations in Kuwait. 

Q Returning our focus to Hakim, have you had any 
other relationships with Hakim? 

A Yes. I think over the years. 

Q When was the next contact you had with Hakim from 
the beginning of your risk assessment program? 

In other words, branching off from there, what 
others were there from that point forward? 

MR. MC KAY: I don't understand the question. 



mtmsB 



73 



!^ imuLA 




m- " 



It 

THE WITNESS: No, I don't either. I just told you. 



BY MR. HOLMES : 
Q There's a period of time toward the end of 1980 
until the end of '82 or the beginning of '82, when you're 
working with Hakim on risk analysis; correct? 
A Uh-huh. 

Q I don't you to start after the end of that 

relationship; I want you to start after the beginning of that 
relationship and tell me what's the very next contact, other 
than that relationship, that you had with Hakim. 

MR. MC KAY: In the time frame when he was doing 
the risk analysis, what else was he talking to Hakim about? 
MR. HOLMES: Yes. Do you understand that? 
THE WITNESS: No, I don't. 

MR. MC KAY: He's taking that time frame when 
you're doing the Iranian-Iraqi War analysis and asking if 
you had other business dealings with Hakim. 

THE WITNESS: No, I don't think I had any other 
business with him. 

BY MR. HOLMES: 
Q I don't want to be quite that specific, because 
in the world of a hunter, business is sometimes defined as 



mmvm 



74 



UNWSIFfED 



•72 



something that brings in money, but my interest is in any 
Ij kind of discussions at all that may have been with Hakim, in 

i; 

the hopes of bringing in money or even in the hopes of 
maybe further contract. 

A I don't know what specifically you're searching 
for. Obviously, you're searching for something. 

Q I'm just on scan at the moment. 

A I did risk analysis. The next thing that I can 
remember, and I can't pin it down to a specific date, and so" 
forth, is that I had some discussions with Hakim about 
modular storage equipment, sale of modular storage equipment, 
where that could be done. 

Q Was there any particular country discussed in 
regard to modular storage? 

A There were several countries discussed at one 
time, and there is some correspondence in there with him in 
the TGS files on modular storage. For Egypt, I think I may 
have talked to him about modular storage. I don't have any 
correspondence that I can recall, but I may have talked to 
him about modular storage for places like the United Arab 
Emirates. Maybe some other customers in the Middle East 
that I can't recall at this particular point in time. 



mssm 



75 



mmm 



73 



Q All right. And nothing actually was built as a 
result of these? 

A Nothing was built. We got no contracts out of 
any of that. 

Q Did this relate in any way to Marwais? 

A No. This was Stanley Vidmar. Modular storage. 
The Marwais thing doesn't appear until much later. 

Q Let's move forward. 

A He was involved -- Hakim was involved in Korea. 
He was doing some projects in Korea. He was a subcontractor 
on a Westinghouse contract for a nuclear power plant, I think, 
in Korea. 

Q What was the business opportunity that was 
discussed with you? 

A Analysis of what kind of security systems should 
be put in there. 

Q So you were assisting his subcontracting role? 

A I didn't actually assist him. I talked to him 
about it. I think I looked -- may have looked at some of 
the specs, but I never really worked on the project. 

Q Were you ever paid or reimbursed expenses? 

A No, not that I recall. I have no memory of that. 



nmm 




76 



« ,oo,nt , 



I don't recall ever being involved with him. You know, I 
talked with him about it. We looked at it. 

Q Did you ever travel to Korea? 

A No. I have been to Korea but not with Mr. Hakim. 
I mean, when I was in the government, you know, 1 traveled 
to Korea. 

Q In addition to the Korea — approximately when 
was the Korea? 

A I don't know. He had several projects in Korea. , 
I^ow we talked to him. And I can't put, you know, a date 
on these. It's very hard to put dates on these things. He 
had the power plant thing he was looking at, and I know that 
I tried to talk him into a modular storage package for 
Korean Airlines and some helicopters, and so forth, that 
the Koreans were going to build. Nothing came of that. 

Q The Koreans were going to build helicopters? 

A Assemble maybe is a better word. Assemble, put 
together. 

Q What kind of helicopters? 

A I don't remember which company it was. There's 
additional correspondence in there. It's in the files. 

Q In the TGS file? 



UNaiSMD 



77 



UNeassiFe 



75 



A Yes. 

Q Go ahead with your narrative. 

A I'm just trying to think what else in Korea. 
Oh. There was a — at one time, I corresponded with him and 
talked to him about a radar project for Trinidad and Tobago. 

Q Let's start at the beginning of that. 

What was your first inkling that there was such a 
thing as a radar project for Trinidad and Tobago? 

A Bill Colby called me up on the telephone. As you. 
know, Bill Colby is the former director of the CIA. 

Q I know . 

A He's somebody that I knew. He frequently calls 
me and others • And told me that he was talking to a fellow 
from -- he was talking to a guy who had a project in 
Trinidad and Tobago. 

Q A U.S. person? 

A Well, I don't remember what he said at that time. 
As I recall the way that unfolded, it turned out that this 
was a black American who was resident in the United States. 
He lived somewhere in Maryland. I didn't basically handle 
much of the day-to-day activities. Somebody else in my 
office talked with him. We defined the project, what it was 



wMm 



78 



UNaiiSSlKD 



76 



that Trinidad and Tobago was looking for, and we raised that 
i| with Mr. Hakim to see if he could find the radar that was 
responsive. 

Q Are there any documents in either of these 
exhibits, 6 and 7? 

A I don't know. I think that probably took place 
before 1982. 

Q All right. Who is the black American? 

A I don't remember the guy's name. I can look it 
up. I'm sure we've got it somewhere. We can find it. 

Q He was doing some other project on Trinidad and 
Tobago? 

A Yes. He was doing something else, and I don't 
remember what his business was. I don't know. Maybe I met 
him once. Shook hands with him, and as I said, somebody else 
in the office handled that particular project. 

Q All right. Then you contacted Hakim about it? 

A Right . 

Q Was anybody else there at that contact? 

A No. Not that I recall. 

Q Nobody from Hakim's companies? 

A There was a fellow that we corresponded with 



mumm 



79 



uNiwe 



77 



in Hakim's company, because somebody in the newspaper business 
' was asking me names of various people that I know. Did I 

!l 

I know this guy, did I know that fellow? And I didn't even 
recognize the name, but I finally remembered it was a fellow 
by the nsime — I think his name is Niedhart, or something 
like that, who worked for Hakim. 
Q In California? 

A Yes. He was the fellow we corresponded with, 
maybe we talked to him on the telephone about this particular 
project. 

Q Now describe the project. 

What was it that they wanted? 
A They wanted a radar system, something for 
coastal defense kind of activity. 

Q What was Hakim's response to your description of 
what was needed? 

A He went into the market and was looking for a 
system, and I think he found a system. I think that was 
conveyed to the individual. 
Q The Marylander? 

A Yes. And nothing ever happened. 
Q Where did Hakim find the system? 



\mm\i^ 



80 



UNCElSSSfFIfO 



78 



A I have no idea. 

Q Do you know whether he accessed any CIA-related 
technical people in order to discover the system? 

A No, I don't think so. My memory of that was, 
whoever this fellow was who was working for him found the 
system, and it was available on the market, but how he 
found it, where he found it, who manufactured it, and so 
forth, I don't have any of those details in my memory. 

Q Okay. You say this is sometime prior to 1982? 

A Yes. That's my recollection. 

Q Can you give me a better read than that? 

A No, I can't; no. 

Q Is this after September of, what is it, '79? 

A It has to be after September of '79, after I 
retired, but I can't put that into any — 

Q Did you have TGS up and running at that time? 
MR. MC KAY: At the time of the conversations 
about Trinidad and Tobago? 

MR. HOLMES: Yes. 

THE WITNESS: I don't know. I probably did, 
because the fellow who handled that has worked with me 
primarily in TGS. 



umssw 



81 




4H /* « J**^ r' !*"1 79 



irjli) 



BY MR. HOLMES: 

Q Who was the fellow? ' 

A A fellow by the name of Gillespie. 

Q That's Vernon Gillespie, the person who his name's 
in the record? 

A Right. 

Q Okay. In addition to the radar venture, what other 
relationships with Hakim? 

A I C2m't think of any. Iran-Iraq War, modular 
storage. Korea. You know, at the moment, nothing else comes 
to me. I mean, what I have since '82 is in there, but I 
can't think of anything else, you know, other than what's 
been discussed here. 

Q Now Hakim, at one point, formed STTGI . Have you 
or any of of your corporate firms or people associated with 
those corporations dealt with STTGI? 

A No. I think — no. He's talked to me about his 
concept. That came into being — that idea came into being 
after there was some law passed a number of years ago about 
benefits in having U.S. trading companies or conglomerates 
that could have certain benefits of being able to put 
together certain packages. So I heard him talk about that 



KlWtB 



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80 



subject. 

Q Prior to the STTGI , I noticed in your records, 
there's a company that he '/as dealing as called Triangle. 

A Right. 

Q Who was Triangle? 

A Let me go back to try to answer that. My 
relationship with Hakim sort of unfolded like this. I 
dealt with Hakim in person, and in some of the early days, 
when I was doing risk analysis work for him, I was paid by 
Hakim, the person, later. The billings were sent to 
Triangle. He asked that the billings be sent to Triangle 
Associates, and we were paid by Triangle Associates. I 
don't know the corporate genealogy. That was a corporation 
that he was involved in. Then later at the end of our 
relationship, we were billing to Stanford Technology. 

Q Stanford Technology or Stanford Technology Trading 
Group International, Inc.? 

A No. Stanford Technology Corporation, STC. 

Q California? 

A Yes. His offices were in California. His 
residence, I think, was Los Gatos , but his office was 
somewhere in another little town somewhere, at least at the 




83 



m 




a A 81 



time. 



Q So it was the California STC, not to be confused 
with STTGI? 

A Yes . 

Q All right. 

There came a time when Hakim, as we now know from 
his testimony, was involved with Iranians, in particular, 
a man named Ghorbanifar. You had had contact with 
Ghorbanifar, in the meantime, in November 1984? 

A Uh-huh. 

Q I notice that in the file, you had a memorandum 
to the file detailing your meeting with Ghorbanifar in '84, 
and although you'll probably be questioned about it by one 
of the other lawyers later, and I'll skip over it for 
that reason now, I'm just drawing your attention in on 
Ghorbanifar and Hakim. 

From the time that you meSj)L Ghorbanifar in '84, 
did you talk with Ghorbanifar about Hakim or Secord at any 
time after that? 

A No, I did not. I had no meetings with 
Ghorbanifar. I personally only met him the one time in 
Hamburg. So I met him, I came back to the states, turned 



1? 




ta^P 



82 



in my report to the State Department, and X never met with 
Ghorbanifar after that. So I never had any basis for 
talking to him. 

As a matter of fact, I don't ever recall even 
talking to him after that, although Razmara had a slight 
difference of opinion on that. He says that one time he 
was talking on the phone to Ghorbanifar. I walked into 
Mr. Razmara 's office, and he said, "Hey, this guy is on the 
phone. Why don't you say hello?" So I said, "Hello, how 
are you. Goodbye." 

And that is the only other time I've talked to him. 
I don't even remember that, but Mr. Razmara says that's 
what happened, and 1 have no reason to doubt it. 

Q From that time period — just put the time 
period in your mind from the end of 1984 forward, have you 
had any contact with Hakim or Secord? 

A Yes. 

Q Let's just concentrate on Hakim. I shouldn't 
really mention Secord. The two were together during that 
period of time, so I thought maybe that would help key your 
memory, and just concentrate on Hakim. 

A I don't remember meeting Hakim until — I don't 



BHWSIfO 



85 



UNKSIflE 



83 



have any memory of meeting him until the Miami lawsuit 
appeared. 

Q And that was sometime early in 1985? 
A No. 

MR. MC KAY: May of '86. 

THE WITNESS: You know, you're jumping around a 
lot of dates here. Let's slow down for a minute and let me 
get this. 

Okay- My memory of the lawsuit is May of 1986. 

MR. MC KAY: That's correct. 

THE WITNESS: May of 1986, the lawsuit appeared. 
All right. After that — 

BY MR. HOLMES: 
Q When the lawsuit appeared, did it come to you as 
a bolt from the blue, when the complaint was filed, or had 
you been aware that something was brewing prior to the 
complaint being filed? 

A I had absolutely no idea, nothing. For instance, 
my first knowledge of the lawsuit was, one of my associates 
picked it up on the wire service, and I had never had any 
conversations, I didn't even know Avirglfan or Honey. I 
never heard of Danny Sheehan, never heard of the Christie 



lEtl^W 



m&mm 



84 



Institute, never knew that there was a law case. 

Q You hadn't heard from a former CIA friend or 
something like that, that the Christie Institute was looking 
into the contra situation or anything like that? 

A No . I maintain very few contacts. 

Q So that gives us a fairly specific reference. 

A I don't remember any conversations between, say, 
November of '84 and that period with Hakim, meeting with 
him or anything else, until the lawsuit appeared. That 
appeared in May 1986. Sometime shortly after that I had a 
meeting with Hakim, and I think I tracked him down somewhere. 
He was in Washington. I had lunch with him. I talked to 
him about the lawsuit. 

Q Was anybody else there? 

A No. I don't recall anybody else being present. 

Q What was said? 

THE WITNESS: Can we take a short break? 
MR. HOLMES: As a matter of fact, i'ts 12:15. Do 
you want to recess now for lunch and come back? 
MR. MC KAY: That's fine. 

(Whereupon, at 12:15 p.m., the taking of the 
deposition was recessed to reconvene at 1:30 p.m., this same 
day. ) 




87 



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85 



AFTERNOON SESSION 

(1:30 p.m.) 
Whereupon, 

THEODORE G. SHACKLEY 
resumed the stand and, having been previously duly sworn, 
was examined and testified further as follows: 
EXAMINATION (Continued) 
BY MR. HOLMES: 
Q Mr. Shac)cley, as I recall, when we broke for 
lunch, I had just asked you what the content of the meeting 
was that you had described between yourself and Mr. Hakim 
in approximately May 1986. 

A That meeting had to be in about June of 1986, I 
told you. 

Q Sometime shortly after the filing of the lawsuit 
by the Christie Institute? 

A The Miami lawsuit came out in May. My guess is it 
would be shortly thereafter, in June 1986, 
Q Good enough . 

A I contacted Mr. Hakim, had lunch with him, asked 
him about the Miami lawsuit, what do you know about it. 
Q Was Hakim a defendant in that lawsuit? 



\0M^^^ 



88 



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A Yes. He's a defendant. Yes. 

Q Was he a defendant at that time? 

A Yes. 

Q Has there been a growing list of defendants? 

A It started off with 30. It's now down to 29. 

Q In any event, what was said back and forth 
between you and Mr. Hakim? 

A I, basically, asked him what he knew about the 
case, because it was a mystery to me. 

Q What did he say? 

A He said that he saw no understanding, had no 
understanding of why I was in the case and, basically, felt 
that he was in the case sort of by guilt by association, 
because he knew a number of the other people. 

Q Did he tell you anything about what he knew about 
what was going on in Central America? 

A No. We focused exclusively on this case, and he 
said he was going to look at it, and that was it. 

Q You didn't ask him if there's something going 
on in Central America you ought to know about? 

A No . I focused exclusively on the law case, you 
know, who are these guys? What do you know about the 



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Christie Institute? What do you know about Sheehan? What 
do you know about Avirg<^n? What do you know about Honey? 

Q He said he didn't know anything? 

A No. He said he didn't know any of those people. 
I asked, "What do you know about Lipenko?" "I 
don't know." 

Q And to your recollection, it was just you and 
Hakim? 

A Yes; to the best of my recollection, that's all 
there was . 

Q Did you memorialize that conversation? 

A If I did — 

MR. MC KAY: I think it was memorialized. I 
think it is in one of the documents that was described as 
not being produced. 

TOE WITOESS: It's in our sort of investigation that \« did 
in relationship to the case. 
BY MR. HOLMES: 

Q And your next contact with Hakim, relating to 

Hakim? ' 

A I don't think I've seen him. We had a conference 

call, Mr. McKay, myself and his lawyer and Mr. Hakim. 



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MR. MC KAY: I think that material is privileged. 

MR. HOLMES: I have no problem with that. 

MR. MC KAY: You don't need to answer further, 
unless you want to say — 

MR. HOLMES: Obviously, it's an attorney-client 
privilege. When I say I don't have a problem, I mean I 
don't have a problem with you not answering. 

THE WITNESS: At some point not too long ago, I 
was in the office fairly early in the morning. The phone 
was ringing. Nobody was around. I picked it up. The voice 
on the other end of the point was looking for Mr. Razmara. 
I said, "He's not here. Can I take a message." And it 
turned out to be Hakim. He said, "What are you doing 
answering the phones?" And I said, "Well, I'm the first one 
here, answering the phones." And he left a message for 
Razmara. You know, it was a very brief telephone exchange. 

BY MR. HOLMES: 
Q Okay. I want to ask you kind of a general 
question. 

As Hakim has testified, there were efforts made 
by Hakim and others, including Secord and people acting for 
STTGI , to establish business connections, commercial 




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relationships in Iran, in the 1985-86 period of time. That's 
come to be known as the First Channel Ghorbanifar and the 
Second Channel. I would like to know if you heard or know 
anything about those efforts by Hakim and his associates? 

A No, I do not. I know nothing about them. 

Q So although he was dealing or planning to deal 
in commodities that ostensibly or presumably would have 
involved countertrade, you and your associates didn't hear 
anything about that happening? 

A No. The only other conversation I had with him, - 
and we met briefly, was on Marwais. 

Q Let's go back into Marwais and explain that. I 
gather that what you are keying on there, is that that was 
a countertrade type arrangement? 

A Right. 

Q Go ahead and explain that arrangement. 

A It's"very simple. Marwais was being represented, 
as far as I know, by Hakim and Secord in the UA£. 

Q You're dealings with Marwais were limited only 
to the UAE? 

A I never dealt with Marwais. I dealt with 
Hakim and Secord. 



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Q And were your dealings with Hakim and Secord in 
reference to Marwais limited only to potential Marwais 
business in the UAE? 

A In the UAE. 

Q You had nothing to do, for example, with Marwais' 
i opportunities in Saudi Arabia or anyplace else? 

A No. 

Q Go ahead. 

A That was it. They were bidding on a project in 
the UAE aircraft shelters. One of the possibilities was 
the UAE would pay for those aircraft shelters in an oil 
barter deal, and I was asked about the oil barter, how it 
worked, how it could work. 

Q Who asked you about it? 

A Hakim and Secord. 

Q When did this occur? 

A I can't pin that down with precision, but I think 

i 
there's a file in here somewhere. 

(A pause.) i 

Q So we're looking at a portion of Exhibit No. 6 j 

I 

that consists of a manila file folder entitled Marwais/UAE J 

Oil Barter Folder, Research Associates International. i 

1 






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A Okay. It shows — here's a memo 1 February '85. 
I talked with Mr. Hakim about a UAE oil barter 
deal. 

Q Did you reach some kind of agreement with Hakim? 

A No. 1 didn't reach any agreement. We just 
discussed, back and forth, what if. There was never a firm 
proposal. In other words, what if they got the contract, 
what if oil became a part of the price? 

Q What was the understanding between you and he, as 
to what would happen, if they did get the contract? 

A Could I help him structure the deal, if it became 
a firm requirement, that is, for somebody to lift the oil 
to generate funds by lifting the oil. And I said yes. 
But it never came to that. They never got the contract. 

Q Why don't you explain for the record and for 
the people who may read this someday, in the dust of some 
archive, what a countertrade, oil barter deal looks like? 
MR. MC KAY: Generically? 
MR. HOLMES: Generically, just so it's 
understood. I think I understand it, and obviously, you 
do. I'd like for the reader to understand it. 

THE WITNESS: The country that wants to have a | 
project built, in this case, the UAE, signs a contract with 




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Builder Marwais. All right. Then part of that is arranged 
with the UAE , whatever entity it is in the UAE that's doing 
this, let's say, the Ministry of Defense, would arrange with 
the Ministry of Petroleum to lift a certain amount of oil. 
That oil would go to an oil company, and that oil company 
would then take and sell the crude and then deposit those 
funds into an escrow account. When those funds were in the 
escrow account, then the bank would pay those funds to the 
supplier of the services, in this case, Marwais, on 
instruction from the country, the UAE Ministry of Defense. 

Q And is the oil company obliged to perform at a 
certain price, whether or not the Marwais contract is done, 
or is it contingent on Marwais completing the contract? 

A It depends on how the deal is structured. 

Q So it may be that way and it may not be? 

A Normadly, it would be, the Ministry would sell the 

crude to the oil company. The oil company would sell that 

crude for a fee, depending on how they negotiated. Let's 

say their fee was something like 15 cents a barrel. All 

1 
right, the oil company would take that 15 cents a barrel as 

their profit for that transaction. The remaining funds would 

be put into the escrow account. At that point in time, that 



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portion of the deal between the Ministry of Petroleum and the 
oil company is finished. Then that escrow account is 
controlled by the Ministry of Defense in the UAE, which 
then issues progress payments, depending on the level of 
construction, to whoever is doing the construction. In 
this case, Marwais. 

So it is put together in that manner, but they're 
really separate transactions which come together to make a 
total deal. 

This financial arrangement is a very common 
arrangement in Third World countries, isn't it? 

A It has been a very popular arrangement in the 
market, probably over the last four to five years. 

MR. MC KAY: Mr. Holmes, could we identify this 
person who's just come in from the House? 

MR. HOLMES: Yes. This is Joe Saba from the 
House. 

BY MR. HOLMES: 
Q When we did the chronology of Hakim up to the 
June of 1986 meeting and beyond, we didn't touch on this. 
A We touched on it, then we got off on something 
else. 



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Q Is there anything else we didn't touch on? Any 
other relationship with Hakim that we didn't touch on, when 
we gave that chronology? 

A I don't think so. To the best of my knowledge, 
we touched on this, and you said, no, you want to discuss it 
later, and then we got off on something else. 

Q Now returning to the model or the phenomena of 
countertrade, this phenomena would also apply as a general 
phenomena i'- Iran, as well? 

A It could, 

Q In particular, as Iran buys high tech items or 
munitions or missiles or whatever, it is oil that they are 
selling, in order to raise those funds? 

A Yes. In the Iranian economy, oil is the largest 
producer of income. 

Q And your job, over the past five or six years 
anyway, has been keeping your thumb on the oil business in 
the Middle East, of course, including Iran, where Mr. Razmara 
is from? 

A Uh-huh. 

MR. MC KAY: I'm going to object to the question 
as vague, in terms of keeping your finger on the oil business 






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I don't know whay that means. 



j| MR. HOLMES: If you don't understand the question, 

il 

let me know. 

THE WITNESS: There are 22 oil-producing countries 

in the world. Okay. I monitor trends relative to those 22 

oil-producing countries, and there are a couple of more 

countries that are coming on stream now. 

BY MR. HOLMES: 

Q We know from the testimony in the hearings that 
were some sizable Iranian purchases going on in 1985 and 
1986 for weapons, some at least, involving the United States 
and others involving other countries. 

Did you gather information about the oil 
countertrade in relation to those kinds of purchases in your 
business? 

A No. Tha*- cas not a particular requirement, you 
know. I looked at the countertrade and the opportunities 
rather than collecting information numerically about 
countertrade. 

Q Wouldn't an Iranian decision to buy a substantial 
amout of arms requiring cash payments be something that 
would cause a blip in their oil trading posture? 





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I A It might, but that's not the way you monitor 

I 

j Iranian oil production, is by backing into it through 

j whatever sales or buys they might be making. In other 

i 

words, you monitor Iranian oil production on the basis of 

output. You know, tanker liftings, and so forth. 

Q In any event, did you hear from any source, 
about Iranian desires to buy missiles in 1985 or 1986? 

A I think the general conversation, you know, that 
the Iranians were interested in buying all kinds of 
equipment, including missiles, I wasn't specifically 
involved in any such action. 

Q Well, I'm not suggesting that you were. I just 
wanted to know what the sources were out there. 

A Well, it's in the newspapers. I mean, this kind 
of stuff is in the newspapers. 

Q Did you have anything more direct than newspaper 
reports on that subject during that period of time? 

A No. There's a file in here where I tried to 
arrange a processing agreement between ^V client and 
Portugal, in which Portugal would buy Iranian crude. 

Q Could you explain that? I'm sorry. You lost me 
on the processing arrangement. 



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A Okay. A processing agreement, you have to have 
a refinery. In this case, Portugal has a refinery. 
Portugal also buys crude for its own account. Portugal buys 
from Iran. It is not unusual in the oil business for someone 
to make a processing agreement. They, in effect, will buy 
barrels of product that come out of that refinery, not the 
crude, the product. In other words, here — • 

MR. MC KAY: I think we understand. 
BY MR. HOLMES: 

Q So your client, in this situation is not using 
its own refinery in the United States. He's buying the 
product of a Portuguese refinery? 

A Right. 

Q And it is the Portuguese who are doing the 
processing? 

A The Portuguese are doing the processing, for 
which they get a fee. 

Q 




Q So it's certainly logical to assume that what 

we're looking at is very much like this Marwais, United 



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Arab Emirates deal, in which the oil being processed in 
Portugal is countertrade]! 




A It's not a countertrade deal. It's an entirely 
different kind of a deal. 

Q Well, it's a payment deal. 

A No. Iran produces crude. Iran sells crude to 
the Portuguese. The Portuguese had a fixed period of time 
within which to pay for that crude. 

All right, let's just arbitrarily, because it 
has to be negotiated, let's say it's 45 days. In that 45- 
day period that Portuguese refinery takes that and turns 
that into whatever it's supposed to turn that into -- diesel, 
motor fuel, whatever, and it sells that to somebody who 
then sells it into a European distribution mechanism. So 
you've got cash flowing throughout this whole mechanism. 

Now what the Iranians get paid for or what the 
funds that the Iranians get paid for their oil, they do with 
that whatever they want. It's not linked to anything 
specific. 



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Q Did you ever discuss with Hakim or anybody 
associated with Hakim any opportunity relating to medical 
supplies? 

A No, I have no recollection of ever talking to 
Hakim about medical supplies. 

Q Have you ever had any discussions relating to 
medical supplies being sold to Iran? 

A No. I don't recall medical supplies. 

Q Not necessarily associated with Hakim, you 
understand. 

A No. I have no recollection of any medical 
supplies being discussed with me, selling them to Iran. 

Q Have you or anybody associated with the companies 
that you've been associated with dealt in medical supplies? 

A Yes. We have recently been talking with Kuwait 
on medical supplies. We've been talking with a company, 
an American company here in Roslyn in the last couple 
months on medical supplies for the Saudi market. 

Q But to your knowledge, none of those medical ' 




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supplies are destined to go to Iran by any trade arrangement? 

A Not that I know of. 

ll 

|| Q And nobody associated with Hakim in any way has 

ll 

I spoken to you or anybody associated with the companies that 

|! you're associated with about trade opportunities in Iran 

in 1985 or 1986? 

A I recall no conversations on trade activities 
in Iran. 

Q Were you surprised to hear that Hakim was 
involved in developing trade activities into Iran? 

A Yes. 

Q When did you first become aware of it? 

A Whenever it appeared on television. 

Q No prior inkling? No discussion with anybody 
about it? 

A I don't have any recollection of that. 

Q Let me broaden my previous question. 

You and he have mutual acquaintances. You and 

Secord have mutual acquaintances. You and a number of ; 

i 
other people who are likely to be in the know on the 

Iranian deals have mutual acquaintances like, for example, ' 

i 
North or other people in the government. None of those ■ 



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mutual acquaintances alerted you to the existence of the 
so-called "Iranian Initiative" up until the time it was 
publicly disclosed on television? 

A I have no kqnowledge of that, and I don't see 
any reason why I would have any. 

Q Well, as a ''(^bresentative of an Iranian- 
specializing oil trader, it would certainly seem like a 
possibility. 

MR. MC KAY: Who says he's an Iranian- .' 

specializing oil trader? 

MR. HOLMES: Mr. Shackley has said he 
specializes in the Near East and Razraara's from Iran; 
his ma^or client, John Dois, is the oil trader. 

MR. MC KAY: I don't understand where the 
Iranian specialization comes. I think that's not in 
anything he's testified to. He's testified on all 22 
markets. 

MR. HOLMES: No, no. He asked me, inferentially , 
why I was asking the question, that's all. 

MR. MC KAY: Are you referring to Razmara then? j 

MR. HOLMES: No , no . 

MR. MC KAY: I thought you said a person 



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specializing in the Iranian oil trade. 

MR. HOLMES: Oh, no. Okay. No, I didn't mean 
that. 

THE WITNESS: I don't specialize in the Iranian 
oil trade. 

MR. MC KAY: Maybe he didn't say that. 

THE WITNESS: Well, that's what I thought — 
that's what I thought you said. 

MR. HOLMES: Okay. I didn't mean it that way. 

THE WITNESS: I don't specialize — in other 
words, I monitor the oil trade per se, and the 22 oil- 
producing countries within those, probably the 13 countries 
in OPEC. 

BY MR. HOLMES: 
Q Wouldn't it be logical, knowing the Middle 
Eastern market and particularly its petroleum component as 
you do, to assume that Hakim's group would have been in 
touch with some countertrader, in order to provide the 
other side of their trade opportunities in Iran, in other 
words, to generate the cash that the Iranians would need 
to buy missiles and medical supplies and whatever else it 
was that Hakim was hoping to sell in Iran? 




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A NO, I don't think that necessarily follows. I 
mean, the Iranians have been in the oil market for a long 
time, and they've got a lot of people scattered all over 
Europe who can put these deals together for them. They're 
constantly out there marketing various and sundry things. 
If what you're trying to say is that there's got to be this 
big mechanism that comes down this way toward a Hakim oi 
somebody like him, and you're on the wrong wicket — 

Q I'm not sure I understood, what you mean — 

a big mechanism. 

A In other words, if you take the total National 
Iranian Oil Company, which is a large structure, and they 
have representatives in a lot of countries -- for instance, 
they have an office in London that markets - so these guys 
are out marketing, and they have an established mechanism 
for marketing. They are selling crude to the same people 
they've been selling crude to for years. 

Q Of course, the same could be said about the 
United Arab Emirates, couldn't it? 

A NO. Not really, because the UAE production has | 
increased in recent years. They've got more crude to deal • 
with than they have had in the past, so they're looking for 



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new customers. 

If you look, historically, at Iranian production, 
it's come down. 

Q So although it would be reasonable to assume they 
might have, it's certainly not necessary that they would 
have. That's the point you're making? 

A Yes. I'm making the point that they've got a 
big marketing mechanism, and if you're looking at there's 
got to be sort of one guy, then I'm saying that I think 
you're off on the wrong wicket, that there is no one 
instrumentality that handles their large marketing. 

Q I understand what you're saying. 

Let's return to Mr. Secord, the second 
principal, and start as we did with Hakim at the beginning 
and go forward in time. 

When did you first know or know of Mr . Secord? 

A I first met Secord in Laos, when we were both 
in the government. 

Q The time frame? 

A I was in Laos in '66 to '68. \ 

Q Was he there the entire time you were there? 

A I have no way of reconstructing that. He and I 



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worked together -n Laos. That's all I can tell you 




Q All right. Where, after Laos, did you have any 
contact with Secord? 



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A I don't know. Maybe when I'd come back. When 
I'd come back from overseas, if he were here in the country, 
at large parties, a get-together, he'd be at some of these 
parties. But I don't have any specific date. I mean, I 
can't say, tell me that you met him on the tenth, of whatever, 
I just mean generically. 

Q For a period of years, you had no professional 
contact with them then? 

A NO. 

Q When was the first business or, hopefully, business 
contact you had with Secord? 

A I saw him after he retired, and m. don't know when 
he retired. 

Q Let's assume he retired in May of 1983. 

A Then somewhere in that period, shortly after he 
retired, I started talking with him about business. And the 
only specific things that I remember discussing with him in 
the business sense, is the Marwais activity that he was 

involved in in the UAE. I think on one occasion he talked 

i 
1 

to me about some possibility of an oil concession or ; 
something in the Sudan. 

Q The Marwais thing was the same opportunity that ■ 



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we've talked about with Hakim? 

A Right. 

Q What was the oil concession in Sudan about? Tell 
me about that. 

A There's not much to tell. He was aware of the 
fact that there was a concession there and raised this with 
me, because he felt that he had some ability to help open 
a dialogue on that particular concession. 

Q I'm not even really understanding what you mean 
by an "oil concession available." You mean the government 
of Sudan is holding itself out as available to grant some 
kind of a lease for developing oil reserves? 

A There are all sorts of combinations. I mean, I 
don't think I'm here to give you an education in the oil 
business today, but in its simplest terms, somebody may have 
a block of land that there are geological findings that 
indicate that it has oil. It's a question of, can you bid 
on it. How do you qualify for bidding? 

Q Did you take this opportunity and discuss it 
with anybody else other than Secord? ' 

A No, I didn't do anything with it. 

Q You never even talked it over with any person in . 



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the oil industry and asked them if they might be interested? 

A No, because my view of the Sudan was that it was 
a basket case. It was not any kind of a place that I would 
want to recommend to any clients. There already had been a 
large number — a lot of reasons for it — a number of 
incidents in the Sudan that didn't make it worthwhile. 

Q What was Secord's hope for his own role in that 
oil concession? 

A We never discussed it. He said, "Look, here's 
something I'm aware of in the Sudan. Why don't you take a 
look at it?" I looked at whatever it was. I didn't do 
anything with it. That's as far as it went. 

Q All right. This was approximately when? 

A After he retired, and we were talking about the 
Marwais activity, somewhere in that period. 



Somewhere before Marwais and after his retirement? 

Would you repeat that? 

Was it before the Marwais discussions or 



Q 

A 

Q 
after? 

A It was probably after the Marwais or at the same j 
time as the Marwais discussions. 

Q Okay. From that time forward, when was your next 



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contact with Secord? 

A I don't have any real memory of any contacts 
with him, until I went in the hospital, 

I remember he stopped by to see me at the 
hospital. That's the next time I remember seeing him. 

Q Are you talking about late in 1986, then? 

A I was in the hospital in October of 1986. 

Q Was there anybody else there when you dropped 
by? 

A I had just had a major operation. All I remembet 
is various people ccming in. I don't remember who was there 
and who wasn't there. 

Q So the conversation you had with him then was 
more or less moral support, hope you get better soon. 



here? 



Are you alive. 

He didn't come there with a big proposal, sign 



No. 



Did he have any proposal at all? 

All I remember is talking to the guy. That's 
all I remember. I mean, I know he was one of several, 
many people who came to see me while I was in the hospital. 



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Q After that, when was your next contact? 

A My next contact with him was after the Miami 
lawsuit. The Miami lawsuit was before that. June, May. 
Let's back up. Back up. I stand corrected. 

I saw him when the Miami lawsuit came out. I had 
a conversation with him in June of '86. I went in the 
hospital in October of '86. 

Q All right. Now — 

A I'm getting mixed up on these dates and this 
jumping around here from the 1960s to 1980. 

Q I thought we had done a remarkable job in 
covering the ground on this one. 

All right. It's June of 1986. You've been 
served with the Avir fan w i and Honey lawsuit. You met with 
Secord? 

A Yes, I did. 

Q Was anyone else present? 

A I don't think so. I don't recall anyone else 
being present. 

Q Was there only the one meeting? j 

A No. I had a meeting with him, and let's see, I ' 
think you were out of town. It was shortly thereafter that; 



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I met with him and his attorney. That is, I met with 
Secord and Secord's attorney. 

Q Who is his attorney? 

A It's Mr. Green. 

Q Guys can have more than one attorney. 

In your first meeting with him, what was said 
between the two of you? 

A It was the same kind of conversation that I had 
with everybody at that time, you know, what do you know? 
Q Who did you talk to about the lawsuit in that 
period of time? 

A Let's see. I talked to Secord, Hakim, Singlaub. 
On the telephone, I talked to Andy Messing. I don't know. 
There may be somebody else. Those are the ones that stick 
out in my mind at this particular point in time. 

Q You were trying to find out what was going on. 
A Yes. I was trying to find out, you know, what 
this consisted of. 

Q What did Secord say? 

i 

A Secord told me that he knew some of the people 
in that suit, that he was going to be discussing it with • 
his attorney. He'd just found out about this case, shortly' 



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prior to niy having learned about it, and why don't I come 
over and sit in on that meeting. I had the impression from 
that that he knew some of these players that had been 
involved in Central America, but I didn't know the nature 
of his involvement. 

Q Did he come to tell you the general nature of 
his involvement? 

A No, he didn't. 

Q Did he tell you that he was withdrawing from his" 
direct involvement in the contra resupply? 

A No, I didn't get into that with him. 

Q Did he say anything about contra resupply? 

A No, he didn't say anything specific. He said he 
knew some of those people that were on that particular list. 



list? 



Of course, you knew some of the people on the 

Very few. 

You knew Quintero and Chavez, Clines, Secord, 



A 

Q 
Singlaub? 

A Yes. Those. 

But I didn't know and still don't know people 
like Hull, for instance. Owen. The first time I saw him. 



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I thought maybe this was the fellow who used to work in the 
Agency, but it isn't. 

I established who he was, and there are a lot of 
people on that list that I don't know. 

Q What I'm getting at is the fact that he knew some 
of these people was perfectly obvious to you at the time. 
He didn't have to tell you that. You know that he knew 
those people . 

A But there's a big difference between knowing 
people like, let's say, Singlaub, whom we knew in the military 
service, as opposed to being involved in a lawsuit with all 
these guys. What are these guys doing in this lawsuit? 

Q That's exactly what my question is. 

A What do you know about the Christie Institute? 

Q He must have told you a lot more than "I know 
some of those people." 

What did he tell you eOxsut what the facts were? 

A No. He simply told me that he knew a number of 
th««e people, that he 'a been active in Central America. 
He was going to be discussing this with his particular • 
lawyer, and Mr. McKay was out of town at that particular ■ 
point in time. This was, I think, in June. I was very 



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agitated by this particular suit, and I decided I'd go to 
that particular meeting, and I did. 

Q Did you memorialize your conversation, your first 
conversation with Secord and your later conversations with 
Secord? 

A Yes. I think those are covered. 
Q What other memoranda are covered in the letter 
with regard to the Avirg^n lawsuit? Just so we'll have a 
catalog of what's not being produced for that reason. 

MR. MC KAY: I ' 11 be glad to give you a list 
by separate mailing and go into it more completely. I could 
have done that and probably should have done that. I can do 
it very easily by getting the names. 

MR. HOLMES: Can we agree to have that on Monday? 
MR. MC KAY: Yes. 
BY MR. HOLMES: 
Q All right. Did those discussions about the 
lawsuit continue, or were those the only two? 

A Those, basically, were the only two. Recently, 
I've had a meeting with him and his lawyer, Mr. McKay and 
myself. 

MR. MC KAY: About the lawsuit. 



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BY MR. HOLMES: 

Q Other than the lawsuit, have you had any contact 
with Secord or discussions with Secord in 1985 or 1986, 
except for, I guess, the Marwais and the Sudan thing were 
before that. 

So without further exception, any other 
conversations with Secord in '85 of '86? 

A The only things that I recall over the last 
couple of years, and I can't pin it down with precision, 
the only business that I recall talking with him about is 

Marwais and the Sudan. And the next thing that is in my 

I 
memory bank relative to Secord is the Christie institute 

lawsuit. 

Q Did you or anybody associated with the companies 
that you're involved with, like PGS or RAI , receive any 
inquiries from Secord or relating to Secord about the 
possible support for any military activity in Central 
America? 

A No. 

Q No requests for, say, a list of names of people ' 
involved in security? People involved in air supply, 
air transport? Nothing like that? 



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A NO. 

Q I want to go back and start with Mr. Clines, 
the same process. 

You met Mr. Clines, as I recall, in connection 
with Miami? 

A No. I think I met Mr. Clines ^^^^^^■■xn the 
'50s. I just have a vague recollection. 




Q Is this in relation to the CIA? 
A Yes. Then my next memory of him is| 
was there when I arrived. 

my memory is that he was still there. 



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A To the best of my recollection, because he was 
there when I arrived, he was there when I left. 

Q Would it fair to say that you became friends 
during those years? 

A Yes. You know, I had a lot to do with him, and 
we all had an esprit de corps comradeship, and so forth. 

Q So from that point forward, you would have one 
branch of your relationship with Clines as a general 
friendship contact throughout those years, social meetings 
and that sort of thing? 

A Yes; right. 

Q When was your next contact with Clines, 
'And I mean to exclude now the totally innocuous 
type of social contact, in order to concentrate on business 



type contacts. 



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A My next memory is that he appeared m Laos, 
probably in '67, but I can't be more specific than that. 

Q His duties in Laos brought him together with 

Secord as well? 

A I'm sorry. You'll have to repeat that. 

Q His duties in Laos brought him together with 

Secord as well as yourself? 




Q How long were you and he there together? 

A I can tell you when I was there. I arrived in 
'66, and I left in late '68. I don't know when he came. 
As I say, he may have come in '67, and he was still there 
when I left. 

Q All right. 

And your next contact with him? 

A My next contact with him, I think, is probably 
about, probably '73, maybe late '72. '72, '73. 

Q What did that consist of? 



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A That consisted of his coming to a Washington 
to with^^^^^^^^^^^^^HH^s 
leaving]HH||H|H^^^^^^H|^s ^^ ^^^ 

from somewhere like the Naval War College or something. 
What phase of H^^^^^^^^^^^^^H was 
A What do you mean, "what phase"? 

Was ^^^^^^^^^^^^^^^^^H ^ 
A Yes. It's the geographical entity that's 

responsible ^°^^^|^H^^^^IH 

Q So it was like a bureau or division: 

A A division; yes. 

Q And he was taking over for who? He was taking the 
job that you were leaving? 

A No. I was leaving as the head of that unit. I 
think he was coming in to be about at some job four or five 
echelons below that. I don't know what job he had there, 
but I remember I was going out as he was coming in. 

Q For a brief while he was working for you then? 

A Maybe very briefly. If he did, it was very brief. 

Q Go ahead. What was your next contact? 

A From that point on, we were both — let's see. 
Whatever that was, it was '73. From that point on, we were • 



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both in the Washington area. 

Q Yes. Do you mean by that that you had fairly 
regular social contact with him? 

A I would see him occasionally for lunch, and so 
forth. 

Q Did you ever have any financial transactions 
with Mr. Clines? 

A Yes . At one time we owned a rental piece of 
property in McLean together. 

Q When was that? 

A I can't reconstruct those dates. Probably in the 
'70s sometime, the late '70s. 

Q Is that the only financial relationship you've 
ever had with Clines? 

A Yes. 

Q Will you describe the rental property? 

A What is there to say? It's a rental property. 
We bought a piece of property. We rented it out. Eventually, 
we had to pay it off, and when it came time to refinance it, 
he bought me out. 

Q You bought the property together? You each put 
in some money on it? 



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A I think the transaction was Clines and my wife. 
At that time, I was trying to create some investment properties 
that my wife could manage, and so forth, but I never got very 
far with it. 

Q Clines, at this point in time, was dealing in 
real estate while he was at the CIA, with the knowledge of the 
CIA; is that right? 

A Right. 

Q Where did the money come from that you and he J 
invested? 

A I don't know where his money came from. My money 
came from savings that I'd accumulated. 

Q How much was it? 

A I don't remember. I'd have to go back and 
reconstruct it. I don't remember. 

Q You bought the property and then made payments? 

A Yes. 

Q And it was a situation where the rent paid for 
the payments and a little bit more? Is that the type of 
deal? 

A Well, it either broke even, or it was a slight 
negative cash flow, $50 or $75, or whatever it was. 



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Q Would it be made up on your depreciation? 

A Right. 

Q Then you say you paid it off. By that, you mean 
that you completed your mortgage payments? 

A No. There was a period of time that we were 
paying mortgage payments . The people who owned the property 
moved and bought another property. At the end of a fixed 
years period of time, whatever it was, a couple of years, we 
did have to refinance it or pay it off. So we had to pay 
them off. 

In order to do that, Clines bought me out. Then 
he refinanced the thing. He bought me out of my share of 
what we assumed the property was worth. 

Q Do you know where he obtained the money for 
that? 

A No, I don't, 

Q Is it possible that he obtained that money from 
Dick Secord? 

A I have no idea. 

Q Did you ever discuss that house arrangement with 
Dick Secord? 

A No. I don't recall discussing it with Secord. 



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Q Did you ever discuss it with Clines in Secord's 
presence? 

A No. I have no memory of that. I can't say that 
I did. I can't say that I didn't. I just don't have any 
memory of it. 

Q Was the amount that you were paid out greater or 
less than your initial investment? 

A 1 made some money on that. 

Q How much money? ' 

A I do not have any idea at this time. 

MR. MC KAY: I don't think they're in there, 
because it's pre- '82 document. I think we're talking about 
an individual family house. We're not talking about an 
apartment building or an industrial complex. We're not 
talking about very much money. 
BY MR. HOLMES: 

Q Do you recall ever discussing this transaction 
with Ed Wilson? 

A No, I don't. 

Q Do you know whether Ed Wilson was the source of ; 
Clines' money? 

A I don't. I really don't. 



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Q Did Clines ever say that he was? 

A No, he didn't. 

Q Were you, Clines and Wilson ever together when 
this deal was discussed? 

A I have no memory of our being together for a 
discussion of this transaction. 

Q How did Clines pay you? 

A With a check through a real estate attorney in 
McLean. 

Q 

A 
check. 

Q Did that check reflect the entire amount that 
Clines gave you in relation to this transaction? 

A Yes. That's my memory of it. 

Q Did you receive any cash at all in relation to 
this property at any time? 

A No, I did not. 

Q Let's go forward with Mr. Clines. 
What was your next — 

A We were both here in the Washington area. 

What else is there to say? I mean, that was it 



Was there only one check? 

Yes. As far as I can recall, there was only one 



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When did you first become aware that Clines was 



] involved in Central America supply efforts? 



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A I think when I got that subpoena. 
Q Which subpoena? 

A Not the subpoena. The Christie Institute papers. 
Q Did you talk with Clines about it? 
A I tried to track him down. I don't remember 
talking with him. He's a very hard guy to track down. 

Q You've never discussed that lawsuit with Clines? 
A I don't ever recall. 

MR. MC KAY: Clines was present at the meeting 
with Mr. Green and Mr. Secord,Mr. Shackley and myself. 
Mr. Green represented Clines. 

MR. HOLMES: Was anybody else present at that 
meeting? 

MR. MC KAY: No. 
BY MR. HOLMES: 
Q Other than that occasion, you never discussed 
this with Clines? 

A I don't have any recollection talking with him. 
Q That was the first time you found out about 
Clines' role in contra supply? 



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MR. MC KAY: I don't want to confuse you. The 
meeting isn't the first time. It was when he got the 
subpoena. He said that was the first time. We've discussed 
the meeting in between. 

MR. HOLMES: You don't mean the subpoena. You 
mean the complaint. That was just an allegation. 
THE WITNESS: The complaint. 

My knowledge of this Christie Institute thing 
came about when we were served papers by the Christie 
Institute. He is listed in that complaint. All right? 
That's when I found out. 
BY MR. HOLMES: 
Q That's just an allegation. I want to know when 
you learned from some other source that he has something to 
do with it. 

You're saying that this meeting with all the 
lawyers and Secord and Clines was it. 

A Yes. That's my memory of it. 

Q And you've never discussed it with Clines since 
then? 

A No. I have not talked to him since then. 
Q You haven't talked to him at all since then? 




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A No. I haven't talked to him. 

THE WITNESS: Can we take a break here? 
MR. HOLMES: Sure. Go ahead. 
(Recess. ) 
BY MR. HOLMES: 

Q Did you know where Clines was during '85 and '86? 

A No. 

Q You don't recall his spending time in Egypt? 

A No. From time to time, people would ask me, have 
you heard of him, have you seen him? We're looking for him, 
and so forth, but I didn't know. 

Q Let's start with Mr. Quintero. Would it be a 
fair characterization of what you said already, that you 
didn't know that Quinterc was involved in Central American 
supply either until it became public? 

A Right. 

Q You hadn't heard what he was doing from any other 
source? 

A 

Q 

A 



No, I had not. 

When di d you first meet Quintero? 

I first met him, to the best of my recollection. 



after I retired. 



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Q How did you meet him? 

A I was introduced to him by Mr. Clines. 

Q What was the occasion? 

A The occasion was discussion of the API business. 

Q Who was present? 

A I don't know. Come on. 

Q Who was involved? 

A All I remember is, I met Quintero through Clines, . 
and I remember discussing the API bid procedure for selling 
valves and flanges. 

Q This was the same business you mentioned earlier, 
involving Quintero, Finney and Chavez? 

A Right. 

Q From that point forward, what has your contact 
with Quintero been? 

A Essentially that. In other words, during the 
time that I was working with API on that particular project, 
I worked with Quintero on the Mexican market, valves, flanges 
and so forth. 

Since then, I think maybe I've seen him once or 
twice in Washington at some social occasion. 

Q No other business with him at all? 



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When did you meet Felix Rodriguez? 
I met Felix when I was in Vietnam. 
And from that point, when did you deal with him 



A No. 

Q 

A 

Q 
again? 

A I think when I came back to Washington, he retired 
shortly. He had a medical disability. He retired on a 
medical disability, when I was still in government. 

He came up here for medical papers or something 
like that. I would see him in a social context. 

Q Were you still with the agency at the time? 

A Yes. 

Q Did you discuss his medical retirement with 
anybody at the Agency? 

A I remember, I think when his papers were being 
processed, and so forth, I think somebody came around and 
asked me what he did in Vietnam. I remember the specifics, 
some of the crashes that he was involved with, and so forth. 

Q Would it be giving you too much credit to credit 
you with helping him get his medical disability? 

A I think he got it on its merits. I mean, he was 
in, I forgot how many crashes he was in. He was in two or 



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three helicopter crashes and got a bad back. He applied for 
medical retirement, based on the advice of the medical staff, 
and then there was regular paperwork. I'm sure I was one 
of several people that people came around to discuss what his 
service had been in Vietnam and what was the nature of his 
claim. 

Q When did you speak with him again after the 
medical disability conversations? 

A After I retired, I continued to maintain social 
contact with him. 

Q Have you ever had any business contact with him? 

A There are some items in here. We tried to get 
him to help us open the Venezuelan market for modular storage 
equipment. 

Q When was that? 

A Well. 1 think that was the TGS thing, if I can 
find it. 

(A pause.) 

Q I just want to know about when it was. i 

A We've been at this for a long time. We're running 
around for a different lot of dates, and I simply do not 
remember the date . 



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MR. MC KAY: Sometime after '79. 

THE WITNESS: It had to be sometime in maybe 
II 
!| 
i; 1980 or '81. I don't know. 

You keep pressing for dates, and I'm telling you, 

it's in the file there. 

MR. HOLMES: I'm just trying to get an idea of 

where we are in time. 

BY MR. HOLMES: 

Q Since that time, have you had any dealings with 

Mr. Rodriguez? 

A Occasionally. I haven't seen him for a number 

of years. Occasionally, he would come to Washington, and 

I would see him when he came to Washington. He was involved 

with Radio Marti, and I would see him when he came to 

Washington. 

I haven't seen him now in quite a while. 

Q Other than, the Radio Marti contacts then, and 

random social contacts, you haven't had any contact with 

him since the modular storage conversations? 

A I don't remember anything specific. Let's see. 

(A pause. ) 

I knew at one time, on one of his trips that he 



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was trying to go to El Salvador. He constantly was 
traveling in and out of Central America. 

Q Did you ever discuss the helicopter situation 
with Felix Rodriguez? 

MR. MC KAY: I object to that. "Helicopter 
situation. " 

BY MR HOLMES: 

Q Some kind of business arrangement involving 
helicopter parts or the sale of helicopter parts? 

A He, at one timcj was involved in trying to 
build a helicopter, a one-man or a two-man helicopter with 
some inventor genius in Miami . I remember talking to him 
about that, but at this point in time. I don't recall any 
other helicopters. Wait a minute. 

He talked with — helicopters. I think he 
talked with a fellow who was the representative of 
Augusta Bell, to try to sell helicopters to — I don't 
know whether that was Guatemala or Honduras . 

Q Let's see if we can flesh that out a little bit. 
What was your relationship with Augusta Bell? 

A I don't have any relationship with Augusta Bell. 

Q Have you had any business discussions with him 



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about helicopters? 

A There was an Italian representative that rented 
space from me for a while who, among other things, worked 
on Augusta Bell helicopter sales. 

Q His name was? 

A Pavone. 

Q He was a representative for Augusta Bell? 

A Yes. 

Q I don't know what his contractual relationship 
was with Augusta Bell, but he represented Augusta Bell. 

Q For the sale of the helicopters, I take it? 

A Yes. 

Did you ever receive any payment or expenses from 
Augusta Bell for any work that you did? 

A No. 

Q He was simply renting space from you? 

A He was renting space from me. 

Q Was this in some way related to Felix Rodriguez? 

A Felix talked with him about marketing, or he 
talked with Felix about marketing helicopters in Central 
America . 

Q Was Guatemala the only country they talked about 



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selling? 

A What I gave you in my answer. It's either 
Guatemala or Honduras. I don't remember at this point. 

Q This is approximately when? 

A Sometime in the '80s. 

Q Do you know whether any of those conversations 
Ccime to fruition in the sale of a helicopter? 

A To the best of my knowledge, there was no sale 
made . 

Q With whom were they speaking in the Central 
American countries? Do you know? 

A No, I don't. I don't recall who they were in 
dialogue with. They were in touch with the government, with 
whatever government it was. They were in touch with the 
government or somebody who had a sales commission or the 
right to go out and find the helicopter or something. 

Q Do you recall any conversations with anybody 
about a radar device operable from a helicopter? 

A No. I don't recall anything about a radar 
device from a helicopter. To do what? ■ 

MR. MC KAY: You've answered the question. 
Let him go on. 



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BY MR. HOLMES: 

Q I'm recalling something that you said in the 
I interview I had with you back in the beginning of the year, 
but I'll look it up and ask you on Monday. 

So you were aware of these conversations with 
Felix Rodriguez relating to Augusta Bell and the sale of 
helicopters and to Central America, but you weren't 
financially interested in the conversations. Is that 
accurate? 

A Yes. That's basically correct. 

Q So if the sales had gone forward, you wouldn't 
have benefited in any way from the sales? 

A If the sales had gone forward, I might have then 
put in a proposal for handling the logistics problem-solving 
on the spare parts. In other words, how could they store 
the spare parts. 

Q So back in your mind, then, there was the storage 
sales situation? 

A Had there been a sale, but there wasn't. It 
was just a discussion of the sale. It was a long way from 
that to trying to plan a logistics system to go with a sale 



that never took place. 



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Q I understand. 

When was your next contact with Felix Rodriguez? 

A I recall him calling me on Christmas Day 1986. 

Q What did he want to call you about? 

A He said that he had just heard that I had been 
sick and had had a serious operation. He wanted to know how 
I was and wished me Season's Greetings. That was it. 

Q At that point in time, you had already been sued; 
correct? 

A Right. 

Q He didn ' t discuss that with you? 

A I really didn't want to talk with him, to be 
honest with you, at that particular point. I didn't know 
what the hell he was doing. He'd been away. I hadn't seen 
or heard from him for a very long period of time. I just 
took the Season's Greetings and let it go at that. 

Q Have you ever discussed the lawsuit with Felix 
Rodriguez? 

A Yes, I have. I have since discussed the lawsuit. 

Q When was that? 

A After his testimony here in Washington, and he 
became a TV celebrity. 



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Q Okay. Was there more than one discussion.' 

A Yes. There 've been about two or three telephone 
conversations. Two, I think. 

Q Just by phone? 

A By phone. He's avoided me ever since. 

Q What was said about the lawsuit by Rodriguez? 

A Well, I wanted to find out what he knew about 
these people and wanted to discuss the lawsuit with him. 
He said he didn't want to get involved. He didn't want to 
be involved in discussing it or anything else. 

Q So he refused to discuss it with you? 

A Yes; basically. He said, "Let me consult with 
somebody, and I'll get back in touch with you." Then he 
left for Central America. I've never been able to catch him 
since. 

Q So you never discussed the substance of the 
lawsuit? 

A No. I discussed with him what I wanted from 
him, and that's when he said no. 

Q What did you tell him you wanted from him? 

A I think that's part of our strategy of what I 
want for the lawsuit, and I don't think that's germane to 



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this. 



MR. MC KAY: Generically, it was assistance in 
helping to get the case dismissed, is what we were looking 
for. 

BY MR, HOLMES: 

Q Returning to Rafael Quintero, did you discuss 
the lawsuit with him? 

A No. I have not discussed the lawsuit with 
Quintero. 

Q Never? 

A Not that I recall. I have no memory of talking 
to Quintero about the lawsuit. 

Q I return to the list which is the appendix to 
your subpoena, and I want to ask you about the Aspin brothers, 
Leslie and Michael. 

Have you met these folks? 

A I have not. 

Q You're certain? 

A Yes. 

Q If I were to tell you that Leslie Aspin went by ] 
Leslie Allen at times, would that help you? 
Do you know a Leslie Allen? 



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A That doesn't ring any bells with me whatsoever. 

Q I want to get into the events around November of 
1984. I understand that you've written a memorandum on this, 
but the Leslie Aspin aspect of that, I'm sure, wasn't in 
your mind when you wrote the memo. 

So I would like to ask you some specific 
questions about that. 

Exactly who was present at your meeting with 
Ghorbanifar and where did it take place? 

A The meetings with Ghorbanifar were attended by 
Mr. Razmara. 

Q You said "meetings" ; correct? 

A Yes. 

Q Let's get the first one first. Then we'll progress. 

A I mean, you have to sort of look at this as a 
sequence. This file in here — could we look in the file? 

Q Sure. 

(A pause. ) 

A We met on the 20th of November. During the 20th 
of November we had several meetings. I think we had a 
meeting with Ghorbanifar, General Manucher Hashimi — not 
to be confused with Cyrus Hashimi. 




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So Razmara, General Hashimi , myself and 
Ghorbanifar . 

Q The four of you were the people present at both 
of the meetings that occurred that day? 

A They were essentially — during the course of the 
day there were three meetings. There was one very brief 
meetino, where we were introduced. General Hashimi introduced 
Mr. Razmara and me to Ghorbanifar. We did not know him. 
We did not expect to meet him. He didn't expect to meet us.. 

MR. MC KAY: The question on the table is, who 
was present at each meeting. 

So just answer that. We'll get along faster. 
BY MR. HOLMES: 
Q Where was it? 

A In the Vier Jahreszeiten Hotel in Hcunburg. 
Q What led up to the meeting. How did you happen 
to be in the Four Seasons Hotel? 

A I cover events in the Iran-Iraq War. Mr. Razmara 
helps me cover events in the Iran-Iraq War. He knew General 
Hashimi- I'd been talking with him on the telephone and 
exchanging views about the war over a period of time. 
General Hashimi ' s views on the war were very insightful. 



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accurate. Therefore, I decided that we ought to get to 
understand this guy better. 

On some occasion, I think it was October of '84, 
General Hashimi came to the United States, to California, to 
see his daughter and grandchildren. He was out there for 
sometime. Mr. Razmara and I flew out there to meet hiir^, to 
talk to him about the war, and so forth. We got along very 
well. It's the first time I'd ever met him and got along very 
well, I thought. Very interesting guy. At the end of 
our discussions out there, he said th£.t he frequently met 
with people from Iran. Given our interest in ".he war, he 
would introduce us to sc«ne interesting people the next time 
he came out, that he felt it was worthwhile to talk to. That 
was the background. 

He called us up in late October and said, there 
are some interesting people probably coming out. Why didn't 
we meet with them, and ^o forth. And we agreed to a meeting 
that was postponed. 

Tlien we met him in Hamburg on the morning of 
the 20th, as I recall. We got there, I think, the night of 
the 19th. 

Q So you and Mr. Razmara traveled to Hamburg for 



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the sole purpose of meeting — 

A Meeting with General Hashimi, who was going to 
introduce us to interesting Iranians who ware traveling in 
Europe at that time and from Iran. 

Q This is all on an open expense account, I gather, 
with your primary client in the oil business? 

A Yes. 

MR. MC KAY: I don't know what you mean by 



'open?" 



"open. " 



THE WITNESS: I don't know what you mean by 



BY MR. HOLMES* 

Q It's a discretionary thing for you to fly out. 
You don't have to call up Dois and say, "Can I do this?" You 
have the discretion to do as you please and bill him for it; 
correct? 

A Well, it's in the total billing. 

Q You didn't have to do any actual business 
transaction in Hamburg to make it worth your wiile in r 
business sense. You were paid to go there and find out what I 
the man had to say. 

A I'm paid to know what is generally happening. 



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What way is the war going to go. What's the trend forecasted, 
and so forth. 

Q Okay. So there's a first meeting in the morning, 
and that's when you were first introduced to Ghorbanifar? 

A Right. 

Q Then there's a second meeting and a third meeting 
all on the same day? 

A Yes. 

Q And are the four people that you've named the 
same people who meet at the second and third meeting? 

A No. In the second meeting, there is an Iranian 
from Iran, who is present at the meeting. 




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Q And the third meeting? 

A The third meeting was in the evening. 
Mr. Razmara, General Hashimi and I were staying in this 
hotel, the Four Seasons Hotel, and at the end of the day, 
we were sitting down to have a drink, and Mr. Ghorbanifar 
came back into the hotel, and we had a drink with him. 

Q But|i|H|0^BKdid not reappear ^°^ the third 

meeting? 

A No. 

Q Did you see any Americans in Hamburg during you 
stay? 

A No. 

Q How long did you stay in Hamburg on that 
occasion? 

A As I recall, we arrived on the 19th. The 
meetings were on the 2 0th, and we took off on the morning 
of the 21st or midday on the 21st. 

Q And you say no Americans in Hamburg during those 
three days, 19, 20 and 21? 




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A I have no recollection. I had no discussions 
with any Americans. I mean, maybe somebody was in the 
lobby of the hotel, who I didn't know was American, but, no, 
I didn't have any conversation with any Americans. 

Q At that point in time , did you know Oliver North? 

A No. I did not know Oliver North. 

Q You wouldn't have known him if you'd seen him? 

A I would not know him if I saw him. 

Q Did you know Earl, Robert Earl? 

A No. I don't think so. I don't think I've ever 
met Earl. I don't know. 

Q Did you speak with or socialize with, in any 
way, any British-speaking persons there in Haunburg during 
these three days? 

A NO. 

Q Was there any discussion during those meetings 
of the sale or potential sale of any missiles to Iran? 

A No. Not really. In one of the early discussions 
with Ghorbanifar, he asked if there was scane way maybe he 
should work toward establishing his bona fides with the 
Americans when he was discussing this. 

I said, "What do you have in mind?" 



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He said, "There' s mU^^H. equipment . Iran has 
equipment. Maybe we could provide that to 
the Americans to show that we have good contacts and 
establish our bona fides." 

I said, "What are you thinking of?" 
Q Let me slow you down for one second. 

You said in one of the early meetings. Are you 
taling about the 20th or some shortly thereafter? 

A No. I told you before, I only met him once, on 
this day, on the 20th, and then in one of these conversations-, 
this came up. I'm trying to see if I can refresh my 
memory . 

Q So when you say one of the early meetings, you 
mean one of these three meetings we're talking about? 

A Right. It was not the third meeting, but either 
the first or second meeting on the 20th. 
(A pause.) 
Did you get into any further details on what 

equipment they had? 
No, because I covered that. He said, in return ■ 
equipment! 
[Tehran would want TOW missiles. I 



Q 
kind of 
A 

for" 




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told him they ought to find a simpler way to establish 
his bona fides, if he wanted to deal with the Americans. 
Q He didn't tell you what kind of interesting 
|equipment he had? 
No. 

But he specified TOW missiles? 
Right. TOW missiles did come up. 
That was the only time. 

Oid^^H^Bhave anything to say about TOW missiles? 
Was he present for that conversation? 

A I don't think so. That came up in one of these 
conversations. I don't think so. 

Q So if he was present, you don't recall? 
A I don't. 

Q Was there further discussion about the TOWs? 
What kind of TOWS? 
A No. 

Q Would you even be familiar with the TOWs? 
A Not particularly, but you know, I've told you 
this before, I don't deal with anything that booms or 
bangs. As soon as I heard TOW missiles, I said, forget it, 
you know. Find something simpler. That's when I asked 



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him if he had ever been in touch with the CIA. That's 
when he told me, yes, he'd been in touch with the CIA^^H 

'but they'd used him like a piece of Kleenex, 
wanted to use him and throw him away. That was his famous 
remark. 

I told you this guy — you've probably met him. 
You've probably talked with him. He's flip. 

Q After the meeting in Hamburg, where did you go? 

A As I recall, I went to London and then from 
London back to Washington. 

Q Have you ever met with Hashimi , Ghorbanifar or 
^^^Ln Frankfurt? 

A No. 

Q Have you traveled from Hamburg to Frankfurt by 
U.S. military plane? 

A No. I mean, wait a minute. U.S. military plane 
what? In this period, 1984? 

Q Yes. 

A No. 

Q Do you know the name Mansur Alkazar? 

A No, I don't. 

Q Do you know the name Batturji? 



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A No. These are new names on the list. I don't 
recognize them. 

Q I wouldn't expect you to have records of those 
dealings . 

MR. SABA: Excuse me. It might be pronounced 

Battur ji. 

THE WITNESS: It's not a name — 
MR. MC KAY: How's it spelled? 
MR. SABA: B-a-t-t-u-r- j-i . 

MR. HOLMES: He ' s a London resident. He lives 
in England. 

BY MR. HOLMES: 
Q During 1984 did you speak — and I hope you 
understand when I said "speak with," I meant speak with, by 
phone or in person, I gather from your answers, you 
understood that, any British arms dealer at all. 
MR. MC KAY: This is 1984? 
MR. HOLMES: 1984. 

THE WITNESS: No. As a matter of fact, no, I 
haven' t. 

BY MR. HOLMES: 
Q Have you ever been present when a transaction 



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involving TOWs was being discussed, other than the one that 
you just mentioned? 

A No. I have no recollection, but I know there's 
a transaction in there, I told you, with the Portuguese. 
There's a Portuguese friend of mine who represents a 
Portuguese arms industry thing. He talks about arms and 
and so forth, but they don't have TOWs. I don't recall any 
conversations with him about TOWs. 

Q They do have TOWs. 

A Do they? You've contributed to my education. I 
didn't they have it. 

Q They manufacture the delivery vehicles and sell 
TOWs as an add on. You didn't know that? 

A No. 

i 

Q I'm sure you're aware, because I've seen your 
denials in the press, of the allegations of this Leslie 
Aspin and his brother Michael. I've tried to cover the 
territory myself, but I would like you to tell me why it's 
not true. I'm sure you've given it some thought. 

Tell me the most salient facts that disprove 
the Aspin allegations as you see them. 

A First of all, I didn't meet him. That's as 



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simple as that. Too, Mr. Razmara and General Hashimi were 

there, and they will say that I didn't meet them. More 

ii 

I; 

i importantly, Aspin told the newspaper guy that he did not 

talk with me in Hamburg. He's changed his story slightly, 

i 

I and he now says that he saw me in Hamburg but he did not 

I 

I talk to me. 

I 

I I've written a letter to the the "London Observer. 

They published it. I got a call from Scotland Yard. If 

the Scotland Yard guy is, in fact, bona fide, and he comes 

here and meets me at the British Embassy, I will give my 

deposition to the effect that I did not meet Mr. Aspin in 

Hamburg in November 20, 1984, and I did not talk to him. 

Q In any of your discussions with Ghorbanifar or 
Hashimi, was there any discussion of the sales of TOWs , 
other than the exchange f or ^^H^^^| equipment? 

A No. 

Q Was there ever any discussion amongst any of 
the people at this meeting or this series of meetings, I 
should say, to include^^^^^f about arranging for a 
payment for any weapon for Iran? 

A No. 

Q For example, setting up a bank account, getting 



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a Certificate of Deposit, an insurance certificate or any 
paperwork at all, relaced to an arms deal, it didn't happen? 
A It didn't happen. 

MR. HOLMES: Do you want to carry this forward? 

EXAMINATION 
BY MR. WOODCOCK: 
Q Mr. Shackley, I introduced myself before. My 
name is Timothy Woodcock. I too am an Associate Counsel 
with the Senate Committee. 

Let me return, if I may, to the meetings that 
you had on November 20 with Ghorbanifar. 

When you met ^^^^^^^^^^^^^^^^^| did you 
understand that he held any kind of political position or 
was affiliated with any political faction within Iran? 

A He talked about his views of the situation in 
Iran and that there were factional groupings, but I don't 
speak Farsi, so all this conversation was being translated 
for me by — primarily by Mr, Razmara. 

Q Did he associate himself with any of the groupings? 
A No. He just identified various groups, talked 
about groups being in existence, but he didn't really come 
down clear-cut and say, you know, I'm in this group or in 



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that kind of a definition. 

Q Was his presence there, did you understand that 
to be to give you a briefing on politics in Iran or did that 
I just happen? 

A No. I think my understanding of the meeting was, 
here was an interesting guy coming out of Iran. Ghorbanifar 
is a guy who is a deal maker. What I understood Ghorbanifar 
to be is a guy who is finding somebody coming out on a 
purchasing mission, opening a dialogue with him, if he didn't 
know him, taking care of their administrative needs, hotels, 
women, wine, finding out what they wanted to buy, have the 
guy stay in the hotel. Then Ghorbanifar goes out and finds 
the product for them and puts the deal together and gets his 
commission from the manufacturer. 

Q Excuse me. What was in it for him to put you 
in contact withi 

A Nothing. In other words, he had whatever deal 

he was chasing with^^^^^Hon prosthetic devices . Somewhere 

in Scandinavia and Germany, he, Ghorbanifar, and Hashimi 

i 
simply talked about developments in Iran all the time, an | 

exchange of information. I was just another adjunct, if you 

will, to that particular exchange, an exchange of views. 



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Q DC you know whether^^^^^B understood that your 
prior career had been with the CIA? 

A That I don't know. 

Q Certainly , you didn't tell him; is that correct? 

A I don't advertise that, but I don't hide it. 
If somebody asked me were you with the CIA, I said yes, 
but I certainly don't go out and say that's what I did. 

Q The reason I ask is, I think the Iranians have a 
sensitivity to persons who work with the CIA, because of 
their internal politics. 

Would you agree with that? 

A Yes. They certainly would be sensitive to the 
fact that they were in touch with ex-CIA people. 

Q And that there might be a political liability 
for them back home, if it were known that they were meeting 
with ex-CIA people? 

A Also, you have to put it in this context. I 
mean, I don't think they knew that, because you have to 
look at it from this point of view: I am ex-CIA. 



So the guy, obviously, he didn't have that sort of picture, 
I don't think. 



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Q Let me back you up now. You mention Mr. Razmara. 
If you've covered this, just tell me. 
How did you meet him? 
A I covered it. 

Q It was through Mr. Razmara that you met Manucher 
Hashimi; is that correct? 
A Right. 

Q Did Mr. Razmara tell you what his prior 
relationship was with Mr. Hashimi? 

A Yes. They were colleagues. 
Q 
A 

Q Have you ever heard of either from Mr. Razmara, 
General Hashimi or anyone else, o^ an individual by the name 
of I 

A Yes. 

Q How would you have heard of this person? 

I met^^^^^^^^^^^^Bthrough 
Q When would that have been? 

A It was sometime in the 1980 -- 1980, that's the 
best. That may not be a precise date, but that's the 
closest I can come. 




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Q Do you recall how it was that you came to be 
I introduced to him? Why Mr. Hakim introduced you to him? 

A There are two aspects of it. I really met him - 
Mr. Hakim was thinking of bringing him to the United States 
and he was going to work for him in his business. 

Q What business was that, if you recall? 

A Stanford Technology. Then later, at some point 
in time, we put on an English language training program 
for^flH^ 

Q This is, I gather, after he came to the United 
States; is that correct? 

A Yes. 

Q Did you meet him before he came to the United 
States? 

A 
States . 

Q At that time he was a prospective employee of 
Mr. Hakim's? 

A Hakim's; yes. 

Q Now how long, if you can recall, after you first, 
met him, did he come to the United States to enroll in your 
English language training program? 



My first meeting with him was in the United 



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Q I don't have any sense of that. I just remember 
Jl meeting him. Then there's a gap. Then after some sort of a 

i! 

|i gap, he was here in the states, and we put on maybe a 

three-week or four-week English language training course for 
ij him. 
I Q Which one of your companies ran that program? 

A RAI , as I recall. 

Q I gather^^^^^^^^^^Hmust have had some basis 
in English; is that right? 

A He had some; yes. 

Q Who was it who was able to communicate the 
English language to him? 

A In terms of the training? 

Q Right. 

A I hired two or three people to teach him. 

Q Were any of those people former CIA people? 

A The two principal instructors were girls; no, they 
were not. But I think in the course of that, we also -- we 
may have had one retired person sort of socialize with him 
in the evening, so he would continue to use the English 
language . 

Q Who would that have been? 



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h I would have to go back -- 

Q It wasn't George Cave? 

A No. 

Q Do you recall whether Mr. Hakim ever discussed 
with you the possibility of setting ^^^^^^^^^^Hup in an 
L.A. business out on the Coast, the West Coast? 

A Let's see. There was a time when Hakim was 
involved in some Korean delis. Korean people were working 
for him. I remember that coming up in the conversation, 
now that you've jiggled my memory. 

Gosh, 1 don't remember whether that came up with 
>r not. 

Q Was it your impression that he went to work for 
SDC? 

A My impression is that whatever deal they had did 
not come to pass, because after that, ^^^^^^^^^H went 
back to England. 

Q Vfhat's your best recollection as to how long 
he was in the United States when this all came apart and 
he went back to England? 

A It was a short period of time. I would say six 
weeks but that's a guesstimate on my part. 



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Q Did either Mr. Hakim ^^^^^^^^H explain to 
you how it was that they came to know each other? 

A NO. I don't recall how they came together. 

Q After this initial period when|^^^BHy =ai^e 
to the united States and then went back to England, did you 
ever meet him again? 

A I think I met him once in London. 

Q How did that come about? 

A I picked up the telephone, called him and had a 
conversation with him. I think my wife and I went out to 
dinner with him and his wife. 

Q Was that just social? 

A Yes. 

Q Did you ever come to understand that he, himself, 
had had some kind of past relationship or continuing 
relationship with Manwher Hashimi? 

A No. I'm not aware of any -- I think they know 
each other, but I'm not aware of any collaboration between 
the two on any projects or anything. I've never heard that. 




Do you know where you heard that from? 



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A No, I don't. 

Q Did you ever see them together? 

A No. 

Q Did you ever hear that they had had a parting of 
the ways? 

A No, I haven't. You know, let me clarify one 
point. 

General Hashimi's English is not very good, and 
when I basically speak to him, I have to have Mr. Razmara - 
there to carry on any kind of a lengthy conversation, other 
than the basic social amenities, whereas ^^^^^^f English is 
quite good now. 

Q Did Mr. Razmara have any kind of a relationship 
with ^^^^^^^1 to your knowledge? 

A I think they simply knew each other from Iran, 
but I don't know. 

Q Did Mr. Hakim ever tell you that he was 
recommending or thinking about reccxamendingj 

Ito the CIA as a soiirce for the CIA? ; 

A No. 

Q Did you ever know of that from any other source? 

A No. You're introducing a new thought. I had not 



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heard that thought. I haven't heard that idea. 

Q Now if you've answered this one, tell me, please. 
How is it that you met Mr. Hakim? 

A I've answered that. 

Q Do you recall, after having met Mr. Hakim, 
recommending him to the CIA as a possible source? 

A I've covered that. 

MR. HOLMES: If we've rushed through it, if you're 
going to cover it, cover it now. 

MR. WOODCOCK: All right. 
BY MR. WOODCOCK: 

Q I gather that you do recall that you recommended 
Mr. Hakim to the CIA as a source. 

A I would not use your words. 

Q Use yours, please. 

A I had a meeting with Mr. Hakim. I wrote up a 
memorandum on that particular meeting. I put it into the 
appropriate distribution mechanism at the Agency and people 
looked at Mr. Hakim's contacts that he claimed that he had, 
and they concluded that they had contacts that were better, 
and they did not want to pursue him, and the matter was 
dropped . 



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Q Okay. If you can recall, how long had you known 
Mr. Hakim before you recommended him for the duties you just 
described with the CIA? 

MR. MC KAV: Do you accept recommending him? 
THE WITNESS: I don't. We're having a little 
problem here . 

You're saying "recommended," and so forth. What 
I did is — 

BY MR. WOODCOCK: 
Q — floated. 

A I mean, it's not unusual for an intelligence 
officer to have a meeting with somebody, come back and write 
it up, and in the scope of that write-up, saying "I met 
Mr. Jones. I talked with him. He's got the following five 
interesting contacts. Are you interested in any of these 
contacts?" 

If they are, then you start trying to put 
together a scenario for figuring out how to get to those 
contacts, not necessarily through the man that you met. 
It could be peeled off in any other different way. That's 
what I did. I met a man, wrote a memo, identified his 
contacts, put it into channels. I did not recommend. I 



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don't recall recommending one way or the other, because I'd 
only met the man once at that time. I met him and I wrote 
it up. 

Q That's what I'm trying to parse through here. 

Before you wrote the memorandum, would it be fair 
to say you were floating him for whatever he may be worth to 
the Agency? 

Is that a bad way to put it? 

A No. I just simply was reporting a meeting. It's, 
a standard operational procedure. You have a meeting with 
an interesting person. You report it. And that's what I 
did, and the people came back and said that they weren't 
interested, and I dropped it. I could have pursued it. I 
dropped it. 

Q Just so I understand this. By the time you 
wrote the memorandum, you had had one meeting on which the 
memorandum was based; is that correct? 

A That's my recollection. 

Q Do you recall how it was that you had met 
Mr. Hakim? 

A Yes. I previously covered that. I was 
introduced to him by Mr. Wilson. 



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Was the meeting that you has with him a social 



meeting? 
A 
Q 
A 
Q 



It was a luncheon. 
Was that in the area here? 
Yes. 

Was this somebody that Mr. Wilson thought you 
might be interested in, or did Mr. Hakim want to meet you? 
What were the dynamics of it? 

A The only dynamics were that Wilson said, "Here's 
a guy that I know. I think you might enjoy having lunch with 
him. " 

Q Now at that time , were you ADDO? 

A That's my recollection, yes. 

Q For the record is the acronym for Associate 
Deputy Director of Operations? 

A That's correct. 

Q Now in the course of this luncheon that you had 
with Mr. Hakim, I gather it dawned on you that you were, 
indeed, having lunch with an interesting character, and you 
begam to make mental note, at least, of the information that ' 
he was giving you about his background, and so on and so 
forth. Is that correct? 



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A Right. 

Q Was that information that you then transposed to 
the memorandum and put into the system; is that correct? 

A That's my recollection of it. 

Q Did you know of any particular needs that the 
Operations Director might have for someone like Mr. Hakim? 

A At that time, Iran was in a state of flux. People 
were looking for enhanced coverage. 

Q Do you recall knowing at that time that Mr. Hakim 
also knew Mr. Clines? 

A I just don't have any memory of dealing with that 
whatsoever. 

Q ' Do you recall enlisting or referring this matter, 
in any way, to Clines, to Mr. Clines? 

A I wouldn't have any reason to, you know, from 
what I can remember, I wouldn't think that he would be -- 
I mean, you can find out these answers by going to the Agency 
and finding the memo. 

Q If you've already covered this, tell me. 

How was it that if you did ever meet, how did 
you meet General Secord? 

A I covered it. 



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Q Do you knc*? whether you would have known General 
Secord at the time you met Mr. Hakim for lunch? 
A Had I known Secord? 

By that time? 

Yes. 

You met him, I gather, in the Vietnam era? 

I met Secord in Laos, somewhere in the '66, '68 



Q 

A 

Q 

A 
period. 

Q Do you recall knowing ,at the time you met Mr. Hakxm, 
that General Secord was in a prominent position with the Air 
Force in Iran? 

Would that have been something that you think you 
would have known at the time? 

A Let's see. . I don't know that I can relate it to 
that particular meeting. 

I knew that Secord was in Iran. By then, I knew 
— I think he was a general by then, when he was in Iran, 
but I can't link when I knew that against the specific one 
luncheon over here. I can't make a track for you. 

Q That's all right. If you did meet, when did you 
first meet George Cave? 

A I know George Cave, and I met him in the Agency, 



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but I can't tell you, you know, I can't pin that down. 

Q Would it be fair to say that by the time of your 
retirement in 1979 that you'd known him for several years? 

A Yes. I had known him. The thing is, I don't 
know. I mean, my recollection is I knew him during that 
period. I knew him before '79. 

Q Do you know whether the memo that you sent into 
the system on Mr. Hakim ever Ceune to rest with Mr. Cave or 
whether he got involved in it at all? 

A No, I don't. 

Q How about Mr. Claridge? Do you recall him 
getting involved in that at all? 

That would be Dwayne Dewey Claridge. 

A I don't recall him getting involved with that, 
but he may have. I don't know. I don't have any memory 
of that. 

(A pause. ) 

MR. WOODCOCK: I think that's all I have on that 
subject at this time. 

Why don't we take a five-minute break, if that's 
all right? 



(Recess. ) 



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BY MR. WOODCOCK: 

Q Mr. Shackley, I have only a few more questions for 
Ji 
'l you. Let me direct your attention, if I may, to Manucher 

Hashimi again. 

Following this meeting that you had on November 

29, 1984, did you ever meet with him again? 

A No. 

Q That was the last meeting with Hashimi? 

A Yes. 

Q I had understood from your testimony that he had 
been a useful resource for you in dividing the goings on 
in the Iran-Iraq War. 

Given that that's the case, wfcy is that you 
didn't see any more of him after November of '84? 

A He continued to talk with Mr. Razmara, and as I 
told you earlier, his English is less than perfect, and 
Mr. Razmara has been in touch with him. 

Q So Mr. Razmara has been in touch with him since 
November of '84; is that correct? 

A Right. 

Q Does that continue up to the present? 

A It's been some time. I don't know when the last 



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time was that they talked. 

Q From your understanding of Manucher Hashirai, is 
he considered a prominent person in the emigre community, 
the Iranian emigre community in Great Britain? 

A I think here we have to define, he's not 
prominent as a political figure . I think he ' s a respected 
individual as somebody who continues to have an interest 
in the future of Iran. 

Q I'm going to put some names out for you and ask 
you if they are feuniliar to you in any way. 
The first name would bej 



A I may have run across it in FBIS or something, 
but the name doesn't ring any bells with me. 

How about^^^^^^^^^^^^^l 

No. It doesn't ring any bells. 

How about 

No. 

How about ^^ 

[a fairly common name. You would 
have to tell me some thing about him or something, but the 
short answer is no, but it is a nam* that I've seen or read 




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in FBXS or something like that. 

Q He has an alias. Let me give you that. 




No. That doesn't ring any bells with 



He has another alias. 
No. 

How aboutJ 

That name is familiar from FBIS or something like 
that. That's the kind of name that you see. 
Q Do you know Charles Allen? 
Yes. I know Charles Allen. 
From your days with the CIA? 
Yes. 
Do you have any kind of ongoing relationship with 



him? 



No. 



Q Have you had any relationship with him since 
leaving the CIA? 

A NO. I don't ever recall running into him. It's 
conceivable that I was at some big party or something, but 
I have no memory of running into him since I left. 





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MR. WOODCOCK: That does it for me. 

Mr. Shackley, thank you. Those are all the 

!l 
II 

i- questions that I have. 

l! FURTHER EXAMINATION 

BY MR. HOLMES: 
Q MR. Shackley, I'm wondering if you're, familiar with 
the neime of a company called Vinnell — V-i-n-n-e-1-1? 
A Yes, I know Vinnell. 

Q Have you ever had a business relationship with 
Vinnell? 

A I have not . 

Q Have any of your companies had? 
A We have not. 
Q None of your employees? 
A No. 

Q What is the business of Vinnell, to your 
understanding? 

A Vinnell, at one time ran the Saudi National 
Guard program. 

Q When you say "at one time," your understanding 
is that they no longer do so? 

A I haven't heard anybody speak of it lately, and 




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I'm simply not up on it, so I don't know whether that's 
still on or not. 

Q What was the Saudi National Guard program at the 
time that Vinnell was running it? 

A Generally, what I know is that it was a training 
progrcun for the Saudi National Guard. 



It involved air support? 

I have no idea. I know nothing about it. 

Do you know who at Vinnell was involved in that 



Q 

A 

Q 
program? 

A No. The only person that I know of that 
allegedly worked there in this progreun was a fellow by the 
name of George Morton. 

Q How do you know George Morton? 

A Mcmy, many years ago, he was in Laos. 

Q You've kept up contact with Mr. Morton since 
then? 

A I haven't seen him in a long time, but people 

will say, "I've seen George, he says hello." "If you see 

him, say 'hi,'" if sraneone who knows us says hi. 

Q Who are you in touch with? 

A Morton was a colonel or lieutenant colonel in 



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the Special Forces or something. He's known to a lot of the 
Department . 

Q What was his relationship with Vinnell? 

A My understanding was he worked for them. That's 
all I know. I've heard others say that George Morton works 
for Vinnell. 

Q Did he have a particular division or function? 

A You're trying to make a silk purse out of a sow's 
ear. I know nothing further than what I was going to say. 

Q When did your first meet Ollie North, or have you 
ever? 

A Yes, I've met Ollie North once. I met him in it 
must have been June 1986. 

Q In what connection did you meet him? 

A When I was at a lawyer's office talking to 
Mr. Secord about the Miami suit. 

Q In which lawyer's office? 

A Mr. Green's office. I told you that before. 

Q I didn't catch North's name. 

A No. 

Q This is a separate meeting? 

A No, no. I was at — no, this is not a separate 



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meeting. I went to see Mr. Secord and his lawyer. While I 
was there discussing the Miami case, at some point in the 
meeting. North walked in. 

Q Who was present? Yourself, Green, Secord, North? 
Anybody else? 

A The meeting was Secord, myself and Green. All 
right. Then at some point during that meeting. North walked 
in. Shortly after that, I left. 

Q That's the only time that you ever met? 

A That's the only time I know that I've met him or 
seen him. 

Q What did he say while he was there? 

A He wanted to talk with Secord and Green, and it 
was clear that they weren't going to be talking while I was 
there . 

Q Is North a defendant in that lawsuit? 

A No. He's not one of the 29 in that suit. 
MR. MC KAY: No. 
Off the record? 
(Discussion off the record.) 
BY MR. HOLMES: 

Q Do you ever speak about Mr . North with Secord? 



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No. 

Nor Hakim? 

No. 



Q Have you ever heard of a man named Kevin Katke? 

A Yes. That's that crazy newspaper article put out 
by the "Miami Herald." 

Q I don't keep up with the "Miami Herald." You'll 
have to inform me. 

MR. MC KAY: Oh, you're missing something. 
THE WITNESS: We've been bombarded by all sorts 
of telephone calls, and some newspaper reporter was badgering 
us back here a couple of months ago that somehow or other 
a gaggle of people came into our office and were somehow 
trying to put together something with a medical supply 
operation to the contras. The story is that they had 
figured out that we were a conduit to CIA, and therefore, 
they were going to give us this proposal to evaluate, and 
we would send it to CIA for evaluation. Well, we chased 
that for several days to sort it out. We talked to the 
"Miami Herald," and they never got the story straight. They 
still claim that somebody came to our office, and one of 
the guys who allegedly was involved in this is a fellow 



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by the name of Katke. 

Q How was Katke allegedly involved? 

A I don't know. He allegedly came to our office 
with this proposal, as I could unravel it. 

Q And you're unraveling it from the media? 

A From the media harassing us. 

Q Do you know whether Kevin Katke was ever at your 
offices? 

A No. I've talked to the people, and nobody seems 
to recall Kevin Katke. I certainly didn't meet him. 

Q Mr. Jameson works for you, doesn't he? 

A Right. 

Q What would you describe his function as? 

A He's a vice president of RAI . He is also a 
shareholder in TGS . He's an analyst. 

Q What's his function? Analyst? 

A Yes. He primarily covers the Soviet Union, 
Eastern Europe and Western Europe. 

Q And Mr. Gillespie also works with you? 

A Mr. Gillespie works in TGS. 

Q Only? 

A Yes. I think maybe at some point in the past 



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I used him on some RAI project, but his primary function is 
TGS. 

Q Have you ever discussed with Mr. Jameson events 
in Grenada? 

A No. Wait a minute. Katke. Maybe that's — is 
this guy a black? There's somebody came into our office, 
because Jcimeson had the FBI in to talk to him a couple of 
times about somebody that they talked to from Grenada. I 
think I may have got the nam.es confused here. 

Q Let's sort it out gradually. 

A Let's back off. 

Q I didn't hear what you just told me. You said 
that somebody came in your office, because Jameson what? 

A Now that you're talking on Grenada, can you 
help me clarify this thing. 

Q Sure . 

A Has Katke got scHnething to do with Grenada? 

Q He does, among other things. I don't know 
whether he also has something to do with — 

A Well, then, I've had a slip here. 

Q Let's back up and start in again from a different 
angle. 



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A All right. If Katke is an individual tied to 
Grenada, there was a gentleman by the name of Katke, now 
that you mention Grenada, who came to our office, and he 
talked with Mr. Jameson. 

Q Yes. 

A I think he also talked with Mr. Gillespie. 

Q All right. 

A Subsequent to that, as I recall, Mr. Jameson 
talked to a couple of FBI people about the visit from 
Mr. Katke, the gentleman involved in Grenada. 

Q I gather that Mr. Gillespie or Mr. Jameson told 
you about it. 

A Yes. He told me that the FBI was coming in to 
talk to him about, you know, Grenada, and so forth, and 
this fellow, Katke. But that happened back quite a while 
ago, and I just got this in the wrong slot. 

Q What did Katke have to say about Grenada? 

A I have no idea. Talk to Mr. Jameson. 

Q What did Jameson tell you about it? 

A You know, basically, it was a guy came in and 
talked to him about Grenada. Grenada's not on our plate. 
I'm not interested in Grenada. It's not an oil producer. 



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It doesn't have any oil, doesn't have any geological traces 
of oil, and I didn't fool with it. And Jamie does a number 
of hip pocket things like this. 

Q Okay. What was it? Obviously, in a small 
business like that, when the FBI's coming in to talk to you 
about contacts you've had, and you're telling your boss 
why the FBI's coming in to visit your company, you give him 
a pretty decent explanation. 

A No. I mean — 

Q What did Jameson tell you about this? 

A Jameson simply told me that he'd had a 
conversation with this guy. The guy had been in to talk 
to him about Grenada. He'd sat and listened to him, sent 
him on his way. Shortly thereafter, the FBI C2une in and 
wanted to know what they had talked about, and that was it. 

Q All right. And what did Jcuneson tell you that 
he had told the FBI? 

A That's what I just told you. Whatever subject 
matter was not an item of importemce to me. I wasn't 
concerned with Grenada. I'm not interested in Grenada. 
I didn't ask him to write me a five-page memorandum on it. 

Q Did he write you anything on it? 



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UNtiASStFIED 

I didn't ask him to write me anything on it. 
Did he write you anything on it? 
I don't believe so. 



180 



Q Did anybody in your office write any memo to the 
file about it? 

A I don't think so. I didn't look at Mr. Katke ' s 
name. I even had it confused with something else when you 
first raised it with me. 

Q Your office -- you had a visit from the FBI about 
some prior business that had been transacted in your office, 
and there was no paper created about it? 

A We've got a lot of things to do and creating 
paper is not one of them. 

Q What was it, in general, that Katke had in 
mind when he came to your office and spoke with Jameson? 

A What else can I say to you? I don't know. I 
didn't talk to the man. I didn't interrogate Jameson on 
what he talked to the man about. 

Q And you're saying that Jameson never told you 
what his conversation Mqtfii with Katke? 

A He talked about Grenada, but I didn't pay — it 
was not a matter of importance to me. I didn't retain 



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anything. As you've just seen, I had the guy mixed up with 
somebody else. 

Q That's different than forgetting that the FBI 
came in there talking to your employees. 

A No. Jcimeson talks to the FBI quite frequently. 

Q On this occasion, the FBI arrived to speak with 
Jameson; right? 

A Yes. That's my recollection. 

Q Katke had notified the FBI. They came an talked 
to Jameson. 

A That I don't know. I don't know how the FBI got 
onto it. Maybe they were surveilling Katke. I don't know 
what they were doing with him. 

Q Did you discuss with Gillespie what Katke was 
doing in the office? 

A Well, my recollection is that Gillespie said 
I sat in while Jaunie talked and one of his people had come 
in through the door. I mean, Jeimie's always talking to 
people. He collects people. 

Q Mr. Shackley, if you really didn't talk about 
this with your employees , then you'll remember not talking 
about it. Would it refresh your recollection, if I 



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suggested that Katke was there talking about overthrowing 
the government of Grenada? 

A He may have been, but, you know, really, if that 
is of that much interest to you, you ought to talk to these 
other people. I didn't sit in on the conversation. I 
didn't talk to the man, and it was not an item that was of 
interest to me. 

Q When did you first meet Michael Ledeen? 

A Michael Ledeen? I met him after I left the 
Agency, maybe 1980, maybe 1979. Somewhere in there. 

Q Let me ask you a few more questions ' along this 
Grenada line. 

Have you ever heard of Vista, International? 

A No, I don't think so. 

Q A company headquartered in Florida. 

A No. That doesn't ring any bells with me. 

Q Do you know about Mountel — M-o-u-n-t-e-1? 

A There's a fellow who has a name something like 
that. Is this guy an ex-Special Forces major or something 
like that? 

Q That would make sense. 

A He is somebody that is known to Mr. Gillespie. 




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I think he may have been in our office. My recollection 
is, he may have been in our office one time after he 
retired from Special Forces. 

Q What does Bob Mountel do for a living? 

A Z have no idea. 

Q Was this visit to your office also in relation 
to Grenada? 

A No, not that I recall. He was looking for work 
for some corporate group that he was putting together, of 
security specialists, if it's the same individual. 

Q Do you know of a man named Dick Gadd? 

A I've only seen his name. I do not personally 
know him. 

Q Do you know of him? Have you heard his name 
before it came out in hearings? 

A No, I don't. He's on this list here. Richard 
Gadd, but I dori't know him. I've never heard of him. 

Q Do you know ofl 

A It's on here. Santa Lucia Airways. That's all 
I know about it 

Q You had never heard of it before it came out in 
the hearings? 



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A No, not that I know of. 

Q Did you have any connection with Southern Air 
Transport? 

A Well, I know Southern Air Transport back in the 
days when I was in the government, but I haven't had any 
contacts with Southern Air Transport since I retired. 

Q What contact did you have with them when you were 
in the government? 

A I knew that they did work for the government, and 
I think that's all I can tell you, in terms of my obligations 
under the secrecy agreement. 

Q Your obligations under the secrecy agreement are 
not implicated in any way by testifying under oath. 

A You're not supposed to discuss the sources and 
methods. I mean, if you say to me, "Is Mr, ABC a spy? Was 
he in penetration of the Politburo." or something like that, 
you know, I'm certainly not going to tell you that. I'm 
going to go back to the Agency. 

Q Let me ask you, since you have been retired, have 
you had any contacts with Southern Air Transport? 

A No. I just told you that. I have not. 

Q Or with any of the people that work there? 



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I A Not that I know of. 

I Q Before I get further afield, I want to ask about 
the allegations. I think they must be in the lawsuit, but if 
they're not, they're made by the Christie Institute people 
on the radio and wherever, about activities in the Bahamas 
known to the Christie Institute as the "Fish Farm." 

Are you aware of the allegations I'm talking about? 
MR. MC KAY: I've heard Sheehan make it on the 
radio. What is the purpose of this, and why are you 
investigating the Christie Institute's allegations? 
MR. HOLMES: I'm not. 

MR. MC KAY: That's exaetly what I'm concerned 
about, about this whole matter. It's all going to go over -- 
it's not going to go over to them, but something's going to 
go to them. Mr. Sheehan, as he tells us in his letter, 
tells us frequently how close contact he has with the 
COTTonittee. I don't know what purpose you have going 
through. If it's something related to Iran or Nicaragua — 
I don't think the Fish Farm is. I don't know what the Fish 
Farm is. But Sheehan has talked aUoout it on the radio. 
That's something he's very interested in pursuing. I'm 
very concerned about talking about whatever the 



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Fish Farm is in pursuit of his allegations. 

MR. HOLMES: Our mandate is broader than just 
Iran and Nicaragua. It includes secret military assistance 
to any part of the globe. Also, it is a matter of concern 
il to us, from an oversight point of view, whether or not 
11 paramilitary operations, such as I understand the Fish Farm 
allegation is, have gone on and are going on, whether or not, 
it's really — 

MR. MC KAY: Is your mandate broader than what's in 
the committee resolution? 

MR. HOLMES: No. That's the resolution. 

MR.MC KAY: I may be misreading it, because I've 
misread other things that you read differently, but I 
don't see where there's this broad reference to military 
supplies anywhere in the world. Is that what you said? 

(A pause. ) 

MR. HOLMES: Well, "This use of proceeds from any 
transaction in Nicaragua or any other foreign country to 
further any political purpose or activity within the United 
States or any other country or further any other purpose of 
any nature whatsoever." 

MR. MC KAY; But it's proceeds from the sale. 



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I Is that Iran? 

j MR. HOLMES: As I understand his allegation — 

MR. MC KAY: I don't think that's his allegation. 

MR. HOLMES: I'm not claiming to understand his 
allegation, but I listen to him on the radio. 

MR. MC KAY: I'll let Mr. Shackley answer this one, 
but I'm not going to sit here, if I can avoid it, and go 
through the Christie lawsuit, because that's not a proper 
purpose of the committee. It's an outrageous thing that he . 
has to spend money defending against. It's more outrageous 
having to sit here answering questi-ons about the lawsuit . 

MR. HOLMES: I can understand your sentiments, but 
I am sure you can understand that the committee would like 
to hear from his own mouth that it didn't happen. 

MR, MC KAY: I don't agree with your interpretation 
of this. I'll let him answer this question, and we'll deal 
with the others as they come up. 

THE WITNESS : How about restating the question? 

BY MR. HOLMES: 
Q I was just laying the foundation in that question, 
and that is, are you familiar with the allegation of the 
existence of something called the "Fish Farm" in the 



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Bahamas? 

A No. I have heard tapes or excerpts from tapes 
by the Christie Institute making some reference to the 
Fish Farm. I don't know what the Fish Farm is. 

Q The allegation, as I understand it, is that there 
is an organization, or I should say, a group of individuals 
who are gathered together and located in the Caribbean, who 
have, as one of their purposes, covert paramilitary activity 
directed against communist interests worldwide, and of course, 
in particular, in Central America. 

MR. MC KAY: That's your statement of the allegation. 
What's the question? 

MR. HOLMES: That's how I understand it. 
BY MR. HOLMES: 
Q My question is, are you familiar or have you 
ever heard from any source whatsoever that such an 
organization or group of individuals exists? 
A Other than what? 

Q Other than the allegations made in the Christie 
lawsuit. 

MR. MC KAY: It's not in the lawsuit. 

THE WITNESS: He's made this on tapes, I think. 



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That's the only — in his various — whatever you want to 
call it. 

MR. MC KAY: You don't need to go through that. 
Do you know anything about this? 

THE WITNESS: I don't know anything about the 
Fish Farm. 

BY MR. HOLMES: 

Q Have you been to the Bahamas? 

A Yes, I have. 

Q On a number of occasions? 

A Since — how about defining it? 

Q Since, say, 1980. 

A Yes, I have been down there a number of times. 

Q Approximately how many times? 

A It would be hard for me to guess. I've been down 
there on business relative to the food business, I told you 
before, importing from Argentina to the Bahamas. 

Q Is that your only business in the Bahamas? 

A No. I have put in a modular storage system for 
the Bahamas Electric Company. 

Q Have you had any other business in the Bahamas? 

A No. I have been negotiating for the purchase of 



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an island down there, but I have not concluded that. 

Q Which island is that? 

A It's an island caled Little San Salvador. 

Q From whom are you negotiating the purchase? 

A From the current owners of it, which is a 
Bahamian Corporation. 

Q Who are the people involved in the corporation? 

A The main individual is a Bahamian lawyer by the 
name of Peter Christie. 

Q Is he a principal or is he an agent? 

A He's also a principal. 

Q Who are the other principals? 

A I don't know that I have all the names with me 
right now, because I've been dealing with him. He's a 
fellow by the name of -- I think one of the owners is a 
fellow by the name of de San Phalle. 

Q For whom are you negotiating the purchase? 

A For Mr. Dois. 

Q What's the purpose of the purchase? 

A A possible site for a residence and/or a 
corporate headquarters. 

Q Not necessarily relating to the oil business? 



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A I don't know what his plans are beyond what I've 
]ust told you. Residence and/or corporate headquarters. 

Q And the site of the island? 

A I've forgotten how many acres it is. It's a 
fairly sizable island. 

Q Under 100 acres? 

A I think it's more than 100 acres. I just don't 
have the legal description of the island. 

Q Have you ever met in the Bahamas with anybody who 
has been associated with, past or present, any special 
operations or paramilitary organizations? 

A No, I have not. I don't recall having any 
meetings there. 

Q Have you ever engaged in business related to 
counterinsurgency programs? . 

MR. MC KAY: Is this arriving from funds generated 
by activities in Iran? Again, I don't see what it has to 
do with the mandate'. 

This is Mr. Sheehan, pure and simple. 
MR. HOLMES: This particular question relates 
to Mr. Ledeen. 

MR. MC KAY: And if this question arises from 



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Mr. Sheehan — 

MR. HOLMES: I never heard Sheehan talking anything 
about Mr . Ledeen . 

MR. MC KAY: You're talking about counter- 
insurgency. The complaint is full of 30 years of counter- 
insurgency. That's what the bulk of the Christie suit is 
about. 

MR. HOLMES: Let's start with Mr. Ledeen again. 
BY MR. HOLMES: 

Q You know Mr. Ledeen. 

A Right . 

Q You've met him since he retired. 

A Right. 

Q Have you and Mr. Ledeen ever engaged in business 
together, discussions of business? 

A Yes, we have. 

Q Would you detail those discussions, please, 
chronologically . 

A I'd say, back in 1980, we put on sort of a 
war game-type exercise in Italy. 

Q For whom did you put on the exercise? 

A For one of the Italian security services. 



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Q Which one? 

A I think it was the military service. 

Q There ' s an acronym? 

A I think it's SISME. It's the Italian Military 
Intelligence. 

Q You were paid for that activity? 

A Yes, I was paid for that activity by Mr. Ledeen. 

Q Was it a contract that he had with the military 
service that you were subcontracting on or what? 

A I gave a series of lectures based on my book. 

MR. WOODCOCK: That book is "The Third Option"? 
THE WITNESS: Right. 
BY MR. HOLMES: 

Q Were you or Mr. Ledeen seeking further business 
with the Italian military service? 

A I was not. 

Q Was Mr. Ledeen? 

A I think Mr. Ledeen had other proposals for 
war game type exercises pending that he had either put 
proposals forth on or had proposals pending or was thinking 
about putting proposals forward. 

Q You had discussed those proposals with him? 



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A No. I knew he was involved in them and was 
putting proposals together with other people. 

Q Had you ever discussed with him or any of these 
other people the possiblity that you could provide equipment 
for any activity that he later was going to get a contract 
to you? 

A NO. 

Q Have you ever provided that kind of equipment? 
A I have not. 

Q Would you be in a position to provide, what I 
hestitate to call "counterinsurgency" equipment? 

MR. MC KAY: Do you know what that means? 
THE WITNESS: You'd have to give me a definition 
of what you are talking about, in terms of counter- 
insurgency equipment. 

Would I be in a position to provide counter- 
insurgency equipment? I don't know what you mean. 

MR. MC KAY: I'll also object on the grounds of 
relevancy. I don't see what difference it makes if he could 
or could not do it, if he hasn't done it. 
BY MR. HOLMES: 
Q Did you provide equipment to the so-called 



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"war game exercise"? 

A I did not. 

Q Who did? 

A There wasn't any equipment. 

Q What was the exercise? 

A The exercise was a series of lectures, and what, 
in essence, is a command post exercise, where you're exchanging 
paper to create scenarios. 

Q So there was no field activity at all? 

A None. It's like a war game exercise. You have 
participants on various teams. You create scenarios. People 
respond. 

Q Since that time, have you had any contacts with 
Mr. Ledeen? 

A Yes. I've stayed in regular contact with 
Mr. Ledeen. I've tried to do some oil business with him. 

Q Is that the only business you've discussed with 
him since then? 

A That's the only business I can think of. He also 
was in touch with Mr. Jameson. He and Mr. Jameson were 
pursuing some oil concessions, separate from what I was 



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Q When you said he was in touch with Mr. Jamesen, 
you mean, you were permitting Mr. Jamesen to operate as a 
free agent outside of the corporation? 

A Yes. Mr. Jameson has money of his own. He's 
made some investments, and he was pursuing some activity 
related to those investments. 

Q Does the corporation pass on those kinds of 
opportunities when they arise and put a letter of "no 
conflict" in the file or something? 

A No. Jamie might mention it to me and say he's 
doing this. Am I interested in it? If I say no, then he 
goes on and pursues it. 

Q No memo to cover it? 

A No. 

Q So what did Mr. j2uneson tell you with regard to 
this contact with Ledeen? 

A They were working on some oil activities, and I 
thought it was a nonevent and didn't want to waste my time 
with it, and if he wanted to pursue it with Mr. Ledeen, that 
was fine. 

Q Where were these oil concessions? 

A I think they were dealing with a company in 



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Q That's where the company was; where were the 
concessions? 

A I think Mr. Jameson has a piece of a concession 
or had a piece of a concession in, I think it was either 
Honduras or Guatemala. 

Q Now the oil business that you discussed with 
Ledeen, was that corporate business? 

A Yes, that was corporate business. I was 
interested in pursuing at one time an opening to Nigeria. 
Mr, Ledeen and I thought that because we saw Portugal was 
buying from Nigeria that that might be a possibility. There 
have been several coups in Nigeria, and I've forgotten which 
coup it was after, when everybody's lines of communications 
were broken, and I was trying to get into the Nigerian 
market. 

Mr. Ledeen introduced me to a leading official 
in the Portuguese Oil Company. 

Q Will there be references to that in the documents 
you provided? 

A Yes, I think there's correspondence there. 

Q How would it be filed? Under "Ledeen"? 



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A No, I think it's probably under — it's probably 
in the folder titled "Petrogal {Pedro Perez de Miranda)." 

Q Is that the person you were introduced to? 

A Yes. 

(A pause. ) 

Q Have we completely catalogued your discussions 
with Mr . Ledeen? 

A Yes, as far as I can think of it. There's oil 
with me, some oil deals that he worked on with Jamie. The 
oil concession area. 

Q For whom was Ledeen dealing in these oil deals? 

A As far as I could see, he was dealing for himself. 
He was trying to be a broker and put a deal together and 
get a percentage of it, of the deal. 

Q Does he have any expertise in the oil industry? 

A No, but that doesn't mean anything. Guys try this 
all the time. During tight periods in the market people are 
around trying to put these together all the time, based on 
the fact that they know somebody. 

Q So he's daisy chaining on daisy chains. 

A Right. That's why, a lot of these, I won't 
fool with. That's why I'm not interested in some of them. 



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Q Apart from those arrangements, has Ledeen ever 
collaborated with you in the risk analysis business? 

A I think maybe on a couple of occasions he's 
written some papers for me. 
Q What about? 

A Probably about the Italian political scene. 
Q As it related to oil? 

A No, just in terms of — can I look through the 
file here? It may refresh my memory on that, and I'm getting 
tired, and you're asking me a lot of different questions. 
MR. MC KAY: Off the record. 
(Discussion off the record.) 

THE WITNESS: He wrote a paper for me on the 
Fanfani government. That was in December of '82. 

Let me just flip through this real quickly, and 
I'll see. 

(A pause. ) 

Mr. Ledeen did introduce - e to something called 
The Young Presidents Organization. These are CEOs of 
fast-growing companies. The criteria was, to be a member of 
this organization, you had to have gross receipts of 
something like $20 million or $25 million a year, be under 



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age such-and-such, and so forth. 

They put together seminars, trips and travel, and 
so forth, and Ledeen introduced me to a couple of these 
people. They wanted me to participate with them in a 
trip either this year or next year — no, the fall of '87. 
I told them I can't do it. 

BY MR. HOLMES: 
Q Other contacts with Ledeen from '82 forward? 
A You know, I'm in — we discussed the business, 
you know, and I tried to describe to you what the business 
is, and I am in touch with him on a social basis. That's 
what occurred on this Iran situation. I was having a 
periodic lunch with him in May of 1985, when he asked me 
at lunch — he probably said to me, "You spend a lot of 
time covering the Middle East. Have you got any bright 
ideas on how we can get the hostages out?" 

I said, "No, I don't have any bright ideas." 

And then, after a while, I said, "You know, but 
back last year, I met these people, and I had an experience. 
I turned in a paper, and I heard from the State Department, 
they weren't interested." 

And he said, "Gee, that's interesting. You know. 



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could you give me an update on that, and could I get the 

original paper? I'll turn it in to somebody in the NSC." 

ii 

! Q Is that the first time he'd ever mentioned that 
paper to Ledeen? 

A Yes. 

Q Is that the first time you'd ever mentioned the 
events of November 20, '84, to Ledeen? 

A To the best of my knowledge, yes. 

Q Why is that? Why hadn't you mentioned it to 
him before? 

A Why should I mention it to him? 

Q He's at the NSC. He's supposed to be working 
on counterterrorism. 

A No. You mean -- I keep my own counsel. I don't 
run around and tell everybody that I meet for lunch everything 
I'm doing. Why? That's not my personality. Maybe it's 
yours, but that's not mine. 

Q In any event, you didn't tell him? 

A No. 

Q Who had you told since November of '84 about that 
meeting? 

A I don't recall telling anybody except the 



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people in my office. 
(A pause.) 

You seem to think I should be out there 
advertising this thing. I had a meeting; I reported it. 
Bangl Finished I 

Q I don't want you to read into my questions. 
I just want to know what you did. 
EXAMINATION 
BY MR. SABA; 

Q On your topic, do you know if Mr. Ledeen during 
the period '84 to the present was in the employ of any 
government or any government agency, U.S. or otherwise? 

A Since '84, the only thing that I know of is, he 
has said that he was an adviser to the National Security 
Counsel . 

Q Do you know if he was employed by any other 
government in any capacity? 

A No, not that I know of. 

Q Do you know if he was an adviser or consultant, 
either to Mr . Schwimmer or to Mr . Deraudy? 

A Those names have never come up in conversations, 
between us. I have no knowledge of that. 



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Q Do you know if he was a consultant to any Israeli 
company? 

A I never heard him mention anything about that. 
Q Or person? 

A No, I never heard him mention anything like that. 
MR. SABA: That's all on that line. 
MR. HOLMES: I think this would probably be a 
good enough time to break. 

Why don't we say 9:00 o'clock on Monday? 
MR. MC KAY: I've got a meeting I really need to 
attend for an hour, starting at 8:30, so we could be here 
by 10:00. 

It's something that's been set a long time. 
I didn't know you were talking about starting that early. 
(Discussion off the record.) 
(Whereupon, at 4:45 p.m., the taking of the 
deposition was adjourned, to reconvene at 10:00 a.m., on 
Monday, September 21, 1987.) 



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TRANSCRIPT 

UNITED STATES SENATE 
SELECT COMMITTEE ON 
SECRET MILITARY ASSISTANCE TO 
IRAN AND THE NICARAGUAN OPPOSITION 

DEPOSITION OF THEODORE G. SHACKLEY (Continued) 



QQEK MTt ' ng ^^ mpgs J^y 

lOASsra 



Washington, D.C. 
Monday, September 21, 1987 




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^ 



Ace-Federal Reporters, Lnc. 

Sitnotype Reponm 
444 North Capitol Street 

\^^) J*/- jAAJ unaei provisions ol E 12356 

Nitionwidt Qovwa^ by K Johnson, National Secunty Council 

800-336-6646 

8;^ 736 207 



208 



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UNITED STATES SENATE 
SELECT COMMITTEE ON 
SECRET MILITARY ASSISTANCE TO 
IRAN AND THE NICARAGUAN OPPOSITION 

DEPOSITION OF THEODORE G. SHACKLEY (Continued) 



Washington, D.C. 

Monday, September 21, 1987 
The second day of the deposition of 
THEODORE G. SHACKLEY, called for examination at the 
offices of taie Senate Select Coqgnittee, Suite 901, the 
Hart Senate Office Building, at 10:15 a.m., before 
LOUIS P. WAIBEL, a Notary Public within and for the 
District of Columbia, when were present on behalf of the 
respective parties: 



CAMERON HOLMES, Esq. 

Associate Counsel 

TIMOTHY WOODCOCK, Esq. 

Associate Counsel 

JOHN MONSKY, Esq. 

Associate Counsel 

United States Senate 
Select Committee on Secret 
Military Assistance to Iran 
and the Niceuraguan Opposition. 



..eciassified/Released on^i±!!fi* 
■met provisions o1 E 12356 
iohnson. National Seeuiity Council 



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JOSEPH P. SABA, Esq. 
Associate Majority Counsel 

United States House of 

Representatives Select 

Connnittee to Investigate 

Covert Arms Transactions with Iran 

JACK MC KAY, Esq. 
Shaw Pittman Potts & Trowbridge 
2300 N Street, N,W, 
Washington, D.C. 

On behalf of the deponent 



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CONTENTS 



206 



WITNESS 



Theodore G. Shackley 
by Mr . Holmes 



By Mr. Woodcock 

By Mr . Monsky 



EXAMINATION 

207,301, 
462 

227 

452, 461, 473 



EXHIBI^TS 
SHACKLEY DEPOSITION EXHIBITS 
Exhibit 8 
Exhibit 9 
Exhibit 10 
Exhibit 11 
Exhibit 12 
Exhibit 13 



IDENTIFIED 
241 
269 
291 
297 
298 
298 



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Whereupon , 

THEODORE G, SHACKLEY 
resumed the stand and, having been previously duly sworn, was 
examined and testified further as follows: 
EXAMINATION 

BY MR. HOLMES: 
Q Mr. Shackley, when we left off in the last session 
of this deposition, we had before us these two boxes of 
exhibits, which became Exhibit 6 and Exhibit 7, from RAI and 
TGS, respectively. 

Have you ever been associated with any other 
corporations other than these two? 

MR. MC KAY: Let me just ask, would you define what 
you mean by "associated"? I mean, he has perhaps been an 
employee or a consultant or \^iatever. 

MR. HOLMES: Sure. 

BY MR. HOLMES: 
Q I mean, in this question, to be as broad as 
possible. In other words, em employee, agent, director, 
officer, a person with substantial control over the affairs ' 
of or representative of any corporation. 



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208 . 

A I think I told you the last time we talked that I 
had done some work for a corporation called API Distributors, 
and we discussed that rather thoroughly. 

Q So there was API . Any others? 

A There was IRT, which was a company that was — and 
SSI. 

Q Let's just get the list first. Then we'll go down 
and explore them, if necessary. 

Are there any other corporations that would belong 
on this list? 

A No. Then I told you the other day that I did some 
consulting work for the sequence of Hakim, Triangle Associates 
and Stanford Technology. And for a short period of time, I 
did some consulting work for EATSCO. 

Q Any others? We talked a little bit eibout 

Trans-World, and that's also a consulting business. 

A We talked eUxiut Trans-World and its various entities. 

Q Are there others? 

A You know, I can't think of — 

Q Was — j 

A Again, go back to the basic question. I'm not a 
director or haven't been a director or a stockholder, and I i 



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have done work for these companies as a consultant. I'm 
just trying to think who else I might have done consulting 
work for, but I don't think that that's the scope of your 
question, is it? 

Q If you were a consultant for a corporation on a 
long-term or substantial basis, that would be within the 
scope of the question. 

MR. MC KAY: We may have given you more than you 
asked for. I would say for the record, I don't want the 
record to imply, because he listed these, that he's been 
consulting for them on a long-term basis. 

MR. HOLMES: Sure. 

THE WITNESS: I did some consulting work for a 
compeuiy called Bernstein Brothers. I'm having trouble now 
trying to think who all the various people were that I did 
consulting work for, but I think that's as close as I can 
recall at this particular point. There might have been some 
oth«r companies. 

BY MR. HOLMES: 
Q Before we go on to discuss these corporations, 
I would like to ask you the same question again with regard 
to any other entity or association. In other words, a group 



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of people who are not necessarily incorporation, to include 
partnerships, joint ventures, associations, foreign 
corporations, foreign businesses that are not incorporated, 
in the sense that we use the term in the United States. 

A I think, you know, on the TGS and the Kuwait 
project, we do have a joint venture for one of the warehouse 
projects we did in Kuwait. 

Q And the name of the joint venture is? 

A I can't think of it. It's in the file. For the 

moment, you know, I got a blank. 

Q We'll call it the Kuwaiti Joint Venture. 

A Yes. 

Q And it's in the file? 

A The cc^npany is a conduit and foundation. 

Q All right. Let me get it straight. Is that your 
joint venturer? 

A Yes. 

Q And is that also the name of the joint venture 
itMlf? 

A No. The joint venture is TGS International/Condui! 
and Foundation Corporation. 

Q All right. Then let's continue with this list. \ 



i 



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A At the moment, I just can't think of any other that 
would be a joint venture. 

Q Remember, this includes things other than joint 
ventures — associations, partnerships, and even governmental 
agencies. 

A The only government contracts I have had is with 

TGS International and has been the U.S. government contract, 

foreign military sales, contracts with Kuwait. 

If you let me look at the files in the TGS, I -think 

there's a rundown there, because we had the first construction 

warehouse project that we did in Kuwait was with Lockheed. 

And I forgot whether we were a subcontractor. I think we 

were a subcontractor to Lockheed. 

MR . HOLMES : You ' re certainly welcome to look at 

the files any time you want. I just rushed past it, because 

I wasn't particularly interested in the Kuwait project. 

THE WITNESS: I'm just trying to go down this list. 

I can't think of any other joint ventures that we had. I 

certainly had no partnerships. 

BY MR. HOLMES: ' 

I 
I 
Q All right. Let's return to the two lists that we 

i 



have created. 



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We discussed API. 

A Yes. 

Q And we have discussed SSI. We discussed all of 
your associations with Triangle Associates. 

A Yes, as far as I know, we have gone through that. 

A And also with STC — Stanford Technology 
Corporation? 

A Yes. Based on what we covered the other day. 

Q Based on what we covered the other day and also 
with STGI? 

A I don ' t think I ever did any work for STGI . I 
was very careful to tell you that all of my correspondence, 
as far as I am concerned, was with Stanford Technology 
Corporation. 

Q Very well . We have discussed at least some of your 
dealings with Trans-World Oil, so we'll check that off for 
the moment. That leaves IRI. 

What association have you had with IRT? 

A That was a company that Mr. Clines had that was 
essentially an international trading company. I think I 
talked with you before. It was a company that we tried to 
do international buying and selling. It was primarily 
during that period of time, dealing with the sales of ■ 



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agricultural canned products and so forth to the Bahamas. 

Q The name was International Trade and Research? 

A Right. 

Q Did you ever have euiy equity position in that 
ccRipany? 

A No, I did not. 

Q You were strictly a consultant? 

A Right. 

Q You never participated in any funding of the 
ccopany in any way, shape or form? 

A No. And I was not paid by them, except for 
expenses . 

Q Let's move down to EATSCO. This is Egyptian 
American Transportation Company; is that correct? 

A Egyptian American Transport Compemy, I think it 
was, but it may be Transportation. I don't remember the 
full title. 

Q And when were you first associated with that 
entity? 

A I did some consulting work with them for about 
three months. Three or four months, as I recall. 

Q Would that be reflected in records that you 



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provided us? 

A I don't think so, because if I'm not mistaken, I 
think that was probably 1980, maybe '81. I don't remember 
the exact period. It was either '80 or '81, and it was about 
a three or four-month period there that we had turned out 
some papers for them. 

Q What was the nature of your consultancy? 

A They were interested in expanding their business 
in several areas . They wanted general papers on the 
political/economic climate in these countries, as I recall. 

Q Which countries did you examine for them? 

A You know, that's been a long time ago. I don't 
remember, specifically. That's seven years ago. That's a 
long time ago. I'm having trouble thinking what countries 
they were. I think one of them may have been Pakistan. 

Q Did you produce papers for them? 

A Yes. 

Q What was the approximate total of payment you 
received from them? 

A Probably somewhere in the neighborhood of about 
$8000 was the total. I'd say about three or four months we 



did work for them. 



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Q Would that be a net or gross figure, including 
travel? 

A I didn't do any travel for them. It was all turning 
out papers. 

Q And for whom did you work, specifically? What 
individuals did you report to? 

A A the particular time period, the two people that 
I dealt with were Mr. Salim emd Mr. Clines. 

Q Had you ever met Salim before? 

A Before Z started doing these papers for him? 

Q Yes. 

A Yes, I think I had met him prior to that, yes, but 
I don't remember exactly when. Maybe early in 1980. 

Q How did you meet hiffl? 

A I met hia through Mr. Clines. 

Q Did you have anybody else help you do the work? 

A Well, whatever people were employed with me at the 
time were helping to turn out the papers. I didn't turn 
out every paper myself. 

Q Who were they? j 

A I can't tell you who worked on the papers. I've ; 
having trouble even remembering the papers, let alone the — j 



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Q So it would have been just your staff people? You 
didn't go outside to an outside consultant? 

A I don't recall going to an outside consultant for 
anything that we were doing for them, no. I don't recall 
that, 

Q I gather you had sane discussions or one or more 
discussions with Salim and Clines about why you were being 
asked to do this work, and it had something to do with the 
expansion of EATSCO? 

A They were interested in other parts of the world. 
I had the impression they were interested in expanding into 
other parts of the world. 

Q What is it that they were expanding? 

A My impression was that they were in the 
transportation business and that they were looking at the 
possibility of expanding their trauisportation business. 

Q Have you ever dealt with an R. G. Hobleman Company? 

A Yes. 

Q What has been the nature of your dealings with 

i 
Hobleman from the beginning? 

A Hobleman was, essentially, a freight forwarding 

company. I used them to arrange shipping from places like 



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Argentina to the Bahamas, when food containers — containers 
of corned beef, for exaimple, were purchased. The freight 
forwarding, we used R. G. Hobleman to arrange that. 

Q When was the first time that you had any dealings 
with R. G. Hobleman people? 

A It's hard to say. Possibly sometime in 1979, after 
I retired and started working on some of these. Maybe 1980. 
I can't be more precise than that. 

Q In any event, it was during your association with 
Clines and his various compemies? 

A Right. 

Q API, IRT and SSI? 

A Yes. My main recollection of R. G. Hobleman is 
in the context of moving food products, and that would have 
been with IRT. And there were such things like corned beef 
from Argentina, com from Canada and thing* like that. 

Q How did you first make contact with R. G. Hobleman? 

A I don't know. I met the principal officer in 
that company, a fellow by the name of Gragga. I think it's 
G-r-a-g-g-a. That's the best I can do for you. That's 
phonetically. ! 

Q All right. How did you first make any contact [ 



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with any R. G. Hobleman people? 

A I think my first contact was with Mr. Gragga. I 
think I met him in a social context through Mr. Jameson. 

Q And that would have been in the period immediately • 
after your retirement sometime, or was it before your 
retirement? 

A I don't recall. My first memory that I can recall : 
is after I retired. 

Q Had R. G. Hobleman or any people affiliated with 
them done work for the CIA, to your knowledge? 

A Not that I know of. 

Q And to clarify the record, they could have done 
work, and you didn't know about it? 

A Right . 

Q In a compartmentalization type situation? 

A Right. 

Q Had they every done work for Clines prior to the 
tina that you met Mr. Gragga in a social situation? 

A I have no way of knowing that. I mean, I have no , 

I 

way of knowing that. ' 

Q They became the freight forwarder implemeter for 
the EATSCO operation; correct? 



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A Yes. I know they did a lot of work together, but 
exactly what the nature of their relationship was, and so 
forth, I'm not familiar with that. 

Q What I'm getting at is, did you know Gragga first, , 
or did Clines know Gragga first? 

A That I don't know. I told you I met him — the 
best recollection that I have is, I met him through Donald 
Jameson . - 

Q But your early association with him didn't discover' 
the fact that he was a longtime associate or business 
associate or even a person that Clines knew? 

A No. As I say, my memory of his is, I met him 
through Jameson, and that's all I can remember about the guy. 

Q Had he ever done any work with Jauneson? 

A No, I don't know where they met. Let's see. That's 

a long time ago. I'm having trouble dredging this out of my 

memory. I just can't remember where they know each other 

fro* or even if I knew. 

Q All right. 5 

1 
Did you later become feuniliar with or hear of the j 

business name of Air Freight International? 

A I'm not familiar with Air Freight International. 



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Q They were a subsidiary of R. G. Hobleman in 
association with EATSCO. 

That doesn't help you at all? 

A No. In that period of time, I was not involved 
in air freighting anything, so had no reason to be involved 
with them, or it's not a name that rings any bells with me. 

Q Your consultancy with EATSCO didn't touch on air • 
freight possibilities? 

A No. All it consisted of was doing basically ' 
papers for them. 

Q Do you have access to those papers now? 

A I don't know. I haven't gone back. Maybe I do. 
I don ' t know . 

Q If you do, could you produce those at a later time 
to the committee? 

A Well ~ 

MR. MC KAY: We are already back 5-1/2 years. We I 
ar« now talking about going back seven years. I have serious 
trouble knowing what any of this has to do with the committee', 
mandate . I 

If you want to subpoena documents going back 
another two years, obviously, we'll have to deal with it, but 



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why don't we take this one down, and without my responding to 
it, see what else you're asking for. 
MR. HOLMES: All right. 
BY MR. HOLMES: 

Q After this consultancy with EATSCO, you had no 
further dealings with Salim? 

A No. Basically, I don't recall that even. I'm 
having a little trouble putting this into perspective, you 
know, the time sequence. I met Salim's brother, who is .an 
oil geologist, but I can't remember when that was. I had 
some correspondence with him for looking at oil concessions. 

Q Would those be the oil concessions that we 
previously discussed, the same concessions? 

A No. The same concept. The same concept. But 
nothing came of that. He was already working for a couple of 
other oil companies. I'm trying to think of them. I can't 
think of anything else at the moment. 

Q Did you ever attend any meetings with any other 
p«opl« at all, in which EATSCO business opportunities were 
discussed? 

A No, not that I recall. 

Q Did you ever discuss the business of transporting 



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military materiel from the United States to Egypt with Ed 
Wilson? 

A No, I don't recall having any conversations with 
him on that kind of subject. 

Q Did you ever discuss it with anybody in his 
presence? 

A Not that I know of. 

Q Was this consultancy with EATSCO your first 
association with, any venture dealing with the transport of 
military equipment from the United States to Egypt? 

A I wasn't dealing with any transport of equipment to 
Egypt . 

Q EATSCO was? 

A As I told you, I did papers for EATSCO. I didn't 
have anything to do with the transport of the equipment. 

Q I understand that. My question is whether you 
had any discussions about that project. I'm trying to get 
at when you first found out about this opportunity — this | 
business opportunity to transport military materiel from the 
United States to Egypt. 

MR. MC KAY: You mean EATSCO 's business? 



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BY MR. HOLMES: 

Q Which became the business of EATSCO. 

A I know that at some point in time that Tom Clines 
was talking to Hussein Salim about forming a company with 
him, and so forth. I vaguely remember that kind of a 
discussion, and so forth. 

Q Do you know whether there were any other ' 

! 

individuals that Clines of Salim spoke to with regard to 
that opportunity? ' 

A Not that I can recall. 

Q Do you know whether Clines spoke to Erich von 
Marbod about that business opportunity at any time? 

A I really don't know. I don't have any 
recollection of anything like that. I remember Clines 
talking eibout trying to get into this kind of a business, 
that was basically what he was interested in it. My doing 
was to help him get some of these other companies going while; 
he want off into another area of activity. 

Did you hear from any source during the period of 
time when Clines was interested in dealing with this 
business opportunity, that Ed Wilson was in any way 
associated with that venture? 



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A No. I don t recall that he was associated with that 
venture, no. 

Q That same question with regard to Erich von Marbod 

A No. 

Q Richard Secord? 

A Not that I recall. I know that Clines borrowed 
some money from Wilson, but that's in the broad context < 
of things, but I don't recall the specific venture. 

Q And what is your source of information on the- 
borrowing of money by Clines from Wilson? 

A I heard him talk about it. 

Q You heard Clines talk eUiout it? 

A Yes. 

Q And what was the amount of money? 

A I don't recall. It was a fairly substantial 
cunount of money, which I know he borrowed from him and 
subsequently repaid. 

Q Do you have any other sources of information, i 
other than Clines? i 

A No, not that I can think of at this point. 

Q Were you ever present when Clines discussed that 

loan with anybody else, for exzunple? 



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A No, not that I can recall at the moment, no. 
Q When you say it was a fairly substantial amount of 
money, does half a million dollars sound — 

A It was in hundreds of thousands. I don't remember 
how many hundreds of thousands it was, but it was what I 
regard as a substantial amount of money. 
Q And it was at what time? 

MR. MC KAY: That he heard of this from Clines? 
MR. HOLMES: Right. 

THE WITNESS: It would probably have to be in 
1979, somewhere in that time period of 1979-1980. 
BY MR. HOLMES: 
Q So it was the same time period when you and Clines 
were in business together and before you struck out on your 
own? 

A Right. 

Q Well, have we covered EATSC07 Is that your last 
asaociation with EATSCO or Salim? 

A I don't recall anything else. I think at one 
time — 1 have to remember the sequence. I looked at some 
trucks. It wasn't for EATSCO. I think Salim was looking at 
another opportunity and asked me to look and see if I could 



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research what trucks were available on the market. I know 
I looked at some trucks. They were GMC trucks manufactured, 
maybe, in the United States with Mexico or something, but 
nothing ceune of that. 

Q The ultimate destination of the trucks was to be 
Egypt? 

A I don't remember where the ultimate destination 
was. It was something he wanted to bid on. 

Q Did you have any other business dealings with 
Clines, other than what we discussed previously? 

A No, not that I can recall. 

Q Let's move down to the Bernstein Brothers, and if 
you could just sketch for me the relationship with the 
Bernstein Brothers. 

A Bernstein Brothers is a Colorado sort of 
investment company, and I did some work for them in looking 
at some issues relative to offshore oil concessions off the 
West Coast of Florida. 

Q During what period of time was this? 

A I don't know. That could have been '79, '80, '81. 
Somewhere in that period. 

Q Is that the only business you have done with 



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Bernstein Brothers? 

A yes. That's essentially it. I think I wrote some 
written papers for it. There were some drop copies of papers 
on oil-related matters. 

Q Would this be, in general, your oil intelligence I 
type service? 

A Yes. I think at one time, he was interested in , 

Guatemala oil potential, and I think that's when Guatemala wais 

i 
coming on stream. ! 

MR. HOLMES: Would you like to? 

EXAMINATION 

BY MR. WOODCOCK: 

Q Mr. Shackley, again, I'm Tim Woodcock, also with 

the Senate Committee. 

Mr. Shackley, when did you become ADOO, Associate 

Deputy Director of Operations? , 

A I think in May or June of 1976. 

Q Now, in that capacity, did you have much experience 

I think, then, the relatively new law governing ; 

findings, covert action findings? 

A You know, I know when the findings ceune in. Once 

the rules came in, basically, if you had anything that 



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appeared to be in that particular area, that was a whole new . 
art form that was being crafted. 

As I recall, that went through a number of changes 
over the years as to what was to be included. But I wouldn't 
want to say my knowledge of the findings started when I became 
ADDO. 

Q I guess, in that capacity, you had some experience 
with findings, the findings process? 

A Right . 

Q And it was in an evolutionary stage at that time? 

A Right, as far as I recollect. 

Q Let me ask you this. Really, what I'm asking at 
this point are policy questions based on your experience as 
a former ADOO. In the course of this investigation, we have 
come across instances in which findings have been entered to 
cover activity that has already occurred, that is, covert 
action activity that has already occurred. 

Has there anything like that in your experience 
a^QlTOO? 

A I can't recall any. No, I don't think so. 

Wait a minute. Once you went from one procedure 
to anyother, I think the first series of findings that went 



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in covered what had gone before, because this was a new art 
form. After that art form started, I don't recall any that 
were ex post facto approval. 

Q Now, based again on your experience as ADDO, do 
you have a feeling or opinion as to the advisibility of such i 
procedure, basically, a ratification of prior actions — 
covert actions? I 

A I could only see that basically hapening in some ' 
dire emergency, where something might happen, where some 
event would come up and the director would go talk to the 
president, and it would be a short, fast-breaking kind of 
situation. But then in a matter of days, you would catch 
up with it. 

Q You never actually had that experience? 

A No. I mean, you know, if you ask me a theoretical 
question, could it happen, or could there be a set of 
circumstances in which it would be applicable, that would be i 
tim only time that I could envision. 

Q The statute, as currently drawn, does not appear j 
to provide any leeway for that kind of event. 

Do you have any feeling as to whether it ought to 
be drafted to provide for such a contingency? 



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A Well, you know, I think foreign policy events 

sometimes are fast-breaking, and it seems to me, in order to - 

have some short-term basis for taking action, if it's 

appropriately staffed. In other words, I could see a 

situation developing where the Congress is not in session, ' 

and you don't want to get on an open phone to talk to 

somebody across the United States, and the director goes to - 

the president, gets approval from him and has to do something 

I 
in 24 or 48 hours, and it's necessary to put a courier on 

the airplane and send a briefer to brief whoever is supposed ; 

to be briefed. I see it as a very short-term kind of thing. ' 

Q Let me, along the same line, in the event that 
you're faced with a fast-breeUcing series of events that 
requires a covert action response, do you have an opinion as 
to whether the covert action findings should always be in 
writing or sometimes not in writing? 

A Given the way things work, I see no reason why it . 
caajt be camnitted to writing, and that's generally the 
waip It's been dealt with. I knew of no verbal finding. I'm; 
not aware of one. 

Q Given that there is a finding process — let me 
rephrase that. 



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A As ADDO, how did you view the written finding 
system? Did you view that as basically a jursidictional 
mandate for you that you could operate within the permises 
of the finding and not otherwise? 

How did you interpret the finding? 

A I saw the finding as creating broad parameters. 
I certainly didn't look at it as being something that required 
the dotting of every "i" and the crossing of every "t." It 
set up a concept in which you might engage in certain 
action. 

Q Would it be the base document for those actions? 
For example, if you contemplated a particular action, would 
it be your practice to refer back to the finding to determine 
if it is something contemplated by the finding? 

A No. I think your base documents would be something 
that would be approved by, you know, whatever period of time 
you're dealing with, the 40 Committee, the 303 committee. 
Whatever historical period of time, because those kept 
changing. 

i 

Your basic policy document really came from that { 
kind of presentation. 

Then the coordination with the Congress and the 



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sanctioning of it. by the Congress came in your finding, but 
your more detailed document would have been the document that 
you would use for policy purposes. Either one of these 
approval groups. 

Q The approval group process would precede the 
finding; is that correct? 

A Yes. In most cases. You know, in an emergency, 
maybe the two would be going parallel and one would get 
ahead of the other, depending on who was in town and the 
ability of a meeting, you know, getting all the principals 
together for a meeting. 

Q And then in the ordinary course, outside of the 
exceptional circumstances, the finding would have contemplated 
what was already contemplated by the 40 group or whatever? 

A It would be approved by it. 

Q Yes. So you, as AODO, having had some participation 
in that process, would know both the underlying, detailed 
discussion that would have occurred in committee and then ^ 
also have the knowledge of the findings; is that correct? 

A That would be the normal proviso. Certainly, 
during my time, that would have been the normal proviso. In 



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Other words, if I didn't prepare the papers, the DOO prepared 
them when he came back and would say, you know, "Here's what 
has happened." But a lot depends on the rapport between the 
two people and the working and would depend to a large extent 
on the director, at the time. Maybe it would be a director — 
there wasn't one during my time, but maybe there would be a 
director who would want to compartment something in a special 
way. 

Q Let me ask you the question a little bit differently. 
Assuming that a covert action has been authorized 
and a particular course of action was contemplated, where 
would you have gone to determine that what you were 
contemplating was, in fact, authorized? 

A You mean if I had sc^ne doubts? 

Q Correct. 

A Well, in my case, if I had any doubts, I would have 
gone to the director. 

Q And then, in your experience, where would the 

diractor go to get confirmation, if he had doubys? Would he 

j 

go back to the committee? I 

I 
A No, 1 think the inclination — that's a very hard ! 

i 

one to deal with, because I'm not sure what has gone before. | 



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Let me try to recast this and see if we're talking about the 
same language. 

Q Please do. 

A Let's say we had put in something, a proposal to 
the 40 Committee, because I don't know what period of time 
you're talking about. Let's just say the 40 committee. And 

at the same time you had put in a porposal as soon as this wa^ 

! 

approved by the 40 Committee, and you had gotten a finding, 
so that you had everything properly coordinated within the 
governmental structure . 

Then if I were sitting down here as ADDO and the 
item came up which caused me to question whether this was in 
this authority, I would first go to the director. The director, 
if he had some qualms about it, would undoubtedly go to the 
president or to the National Security Adviser. A lot depends 
on the personal relationship between the people at the time. 

I mean, there have been times when directors and . 
National Security Advisers have not had the best of rapport, - 
and there are other times when they have had good rapport, < 
and that would be the place for them to go. That's where you 
would start the process of clarification. It could be a 
matter of minutes before they could clarify it; it could be a 



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day. But I wouldn't ejtpect it to be more than a day, because, 
obviously, it would be something that would be pressing. It 
would be something that would be troublesome to the ADDO or 
the DDO. 

Q As ADDO, did you have routine access to presidential 
findings? 

A Yes. During the time I was there I had a free 
exchange with the fellow that I worked with, and I knew of ' 
no action of this type that I wasn't aware of. I mean, I 
have not been aware of each and every detail, but generally, 
I was aware of what was going on, and we were interchangeable. 
The other fellow travelex extensively, and when he was gone, 
I ran the shop. 

Q Who was the DDO, when you were ADDO? 

A Bill Welles. 

Q Do you know of any insatance when a finding was 

not provided to the CIA? That is, not physically provided? 

I 
A I have no recollection of such a thing. I mean, 

wban a finding was signed off on, you know, it always came 

back. 

Q Came back to the CIA? 



Right. 



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Q Where it could be checked by you, if need be, or 
anyone else? 

A Yes. I would be available to the director, let's 
say. The DDO of AODO would be available to the Office of 
General Counsel. 

Q Right. Let me ask you this. We have come across, 
in our experience in this investigation, an instance in which 
a finding was signed, and the original was kept, and that 
original was kept at the NSC. No copy was transmitted to , 
CIA for nearly a year? ' 

Would you have an opinion, based on your experience 
as AODO, as to the suitability of that kind of a procedure? 

A Well, I'd say it's unusual. 

Q How about good or bad? 

A Well, I think you need to have a straight flow 
of paper back and forth. I would expect we would have gotten 
a copy of the paper, and I would looked for it. 

Q And you never had any experience where someone 
wittkheld a paper? 

A No, I don't ever recall any problems with that 
aspect of the procedures. 

Q In your experience, in the event that a covert 



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( action, at some point, came to light, do you know whether 
you or the CIA would have used the existence of the finding 
as providing some protection for the Agency? 

A I think you would want to know that if it fell in 
that category, you would want to know that it has been 
approved by the 40 committee and that it had been approved 
by the finding, so you could establish that this was 
appropriately coordinated, and it was a government program. 
Q And authorized? 
A Yes. 

Q And by the converse, in the event that a coveirt 
action was attributed to either our government or the CIA, 
in particular, that, in fact, we had nothing to do with, 
would the nonexistence of a finding then argue that, in fact, 
at least from among our leadership, we were not associated 
with it? 

A I think, in all probability, that would be the 
way people would approach it. If you don't have it, it's 
not there. I think that would be the general view. 

Going back to this thing, it's also possible that 
the legislative counsel at various times play different 
roles, and they would have been, in some cases, involved in 



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arranging meetings in relationship to the finding for the 
director or for others to brief the congressional committee, 
so you would have another component of the Agency involved. 

Q As a matter of course, do you know who would have 
been consulted before a finding would have been issued during 
your tenure as ADDO? 

I'm speaking in terms of the Attorney General or 
Secretary of State. Would those people automatically have 
been consulted? 

A They would have been consulted in the context of, 
say, the 40 Committee mechanism, because they are senior 
representatives and would be sitting in at the 40 Committee. 
So that individual, the senior State person, would go back, 
and it was incumbent upon him to make sure the Secretary of 
State was appropriately briefed and concurred. 

Q Do you know of an instance during your tenure as 
ADDO, when a finding did not go to the 40 Committee? 

A I can't recall one. I mean, I don't have any 
memory of any such thing. 

Q Let me ask you a question on the concept of [ 

! 
plausible deniability. 1 

i 

First, if you would, could you describe for me 



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how you perceive the concept of plausible deniability. 

A Well, the concept of plausible denial has gone a 

number of mutations over the years. Its initial presentation 

probably in the fifties, was that you wanted to create i 

covert action in a way that the U.S. government and the 

senior policymaUcer, i.e., the president, could say that he 

was unaware of that particular action and had it structured j 

j 
in such a way thatyou had policy approval for the action ' 

within the U.S. government, but you didn't have a tangible ! 

audit trail leading to the president. That, in fact, is 

what was inherent in such mechanisms as, let's say, the 40 

Committee, which we used generically here. That is, it would 

be approved by the senior policymaking body, that's where 

the approval came from, and it stopped, essentially, there. 

Although they, in turn, might have briefed the president. 

But the trail led to the 40 Committee. 

Q But, in fact, under that set of circumstances, 

didn't that assume that at some point the president was 

j 

made aware of the process? 

A Yes. I think one would have to assume the 
president was made aware. I think that was a fact, that 



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the president was made aware, but it was this concept of 
plausible denial . I think after you had the investigatations 
essentially, in the seventies, the concept of plausible 
denial went by the wayside, because the finding mechanism 
required the president to sign it. Therefore, once the 
president signed a finding, you had an audit trail leading 
to the top policymaker in the United States government and : 
plausible denial was no longer plausible. 

Q Right. There was some testimony — I don't know 
whether you heard it — that seemed to revive the concept of 
plausible denial, for aspects of the Iran operation, and I 
believe it was Admiral Poindexter espoused his view of 
plausible denial as essentially encompassing a process 
whereby the president was not informed at all of covert 
action. 

Was that ever a live theory within your experience? 

Q Not in my time . , 

Q I mean, in fact, that's absolutely absolute 

! 

deniability, is it not? j 

A Right . 

Q Not plausible, as a fact? 
A Right. 1 don't see how that can function, if you 



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have so many other aspects — budgetary aspects, manpower 
aspects, you know, interfacing with cover, and so forth. I 
don't see how that could transpire. 

Q But that expression, to the extent it assumes 
the president is not told at all , did not comport with your 
understanding of how plausible denial was? 

A No. As I say, there may have been a couple of 
minor shadings in between these two very severe definitions , 
but the benchmark that I was seeing would be the 50 to 70, 
whatever it was, 72, to the Church Committee period, and 
the Pike Committee created another watershed, where you had 
this proceeding, and after that you had a trail that would 
lead directly to the president. 

Q There was a rule within CIA — I'm going to show 
you a copy of it. 

MR. WOODCOCK: Let me just have it marked 8. 

(Shackley Deposition Exhibit 8 
identified.) 
BY MR. WOODCOCK: 

Q Mr. Shackley, I'm going to show you what has been 
marked as Deposition Exhibit No. 8, and it is taken from 
the CIA Regulation Book, and I have put a green bracket 



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around the letter "H," which reads: 

"Support to the White House office." 
That reads as follows: 

"Any support requested by or extended to 
the White House office, excluding the 
production and dissemination of foreign 
intelligence, must have the prior 
approval of the director." 
Are you feuniliar with that rule? 
A I don't recall it, but let's see if I can see when 
it's dated. It looks like it's dated 1978. 

No, I don't recall this rule off the top of my 
head, but it's the kind of embodiment of what the procedures 



In other words, nobody would go to the White House 
or be in touch with the National Security Adviser without 
having some coordination, internally, and having the approval 
of the director. 

In a progreunmatic sense, you might have approval , 
from the director, yes, we're going to be talking about I 
paramilitary operations in Laos, let's say. There might 
have been a historical period when somebody might have said. 



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yes, we're going to be talking about those kinds of 
operations, and here's what we're going to be dealing with, 
and you get approval frotn the director. 

Q And so that was before the embodiment of this 
rule? 

A Yes, I just don't happen to recall that 
particular rule. 

Q Let me ask you this, Mr. Shackley. 

Based on what you have just said, when you were 
ADDO, if a call had come into, say, your office, directly 
from an NSC staff person saying the National Security 
Adviser has told me that he wants to use the following 
resources of CIA for the following purposes, would you have 
felt that you would have been in a position to say, okay, or 
would you have had to go beyond that to seek approval for 
that request within the CIA? 

A Well, if it was within the scope of an approved 
program. If it was not within t he scope of an approved 
program, I would not have felt that I could do that on my 
own. 

Q Now, again, in your experience, first, did you 
ever have that kind of experience? 



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A No, I don't 2ver recall having anything like that. 

Q Second, if you had, what would have been your 
procedure to get the proper authority to move ahead on that 
request? 

A Well, if the DDO was in town, I would have called 
him and said, "You know, I don't know why you didn't get 
this call. I'm home, you're out. Do you know anything that 
I don't?" It might have been during the course of the day 
I had not seen him, the way the schedule went or something. 

I might have been up on the Hill testifying on 
something, and he might have been dealing with foreign 
liaison or something, and we just didn't meet by the end of 
the day. "What do you know that I don't know." 

That would have been my first reaction. If he said 
he didn't know anything, then we would have agreed between 
us, who was going to take the next step, i.e., I probably 
would have taken it, because the call came to me, and my j 
next step would have been to call the director. Or if the 
director wasn't in town, call the acting director. 

Q And it would have gone to either one or the other 
for approval before you would have taken steps? 



A Yes. 



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Q In your experience, has the NSC itself ever 
performed covert operations? 

A None that I'm aware of. 

Q And the CIA was seen as the primary implementer 
or covert operations; is that correct? 

A That's correct. 

Q And I gather, in some circumstances, purely 
military, perhaps only the military would implement it; is 
that correct? Did you ever have that experience? 

A On a covert action? 

Q Right. Ever? 

A I think I can recall the military being given 
action responsibility to implement something, but they, too, 
have a coordination mechanism. 

Q With the CIA? 

A With the CIA and depending on the nature of the 
program, it could have been a military program put into the 
4 Committee format, approved by the 40 Committee and the 
finding found, but the instrxment for implementation would 
be the military. 

Q Let me back up to the subject of getting approval 
or getting a request from the NSC to take action. Let me 



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get down to some specifics. 

If an NSC staffer called you to enlist your 
support to gain, for example, flight clearances in foreign 
countries for a flight, would that be something you would i 
deal with and take up the line? 

A If it had nothing to do with an approved, you know, 
activity — you always have to structure this. If it were 
an ongoing program, I would have to make a judgment as to ] 
whether that was within the tolerance threshold of the ' 
authority that I had. And if it were an approved program, 
I would have to judge it at that point in time, as to what 
I wanted to do. 12:00 o'clock at night, you know, the 
director is out of town, and I would know he's out of town, 
and the acting director is at some conference or something, 
I would have to sort of judge all those things amd then make 
a decision within the scope of the approved program. If it ' 
was not an approved program, it would be the kind of thing | 
that I would have to go to somebody else and say, "Hey, 
this is something I don't know anything about. 

"This is an unusual requirement. It's out of the 
scope of our charter, and what do you know?" 

Q So, before you began calling your chiefs of 



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Station to prepare whatever flight clearances, y^u'd have to 
go through the process you just described? 

A Yes. 

Q Now what you have just testified to — and correct 
me, if I'm wrong, I think that is assuming that you would 
feel an obligation to question the NSC staffer as to what 
precisely it was he was trying to accomplish? 

A Yes, I think I would ask a question, and he might ' 
say this is some approved program, the director knows about 
it, if you don't. This is the help that I need, or something 
like that. And I'd say, fine, I got to check it out. 

Q Right. In other words, get the director's 
approval? You would have to check it out? 

A Right. 

Q You wouldn't rest on his word alone; you would 
let the director know about it, then do it? 

A It depends on the interrelationships people have 
with the memagement. I mean, the time I was there, I felt 

confortable in being able to call the director at any time 

I 

of day or night and say, hey, I got a problem, and here's | 

t 

. .1 
the issue and here are my concerns or here s my recommendatipn. 

Q Let me Jbid another layer to this hypothetical. 



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Let ' s assume that you go ahead and you ask the 
NSC staffer what it is that he is trying to accomplish, and 
he gives you a story which you suspect to be a cover story; 

would you feel satisfied to take the cover story, with your 

i 

suspicions, to the director, or would you try to penetrate j 
the cover story with the staffer? 

A You know, that's a hard one to answer. I don't 

know. A lot would depend. My own inclination would be thati 

i 
I don't work for the NSC staffer, I work for the director, 

and therefore, if I'm going to err on the side, you know, o£ 

being on one side or the other, I got to pay attention to 

what the director's equity is, so I would be inclined to 

go to the director and say, look, I don't know anything 

about this . More ' s a rec[uest . Yes , I can implement it , 

but I don't know anything 2d>out it, and your name is being 

quoted here as having knowledge of it or approval of it or; 

something. So what's the word, boss? | 

Q All right. Let's leave the hypothetical director; 

i 
approval out of it and just go to the question of whether 

you would feel obligated to pierce that cover story. 

Let's assume he has not represented the director 

has approved the operation. 



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A I don't think I'd necessarily be inclined, if he 

said, "Look, I want to do X, Y or Z, it's not within an 

approved program, I have no knowledge of this before," and 

he says, the National Security Adviser or somebody wants to 

do it, I'd say, "Gee, that doesn't make an awful lot of 

sense to me. What is it about?" And he says, "That's all 

I can tell you, that's all I'm authorized to tell you." 

I 
I'd say, "Well, I got to get back to you. I'm ! 

not authorized to do it." ; 

Q Right. So I gather — let me fashion a response, 
and you tell me if I'm wrong. At a minimum, you would feel 
obligated to go to the director and say, "I have been 
called by the NSC staffer. They have proposed the following. 
They have given the following rationale, and you should 
know, I suspect it's a rationale, a cover." 

A Yes. Or I'm uncomfortable, or it doesn't make 
sense to me or something like that. A lot depends on who 
is in to%m. If the DDO was in town, I would call him ! 

first. 

i 

Q But either way, it would be the same discussion? { 

A Either way, the seune flow. 

Q And it would be up to the person to make the 



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judgment as to whether to pierce the story or not? 

A Right. 

Q Let me get back to the NSC, as a performer of 

operations, and again, I'm asking you td draw on your ' 

experience as a member of the CIA. 

In your opinion, is the NSC an appropriate 

institution to perform covert operations? 

I 
A No, I don't see them as an implementer of | 

operations. 

Q Now, why do you say that? 

A Well, basically, they don't have the structure 
to do that, and by and Icirge, they don't have the experience 
to do it. In other words, most of the people who are 
assigned to the NSC staff have substantive positions, you 
know, go into these jobs either as political appointees or 
come front the academic or economic community or business. 

They're in there for two or three years, four 
years, amd they are gone. And they don't have anybody of . 
experience. Or they are people that come from other agenciesj. 
State Depairtment, and so forth, where they may be top notch 
2uiaiysts in a particular area or region and familiar with 
policy but aren't familiar with program implementation. 



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I just don't see the talent being there for it. 

Q Do you think it should be given the capability 
to perform covert operations? 

A No, as a personal opinion, no. 

Q Again, why? 

A Because 1 don't think we have the depth of skill 
and experience to permit the U.S. government to staff those 
kind of functions adequately by having multiple repositories 
to implement those kind of programs. 

Q In effect, a second small CIA? 

A Yes. I don't see that we have the talent. And 
this kind of talent is not developed in a short period of 
time, and the opportunities for developing talent of this 
kind are significantly decreased. 

Let me make that point. It is a troublesome 
point. I think, if you took somebody who came in to the 
CIA up to the mid- '50s, they entered prior to '55, '56, 
probably in two yeairs' time or three years' time in the 
fiald, they acquired more experience than the fellow 
entering, let's say, in the '80s will in ten years. 

Q Why do you say that? That's an interesting 



coRonent . 



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A Because that's why I'm making it. Because the 
opportunities aren't there. The political sensitivies are 
different. 

Let me use an example — two examples — to perhaps, 
make my point. i 

Take Germany. Before the wall went up in 

Germany, in Berlin, there were thousands of people flowing | 

i 
across the border daily, so there was a lot of opportunity [ 

i 
to get exposure and experience in pursuing programs, because ; 

there was just this vast array of people coming out there, 

which was a potential pool within which to work. After the 

wall went up, that decreased, and therefore, a young officer 

coming out has to wait months before he ever gets his chance 

to even pursue one action. 

In the earlier days, the guy had trouble deciding 

which of the ten good things was he going to pursue in the 

course of a day. ^ 

Hong Kong is the same thing. The flow of people 

i 
coning out of China was great at one point in time, and then 

it was closed off. 

Q And I gather that was generally true in almost 

all locations, and it is today? 



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A Yes. And also the political sensitivities are much: 
tighter in a lot of places around the world, where a mistake 
is much more costly to the United States, so the young 
officer coming in now has less opportunity to gain experience. 

Q The CIA, in that period, too, had a pool in that \ 
period, in particular, I think, from Europe, of people who 
were expatriates from European countries and were enlisted in i 
the CIA or OSS, who were culturally, I think, more sympathetic 
to the countries in which they were stationed than it is ' 
today; is that your experience? 

A No. I think what you had out of that is a greater 
reservoir of language skills and cultural understanding, but 
not necessarily sympathy for the countries that they were 
working in. 

Q Well, I guess that's a bad choice of words. A 
greater understanding. Let me put it that way. 

A They understood the environment in which they were , 

working, and they had greater language skills. 

1 

Q That's a natural process, as people get old, older 
that they were unable to reap the circumstances under which 
we would have that manpower reservoir of persons from other 
countries coning into the CIA. 



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In your experience, at the time you were leaving, 
was the CIA successfully addressing this debriefing of, say, 
native language speakers in its ranks? 

A Yes. Attempts were being made to do that. There j 
were various programs which, in part, eliminated some of 
that, because you had a different managerial approach. The 
approach came in at one point in time in which you had to 
look at the young officer who had to go up or out, in 
essence, whereas, in this business, there are a lot of 
people who may have acquired, for whatever reason, very good 
language skills and area knowledge and should be left in a 
particular area. Not everybody has to come in as a junior 
officer and aspire to be a director. 

In other words, a guy can come in and have a very 
honorable, productive, satisfying career and to come in as 
a junior officer trainee and, you know, retire as equivalent 
of a full colonel in the Army, and you know, be the greatest; 
expert on Fremce or Pakistan or whatever area — Indonesia 
or Southeast Asia or Africa. j 

i 

Q You just mentioned a difference in managerial { 
philosophy. That, I gather, has resulted in shifting people 
around in fair amounts; is that the idea? 



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A No, it's also this idea that you've got to have a 
throughput in an even cone in all age grade activities, and 
so forth. 

Q I guess I'm not following you. What are you 
describing there? 

A If you take the total personnel and make a chart, 
you can divided your personnel by grade and age, and so 
let's say you have an X number of GS-12s, and then you have 
so many, and you have a throughput kind of thing. You start 
off with a very large base here, and the higher the grades 
are, the lower the numbers are. All right. 

There was a theory of management put in by one 
group that you had to have this large base and everybody had 
to be moved along on an up or out kind of proposition, 
almost like the military structure. 
Q When did this come in? 

A This came in in probably about '77, '78, somewhere 
in there. 

Q During the Turner years? 
A Well, you came to that conclusion. I'm not lookincf 
to be — 

Q I'm not assigning it directly to him. He would 




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have been director at that point? 

A He would have been the director at that time, 
I'm not looking for a polemical discussion. 

Q I'm just trying to place it in time. 

A Others don't have that seune theory. There's a 
theory that you bring people in and you find that an 
individual, let's say, is the son of a missionary, his ! 
father has served as a missionary in Korea, and he's learned. 
Korean, and he's got to American University to study Korean, ' 
and gone to one of these area study progreuns, and so forth, 
and speaks fluent Korean, and he's interested in that area, 
then you might want to use him in the context of the Korean 
situation for a long period of time. 




He's got a broad career, but perhaps the 
cap on that career is, he would get to be a GS-15, but 
b«c«use he gets to be a GS-15 at age 40 and doesn't go any 
further, it doesn't mean at 45, you should retire him, 
because he has no aspirations at being director, he's not 
director material, but he's a hell of a good man for what 
he does . He ' s got area knowledge , language interests , and 



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so forth, and these are the differences. 

So we have lost a lot of skills. 

Q Do you know whether the cone philosophy that you 
just described is still in vogue today? 

A I have no idea. I have lost all contact. 

Q We have, in the course of this investigation, 
come across what people tell us is an unusual situation, 
in which a national intelligence officer, in effect, acted 
as a case agent for Manucher Ghorbanifar. 

Do you recall, in your experience, a national 
intelligence officer ever taking on those kinds of 
responsibilities? 

A Being a case officer? 

Q Right. 

A -No, I don't recall that ever happening, no. 

Q 1 No, granted that you had, I gather, one day in 
which you met with Ghorbanifar, November 20, '84, do you 
have an opinion, based on that meeting, whether he was an 
individual that you would have run as an agent or not, and, 
if so, do you have an opinion as to how you might have run a 
person like Ghorbanifar? 

A Well, if you will go back to my memos, you will 



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see that in several places I have said in those memos that 
he would, a) be a different person to manage; that whoever 
managed him r;«»rtainly had to have certain talents and certain 
skills, and I raised that, I think, in both memos that I 
wrote, as a cautionary note, because he is a complicated ' 
man, and I envisioned difficulties from dealing with this 
guy, and I said that in those memos, and I think it's very i 
clear, and I think if I had been trying to work with him, 
I would have used somebody who knew him as an intermediary. 
And I don't know what else what was available, but just in 
the short time I was involved, I would have probably used 
somebody like^^^Hf^^^^^^Hto try to work with him. 
I think I would have used him much more as a 
cutout or filter. 

Q "Used"? 

^^^^^^^^^^^^H Somebody like 
And maybe I would have used^^^^^^^^^Vor somebody like 
that, who you had more confidence in and had more of a 
stake in the United States, and interest and so forth. 

Q Let me ask you another question, this one, coming 
to you out of the blue. Would you have an opinion on 
whether the position of inspector general at CIA should be 



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confirmed by the Senate? 

MR. MC KAY: Have you ever had an opinion before 
this moment? 

THE WITNESS; No, I thought about it before. No, : 
I don't think he should be approved by the Senate. ' 

BY MR. WCX)DCOCK: 

Q And why not? 

A I think that would tend to politicize the ' 
position, and you find a lot of people trying to build 
careers are perhaps seeking the kind of congressional 
exposure, which may not be good for an institution. 

Q How do you see, absent some kind of congressional 
involvment in the IG, ensuring that the Office of Inspector 
General, CIA, is functioning properly and aggressively? 

A Well, I think you could do that with program 
reviews; that is, the Office of Management and Budget, when 
they're doing their annual program review, they can certainly 
focus on that kind of a problem. I mean, you can look at 

the quality of the person being assigned, the number of i 

i 
people being assigned. You can look at the dollars which 

are being allocated to the budget and the Office of 

Management and Budget does have the ability to review 



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a) what has transpired in the past fiscal year, in terms of 
programs; what have they looked at and what have you got 
on your plate for the coming fiscal year and what do you 
know about the problems that you're working on. Their 
continuing interest. 

One problem might well be this language problem. 
In other words, we understand it's a problem, what are you, 
the Inspector General, going to do about this? Not just 
in regard to, let's say, the DDO; what are you going to do 
about it in terms of looking out for the Agency as a whole? 
What about DDI? What are their language skills at this 
point in time? 

Q When you were at CIA — let me limit it just to 
your experience as ADDO. 

When you were ADDO, was the inspector general 
position seen to be a position that was a step up on the 
ladder, a place from which people would go on to bigger and , 
better things? 

A Well, you have to answer that in two different j 
ways. If you're saying, was it seen by somebody in the DDO 
as a stepping stone to a larger job, I would say no. If 
you're looking at some other component, it was conceivably 



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a platform from which to go to bigger and better things. 

Q And when you say "some other component"? 

A Well, let's say something like Deputy Director for 

Administration. I think somebody could see themselves moving; 

from a position in the Director of Administration to be ' 

Inspector General, and a couple of years later, perhaps come 

back to be the Deputy Director or Controller or the head of i 

Administration or some other job that was more important, in ■ 

I 

terms of resource controls. 

Q In your opinion, was there anything wrong with the 
idea not being a stepping stone for someone? 

A No. Because it's quite a visible position. If 

somebody wanted to go back overseas again, it carried a 

certain eunount of ballast by having been the Inspector 

General. You get to be known throughout Washington, 

throughout a lot of parts of the government, and then it's 

very hard to suddenly reappear, you know, ir 

land be the station chief, as your twilight assignment : 
I I 

for your career . 

Q Isn't it also a problem, unless you come out of 

the DO, it's pretty difficult to investigate the DO? 

A No, I don't think so. 



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Q The DO isn't something unto itself, in many 
respects? 

A No. I don;t see that, because the element — 
basic element for conducting investigations is access to 
the personnel, money, and program, and I think if you have 
the access to those, it's fairly well established. 

Q Well, isn't it also, if you're going to conduct 
an effective investigation, the capacity to have some 
rapport with the people you're investigating? 

A Yes. That's a factor, but I guess if you look 
at that on a scale of 100, the rapport is probably less 
important than access to the program records and the 
financial records and the personnel records. 

Q We came across, in our investigation, an instance 
in which DEA worked with CIA on a project — the Drug 
Enforcement Adminstration . When you were ADDO^ I guess it 
would have been called DEA at that point too — what was 
their relationship with CIA? 

A Well, it was still evolving at that particular 
point in time, because you have to go back. I forget what 
DEA was called then. 

Q It was Bureau of Narcotics and Dangerous Drugs? 



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A Drug Control, I guess. 

Q And before that, it was the Federal Bureau of 
Narcotics. 

A You know, as it evolved. Ajd it was still 
evolving in my time, that is, the relationship and the scope. 
of activity, because that was a new requirement, really, 
and initially when the narcotics problem came into focus, i 
the Agency's primary responsibility was collection of 
intelligence; who were these guys? What were they doing, 
and so forth? Then later, came a point in time when there 
was more cooperation, in terms of trying to obtain 




And therefore, there was a greater exchange of 
operational information with the Drug Enforcement Agency. 
So it was still evolving during my time. 

Q Had it evolved to the point where the DEA would 
join in an operation with CIA? Their agents actively 
involved? 

A I can't reall. You better give me a better 
definition of what you see as a joint operation. I think 
maybe I can tell you. I 



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Q Are you familiar with the Third Agency Rule? 

A Yes . 

Q Could you articulate that for me, please. 

A Well, the Third Agency Rule is that the CIA obtains 
information from, let's say, the FBI. It is not to pass that 
information to DEA. It was not coordinating it. 

Q In other words, notifying FBI? 

A No. You could not get information from the FBI and 
have that information come to the CIA, and the CIA willy-nilly 
then give that to DEA. 

Q Now, that process of notifying FBI, is that 
actually a process of getting their approval? 

A Right. 

Q It's not simply notice; you actually have to 
approve it; is that correct? / 

A You have to discuss it with them, and a lot would 
depend on what operational , and you have to get their 
approval . 

Q Let me share with you one of the frustrations of 
an investigation. We have found that the Third Agency Rule 
applies to Congress as well. We run into instances where 
we can get, basically, composite documents with the CIA, 



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blanking out what maybe the FBI has told us, and the FBI 
giving us the same document in their folder, blanking out 
what the CIA has told them. Together, we have a complete 
picture. 

That has struck at least some of us as having some 
limited logic. 

Would you have any position on how the Third 
Agency Rule might apply to Congress? 

A Well, let me say that I think that the Third, 
Agency Rule is a good rule. It's a sound rule in practice, 
in terms of dealing among the intelligence and security 
agencies a) within the government, within the U.S. 
government and b) with foreign services. 

So, having started with that as a premise, you 
have the special problem, in terms of dealing with the 
Congress. 

Q Let ' 8 leave ^^^^^^^^^^^^^^^^^^^^^^^^^^^^H 

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^■but say 
tbm government. 

/A I think you got a special case, insofar as the 

Congress is concerned. I haven't really given that any 
thought as to how one might work around it. Insofar as 



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the relationship between the agencies within the government 
is concerned, I think the Third Agency Rule is good and should 
be adhered to, because there may be something that, when the 
FBI gave you this information, they gave you perfectly sound ■ 
information, but how that information is acquired or was 
acquired and what jeopardy the source of the acquisition 
might be placed in by being given further dissemination to 
SCTnebody who would use it in a different form, can only be 
made by that agency. 

And if you're going to have a free flow of 
information, I think you have to honor the Third Agency Rule. 
How you solve that for relations with the Congress, you do 
have a special problem. I don't have an instant answer. I 
hadn't thought about it. 

Q I just have one more line of questions for you. 
The CIA has its own security clearance process; 
is that right? ' 

A You mean for hiring peop}j^? ^ 

Q Let's say, for a person who would participate in j 
a covert action. 

A Yes, there's a clearance procedure for that. It's 
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Q And am I right that a person who, say, has a 
security clearance with the Department of Defense, would 
not, ipso facto, have a security clearance with CIA to 
participate in a covert action? ■ 

i 

A That's generally correct; yes. i 

Q In other words, the CIA would also clear that 

person into its operation? 

i 
A Depending on what kind of a role they were playing,! 

and so forth. 

Q And do you think that's sound practice? 

A Yes. 

Q Prudent? 

A Yes. You have to know, I think, depending on the 

role they're going to play. That's why I came back to, you 

have to define the level of participation; then, how much 

time you're going to spend on clearing the person. 

MR. WOODCOCK: Okay. That concludes the questions 

I have for the moment. 

THE WITNESS: Can we take a break? 

(Recess.) 

BY MR. WOODCOCK: 

Q Mr. Shackley, you recall when we were last together 



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I asked you some questions about Albert Hakim and your 

circulating him within the CIA back in the 1970s as a possible 

sort of assistant to the Agency. 

What I'd like to do, if I could, with you, is to 

show you a series of documents here which we have received 

from CIA. First let me ask you to read this document, which 

I will ask the reporter to mark as Deposition Exhibit No. 9. 

j 
(Shackley Deposition Exhibit 9 ; 

identified.) I 

MR. WOODCOCK: I'll describe it for you the record. 

It's a memorandum for record, dated August 5, i976, and 

signed on the back, "Theodore G. Shackley, Associate Deputy 

Director for Operations. 

BY MR. WOODCOCK: 

Q Now Mr. Shackley, if you will take a moment to 

read this, it's a four-page memorandum, single space, so 

it might take a little time, but I would ask you to take a 

moment and read it carefully. 

(A pause.) 

First, Mr. Shackley, have you had an opportunity 

to review Deposition Exhibit No. 9? 

A Yes. I have read that menorandum. 




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Q Before we get into the substance of it, is that 
your signature on the last page, page 4? 

A Yes, That's what it looks like. 

Q And I gather that's a memorandum that you yourself ; 
prepared; is that correct? 

A Yes. That's clearly the kind of thing I owuld have 

done, and I think it's a reasonably accurate thing of what I 

i 

I told you I did do the other day. j 

Q Right Now, let me go through the memorandum with 

you, if I may, because there are some points in it that I'd 

like to see if you can expand on. 

The memorandum gives under the heading "Background,* 

on the first page, there's a reference in the first sentence 

there that during the May to August 1976 time period, you 

had collected "numerous references" on Albert Hakim. 

As you recall, what were these references you 

were picking up during that period of time? j 

A You know, I don't really know. This is a long 

time ago. This is 1976. I know that's what it says, but ; 

I 
those words don't bring any specific details. Obviously, 

whatever I had, I wrote in there at the time, given the 



way this unfolds. But I can't recall what that had 



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reference to. 

Q You were introduced, I think you testified, to 
Mr. Hakim by Ed Wilson; is that correct? 

A Yes, I was. 

Q Was Wilson the source of these references, do you 
recall? 

A I know he introduced me to him, but that's my 
main recollection of the thing. 

Q Let me ask you this, a different kind of question. ' 
Your present inability to recall would suggest 
that it might have been prudent to set out the numerous 
references at the time. 

Would that be the ordinary thing to do, when you're 
putting a memo like this together, to say "I have had 
references on so-and-so from the following sources?" 

A No. That would be sort of a judgment call, 
depending on what you saw coming out of this particular 
thing, as I think I told you the other day, and this 
c«rtainly reaffirms my own memory of the thing. I had a ■ 
meeting, I came back, ajid I wrote up what I thought was a ! 
fulsome report and put it into the system. 

Q Now, there ' s also a reference — let me go down 



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the page here. We're still on page 1, under the heading ; 

of "Commercial Structure." 

A Right . i 

Q It says "Mr. Hakim is involved in a number cf 

commercial enterprises." 

Do you recall what series of commercial enterprises 

would have been? | 

I 
i 
MR. MC KAY: You mean beyond what is mentioned? 

MR. WOODCOCK: Yes. In addition to anything I 

that's mentioned. ! 

THE WITNESS: Let me just reread that again. 

(A pause.) ' 

THE WITNESS: No. The way it's written, I assume 

that he has a number of commercial enterprises, and it 

goes on to discuss two of them here. | 

BY MR. WOODCOCK: 

Q ' Do you recall whether there would have been any | 

that you would have known of, using that term, that you 

didn't put down? I 

A No. I wouldn't have thought so. I just have no 

way of dredging that out. 

Q Let me ask, if you would turn to page 2 of 



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Exhibit 9, |Under "Type of Business." 

The first sentence there, you say "Mr. Hakim has 
let it be known that he is currently in the process of 
selling the RDJ-9000 security system of Stanford Technology 
Corporation to Iran." 

When you say, "Let it me know," do you recall 
whether that's something he's telling you, or is this 
coming to you from another source? 

A The way this is written, I assume I got it from 
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Q Now, dropping down to number 2, the first 
sentence there. 

"Mr. Shackley's contacts have indicated 
Mr. Hakim is quite anxious to play a 
pivotal role in the Iranian purchase of 
American technology." 
What contacts are we talking about? Do you 
recall? 

A No, I don't, but I assume that that's probably 
what came out of the discussions with Wilson. That's 
certainly one of them. But I don't know. It's plural, 
more than one. That's the only one that comes to mind at 



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this point in time. 

Q Let me put this for this particular time period. 
Is there anyone else that you associate with 
Mr. Hakim at this point, other than Ed Wilson? 

A There obviously must have been somebody else I 
was talking to, because I used the plural here, but I can't 
~ nothing comes to mind. I met an awful lot of people all 
over the world, and it's hard to put this — I mean, this 
refreshes my memory, and I'm surprised that my memory was 
as accurate at it turned out to be. 

Q Let me ask you about a phrase that you have 
employed in paragraph number 2, on page 2, the one on 
"Assessment." it says: 

"Mr. Hakim is casting about for contacts 
in the U.S. government with whom he can 
find a mutuality of interests concerning 
Iranian attempts to procure hardware in 
(the United States." 
That phrase, "mutuality of interests," what did 
you mean^by that? 

A Well, that's a phrasi that would mean that 
somebody would provide intelligence or information and keep 



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the U.S. government posted on what they were doing, in return 
for which he would be told, you know, "We got a system up 
here." "Hey, that system can't be sold, and you're wasting 
your time trying to sell that system." 

Q Okay. Explain that to me. Mr. Hakim, if I 
understand what you're saying, is considering a proposal to 
sell a certain system to Iran? 

A Right. 

Q Now, again, explain what it is that is in his 
interest? Why is it in his interest to assist us? 

Q It's in his interest to see if that is a system 
that can be sold. In other words, his choices are to go 
to the Munitions Control Board, as an example, and to file 
a license, and he might spend a year or two trying to get 
that license through and get approval, or at the end of 
two years, after he's invested all this time and effort, 
find out that he can't sell it or isn't going to sell it, 
there's a U.S. policy against selling it. And it's not 
unccnunon for people to try to strike a deal with the U.S. 
government, where they say, "Look, I want to tell you what 
I'm doing, but don't let me spin all my wheels here forever 
pursuing a project that doesn't make any sense." 



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Q And what role would CIA play in making Mr. Hakim 
wiser than he would be otherwise? 

A Well, I think about the only thing — first of all, 
he'd have to check all that out to see whether there was a 
policy for not selling something, and if there was a policy i 
for not selling it, and it was not a secret, you might say 
"to him, "Look, I don't think you're going to sell that. I 
don't think you can sell that." ' 

Q And that would be someone in CIA would convey that ; 
information to him? 

A Yes. 

Q Let me bring you down to the next paragraph, the 
one numbered 3 on page 2 . 

That starts out, "Mr. Hakim was transiting 
Washington on August 4." 

A Right. ; 

Q How is it that you knew Mr. Hakim was transiting 
Washington on August 4? 

A I really don't know at this day and age, how I j 
knew. When did I have the luncheon with him? 

Q I believe it's contained in that paragraph? 

A Okay. I met with him for lunch on 4 August. I 



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knew he was transiting. The person who introduced me to him 
was Wilson, so I'd have to assume from that, that I probably 
learned of that from Wilson. 

Q Up to this point, up to this luncheon on August ; 
4, 1976, you had not yet met Mr. Hakim; is that correct? 

A That's correct. 

Q So at that luncheon that ' s described in paragraph I 
3 at the Jockey Club, you actually came face to face with I 
him; is that correct? 

A Right. 

Q At -that luncheon — I don't think I covered this 
in your prior appearance. If I did, then please forgive me. 
But at that luncheon, it was you and Mr. Hakim and no one 
else; is that correct? Or was there someone else? 

A I really don't remember that clearly. It's 
possible that Wilson was there. I can't fix him definitely, 
but I can't exclude him. I 

Q What I'm trying to get to — I think you can see j 
my problem. ■, How was the introduction made? ■ 

A Clearly, Wilson introduced me to him. Whether he 
stayed for the luncheon or was there or not, I cannot 
remember. I have trouble with that. I cannot say with 



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certainty one way or the other. 

My guess is, he probably was there, but it's 
strictly a guess. 




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Q Do you recall Aether you had developed a thought 
in Mr. Hakim's case, to that degree of specificity? 

A No. What I did was, I went out, met the fellow 
and came back, wrote a rather fulsome report, put it in the 
system and nothing happened. In other words, as I told 
you the other day, I probably got some correspondence. My 
recollection of what happened is, people came back and said 
they simply weren't interested in what we had to offer, that 
<^^ey had contacts that were better than what he was suggesting. 




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Q Now at this time, did you yourself know either 
Secord or von Marbod? 

A Yes. This is '76. I testified earlier that I 
met him in Laos. The Vietnam War was over. Yes. By then, 
I knew von Marbod. 

Q Let me back up. Do you recall how it was you would' 

I 
have know where these two individuals, Secord and von Marbod,' 

were at that time? 

A They were prominent in the situation in Iran. Their 
names were in cable traffic all the time, so I certainly knew 
that that's where they were. 

Q As I recall your testimony — and correct me if 
I'm wrong — after you parted company with General Secord 
in Laos, you had very little contact with him subsequently; 
is that correct? 

A Yea. Basically, social contact, if we were both 
acmmih^ze at the same time. I don't recall all of his 
assignments, where he went, but there was a long period of 
time that we weren't in any place where our paths crossed. ! 

Q Do you recall ever meeting him in Ed Wilson's i 



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company? 

A No, I don't. I don't recall meeting him in Ed 
Wilson's company. I have no recollection of that. 

Q And the same for Mr. von Marbod? Do you recall 
ever meeting him in Ed Wilson's company? 

A NO, I don't have any recollection of meeting him 
with — nothing jumps out. I have known von Marbod for a 
number of years. 



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that when I came 'away from this, and I wrote this, I obviously 
had the impression he had been on the periphery or knew how 
these functions, and so forth. 

Q And that in particular, he had some relationship 
with French and British arms sales? 

A Yes . On the periphery of whatever was going on at 
that time. I have no way of recalling that. 
Q You recall no particulars of that? 
A No. 

MR. MC KAY: Mr. Woodcock, do you know what the 
blacked out line is in paragraph 6? 

MR. WOODCOCK: No, I don't. 

Let me have this marked as the next exhibit, number 
10, and I will ask you to take time and read it. 

(Shackley Deposition Exhibit 10 
identified.) 
MR. WOODCOCK: Let me identify it for the record. 

{ This is a memorandu, dated August 16, '76. It's 

I 
three pages, single spaced, and appears to bear the signature 

of Theodore G. Shackley, on the third page. 

The subject is "Mr. Albert Hakim, Iranian National 

and Importer/Exporter." ' 'v.^-' 



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Take a minute, if you would, to read that. 
(A pause.) 
BY MR. WOODCOCK: 

Q Now, again, as with Deposition Exhibit No. 8, on 
Deposition Exhibit No. 10, is that your signature? 

A Yes, that certainly looks like it. 

Q And have you had a chance ot review that? 

A Yes, I have. 

Q Let me ask you just a few questions about that. 
From the introductory sentence of that memorandum on page 1, 
it appears that 14r . Hakim is making yet another trip to 
Washington. 

Is that the way you read that? That is separate 
from the one where you met him in August 4? 

A Yes, I'd say that's another trip. It certainly looks 
like it. 

Q Now, it's not clear from the memorandum, but do 
you recall whether you met him on the second trip? 

A I don't have any recollection of meeting him, and 
this doesn't say. that I did meet him. I think if I had met 
him, I probably would have said somewhere, unless we have 
another memo that says that I did meet him or something, but 



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normally, i think the information would have been, if I met 
him, that I i^t him at such-and-such a place. 

Q Now, you brought Mr. Hakim to the attention of 
George Cave^^^^^^^^^^^^^^^^V Do you whether, 
you brought this to his attention that anyone else was present!? 

A No, I don't. 

Q Do you recall bringing this to his attention? i 

! 

A No. This refreshes my memory. I have forgotten 1 
all about this. I know George Cave, and I think I told you 
the other day, I didn't remember. Nothing popped out at that ', 
time when we were discussing George Cave, but I do know him. 
It says I talked with him, so I did talk with him, but I don't 
recall the meeting. 

Q You don ' t have an independent recollection? 

A No, I don't. 

Q Do you recall, having read this. Cave having any 

involvement — an independent recollection of Cave having j 

any involvement with this at all? 

1 
A NO. And this is perhaps one of 20 or 30 such 

meetings I might have had during the course of any particular 

day dealing with various items. Z just don't recall discussir|g 

this with Cave, other than that's what it says there, and I 



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have to accept what it says there is correct. 




Q Partly through the sentence, it notes, Tom Clines 
was then DDO Training Officer, had also met Mr. Hakim in a 
social context. 

Do you recall how it is that you knew that at that 
time? 

A No, I don't. But obviously, I knew it somehow, or . 
it cmme out, because it's in there. 

Q Having seen that, is it possible that he is one of \ 
the contacts you're referring to in your earlier memoranda, 
who was giving you information on Mr. Hakim? 

A I have no specific recollection of it, but I can't 



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exclude it, you know, that he was one of the people. My main 
recollection is, I was introduced to this guy by Ed Wilson. 
That's the main thing that sticks out in my mind, and it's been 
a long time ago. 




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Q Let me ask you this. You have had an opportunity 
now to read to the end of this deposition, Exhibit No. 10. 
As the Associate Deputy Director of Operations, was it usual 
for you to get involved in this kind of detai] 




A It could be, yes. I mean, a lot of 
proposals were discussed with me, but as I recall, this one, 
for some reason, never went anywhere. As I recall, this 
thing all fell apart. You probably have an additional track 
in here. 

Q I will show that to you in a moment, but on that 
question, you have looked at these two memoranda in detail, 
and they show a personal interest on your part in this deal. 
Is this unusual to you, or is this typical to you 
thmt you would have gotten involved in this kind of detail? 

MR. MC KAY: I'm going to object to the question, 
in that it talks about a personal interest. He is involved 
in his office capacity, if that's what you mean. 



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BY MR, WOODCOCK: 

Q Excuse me. Not a personal interest separate from 
your official duties. I'm not implying that, but that you 
personally are taking a lead in this. That's what I mean by ; 
that. 

A No, that would not be unusual. I meet somebody, I 
put a memo into the system. I checked on it. It would also ; 



be quite common for me to look at some ceible traffic coming 




Q So that would be something that you, yourself, might 
do as opposed to say, to somebody who is a subordinate, "Look, 
we have ccnne across this interesting character. You go out 
and meet him, and you make the judgment on him." 

That's something you yourself would do as AODO? 

A Yes . i 

Q Do you know whether, in following that kind of 
practice, it would be unusual for an ADDO, or is this pretty 
much standard in your experience for an ADDO to get involved 
in that? 

A No, I don't think it's unusual. It depends on the 



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times and the events and the areas of interest. There are 
predecessors in that job that did a lot in the covert 
action activity that were very much interested in various 
aspects of covert action and played a very action role. 

MR. WOODCOCK: Now, I have some cable traffic that : 
resulted from your two memoranda, and I won't burden you with 

I 
f 

The first ccUale, which is dated August 18, "76, '■ 

based on the inquiries that were generated 

by the interest in Mr. Hakim, giving a position 

on the proposal to use Mr. HaUcim> let me have it 

marked as Exhibit No. 11. 

(Shackley Deposition Exhibit 11 

identified.) 

MR, WOODCOCK: And I'll ask you to take a moment 

to read it. 

(A pause.) 

THE WITNESS: Do you have the other one, because 

i 
this doesn't make sense? Do you have the 90015? Obviously, \ 

i 
sc^nething went out. 

MR. WOODCOCK: Well, there are two that went out 

I wasn't going to burden you with them. Let me have them 



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marked as exhibits, and you can read these, the predecessor 
cables. 

The first cable, number 900015, followed by 900016 
Both are dated August 17, 1976. They were sent out within a 
minute of one another. They are companion cables. 

I'll have 900016 marked as Deposition Exhibit 12 
and then 900016 marked as Deposition Exhibit No. 13. 

(Shackley Deposition Exhibits 12 and 13 
identified.) 
BY MR. WOODCOCK: 
Q Now, Mr. Shackley, have you had an opportunity to 
read each one of these exhibits? 
A Yes. 

Q I was really interested in Deposition Exhibit No. 
11, which provides the rationale which^^^^^^^^Bmade for 
rejecting the proposal to use Mr. Hakim. 

Is that rationale consistent with your recollection 
of what happened here? 

A I think I told you the other day, I just remembered 
this was turned down by the field. I didn't recall the 
rationale when we talked about it the other 




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But this also shows there 
was some concern about Stanford Technology's reputation in 
this field. It had escaped me, so this provides clarifying 
data. 

Q Do you recall whether you received this cable? 
Do you have an independentrecollection that this information 
came to your attention in August of 1976? 

A No. I don't have any independent recollection 
from it. Analyzing what I can see on this thing, it does not 
appear that I got a copy of it. But that's by deduction 
rather than by memory. I may be able to unravel this. Just 
give me a minute and let me look at this. 
(A pause. ) 

No, I can't tell. I thought I could tell from 
this, but I can't. 

Q In your August 16 memorandum, I think it was, you 
charged Mr. Cave and Mr. Clines with drafting the cable 
traffifc to make the proper inquiry 

Do you recall either one of them coming back to you 
and saying this is what we've got; it isn't going to fly, or 
they're not interested for the following reasons? 



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A No. The only recollection I have of this thing is ■ 
that it fell apart. It didn't go anywhere. That's all I 
remember of it. 

Q Do you recall, independent of this cable, coming | 

cross information that either Albert Hakim or Stanford 

Technology had, I think what the cable calls "an unsavory 

reputation"? ■ 

I 
A No. I know that's what this says, but I don't 

recall that coming up with it. 

Q You don ' t recall getting that information from any 
of the contacts that you had originally made in Mr. Hakim's 
name available to you? 

A No , I don ' t . 

Q Subsequent to these events, this August '76 period, 

do you recall at any time other than right now, coming across 

information that either Albert Hakim or his Stanford 

Technology Group had acted in an unethical manner with the i 

Imperial Iranian Air Force? 

I 
A No. I think the only thing I've seen — or seen 

any time since — I think I saw some newspaper articles 

recently that he was involved in some sort of a sale of 

eunmunition or something, but that was in some newspgiper article 



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I have seen in the last perhaps year or so. 
Q So, other than public sources — 
A No, I've not aware of it. 

MR. WOODCOCK: Okay. I don't have any further 
questions on this. ' 

MR. HOLMES: Okay. Let me just follow on the last 
question. I 

i 

EXAMINATION 

i 
BY MR. HOLMES: '< 

Q The person that he was supposed to be involved in 
the ammunition sale happened to ^^^^^^^^^^^^^^^^^B ^°^ 
had never heard, up until the time of these hearings that 
he had, in fact, been bribing^^^^^^^Hthrough the early 
■70s? 

A No, I have never heard that. The first time I ever; 

knew he was actually involved in selling ammunition, as far 

as I can remember, was, when I saw that in the newspapers. j 

Q He was actually selling ammunition and primarily 

I 
selling an opportunity to build an ammunition plant in Iran 

for a U.S. company, and as part of that was enriching 

in a Swiss bank account. You had never heard up 

until these hearings that the very person he was planning to 



BRISASSIFIED 



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infiltrate had, in fact, already been bribed by him? 

A No. I can't even make those match up, because 
what I remember reading is a very short story in one of the 
newspapers, and I don't even remember if^^^^^^^^^Hname 
was in that story, that said he was involved in a sale of 
ammunition to the Iranians, and there had been, you know, 
bribes involved in that sale. And I can't even remember when 
that was . 

Are you saying during the time of this hearing? I | 
don't even remember that. It's been within the last six 
months or year that I've seen that, but I can't define it 
more closely. I don't recall ^^^^^^^^^^Kname being in the 
story that I saw. 

Q Have you had any contact with^^^^^^^Hat all 
since 1976? 

A Why are you saying "since 1976"? I never met 



Q Well, you had some conflict with his name in '76, 
because it's in your memo. 

A Yes. But that doesn't mean contact. I think we're 
talking past each other. I do not know^^^^^^^^l I don't 
recall ever having seen him or met him, and if you use that. 



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in the course of any day, hundreds of names came across my 
desk in the traffic. 



[at any time 



Q Do you recall talking withj 
since these memos in ' 76? 

A No. As a matter of Tact, the only time I remember 
anything else coming up about^^^^^^^^^Bwas some newspaper 
guy called me one day and asked me if I knew where 
was. I think he's alive, in the United States, based from | 
this inquiry that I got. i 

Q But you don't know where? ! 

A I have no idea. 

Q Have you ever been present when Wilson and Secord 
discussed rescuing^^^^^^^ffrom Iran after the fall of the 
Shah? 

A No, I don't recall any such conversation. You know, 
it's not the kind of conversation that — in what year? 

Q Sometime after the fall of the Shah in '79. j 

A No. In '79? No. 

Q After that? 

A No. 

Q Do you recall any discussion for bringing any 
Iranian out of Iran after the fall of the Shah? 



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A Remember, I retired in '79. The fall of the Shah 
was, I think, after I retired. I just can't remember when 
the Shah fell. I retired in August of '79, and I think the 
Shah ~ 

MR. WOODCOCK: I think he had left the country by 
then. I think he left sometime in early 1979. 

THE WITNESS: Okay. But by then, if he left in 
early '79, I was not in a job where that. would have been a 
topic for discussion with me. 
BY MR. HOLMES: 

Q I'd still like an answer to the question. 

A I'm answering it. 

Q Whether you heard such a discussion? 

A I had no reason to. I'm trying to place myself 
chronologically in the sequence of where I was. In '79, I 
wasn't in a job where I would have access to that kind of 
information, where it would normally be discussed with me. 
I wms in an entirely different kind of a job, and I have no 
recollection of^^^^^^^Hbeing a subject of discussion. 
I wasn't consulted. Nobody asked me about him. \ 

Q During the time of the investigation of Secord and | 

Wilson and others in relation to their dealings in the Mideast, 



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do you recall any discussion about Secord's use of an airplane 
purchased by Wilson here in the United States? 

A Yes, I think that came up in some of the questioning 
of me. I know there was an airplane, and I know from these 
questions, and so forth, that Secord flew the airplane. 

Q Would I be presuming too much, if I presumed that 
clients may have discussed this topic with you since he was 
alleged to have flown with Secord in the plane? 

A No, I don't recall that coming up with conversations 
with Clines. My recollection of that — and this was a 
series of questions that were put to me by an investigator 
at that time. 

Q You don't have any recall of any discussion about 
it with principals, then; is that what you are saying? 

A I'm trying to give you an answer, and I think I'm 
telling, you that I don't recall. My recollection is that I 
was asked about this, and I'm aware there was an airplane, 
but my memory of it is that this came from questioning 
about others who were playing the role that you ' re playing . 

Q So you did know about it before you were asked 
about it? I 

A No, I have no recollection of being aware of that. 1 



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MR. HOLMES: That's all. We can meet after 
lunch. 

Off the record. 

(Whereupon, at 1:05 p.m., the taking of the 
deposition was recessed, to reconvene at 2:10 p.m., this 
same day . ) 



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AFTERNOON SESSION 

(2:10 p.m.) 
Whereupon, 

THEODORE G. SHACKLEY 
resumed the stand and, having been previously duly sworn, 
was examined and testified further as follows: 
EXAMINATION (Continued) 
BY MR. HOLMES: 
Q You understand you are still under oath? 
A Yes. 

Q This afternoon, we are going to s}cip around a lot, 
and if we hit the same general point, obliquely, several 
times, you will understand why, and hopefully, we will be 
able to move along a little more rapidly. 

You mentioned Mr . Robinette the last time you were 
here. 

Could you tell me the history of your association 
with Mr . Robinette? 

A My memory is, I knew him for years and years in 
the Agency. I can't tell you when 1 first met him in the 
Agency. He's an old-time career employee, and so was I. 

Q Have you ever had any association with him outside 



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the agency? 

A Social contact. Talked to him periodically. 

Q No business contact? 

A No. I think, at times, we talked about risk 
analysis business, investigative activity and so on, but we 
never did any real business. 

Q Have you ever spoken with him about his activities 
during 1986? 

A I talked to him in the context of the Avirgnan- 
Honey lawsuit. I remember talking to him sometime about the 
Avirgnan-Honey case, yes. 

Q What about it? 

A You know, what did he know about it and trying to 
figure out what he had been looking at, if he had been looking 
at it. You know, he's a professional investigator, has worked 
for a lot of companies at various times that had investigated 
resources, and I wondered whether he knew anything about this 
particular group. 

Q Did he ever work with Ed Wilson, do you know? 

A Not that I know of . ■ 

i 

Q What did he tell you about what he knew about ■ 
the lawsuit? I 




309 



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A Basically, what he told me was, this suit had been 
filed, what I already knew, that the majority of the people 
were not linked together by any common thread. We talked 
about tracking down some depositions. There are some 
depositions by various people who are involved in that suit, 
that were taken in Costa Rica, and so forth, or in the United 
States. He was going to track them down, and so was I. 

Q Was anything else said between the two of you about 
his activities in Central America in '86? 

A Not that I can recall. Everything was focused 
really on, basically, this lawsuit. 

Q Did you have any idea that he was doing any work 
on the home of Oliver North? 

A No, I didn't. I don t think that ever ceuae up in 
any conversation with him. 

Q Did you know Mr . Casey? 

A I met him on one or two occasions . 

Q How did that occur? 

A I was at a dinner party where he was a speaker. I 
remember meeting him under those circumstzmces . 

Q Was that the only meeting you had with him? 

A There may have been two similar type things, where 



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he was the guest speaker at a small group that I was at. 

Q Did you ever dicuss policy with him? 

A No, I had no reason to discuss policy with him. 

Q Did you ever discuss with any person a potential 
idea for a business, the name of which was to be International 
Security Systems Limited? 

A International Security Systems? No. Could you 
tell me any more about what you're trying — 

Q My understanding of the business idea was that it 
was to be a longtime European headquartered trading business 
aimed at Iranian trade. 

A No, I don't recall any conversation like that. 

Q Dq you recall any conversation about that idea, 
whatever label might have been placed on it? 

A I recall some conversations with people who had 
retired from various governmental agencies around the world 
to create some sort of an international risk analysis 
company, and s don't know that there was a time ascribed to 
th«t. 

Q With whom have you discussed the idea of an 
international risk analysis company? 



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A It's one of those files in one of those boxes that 
I gave you. A fellow by the name of Peleg Radai. I don't 
even know what the thing was. The name of this one company 
was International Protective Security and Intelligence. 
Is that what you were saying? 
Q No, that's not the name. 

A International Protective Security was the name of 
his company. 

Q The document you just referred to is a portion 
of Exhibit 6 marked as H00231, his business card. 

I gather Mr. Radia, referring to SH 229, was at 
least for reference referred to Oliver North of the NSC by 
yourself; is that what this document indicates? 

A No. What I recall of that is, he told me he already 
was in touch with Oliver North, and I said, "Based on 
what you're looking for, that's your best bet for obtaining 
it." 

Q Do you whether he did, in fact, contact Oliver 
North? 

A I have no way of knowing. 

Q What was it that he was looking for from Oliver 
North? 



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A I think that he was looking for information on 
something to do with a lawsuit in a magazine in Greece. 

Q The issue is whether a magazine named "Ethanos" 
was KGB-aonnected? 

A Right . 

Q And referring to SH230, the next page, Mr. Radai 
told you that Mr. Livingston and also Mr. North were trying 
to help him determine whether or not that was a true 
allegation? 

A Let me check what I wrote there. ' 
(A pause. ) 
Yes; right. That's what I wrote. 

Q Did you ever discuss the concept of a worldwide 
risk analysis organization with anybody other than Mr. Radai? 

A There's another folder in there. 1 discussed it 
one time with a Mr. Navoth — N-a-v-o-t-h, I believe. 

Q Where's he from? 

A He's from Israel. 

Q And Radai is also from Israel? 

A Yes . 

Q What is the time period of these discussions? 

A I don't know, really. You know, we're jumping 



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around a lot here, and you're asking me some questions in 
1976, and then we're up into the '80s here, and I can't be 
more specific. It's in the file. 

Q Does this Radai file help you at all? 

A Yes. I need the other one. Okay. The first 
contact with Mr. Radai with my office was in February of 
'86. I did not talk to him in February of '86, but — 

Q And so the conversations you're talking about with 
Radai, in any event, were in '86? 

A Right . 

Q What is that the international risk analysis firm 
would engage in, exactly? 

A Just risk analysis, what is the threat and the 

business environment, and so forth. 

Radai was peurticularly interested in doing work 

for airlines, helping them with training progreuns to deal 

with international terrorism. Looking back on this Livingston, 

that was not discussed with me, as I look at this memo. 

Livingston was discussed with an associate of mine ' 

in my office. That was the first contact. i 

i 
Q This is Neil Livingston; is it? 

A I don't know who it is. It just says Mr. Livingston 



UNCUSSIBED 



314 



314 



UNcmssinEo 



was a political analysis firm. 

Q Do you know Neil Livingston? 

A No, I don't. 

Q Do you know Doug Schlachter? 

A Yes. 

Q How do you know him? 

A He was an employee of Ed Wilson on Wilson's farm. 

Q And you met him out there on the farm? 

A Right. 

Q How often did you go to Wilson's faror? 

A I'd say I'd occasionally go down there for a 
Sunday picnic. I'd drive down with my family, and I'd bring 
some wine and he provided the hamburgers. We'd have a 
cookout. 

Q Did your daughter have a horse that was there? 

A Yes. 

Q More than one? 

A Ho, just one. I bought a pony from the Wilson 
family. 

Q And this is the same pony. 

A This is the same horse. Eventually, it grew up 
to be a horse. I bought it as a foal. 



WSM^^ 



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UNCUtSSIFIED 



315 



Q Not a pony? 

A No. I bought it as a small horse. Not a pony. 
The term may not be correct. I bought it when it was a 
small — 

Q Ponies don't grow up to be horses. 

A All right. This was, I guess, some sort of a 
offbreed quarter horse or something. 

Q How much did you pay for it? 

A I don't know. Probably some munificient sum like 
$150 or $200. I'm not sure what the exact amount was. 

Q Moving through time with Schlachter, what dealings 
did you have with him? 

A I basically didn't have any dealings with him. He 
was around on some occasions. He and his wife would join 
in on these Sunday picnics. They lived on the property. 

Q Did you ever have any business dealings with him 
at all? 

A No. I was not involved with him in any business 
taHnaactions . 

Q Never received money from him or gave money to 
him under any circumstances? 

A Never gave him money, never received any money 



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from them. 

Q Do you know Bobby Barnes? 

A No. 

Q Never met him? 

A No, I never met him. 

Q When you were at the agency, did you have any 
direct connection with Nicaragua? 

A Well, no. I mean, I don't know. You have to 
phrase that question somehow differently because that doesn't 
generically mean anything to me. In other words, what are 
you trying to ask? Because did I have any contact with 
Nicaragua, what does that mean? I mean, I read traffic 
about Nicaragua. 

Q Let's start with, were you ever there? 

A No, I don't ever recall being in Nicaragua. 

Q Did you have any meetings with Somoza? 

A No. Never met Somoza. 

Q Did you discuss with Mr. Clines or Mr. Wilson any 
mgilting that he had with Somoza? 

A No, I did not. I have no recollection of that. | 

But that's again like one of these other questions that you j 

I 
asked me during the course of this investigation. Other | 



UNttiSSm 



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wwn 



317 



investigators have asked me, you know, so I know or at least 
I assume there has to have been some contact between them. 

Q But like any other instances, you didn't know about 
any contact that they had with Somoza or trips to Nicaragua? 

A No, I was not aware of it. 

Q Or any of what turned out to be allegations before 
you were asked about it in an investigative context? 

A Right. I was not aware of it. 

Q Did any business that you have been associated 
with receive money through a corporation in Texas? 

A Any corporation in Texas? 

MR. MC KAY: Can you give us the name of it? 
THE WITNESS: If I'm not mistaken, API Distributors 
was originally a Texas corporation licensed — I think it 
was licensed to do business in Virginia. 
BY MR. HOLMES: 

Q And did it remain incorporated in Texas? 

A I don't remember . This is what I recall. That 
may have been a Texas corporation, licensed to do business 
in — I can't remember if it was Texas or Delaware. That's ' 
the only one that I can think of. 

Q Was there a Delaware corporation that was 



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318 



associated with you in some way? 

A Let's see. RAI is a Delaware corporation. 

Q RAI is a Delaware corporation? 

A Yes. TGS is a Delaware corporation, as I recall, 
doing business in Virginia. 

Q Did Hakim have anything to do with EATSCO that 
you're aware of? 

A Was he ever present at their offices, that you're 
aware of? 

A No. I can't say that I ever say him there. My 
own trips out there were very rare, and therefore, not 
necessarily a good indicator. I never recall seeing him 
there. 

Q I notice in your financial records a line of 
credit. 

A Yes. 

Q Do you know what a back-to-back loan is? 

A Yes, generally. 

Q Has any corporation or any of the businesses 

we listed out this morning ever had a back-to-back loan that 

you're aware of? I 

t 

MR. MC KAY: I don't understand what that has to ■ 



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e 



319 



do with his line of credit. Are you tying the two together? 

MR. HOLMES: I'm just telling him why I'm asking 
him the question. 

MR. MC KAY: So that was some preface to 
back-tb-back loans? 

THE WITNESS: No, I can't recall any. The line 
of credit I have is from a bank for TGS International, and 
that's simply a line of credit obtained from the bank that's 
periodically renewed. 

BY MR. HOLMES: 
Q Turning then to that specific line of credit, 
that line of credit is in no way conditioned on or related 
to any deposit that may have been placed in another financial 
institution anywhere in the world? 
A No. 

Q I hesitate to ask you some of these questions, 
because I probably asked you before when you were not under 
oath. I have to ask again. 

You are aware of a bank called Nugan-Hand Bank? 
A Yes, aware of it. I'm aware of the existence of 
the bank called Nugen-Hand. ! 

Q Ever been in Australia? 



IINClSSS!fi[i! 



320 




320 



A Yes, I have been in Australia. 

Q When? 

A When I was an employee of the U.S. government. 

Q What time frame? 

A I have no idea. Probably somewhere in the period 
1973 to 1976. Somewhere in there. That's the best I can. 

MR. MC KAY: I'm going to object to the whole 
line of questioning about the Nugan-Hand Bank. I can't 
conceive of the Nugan-Hand Bank bearing upon the committee's 
mandate. Whatever went on, Mr. Sheehan apparently is in 
the Nugan-Hand Bank. For whatever reason, I don't know. 
He's made a great flap about it. I can't imagine why this 
committee's interested in Nugan-Hand Bank. 

MR. HOLMES: Well, it's connection is that Mr. Clines 
and Mr. Secord are connected with these allegations, and 
they are principals in our investigation, and therefore, 
their associations previous are of interest to us. But I'm 
sure Mr. Shackley can, in some way, put this to rest. 

MR. MC KAY: Well, let's move through it rather i 
than talking. I just don't see what in the world it has 
to do with what we're spending time with. 



^m.mm 



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BY MR. HOLMES: 

Q Have you ever been to any branch of the Nugan-Hand 
Bank? 

A No, I haven't been to any branch. I haven't 
been to the bank. 

Q Ever have a deposit there? 

A No, I have not. 

Q Ever had any control, whatsoever, over any funds 
that were on deposit withthe Nugan-Hand Bank? 

A No, I have not. 

Q Do you know anybody who has? 

A I think I told you once before, the only fellow 
that I, know that was connected with the Nugan-Hand Bank was 
an employee of theirs. Hand himself, and a fellow by the 
name of Houghton, who worked for them. 

Q How did . know these individuals? 

A I k'lew Hand from Laos. He was in Laos when I 
waA in Laos. 

Q And Mr . Houghton? 

A Houghton I met here in Washington after I retired.; 

Q And you say he was an employee of the bank? 

A That was my understanding that he worked for the I 



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UNCkASSlFO 



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bank, primarily specializing in the Middle East. I think it 
was Saudi Arabia. 

Q And your connection with Houghton was after his 
connection with the bank was over? 

A After his connection with the bank was over? 

Q Was he still working for the bank when you met 
him? I may have misinterpreted the way you phrased that. 

A All I remember is the one time he had something 
to do with the bank, and he was responsible, sort of, for 
Saudi Arabia. 

Q Have you ever had any business dealings with either 
Hand or Houghton of any kind? 

A Yes. I met Hand after I retired, on the basis of 
a telephone call from Bill Colby, who said Hand was in the 
Washington area, had asked about me, would I have any 
objections, in terms of meeting Hand. I met Hand here in 
Washington . 

Q And I gather from your answer that was at least 
in contemplation of some kind of business relationship? 

A No. We had a couple of meetings. I don't 
remember whether it was two or three, over the period that 
I had contact with him after I had retired. He put me in 



^mmm 



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mumB 



323 



touch with a friend of his in Taipei, who did some research 
for me on trying to get valves and flanges manufactured in 
Taiwan. Nothing ever came of that, because of the way the 
Taiwanese people wanted to structure the deal. It was just 
not a doable deal. 

Q So the reason -- the reason you answered yes to 
the question of business dealings with him was that there 
was a business type of meeting? 

A Yes . 

Q No actual money transferred? 

A No actual money transferred. There was a 
discussion of whether he could help me or whether I could 
help him. The only thing that was ever followed up, had 
my office correspond with the guy in Taiwan about valves 
and flanges and nothing ceune of that. 

Q Other than those meetings, you never had any 
business meetings with either Hand or Houghton? 

A With Houghton, I think at the time I knew him, I 
may have seen him here in the Washington area two or three 
times also. On one or two occasions, I had a long distance 
phone call from him, where he was chasing, I think it was 
aviation gas, J. P. 4. And I never did put any kind of 



WimWi 



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deal together. 

Q Which brings us rapidly back to Ghorbanifar in 
November of '84' right? You met with Ghorbanifar in 
November, approximately the 20th, and you had been in Europe 
a total of about three days during that trip; is that right? 

A The best I can remember it is, that it was the 
19th through the 21st. That's my memor of the thing, the 
19th through 21 November of 1984. 

Q I want to know the names of every single person 
that you met or talked to during those three days. 

A Well, let's see. I left here with| 

Q All right. ^^^^^^V-^ 

A I talked with^^^^^^^l Got to Hamburg and met 
The next morning, as I recall, I met 
Ghorbanifar and talked with^^^^^f I'm trying to walk 
through this chronologically. Oh, I had dinner with a 
German friend of mine that evening. 

Q Who ia that? 

A His name i 

Q His first neuae? 

A 

Q And did that have anything to do with business? 



mmmw 



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\immm 



325 




A No. Let's see. I had dinner with him and his wife, 
Q Anybody else? 

A I'm trying to think. Well, that evening, when I 
to^^H^^no, askec^^^^Hto check for 

me on the possibility of who from the Iranians might be in 
Hamburg. 

Q How would he be able to check that? 
A 

Q A government type? 
A Yes. ^^^^H government . 
Q Did he ever tell you who? 

A No. He wasn't able to run down anybody that was 
any kind of concern. 

Q You were trying to ask him if the Iranian 
government was shadowing you? 

A No. I din't know when we arrived who we were going 
to me, so I asked him to try to find out for me who was 
going to be in the area, could he check, was there any 
recaption planned, and so forth, with a delegation, to find 
out that kind of data for me. I was trying to figure out 
who these people were going to be. 

Q This was before you met Ghorbanifar? ■ 



UNtAS^PIED 



326 



»AWtI) 



326 



A Yes. Or maybe it was — yes, I met him the next 
morning. I think I talked witl^^^^^^Kn the phone when 
we first got there on the 19th. 

Q And then he reported back to you later on that he 
was unable to determine anything? 

A Yes. Basically, there wasn't anybody of any 
particular interest there. 

Q And when did he report that back to you? 

A Probably either the late evening of the 19th or 
the morning of the 20th. 

Q So he got right on the phone then? 

A Yes. I talked with him on the phone, as I recall. 

Q And he must have gotten right on the phone. 

A I don't know how he did it. 

Q Was there anybody else that you met during these 
three days? 

A No. I flew from there, as I recall, to London 
and then from London back to the states. As I flew Hamburg 
to IdOndon and thea London to the states. 

Q And you didn't meet anybody in London? 

A I don't have any recollection of that. I'd have 
to look at my travel, and so forth, but I don't have any 



UNimiFIED 



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m\mm 



327 



recollection at this point in time. I think I came straight 
back. That's what I recall. 

Q All right. Do you know a Misha Popov? 

A No , I do not . 

Q Do you know a Harry Rastatter? 

A Yes. I think I have talked to a fellow — wait 
a minute. Harry Rastatter, the name is familiar. It has 
come up in some context. If you refresh my memory a bit 
as to who he is. 

Q He was an associate of Hakim's through the late 
'70s, early '80s in California and elsewhere. 

A The name is familiar to me. I can't place it in 
any context at this point in time. I can't sharpen it up 
any more. There are two or three people in that company 
that we dealt with. You asked me the other day about one 
of them, who was the guy that worked on some radar thing, 
and I remember him vaguely. His name is familiar, and I 
know it csune up in other questioning of me, but I can't 
place it at this point in time. 

Q I don't recall whether you have told me that I 
you did or didn't see any part of the hearings. 

Did you see any part of the hearings on this? 



muMB 



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wmmm 



328 



A I watched some-. of it, but sort of an in and out 
kind of thing. You know, stop and look at it. it was on 
in my office. 

Q If I refer to ARIA, a ship that was purchased 
through Denmark by North, Secord, Hakim, et al., would you 
know what I'm talking about? 

A Yes, I know there was discussion of the purchase 
of a ship. 

Q Had you ever, through any other source, heard - 
about the ship prior to the public disclosure? 

A I have no recollection of anything about a ship. 

Q And there was also reference in the hearings to 
some radios that were supplied tol 

A I have no recollection of that ever coming up 
in any conversation I have been involved in. 

Q You never discussed supplying any radios to any 
[nation with anybody prior to the hearings? 

A No, I have no — I recall no radio. 

Q Would it be fair to say that after the Turner 
years, that the CIA was engaged in a period of rebuilding 
and revitalizing its covert operation capabilities? 

A After the Turner years? 




329 



mtitmw 



329 



Q Yes. 

A I have no way of knowing. 

Q You don't mean to say that you just haven't talked 

to anybody in the CIA since you retired? 

A No. But that's not the kind of thing you would 

talk to him about. For instance, I have been at meetings 

who 
where people/were still in the CIA were present. I may have 

said hello to them, John or Bill or whatever it is, and 

may have discussed the topics that were being kicked around 

at the symposium or whatever, but I certainly would not have 

talked to them about covert action capability and what they 

were doing. 

Q Have you discussed with anybody the general 

proposition of a need for a covert or paramilitary action? 

MR. MC KAY: In what context? Is this since '79? 

MR, HOLMES: Since '79. 

MR. MC KAY: In terms of CIA activity? 

MR. HOLMES: No. As a general proposition, in or 
out of the CIA. 

THE WITNESS: You're going to have to be more 
precise. You know that I've written a book on guerrilla 
warfare. You know, I've lectured at universities, and so 




330 



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forth, but I don't — I taught a course at Georgetown, so 
yes, I have talked about the reorganization of the 
intelligence community, but that's something I have also 
written about in my book. 

I have written articles on various and sundry 
things, but I don't discuss those with the people in CIA? 
I lectured at the Air War College. 
BY MR. HOLMES: 

Q So am I understanding correctly that you, since 
'79, have taken a strictly intellectual role in that process? 

A That's right. 

Q In other words, as an academic advocate perhaps, 
but in no way connected with any operations? 

A I have not been connected with any CIA operations 
since I retired. 

Q Have you been connected with any operation that 
could be classified as a covert* or paramilitary, even outside 
of the CIA? 

A No, I have not. 

i 
Q Do you know a Norm Callahan? 

A No. That name doesn't ring any bells with me. 1 

I 
1 

Q Have you ever met a Heine Aderholt — j 



UN^SSIFIED 



331 



UlUtSSIFIED 



331 



A-d-e-r-h-o-l-t? Is that the correct spelling? 

A This Callahan? What is his first name, Norman? 

Q Norm, yes. 

A No, I don't recognize Norman Callahan. 




Q Are you feimiliar with Mr. Aderholt? 

A I met Aderholt at some point in Southeast Asia 
between 1966 and 1972. 

Q Have you had any association with him. since then? 

A I think I may have seen him once since I retired, 
in some social event here in Washington. That's the only 
thing I can recall . 

Q No business association? 

A No. 

Q Have you ever discussed with him covert operations 
or the general need for them? 

A No. I don't recall. I don't recall discussing 

it with him, but he and I were at a symposium, I think, and 

i 
if you call that a discussion with the people talking from 

the floor, I don't know. ! 

i 
Q I wouldn't classify it as that. | 




332 



Mmm 



332 



A But he and I were at the National War College 
at some symposium. 

Q Do you know of a person named Svendsen - 
S-v-e-n-d-s-e-n? 
A No. 

A former Air Force officer? 
NO. I don't have any memory of a Svendsen. 
Do you know of a company named All Source? 
NO. that doesn't tell me anything, i-m not 
familiar with that company. All Source. 

MR. MC KAY: I don't think that's even on the 
sheet. 

Off the record. 

(Discussion off the record.) 

BY MR. HOLMES: 




Q Do you have any connection whatsoever with any 
funds were derived or destined for^^^^H^^H 
since your retirement from the CIA? 



mm 



333 



maSSIflEO 



333 



A No. 

Q Do you know an individual named Max Hugel? 

A No, I don't personally know him. 

Q Do you know of him? 

A I know of him from reading about him in the papers . 

Q And that's your only connection? 

A That's my only connection. 

Q You said, the last time we were together, that 
you knew Richard Allen? 

A Yes. 

Q Have you ever discussed — 

A I think I said that, but I do know Richard Allen. 

Q Have you ever discussed with him the need or a 
need for a covert operations capability? 

A No. And certainly not in any one-on-one 
conversations. He may have been in some symposium, again, 
that I have been at. 

Q Have you ever been to Panama? 

A When I was in government, yes, 1 think I transited 
Panama a couple of times. 




Do you know the name Steven Samos, as a person 



wMim 



334 



334 



mamm 



in Panama? 

A No. That's not a name that registers with me. 
Q It's S-a-m-o-s. 
A No. 




Q Are you familiar with the name Ramon Milian 
Rodriguez? 

A No, I'm not, but I think I read something about 
him in the papers recently. 

Q Prior to your reading about him in the papers, you 
had not heard about him? 

A No, that's not a name that I'm familiar with. 

Q Just so we're on the same wavelength, what was it 
that caught your attention about this individual in the 
newspaper? 

A I think I read somewhere that he is in jail, that 

h«'a a drug smuggler or something. That's what I remember 

reading about him. 

Q I think we must be talking about the same 

I 
individual. This one was a money launderer, to be precise. 



for drug smugglers. 



\mmm 



335 



NSm^tED 



335 



A It's probably the same individual. That's the 
extent of my memory from what I read is different from 
what you're telli: 




imOBEB 



336 






CtRSStBEO 



336 




Q Since your retirement from the CIA, have you . 
become aware of any government entity using a commercial 
laundering service? 

A No. I'm not aware of any. 

Q How about any other entity? Have you any knowledge 
of any such service even existing? Let's start with that 
proposition. 

A You mean money being transferred or converted 
sanehow? 

Q Right. 

A No, I'm not, other than straight commercial 
bank transactions. No, I'm not. 

Q Now, this Milian Rodriguez claims to have made 
payments to the Watergate burglars with government funds. 



mmmi 



337 



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337 



Can you confirm or deny that that occurred? 
A I have no way of knowing. 
Q You just don't know? 

A I just don't know. I have no way of knowing. 
Q Now, you know an individual named Benson; is 
that correct? 

A What's the name? 

Q Benson. 

A Which Benson? 

Q I don't know which Benson. 




Q And did he furnish you with any information after 
you left the CIA? 

A No. He came up, I think, one time when I talked 
with him, when I was checking something about an overt 



wMsm 



338 



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338 



teference to the Soviet constitution, when I was writing my 
book, and I think I talked to him about my book, and I think 
in some library or one of the libraries who looked up 
something for me on the Soviet constitution. An exact 
quoting out of the Soviet constitution. 

Q That's the only information you received from 
him since you retired? 

A Right. Well, he works with me now 
If we're talking about the same person. 

Q He works with you now? 

A Yes. A fellow by the name of Benson Grayson. 
He's an economist researcher, and he's working for me, if 
that's who we're talking about. 

Q Your papers identify Barbara Rozzotti as a primary 
counsel to your firms. 

A Yes. 

Q This is the saune woman who was also Hakim's 
lawyer? 

A I don't have any knowledge of her being Hakim's 
lawyer. 

Q Is she also Clines' lawyer? 

A Let's eee. Yes. At one time, she did represent 



m^m 



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339 



Clines. 

Q And that was in connection with the recovery of 
the loan from Wilson? 

A I don't know the totality of what she did for 
him, but I know she represented hin. 

Q Did you discuss her with Clines? 

A Discuss what? 

Q Did you discuss the underlying acts on which 
Barbara Rozzoti was representing Clines, with Clines? 

A No, not once he got off and was off into — she was 
the lawyer for — she worked on helping me get API properly 
registered and, you know, that kind of thing, and in later 
years, I know that she represented Clines. What was the 
nature of the representation, I don't know. 

Q Did you ever come into possession of furniture 
that had once been used by Mr. Wilson? 

A Not that I know of. but I think in the API offices, 
th*re was some furniture there that Mr. Clines had, and I 
have heard stories that some of that, at one time, belonged 
to Wilson. I 

Q From whom did you hear the story? i 

A I don't where I heard those stories, but that's I 



UNOli\$!^F![D 



340 



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340 



what I heard. 

Q Did you ever ask Mr. Clines, "where did you get 
the furniture"? 

A NO. 

Q Did those stories include the story that the 
furniture had once belonged to Task Force 157? 

A No, I had not heard that. 

Q So the story you heara was that it was Wilson's 
personal furniture? 

A Right. It had, at some point in time, been in 
some facility that Wilson had had, and Clines had the 
furniture. That's all I can tell you. 

Q Have you or has any business you're associated 
with ever received funds from Mr. Clines at the EATSCO 
office? 

A Any funds ever received from EATSCO were, as far 
as I know, collected for the papers that we did for them. 
I don't know how I got those. I assume those came in the 
mail, but they were very slow paying. Maybe I did go out 
to their office. I don't really know. I think I got paid 
by check and all of those came in the mail. 

Q None of that money was in cash? 



UNmsiriED 



341 



^mmm 



341 



A No. 

Q And it was not in excess of the total of $8000? 

A That's my recollection that the total was $8000. 

Q Did you ever know Frank Terpil? 

A No. 

Q Did you ever discuss with Mr. Clines his 
relationship with Ghaddafi? 

A His relationship with Ghaddafi? Clines' 
relationship with Ghaddafi? 

Q Yes. 

A No. 

Q Did you ever discuss Wilson's relationship with 
Ghaddafi with emybody, including Clines, prior to the 
investigation? 

A No. This has all been covered ad nauseeun in all 
these investigations, and so forth, so I know that Wilson 
was doing work for Ghaddafi. 

MR. MC KAY: He's asking you, prior to the time 
of these investigations. 

THE WITNESS: No. 

MR. HOLMES: I'm aware this is something you know 
ever since the investigation. 



wmm 



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uiffitiesM 



342 



BY MR. HOLMES: 

Q Does Clines have a daughter? 

A He's got a couple of daughters. 

Q Either one of them ever work for Hakim? 

A Not that I know of . 

Q Do you know a Jerry Daniels? 

A I know a Jerry Daniels. 

Q How do you know him? 

A He was in Laos. 

Q When you were there? 

A Yes. 

Q What has your relationship been with him since 
then? 

A He ' s dead . 

Q When did he die? 

A I don't remember when he died. He died after I 
retired, but that's as close as I can fix it for you. 

Q Between Laos and the time that he died, did you 
have any contacts with him? 

A I don't ever recall seeing him after I left 
the government. 

(Recess. ) 



«tfSSW 



343 



IMA^FIED 



343 



BY MR. HOLMES: 

Q We were talking about Jerry Daniels, and I just 
asked you if, between Laos and the tine of his death, you 
had any contact with him, 

A I don't recall between my retirement and his death. 

Q Is there a Four Seasons restaurant in the 
Washington, D.C. area? 

A Yes . 

Q Have you ever been there? 

A Yes. 

Q Ever been there with Secord? 

A I have no memory of going there with Secord . 

Q Have you ever been there with Hakim? 

A Yes, I think I have. 

Q And how and when did that occur? 

A A niimber of years ago. I can't remember when 
Hakim stayed there, and I think I met him, and either had 
breakfast or lunch with him at the hotel. 

Q Approximately when was this? 

A I have no idea. 

Q Was this after your ' 76 meetings with him? 

A No. This was after I retired, but I don't know 



UNIUSetHED 



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when that was. 

Q Could Secord have been there with you and Hakim 
on that occasion? 

A I have no memory of Secord being there. 

Q Have you ever heard of an air freight company 
named Trans World? 

A No, I haven't. I think it's one of those listed 
in your subpoena document. 
That's my only — 

Q Do ydu know an Ed Dearborn? 

A Ed Dearborn? 

There used to be — I don't know whether this is 
the same fellow. 




Q The same individual. 

A All right. So I know hin 

I don't ever recall seeing him since I 

retired . 

Q Do you know a Gene Vlheaton or Carl Jenkins? 

I 
A Carl Jenkins, I know. And what is the other 

guy's name? 

Q Gene Wheaton — W-h-e-a-t-o-n. 



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ranember his first name. I'm not sure it's the same guy, 



Q Let's assume it's not. 

A Okay. That's the only Wheaton that I can remember. 

Q And Carl Jenkins? 

A Carl Jenkins, 

Q Have you had any contact with him since then? 

A I haven't seen him in a number of years. He- 
occupied some office space in Clines' companies at the time 
that I moved out of there. He was beginning to occupy some 
space . 

Q And the nature of his business at that point in 
time? 

A 

Q 
then? 

A 

Q 

A 



I have no idea. 

You have never done any business with him since 



No. 



No business-related discussions? 

I didn't do any business with him then. You 
say I haven't done any business with him since. I mean, I 
haven't done any business with himj_.^Hl8t know he was 



business with tiim. ^ius 

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346 



u 



scheduled to move in, as I moved out. 

Q I understand. All right. 

Have you heard of the Southern Air Transport 
since your retirement, other than these investigations? 

A No, not other than these investigations. 

Q The name Southern Air Transport was new to you 
when it hit the newspapers as connected with the Hasenfus 
airplane? 

A You're going to have to clarify that. Southern 
Air Transport, you know, you asked me some question about 
it, and I told you you ought to go talk to the Agency about 
Southern Air Transport. 

Q All right. I'm going to carve out a piece of 
time. 

A So you're going to have to be more specific. 
Otherwise, I can't help yovi. 

Q You retired in '79? 

A Right . 

Q From the date of your retirement — that's the 
beginning date — Hasenfus was shot down October 5, '86. 
That will be the ending date. Did you hear about Southern 
Air Transport between the beginning and ending date? 



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A No. I don't recall Southern Air Transport ever 
coming up. 

Q Do you know an individual neuned Bob Lilac? 

A Yes. I know Bob Lilac. 

Q How do you know him? 

A He was an Air Force officer working in the 
Pentagon, and as I recall, I met him here in Washington 
after ■! retired. 

Q And in what context? 

A I think I met him when I was helping Bander Bin 
Sultan, when he was working on his master's program. 

Q And you were helping Prince Bander in what 
program? 

A He was getting a master's degree from Johns 
Hopkins _Jfrie«^niversity here in Washington. 

Q What help were you to him in that program? 

A I was peurt of the lecturing staff for his master's 
program. 

Q Would you explain to me what that is? 

A Well, a program was laid out for him by a group 
of people, so he could qualify for a master's program. 
I was one of the instructor — lecturers in that particcular 



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program. 

Q And they called it a lecturer, even though it's 
more like a tutor? 

A Yes. That's my recollection of what they called 
it, was a lecturer. 

Q The function that you performed was one-on-one 
tutoring with the Prince? 

A Yes, basically, one-on-one. Sometimes there would 
be one or two other people there. 

Q And this was what period of time? 

A I retired in '79. I don't know. It could have 
been '79- '80, somewhere in that period. 

Q And the subject of your lecturing? 

A Was such things as national policy formulation? 

Q And that was arranged through Mr . Lilac? 

A No. That's how I met him. Lilac was in and 

out of Bander's quarters at that time, and if I'm not 

mistaken. Lilac was the Saudi Desk Officer at the Pentagon 

at the time . 

i 

Q Was he also a personal friend of the Prince? 

A I couldn't characterize that. He was in and out 

i 
there all the time. That's all I can tell you. What their ; 



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relationship, I don't know. 

Q We touched on a project with Mr. Neidhart — 
N-e-i-d-h-a-r-t — at Hakim's company, Stanford Technology. 

A Yes. 

Q The nature of the particular project was helicopter 
transportable radar; is that correct? 

A No . You were trying to — 

Q I asked you once before. 

A You tried to get me into this helicopter radar 
business, and I was telling you that, no, ray recollection 
was radar for Trinidad and Tobago, and it was coastal 
surveillance type of radar. 

Q Would it be suitable for installation in a van, 
for example? 

In other words, was it mobile? 

A I don't remember. All I know is it was coastal 
surveillance radar. 

Q Oo you know whether any such system or similar 
system had ever been developed by the CIA or any contractor 
for CIA? 

MR. MC KAY: What system? j 

MR. HOLMES: The system he was discussing with i 

i 



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Mr. — 



THE WITNESS: No, I'm not aware of any. 
BY MR. HOLMES: 
Q You're not aware whether there was or wasn't? 
A Yes. I mean, that's normally not the kind of 
thing that would have been developed by CIA. 

Q Have you had any dealings with Jamaica since you 
retired? 

A No. Dealings? No. I had some inquiries that I 
made of these things, but I haven't had any dealings with 
Jeimaica. 

Q What were the inquiries about? 
A I was trying to find whether the Nigerian oil 
minister was visiting Jamaica, and he was supposed to be 
in Jamaica. 

Q You never had any business dealings? 
A No , nothing . 

MR. MC KAY: Off the record. 
(Discussion off the record.) 
BY MR. HOLMES: 
Q Since you retired, have you met former National 
Security Adviser Robert McFarlane? 



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A No. 

Q Have you met Elliott Abrams? 
A No. 

Q Do you know whether they are members of an 
organization known as The Circle? Just yes or no. 

A I don't know that they are members of that 
organization. 

Q Have you ever heard of an individual named 
Richard Brenneke — B-r-e-n-n-e-k-e? 

A No, that's not a name I'm familiar with. 
Q He's an Oregon businessman. 
A No, that doesn't ring any bells. 
Q I'd like you to tell me what your history of 
association has been with Oliver North. 
A Very simple. 

Q It may be a very short story. 

A It is very short. I ran into him once, as I told 
you, in the office of a Washington attorney. 

Q Now, that's for personal meetings; right? 
A Right. I 

Q That ' 8 your history with North on personal meetings^ 
A Yes. 



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Q Have you ever referred anybody to Oliver North for 
any operational purposes? 

A No, not that I can recall. You know that one file 
that we're looking at, somebody said they were already in 
touch with North, and I said that's probably a good guy to be 
in touch with. 

Q And you have never spoken with him on a personal 
meeting, other than that one time? 
A That's right. 

Q And I ask you the same questions ror Mr . Poindexter 
A I did meet Poindexter once sometime in the fall 
of 1985. 

Q What were the circumstances of that meeting? 
THE WITNESS : Can we step out for a minute? 
MR. HOLMES: Sure. 
(Recess. ) 

MR. HOLMES: Back on the record. 
THE WITNESS: Would you mind repeating the 
question? 

BY MR. HOLMES: 
Q I asked you the circumstances of your meeting with 



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Vice Admiral Poindexter. 

A I took an Italian citizen over to the White House 
to meet him. After the introductions were made, I left. 

Q This was in the fall of '85? 

A Yes. 

Q You have never spoken to him before or after? 

A No, I have not spoken to him before or after that. 

Q And how was it that you took this particular 
citizen to see him? 

A This fellow was looking to talk with either 
Poindexter or McFarlane, and I arranged for him to meet 
Poindexter. 

Q For what purpose? 

A To discuss a Vaticem issue. 

Q I gather , from the f ac t that you referred to your 
lawyer, that this has some national sensitivity? 

A Yes. It's a sensitive thing, and it is Vatican 
business and doesn't have anything to do with this. 

MR. HOLMES: I'm going to go through these files 
that you provided us and simply stop at points where 
questions come up. '■ 

As we go through, I'll identify the page number 



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that we're referring to, and in each case, the number will 
begin with an "S-H." I'll just say the numerical designation 
that follows. 

BY MR. HOLMES: 

Q I'm looking at page 163, the Michael Ledeen file. 
I gather from this and other documents in this file,. that 
you have been discussing deals relating to oil with 
Mr. Ledeen for a number of years; is that accurate? 

A Yes. Either I or somebody in my office, primarily 
Mr. Jameson, one or the other of us. 

Q And would it be fair that you and Ledeen were 
partners in various ventures, hoping to obtain oil fields? 

A No. That;s not — 

Q Why is Mr . Ledeen receiving copies of these 
various proposals then? 

A Can I see that one? I think, as I told you the 
other day — okay, this looks like, if a deal had come out 
of this, there would have been a fee for the participants. 
But it's not a structured kind of thing, where you would 
call it a partnership. In other words, somebody helped you 
put together a particular oil transaction, you end up with i 
the equivalent of a finder's fee. Had one of those gone i 



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through, that's what would have occurred, but the reason 
I wanted to look at this is because Mr. Jameson and Mr. Ledeen 
did do some business separate from me. I wasn't interested 
in pursuing it. I think I told you that I didn't think it 
had any chance of success, and I wasn't interested in 
pursuing it. They decided to pursue it. They did and nothing 
ever came of it. 

Q Although the word "partnership" sounds a little 
strong to you, maybe "joint ventures" and certain discussions, 
how would you characterize that sort of networking daisy 
chain? 

A I would just say it ' s a finder's fee type of 
arrangement. Somebody helps you put a deal together, and 
depending on what your exact role is, if the deal goes 
through, they would get a percentage of that particular 
transaction. 

Q Did you discuss in the early stages of a particular 
deal what percentage the finder's fee might be? 

A No. 

Q Was it understood to be a flat rate then? ' 

A No. It was understood that if we got beyond I 
the point of these basic inquiries, my experience has been | 



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that there are so many of these, and 99 percent of them 
don't go anywhere, that it's ridiculous to structure anything. 

In other words, if you simply send off a 
telex to make an inquiry and nothing happens, you don't do 
anything. And that is what happened to most of those. 

As a matter of fact, that's what happened to all 
of them. 

Q You're sort of relying on each other's good faith, 
that if you strike oil, so to speak, you will be fair to 
each other in parceling out your commission? 

A Right . 

Q I notice that a number of these deals involve 
Portugal in one way or another, and I use that observation 
to ask you whether you ever discussed Portuguese officials 
or made introductions or referrals between Portuguese 
officials and Tom Clines . 

A No. 

Q Looking now at number 166 — page 166 , in the 
SUM file ~ this particular one happens to be dated 21 
November 1984, the day on which we know you were in Europe, | 
and this is from Jameson to somebody in Portugal on behalf of 
yourself and Mr. Ledeen; is that correct? 




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A Let me take a look. 
(A pause.) 

Yes, that's what it says. It's to a company to 
look at an oil transaction. It would be a trade of commodities 
for oil. 

Q This particular oil is Iranian oil? 

A Yes. 

Q And you're talking to 2 million barrels at 
$22 a barrel? 

A Yes. 

Q Does the fact that Ledeen's name appears on this 
document indicate that he is dealing with you on the deal as 
a co-ccxnmission? 

A I would say that, based on that, that he and 
Jameson had a conversation — let me see if there's anything 
else in there — that they had a conversation, and on the 
basis of that, one or the other decided to — this makes 
reference to another message. 

Without going back into this thing, it makes 
reference to Mr. Miranda. Mr. Miranda was the head of the j 
Portuguese Oil Company, and I don't know what prompted this 
particular one, but obviously, Miranda was asking that [ 



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Jameson go back to this particular guy and spell out the 
deal. 

Q All right. Now I gather that Jameson is answering 
for you and Ledeen, since you're not there. 

A Yes. He's amswering in a generic sense, yes. 

Q Was Ledeen also there? 

A That I don't know. 

Q And on page 173, we have a very similar document, 
this one referring to Saudi light up to 50,000 barrels per 
day at $27.85 a barrel. 

Is this another feeler type? 

A Yes. Let me just see it. Yes, that's another one. 
I would say, on the basis of that, that's something that 
Ledeen came up with. Sent it to Miranda, the fellow at the 
Portuguese Oil Company. 

Q So would it be accurate, in the vernacular, to say 
that Ledeen is sort of bird-dogging the deals for you? 

A No, he wasn't bird-dogging for me. If he found a 

deal and he thought I could help out, or I was the best one 

with facility for helping out, he would come to me. That 

t 
doesn't mean he wasn't dealing with two or three other 

people at the same time. ! 



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Q Page 176. Another Iranian crude deal. This one 

is 300,000 barrels per day for a year. That's a sizable 

chunk of change, isn't it? 

A It would be, if it went through. 

Q My little math that I did when I read that indicates 

we're talking about $2,682,750,000. 

A Yes. But very few of those go through. Yes, that 

looks like another one of these deals that he has picked up 

and had come in and again went to Miranda. Probably one of 

the reasons for that is, he introduced me to this fellow 

Miranda, so he thought that was something that Portugal would 

like in the oil deal and probably came to me. 

Q What type of percentage are you talking about as 

a finder's fee on a deal like that? 

MR. MC KAY: None of them ever came to fruition. 

MR. HOLMES: I know. 

BY MR. HOLMES: 

Q What is the industry standard? 

A There is no industry standard. In other words, 

at that time, when it was $20-scaie-odd a barrel, probably } 

i 
would have been lucky, if you could have gotten, say, 2 or i 

3 cents. ■ 



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Q On the dollar? 
A No, on the barrel. 

Q On page 179, there's a reference to an ISI, and 
in parentheses, "President Michael Ledeen has located a gas 
supply . " 

What is "ISI"? 
A I have no idea. 

Okay. That was essentially a deal that Jameson 
and Ledeen worked on, which basically, after I got into it, 
T. didn't think there was anything in it and walked away from 
it. They pursued it for a while and got a lot of heartburn 
from it. 

Q This is the deal you were talking eUsout the other 
day that Jameson and Ledeen did separately? 
A Right. 

MR. MC KAY: Let me state this on the record. 
We're never going to get through here. His 
question is, what is ISI. You don't know what ISI is, wait 
for the next question, because he may not have any interest 
in it. 

BY MR. HOLMES: 
Q Did you ever discuss Portuguese government ties 



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with Secord, as apart from Clines? 

A No, not that I can recall. 

Q I'm going to show you page 180, dated 1 March of 
'84, and I want to ask if you recall this deal. This is 
another fairly sizable deal, if it wwent through, of course. 

A No, I don't recall this specific deal. That was 
your question; right? Do I recall the specific deal? 

Q Right. 

A No, I don't recall the specific deal. 

Q This one is from Michael Ledeen. Do you know 
whether you had anything to do with this deal? 

A No. It looks — 

Q I assume, since he's signing off as TGS 
International, he was doing it at your office; right? 

A Well, that looks to me like we transmitted this 
for him. He needed to send a telex, and we sent a telex 
for him as an accommodation. 

Q Do you know whether anybody in your office had 
any part of this deal? 

A I don't recall that particular transaction, and I | 

I 
would say, given the way that message is set up and one i 

thing or another, I would assume we did not, that we were ' 



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simply acconmbdating Ledeen by transmitting a telex for him. 

Q Do you know whether anybody in your office had 
any conversations at all with any Japanese during this 
period of time, early in 1984? 

A No, I don't recall our being in touch with any 
Japanese. 

Q With whom in Portugal is this deal being done? 
I see that it's — 

MR. MC KAY; I'm going to object. The document 
speaks for itself. The witness says he doesn't know anything 
about the deal. It's a matter of interpreting what is 
written down. 

MR. HOLMES: I don't know how to interpret this, 
so I'm asking him. 

THE WITNESS: That address is not the address of 
the Portuguese Oil Company. 
BY MR. HOLMES: 

Q You have had a chance to read this document. Can 
you tell m« what business purpose would be served by this 
arrangement they are discussing? 

A Let me read it again. I was looking at it from 
a different point of view. 



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(A pause.) 

I don't know. I can't help you on the basis of 
that. 

Q Why wouldn't Nigeria simply sell their oil 
outright to the Japanese under the circumstances described 
here? 

A It depends what the quotas were at that time. I 
mean, what year is that? That's '84. You'd have to do an 
awful lot of research to try to get an answer to that. 

You'd have to go back and see what the Nigerian 
OPEC production quota was, whether they were in excess of 
their quota at that particular time, whether this was a 
way they were trying to circumvent the quota. A lot of 
cheating on quotas. 

Q So you're speculating that perhaps the business 
purpose, widely defined, being served here, is the business 
of selling on the free market instead of obeying the OPEC 
quota? 

A It's conceivable that they could be selling on 
the world market in excess of quota, and this is a mechanism 
to permit them to do that. 

Q And they're willing to let go of the ten percent, i 



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in order to accomplish that purpose? 

A It's quite common. 

Q 10 percent in this case, being $98,550,000. 

A Quite common to discount. 

Q Do you know whether ISI had anything to do with 
the deal described in page 180? 

A No. 

Q I'm showing you page 111 from the Albert HaJcim 
file. I just want to flip past these. I gather from the 
fact that for a number of months in a row, the figure being 
billed comes up to $5065, totaling up the consultant's 
salary, secretary, office rent, parking refund for the 
month, that was a fairly flat rate between yourself, for 
yourself as RAI and Albert Hakim, as Triangle Associates, 
during that period of time in '82? 

A Yes, because one of those consultant salaries, I 
told you, I administered^^^^^^^^^H There was a secretary 
that he used, office rent, parking, the retainer for 
December. That was what he was paying, essentially, RAI, 
for papers that were being prepared for him. 

Q So the consultant being referred to here is 



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A Right . 

Q And the retainer is something RAI is getting, in 
addition? 

A Right. 

Q And that apparently continues through July '82, 
anyway, the same general setup? 

A Yes, the same basic formula. 

Q Now, this one is dated March of '82. When did 
this arrangement begin, when did the^^^^^Hconsultancy 
with Hakim begin? 

A I don't know. Maybe I can tell from looking at 
the file. 

Q That's probably the earliest one in there. 

A Let's see if I can tell from that. 

Q You're looking at page 126? 

A Yes. Let's see. It's the billing for January, 
consulting fee, February. I would say it must have started 
about then. 

Q I'm assuming that since the subpoena goes back 
to January of '82, that's why it ends there. 



Right. 



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Q So I want to know if it was in existence before 
then. 

A I really couldn't tell without going back. I 
don't have all these numbers in my head. I couldn't tell. 

Q In page 15 is an example cover letter of an Albert 
Hakim financed RAI/Iran/Iraq War information: is that right? 

A Let me take a look at it. 
(A pause.) 
Yes. 

Q And what follows is the intelligence itself? 

A Yes. 

Q On page 24, there's a reference to Bell helicopters 
from American Bell to its Italian branch. 

Are these the S2une helicopters that we talked 
about before? 

A Let me see. 

Q These are destined for Iran, apparently. 

A No, I think that's a different thing. That was 
a carryover going back from what I remember, going back to 
the days of the Shah. That's some equifsnent that was sold 
to the Shah but had not been delivered. 

Q So it was already purchased, and there was no 



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further need for the helicopters, was there? 

A I think what happened is that Iran bought a lot 
of the equipment, but when the Shah fell, the equipment was 
in the pipeline and that equipment wasn't delivered, and a 
lot of those have subsequently been arbitrated. 

Q Do those helicopters or the promise to deliver 
those helicopters have anything at all in common with the 
helicopters that we were talking about relating to Central 
America? 

A No. And they have nothing to do with the 
helicopters we were talking about for Korea. 
THE WITNESS: Can we take a break? 
MR. HOLMES: Sure. 
(Recess. ) 
BY MR, HOLMES: 
Q Mr. Shackley, looking at page 66 of the materials 
you provided, there is a reference to a joint venture to 
sell Stanley Vidmar products in Egypt. This is a memo by 
yourself about a meeting with Mr. Hakim in New York. 
A Right. 

My question is, whatever became of the joint 
venture you were discussing with Hakim in New York? 



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A Nothing. We gave him some material on the 
Stanley Vidmar data. He cast it in front of whoever were 
his Egyptian contacts. No response. 

Q This related to the modularized storage? 

A Right. 

Q And on page 75 — this is a telex to Hakim — 
no, it's from Hakim to you, referring to a meeting a week 
before. That would have been in October of '82 in Geneva, 
about crude oil and the Iranian government. Could you tell 
me more eibout this deal, after looking at the document? 

A It looks like he was proposing — where is the 
answer? 

Q I'm not sure we have the answer. 

A That doesn't bring back any memories of anything. 
Certainly, no deal was concluded as a result of that. I 
don't know what the specifics of that are. 

Q There is another reference on page 79 to either 
another Iramian crude oil deal or perhaps the same deal in 
a different reincarnation, and another one on page 85, 
an Iranian crude oil deal with several potential buyers on 
2 September. 

Would it be accurate to say that simply you and 
Hakim were inla similar relationship as yourself and Ledeen, 



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in that you were both seeking to broker crude oil deals 
in the Middle East during this period of time? 

A Yes. And, you know, if a deal had gone through, 
we would have worked out some sort of arrangement, depending 
on who did what. 

Q And would it also be a fair observation to say 
we're talking about a fair amount of money in these deals 
as well? The one on page 79, for example, is 200,000 
barrels a day or 12 million barrels, at a time when the price 
was in the $25 a barrel price range. 

A Yes. But those are the kind of purchases that 
refineries do make. 

Q Sure. Which makes it very attractive, if there's 
a possible financial venture. 

A But a lot depends on how the deal is structured, 
what you get out of it. 

Q Is it your testimony that no deal like that 
ever went through for you? 

A No deal went through. 

Q Do you know whether any deal of that level ever 

t 
went through for Hakim? ' 

A I never heard him say he put one through. j 



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Or Ledeen? 

heard 
No, I never /Ledeen say he put one through. 



Q 

A 

Q Looking at page 5 inthe Aspin file, a letter 
written to "The Observer" by yourself, it refers to a 
chance encounter with Ghorbanifar. If I haven't misunderstood 
you, your encounter with Ghorbanifar wasn't exactly a chanie 
encounter; you were specifically to meet with him. 

A I went there to meet with an Iranian, not 
identified. I didn't expect to meet Ghorbanifar. 

Q But it was not by chance that you met him. It 
was by design. It just wasn't known to you which Iranian 
contact you were to meet. 

A Well, I didn't expect to meet Ghorbanifar, because 
I thought I was going to meet somebody from Iran. The first 
person I met is Ghorbanifar, who was living in Western 
Europe and is not a current vintage Iranian. 

Q But he was produced for you, specifically for 
the purpose by^^^^^^H wasn ' t he? 

A ^^^^^^Hintroduced us to him, and then it turned 
out that Ghorbanifar was the individual who brokered the 
meeting with the Iranians from Iran. But I hadn't expected 
to meet Ghorbanifar. 



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Q It was your understanding, Ghorbanif ar ' s role 
at the meeting was simply to act as a go-between between 



A Yes. I had no anticipation of meeting Ghorbanifar. 
In other words ^^^^^^^Htold us, "I want to introduce you 
to some interesting people from Iran." 

So my mind set was, whoever we were going to 
met was going to be coming from Iran. But the first guy 
he introduces us to is Ghoribanifar, who is an Iranian 
exile. 

So to me, that was a chance encounter. I mean, 
I had no intentions of meeting Ghorbanifar. And as far 
as I know, he didn't have any intention of meeting me. 

Q Well, he had the intention of meeting an 
American. 

A Well, you know, that's what I don't know, what 
his arrangement with^^^^^^fwhat^^^^^Hhad told 
him whc^^^^^^^^^^Lnd I were that were coming into this 
particular meeting. But as far as I was concerned, the 
meeting with Ghorbanifar was purely by chance. I didn't 
expect to meet him. 1 

i 

Q All right. If you choose to call that a chance I 



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encounter. 

A Yes. What I'm trying to say is, I was focusing 
on meeting somebody from Iran, not a Ghorbanifar type, 
whether it was Ghorbanifar or Mr. Blue or Mr. Green or 
what. 

Q What is a "Ghorbanifar type"? 

A That's an exile living in Europe. 

Q I'm looking at page 197. I don't want to spend 
any time looking at it. It refers to a contact with Air 
Force personnel, and I gather from it that you were a 
lecturer from time to time on counterinsurgency in low- 
intensity conflict. 

A That's correct. 

Q Do you have other similar roles with other 
government agencies? 

A Not any more. I have pretty well given that whole 
thing up. You know, I can't afford any time. 

Q When you were doing it, were you doing it for 
others besides the Air Force? 

A The Air Force and Eglin Air Force Base and 
Maxwell Field. I was supposed to go out to Fort Leavenworth 
at the College there, but something happened, and I couldn't 



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keep that one. 

Q Have you some channel to Nicaragua, or did you 
have, in 1984? 

A No, I have no channel to Nicaragua. 

Mr. Jameson has been in touch with a number of — 
what are you referring to? 

Q Well, I'll show you. It's pages 203 and 204, and 
it refers to an oil deal in Guatemala. Are you familiar 
with the discussion involving that oil deal? 

A Well, I'd have to see that to see which one 
you're referring to. 

Q This meeting with Givardo somebody and Felix 
Rodriguez. 

A There was a meeting between Mr. Jameson and these 
people, and I remember that there was a discussion of oil 
activity. That was at a time when Guatemala was just coming 
into the world oil market. 

MR. MC KAY: You said Nicaragua. Did you mean 
Nicaragua? 

MR. HOLMES: Yes. 
BY MR. HOLMES: 

Q What was it about the Foreign Corrupt Practices 



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Act that caused Mr . Jameson pause? 

A Well, I thi-ik he wanted to make sure that whatever 
was done was no violation of the Foreign Corrupt Practices 
Act. That's basically what he's saying there. 

Q Did he discuss with you that he felt in some 
way impinged by the Foreign Corrupt Practices Act? 

A No. But this is a standard kind of thing you 
need to be concerned about when you're looking at concessions. 
His concern was what was Mr. San Pedro's position in 
relationship to the Guatemalan government. 

Q I can imagine his concern. 

A Yes. 

Q Now on the next page, in the middle of the second 
paragraph, it says, "I mentioned my interesting channel 
to Nicaragua and proposed, which he accepted, to pass word 
of this on to Daniel Ortega via Senor Lopez to see whether 
that might help in getting at least the crew and other 
personnel freed." talking about the crew of a ship seized 
off the Pacific coast of Nicaragua. 

A That was a ship belonging to San Pedro that was 
seized, I believe; right? 

Q I believe so. 



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A And Jameson had a contract, I think — I don't 
know whether he's still got it — with the people that put 
him in touch with Daniel Ortega. 

Q What is this "interesting channel"? 

A That's what he's talking about, the person who 
put him in touch with Daniel Ortega. 

Q Who is it? 

A I think it's a woman by the name of Jahilma, I 
don't know how to spell it. We'll just have to go 
phonetically. It might be something like J-a-h-i-1-m-a. 

Q What was her role in the Nicaraguan government? 

A I don't think she has any role in the government. 
I think she's a longtime friend of Daniel Ortega, a female 
friend. 

Q Do you know whether she has been contacted in the 
last year and a half by Secord, Clines, Contaro Company? 

A To the best of my knowledge, they're not aware of 
her existence. 

Q On page 215, we find reference in the Nava file, 
the International Security Consortium that we have already 
discussed. Mr Jenkowitz. 



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Q Jenowitz? 

A Yes. 

Q Had been contacted by Mr. Nava, who was interested 
in discussing the concept of an International Security 
Consortium with Mr. Nava and Mr. Radai, which Mr. Nava and 
Mr. Radai are pushing. 

My question is, is that the same consortium we 
talked about earlier? 

A Right, the same consortium. 

Q Which nations were planned to be involved in 
that consortium? 

A Well, I think they were just taking soundings at 
that pirticular point in time. I think the United States, 
Canada, Britain, Israel. 

Q I'm reading on page 302, a memorandum for the 
record by yourself, memorializing the fact that a 
Mr. Ferrera contacted you and discussed an Iranian arms 
purchase through Portugal. 

Do you recall that? 

A Let's see. I don't think it's an arms — 

Q It says "Iranian arms purchases." 



Yes, 



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Q Who is Mr. Ferrara? 

A He is a Portuguese fellow who, I think, probably 
has dual citizenship. He lives part of the time in England 
and part of the time in Portugal. You'll see he has been 
involved with me in attempting to do an oil deal with 
Portugal. 

Q All right. This memorandum also refers to a 
Mr. Chartier in Paris. 

A Right. 

Q Is he not a representative of Trans-World Oil? 

A Yes, he was employed by Trans-World Oil at that 
time in Paris. 

Q And, if I understand what's going on here, Iran 
is purchasing arms and needs the cash to do so and is raising 
the cash by selling oil? 

A Yes. But those aren't necessarily linked. 

Q Well, they're deliberately unlinked, according to 
other memoranda; correct? 

A No, they're not deliberately unlinked. It's just ; 
that most oil companies will not link themselves to any 
specific transactions dealing with weapons. You're selling • 
oil. If the country then who sells the oil, Iran, generates} 



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cash from that and then decides to buy weapons, then that's 
what they do. 

Q But as a matter of practicality — and it's 
reflected in maybe memos within this little packet here — 
certainly some of these memos, if they don't get the oil 
sold, they don't get to buy the weapons. 

A That's a problem for them. Their main export is 
oil. 

Q Sure. And : the big dollar import is weapons. 
So the two are inextricably linked in economics? 

A Yes , but not necessarily in the transactional 
sense . 

Q Now, this memo on page 302 also refers to a 
Nigerian deal. Does this Nigerian oil deal have any 
connection at all with the previous Nigerian oil deal we 
saw involving Ledeen? 

A No. 

Q Is it structured in the same way? 

A I don't think so. No. This is an entirely 
different kind of a proposition. I forget what year that 
was. Remember, looking at the previous one, this is '86. 
In the meantime, there have been one or two coups in 



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Nigeria and part of the problem here was to open up a 
dialogue with a new government in Nigeria on oil matters. 

Q Who is Fatanmi? 

A He was some individual — I don't know him. He 
was some individual Mr . Ferrara was recommending to me or 
mentioned to me . 

Q And this Dr. Fatanmi is somebody you were hopii^g 
would put in touch with the new government in Nigeria, in 
order to broker oil? 

A Open the door for oil discussions . Does it 
mention Babaginda in here? Yes, by this time, Babaginda — 
General Babaginda had become the head of the government in 
Nigeria. 

Q So the commercial triangle that his refers to is 
Nigerian oil, a Portuguese refiner, and Trans-World is the 
ultimate purchaser of the refined product; is that correct 
or not? 

A That was true on the Iranian oil. The Nigerian 
was simply to open the door with the Nigerians, to start a 
discussion with them. It was not structured in the same 
way. 



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Q And if the door was opened, what would be done? 

A Depending on what could be negotiated. In other 
words, what did the Nigerians have to sell, how much, what 
were they willing to do. You know, back in one of these 
other things I think you see I did try earlier on in some 
earlier period to deal with the Nigerians through the 
Portuguese, but it didn't turn out to be possible. This is 
simply an attempt to see if Mr. Ferrara had any contacts 
with the Nigerians. It was not structured to the Portuguese 
market. 

Q You were in touch with the Portuguese on a 
broader range of issues than simply oil and oil refining, 
weren't you? 

A No. 

Q There ' s a memo here , page 3 of 3 , in which you ' re 
talking about training the Portuguese VIP protection — 

A That was with Mr. Ferrara. 

Q The same guy? 

A Yes. He asked me one time, if it would be 

possible for me to put on that kind of a program. 

i 

Q Now, Ferrara is a quasi-government official, ; 
isn't he? He's president of Disarma, which is their ; 



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stat^-owned -- 

A I think he is a representative of their state-owned 
company. He has an independent company, as I understand the 
structure. 

Q This page 303 refers to him as president of 

Disarma. 

A Right, And I think Disarma is an independent 
trading company. I don't believe it's ovmed by the 
government. 

Q Did you look into, as a matter of fact, training 

VIP protection units? 

A I talked to one or two people here in the States, 
who would have helped me put together a program, but it 
never worked out, timewise. 

Q Now, page 305 is, I think, what you were talking 
about a moment ago in the Petrogal/Iran crude deal? 

A Yes. 

Q And Petrogalwas doing the refining and Trans-World 
was doing the purchasing of the refined product? 

A Right . 

Q So, as of early '86, you were financially in the 
business of dealing in Iranian crude? 



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A That deal was a product deal. Petrogal would 
refine it, and we would take the refined product. 

Q But unlike the unlinked arms deal we were talking 
about before, this is totally linked? No crude, no refined 
product? 

MR. MC KAY: Linked? It's just an oil deal. 
BY MR. HOLMES: 

Q The linkage between the refined product and the 
crude . 

A Yes. The Iranian crude is sold to the refinery. 
The refinery refines it, gets a fee, sells the product to 
a distributor like Trans-World, who then puts it in the 
European market hoping to sell it for a profit. 

Q In this particular deal. Trans World wouldn't be 
obliged to pay anything until the refined product was 
delivered? 

A Yes; that's correct. 

Q And it wouldn't be delivered unless the Iranians 
delivered on their part. 

A Right. 

Q Isn't it true that it was during that period of 
time, early 1986, the Iranians were desperately in need of 



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funds from their oil production? 

A Basically, in the last couple of years, they have 
always been desperate for funds, and they had ebbs and flows 
of desperation. They would send delegations out. 

Q Reading from page 307 now, this is a memo written 
and initialed by yourself on the Petrogal deal. It says: 
"Mr. Shackley told Mr. Chaurtier this might 
not be the end of the deal for Mr. Ferrara. 
I just returned from a meeting with the 
Iranians in Switzerland. The Iranians 
were saying they needed funds desperately 
and wanted to put through an oil deal with 
Portugal. The Iranians had also told 
Mr. Ferrara that if they could not put 
through such a deal, they might not be 
able to buy munitions from his firm." 
That's Ferrara' 8 firm. So the Portuguese needed 
the Iranians to be able to deliver crude, so that the 
Portuguese could sell the Iranians munitions? 

A Yes. But I think what I was focusing on was the 
desperation. What I was trying to question was to say that 
there are these ups and downs and during this last couple of 



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years there certainly have been a lot of those periods. That's 
what I was trying to get across, because you were sort of 
zeroing in on that. 

What I was trying to say is that that is not an 
isolated case. 

Q Oh, no, I didn't mean to imply that, it's an 
isolated case. I'm just pointing out for the committee's 
purposes that Portugal wasn't simply a disinterested bystander 
in all of this. They were commercially entwined with Iranian 
oil and that they wanted to sell arms to Iran and needed to 
have the countertrade occur, in order for that to happen. 

A Yes. That's part of their equation. 

Q Did Mr. Ferrara ever get a finder's fee or any 
such like from Trans-World? 

A No. Because no deal went through. 

Q But if it had gone through? 

A If a deal had gone through, we would have to have to 
have given him a fee. 

Q How are those fees arranged? 

A In what sense? 

Q Physically, how are they made? 

A He would have gotten some percentage , depending on 



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what the valuation was and would have gotten a check. 

Q Did you ever discuss with Trans-World the concept 
of doing Iranian crude deals via European cut-outs, so 
called? 

A Let me see what you have reference to, because I 
don ' t know whether — 

Q Why don't you take a look at page 332, titled 
"Iranian Crude Deals Via European Cutouts." 
(A pause.) 

A yes. It talks about a storage agreement and using 
places like Portugal as a way of putting those together, as 
a sale. 

Q What is the applicability of the term "cutout" to 
this arrangement? 

A It's simply the Portuguese entity is in between 
Iran and the person who gets the end product, the refiner. 

Q Well, maybe I'm reading something into it from the 
vocabulary that we have been introduced to on this committee, 
but when I heard the word "cutout" used, it's in the context 
in which the parties on either end of the transaction don't 
want to have some connection made between them. The party 
in between is called the "cutout." 



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Am I to gather that Trans-World is somehow 
unwilling to have it be known that they're buying Iranian 
crude, or is that just a misfortunate use of the wor^d? 

A I think it's a mis£ort\inate use o£ the wof||ii. 
Your definition of "cutout" involving the intelligence 
context is correct. This is an entirely different context. 
In the oil trading business, it's just somebody in between 
that the producer and the eventual seller of the refined 
product . 

Q What aren't they referred to the intermediary 
refiner? 

A Maybe my vocabulary has been corrupted by 30 years 
of the government. I'm sure that's permitted. 

Q In the deal that's under consideration in this memo 

of June '85, is there seme commercial purpose for using 
Portugal, when Portugal would be able to turn around and 
resell the crude without ever having teJcen delivery? 

A What period of time was that again? 

Q June '85. 

A It might have been a time when Iran would have been 
more willing to sell to a small country like Portugal than it 
would have been to some other countries. 



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Q Like, for example, the United States? 

A Or, say, at this particular point in time, they 
might not have been willing to sell to France. 

Q So they were willing to deal, say, apparently 
Ireland is mentioned in here. 

A That's another one which we were aware of that had 
transpired. We played no role in that. I think what I was 
saying is that we had heard of such a deal; is that correct? 

Q Yes. It's just a reference to it here as another 
deal the Iranians had done by the same general method. They 
recently concluded a transaction of this type with the Irish 
National Petroleum Corporation in Dublin, which worked out 
to everyone's satisfaction. 

A Right. 

Q Is it an unspoken understanding in this memo that 
the 23 U.S. dollars a barrel is going to be different than 
the world price of oil at the time? 

A No. Let me read that. I don't — 

Q Go ahead and read it. It says: 

"The Iranians will sell the crude to 

Portugal" — 
I don't know how to pronounce that — 



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" — for 23 U.S. dollars a barrel or some 
other agreed-on price. At this price 
level, Portugal would be able to sell 
the crude at a profit." 
Meaning that this a price below the existing 
world price? 

A It could have been a dollar below the market that 
the Iranians were discounting at that particular time. 
Q And their motive for discounting it is what? 
A To move it. In other words, to move it or to 
increase- their sales to new markets in excess of their 
quota, their OPEC quota, finding new markets which will 
take their crude and increase their volume and get more 
revenue . 

Q So here again is the OPEC quota problem that's 
being circumvented? 

A The OPEC quota is constantly a problem to the 
producers . 

Q All right. And is it true, from your knowledge 
of this deal — and I gather you have knowledge, you have 
written this memo — that this $23 price is a — I don't 
wamt to say your official price, but as an economist, an 



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OPEC quote is not an artificiality. 

A My guess is, that probably represents some sort of 
a discount at that particular time. But, you know, to get a 
real ironclad definitive answer, it would take hours of 
research . 

Q I gather that from time to time you have had 
requests for referrals relating to armaments and have made 
the appropriate referrals? 

A I think I told you that I personally have never 
handled anything that booms or bangs. Now, if somebody comes 
to me with something like that, I refer it to somebody else 
as a courtesy or favor. 

Q And that would, I assume, apply, especially for 
Portugal, since you were dealing with Portugal on a regular 
basis? 

A I was dealing with Mr. Ferrara and Petrogal. Those 
are the limits of my real contact with Portugal. 

Q Did you ever have any contacts with a company 
named Defex — D-e-f-e-x? 
A No. 

Q Did you ever have any contact with an individual 
ncimed Brito — B-r-i-t-o? 



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A No. 

Q Or a Jose Carnel? 

A No. 

Q I wonder if you considered a finder's fee possible, 
when you made referrals on munitions deals? 

A I never got any finder's fee. I mean, if I had 
referred such a deal to somebody, and they had given me a 
finder's fee, I probably would have accepted it, but I 
don't think I ever got one. I know I didn't get any finder's 
fee. 

Q Looking at page 337, it says, at the end of the 
memo about a referral of a Thai military ammunition 
requirement . 

"If scMnething contes from this from the 
Thai side, there's a finder's fee in 
this package." 
That's a fee for you; right? 

A Probably, if the Thais had pulled it off or 
something, I would have expected that somebody would have 
said, okay, he helped us put a deal together, what can we 
do for you? Probably a finder's fee. 

Q And this is just the way the international 



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business community works? 

A Right. 

Q So sort of daisy chains on daisy chains? 

MR. MC KAY: Is "daisy chain" a term that you use? 
THE WITNESS: Yes. "Daisy chain" is an industry 
term in the oil industry. 
BY MR. HOLMES: 

Q What is BYIEX Trading Company — B-Y-I-E-X? 

A I think that was a company that Ghorbanifar said 
he was the president of or that he represented. 

Q Did he say what they did? 

A No. 

Q Do you know if it exists? 

A I think somewhere in there, there's some — 

Q I think you did a check or something. 

A No. I think it turned out that he really didn't 
have anything to do with the company. 

Q Here on page 470, somebody is answering you 
back that there is no record of any Ghorbanifar in Paris, 
and inquiries in local oil circles have failed to identify 
Ghorbanifar as being a trader or intermediary for Iranian 
oil or crudes. 



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Who is this answering this back? 

A That's a fellow in Geneva who does checks for me, 
that works for me. 

Q Who is he? 

A Well, his name is Gerber, Conrad Gerber. 

Q Did you ever find out, to the contrary? 

A To the contrary, what? 

Q Did you ever find out that Gerber is wrong about 
this, and Ghorbanifar was involved in crude oil deals? 

A No. 

Q So if he was dabbling oil and his real business is 
arms — 

A I don't know what his real business is, because he 
did not introduce himself to me as an arms dealer, and I 
think if you read through those memos, you know that my 
inquiries about him show that the people 1 .talked to 
certainly did not know him as an arms dealer. 

Q Did you ever confirm that Ghorbanifar had worked 
for SAVAK? 

A Yes. 




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Q When you were talking with Ghorbanifar, what 
specific Soviet equipment did you refer to? 

A I don't have any recollection of that, that it was 
just Soviet equipment. 

Q Do you know whether it was tanks? 

A That I can't — if it had been something specific, 
I would have written it down. What did I say? Soviet 
equipment? 

Q "Interesting Soviet equipment 
A That's probably as close a translation of what he 
told me as I could capture. 

Q I'm going to have you read this sentence on page 
478. I'll read it to you, so the record will pick it up. 
It says: 

"On the other hand, the new oil companies 
could be generous, and if there was a 
humanitarian deal to be made, in simply 
terms, with adequate safeguards for 
life and funds, we woulc i^e willing to 
take soundings with our oil company 
clients and contacts, to see if a deal 
could be structured." 



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Forgive me, if I'm reading more into it than exists, 
but it sounds to me that you're talking a little bit 
euphemistically . 

Could you tell me what you mean here by "oil 
companies could be generous"? 

A Well, you have to put that into some context. 

Q Yes. That;s why I'm asking you the question, so 
you will do that. 

A Yes. The context was, he raised the question of 
the Americans in Lebanon. 

Q Yes. This is right at the end of your memo on 
that. 

A I responded by saying that it would be interesting 
to find out what the status was. He flippantly said, "I 
assume you're talking about tractors for prisoners exchange." 
And I said, "I don't have anything specific in mind." 

Q When he says "tractors," he's talking about 
TOWs? 

A No. Tractors. I think what he was talking about 
was the John F. Kennedy exchange of tractors for Cubans at 
the Bay of Pigs. It's a well-known international trans- 
action and most people referred to that. So I think he's 



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a very flip kind of guy, and so when he says, "Wel^, oO we're 
talking about tractors?" And I said, "No, we're not talking 
about anything. I'm interested in oil, and if some sort of 
deal can be structured for humanitarian terms, and so forth 
and so on, that's something I'll take up, or I'll take up 
with our oil ccxnpany clients and contacts, if a deal could 
be structured." 

I wasn't going to commit myself to anything. 

Q Spell it out for me, because I'm still not — 1 
don't understand what Ghorbamifar means. Tell me exactly 
what you mean by that. 

A Well, that's an elliptical response to an 
elliptical question. There's nothing to explain. He says, 
"Tractors for prisoners," and I say, "No, I'm not thinking 
of anything, but people can put these kind of deals 
together, and if you know something specific, I'll consider 
it. I'll take soundings." 

Q What role were the oil ccanpanies supposed to play 
in this? 

A I think that was an elliptical response on my 
part, simply to the exchange that was going on at that 
particular point in time. In other words, as you can see 



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by my actions, when he qualified this thing, and what I did 
was write a memo and go to where I thought was appropriate. 

Q To the U.S. government? 

A And specifically to the State Department. And I 
still think that's the right thing to do. 

Q Did you ever make any person affiliated with 
any oil ci^npany aware of this situation? 

A No. 

Q Of course, other than yourself, because you 
were there on Trans-World Oil business at the time. But 
I mean, other than yourself, did you mean this sentence 
about oil companies to i]nply to Ghorbanifar that you would, 
in fact, contact any oil companies? 

A No. I told you, he was being flip, and I don't 
know how else to put it. He was being flip, gave me a 
flip response, and I gave him an elliptical response, 
noncommittal. In other words, I would look into it. People 
can be generous, you know, something aJsout these. It's 
a humanitaurian thing, you know, sit, discuss it, and we'll 
look into it, and I will take note of it. That's not a 
ccxnmitment. 

Q Oh, I understand that. I'm wanting to know why 



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you were referring to oil companies a couple of times. 

A Because we had talked about oil, and my rationale 
for engaging in the dialogue was to orient myself on the 
general Iranian market, which is a very substantial factor 
in the oil industry, and I wasn't making any secret of that. 
There was no reason for me to make any secret of it. You 
know, conversely, I had nothing specific to deal with at that 
point in time. In other words, he hadn't said that the 
following two guys, one guy, two guys, three guys, are 
available. He just made this generic statement, so I made 
an elliptical response, which is the noncommital to keep the 
dialogue going. Nothing more complicated than that. 

Q So you wanted him to understand that you picked 
up his feeling as a commercial person that the hostages 
were an obstacle to trading between the West and Iran? 

A No. I had no broader motives. I think you're 
ascribing to me something broader. You are trying to make 
something out of this that wasn't. It's a very quick, 
flip exchange, that's all, and I wanted to keep the dialogue 
open and told him that it was a humanitarian item, if he 
would do something about it, could do something about it, j 
that this would be something I would be interested in 



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listening to. 

Q You said, .in response to a previous question, 
you made no bones about being interested in oil. 
A Right . 

Q I would like to develop oil-related commerce. 
A No, I wanted to be informed on the oil market, 
in terms of what were the circumstances. I made no 
commitment that I was going to buy X or that I would 
pursue Y for a refinery or anything else. This was a 
feeling-out process. It happens all the time. 

Q On page 480, the same set of memos, you say: 
"Ghorbanifar has no known intelligence 
connections with any Western 
intelligence service." 
What is your source of that information? 
A Talking wit^ 
Q How would they know? 

A Well, you know, this is the kind of question I 
put to them. "What do you guys know about this guy? Have 
you ever heard anything about him?" 

These people talk about each other all the time, 
and there is an international grapevine. I just wanted to 



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know if he had heard anything. 

Q Had you put out any feelers to any Western 
intelligence agencies, before you wrote that? 

A No. 

Q And I assume that's why you didn't find out that 
he had connections with the CIA? 

A I wouldn't have any way of going to the CIA, 
because when I came back, you can see the 'time. I was rather 
prompt, wrote it, hand-carried it, took it to the State 
Department, and I deliberately did not go to the CIA. 'I 
had no reason to go to the CIA. 

Q I'm going to ask you a general question, and 
really more by way of flagging this spot in the transcript 
than anyplace else. 

This file folder marked "William Buckley," which 
is pages 459 through 489, contains your memoranda on the 
subject of Ghorbemifar. 

A Right . 

Q And these are the memoranda you wrote at the time? 

A That's correct. 

Q On the subject of oil pricing, what commercial 
value would the information have, if the person were to find' 



n-nocuu. Mraims. im 



HNMSiKD 



400 




400 



f.JfL , 
out that Iran was dealing with the United States in missiles, 

with an eye towards future commercial development? 

A What impact would it have on the oil market? 

Q Yes. 

A None . 

Q Zero? 

A Yes. My initial reaction to that would be zerc3. 

Q Why is that? 

A Because it doesn't change anything. If you're 
dealing with the United States on missiles, so what? I 
mean, you have to look at, would that change the balance of 
the power in the war . 

Q Well, as a matter of fact, the price of oil went 
up quite rapidly after August of 1986, didn't it? 

A Well, 'getting to the period of August '86, when I 
was out of the market, this is a time when I'm finishing 
up all of my medical testing, and so forth. I'm getting 
ready to go to the hospital, so I'm beginning to be out of 
the market at thfit particular point in time. I don't 
remember any large surge in prices just before I went to 
the hospital. 

Q What knowledge do you have, if any, of any trading 



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401 



done in oil-related stocks or similar transactions by 
anybody within the circle of those who knew or could have 
known about this Iranian initiative? 

A None . 

Q You have heard no industry riainors that there was 
any insider trading of any kind relating to this initiative? 

A No, I haven't heard anything like that. 

Q Do you know a guy named Maurice Rehm — R-e-h-m? 

A Yes. 

Q How did you first contact him? 

A I didn't contact him. He contacted me. From 
what I recall, I think I got a phone call from Ambassador 
McCormack. He said he had been talking to this fellow 
Rehm, and he would appreciate if I would talk to Rehm and 
see if I could give him any advice as to what he should do. 

Q What did he tell you Rehm had told him? 

A Nothing. He said he wanted Rehm to come over and 
see me, and I made some arrangements. 

Q Where was he the ambassador at that time? 

A I believe he was the ambassador to the OAS. 

You'd have to check that. I'm not absolutely 
sure. He had several jobs at the time. He was an assistant' 



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«H«sro 



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secretary, and I don't remember what period. It sticks in 
my mind, he was the ambassador to the OAS. 

So I agreed to talk to Rehm. Rehm Ceime to my 
office, introduced himself, told me a little bit about 
himself and gave me some papers, the copies of which you 
have there, and I told him that there was nothing I could 
do for him. 

He had some interest in an airline in Africa, and 
I told him the place to work on that was with the State 
Department, which he did. 

Q You had never heard of him before? 

A Never heard of him. 

Q And his other interest was in supplying the 
contras by air drop? 

A Right. And I told him I had nothing to do with 
it, I'm retired, I can't help you. 

Q He supplied you with a proposal; is that right? 

A Right. He insisted on leaving those papers with 
me. 

Q This is August of '86. It was actually earlier. 
His close out letter to you is August '86. 



Right. 



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Q His first contact was more like July of '86. He 
had a business called Connor Airlines; is that right? 

A I don't think that was his business. I think he 
worked for or was associated with Connor. I think there's 
some data on Mr. Connor in there. 

Q Yes. What did he tell you about Connor. 

A He said he's an independent air operator, very 
capable, had the capacity to expand his air facility and 
was interested in being helpful. 

Q Do you know anything more about the Regina Group 
Limited and the fact it occurs on Mr. Rehm's business car? 

A All I know is right there. 

Q Now I gather that it has made some impression on 
you. This is around the beginning of July '86 that you had 
met with Mr. Rehm, since you immediately wrote a memorandum 
to the file. 

A Right. 

Q And you referred Rehm to Colonel Ollie North in 

the NSC; right? 

i 

A What did I say there? You got to talk to somebody " 
like North or something to that effect? 

Q "In view of this, Mr. Shackley" — and this is you '" 



tumm 



tt-naaui. umwtus, iik 



404 



UNCIASSI^ED 



404 



writing to yourself in the third person — "felt that 
the only advice he could give Colonel Rehm was for him to 
try to see Colonel Ollie North in the NSC, who had recently 
been identified in the press as the main player in whatever 
the NSC was doing to provide assistance to the contras of 
a humanitarian nature." 

A Yes. 

Q Now, what was it that was humanitarian about 
Mr. Rehm's proposal? 

A Well, I think he was interested in doing what he 
could to be helpful, and the only thing that was going on at 
that time was what I was reading in the papers. 

Q Did you know anything further about this contact 
by Mr. Rehm? Contacting any other government people, for 
example? 

A No, I did not. 

Q He gives some fairly significant information in 
here. He names, in your own memo on page 433, you quote 
him as naming Southern Air Transport, Florida West, 
Challenger International Cargo, Caribbean Cargo, and you 
go on further to say: 

"Colonel Rehm also felt a number of 



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these airlines were doing things 
that could be embarrassing to the 
U.S. government." 
Why didn't you contact anybody in the government, 
if you felt he had said they were doing something? 

A I had no reason to. I didn't want to get involved. 
I'm not looking for involvement, and the one thing I have 
done has got me involved with more than I want to be. I 
got a humanitarian piece of information I turned in and 
look at all the time I spent with you. 

In any event, the short answer to your question is, 
I did nothing. 

Q I gather that Rehm knew Ambassador McCormack 
personally? 

A That's the impression I had, yes. 

Q He refers to him in his letter of August 17, which 
is pages 417 through 419, as "Dick ttcCormack." 
A Yes. 

Q Now in the same letter on page 418, he specifies, 
with remarkeible accuracy, exactly what aircraft are being 
used in Central America at that time by Secord. Of course, 
he doesn't name him. He says, "I'm pzurtially aware of the 



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u 



406 



ONtASSIREI] 



406 



current success and lack of same with respect to direct air 
support drop missions to date." 
This is August '86. 

"I recognize the difficulties inherent in trying 
to maintain and operate desert relics, such as Fairchild 
C-123, C-7A/8A Caribou/Buffaloes," et cetera, which are the 
aircraft that were being used at the time. 

Did you inquire of him how he knew precisely what 
aircraft were being used? 
A No, I did not. 

Q He says that this Connor Aircraft, the one he 
worked for, is right next to Southern Air Transport. 
Presumably, he's sitting there at Connor, looking down the 
tarmac in Miami and watching — 
A Could be. 

Q — Secord and company taxiing in and out in 
their Caribous and C-123s. 

If you had asked him about that, he would have 
told you? 

A I don't know. I didn't. I had no reason to. 
Basically, I had no interest in talking to the 
guy. I was doing McCormack a favor. The guy C2une over, and. 



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INKMD 



he said, "Please talk to him." And then I talked to him. 
That was it. I didn't want to get involved any more than I 
had to. 

Q What did you think of his proposal for what he 
calls "Closely controlled DC-6 aircraft with a unique 
delivery technique," and he goes into enormous detail on 
exactly how they are going to do it, their altitude, their 
drop methods, page after page after page? 

A I read it. As far as I was concerned, it was 
nothing new. 

Q Is it a competent idea? 

A Yes. It's a standard package. 

Q Not entirely standard? 

A No. I mean, it's a standard package for that kind 
of activity. It's nothing new. Did it excite my 
attention? Did it stretch my imagination? Did it teach me 
any new skills or techniques? No. I read it. 

Q I'm asking as a guy who served in Laos and 
lectured on these techniques, whether this guy Rehm is a 
knowledgeable guy with a sound idea , or whether he ' s some 
kind of fly-by-night pilot looking for work. 

A Perfectly sound, but there's nothing new. 



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Q And why didn't you let anybody in government know 
about this? 

A I didn't have any interest. Didn't have any 
desire, and as I told you, my basic rule is not to get 
involved. I'm out. I did all my time in government, and 
that's it. I'm finished. 

Q So you referred him to Ollie North? 

A I told him what I read in the newspapers, and 
that that would be a good place for him to go. 

Q Do you know if he went? 

A I have no idea. 

Q You never heard back from North? 

A I told you, the only time I talked to North is 
the one time I saw him in Tom Rehm's office. 

Q So the answer is, no, you didn't. 

A No, I didn't hear from North. Why would I? 

Q And you never heard from Rehm? 

A I think Rehm called me once or twice since then. 
There may be another memo in there. Rehm called me in 
July of '87. 

Q That's page 414 you're referring to. Obviously, 
the complexion of the covert operation in Nicaragua changed 



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409 




409 



in the meantime. 
A Yes. 

Q And he called about something else; right? 
A Right. 

Q Did he ever tell you what, if anything, had 
occurred with his Nicaragua support operation proposal? 
A No. 

^4R. MC KAY: Off the record. 
(Discussion off the record.) 
BY MR. HOLMES: 
Q I'm looking at page 641 and also on page 640 and 
642. This is your telephone log for RAI , and these three 
pages each have some calls made on the 19th, 20th or 21st 
of November '84. I'd like you to look at these billings 
and tell me, if you can, what those calls related to and — 
MR. MC KAY: Any call on the 19th — 
MR. HOLMES: 19th, 20th and 21st. 
THE WITNESS: I'm not sure I follow you. You're 
asking rae to look at the calls here. 
BY MR. HOLMES: 
Q We're talking about the three days that you 
were in Europe, speaking with Ghorbanifar. 



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A Right. So these are the calls here. 

Q Yes . There are a few on that page and a few 
on each succeeding page. You're now looking at 64 0. 

A These are calls — the way this is structured, 
these are calls from my office to these locations. 

Q Not necessarily. They would be billed to your 
office, whether made from your office or made from a 
remote place. 

A Usually, we say that they're billed, and they're 
not. So this looks to me like these were made from my 
office to these locations. 

I mean , I wasn ' t here . 

Q Different carriers have different methods of 
billing. 

A Normally, my experience with this is to handle 
this on a — I don't handle the telephone bills. I know 
how that sounds, but that's the way it is. I don't handle 
the telephone bills. 

Q So you can't tell me what those numbers are? 

A X have no idea. 

Q You don't have any idea what those numbers are? 

A No. These are calls to the U.K. Here's a call 



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to France, a call to Kansas City,- Petersburg, Virginia. 
I wasn't here, so even if i were here, I probably wouldn't 
know what the calls are. I don't monitor every call made 
by every person. 

Q Well, what I'd like you to do is place yourself 
back in time and tell me who would be the likely recipient 
of a call from your office during that period of time in 
those cities and country. 

I realize it's not — 
A None of these jump out at me. I have no way. 
really don't know what to tell you. 

Q If none of those, we can go to the next page and 
see if we can find any clue as to what was going on. 

A Well, there's one call here I recognize. Two 
calls here. One is to New York to TW Oil, one is to 
TW Oil in Holland. One is a call to — there's another call 
~ no, it's the 27th. You said the 19th, 20th and 21st? 
Q Yes. 

A There's a call to TW Oil in Bermuda. It sounds 
like all standard business calls, whatever was going on at 
that particular time while I wasn't here. 

Q You and the people in the office would be in 



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touch with TW Oil on a daily basis? 

A Right. But there's a call here to Germany. 
I don't know. Probably have to look up the area code. I 
don't even know the area code for Hamburg. 

Q What hotel did you stay at in Hamburg? 

A I told you the Four Seasons. The English 
equivalent of Four Seasons. No, I can't help you with this. 

Q I'm showing you page 904, same question. 

MR. MC KAY: The earliest call here is 9/26 that 
I see on this page. 

THE WITNESS: That looks like 9/30. I think we've 
got a disconnect. 

BY MR. HOLMES: 

Q I gather from your Rolodex, which starts at page 
1609, that you have stayed in fairly close touch with the 
House and Senate Intelligence Committees over the years. 

A I think early on in the early days, I had some 
calls, but I haven't stayed in touch with them recently, 
but their cards were in the Rolodex. 

Q When you say "early days," you mean early after 
your retirement? 

A Yes. 







413 



UNSI^SIFIED 



413 



Q But you didn't see fit to call them up about 
Mr. Rehm? 

A No. 

Q Would it have been inappropriate for you to do 
that, do you think? 

A I told you, I tried to describe to you my mind 
set. A guy came in. I talked to the man, told him what he 
could, and that was it, as far as I was concerned, and it 
was a closed chapter. There's no law that says a guy walks 
in your office, you got ot report it to somebody. 

Q Well, you knew that what he was proposing would 
have been a violation of the Boland Amendment? 

MR. MC KAY: I object. That calls for a legal 
conclusion. There's no indication whatsoever he was thinking 
about what the Boland Amendment said. 

THE WITNESS: I wasn't involved in it. Why would 
I worry eUsout the Boland Amendment? 
BY MR. HOLMES: 

Q Well, I'm not suggesting you're sitting in your 
office chewing your fingernails eibout the Boland Amendment. 
As a person who is discharged from the CIA and living in 
the Washington area and cognizant of what's going on in 



lEti^ra 



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414 



ONtfiSSffl 



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covert operations around the world, you had to know the 
Boland Amendment existed. 

MR. MC KAY: Are you saying he is cognizant in 
1986 of what was going on in covert operations around the 
world? I don't think there's anything to justify that. 

MR. HOLMES: Well, as a general statement, he 
was giving lectures to the military. 

THE WITNESS: I'm talking about very specific 
kinds of things in terms of theory of guerrilla warfare. 

Have you read my book? 

MR. HOLMES: No, I haven't. I'm willing to. 

THE WITNESS: It's a book on theory. It's a 
theory of guerrilla warfare, counter insurgency, as seen by 
my perspective . 

BY MR. HOLMES: 
Q And you're not disagreeing you didn't know of the 
Bolsmd Amendment? 

A I may have read something about the Boland 
Amandment, but I wasn't worrying about it. It didn't impact 
on anything I was doing. 

Q You knew it existed? 
A I knew it existed. 



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Q And you knew when you read Rehm's piece, that if 
that was implemented that would have been a circumvention 
o the Boland Amendment? 

A No, I don't think that that thought even came to 
my mind. 

Q All right If it had come to your mind, you 
understood the Boland Amendment enough to know that that would 
have violated it? 

MR. MC KAY: I'm going to object to that and say 
it's speculative and direct him not to answer. 

He told you he didn't have a thought, so what 
difference what might have cone to his mind, if he had 
thought eibout it? 

MR. HOLMES: I'm getting now to what he 
understood the Boland Amendment to mean. 

MR. MC KAY: He didn't do anything. He didn't 
deal with this man. Are you saying he's got some obligation 
to decide what you all have been spending months arguing 
about what the Boland Amendment means? 

MR. HOLMES: No, I'm getting into the facts of 
what he knew. 

MR. MC KAY; Well, he knew the Boland Amendment 



mmiB 



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existed. He's told you that. 

THE WITNESS,: The man caune in and talked to me. 
I talked with him. I felt no compunction to do anything, 
period. 

MR. HOLMES: I heard that. 
THE WITNESS: Bang, finished. 
BY MR. HOLMES: 
Q I want to know if, thinking about it now, in 
retrospect, you understood the Boland Amendment at that time 
to prohibit what he was suggesting. 
A I don ' t know . 

MR. MC KAY: Object on the grounds it calls for 
a legal conclusion, and it's irrelevant. 

THE WITNESS: I don't know that I did. 
BY MR. HOLMES: 
Q You say you don't know whether you did or not? 
A Yes. 

Q Who is Jeff Footner — F-o-o-t-n-e-r? 
A Let's see if I can refresh my — 
Q He's with R. G. Hobleman. 

A He was a guy who was an account executive at 
R. G. Hobleman, the freight forwarding company. 



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417 



Q How long did you do business with R. G. Hobleman? 

A For a couple of years . I may have used them 
for a while when I was doing food brokerage business through 
TGS, when I was still trying to do something in the Bahamas. 
I may have used them for a while then. 

Q So, '79 and '80, that period, and then later 
again? 

A Yes, certainly '79 and '80, and then maybe at 
some later period. 

Q Are they still in business? 

A I don ' t know . 

Q What was the last you heard of them? 

A It seems to me, a couple of years ago, but I 
can't be more precise than that. 

Q And how was it left? How was your relationship 
left? Did you simply get no more business for him? 

A It was simply left that we weren't doing that 
boainess, and I had no need for the services. 

Q What is Freedom Oil, Montgomery, Alabama? 

A Freedom Oil is a company that has gone out of 
business. It's a company that did land leases in Louisiana 
and was located in Montgomgery, Alabama. 




418 



mmmiw 



418 



Q Is Dennison Mines a principal in that business? 

A No. They were doing work for Dennison Mines, 

Q And is Andy Nolan a principal? 

A Yes. Andrew Nolan is a principal. He was the 
owner of that particular company, and he's a cousin of my 
wife' s. 

Q How do you know Paul Hewgill? 

A I don't know that I know, that I do know him. 

Q H-e-w-g-i-1-1? 

A Everybody in there doesn't necessarily mean Z 
know the person. Could be somebody else in the office had 
put the individual cards in. 

Q It says he's senior vice president of H.M.H. 
Associates Limited, International Security Consultants, here 
in D.C. 

A That doesn't tell me anything. 

Q Do you know Bill Heron or Art Kim? 

A Oh, yes. Art Kim. I do know Art Kim. 

[who has a security firm in the Washington 



area. 

Q 
A 



How eibout Bill Heron? 

Bill Heron used to work for him. I don't know 




419 



vmmm 



419 



whether he still does or not. 

Q Have any of these men ever worked for you? 

A What do you mean, "worked for me"? When? 

Q Since you retired. 

A Kim has done some work for me in helping install 
security systems. 

Q Install security systems? 

A Yes. 

Q What kind of security systems? 

A Controlled entry to office complexes. 

Q I didn't know you did that kind of work. 

A I told you I did design security systems. 

Q I guess I didn't pick that up. 
What kind of security systems? 

A Because you asked me if I could design a security 
system, and I think you jokingly said whether I designed 
the security system in North's house, and I told you no. 

Q You told me you did home renovations, did VIP 
security. 

A Right. And I think I told you also I did security 
systems . 

Q And how long have you done that? 




I. 



420 



UN£LAS$[F{ED 



420 



A I was doing that for a number of years. I don't 
know when we first started. I just can't come up with 
a date. 

Q Has this ever been in connection with or in 
cooperation with Albert Hakim? 

A No, I haven't bought any equipment for him or 
done anything like that. 

Q Have you consulted with him eUaout security 
systems? 

A No. 

Q Do you know Andy Messing — M-e-s-s-i-n-g? 

A Yes. 

Q How do you know him? 

A I met him here in the Washington area. Like in 
the days when I knew him, he was in the Conservative 
Caucus . 

Q Have you had any business dealings with him? 

A No. 

Q What business, if any, have you had with a 
Mr. Raymond J. Okudzeto ~ 0-k-u-d-z-e-t-o? 

A That sounds like a Nigerian name. Let me look at 
that. That sounds like a Nigerian name. 



mmm 



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421 



Q Page 1662. 

A I don't recall. That has something to do with 
some company in England. That has something to do with oil, 
but I don't remember the details of it at this point in 
time. It sounds like a Nigerian name. 

Q That's the only time you had dealings with this 
gentleman? 

A Well, I don't even know that I had dealings. 
Obviously, somebody in my office had, but that name rings 
a bell, in the context of Nigeria. 

Q Have we talked about John Singlaub before? 

A I don't know. We talked about so many people, 
at this point. 

Q Do you know John Singlaub? 

A Yes, I do know John Singlaub. 

Q How do you know him? 

A I first met him in Laos. That's the only place 
I knew him from, and I knew him in Vietnam, and I forget. 
I don't think I have any memory of dealing with Singlaub 
after Vietnam. 

Q Have you had any contact with him at all since 



ONeHSSIfltD 



422 



uNsussra 



422 



then? 

A Yes. A couple of times he came into my office to 
discuss various things, and since this famous law case in 
Miami broke, I called Singlaub in, let's see, June of '86, 
about the case. 

Q Prior to that, what various things have you 
discussed? 

A I think he came in an talked in general about what 
was happening in Asia, my appreciation of the Middle East, 
and so forth. 

Q What was his reason to come and see you about that? 

A Just general conversation. 

Q Did he have any exhortations for you? 

A No. No exhortations. 

Q In your discussions with him in early 1986 , what 
did that consist of? 

A The sqme thing with everybody else I contacted in 
June of 1986: "What do you know about this Miami lawsuit, 
and why am I in it?" 

Q And what did he say? 

A He said he understand why he was in it, but he 
didn't understand why I was in it. 



}immm 



423 



M«9 



423 



Q What did he say about why he was in it? 

A World Anticoiranunist League fund raising, so forth 
and so on. A very b^ief telephone conversation. 

Q Did he give you any more details than just that? 

A No. 

Q Are you friends with the people at R. G. Hobleman? 
I notice you've got five or six different R. G. Hcbleman 
em-ployees listed out separately. 

A No. I think at various and sundry times, their 
people changes, and we had just different cards with different 
people. 

The only people that I can remember meeting is 
Hobleman. 

Q So these would have been cards for the use of 
your office staff in making commercial connections back and 
forth over the time you were there? 

A Right. 

Q Have you been in touch wit} 
— since you retired? 



A Yes. 

Q You have both' 
separately. You hav 




and^^^^^^^HLn here 

and you have spelled 







424 





424 



/hich is one of a number of optional 
spellings . 

A Yes. 

Q With the saune phone number. I gather that you 
have had contact with him yourself? 

A Yes. I told you I met him. 

Q And what was the context of that? 

A We covered this the other day. 

Q You had personal contact with him, or are you 
talking about Hakim? 

A We covered all of that. Just to refresh your 
memory, put out an English language training program for 
him, so I had dealings with him at that time. 

Q You haven't had dealings with him other than the 
ones you talked a^ut the last time we were here? 

A Right. 

Q There's a Jim Fees in here. 




have seen him several times 



in social context. 



wwra 



425 



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425 



Q No business dealings? 

A No. 

MR. MC KAY: Off the record. 
(Discussion off the record.) 
BY MR. HOLMES: 

Q I asked you. abou^^^^^^^Bbut I didn't ask you 
if you had any business dealings with them since you retired, 

A No, I didn.'t have any business dealings with them. 

Q What is RPV? 

A That's reconnaissance airplane type thing, little 
drones. 1 think it's reconnaissance photo vehicle. 

Q And what did you and Felix Rodriguez have in 
conunon with RPVs in 1982, looking at page 1895? 

For the record, I might note we are in the TGS 
documents. 

A This is a letter written by a fellow who was 
associated with me at the time, Johnny Carter, to a company 
in Panama that obviously was looking for RPVs, and this was 
an attempt to open a dialogue. This probably was some 
company that was recommended by Felix. 

Q The Paneuna Comp2uiy? 

A No. It looks like it's in Caracus. I think if 



^mmm 



426 




426 



you look at it, it shows it's Caracus. 

Q What did FeJix Rodriguez have to do with it? 
That's my question. 

A I don't know. This was obviously a transaction 
that one of the fellows, at that time, John Carter, handled 
with Felix. And it looks like we were trying to market 
an RPV. This is probably some company that Felix said, 
these guys are interested in RPVs. 

Q Were were you getting the RPVs to market? 

A Let's see if it says in here. I don't recall. It 
says about a brochure. Let me see if there is anything in 
here. I don't see it. It just says, "I'm enclosing 
brochures and flyers on the system." 

I don ft know what company we were getting them 
from. 

Q Are there a number of RPV companies? 

A Yes. It's a fairly conunon — 

Q What is Project Long Look? 

A For me, it looks like that's a description of 
whoever 's brochure it was, they were describing this 
system. 

Q And it says they are being bought by any of the 



issiFe 



427 



iwctwe 



427 



South American countries. 

A Yes. 

Q What does it do exactly? It flies around in 
circles and — 

A No, It can v6 used as a reconnaissance vehicle. 
In other words, if you want to put it — it's like a drone. 

Q I'm not getting the whole picture of what kind of 
things you would use it for. Is it high altitude, low 
altitude? 

A No, this is essentially low altitude. 

Q Elestronically radio-controlled? 

A Essentially, ground control, so that you can 
fly one of these reconnaissance vehicles and take photographs 
of a particular area. You might use it for geological 
surveys in inaccessible areas. That's its commercial 
civilian utilization. It also, obviously, has a defense- 
related utilization. 

Q What are the ranges? 

A They vary. I mean, the systems vary. You're 
talking short ranges, 50-75 miles. 

Q And you paid Felix Rodriguez for some travel in 
connection with, I gather? 



UNSI^SSIFiED 



428 



^mmm 



428 



A Right . 

Q None of this was ever sold? 

A No. 

Q Did you ever discuss RFVs with anybody who was 
intending to support the Nicaraguan opposition? 

A When your lawyer contacted me about this 
disclosure, we discussed a Kuwaiti project. I gather in 
this financial document section, I see some references 
to a Navy claim for $3-1/3 million, and it seems to be 
in connection with work contracted to be done in Kuwait. 

A That's correct. 

Q Can you give me a thumbnail sketch of the Kuwaiti 
project|| so we'll have that? 

A I think that's a write-up in the file there. 
The last project we did was to refurbish a 
warehouse and build a new warehouse and an administrative 
building. That's the proejct on which there's a claim for 
funds in excess of $3 million. 

Q Did your line of credit with the Capitol Bank 
have anything to do with the Kuwaiti project? 

A Yes. 

Q And was the Kuwaiti project the purpose of the 



ONtUtSSIHED 



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429 



$1 million in documentary letters of credit for material 
purchased? 

A Yes. 

Q So this was also construction materials? 

A Right. Construction materials or prefabricated 
warehousing components. 

Q In your dealings with Mr. Singlaub, you had 
occasion to deal with his company, GEOMILITECH? 

A Not in my dealings with him. Separate from that, 
i can't think of the lady's name, but if you show me the 
file, I'll tell you the lady's name. 

Q Barbara Studley? 

A That's right. She came into our office with 
Andy Messing and said she was interested in risk analysis 
business. She was interested in the defense market in Latin 
America, so forth, and we talked with her, Andy Messing and 
her lawyer, whoever he was. I don't remember the man's 
name. And then she gave us a brochure, or we got a 
brochure subsequently, which mentioned Singlaub as being 
one of the people in that company. 

Q And the people that are described in their 
literature are former Air Force and special operations 



nmmn 



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UNMtSIRED 



430 



types, for the most part; is that correct? 

A I haven't looked at that for a long time, other than 
Singlaub. If you let me look at it, maybe I can — 

Q There's a Bruce Herbert, who is Intratheater 
Air Lift to Support the Kuwaiti Forces; there's Ron Harold, 
who is a former Israeli Air Force; there's Singlaub himself, 
who is former Joint Unconventional Warfare Task Group. 

A Of the names you read there, the only neune I know 
of is Singlaub. 

Q Did you or any of your companies associated with 
you ever do business with GEOMILITECH? 
A No. 

Q Back in November of '84, according to page 1903, 
in the disclosure you wrote another one of your self- 
protective memorztnda for the record relating to a contact 
with the GEOMILITECH consultants. I'll just read it in the 
record; since it's very short. 

"Mr. Rafael Garcia-Toledo visited the TGS 
International office on 16 November. He 
was acccoipanied by Mr. Munez. The people 
in GEOMILITECH that were known to us were 
discussed, i.e., Barbara Studley, 



'*SSIRffl 



431 



mmsB 



431 



Major General Keegan, Major General 
Singlaub and John Carbugh. This led 
to a discussion of the arms market 
and general trends in this arena." 
I'd like to know what discussion you had with 
those folks on that subject. 

MR. MC KAY: I'm going to object to the question. 
I don't know what you mean by "self-protective memoranda." 
He writes memoranda for the record of visits to make a 
record. 

MR. HOLMES: I don't mean it in a derogatory 
sense. I write self-protective menoranda to the file too. 
I think it's a good practice. I'm just asking him to 
expand on this. 

MR. MC KAY: All right. 

THE WITNESS: When you read those names, you 
didn't read Keegan 's name. Is he in the original list? 
MR. HOLMES: Well, Keegan is on your list? 
THE WITNESS: Is he in the list? You read a 
couple of names, and I don't remember you reading Keegan. 

MR. HOLMES: No, I didn't read it. It's not 
in there. 



^fcKSWfS 



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vmssim 



432 



THE WITNESS: I just want to make sure we didn't 
cross there, because I do know Keegan. 

Rafael Garcia-Toledo has been active in the 
Latin American market for a long period of time, essentially, 
in the housing area. I think he was looking, in terms of 
expanding his business into what he thought was a lucrative 
market in Latin America for arms. He ceune to us to talk 
about GEOMILITECH, raised these names with us, and we gave 
him our evaluation of what we knew of these people. 

Q Was he contemplating some kind of joint venture? 

A I don't know. He had met these people recently 
and wanted to know who they were, and I don't know what 
the interrelationship was, you know, what they were going to 
do, and we talked about the trends in Latin America, who 
had money, who didn't have money, who was likely to have 
money in the future, and so forth, and I think my advice 
to him was to say out of the arms market. 

Q Were you able to tell him from any source you 
now recall what the financial picture was for arms in 
Central America? 

A No. But there are a lot of overt publications 
that are around, and we get those publications, so we keep 



11, 





433 




433 



abreast of the trends and developments in this area. 

Q And there ' s another cryptic sentence here on page 
1904, which is from GEOMILITECH documents. 
A Is it a brochure or something? 

Q I don't know if you call it a brochure, but it's 
some stuff that's got their letterhead at the bottom. It 
says: 

"GMT corporate strategy rests upon 
the jJaility for a strong national 
defense, perpetuates a healthy 
economy and, therefore, the potential 
for world peace." 
Have you ever discussed this belief with anybody 
from GEOMILITECH? 
A No. 

Q As a person who has spent his career in government 
operations that have some connection with national defense, 
what is your opinion about that statement? 

MR. MC KAY: I'm going to object on the basis, 
it's irrelevant, but you can answer the question, if you 
can. 

THE WITNESS: I don't think I really focused on 



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mmmiw 



434 



(6:00 p.m.) 
it. I didn't pay any attention to it, and at this point in 
today's session, I'.n getting tired, and you know, we're 
running down. I don't have any views on that. 
BY MR. HOLMES: 

Q Now I gather there was a period of time since 
your retirement — or maybe it's a longer period of time — 
in which you solicited information in preparation for 
bids relating to weapons systems from the U.S. government? 

A Related? That is, the support aspect of weapons? 

Q Right. 

A A lot of times what you see is in the "Commerce 
Daily Business," a two-or- three- line thing saying, if you're 
interested — you don't even know from the description 
whether you're interested or what the system is. You sort 
of have to go on a few key words. 

So we did write a number of proposals to see if 
it was something we wanted to bid on. 

Q Some of these have included missile systems, 
haven't they? 

A I'd have to look at that array of paper there . 

Q I'm looking at page 1916, where you're asking 
through Bill Howe, your vice president, for information 



nmmm 



435 



UNCUSSIHED 



435 



pertaining to technical services in support of a ground 
launched CRUISE missile project. And there's another one 
relating to HAWK missiles. 

A We would be looking at that in terms of the 
storage aspect of spare parts and backup for these particular 
systems. 

Q And did you ever do any contracts? 

A No. 

Q You were prepared to do contracts, if you had any? 

A We were prepared to look at them to see if that 
was within our capability. 

Q Does Harper Robinson & Company have any ties with 
R. G. Hobleman & Company? 

A No. 

Q Does it have any crossover in employees or 
offices or facilities at all that you are aware of? 

A No. No. Harper Robinson was a designated 
freight coordinator for the Kuwaiti government, and that's 
why we dealt with them on the Kuwait project. An 
idependent company. 

Q Looking at document 1935, in which you are 
responding to a Jorge Poveda — P-o-v-e-d-a — in Costa 



mmmi 



436 



immww 



436 



Rica and say at the bottom: 

"Re lobbying for a Peronista group, would 
need more details before being able to 
express serious interest. Some Peronista 
factions clearly all right. Some not." 
Excuse me. That's Jcimie who said that. 
A I was going to say that sounds like a Jamie 
cable, because he has, on several occasions, looked at 
representing foreign governments in the United States. 
I don't subscribe to doing that, and therefore, if he 
had ever got a contract to do that, he would have gone off 
on his own. 

Q Do you know what he means by this — what 
Peronists he thinks are all right and which ones he doesn't? 
A I haven't discussed that with him. 
Q Have you ever done any business with this 
Jorge' Poveda? 

A No, I have not. 

Q When I say "you," I naturally mean you and the 
ccnipany . 

A No, we have not done any business with them. 
I think that was a contact of Jamie's. Jamie was exploring 



mmm 



437 



WEissra 



437 



something with them, and that was it. Nothing came of it, 
as far -as I know. 

Q Have you discussed with anyone the possibility 
of lobbying on behalf of greater foreign aid for a Central 
American country? 

A No. I think Jamie was looking at one time as to 
represent somebody in Guatemala or somebody, and he was 
trying to put a group together and had some discussions. I 
never discouraged him from doing it, but the understanding 
was, if he ever put a package together, that he was off 
on his own. 

Q This is dated February 1983, and he states in the 
letter cable to Francisco Bianchi — B-i-a-n-c-h-i: 
"Must stress that good lobbying efforts 
here, in all probability, would add 
millions of dollars to Guatemala's 
aid package and significantly increase 
opportunities to export to U.S." 
Does that sound like an offer to lobby for 
Guatemala? 

A I think he probably was interested in looking at 
that. I recall he talked with two or three people to see 



wmsm 



438 



438 



'h 





if they could put something together. 

Q Do you knovv if Donald Jameson has ever registered 
as a foreign agent or agent of a foreign government? 

A I don't think he's ever represented a foreign 
government. I think he tried on several occasions to put 
a package together and has not been successful in doing so. 

Q Hassan Managa is an employee of TGS, isn't he? 

A He was an associate. His father is a shareholder 
in TGS . He did some architectural work for us on the 
Kuwait project. 

Q I'm looking at document 1021. It's 2011. He's 
talking about a barter deal with Iran. 

A Yes. 

Q And he says, "Say hello to Ali for me." 
Who is Ali? 

A I have no idea. 

Q Would it help you to look at the thing? It's 
dated September of '85, if you can narrow down the "All's." 

A No, I can't. 

Q During the 1985- '86 period did your company, TGS, 
have something to do with looking for specialized security- 
type people to work in Saudi Arabia? 




y:1bLnOil?i « 



439 



E\mm 



439 



A Specialized security people? Better let me take 
a look at that. 

Q 2033. 

A Let me take a look at that. 

Q Specialized U.S. and British workers for 
eiTiployroent in Saudi Arabia. 

In other words, workers to be security type 
people . 

Are those construction people, or what? 

A Just let me plow through this , because that 
doesn't tell me anything. This was a transaction handled 
by Mr. Gillespie. 1 don't see anything here that would help 
me answer that question. It doesn't ring any bells with 
me. I would say they odds are that some sort of construction 
work. 

Q Why would you look for British people to do 
construction work? 

A Depending on what the items were. In some cases, 
the British engineers are cheaper than American engineers. 

Q I'm looking now at a foldeJ[^ marked Stanford 
Technology. It starts on page 2081, and at 2084, there's a 
letter from yourself to Hakim relating to helicopter 



mumm 



440 



mmmm 



440 



sales in South Korea. These are the Hughes helicopters we 
talked about before? 

A Yes. 

Q What was Hakim's part in this transaction? What 
was he bringing to it? 

A Basically, the entry into the Korean market. He 
had neen doing some work, I think, by that time, in Korea. 

Q Who were his contacts there? 

A I don't know. I know he had done some work for 
the Korean Power Company or Electric Power Company and had 
a lot of contacts with the Korean business community. If 
I recall that correctly, we were recommending to him to look 
at the Korean Airlines import of helicopters or assembly of 
helicopters. 

Q These are military helicopters; right? 

A No. 

Q Model 500MD Defender Scout sounds like a military 
helicopter. 

A No. I think that was an assembly. But I would 
have to look at the catalog. I think this was an assembly 
project of a fairly light helicopter. I think it's a 
commercial helicopter. Otherwise, I don't know why Korean 




n,iju-\v\ 



441 



mmm\i 



441 



Airlines would be putting them together. 

Q I'd like you to look at page 2085. This is an 
early 1983 termination of the Trinidad and Tobago project 
and the Honduras project. 

I want you to tell me what the Honduras project 
was at that point. 

A It looks like someone in Honduras had some sort of 
a radar program that we had been asked to look at or we 
had proposed. 

I don't recall the details of it. Looking at these 
two numbers, they both look to be in the same category, so 
I know that the Trinidad-Tobago one was a radar, so I 
assume this is a radar. 

Q You don't recall anything more about the Honduras 
project other than radar? 

A No, I don't. 

Q Has it the sazae kind of shore type or shore coast 
radar as Trinidad and Tobago? 

A No, I really can't recall. Obviously, it says 
here, specifically, Hestinghouse is coming up with a project, 
so they make a wide array of stuff, so I don't know what that 
could be. Right here it says in here there's a description i 



OlflMOTED 



442 




m 




442 



of this. 

Q 2086? 

A Air Transport Long Range Search Radar. 

Q What is that? 

A This is possibly some sort of a radar system that 
can be put into a van and can be moved from one location to 
another to give the radar facility mobility against whatever 
target it's looking at, not tied to a fixed base. 

Q What is the application for a system like that? 

A Probably coastal and air defense. 

Q Against what? 

A Airplanes, ships. You know, whatever you're 
targeting against. 

Q And what was Honduras concerned eibout at that 
time? 

A That I can't tell you. I don't have any — 

Q Other than Dick Secord? 

A In 1983? You know, there was a time — I can't 
clarify that any further than that. I'm just trying to 
think what was going on in ' 83 . 

Q Was this intended for use in Honduras? 

A That's certainly the impression I get from that. 



l.nTUl.H^3^TnL1J 



443 



mmm 



443 



I don't remember that transaction. 

Q And you don't recall discussing this with Neidhart 
or anybody else? 

A No. 

Q Is it possible that that system was meant to be 
purchased by Honduras and turned over to somebody else like 
the contras for use? 

MR. MC KAY: I object. I think that calls for 
speculation. 

THE WITNESS: You know, in '83, I have no concept 
of that. 

BY MR. HOLMES: 
Q I gather, from page 2091, that you and Mr. Hakim, 
as early as August of 1982, you and TGS were engaged in 
discussions about support systems for a number of military 
weapons in Egypt, including armored vehicles, HAWK missiles, 
F-16 Falcons and P-4 Phantoms; is that accurate? 

A Yes, I think we mentioned before, we had given 
tiMB a series of packages relative to logistics systems 
for various tactical components. 

MR. MC KAY: Explain for the record what you 
proposing to provide. 



wmmi 



444 




444 



THE WITNESS: Part of the storage equipment which 
would enhance the retrieval and issuance of spare parts for 
systems . 

BY MR. HOLMES: 

Q Have you ever heard of a company called Four Ways? 

A No. I think you asked me this before. I'm not 
familiar with a company. Four Ways, but I think you asked me 
this before. It's come up somewhere here recently. 

Q It might have been in the subpoena. 

Are you fcuniliar with any company by any name 
that manufactures difficult-t<3- locate, out-of-production 
military spare parts? 

A No. 

Q You have never done business with any company like 
that? 

A That manufactures difficult spare parts? 

Q Right. Spare parts that are either out of 
production or a particular need for one reason or another , 

A No, I don't have any recollection of being in 
touch with that kind of a company. 

Q Have you ever discussed that kind of company 
with Hakim or Secord or Clines? 



PPBHED 



445 



^mmm 



445 



A No, not that I have any memory of. 
Q Various of these proposals that you put together 
I notice are a sizable amount of money, are they not? 

A Yes. Some of the spare part systems to handle 
that kind of item are expensive. 

Q So it would be fair to say that if you and Hakim 
had been successful in any of these, that it would have 
made an enormous difference to your company's financial 
well-being? 

A Yes. 

Q Like this HAWK parts logistic support system is 
$5 million and some of these others are larger? 

A Right. 

Q Has TGS engaged in the sale of medical supplies 
in the Middle East? 

A We are trying to get involved in the sale of 
medical supplies in the Middle East. 

Q When did this effort begin at TGS? 

A Probaibly in a serious way, 1 guess maybe about 
a year ago. 

Q In other words, December of '86? 

A Well, it seems to me about a year ago we were 




mmi 



446 





446 



talking. Prior to that, we had some correspondence with 
Kuwait and so forth on individual medical items, but I 
think in a serious vein in Kuwait about a year ago. 

Q And the source of these medical supplies would 
have been where? 

A U.S. firms. 

Q Strictly U.S.? 

A Yes. 

Q Not European? 

A No, we have not looked in the European market. 

Q Have you discussed supply of medical supplies to 
any Middle Eastern country with Hakim? 

A No. 

Q Secord? 

A No, I have no recollection of that. 

Q Has TGS, through its board of directors, discussed 
the possibility of providing or purchasing, for any purpose, 
jet aircraft? 

A We have talked about 747s. I think I covered 
this with you the other day, about 747s for China. 747s, 

and I think, 707s. You're probeibly reading from the 

i 
corporate minutes there. 



\m 



:i^S!flEO 



447 




447 



Q I'm reading this from document 2962. But the 
reference is to a Fernando Povone. 

What role did he have in this transaction? 

A He is an Italian, and he was representing the 
Italian company that was interested in putting together a 
transportation deal with China. 

You remember I explained to you that they were 
looking at various configurations of airplanes: total 
freight, half freight, half passenger, all passenger, which 
made it very difficult to put together what they wanted. 

Q What is the market price for a 747 aircraft? 

A It depends. I can't give you a cold answer like 
that. 

Q Sure, I understand that. Give me a range. 

A I mean, there are so many variables, and you 
can't back me into an answer, because you want an answer. 

Q I don't want a specific answer. I want to know 
what kind of money we're talking about. Would it be a 
couple of million? 

A You're talking about a substantial amount of 
money. It depends on how many hours are on the air frame, 
how many hours on each engine, what spare parts package 



UmSSRED 



448 



^mmm 



448 



goes with it, and so forth, and each one has to be looked 
at in the context of the time. 

Q Let's get into it a little bit further. You 
had potential buyers in China; correct? 

A Mr. Povone had potential buyers in China. 

Q And they had at least some, idea of their needs? 

A Right. 

Q And they communicated those needs to you? 

A No. To Mr . Povone. 

Q And at some point in time, you and Mr. Povone 
attached some specific group of aircraft to their needs? 

A Well, we were looking at and negotiating at that 
time, I think, with TWA. 

Q And negotiations with TWA were for particular 
needs? 

A Right. For a specific type of aircraft and 
configuration. But the Chinese couldn't define exactly 
what they wanted; TWA had no schedule for releasing the 
aircraft, and eventually, the thing just disappeared. 

Q Now I want to know what the price ranges were of 
the particular aircraft that^you and TWA were discussing. 

A I don't recall. If it's in there, let me read 



4^£«:i «A(#'lJr5i tS»t«* 



449 




449 



the thing. 

Q It's not in here. 

A I really don't recall. It's that complicated a 
kind of transaction, you just can't come out with a number. 

Q Did you and TGS discuss the purchase of any other 
jet aircraft? 

A In what time frame? 

Q Any time frame? 

A I think jet aircraft — no, I don't recall any 
jet aircraft. 

Q Does that mean that you recall nonjet aircraft? 

A We talked the other day about the Buffalo- 
DeHaviland's airplane. That's not a jet airplane. That's 
a reciprocal engine. 

Q Have you discussed with Hakim the proposal 
purchase of aircraft at any time? 

A I have no memory of talking to Hakim, other than 
what we talked about when we talked about helicopter spare 
parts, and so forth, and no other aircraft that I can recall 

Q In the 1985 time frama, was TGS interested in 
becoming a food broker for Iran? 

A Well, we looked at that proposal that Managa had 



mmm^ 



450 



mmsmi 



450 



raised. You showed me some correspondence, we were talking 
about before. 

There was a proposal to sell food products to 
Iran, but we found it couldn't be done. 

Q And these were food products that were going to 
be brokered through the Bahamas? 

A Right. 

Q Tell me how that was going to work in a business 
sense. 

A Well, there's a lot of food imported from the 
United States into the Bahamas. 

The question was, could you put a label on it, so 
that you had American food products but not showing that it 
came from the United States, and the answer is, no, you 
can't, or could you put a Bahamian label on it? You can't? 

Q And then transship it to Iran? 

A Ship it to Iran. There's no way you can do that. 

Q You can buyers in Iran for the food, if it was 
possible? 

A The Iranians had contacted Hassan Managa and said 
they were interested in large purchases of food, U.S. type 
products, but not U.S. -labeled. So the question is, can 




^ i»-2:,nU 



451 



ONEMSSm 



45i 



you relabel? Is there a way to do that? And the short 
answer to it is no. 

Q Which I take it, took a while to figure out? 

A Right. 

Q During what period of time was that opportunity 
being discussed? 

I'm looking at 2980, which is your board of 
directors meeting for 20 May '85. 

A That sounds right. And you've got some other 
traffic there, which was a telex exchange between Hassan 
Managa and somebody in Iran. 

Q Did TGS explore any alternative routeeof supplying 
food to Iran? 

A No. 

Q And have they ever supplied food to Iran? 

A No. 

Q Looking at 2980 still, I would like you to tell 
me, in paragraph 4, what K-4 means, and what — well, just 
tail me what K-4 means first. 

A Well, K-4 is a warehouse complex in Kuwait. 

Q And the C-130, DC-9 warehouse is another complex? 

A Another project; yes. 



IINrjiSldED 



452 



mimm 



452 



Q Is it in Kuwait? 
A Yes. 

Q Has TGS ever done any business with Libya at all? 
A No. 

Q Has it ever done any business in C-130 parts or 
maintenance? 

A No. This is a warehouse for spare parts which 
were already there in Kuwait. 

Q Kuwait was supplying the spare parts? 
A Kuwait had the spare parts already. It was a 
matter of creating a warehouse, so they could recover their 
parts. 

MR. HOLMES: Any questions? 

MR. MONSKY: Have you covered Mr. Zucker? 

MR. HOLMES: No. 

EXAMINATION 
BY MR. MONSKY: 
Q Have you heard of a Willard Zucker? 
A Yes, I have heard of Willard Zucker. 
Q What do you know about him? 
A Basically, that he is a tax man, lives in 
Geneva, Switzerland, and has been a longtime associate 



wmmm 



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"NMS/WD 



453 



of Mr. Hakim. 

Q Have you ever met him? 

A Yes, I met him once and possibly twice. 

Q Could you tell me when that was? 

A I met him once in the United States, but I can't 
remember the year. It was probably sometime in the '80s, 
but I don't know what year it was. 

Q And what was the context? 

A The context is, I was meeting Hakim and Hakim 
was finishing a meeting with Mr. Zucker, and Mr. Zucker 
was going to the airport, and I was introduced to him. He 
took off, and that was about the extent of it. 

Q And where was the meeting? 

A I don't recall. I think it was in the hotel 
somewhere, in a downtown hotel, but I don't have any 
recollection of that, except I met him. I was introduced 
to him, and that was it. 

Q What was the nature of the transaction that you 
were conducting with Mr. Hakim? 

A I think it was just a periodic meeting with 
him that I was going to. I donit want to go back, you 
know, this late in the day. I'm tired, and I have been at 



mmsiE 




454 



now for a while. I had a series of discussions with 
Mr. Hakim. I met with him periodically. I can't be any 
more precise than that to you. 

Q You said two meetings? 

A I met Mr. Zucker once just to say hello and talk 
to him in the Geneva airport when I was transiting Geneva 
airport with Mr. Hakim on a trip. 

MR. MONSKY: Off the record. 
(Discussion off the record.) 
MK. MONSKY: Let's go back on. 
BY MR. MONSKY: 

Q Can you tell me what that trip involved? 

A I think Mr. Hakim and I were on a trip to — 
either coming back from Egypt or going to Egypt. 

Q And the purpose of the business in Egypt? 

A General marketing, and we had a conversation with 
— I think it was the wife of the deceased Shah. She was 
then in Egypt. 

Q And what was the nature of the conversation with 
the Shah's wife? 

A General conversation about conditions, politics, 
so forth, what she was planning to do. 



mmii 



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UNMSSIFIf! 



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Q No specific reason for the visit? 

A No. 

Q Who knew the Shah's wife, you or Mr. Hakim? 

A Mr. Hakim. 

Q Was there any other business purpose for the trip 
to Egypt? 

A No. Just the overall logistics problems, problem 
solving and meeting with the Shah's wife. 

Q Problem solving for what? 

A Well, there were some proposals we put in at 
various times for modular storage systems to support various 
technical systems. 

Q When was the earliest time that you heard Zucker's 
name? Does it go back to the '70s? 

A I don't know. The earliest time I ever heard 
Zucker's name probably goes back to the '80s after I retired 
in 1979. I think I started in business — let's see — 
did some work for Hakim, and it was about that time. We 
can look in here when I did work for HeUcim, and it was after 
the start of the Iran-Iraq War, which is in September '80, 
so it was after 1980. 

Q Did Mr. Zucker's name ever come up in the context I 




456 



msMM 



456 



of consulting work with EATSCO? 

A Not that I know of . 

Q Have you heard of a company called lOS? 

A Is this the famous Bernie Kornfield, the investment 
company going back a number of years? 

Q Yes. 

A Yes, I have heard of it. 

Q Do you know any of the individuals who were 
involved in that company? 

A No. But I heard somewhere — and this is not the 
first time these questions have come up, so I heard somewhere 
in this panoply of questions that Zucker was employed by 
Kornfeld and Zucker is a tax expert, allegedly. 

Q Do you know that there was an assistant to 
von Marbod, a General Fish? 

A Do I know him? I have heard of the name, but I 
don't ever recall meeting him. 

Q Do you know of a company called Coastal Caribbean 
Oil Company? 

A Yes. 

Q What can you tell me about Coastal Caribbean? 



marnvB 



457 



mms&m 



457 



A I already discussed that. That was the company 
that I did some work for, the Bernstein Brothers, on offshore 
Florida leases, that Coastal Caribbean was involved in. 

Q Has Mr. Zucker's name ever come up in the context 
of Coastal Caribbean? 

A Not that I'm aware of. 

Q Do you know an Edmund Safra — S-a-f-r-a? 

A No, that's not a name that rings a bell. 

Q In international banking? 

A No, that doesn't tell me anything. That's not a 
name that I know. 

Q Have you had any contact with any other people 
associated with Zucker or know Zucker? 

A You have to phrase that some other way. I'm not 
sure follow you, what you mean by that. 

Q For example, have you been introduced to people 
who are friends or business associates of Mr. Zucker? 

Q No, I don't recall meeting anybody, you know, 
that has been portrayed as a business friend of his. All 
I can recall is having met the man twice. 

Q Have you ever heard of an oil company called 
PROSOL — P-R-0-S-O-L? 




458 




6 




458 



A No, never heard of it. 

Q What about a Mr. Al Bagen, who trades in Chemicals? 
A No. I don't know anything adaout him. That's a 
fairly common name. Where is he located? 
Q Florida. 

A No, I would say, no, I have not heard of him. 
Q Or Canada? 
A No. 

MR. MOSKY: Can we go off the record one second? 
(Discussion off the record.) 
MR. MONSKY: Back on the record. 
BY MR. MONSKY: 
Q Do you know of two lawyers in Californa named Jones 
and Barnett? 

A No, those names don't mean anything to me. 
Q Were you ever aware of a fact that General Secord 
bought some pocket computers from Ed Wilson? 

A No, I'm not aware of any pocket computers or any 
computers ' transaction between Ed Wilson and General 
Secord. I never recall anybody discussing computer 
transactions. 

MR. MONSKY: Off the record one more time. 






459 



iw^ie 



459 



(Discussion off the record.) 

MR. HOLMES: I Still have a few more. 

EXAMINATION 
BY MR. HOLMES: 
Q Following on the computer question, did you ever 
discuss with Hakim the sale by Hakim of computer systems 
or computer support systems in the Middle East? 

A I don't ever recall that coming up. I don't have 
any memory of computers coming up. 

Q Turning to Coastal Caribbean Oil Company, you 
didn't ncime it at the time we went through it the first 
time. I need to know a little more about that. 

Who were the principals in Coastal Caribbean? 
A I have forgotten the principals in it, but the 
Bernstein Brothers had a large equity position in Coastal 
Caribbean stock. It's a stock that's traded on several 
over-the-counter exchanges. Boston, Philadelphia, Seattle 
and so forth. 

Q Were there other principals besides the Bernsteins? 
A Yes. I'm saying he had a large — I told you I'm 
getting tired. It's late in the day. It's a company that 
issues a standard annual report once a year, and it's got 



mmm 



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uNWsra 



460 



a normal board of directors and has an annual meeting. I 
forget the guy's name. The guy has been president of it 
for a long time. I just can't think of his name at the 
moment. 

Q Have you or anybody associated with your companies 
ever invested in Coastal Caribbean? 

A Yes. I own a few shares in Coastal Caribbean. 

Q And when did you purchase those shares? 

A I don't know. I guess that at the time I started 
working, doing some work for Mr. Bernstein. 

Q Approximately when? 

A I told you I remember that happened shortly after 
I retired. It could have been '79, could have been '80. 

Q Do you know anybody else who has shares in Coastal 
Caribbean? 

A The only other person I know of who has shares in 
it and monitors it fairly closely is Felix Rodriguez. 

Q And how do you know of his interest in it? 

A Because he discussed it with me. Essentially, 
I met Bernstein through Felix, and I know that he has some 
shares in it or had sane shares in it and is monitoring 
developments in the company very closely. 






wmm 



461 




461 



Q Felix Rodriguez? 
A Yes. 

Q Do you know what the approximate value of those 
shares are? 

A No, I don't. 

Q Is it a substantial block of shares? 
A No. I don't know that. I really don't know. 
MR. HOLMES: Let me check off some things. 
MR. MONSKY: May I go to Coastal Caribbean? 
MR. HOLMES: Of course. 

EXAMINATION 
BY MR. MONSKY: 
Q Did you know Richard Secord owned stock in 
Coastal Caribbean? 

A No, I don't think I ever heard him discuss Coastal. 
Q He acquired his stock about the same time you 
acquired yours. 

Was there something special about Coastal 
Caribbean that led you to acquire your shares? 

A No. It was a situation that this individual, 
Maury Bernstein, was very enthusiastic about, and he ' s a 
fellow who made an awful lot of money in the stock market, and 

i 



m\mm 



462 




462 



he got me interested in it. I did some work for him on the 
thing, in terms o£ leases off of Florida, and I bought shares 
in it. 

Q Do you know if he knows Richard Secord? 

A I don't think he does. That's an opinion. I don't 
think he does . 

Q Have you met Mr. Dill or Mr. Pearman — 
P-e-a-r-m-a-n? 

A No, I have not. I'm not familiar with those names. 
EXAMINATION 
BY MR. HOLMES: 

Q Do I understand that you purchased shares in 
Coastal Caribbean but have never sold shares? 

A I have sold and I have purchased. 

Q In what order? 

A Well, I would have had to buy them to be able 
to sell them, and so I bought some and then there have been 
stock options at various times. I purchased the stock 
options and sold, and so forth. I bought some shares. 

Q What I'm getting at is, have you traded them on 
a buy-sell, buy-sell basis or just been one purchase and 
then a partial sale? 



mimw 



463 



wftssro 



463 



!! 

jj A Basically, I have held them for a substantial 
;' period of time. You're asking was I turning in the stock 
or something on a speculative basis, the answer is no. 

Q You purchased and then you sold some? 

A Right. 

Q And then did you purchase more later after the 
first sale? 

A At different times I had purchased and sole. As 
the stock has fluctuated, as its problems have changed. 

Q And you have monitored those changes yourself, I 
gather? 

A. Yes. 

Q But you never discussed those changes with 
Secord? 

A I don't ever recall discussing those chemges with 
Secord. 

Q You never discussed the company at all with 
Secord? 

A Not that I can think of. I don't recall discussing 
it with him. 

Q And other than Rodriguez, you don't know of 



k 



464 





464 



anybody else who owns stock other than Bernstein? 

A Bernstein. I know other people. I can't think of 
the guy's name. There's a fellow in Philadelphia that's 
accumulated a lot of stock. He's an investor. I can't think 
of his name. I can't dredge it out of my memory right now. 

Q have you ever heard of a man named Sam Bamieh — 
B-a-m-i-e-h, a Saudi Arabian-American businessman? 

A Oh, wait a minute. Is this the fellow who was 
written in "Regardie' s" magazine recently? 

Q I don't know whether he has been, but it makes 
sense. He lives here in the D.C. area. 

A There was an article that appeared in some 
magazine about a guy who's name is very similar to that. 
I don't know him personally. 

Q Have you done any business with any company of 
his? 

A No, I have not. 

Q Do you know of a cranpany named IDG, for Industrial 
Development Group? 

A No, I'm not fauniliar with that. 

Q Have you ever heard of a company known as ADG, for 
Arab Development Group? 



UNe^StFlEO 



465 




465 



A No, I have not. 

Q Do you know of a company named Argo Systems? 

A Argo Systems? No. 

Q They dealt, at one time, in laser sights. 

A No, I'm not. 

Q Have you ever discussed any laser sight business 
opportunities with Hakim or Secord? 

A I don't have any memory of laser sights ever coming 
up in any discussion. 

Q Have you done any business discussions about laser 
sights with any person? 

A Not that I know of, no. I don't recall any laser 
sights . 

Q Do you know of a company n2uned Century Arms? 

A Century Arms? 

Q Based in Canada. 

A No , I don ' t . 

Q Have you ever met an individual named Mandy 
Higginsberg, also known as Weisenstein? 

A No, I;m not familiar with that n2une. 

Q Do you know of a company named Trans World Arms? 

A No, I'm not fauniliar with them. 





.nt 




466 



UNMSm 



465-A 



Q Have you ever discussed a machine gun manufacturing 
business opportunity with any person over the years in the 
last several years? 

A I don't know that I — a machine gun? 

MR. MC KAY: Machine gune manufacturing. 
THE WITNESS: I talked with a fellow a couple of 
years ago from a company called Tround -- T-r-o-u-n-d -- 
that makes a cartridge that is shot into the face of 
rock formations for mining for drilling, but this fellow has 
been developing a gun called the Tround gun, and it's like 
a Catling gun. I talked with him periodically, and he called 
me up about a year ago. He was involved here in a show 
in the Washington area. He asked me to come down to the 
show where he was participating here in some defense thing. 
I didn't get a chance to go to it. 

Q What are the applications of this Tround gun? 

A I don't know. It throws out a round which has 
a lot of little needles in it. You might be able to use it 
in SDI or something like that. 

Q Could you explain that to me? 

A Well, you throw out a big field of fire, and you're 
blanketing the sky with metal, and if metal has any impact 



vm.mm 



467 



UNtrera 



466 



on penetrating anything that's flying through that. 

Q It's not designed as an antipersonnel weapon 
at all? It's an anti-electronic measures weapon? 

A I would say it could be used against personnel. 
He had, at one time, developed a hand gun many years ago 
on this particular principle and developed some sort of 
rifle at this point in time looking at it for a Catling 
gun type of arrangement. 

Q I take it you never had any business involvement 
with this? 

A No. I went up and looked at his plant, looked 
at what he was doing in the drilling area. I never did any 
business. I never bought anything from him, so forth. I did 
look at it. 

Q Have you ever had any business — and of course, 
I'm always including the companies — with the Saudi Arabia 
National Guard? 

A No, I have never worked for the Saudi Arabia 
National Guard. 

Q Since you retired, have you had any business with 
any shipping company other than the ones that you have 
already mentioned? 




liii^unJOn I 



468 



mmma 



467 



A No. I can't recall any. 
Q Do you know a man named Ed DeGaray? 
A No, that name doesn't tell me anything. 
Q Does Corporate Air Services mean anything to you? 
A No. I think that was one that was on here. 
Q Yes. Have you or any company that's on the list 
that we made this morning or that is one of the ones you 
responded on behalf of, had any deposit in any bank account 
outside of the United States, other than the construction- 
related bank account in Kuwait? 

MR. MC KAY: I don't understand which company 
you're asking him to respond to. We had four companies 
that were subpoenaed. What else are you asking him to 
respond to? 

MR. HOLMES: I made a list of companies this 
morning, the ones he was associated with: 

API, RIT, SSI, Triangle Associates, STC, EATSCO, 
Treuis-World and Bernstein Brothers. 

THE WITNESS: What's your question again? 
MR. HOLMES: That's an inappropriate list, 
because I included Trans-World Oil and STC. 



mmmii 



469 



468 



\imm 



BY MR. HOLMES: 

Q Have you or any company that you were a director 
of, officer of or controlling employee of, ever had a 
deposit in a bank account outside of the United States, 
other than in Kuwait? 

A I don't consider myself to be those categories 
you used to apply to TGS and RAI, and we have no accounts ; 
other than the Kuwait bank account that we had in a foreign 
bank account. 

Q You lost me when you qualified it at the beginning. 

A Well, I have only been an officer or director, 
so forth, whatever the other items were that you mentioned, 
for the company TGS International and RAI. Those companies. 
The only foreign bank account we had was an accommodation 
account in Kuwait, where we had to pay for local materials. 

Q Let me ask the question in a slightly different 
way to get a slightly different situation. 

Have you, through any mechanism, whether it's 
by ownership of shares in a corporation or control of the 
corporation or through a lawyer who controls the corporation! 
or any other agency or any other method at all, had control ; 
of any funds outside the United States, other than the 




470 



ytfllUSSPlED 



469 



Kuwait bank account? 

A No, I haven't No corporate activity that I know 
of. 

Q We're not talking strictly corporate activity. 
I want to know if you, Theodore Shackley, through any method, 
corporate or noncorporate, have had control of a foreign 
bank accovint, whether it's in a bank or fiduciary or 
depository. 

A I'm not sure what you're — I've tried to answer 
the question. I told I don't through corporations. What 
else are you trying to get at? I told you the only 
companies I have been an officer or shareholder in have been 
TGS and RAI . I'm not following you. You've lost me 
somehow with the other part of your question. 

Q Mr. Shackley, I'm sure you're aware, through your 
experience in the CIA, that there are a number of ways of 
controlling funds without having your name on the bank 
account or without have specific direct corporate control 
of a bank account. 

Do you agree so far? 

A Yes. But I told you, I don't have any — 

Q For exeunple, a person can have a corporation 



««ws«i) 



471 



UNgl^glFIED 



469-A 



created in the name of ABC in Panama and then instruct his 
Paneunanian lawyer to have that corporation open an account 
in a bank in some other country, and then that corporation 
can control the money at the direction of the person who 
originally opened the account, without having his name 
associated with it. 

A Haven't I answered that? I told you I don't have 
any or haven't had any corporate-related accounts except the 
Kuwait account. 

Q I want your answer on the ultimate question of 
whether you, Mr. Shackely, through any mechanism at all, have 
had control — 

A Are you talking about me, personally, as an 
individual or talking about corporate structure? 

Q Either one. Personal or in a corporate structure 
or through a partnership, through an anonymous society or 
any other mechanism, have you had the eUjility to direct the 
payment of funds from any foreign account at any time since 
you retired? 

A In a corporate activity, none whatsoever. At one 
point I had a personal account in Bermuda, where I had a CD 
in a Bermuda bank. 

Q When was that? 



m.mm 



472 



iWfREO 



470 



A That was probably about 1980. 

Q And the amount of the CD? 

A I don't remember. It was probably about $15,000, 
maybe $20,000. 

Q And the source of the funds? 

A Those were funds that I earned in lecturing and 
that Italian war game that I discussed with you. 

Q So they had never been brought ashore from the 
Italian payment, paid into Bermuda? 

A No, I was paid by Mr. Ledeen. I opened an account 
in Bermuda. I had that account for a short period of time, 
because of the difference in interest rate. I subsequently 
closed that account, brought the money to the United States, 
and that's it. It's on my income tax, and so forth. 

Q The entire cunount was paid you by Ledeen? 

A Yes. 

Q And it was in exchange for your services in the 
Italan war games? 

A Right . 

Q So lecturing was as a component of the war games? 

A Right . 



mmME 



473 




471 



Q And was approximately $15,000 or $20,000? 
A I think that's what the account was; right. 

Q When did you bring it ashore? 

A I don't know. Normally, I think I did that 
through a bank transfer or through a check. 

Q When it was brought into the United States, it 
was brought into the United States as a credit, as opposed 
to a loan? 

A Hes. I mean, it came into my account. It wasn't 
a loan from me to me, if that's what you're saying, 

Q I'm not saying that. 

A No, I mean, if that's what you're asking, was it 
a loan from myself to myself, the answer is no. It just 
came in, and it was a deposit to my account, and that was 
it. 

Q And the name on the account? 

A It had my name. 

Q I take it then, from the answer to the previous 
questions, that you have never controlled funds outside of 
the United States in another name? 

A No. Since I have retired, I haven't had any. 



NtEsssra 



474 



\imm\\ 



472 



Q No, within the United States — 

MR. MONSKY: Let me ask, can we go off the record 
one second? 

(Discussion off the record.) 

BY MR. HOLMES: 
Q Mr. Shackley, while we were off the. record, we 
discussed a couple of examples of possibilities of how money 
or representatives of money can be controlled, indirectly. 

For example, an oral agreement with a person to 
act as agent or representative of you in controlling money 
for you or, as another example, a bearer certificate or a 
letter to a Swiss fiduciary naming you as the true owner of 
the particular account or other agreements by which a person 
can become an owner of an account without having his name 
on the account or any paper evidence of his control over the 
account, and you have indicated that not only do none of 
these examples apply to you, but no other similar exeunple 
does. 

And I'll ask you this question to cement that. 

Mr. Shackley, other than government funds, have 
you ever had, through any mechanism, control of any funds 
outside of the United States other than your Kuwait account? 



mmm 



475 



uNWSira 



473 



A I was just talking about the Bermuda account. 
Q And your Bermuda account? 

A No, I haven't, other than those that we have 
discussed. That is, the Kuwait account and the Bermuda 
account. 

Q And that includes the years that you were in 
government service but excludes money that ?ou controlled 
on behalf of the government during those years? 
A Yes, that's correct. 

MR. HOLMES: Mr. Shackley, I'd like to prevail 
on you, if I can. I know you're tried, but I'd like your 
opinion on one thing. 

We can go off the record and discuss it, if you 
want. 

Let's go off the record. 
(Discussion off the record.) 
MR. MONSKY: On the record. 

EXAMINATION 
BY MR. MONSKY: 
Q Have you heard of a company called ARVAG — 
A-R-V-A-G? 

A No, I have not. 



iiw.e,ici\i(jew:i[n 



476 




E 



474 



Q A Swiss corporation? 

A NO. 

Q ICT, International Chemical Trading? 

A No, not familiar with that. 

Q Karma Trading Corp.? 

A No. I don't believe I've ever run across those. 

Q Overseas Corporation? 

A No, I'm not familiar with them. 

Q And with respect to BDM, my understanding is, you 
haven't had an transactions with them in the past few years? 

A I have never really had a transaction with them. 
I had one conversation a number of years ago with a friend 
of mine, who asked me to fill out some forms for him to be 
on a consultant call list and never did do it, and I have 
never done any work for them. 

MR. HOLMES: That concludes our deposition, 
Mr. Shackley. 

I appreciate your time. 

(Whereupon, at 7:25 p.m., the taking of the 
deposition was concluded.) 



UNHLASSFIEO 



477 







THIS IS A COVER SHEET 

FX)R 

INFORMATION SUBJECT TO 

Basic security requirements contained in Department of Justice Regulations 
(28 CFR Put 17). 

The unauthorized disclosure of the information contained in the attached docu- 
ment(s) could reasonably be expected to cause exceptionally grave damage to the 
national security. 

Handling, storage, reproduction and disposition of the attached document($) will 
be in accordance with policies and procedures set forth in regulations cited above. 



^*^ L2^ **^7 



fflto mtr *tm 1$ —rltiM*^ »*«■ itpfmt^ ficm datn/M iocwmnal 








478 






DEPOSITION. OF GASTON J. SIGUR 

Tuesday, April 21, 1987 

U.S. House of Representatives, 
Select Committee to Investigate Covert 
Anns Transactions with Iran, 
Washington, D.C. 



1 
2 
3 

4 
5 
6 

7 

8 

9 
10 
11 
12 
^3 The committee met, pursuant to call, at 2:00 p.m., in 

14 Room 6205, Department of State, Washington, D.C, with 

15 w. Neil Eggleston (Deputy Chief Counsel of the House Select 

16 Committee) presiding. 

17 Present: W. Nell Eggleston, Deputy Chief Counsel, 

18 Timothy E. Tray lor. Counsel, Steven Berry, Associate Staff 

19 Member, Minority Staff, on behalf of the House Select Committee 

20 OD Covert Arms Transactions with Iran;' and Terry A. Smiljanich 

21 on behalf of the Senate Select Coonlttea on Secret Military 

22 Assistance to Iran and the Nicaraguan Opposition. 
23 
24 
25 






479 



10 

11 



14 



Vihereupan> 






GASTON J. SZGUR 
having b«en first duly sworn, was called as a witness herein, 
and was examined and testified as follows: 
EXAMINATION 
BY MR. EGGLESTON: 
^ Q It is Dr. Sigur, correct? 

8 A That is right. 

9 Q Olcay. 
A However you want to do it. 
Q Or. Sigur, my name is Neil Eggleston. we have been 

^2 introduced. I am Deputy Chief Counsel of the House Select 
^3 Committee to Investigate Covert Arms Transactions with Iran. 

I am here today pursu^tnt to the Committee ' s mandate to 
^5 investigate the circumstances surrounding the Iran/contra 

16 affair. 

17 The paraBMters of the investigation are all spelled out 

18 in what !• called H. Resolution 12. Terry Smitjanich is with 

19 the Senate Connittee and he is also here and when I am done 

20 will h«v« questions on behalf of the Senate that he would 

21 like to pose to you. 

22 So it is really being conducted in the guise, I think, 

23 of a joint deposition of you. 

24 Let me start, if I could, by just asking you if you 

25 could generally tell us in a brief fashion about ;^ypur own 

' "" ^- ' •■~i 1 n o c* r 



^ 




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background, where you were born, grew up, your education 

and your jobs prior to the time you first began with the NSC. 

A Well, of course, I have got a number of years behind 
me. 

Q That is why I — 

A That is quite a little ways. I don't know how far 
back you want to go. 

U Let's just go with your education a little bit. 

A I got my degrees from the University of Michigan, 
B.A. , M.A. , and Ph.D., and I did my work in history. Far 
Eastern h story. Then I worked at the university for a time 
as an assistant director of international affairs, did a 
little teaching — in the international center, not internation 
affairs, assistant director of the international center, 
teaching. 

Went to the Asian Foundation -for quite a number of years. 
I was with them from 1956 through 19S9 and then I took off a 
couple years. I was with the Gotham Foundation and did 
some teaching in Japan and then I in 1962 went to Afghanistan 
as the Asian Foundation representative.- stayed with that 
organization until 1972 when I became the director of the 
Institute for Sino-Soviet Studies, professor of international 
affairs, George Washington University. 

Stayed there until 1982 when I went with the National 
Security Council in July of 1982. And I took leave from the 



-^n""^ 



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481 



university; and went bac)t to the university full time in 
October of 1984, remained a consultant to the National 
Security Council and was at the University until March 1986 
when I took this job. 

Q What is your current title? 

A Assistant Secretary of State for East Asian and 
Pacific Affairs. 

Q Maybe if you could just tell me very briefly what you^ 
current job entails, what are your duties here at the State 
Department? 

A Well, I am responsible really for all affairs 
involving the East Asian and Pacific region and for policy in 
that region. That covers China, Japan, Korea, Southeast 
Asia, Taiwan, Australia, New Zealand, Pacific Islands, Burma. 

Q Let me — 

A I am chief advisor, in other words, I guess the way 
we put it, to the Secretary of State. 

Q Let me *rect your attention back to the period of 
tine between July of 1982 and October of 1984 when you were 
actually, I take it, assigned to the »SC not as a consultant, 
but you were actually there. 

A That is right. 

Q Can you describe what your jobs were or what your job 
was during that period of time and what your duties were? 

A Again, from the point of view of the National Securit 



bNClA^biJp felt^ SECRET 



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Council, I oversaw Asian security nutters, Asian affairs 

as the NSC operated. I was responsible to the National 
Security Advisor at the time and I came in when Bill Clark 
was the National Security Advisor and I stayed on when 
McFarlane took over and then, of course, stayed as 
consultant. My duties were quite broad in the sense that I 
dealt with the whole of East Asia and the Pacific and I had 
two people who worked with me. 

Q Who were they? 

A David Locks and Dick Childress. Locks was China, 
but also he was, basically he had an academic background, 
I mean, economic background so he was helpful in that regard. 
Childress was a military man so he was helpful in that 
regard. I was not, of course. 

I didn ' t have that kind of background . 

Q Were you then Director of the Directorate on East 
Asian Affairs? 

A Yes, as the Director. 

Q And there were these two other people in your 
Directorate? 

A Yes. 

Q I take it your job was basically, advising and 
coordinating, advising the National Security Advisor on East 
Asia? 

A On East Asia and the Pacific, yes. 



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Q Did your title and job description remain 
substantially the same throughout the period of time? 

A Throughout the period, except in July of 1983 
I was named Special Assistant to the President. 

Q Was that a name change, change of title or just 
a change in the ]obs? 

A No. Didn't mean any change in job at all. i did 
exactly the same thing. 

Q I understand that -- 

A The working title was Senior Director and Special 
Assistant to the President which meant you could eat in the 
White House mess. 

Q I had heard there were changes in the way it was 
set up. 

A But the job was exactly the same. 

Q OJcay . 

A The job was no different at all. 

Q Let m« take you then before I sort of go back to 
that time period, after you left there in October 1984, and 
went back to — did you say Georgetovm' or George Washington? 

A George Washington. 

Q You remained as a consultant for a period of time to 
the NSC. 

A Yes. 

Q How long did that last? 



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A I remained until I cane here in March 1986. 

Q Did you — if you could describe the circumstances 
around that. Did you have an office there still? 

A I kept the same office I had and, in fact, I still 
oversaw the policy and still reported directly to the 
National Security Advisor, but I didn't spend nearly the 
amount of time on it. I tried to spend, say, up to three or 
four hours a day, I would usually go over, say, about a 
quarter of seven in the morning or something, and attend the 
7:30 staff meeting, stay maybe until quarter of nine or 
nine, and go over to the university and spend the rest of the 
day there and go back for a couple of hours in the 
evening. 

Examination 
By Mr. Berry: 

I an Steve Berry. Was that normal or usual? Were 
there other consultants with similar duties? 

A I am not sure anyone else had anything quite like 
that, Z don't believe. 

Q You retained all your securiTty clearances and 
everything and had the same access? 

A Yes. That is right. And there are consultants 
who have done that, retained their security clearances as far 
as I know. 

Q Were there other consultants at the time that did 



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that? 

h I can't tell you. I really don't Icnow. 
EXAMINATION 
BY MR. EGGLESTON: 
Q Were you replaced? Was your position in 1984 

filled? 

A No. It was not. 

Q So you essentially retained your job? 

A Yes. 

Q How many people v(f^nq under you, did the same 
two individuals remain in your directorate? 

A Yes. 

Q I take it after Mr. Poindexter became National 
security Advisor you continued to consult with him? 

A Continued the same, that is right. 

Q Let me as)t you a few other questions about the 
organization of the NSC or about your participation. During 
the period of tine that you were there as a regular senior 
director, 1 take it you attended the senior members staff 
nM«tinga; ii that right? 
A Yes. 
Q And during that period of time were they held on a 

regular basis? 

A Yes, as I remember they were. 

Q Did you continue to attend those? 



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A I continued to attend those. 

Q I understand that during 19 35 and 1986 they were held 
on four days a week. Am I correct in that? 

A I thought they were £ive. 

I don't know where you got the four from. 

Q I thought for some reason on Wednesday it was 
omitted. 

A You may be right about that. Sometimes there was no 
meeting on Wednesday, but I am not sure that was true all the 
time. 

Q It is not important. 

A That is right, though. Sometimes Wednesday was 
omitted because there was a breakfast that Poindexter and 
Shultz and Weinberger held, and Casey. That is right. Yes. 
You are right. 

But that waa not always the case. Quite often, in fact, 
those breakfasts were not held. But you are right about 
that, yes. 

Z had forgotten that. 

Q Z assumed you had attended them. I understand 
those were for senior members. Were there also, I take it, 
staff meetings that involved the entire staff of the agency? 

A Yes, one a week. 

Q Did you attend those as well? 

A Not always. Often not. Sometimes. 



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Q Okay. I thought you might not have. 

A Not always. 

Q Let me, having covered the background of your 
involvement at NSC, let me ask you questions about the 
various areas that are of particular relevance to this 
investigation. 

A Sure . 

Q What I hope to do is ask you as to each of the 
countries your best recollection and ask you some sort of 
follow-up questions. 

Let me first ask you aboutl^^^^Band if you could 
just relate to me as best you recall your involvement in 
that event I would appreciate it. 

A Well, as I said last time, Ollie North came to me and 
I thought it was in 1985 and I hav« been looking over my 
calendar, I see I had a breakfast meeting with^^^|^^m|ii 

1984 but 1 can't believe it was that early on. I 
thought it w«« in 1985, but I don't have anything in my 
calendar on that. In any event, Ollie -North came to me and 
asked if I would, he said that he and Bud wanted to know if I 
would get in touch wiU^^^fcecause they understood that 

ould be interested in helping in Central America with 
the contra*. ^^^^ 

And I said I would, so I had met witA|H^I believe 
it was for breakfast at his home on a Saturday — that is 



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why this dat* oe^HHVl984 caught my tyt. 
Q Is that a — 

A Sut that seema awfully early. I didn't think it 
was that early. But maybe it wa*. Maybe I an wrong about 
that. But I didn't think so. 

I thought it was 198S. In any event, I had 
breakfast with hin and I talked to hin about this. Ollie 
had told me that it was a desparate situation for the 
contras and that they needed funds for food and clothing and 
medicine and all that sort of thing, or everything, I guess. 

So I spoke to^^^B in that regard and he said, well, 
they had an interest in helping financially, but through the 
United States Government. 

I went back after the breakfast and I saw 
NcFarlane and I told Bud about this conversation. I said 
they say they have an interest, but they want to provide the 
money through the U.S. Government. 

He says that is impossible. That can't be done. 
Can't do that. 

So X told North that, what Bud had said, as well as 
and then the next I had a call froa Ollie and I can't 
remember, again, I thought this was a relatively short period 
of time, but it could have been longer. I mean, I thought 
it was weeks. It could have been months, perhaps, but I — 
I just don't know. 

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But In any event, he asked if I could arrange to 
wlth^^Aand have him talk^^^^^ And he 
gave.aa I recall then — I am not sure I said this last 
time — but I think if I remember right, he talked about the 
having someone f rom^^^^^^^^^^^^^Kr 
^^^^himself meet, get together with the centres, with some of 
the contras. 

In any event, I arranged a meeting betweei^^^Hand 
Ollie to take place at the Hay Adams Hotel. The only — 
I don't have a date for that. I have a Hay Adams Hotel 
tea with nobody listed which is August 2, 1985. That is 
possible. 

I can't swear to that, but it is possible that that 
was the date. 

Q Okay. 

A In any event, I brought 'Ollie over there, introduced 
him to^^^Hand I left and I don't know what the 
conversation was. The next thing I heard was -- again, I don't 
know how long a period this was, I really don't — I didn't 
think it was that long, but I coul ' be' wrong, the next I 
heard was that Ollie telling me^^^^Hl telling me, I guess, 
I had a call fron^^^Hthat^^^^Hwas prepared to offer 
million dollars to the contras. 

So I told Ollie this and again on the timing I really 
don't know how long a period of time this took, bxit Ollie callec 



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me back and asked If X would cal 



«y to him that 

th«r« would be someone representing the contras to 90 by his 
office and who would tell him how to provide the funds. He 
may conceivably have given me a name. If he did, I don't 
have any recollection of it. 

He might have. He may not have. I don't know. 
He just said someone would in the next couple of days. Then 
^^^H^^Htold me that that had taken place. 

Now, that is all I know. I don't know whether the 
funds actually got anywhere or what. I don't know anything 
about it. 

To pursue that, there was a period of time that 
passed when Ollie came to me again and spoke of the desparate 
need of the contras and whether^^^^Hcould do anything 
further financially and I called^^^^Bmentioned it to him, 
he said he would check, he came bxdk and said, yes, and I 
told Ollie and that is I think the last Z heard of it. But 
my understanding is something was done further. 
Q On the second occasion. 
A On the second occasion. 

Another million. 
Let me take you back through thie and ask you 
some other sort of detailed questions. First, what date 
was it that you thought the meeting was in August — let me 
ask you this way — your calendar reflects a meeting in 



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August 1984 wlth^^^^^^l You thought it v»b c 
Saturday. I didn't g«t down to th« exact date th£ 
calendar reflected that meeting taking place. 

A August^^H But that seems to early. I can't — 
it is hard for me to think — I used to meet^^^H you 
understand, about once every couple months either in his home 
or at his home or at a restaurant. We used to get together 
and talk about our relationships. 




Q Okay. 

A So that was fairly standard procedure to meet, 
but I don't have any other breakfast as such written down in 
1985. I am pretty sure it was a breakfast. And I am pretty 
sure it was a Saturday. 

Q And August 18, 1984, is a Saturday. 

A That is the only one I have written down. But 
that doesn't mean it didn't happen in 1985, you see what I 
aa saying. Z just want you to be sure I am not saying that 
that was it. 

It may have been and it may not- have been. 

All right. Let me ask yoa, at the time let's just 
assume, although I understand you are not saying it was around 
August 1984 that this meeting took place — 



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A It could hav« b««n August 1985 i« what I am ««ylng. 
But let'i say a» of August 1984 did you know that — 
I hav« Colonel North's calendars so I was looking just to check 
some stuff and we will take a look. 

A Fine. 

Q Did you know that at that time, as of August or 
so of 1984, that the contras was one of the areas that was 
within ~ I guess it is called an account or one of 
Ollie North's accounts? 

A I didn't know specifically what Ollie did. I 
assumed — there was no doubt that he dealt with the 
contras and with Central America. No question about that. 
But how much it was his account, I didn't know that. I 
really didn't know what he was doing. 

Q All right. 

A I really didn't. 

Q Did you have much previous -- prior to these 
events that you will tell us about and have told us about — 
did you have much previous contact with Colonel North? 

A Bardly any. 

Q He did not come within East Asian areas at all? 

A Oh, no, no. If he did, not with me. 

Q Hot with you, okay. You said as you went 
through this that the first thing that happened 

I wea that Colonel North came to you 







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and asked you. 
A Yes. 

Q Did he come to you in person or on the phone? 

A In person. He talked to me in person. 

Q Was anybody with him? 

A NO. He was by himself. 

Q This was at — let roe help the time out a 
little bit. It seems to me at one time you be able to 
remember is the October 1984, whether or not you were -- in 
October 1984 is when you ceased being a regular NSC employee 
and also have your George Washington duties. 

DO you think this took place in that period of 
time that you had already gone back? 

A I can't say. As I say, initially I thought it^ook 

place in 1985. 

Q Right. -...- 
-.. &..- That was my initial thinking until I saw that thing 
on the book. I thought all of this took place in 1985. 
Q Right. 

A Until I looked at my calendar, then I got 
slightly confused when I saw this. That is if only thing 
because I thought it w.. 1985. That certainly was the way 
my thinking was. It was 1985. 

Q was it just the two of you in the office? 

A 1 am not sure it was in the office. It could have 



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b««n anyvh«r« ovar thara. 

Q In tha NSC? 

A It could hava baen anyvhara, but it was just tha 
two of us. I aa pretty sura thara was nobody alsa there. 

Q Ha didn't bring anyone with hin and you didn't 
hava one of these two guys with you? 

A No. There was nobody there. To the best of my 
recollection, it was just the two of us when he said he and 
Bud McFarlane had these discussions and they wanted to know if 
Z would speak with^^^Kabout it. That was it. 

Q I know that you indicated ha told you about the 
situation that the contras were in, they had run out of money. 

A He gave a very strong case about how terrible their 
situation was. 

Q Did ha tell you what the money would be used for? 

A No. Basically I got tha~idaa that it would be, 
again, humanitarian, ha talked about the terrible shape they 
were in, all tha things they needed, medicine, there was no 
madlcina. Everything. 

Ha want into a long, long story alout tha situation, 
you know, and how terrible it was. Not specifically, 
though, no. 

Q How long did you talk to him? 

I know I am asking you about things that happened 
a long time ago. 

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hi 



A I don't think it lasttd longer than fiv« minutes. 
But I don't know. Five or ten minutes, maybe. 

I take it at this time you kne( 
fairly well. 

A Oh, I have known^^^Hfor a long while. 




~0 And do you have any recollection, how did you get in 
touch wit^^^^^H just call him up? 

A I called him up on the phone, I think. 

Q How long was that after this encounter with 
Colonel North. 

A It is hard for me to say. I would guess it 
wasn't that long. A couple weeks maybe. 

Q Okay. 

A Something like that. 

Did you have the sense from Colonel North in his 
discussions with you that it was an emergency situation? 

A Oh* sure. No question. He presented it in that way 
Yes. 

Did he give you any indication of how much money 
he was hop/ing that^^^^^<rould be willing to give? 

A As much as possible, I think, is the way he put it 
and he was talking about several million, I think. 

Q Is that right, your impression was — 






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A Hy Impression, was, y«s, Z can't r«iMinb«r exactly. 
But h« was talking about as much as possible. 

Q Was th« m««tln9 witt^^^Bthen scheduled 
specifically to discuss this? 

A That was my intent, yes. Though I think we talked 
about other things, other possible relationships, but the 
meeting was basically for this purpose. 

Q Did — 

A No one else was there. 

Q Where did the breakfast meeting take place? 

A In his home. 

Q In his home? 

A Yes. 

Q Has anyone there during the breakfast? 

A NO. 

Q Just the two of you? 

A Right. 

Q But during the course of that, how did you relay 
the request? Did you relay it as having come from 
Colonel North and McFarlane or from the O.S. Government, 
maybe if you could flesh that out. 

A I can't remember basically how r put it, but I 
certainly put it in terms of coming from McFarlane, I mean, 
the National Security Advisor, no question about that. That 
is the way I put it. 



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Q What ~ do you know what you told him the monay 
would b« us«d for? 

A No. As I recall, I told him the great need that 
they had told me about and so forth. I am not sure that I 
ever specifically said, other than I told him of the need 
and the things that they have to have. 

Q Old you tell him ~ did you ask for a specific 
amount of money? 

A No, I don't think I did. I think I talked -- no, 
in fact, I am pretty sure there was no specific amount of 
money . 

Q Was there any discussion about the amount of money 
they might want to give or not give during that time? 

A NO, I don't believe. To the best of my recollection 
I don't think he said anything about that. I think the first 
time he said anything about money .was when he came back and 
said they could provide a million dollars. I don't think 
he said earlier. 

Q Nh«n you first talked to Colonel North about this 
did you have any discussion with him or qualms about whether 
or not there was — donating money by third countries was 
legal or illegal? 

A I asked hin. 

Q You did? 

A Yes, I said, are you sure everything you are going 



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to do here is legal? He said, oh, yes. 

Q Did you get any sense of how he knew it was legal? 
A He said they had checked it out with lawyers. 
Q Did he tell you what lawyers? 
A No. 

Q Did you have the impression it was the White House 
Counsel's Office? 

A I had no impression at all. I really didn't think 
about it one way or the other. 

MR. BERRY: What was the policy at that time at the 
NSC, especially when you came into a grey area where you 
thought you should at least check with legal counsel, was the 
policy to check with NSC legal counsel or what was the 
stated policy of the NSC? 

THE WITNESS: I can't answer that because I don't 
know what that was. Z have no idei. 

MR. BERRY: There was no enunication of a policy 
then that you can recollection? 

THE WITNESS: Not as far as I knew. 
MR. BERRY: When Mr. McFarlane indicated to you, 
you cane back to — 

MR. BGGLESTON: Could we wait until I get to 
that? 

MR. BERRY: Sorry. 

MR. EGGLESTON: Otherwise we will have a problem. 



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Do you hav* anythin? els* about what w« hav« now? 
MX. BERRY: Just the l«9al question. 
BY MR. EGGL£STON: 

Okay. Old you talk to anybody else other 
than Colonel North about whether or not there might have been 
a legal problem? 

A No. 

Q During this course prior to talking t 
the first time, did you talk to anyone at the State 
Department or anybody else about this? 

A NO. 

Q Did Colonel North ask you not to or was there any 
reason not to? 

A Not specifically. I don't think he specifically 
asked me not to, I just didn't. 

Q Okay. 1 am curious that"it is a contact between 
the States Governnent and^^^^^^^^^^^^^^^^^H 
involving asking for money to be provided at the United 
States Govemawnt's request. Is that something that you would 
have normally brought the State Department in on or is that 
the kind of thing — 

A I never thought about it one way or the other. I 
thought this was a request from McFarlane. He was my boss and 
I did what he asked me to do. It was as simple as that. My 
assumption was that this was agreed upon policy. 



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Okay. 

A Z was not doing something that othsr people — after 
all. McFarlane was in daily contact with Shultz and 
Weinberger and Casey. I assumed that these things were -- 
Q Right. 

A — were done. I didn't have any reason to question 
that. Why should I think that there might have been 
something else? 

I was asked to do it. I did it. 
Right. Did you prior to the time you spoke to 
did you discuss it with McFarlane at all? 
A Not prior. It was after I talked. I had no reason 
to doubt Ollie at all. I didn't question him for a minute 
and obviously when I spoke to McFarlane there was no reason 
for me to have done so because it was right, I was 
correct. Everybody knew, at least t thought, that on matters 
involving this area Ollie spoke for McFarlane. There was 
never any question about that. 

Q By "this area", you mean the area of the contras? 
A Central America, yes. 

21 Q So you regarded Ollie as clearly having authority 

22 to do this? 

23 A Not a shadow of doubt. 

24 Q To do this thing. 

25 A No doubt. 

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W« h«v« covered that breakfait th«n. A{t«r th« 
breakfast, you come back and you ••• McFarlane at that tiin«? 

A y«fl. 

Do you recall where you saw him? 

A In his office. 

Was Colonel North present? 

A No. 

Q Just the two of you? 

A Yes. 

And I take it — what was the conversation then? 
You told us — 

A Simply Z told him that I had had — it was a very 
short conversation. There was no more than a few minutes. 
I told him in accordance with the conversation I had with 
Ollie and the request he and Ollie had put to me, Z said I had 
breakfast with^^^H talked with him about it. He said they 
might be able to help but they would have to do it through the 
U.S. GoverniMnt. 

And McFarlane said that is not possible. Zt can't 
b« done that way. 

Q Did he indicate to you why it couldn't be done that 
way? 

A No. 

Old you have any understanding why it could not be 
done that way? 



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I thought there was probably something wrong with 



it. 



wrong? 
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Q 



But you didn't have any specifics on why it was 



I didn't have anything specific, no. 
By doing it through the U.S. Government, I take it 
you understood^^^^^Bwould — 

A They would give the money to the U.S. Government, 
that is right. My assumption, you see, it is interesting, 
rather than me bringing it down like that, rather than me 
thinking it was necessarily anything illegal about it. 




I didn't see it in other terms. I saw it in 
those terms perhaps. You know, this is the way I looked 
at it. 




Did Mr. McFalrane indicate to you how it could be 



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done? 

A No. But as I say. when Z talked later with 
Ollie saying about how he wanted to do something about 
introduci(tg hira to the contras, I assumed that is the way he 
and Bud had decided on it, to try it that way. See whether 
that was possible. 

Q To do it direct? 
A Do it direct. 

Q As of the time you spoke then to Ollie, was that a 
conversation you had after you talked to McFarlane? 
A Yes — about the contras? 
Yes. 

Yes, oh, yes. 

Did Ollie already know what you had said? 
No, I told hiffl what I had said. 
I wonder if you had an Indication that McFarlane 
had told Ollie that? 

A Z don't know, it is possible he might have. I told 
hia in any event what McFarlane said to me. I can't recall 
how he reacted. I mean, whether he may have known. It is 
possible. He may have spoken to McFarlane. Yes. Sure. 
I don't know. 

Q You told Colonel North that it was not possible the 
way^^^H wanted to do it according to McFarlane, what was 
Colonel North's reaction? What did he say? 



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A I don't know that h« said anything at the tlm«. i 
think h« sort of shrugged. It was later, I believe that he - 
again, as I say, it was a little later when he came to me about 
wanting to meet with^^^^^^Hmade comments about introducing 
somebody in that outfit to the contra leadership. 

Q Did the discussion with McFarlane or where 



McFarlane said you can't do it that way, did that prompt you 
to ask Colonel North about this, is this okay, is this all 
right, is it legal? 

A No. I thought, frankly, that was the end of it right 
there. Z didn't think anything would proceed from there. 

Q All right. 

A I had done what they asked me to do. I did it. 
That was that. But he came back again. 

Q Then I take it Ollie came back. I think the first 
time you told us, at least to me, you indicated he called you. 
Do you have a recollection he called you on the phone as 
opposed to meeting with you? 

A Z can't remember. He might have called me on the 
phone . 

Q Z know this was the occasion where you started to 
wonder about just what the timing was. Do you have any 
recollection about a year, that is a long time? 

A The only — I know, a year seems an awfully long 
time, and Z can't believe it was that long. Therefore, 



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I think it was in 198S because I do know when he came back to 
me for the second amount, when he asked again if they could 
help further, and I checked with^^^fon that, that 
took place in October of 198S. I know that because there 
is a recollection that I have of someone who was in my 




I didn't talk with him about this. I simply — 
what I am saying I recollect the two things together. 
Therefore, I know it, it is in my mind as being October. 

Q Let me just probe your recollection. 

A Of 1985. 

Q Just to probe your recollection of these events, 
was it a longer period of time between — it %«}uld strike me 
it would be a fairly short p/eriod of time between your first 
contact with^^^H about this and the time Ollie comes back 
and a longer period of time before he wants you to go back to 
them again. 

A I don't think it was all that long. I don't think 
it was all that long. My thinking would have been three 
months, four months, something like that. ' But if that thinkinc 
of August 1984 is correct, then we are talking about a year. 

Right. 

A Which is not impossible, I guess. I have got to — 






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but it just strikes m« as difficult to see it that way. 
To think it was that much time? 

A TO think it was that much time. But I can't swear 
to that. I Just have trouble on that business of trying to 
accept those times. 

Q When Ollie called you, in any event, putting aside 
when it might have taken pl ace, wh en Ollie called you again and 
said he wanted to meet withal take it at that time 
you know that it is again about the contras and solicitation 
of money from a third country. 
A Sure. 

Did you ask him what happened? 
No, I did not. 

Was that just a brief conversation? 
I don't know how long they met. 
I am sorry. I mean, thi conversation about 
setting up the meeting with North? 

A Oh, that was just nothing more than a minute and 
asking me to set it up, that was all. 

Q And so then you do set up the meeting with 
two of them at the Hay Adam, and then after the introduction 
I take it, you left? 
A I laft. 

Q YOU simply disappeared? You indicated before that 
you had « date of August 2, 1985, in your calendar. 












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A I havt that do%ni hera aa tha Hay Adaaa te%. But 
X had tea at Hay Adant on nwunarous occasions so it doesn't have 
to be that. I will tell you the only reason I wrote that down 
as being important is because it ties in with the 
conversation I have listed on my calendar as I having had with 
the^^^^^^^^^^^^^^^^^^^^^^^^^H It is 
possible those two things were togetherabou^this. 

In other words, it fits in timing, but I can't — I 
could be wrong about that. It may not be that. It could be 
another date involved there. 

Q But just to finish our the rest of this story, so 
you leave and there comes a tine then when you hear back from 
again? 
A Yes. 

Is that right? 
That is right. 

How do you hear back from him? 

I can't remember. X think he called me or said to 
me at a lunch or dinner or something, I can't recall. 
Q What did he tell you? 

That they were going to assist. 

Did he tell you how much? > 

A million dollars. 

Did you have any discussion by this time with' 



about how the money was going to get from them to the contras? 






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A 

Did h« ask you about what his next step should be? 
A I can't remember whether he ever asked me that or 
not. I don't think he asked me specifically. I told Ollie 
about it, you know, that he had said that they could assist. 
Ollie said he would make the arrangements or something like 
that. For it to be done, you know. I don't know if there 
was anything further that took place between^^^Huntil the 
next time. 

Q And thereafter as far as you know. Colonel North 
took care of the arrangements of actually getting the contras 
and ^^^^^^^^^H together? 

A That is right. I know absolutely nothing about that 
He said nothing to me about it and^^^^^^^H said nothing to 
me about it. 

I have no idea. 

Q Okay. Then there comes a tine when Colonel North 
comes back to you again. 

A For more money. 

Q Saying they need more money. 

A Right. 

Q Do you remember anything more about the 
logistics of that? 

A No. 

Q Did he come to you in your office or a phone call? i 
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A No, no. X don't rtmenbcr that. It could h«v« b«cn 
X think it was probably — remember now, I saw him almost 
every day at that senior staff meeting. 

Q Right. 

A It could have been after that. It could have been, 
you Icnow, when he said something to me. That is possible. 

Q You indicated before, I think, and X am just 
recollecting this, you placed this around the time of 
October 198S because of the ambassador — > 

A The second go-around. 

Q Was it the day of the second go-around? 

A I am not sure of the date. That I can't tell you. 
But I recall it being around that time because I had — North 
had talked to me about it. I recall and I was seeing our 
ambassador designate and the two things stuck somehow in 
my mind. They happened together. 

Q Right. So you are able to place that? 

A That is why I am able to place that in October, 
which I think is pretty accurate as far as I remember. I mean 
it was October, maybe late October, but somewhere in there. 
Somewhere in there. 

Q Did you contact^^^Bagain then?' 

A Yes. I did. 

Q And what happened? What did you tel 
We need more money? 



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A That if what X told him. I talked to 01li«, oilla 
tells me that they are again desperate ,^^^| said i will 
see what I can do. 

Q Then you are out of it? 

A Then I am out of it. 

So you don't know what happened? 

A No. 

Q Did you get the impression from| 
meetings that more money had been sent? 

A Oh, yes, he told me so. 

Did he tell you how much? 

A He said another million. 

Q Other than those two occasions, did Colonel North 
ever approach you about getting any other money from I 




in later 





A No. 

Q There comes a time in the summer of 1986 where the 
contras end up pretty hurting for money between the time that 
the NHAO money runs out and further congressional money 
that has been appropriated is availabre to them. Did he 
approach you at that time? 

A I don't recall that. 

Q You don't think so? 

A No, I don't think so. 



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EXAMINATION 
BY MR. BERRYt 

Just one question, If I could, or a couple. 
Old North ever describe the type of assistance 

which he wanted to solicit frorai 

A My understanding was we were talking 
fundamentally about humanitarian stuff. That is, he talked 
about medicines, food, clothing. They needed everything, 
obviously. I mean, there was no question. 

Q Ha never used the magic phrases such as 
humanitarian only and not lethal? 

A I don't know as he ever said that to ma, but I 
can't remember that. Not in that sense. It is possible. But 
I don't know. 

1 don't recall. It was clear that they needed everything 
they could have. Everything theycould get, but he talked 
about, as I say, about medicines, he talked about that, yes. 

Q You got the impression that it is basically 
fungible •••istanca, that is, dollars or monies, so that — 

A Yes. No question that ha was asking for money. 

Q Okay. Did Mr. North ever — Colonel No rth ever 
at any tima request that you keep your t*lks wit! 
compartmantalizad, that you never discuss it with anyone 
else? 

A I don't think so. I didn't, but I don't think he 






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ever asked that. 

Oid^^^^^^l ever indicate to you^hat he was ever 
contacted by any other U.S. Government agency or official 
about this issue? 

A No. 

Q Do you know if Ollie North ever indicated that he 
contacted any other U.S. Government agency about 

A He never said anything about any other U.S. 
Government agency. It was never mentioned. 

As far as you knew, you were the only contact with 
U.S. Government was having withj 

A That is right. 

Q Okay. 

EXAMINATION 
BY MR. SMILJANICH 

Just a few questions. 

After each Incident with regard t^^^^^^ you 
said earlier tha^^^^^^^H con firmed after the fact, the 
fact that it had gone through successfully. 

A Yes. 

Q Is that right? 

A Yea, or they had provided it, however they did it. 

Q Is it also tr\i« that Colonel North also advised 
you after the fact on each occasion that, in fact, it had 
gone through? 



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A Yei, I think that is right. I think he did. 

Q Did h« give you anymore details when he told you 
that things had taken place succe9afully> did he tell you 
what had been done or anything like that? 

A Not a peep. 

On each occasion your understanding was the donation 
was $1 million in cash on each occasion? 

A I guess so. 

That was the impression you had? 

A That was the impression. It was $1 million. Now, you 
know, that was my understanding. That is righ_t 




Q He didn't react one way or the other, adversely or 
A He didn't react. I don't think he said anything. 
He just kind of brushed it off. It was nothing, he said to 



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Can you put any time frame on that mention by 



A I think it would be 1985, sometime, but it is hard 
for me to put it when. Probably somewhere irpetween the 
time of the first amount and the second amount, probably, 
but I can't -- 

MR. EGGLESTON: Whenever that happened. 
THE WITNESS: Whenever those happened, right. It 
is hard for me. 

BY MR. SMILJANICH: 
Q It is down that black hole somewhere. 
A It is down that black hole somewhere and I can't 
remember it. 

Q All right. That is all I have. 

BY MR. EGGLESTON: 
Q I have just one more on this and I will go on. I 
indicated you had one conversation about this general area of 

ind solicitation with Mr. McFarlane, did you have any 
other conversations with hia? 

A No. That was all. Just that one. 
Q Just that one? 

A I never spoke to hi* again. My assumption was 
quite clear, that Ollie North represented Bud in this case and 
there was no reason for thinking otherwise. 






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Let iM go on to^^^^^^Hknd I think it might 
maXa fens* to follow the same format which is I win ask you 
to remember whatever you do remember and go back and ask you 
to. Why don't you launch in? 

A Ollie asked me and, again, it is probably sometime 
in the summer of 198S, again, talking about the needs and 
so forth, in Central America. It was broad, Central America, 
contras, but Central America. And if I knew anyone at the 

whom he could talk to. I don't think, as I 
remember it, that he said anything to me about necessarily 



trying to get money from them. He wanted to talk to them 
about the Central America situation and the contras. I said, 
yes, I knew a man over there that he might talk 




Ha has a^^^^Hbackgr(?und. Ollie asked me if I 
would call hia and try to set up something with him. I said 
I would call hia. So Z called ^^^^^^|and I think he 
caa* by to see ma. W* had some other things to talk about. 

As I recall, he cam* by to see m* and I mentioned tha 
Colonel North wanted to talk with hia and talk to him about 
Central America. H* said h* would b* quit* happy to. I told 
Olli* that. I gav* hia hi* nunb*r and 1 never heard another 

thing about it. 

That was th* end of that. I have no idea whether 






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thay «ver met or whether they did eny thing. 

Is ^^^^^^^H 
A I think BO, yes. 
Do you remember his first name? 
A No. 

Q Did you know him well? 

A No, I just knew who he was. I had met him 

once or twice. 

Did you know what his position was? 
A Yes, I 



ia 




is very close to 
I That job always has that to it. 
Sort of a personal representative. That is why I thought if he 
wanted to talk to hin «ibout Centr'%1 America, that was probably 
the guy to talk to. 

Q Is this the only tine that — I better not ask that-- 
can you place this conversation with Colonel North and these 
events with Colonel North at all in a tine continuum? 

A The only thing I can say is Z have on my record 
that I met witl^^^^^^^^Bin my of f ice >on August 2, 198S. 
That is probably it. 

Probably. I can't swear to that because I met 
him a couple times. But that is probably it. 






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Q So that if th« date that you would have met with 

^^^ Colonel -^ 
A 

^^^^^^^^^sorry, after Colonel North had asked 
you to set up some sort of meeting? 

A Well, I didn't really set up a meeting. All i 
did was say that North wanted to talk with him and I gave him 
North's telephone number and he could call him himself. 
So unlike the meeting — 
A I did not set a meeting up, no. 
Q This is nothing you have ever seen before, so I 
am not going to ask you to identify it, but Z have Colonel 
North's calendar for this week, and it is the week ending 
August 4 and on Friday, August 2, whicl» is the same day that 
you have recorded. Colonel North ha 
Gaston Sigur; and later, 2:15, it 'looks like Gaston. 
A Well, I — 

Q I am not suggesting this is necessarily right. 
A I don't know what he means by that unless he means 
by that that he talked to me about it there and I called him 
back then about it and told hia what this guy had said, because 
Z never met with those two together. 

That i» what I would ask you. You have a clear 
recollection that you were never in Colonel North's office witt 
and Ollie North? 







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A That li absolutely cl««r. I was n«v«r in that office 
witC^^^^^^^H I don't Know th« ins and outs of this thing. 

hav« gona down to his office. I have no idea. All 
I Know is. I did not meet with those two together. I am sure 
of that. 

Q Did Colonel North give you the same sort of — we 
went through this — the same sort of introductory speech? 

A Yes, oh, yes, very similar. 

Q And I take it then you assumed that it was involved 
in solicitation of money, although he never mentioned that? 

A He never mentioned it. It was probably in the baclc 
■y my head, but all he said is he wanted to talk to him 
about Central America and fill him in on what was going on 
down there. This was basically the wa/ he put it to me. But 
I have no idea how he talked to him, if he talked to him, 
and what he said to him. 

Q Did you ever talk to Colonel North about — did 
he ever tell you that he had a nice meeting with^ 
or a terrible meeting? 

A No. He never spoke about that^^^^Hconnection 
again. 

Q Similarly, I take it then you never spoke tc 
Habout whether or not he had any dealings with Colonel 
North. 

A No. No. 



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Q So, basically, you Juat don't know how that^^ory 

ends? 

A I have no idea what happened. 

Q Did you ever discuss that at all with Mr. 
McFarlane? 

A No. 

Q Or anyone else? 

A No. I don't think I talked to anybody about that 

Q But just so that I am clear, your calendar seems 
to suggest that you had a meeting with 

A On the second. 

Q On the second. 

A That is right. 

Q YOU probably didn't write it -down, do you know what 

time of day? 

Does your calendar indicate what time the meeting 

was? 

A Let me see if I can get the time of day. I may have 

the time of day. VOiat did 1 say, August 2? 

Q Yes, August 2. 

A 9:30 in the morning. 

Q 9 t 30 in the morning? 

A Ye«. 

MR. TRAYLOR: 9:30 it says. 

THE WITNESS: 9:30, August 2. 

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BY HA. EGGLESTONi 
Oicay 




Q Can you tell us what you recall about that? 

A The- only thing I recall is Ollie made some mention ta 
me — I think it was at one of the staff meetings that 
there was a ship going from North Korea, if I remember correctly 
about this — I didn't pay too much attention^o it — to 
Nicaragua and they were trying 
to stop the ship. That is all I know 

And you think that was just » single conversation? 

A I am pretty sure it was just a single conversation. 
I don't know he said anything to me again. As far as I recall 
It is not impossible, but I don't remember. 





Q 
A 


ship — 
A 



Did he tell you the name of the ship? 

I think he did at the tioM but J, don't remember it. 

You don't recall it. If I mentioned a number of a 



If I saw it in the newspapers, but I ddn't 



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rememb«r. 

Q You don't hav« a current recollection? 

A It didn't ring « bell with me. It didn't really 
mean anything. 

Q But your best recollection was it a single shot 
item where — 

A That was ny recollection. 

Q Did he ask for any action from you? 

A NO. 




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MR. EGGLESTONi Sttva, did you hav« anything on that? 

EXAMINATION 
BY MR. BERRY: 
Q Just on* question on th« ship, depending on the tine 
frame we are talking about, there was^a Newsweek report] 




about a ship from North Korea carrying arms to the 
Sanini! 




Do you know if that is the same time frame or the 
same ship that — 

A I really don't know. 

Q The ship Colonel North was talking about? 

A As I say, I don't recall focusing particularly on 
that ship thing. Re mentioned it to me. I didn't pay much 
attention to it. I heard what he said and, that was that. 
I didn't focus on it particularly. 




TQPIECRB g 



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MR. BERRY. Thank you. 

MR. SMILJANICH: I hav« no questions. Thank you. 

EXAMINATION 
BY MR. EGGLESTqN: 

w go on t^^|^^^HH^H^H|^^^^^^^|^ 
I think th« system has worked well up to now. I will let 
you do the sane thing. Let ne get you started on this by 
asking you sooething. 

We might be able to help place a date in your head 
which may or may not help you out. Did you have more than 
one meeting with(flHH|^^^^^^d Colonel North? 
A NO. 

Q At the Cosmos Club? 
A NO. 

Q Where is the Cosmo* Club? 
A 2121 Mass Avenue. 

I will tell you that Colonel North has on his calenda 
in late 1984, a meeting with you and^ 
Cosmos at — at 2121 Mass Ave. ' 
~ A That is what 1 got here. 



)in the 



lauCIRET 



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Q It Is Wednesday, November 28, 1984 

A That Is the one, yes. 

Q With Gaston Slgur an 

A I thought it was June 19 when I looked over my 
calendar, but I have it listed November 28, 1984, possibly 

at Cosmos..^ I can't be sure about that. But Z 
have it listed here. If he has that, then that is it. I 
would accept that. 

That is what he has. 

A I will accept that. 

Q Obviously, I will not vouch for his calendar but that 
is at least the one he has. 

A I would think that is right. I have something in my 
book written here, I sort of scratched *it through and put 
something else but I have it as po8sibl)^H^^^^^^^H)at the 
Cosmos Club,. November 28. 

Q Now that we have a start — 

A Then that is right. It is November 1984. That is 
the time it was. 

Q Does that help you place^^^^^^^^^A event 

A Well, I thought — 

Q Assuming that is November 1984. ' 

A Then I would have thought ^^^^^^B event was be for 



that. 



Okay. 



525 



1 A That is my thinking th«t it was. 

2 Q So you think it was probably August 1984? 

3 A Could very well have been because it has as I said 

4 clearly a breakfast on Saturday at his place and that is the 

5 week I had it. So then we are talking about a long period of 

6 tine that passed between the first and second. That is what 

7 screwed me up, I think. I didn't think there was that much 

8 time. 

9 But that fits very well. That fits basically. 

10 Okay. November 28, 1984. Do you want me to go on? 

11 Then I will let you go, yes, go on. I wanted to 

12 get you started. 

13 A Anyhow, Ollie asked me again if I could introduce 

14 him to — I think he knew the name, I think he saidj^^^H^^ 
' ^^^^^H|^^^^^^^^^^^^^^^ and he to him 

16 Central America, the situation here. So Z said, all right, 

17 I would set up something and I set up this lunch. I called 
IS^^^^^^^^^^Rand told him that Colonel North who dealt 

19 with Central America from our point of view would like to 

20 talk with him. 

21 He said, fine, he trould be interested. 

22 So we got together for lunch and. Ollie gave 

23 him a long pitch, as I recall, about the Central American 

24 situation, the gravity of it, the seriousness of it, and all 

25 of this, and talked about the need in that area for 




I^RET 



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assistance. W« will have to b« cartful because, as x 
ranenber, and I must say I don't think last tima I said this, 
but Z do baliava that at that lunch I think I wasn't 
there all the time. I think I went off and made a phone 
call and went to the bathroom, so I can't be absolutely 
certain of everything that went on. 

In fact, I can't be anyway, because my memory is not 
that good, but I do remember Ollie and ^^^^H^^^ talking 
about the situation dotm there ^^^^f^^H^was very much 
interested in it. 

interested in Central America, 




So they had quite a conversation. They passed me 
by, I didn't know anything of this stuff, but they knew this 
and they were talking back and forth about all this. Ollie 
got on to the need down there for the contras, and he talked 
to him about the sale of weapons, as I recall. 

Again, I can't — as Z remember, I don't know 
whether he specifically talked about s&le of weapons to the 
contras. He talked about sale of treapons generally there. 
Obviously, the contras would benefit. Whether the contras 
would buy the wapons that is beyond urn. 

1 wasn't — I didn't know how that went. It 
could have been for all I know the sale of weapon* to Honduras 



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1 just don't know wh«t th« conv«r««tion was, how it went in 
that sense, because it was a very broad and general one, but 
clearly he was talking about the contras needs and so 
forth involved. No question about that. 

Anyway, that was the gist of it. I left and I think 
they sort of walked out together, as I remember, and I left 
and that was the end of that and again the next thing I heard 
was from 




Q But a different person? 

A Oh, yes, a different person. And he said something 
to me at a reception or dinner or something, he just said, 
oh, by the way, I sent bac)<^^^^H^Ka report on the 
conversation betweenH^^^^^^^B)and Xolonel North, 
said fine. And I think I told Ollie that. 

That was the end of that. I never heard 
another word about it. 

Q Okay. Let me just ask a few more questions 
about this one as well. 

A Sure. 

Q It is your recollection then that Colonel North 
already knew of the name oi 

A I think so. 

Q So he had — • 

He could have s«i<^d^^BB^B ^"^ 



528 



' lyjr OiLOixxiA 



3i 



1 he may have mcntlonisd hife by naiMr. x ««n't sw««r to that, 

2 but X juit don't rememb«r that typa of thing. 

3 Q Unlike tha other tituationa it was not merely a 

4 request to set him up with someone from that country, it was 

5 either — 

6 A No, I think it was more specific. As I say, I 

was<^^^^^^^^^^^^^H he 

8 Q And had you known, did you have a relationship 

9 with( 

10 A 

11 Q 

12 A 

13 Q 

14 A 

15 remember. 

16 Q But your recollection i» that Colonel North asked to 

17 speak directly to this person or t( 

18 A I don't know, it could have been by name or could 

19 have beeii|H^^^^^P^^P can't say. 

20 Q But he had not previously — ' I shouldn't say 

21 previously. I aa not sure I have all the dates right. But 

22 as to the other people he had not specifically asked to speak 

23 to( 

24 A Oh, no, no. That is right. 

25 Q When he asked you to set this one up, I take it once 



Oh, yes, I know hin. 

You have kno«m him for a long time? 

I know them all over there. 

I wasn't sure how long he had been here. 

He had been here quite a litfrle while, as I 



tC^Sifel^fiT 



529 



■ iiJV iS>£i01\JLji 

1 again he indicated that he wanted to talk to the person about 

2 Central America? 

3 A Yes. Oh, yes. 

4 Q Then you got the lunch together? 

5 A Yes. 

6 Q And during — let tne sort of probe your 

7 recollection of this lunch a little bit more. Was it a 

8 lengthy lunch? 

9 A I wasn't — I don't know. I wouldn't say it was 

10 lengthy. No. 

11 Q Was it an all-afternoon affair? 

12 A Oh, no, no, an hour maybe. I don't know. 

13 It was a normal course of things, it was not a lengthy lunch, 

14 no. 

<{5 Q Did General Singlaub's name come up during 

18 the course of this luncheon? 

17 A Never, not to the recollection I have. 
1g Q Do you have a fairly firm recollection? 
ig A Of whether Singlaub's neune came up? 

20 Q ^••• 

21 A I don't know. I can't swear to it, but I certainly 

22 don't remember it coming up. 

23 Q By this time you knew at least who General Singlaub 

24 «•»' 

25 A Oh, I knew who Singlaub was. 



TOP^ sBtdltET 



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Q So It would not h«v« b«*n on* of th« unfamiliar 
naiMS Ilka 1^^^^^^^^ people who cama up? 

A No. No, that la right. If Slnglaub's name came 
up, I might have remembered It, yea, oh, yes. 

Did you know a many by the name of General Secord by 
this time? 

A No, never did. 

Q Since November 1986, he has become — 

A He has become a name now that I read out of the paper 
X never heard of the man before I read the papers. 

Q Do you have a recollection of whether his name 
cam* up at this lunch? 

A No. 

I take It you would be less Vlkely to remember that 
one? 

A Probably. 

Q Since you would not have had prior familiarity such 
as with the name Slnglaub? 




Q Okay. 

A Secord wouldn't have meant anything to me. 
Q During the course of this lunch, I take it 
Colonel North, once again, gave his assessment of the 



531 



1 dcsparatc itral^hta of th« contraa. 



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2 A Y«i. oh» y«i. 

3 Q Of th« Nicar«9u«n resiitanc*. th« contras? 

4 A Yea, I think th« regular ~ 

5 Q Did you have any knowledge or senae that the 

6 Boland Amendment had recently become effective? Was that 

7 something you follows? 

8 A I knew nothing about that. We heard talk, but I 

9 paid no attention to that. 

10 Q It was not your area? 

11 A It was not in my area. It meant nothing to me. 

12 Q And again, at this time Colonel North is talking to 
13' 
14 A Yes. 



Q It would make sense to me that he is talking to this 



16 guy not about blankets but — 



A I think I said something to Ollie at the end on the 
way out withoutfCj^UB hearing, something about you 
sure all thia ia legal that you are doing, Ollie? He said, 
oh, yea. everything ia legal. I aaid'that ia all. 

Q I take it you have a clear recollection that 
colonel - you indicated you were not abaolutely sure, but I 
am aure you had a clear recollection that Colonel North 
wanted arma for contraa either througK|mm)or — 

A Aa 1 aay, I don't know how, but he clearly expressed 



■F.2 ". =; :", "i*'^ 




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the view that the contrae heeded ermi, no question about that. 
But he talked about — he put it in auch a broad sense, 
everybody needed arms, you know what I mean, so did all the 
rest of them dotm there. I mean it was this kind of a thing. 
So that is why I have to be a little careful about how I say 
this because I do want to say that that is the way he did it. 
But certainly, obviously, I had the impression that the idea 
was arms to be provided somehow for the benefit of the 
contras. 

Q Either by — 

How it was done, I didn't have the vaguest idea. 

Either by selling directly to the contras or selling 
who provided them? 

Or to^^^^^^Hor whatever ^ I don't know. 



A 

Q 

them t 

A 




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Q So as you ar« leaving you had this conversation 
with Colonel North, you asked hi0>— 

A Z sort of did it in passing. Z said, you sure 
everything is legal here now, Ollie. He said, oh, he did. 

Q Anything more? 

A That was all. I took off and I think he and 
^may have talked longer, or they may have 
walked on, I don't know. 

Q Did you ever discuss this event with Mr. McFarlane? 

A No. 

Q Or anyone else? 

A NO. 

Q Or anyone in the State Department? 

A NO. 

Q Or anyone else? 

A No. 

MR. BGGZfSTOHi Steve, do you have anything? 

EXAMINATION 
BY MR. BERRY t 

Q One question. Where there any other issues discusse< 



534 



1 I «t that mettlng such as terrorism or counttr-terrorlsa, anti- 



r 



terrorism policy b«twe«n the U.S.( 

A Zt Is possible. It might have been. But I can't 
remember that. They talked about — they sort of went over a 
lot of things. As I say, I didn't pay that much attention 



It is your clear impression that the main purpose 
of the meeting was to discuss the need for equipment and/or 
supplies for the centres? 

A Oh, sure. No question in my view. 
MR. BERRY: ThanJc you. 
THE WITNESS: As I remember it. 

EXAMINATION 
BY MX. SMILJAMICB: 
Ha* this meeting ever mentioned to Bud McFarlane 
as far as you can recall? 

A Not as far as I — 
Q By you? 

A Not by me. My assumption %rould be surely it 
must have been mentioned by Ollie. My assumption was they wen 
pushing together on this thing, and so was everybody else for 
that matter. I had no reason to think otherwise. 



535 



56 



I undtrstand.-' " -' ■- •' * ■;-' -.." i -' ' 
A 1 did not think oth«rwiM. 
Q I just meant you personally. 
A NO. 1 didn't. 

MR. SMIWANICH: That is all. 
EXAMINATION 
' BY MR. EGGLESTON: 
Q Let's go back to — 

A Back tefl^^^ thing and Ollie's -- I think what 
he may have put down there. I a« sure I probably told him I 
was seeing H he may have put that down that 1 was. 

Q Actually, though, hi. calendar is maintained not by 
himself but that is the handwriting of his secretary. 

A He could have said, though, that I was seeing him. 
Then I told him later that I had seen him and gave him the 
number and then I don't know what J.. »i9ht have done with it. 
But that i. Possibl.. I « i«.t trying to suggest how it coulc 

have been. 

Q Okay. I «« "*<»y *<» *•'' y°" **^'*'' 

A Fine. 

Q 1 take it this 1. substantially in the summer of 

1986. by that tim. you -r. h.re. i. that right 7 

A Yes. I «•• here. 

0k.y. «,, don't you t.ll ™ «i»t h.pp.n«l. 

» «U. twr. I. not ».cn to ..,. «. ^t th. =.bl.. 




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that gives you th« rundown of it. I discu«««d it with 
Secretary Shultz on the plana going t 

and I don't know how the 
decision had been made, but apparently a decision had been 
made to request ■mUmmimH to $10 
for assistance to the contras. It was told, the Secretary 
told me this, and I made some question about possibly saying 
something to^^^^H^^Bwhen we met him. I said I thought that 
would be wrong. 

I thought you had to kind to talk to other people 
around him, that you just can't talk to him directly like 
that. So anyway, that was given up, the idea of doing that. 

So as the cables indicate, this is how we did it 
another way, by having the Ambassador »peak and Elliot 
Abrams went to London. That was that. 

Q You are on the plane betwee 
how did the subject come up? 

A The Secretary talked to me about it. He raised it. 

Q Nhat did he tell you? Just as best you can 
recall, what did he say? 

A He said he was thinking of making an approach 
to iHHjjjj^HHUHHjjH^^I^^IHJ^^IBand see whethei 
could provide $10 million to the contras for humanitaiian 
assistance and Z said I didn't think it was a good idea for 
him to do it. That is all. Z thought it was not right. 

i'.'i ti -f. "ty 'a k» I K< K 



537 



1 I mean, it was not th« way to handle it. That ought to b« 

2 dona through other channels. It is not for him to do it. 

3 Q Because the Secretary of State shouldn't be 
* directly asking for money from a foreign government? 

5 A That is exactly right. So that was the way it was. 

6 Q I take it prior to this time that you had no 

7 knowledge that the Secretary of State was going to raise this 

8 issue or wanted to raise this issue? 

9 A No, I had no knowledge of it. 

10 Q Did he tell you anything more about where the idea 

11 came from? 

12 A No, he did not. 

13 Q Did you know whether Mr. McFarlane had any 

14 involvement in this? 

15 A I had no idea. Of course, it was not McFarlane, 

16 Poindexter. 

17 Q Poindexter, yes, sorry. 

18 A I had always assumed, though, you have to remember, 

19 just as I did on the other, I assumed that was not an 

20 individual account. This was the account of a government 

21 and these decisions were made by McFarlane and Shultz and 

22 Weinberger and maybe I was wrong in my assumption, but that 

23 was my assumption. My assumption would be on something 

24 like this we are talking about a situation decision that was 

25 taken by Shultx, Poindexter, so on, Weinberger. 

pjj y '^ ^ - ^ ^iLPifcCL 



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Right. 

A And I had no raaion to question that. No reason. 

It was your assumption that Shultz didn't get 
this idea all by himself setting on the plane? 

A I couldn't believe that, no, I didn't think so at 
all. 

Q Was thtere any discussion with Mr. Shults or. 
Secretary Shultz about where the 10 million figure came from? 

A NO. 

Q It is a larger figure than — 

A Pretty substantial figure, but I have no — of 



Q Was it your understanding this was going to be a 
request of — maybe this is tough in tikis area •". of him 
personally or of is government? 

A Well, it doesn't matter .,|| 
So. 

Doesn't make any difference. 
So 10 million from him %rauld be 



Q 
A 

A 

Q Did you during the course of this talk to Shultz 
about the prior solicitations? 
A No. 
No? 



NO. 



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Q Did you mvt talk about that with Mr. Shulti? 



A NO. 

3 Q I don't want to go through a lot of detail about 

4 how tho dacialon waa actually mada, but wara thara othar 

5 paople participatin? in thia convaraation? 
Q A Charlia Hill. 

- Q Charlia Hill waa participating? 

A Yas. 

Q Did ha alao agraa with you that you ahould not 
go to ^^^^^fhdiractly? 

A Charlia didn't aay much, but Shultx agreed. 
Aa aoon aa ha thought about it, ha agreed. 

Q Who waa it who decided that the beat way would be 
to go through the Aabaaaador or whatever? 

A Oh, I think we talked about it, thought that was 
the only way to go about it. That aay have been my 
auggeation. I don't know. I eaid you got to - we talked 
about it. it •••aed the way to go. I don't know that anybody 
a. on. peraon. it wa. aort of a -- ju.t that i. the way to do 

it. 

Maybo ainca wa are in a depoaition we can get this 

down for th. record, you ahould de.cribe -- I know you have 

don. it befor. - but d.acrib. how th. alt.mativ. way wa. 

designed. 

A Which alternative way? 



540 



1 To ua« th« Amb«ss«dor and if you could just 

2 d««crlb« what actually than cndad up happanlng? 

3 A What actually happened was that wa got tha 
^ Ambassador comf^^^^^^^^H^and meat there. 

S Q This is Ambassador -- 

^ A I^Ktb ^'^ ^* c*i»* "id ^ talked with him about what 

7 the Secretary was interested in and he said, well, the way to 

^ handle this would be for ma to quietly talk to the 

9 flH^IB*^^' to ^^BB himself, and so that is the way it 

10 happened. That is what he did and then the arrangement was 

11 made that Elliot Abrams meet with this aid,. 
■2 Q vrhat was the ai^^'s nana? 

A ^^^^^^^H^^^^^^H And he met him in 

14 London. I don't know what happened, i don't know again 

15 except they got the money, I guess. But I don't know what 

16 happened to tha money. - 

17 Q That is a good question. 

18 - A X have no idea about that. 

19 Q You don't know where the money is? 

20 A I know nothing about that money. 

21 Q You don't hava tha money? 

22 A All I know is I haven't got it. 

23 MR. SMILJANXCBt Does anyone hare have the money? 

24 MR. EGGLESTONi We can at least eliminate who is 

25 here; right? 



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541 



BY MX. EGGLESTONi 
H«v« you b««n -- I -ould "•"»• t h«t ther« would be 
■ooM discussion then between the government ^^m^m 
HHand our government about where the money Is or 
that it had been received or had not been received. Have 
you participated in that? 

A The only thing I know about that is in the cables. 
I haven't participcated in any discussion. I have no idea. 
Ail I know i. what the cables say. I know nothing more. 

Q All right. Oo you know as of August of the summer 
of 1986 that the money was about to be r.-upped for the 
contras, another hundred million — 
A From the Congress? 
Q From the Congress, yes. 
A I r-i the papers. Other than that, I didn't know 

anything about it. - 

Q There was no discussion with Kr. Shultx about 
Why we are doing this. Congress is allocating the money. 
A if yott mean did I do that, no, I did not. 
Q you didn't have any discussion with the Secretary 
.bout the wisdo- of this «.rt of solicitation. 
X MO, X didn't. 
Q Just the mechanics of it. 
A That is .xactly all. A. far as I knew the 

^ .- I MV. I assume the decision was 

decision was made and as I say, i ""^ ^ 



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542 

r "■ ' ~ ■""»■,'- 1 

! : . , . . .. •; . ^i d) 

m«d« by th« top p«opl« In th« govarnBicnt. 



Q Did h« — 
A And it w«f. 

Did h« tail you who had b«en involved in the 
decision? 

A No. 

MR. EGGLESTONi I don't have anything else on this. 

EXAMINATION 
BY MR. BERRY t 
Q I just %fonder. How did you Icnow that Abrams met 
vith I^^^^^Hl Be met sometime later. 
^2 A I don't know whether he met with|^^^^HHor not. 

13 Because we had arranged it in the cables that went bade and 

14 forth. 

15 Q At the time you were therein the — 

16 A No. They were back her*. 

17 Q You case back here and then arranged it then? 

18 .. A Yes. 

19' So you were just aware of one meeting with Elliot? 

20 A Yes. t 

21 Clearly because of cable traffic? 

22 A Yes, you know, those things, my name, I think, is 

23 in those cafl^s. After all, I am the guy who coanunicates 

24 with our anbassadors in Asia. 

28 1 wonder if you had talked to Elliot about that. 




543 



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^-«rvyx i^u' 



A Oh, w«ll, only in th« f*ct of him going to London 

to ^^^^sim^^Hi 

Q You briefed Elliot before he went to London? 
A NO. No, 1 didn't brief him. He was talking to 
them. There was nothing to brief in a sense. He was the one 
who was going to make the case. He knew all about it. I 
didn't know anything about that. 

And since I can't make a case for or against them, 
other than I support the Administration policy, but I 
didn't know the ins and outs of it. 

Q I just wonder if you briefed Elliot about the 

tter? 
A If I remember correctly, I don't think I briefed 
hi». I think we had a - w. have the s* sheets on key official 
in governments around the world. I think there was such a 
Sheet which he looked at as I remember. We gave it to him. 
we have that on everybody in our region. These are put out 
by the agency. But they just give you a general statement 
about who these people «.. I think there was on e on 
I know there was one on ^^^^H 

something. 

Q But that i. the only contact you. had with Elliot 

about this? 

A Yes, that Is correct. 




544 



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'JL t-^i 



EXAMINATION 
BY MR. SMILJANICH: 
I have no question 



but there was one 




question I forgot to ask you about 

series of events. Yovfiiad started off by saying that you 

had gone back and looked at your calendar on November 28, 

1964. Could we see exactly what is in your calendar for that 

day? 

A Yes. you can. That is no problen. You see my 
difficulty was that I have another meeting witr 
at the Cosmos Club, and that is the one I thought may have 
been — what is the date of that? November 287 

Q November 28. 

A mev^^^^^^^^^H occasionally 

August what? 

Q November 28. 

A November 28. Excuse me. 

Q 1984. 

A Let's see if I have the right calendar. Here it is. 
This, by the way, is one calendar, I was keeping two 
because I kept one at the university. This is the one that 
has the indication right here. I obviously had a luncheon 
with^^^^^^^^^H then you see what I have %rritten here. 




mm 






^' TOP GCORET 



545 



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Th«n Z put Cosmos up her*. So Z think that is — 
■•• thst? 

Q Right. 

A That is what I have h«r«. I was not sure about 
that because you see it looks confusing. You understand the 
confusion. 

Q Thank you. 

A Fine. That is fine. 
EXAMINATION 
BY MK. EGGLESTONi 

Q I only have one other area to ask about and I just 
want to ask a couple questions about things that may have 
come up during the course of that meeting with 
It lunch at the Cosmos Club. 

A All right. 

Q Do you "' all — I understand you are not sort of 
involved in thi», but you are sitting here. Do you recall 
conversatiofn about Canada coodng up during the course 
of that meeting, an arms deal through Xanada 7 

A No. 

Q Anything like that? 

A NO. 

Q Do you think — 



I don't recall that. 



546 



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iJljVii/AVi-l X 



Ml right. 

I can't .wear it didn't, but I don't recall it. 
YOU don't racall it. That i» what I wa. going to 
ask you. Do you hava a firm racollaction? 

A NO. I don't. I don't hava a firm recollection. 
A. I .ay. the meeting wa. .ort o£ diffu.e a. far as I could 
determine. It didn't hold my attention. I didn't listen 
and. a. I say. I do believe I took off in the middle of the 
dinner, or lunch, rather, and went to the bathroom. But it 
wa. a very diffu.e type of thing. 

1 have given you what I think they talked about 
baaically. But I don't recall anything about Canada, no. 
Q YOU don't have any recollection that some of the 




A I don't know. I have no indication of that. A. far 
e. I know, I have no recollection o£ that. 

Q There i. a man who .ometime. aa.ociates with 
I Canada, I think hi. nam. i. Wittenberg or Wittenstein. I 
would hat. to .ay for .ure which - did that nam. come up? 
A HO. I don't remember any name, of any kind. no. 
Q DO you recall any .pecific di.cu..ion of Calero. 

Adolf o Calero coming up? 

A calero'. name may well have been mentioned. A. 
0111. talked about the whole .ituation. I suppo.e.he mentioned 




547 



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ntMi of p«opl«, but X don't r«»««ib«r •pacifically, in 
oth«r words, that wouldn't turprlM »• if Cal.ro' • naiM had 

com* up. 

Q You knaw who Calero waa? 

A I knew who ha waa. 1 hava read about him in tha 
nawapapars. 




A That waa raiaad with ma laittima. I do not 
r«i-mbar that. I don't racall that Kind of a di.cu.aion. 
But. a,ai«, a. I -y. I wa.n't thar. all th. tima. I don't 
think - and again, it i. po.aibla. I-aaauma. you know, that 
that probably wa.n't th. la.t -tin, b.tw.«. Olli. and th. 
Gan.ral. I don't know whath.r that i. right or not. but I 
aaaum. th.y -y hav. gon. - whan I l.ft, I l.«t. th.y 
.u„g around. Thay war. moving off in aaparata dir.ctiona. but 
for all X know thay -y hav. talkad anothar 15. 20 minut... 

^ f •* 1 



548 



l»i/lU>i^AVXJ 



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X don't know. 

You didn't )c*«p track of th« dcalln?* th«t 011i« 
waa having withN 

A 'No, oh, no. 

Q I hava asked you earllar if you knew who 
General Slnglaub waa and you Indicated you did. Did his name 
come up at all in connection with any of these operations as 
someone who had been out there? 

A Only in the sense, as Z mentioned, thati 
as Z recall, stated, as I thought about it,* 
mentioned that he had been ^^^^^^^ But otherwise, no. Not 
to me. I don't recall 01 lie ever mentioning him to me, or 
any of the others. 

But they didn't — remember,.! didn't talk to them. 
Z never talked to any of them, except ^^H^initially, at all. 
for inatance, ten minutes, Z mean that was it. 

it was with Ollie and he was doing all the 

talking. 

I never said ttro words. They were talking and Z 
just don't recall names at that tiaa^. 

Q Okay. Z don't think Z have anything further, althot. 
Z will take a odnute and maybe we can take a brief break and 
Z can look over my notes. 

MX. SMZLJANZCHi Yes, let's take alittle break. 
MR. BGGLESTONi Zs that all right? So we can take 





—^ 



549 



i; -Tfj^-'WttrVftin^ Vou-^lwit it for us tc 



1 a look at our notes; -Tfi«''nstr VnM^ Vou'-*'*^t is for us to b« 

2 back. 

3 THE WITNESS: All right. That is all right. Ask 

4 what you want to ask. So let's take a break 

5 (Recess.) 

6 MR. EGGLESTON: Back on the record 

7 THE WITNESS: I am very pleased to do anything I 
8 
9 MR. EGGLESTON: Let me close out the record. We 

10 thank you for cooperating with us today, Mr. Sigur. We don't 

11 have any further questions and we appreciate your talking with 

12 us. 

13 THE WITNESS: Thank you. That is all right 

14 (Whereupon, at 3:40 p.m. the deposition was 

15 adjourned.) 
16 
17 
18 
19 
20 
21 
22 
» 
24 
25 



" l!lWR3S*I»fift' 



550 



551 



ONCLASSIRED *^j'!^ 




1 
2 

3 COKNO— / OF — ^ .COWES 

4 

5 DEPOSITION OF 

6 MAJ. CHRISTOPHER SIMPSON 

7 

8 Monday, June 1, 1987 

9 

10 United states Senate, 

11 Select Committee on Secret Military 

12 Assistance to Iran and the 

13 Nicaraguan Opposition, 

14 Washington, D.c. 

15 The deposition of MAJ. CHRISTOPHER SIMPSON was 

16 convened, pursuant to notice, at 9:20 a.m.. Ninth Floor, 

17 Hart Senate Office Building, the witness being first duly 

18 sworn by JANE W. BEACH, a Notary Public in and for the 

19 District of Columbia, and the proceedings being taken 

20 down by Stenomask by Jane w. Beach and transcribed under 

21 her direction. 
22 




DNCUSStflEO 



C»PY NO -iJibf L — COPIED 



""^^ u,^er pfo»Wons of LO. 123S6 

- by D. Sirko, National Security Council 



552 






iiMFJEO 



1 

2 

3 APPEARANCES : 

4 On behalf of the Senate Select Committee: 

5 JOHN SAXON, Esquire 

6 United States Senate Select Committee 

7 on Secret Military Assistance to Iran 

8 and the Nicaraguan Opposition 

9 901 Hart Senate Office Building 

10 Washington, D.C. 20510 

11 On behalf of the House Select Committee: 

12 ROGER KREUZER, Esquire 

13 On behalf of the United States Army: 

14 CHARLES LAWSON, Esquire 

15 COL. JOHN WALLACE 
16 



Hfity^ro 



553 



Mumm 



1 CONTENTS 

2 

3 

4 Examination by Counsel on Behalf of 

5 Senate Select House Select 

6 Deposition of: 

7 CHRISTOPHER SIMPSON 

8 By Mr. Saxon 4 

9 By Mr . Kreuzer 26 

10 By Mr. Saxon 29 






ICilSSffl 



554 



iwsra 



1 

2 PROCEEDINGS 

3 Whereupon, 

4 NAJ. CHRISTOPHER SIMPSON 

5 was called as a witness by the Senate and House Select 

6 Committees and, having been first duly sworn by the Notary 

7 Public, was examined and testified as follows: 

8 EXAMINATION ON BEHALF OF THE SENATE SELECT COMMITTEE 

9 BY MR. SAXON: 

10 Q Would you state your name for the record, please, 

11 sir? 

12 A Christopher Simpson. 

13 Q What is your occupation? 

14 A I am a Finance and Accounting Officer in the 

15 United States Army. 

16 Q What is your rank? 

17 A Major. 

18 Q And what is your current assignment? 

19 A I am the Finance and Accounting Officer for 

20 Fitzsimons Medical Center in Denver, Colorado. 

21 Q When did you assume that position? 

22 A Late June, '86. 

23 Q And what were you doing prior to that position? 

24 A I was working on the Army Staff in the Office of 
2 5 the Deputy Chief of 



iM*S»0 



PaftUty OwiMMMl/Rcleaaed on -^^^^ -^ -' ''^•^^ 
umler provWont of E.O. 12356 
kr D. SMo, NaikMMl SKurlty Council 



555 



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Q And what were the dates of that assignment? 

A Roughly 1 September '86 — or, excuse me, 
1 September '83 to late June, '86. 

Q And in that assignment, what were your particular 
duties? I believe you told us earlier that you had both 
white world and black world functions. 

A Yes, sir, that is correct. 

Q Let me say for the record, by the way, that when I 
make reference to the fact that you have told us something 
earlier, I am having in mind that on April 14th you met with 
several members of the House and Senate staffs, in fact for 
about six hours, and we had a lengthy discussion about these 
matters. So when I say you have told us before, that is 
what I have reference to for subsequent readers of this 
record. 

Now I believe you told us that you had both white 
world and black world missions in your desk log assignment. 

A Yes, sir, that is correct. 




556 




Q And you were in this position when the initial TOW 
missile request came for the Army to transfer TOW missiles 
to the CIA. Is that correct? 

A Yes, sir, that is correct. 

Q And you were more or less the principal individual 
for executing on that request at the Department of the Army? 
Is that a correct assessment? 

A Yes, sir, that is a correct assessment. 

Q What I would like to do, Ma j . Simpson, rather than 
immediately having you walk us through the chronology, 
because your involvement was so extensive and this 
discussion is going to be rather lengthy, let me ask you a 
number of specific questions from the outset. Then, after 
we cover some of this ground, we can go back in and pick up 
the story in chronological order. 

First, when did you first become aware that the 
destination for the TOW missiles was Iran? 






557 



UNCUSSIRED 



1 A When did I first become aware of it? 

2 Q Yes. 

3 A When I opened up The Washington Post newspaper in 

4 the City of Denver in late November 1986. 

5 Q And is that likewise true for the HAWK repair 

6 parts? 

7 A Yes, sir, that is true. 

8 Q So you did not know that they were destined for 

9 Iran at the time you were working on these requirements? 

10 A No, sir, I did not. 

11 Q If you had known they were destined for Iran, 

12 would that have affected your executing on the requirement, 

13 or what would have been your response? 

14 A Sir, at the very least, besides notifying the Army 

15 leadership for which I worked, my good friend, a legal 

16 counsel in the Office of the Army General Counsel, Tom 

17 Taylor, I would have gone to him and sought his advice on 

18 that matter. 

19 In the three years that I had worked there, I had 

20 be«n instructed both by the leadership and by my predecessor 

21 boss, now retired, never to do anything illegal. And I 

22 would have felt that we were doing something illegal. 

23 Q Your predecessor boss, now retired, that would be 

24 Col. Stevens? 

25 A Col. Jeff Stevens, yes, sir. 







558 



UNCUSSIFIfO 



8 



1 Q What would have been your assessment in January 

2 1986 if someone asked you what our policy was toward the 

3 shipment of arms to Iran? 

4 A Sir, I would have flat said that I was pretty 

5 intimately familiar with it. with the U.S. Customs folks 

6 that I had worked on covert operations with, there were any 

7 number of papers in my office where they were asking for our 

8 assistance in covert operations — in fact, a snare, deadbeats 

9 that were trying to export arms to Iran — so I knew in fact 

10 it was a violation of the Arms Export Control Act. 

11 That Act was frequently cited by the Customs 

12 Service, that so-and-so was a suspect, and that they were 

13 asking for our assistance, and the suspect was accused of 

14 violating U.S. Code umpty-ump which was in fact the Arms 

15 Export Control Act. So I was very familiar with what that 

16 means in terms of with respect to Iran. 

17 Q That, however, would be with regard to 

18 individuals. 

19 A That's true. But I would have attached the same 

20 interpretation to any government dealings with Iran. 

21 Q Was the legality of meeting the TOW requirement or 

22 the HAWK repair part requirement raised, to your knowledge? 
2 3 A Well, the legality of supporting of it absolutely 
24 was raised. Again, I went to Tom Taylor, a very competent 

2 5 counsel in the Office of the General Counsel of the Army, 



ONCDISSIFIED 



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UNCMSSIFIED 



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and we did that early on. 

There were also extensive legal reviews on the 
support request by a number of other Army principals, 
including the Deputy Staff Judge Advocate and the Army 
General Counsel herself. 

Q That would be Susan Crawford? 

A Yes, sir. 

Q I believe you told us previously that you were 
fairly familia^itj^n^perated frequently through the 

Army' J|^^m|^^H ^ 

A Yes, sir, that is correct. 

Q And am I correct in stating that the! 

■is the formalized system and set of procedures 
■pA 
employed within D^ f or handling sensitive transfers from 

the Army to other agencies, principally the CIA? 

A Sir, you're c orrect, with one small correction. 

loperates down to the Army through the 

Department of Defense. 

Q Is it safe to say that the TOV^ransfe^n^J^ 
HAWK repair parts transfer by passed j 

A Yes, sir, that is correct; they did bypass thi" 



Q They did not go through it? 

A No, sir, they did not. 

Q Are you aware of any other transfers during the 





560 



NCUSSIFIEO 



1 time you were at DCSLG from D^A to the CIA which bypassed 

2 ^^^^^^^ 

3 A Sir, there were no other transfers after September 

bypassed^^^^^^^^^^^^^^^^Hxhere were 

5 any large number of new controls implemented after September 

6 of 1984 to keep the Secretary of the Army informed on our 

7 support to the Agency. Prior to that time, there were small 

8 requests. But even prior to September of 1984, there was no 

9 support of anything that killed people that did not get the 

10 Secretary of the Army's written approval. So this was a 

11 major departure from our prior procedures, even before the 

12 extensive controls that were implemented in September of 

13 1984. 

14 Q Let me ask a question about pricing. As far as 

15 you know, was there any pressure put on you to low-ball on 

16 the price for either the TOWs or the HAWK repair parts? By 

17 which, I mean pressure to come up with a low price? 

18 A No, sir, there was no pressure at all. 

19 Q Are you aware of pressure put on anyone else 

20 within the Department of the Army to come up with a low 

21 price? 

22 A Not within the Department of the Army, sir. 

23 Q Are you aware of pressure that was put on people 
2 4 outside the Department of the Army who were involved with 
25 this transaction to come up with a low price? 



UNCmSIFIED 



561 




sf^i'iiej Ji II 11 



1 A Sir, I'm aware of no pressure on a low price, but 

2 there certainly were external pressures on the Agency with 

3 regard to changing the price once we had initially 

4 established a figure to start from. 

5 Q Okay. We will get into that a little later.. Who 

6 first came up with the price on the TOWs of $3,169? 

7 A Succinctly put, sir, that price originated from 

8 DCSLG, Department of Army. 

9 Q By going to the AMDF, the Army Master Data File 

10 and looking up the price for a — 

11 A —Particular stock number that matched the 

12 terminology for a basic TOW, which is what the Agency was 

13 requesting at the time. 

14 Q And approximately when was that price arrived at? 

15 A Sometime in late January, 1986. 

16 Q So within the first, more or less the first week, 

17 or the first two weeks of meeting this requirement? 

18 A Yes, sir, that is true. 

19 Q When did you first learn that there was a price in 

20 th« AMDF for a basic TOW with safety modification, a MOIC, a 

21 M-O-I-C, of $8,435? 

22 A Sir, that was a discussion that I learned about 
2 3 some weeks after we got started. It emanated from the 

24 project manager TOW's office at Missile Command 

25 Headquarters. 



UmSSIFIED 



562 



MSSIflfO 



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Q Col. Lincoln? 

A It was either he, or George Williams, I forget 
now; one of the two of the principals. 

Q Did you ever see that figure of $8,435 on any of 
the transfer documents or shipping documents which came from 
Anniston Army Depot? 

A No, sir, I did not. I am aware, at this late 
date, though, that such a price was on some documents. 

Q And if I'm asking you to speculate here, just say 
so, but do you know what system, or process, or mechanism 
the people at Anniston Army Depot utilized which enabled 
them to come up with that figure? 

A No, sir, I do not. 

Q At any point in working the TOW and HAWK 
requirements, were you aware that they were being done 
pursuant to a Presidential Finding? 

A Yes, sir, I was aware of that. 

Q At what point did you become aware? 

A Sir, I can't precisely tell you today without 
referring to notes and papers, but ^^^^^^^^^1 the CIA 
Agency Action Officer and myself discussed that early on in 
support of the mission — in the early days is all I can tell 
you, back in January of 1986. 

Q ^^^^^^^^^^^^^ 

r there at the CIA. 




m\m 



563 



uussm 



13 



1 Q I believe you told us that there was fairly 

2 extensive discussion within Dj^A about the issue of 

3 congressional notification? 

4 A Yes, sir, there was extensive discussion at many 

5 levels of the Army leadership. 

6 Q At what stage did that issue arise? 

7 A Sir, that stage arose when I went to seek advice 

8 and counsel from Mr. Tom Taylor on the legality of support 

9 of the mission in its entirety, and within a few hours of 

10 when I went to see him he brought that back down to my 

11 office, a small copy of the Congressional Intelligence 

12 Authorization Act of 1986 and said, Chris, you need to be 

13 aware of this. He said, this impacts on this particular 

14 mission. 

15 Q In what way? 

16 A In that he said that congressional notification is 

17 required, he said, on any shipment of arms over a million 

18 dollars. He said, this is clearly— and we had determined 

19 the price within the first couple days, so by the time we 

20 had gone to see Tom the price already was well in excess of 

21 several millions of dollars, and he said this clearly meets 

22 that requirement. 

23 He offered to do the notification for us to 

24 establish points of contact in the Congress. At that point, 

25 I went to see General Russo for guidance and counsel. He 



UltASSIHED 



564 



UNCLitSSIFIED 



1 brought Tom Taylor down to discuss it extensively with him. 

2 Within a short number of days, Tom Taylor brought back to us 

3 a paper that Mrs. Crawford, the Army General Counsel, had 

4 given to the Secretary of the Army to advise him that she 

5 felt that notification was a legal requirement. 

6 Gen. Russo then asked me to take that paper down 

7 to Ma j . Gen. Sutter, who at the time was the Army's Deputy 

8 Principal Lawyer, the Assistant Staff Judge Advocate 

9 General. After Gen. Sutter looked at it, I also was asked 

10 to take it to Gen. Brown, the Director of the Army Staff. 

11 And later I know that it also went to Gen. Cavezza, the Aid 

12 to the Secretary of the Army. 

13 I also know that a meeting later was held with 

14 Gen. Russo and other Army principals where they discussed 

15 notification at length at the most senior levels of the 

16 Army. 

17 Later I was involved at the end of the 

18 notification issue when it was surfaced to Gen. Powell, at 

19 the time. Ma j . Gen. Powell, the Aid to the Secretary of 

20 Defanse. In a memorandum that I was asked to type, which I 

21 kept Gen. Russo's handwritten notes from the meeting of his 

22 meeting with Gen. Powell that day. Gen. Powell was asking 
2 3 Gen. Russo to reassure the Secretary of the Army that 

24 notification was being handled at the level higher than an 

2 5 outside-of-Department-of-Army, and that it had been 



rosifiED 



565 



yimssiRED 



15 



1 addressed, and it was taken care of. 

2 Q Major, if I understand your testimony, you are 

3 saying then that from the earliest days the issue of 

4 congressional notification was flagged; that Secretary Marsh 

5 weighed in on it; Gen, Brown, the Director of the Army 

6 Staff, Gen. Russo, the Army General Counsel, and that on at 

7 least one, if not more, occasions one or more of these 

8 individuals communicated directly to Gen. Collin Powell, 

9 Secretary Weinberger's Military Assistant, to see that the 

10 issue of congressional notification was identified and 

11 examined by appropriate authorities above the D^ level. Is 

12 that correct? 

13 A Yes, sir, that is correct. In fact, there was 

14 great concern at the Army level about the notification 

15 issue. In addition, I took a copy of the Intelligence 

16 Authorization Act to my counterpart in the Agency, and he 

17 also from his end reassured me that the Agency was executing 

18 its legal responsibilities with respect to notification. 

19 MR. KREUZER: You said something about Gen. Powell 

20 was asking Gen. Russo to reassure the Secretary of Defense 

21 that — 

22 THE WITNESS: No, the Secretary of Army. 

23 MR. KREUZER: Or the Secretary of Army, that 

24 notification was being made? 

25 THE WITNESS: Was being handled, sir. 



(INMSSIFIEO 



566 



UmSSIFIEI 



16 



1 MR. KREUZER: Was being handled. 

2 THE WITNESS: That the issue had been addressed, 

3 and was being taken care of. 

4 MR. KREUZER: I see. And so did he in fact, did 

5 Gen. Powell in fact do that, do you know? 

6 THE WITNESS: Sir, the memo that I typed for Gen. 

7 Russo, which was from his handwritten notes, made no mention 

8 of the fact that DoD was going to do a notification; only 

9 that Gen. Powell for the SECDEF wanted Mr. Marsh reassured 

10 that the issue had been addressed at DoD level. 

11 BY MR. SAXON: (Resuming) 

12 Q To your knowledge, Maj . Simpson, were you ever 

13 told, or was anyone at the DA level every told, that this 

14 issue had been handled in a manner of informing the 

15 Congress, that it resulted in-- 

16 A Was I ever told by anybody at the DA level? 

17 Q Yes. 

18 A No, sir, I was not. 

19 Q Were you ever made aware of the requirement on the 

20 TOW nlssiles being handled in order to replenish Israeli TOW 

21 stocks which had gone to Iran in late '85? 

22 A No, sir, I was not. I became aware of that from 

23 reading the public papers much after November of '86. 

24 Q Did you yourself ever at any time deal with the 

25 Israelis? 



lllSySSSiFIED 



567 



UNCUSSIFIED 



17 



1 A No, sir, I did not myself deal with them. I do 

2 know that my boss-now-retired j'eff Stevens had had occasion 

3 on a number of different matters to deal with the Israeli 

4 Government . 

5 Q But as far as you know, matters unrelated to those 

6 before this Committee? 

7 A Yes, sir. 

8 Q Did you ever have any contact on these matters 

9 with Noel Koch, K-o-c-h? 

10 A No, sir. That name isn't familiar to me. 

11 Q Did you ever have any dealings on these matters 

12 with Glen Rudd, the Deputy Director of the Defense Security 

13 Agency? 

14 A No, sir, I did not. 

15 Q Did you ever have any dealings on these matters 

16 with Dr. Henry Gafney, the Director of Planning for DSAA? 

17 A No, sir, I did not. 

18 Q Are you aware that under foreign military sales, 

19 FNS sales, the cheapest the United States had ever sold a 

20 basic TOW missile for was $6800? 

21 A No, sir, I wasn't aware of the specific details, 

22 but I am generally familiar with FMS pricing policy. 

23 Q Let me ask you a question or two about the checks 

24 which the Army received from the CIA as reimbursement, or 
2 5 payment for these weapons systems which were transferred. 



UimSSIFIED 



568 



mssiriED 



18 



1 What do you recall the amounts being for those 

2 checks? 

3 A Sir, as I recall, the sum of money was about $5.5 

4 million. As I recall, I received from the 

5 H^^^^^^^^^^^^^^H CIA, them 

6 came out to $999,999. 

7 Q Did you ever ask why the checks were cut in that 

8 amount? 

9 A Yes, because again I was keeping in mind the 

10 advice I had had from the earliest days, to keep the 

11 paperwork to an absolute minimum. I was concerned about the 

12 audit trail of six checks, as opp osed to one. Anc 
^^^^^^^^^^^^^^^^^^^^^^^^^^H^^^^^^^^^^^B explained to 

14 me that there were computer problems and that they could 

15 only program a check up to a certain amount. 

16 Q Did he explain that there might be a reason for 

17 them only to program a check up to one penny short of a 

18 million dollars — 

19 A No, sir, they didn't. 

2 Q — because if they exceeded a million, they would 

21 hav« to notify Congress? 

22 A No, sir, they did not. 

23 Q Did — 

24 A Again, if I had heard that I would have been 

25 especially sensitive to it, because the checks were coming 



ttSSIFIES 



569 



uNQiSSIFIEI 



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2 

3 

4 

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in at the end of the mission where we had had so much 
concern about notification at the beginning. Had that issue 
surfaced in the end, I would have again immediately gotten 
bac)c to General Counsel and asked for some guidance and 
reaction. ^^^^^^^^^^^^^^^^^^^^ 

Oic^^^^^^^^^^^^^^^^^^^Bat the ever 
you that he had been at the White House for a meeting on 
January 18th with Admiral Poindexter, Col. North, Clair 
George, and Stanley Sporkin, the General Counsel of the CIA? 

A Sir, he never told me that, although 
and I have spoken before, and I knew he was dealing with 
principals over there, but I did not know any of the names. 

Q Did he ever tell you that his point of contact at 
the White House or the NSC was Col. Oliver North? 

A No, sir, he did "ot^^^^^^^^^ 

Q Were you aware that^^^^^^^Vtold Gen. Russo 
that the price of $6000 per TOW, which apparently Gen. Russo 
had provided him as a working figure early on, was too high? 

A Was I ever aware that he told him that it was too 
high? No, sir, I wasn't. 

Q Were you aware that Col. North told| 
that $6000 per TOW was too much? 

A No, sir, I did not. I do feel there's an answer I 
could provide here that might clarify matters for you. 




Sure. 



NtASSIFIED 



570 



OmSSIHED 



20 



1 A I do believe that when Gen. Register, the Army 

2 Deputy Chief of Staff for Logistics, talked to me the first 

3 day that he had the thought that the price would be higher 

4 than it turned out to be for a basic TOW. And the numbers 

5 that he had provided to me, which was around $4000 ^ once we 

6 had communicated that lower price to the Agency in the early 

7 days of the mission, then the number went up very quickly in 

8 terms of the number of missiles that they were asking for. 

9 And I think that has a bearing here. 

10 Q Okay. Did Gen. Russo ever tell you that 

11 ^^^^^^^had told him to find the oldest TOWs that existed in 

12 the Army warehouses? 

13 A Sir, I'm not sure about that. That might be true. 

14 I'd have to go back. I've kept an awful lot of detailed 

15 notes on this mission. I'd have to go back and study those 

16 to provide you a better answer. 

17 Q Did^^^^^^^^Hever tell you that Col. North had 

18 checked with the Marines on TOW prices? 

19 A No, sir, he did not. 

20 Q Did^^^^^^^^Hever tell you that 

21 told him to avoid the 

22 A Yes, sir, he did. That was ve ry much a concern, 

23 again, from the first time I spoke toj 
2 4 ^^^^^^^1 because he knev^^^^^^^^^^Band I from prior 
25 extensive dealings with each other and knew well what the 





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ONGUSSiriED 



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rules were on our support to the Agency. That was almost 
the first five minutes of our discussion the first day we 
met, was not to deal with any of the people in the] 




And it was specifically addressed by name as the 





A Yes. ^^^^^^^^^Kknev well what that was. 

Q Do you have any knowledge that Gen. Russo dropped 
the pri ce from $6000 per TOW to $3400 per TOW on the first 
day that^^^^^^^^^lwas involved because of a call Gen. 
Russo received froo 

A Sir, I would have to say that has to be absolutely 
untrue, because in fact Gen. Russo was out of town when this 
mission got started, and I already had provided the basic 
price of $3169 to Gen. Register. Gen. Russo didn't pick up 
the mission for several days, and it wasn't until a couple 
of weeks after that that I surfaced to him from the bottom 
up the fact that we needed to add $300 more to the price, 
bringing it up to about $3469. 

Q The requirement for that was due to the safety 
modifications? 

A Yes, which were surfaced to me from MICOM 
headquarters. So it was absolutely a matter of the field 
surfacing to the Army leadership, and not vice versa. 

Q Let me ask a question or two about the readiness 



y^rassiFiEO 



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UmSSiFIED 



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impact of meeting the TOW requirement — excuse me, the HAWK 
repair parts requirement. 

A Okay, we're on HAWKs, now, sir? 

Q Yes. Did you ever tell^^^^^^^^^Vof your 

concern about the readiness impact of providing all 234 
items requested for the HAWK repair parts? 

A Yes, sir, I did. 

Q And what was his response? 

A His response was that that was what they needed. 
But, sir, that again is not such a simple matter. Gen. 
Russo and I personally chopped the list down. Using the 
vernacular, that means we reduced the number of critical 
items that would have an impact on Army readiness. 

I would point out, and it is of concern, that the 
principal number of items that the Agency was asking for on 
HAWKs were of an older model called Pre-Phase II PIP 
configured radars. 




Q If I understand what you're saying, you and Gen. 
Russo were concerned about the readiness impact on certain 
parts, and sought to not meet the requirement as to a 
certain number of parts. Is that correct? 



limSSIflED 



573 



mmmB 



23 



1 A Yes, sir, that is co rrect . 

2 Q And in fact did^^^^^^^^^Bre instate those parts 

3 and say in essence that you would have to provide them 

4 anyway? 

5 A Sir, there was give-and-take on that. The numbers 

6 that I had chopped down for him on some that he came back, 

7 there was a critical question that Gen. Russo asked me to 

8 ask^^^^^^^^H early on. Early on, the question that I was 

9 to ask him was, were they just buying these items to put on 

10 the shelf? Or were they buying these parts to replace 

11 damaged equipment? ^^^^^ 

12 The answer that came back from^^^^^^^Hseveral 

13 days later was that they were buying the parts to replace 

14 damaged equipment. And that, then, affected the Army 

15 assessment of whether or not to support. Even after that, 

16 though — and you and I had extensive discussions on this in 

17 April — the technicians assisting us in assessing Army 

18 capability to support this project felt that some of the 

19 numbers were wrong. That is, that some of the parts that 

20 thay had requested would have been supporting about, as I 
recall, ^^^^^^^^^Hj^H and some the repair parts, 

22 of the technicians felt, would have supported a number far 

2 3 in excess of that. 

24 So again, it was a complex matter, and there was 

2 5 give-and-take on the list as we reduced the items they were 



iiNebissifiEo 



574 



ymssra 



24 



1 asking for, sometimes just because they didn't make sense. 

2 And other items were we could not afford to give them all 

3 that they asked for. 

4 Q But while there was some give-and-take, were there 

5 any items that you and Gen. Russo would have preferred not 

6 to transfer to the CIA which^^^^^^^^H insisted you 

7 transfer? 

8 A Yes, sir, there were a small number of items that 

9 we in fact gave them slightly more than we had originally 

10 chopped the list down on. 

11 Q And how many would you say that would be? 

12 A To my best recollection, and again I've got my 

13 notes on it, there were probably about 6 items out of that 

14 whole list of 234 that we gave them more than we intended, 

15 after reviewing the criticality of the items. 

16 Q And those would have been items which you would 

17 have preferred not to surrender due to the readiness impact? 

18 A Yes, sir. And it might not necessarily have been 

19 the readiness impact on U.S. forces, but the readiness 

2 impact on some of our FMS customers where they owned these 

21 older systems and might be coming in. I would also mention, 

2 2 I think it is important here, that we offered, and it was a 

23 more sensible alternative offered by the U.S. Army Missile 

2 4 Command, to in fact bring the^^^^^^^l systems back to the 

25 Army's overhaul facility. We felt that it would not only be 




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UNUSIFIEO 



25 



cheaper, but much easier to resupply and maintain in the 
future to modernize the ^^^^^^Hsy stems to something we 
called Post-Phase II PIP configured, which would then have 
made it easier for them to both maintain and operate the 
systems in the future. 

They would have also had a better capability, a 
state-of-the-art capability. 

Q We will talk about that in more detail later. For 
now, that was not done, even though the Army suggested it? 



That was not done. The offer was not — yes, sir. 
The offer was not taken up by the Agency. 
Was declined. The offer was declined by the 



A 

Q 

A 
Agency . 

Q Were you ever told by anyone that the decision to 
delete the radars, the tw<^^^^^^^^Hradars , was made by 
the White House? 

A Was I ever told the decision was made by the White 
House? No, sir. That was a twisted and sordid affair, as 
you may recall from our prior testimony. I had done a great 
deal of work for^^^^^^^^f in finding out the 
availability. As you recall, I had told you that 




It turned out they we re proper ty of the Iranian 
Government, and that I had told^^^^^^^H that both the 
Treasury, the White House, and the State Department, as well 



liNttffism 



576 



UNttASSro 



26 



1 as the Defense Department, and a number of agencies, all 

2 needed to be involved in the. release of that equipment. He 

3 was very concerned that I had gone and done this work, 

4 although he had vigorously told me to go ahead and ask to 

5 procure them. 

In was boss, ^^^^^^^^^^^^^H that 

7 called my boss. Gen. Russo, to complain about the fact that 

8 we were "making noises" so to speak, about the items, and 

9 asked us to cease and desist immediately. 

10 And of course, hypocritically, they turned around 

11 on that just a couple of weeks later and asked us to go and 

12 inspect them for readiness capability; and in fact provided 

13 funds to do that. But I never did hear an answer — a short 

14 question with a long answer — I never heard the White House 

15 mentioned as the activity that asked us to back off. 

16 Q And just for the record, you were never told that 

17 Col. North himself made the decision to delete the radars? 

18 A No, sir, I did not. 

19 Q All right. That completes what I would want to 

20 run through as sort of some overview, or sort of bottom-line 

21 questions. 

22 Roger, do you have anything in that category 

23 before we start to another one? 

24 EXAMINATION ON BEHALF OF THE HOUSE SELECT COMMITTEE 

25 BY MR. KREUZER: 



UmSSIFIED 



577 



imim 



27 



1 Q The discussions that you had with Gen. Russo, you 

2 went to the AMDF. You found the first price of $3169, and 

3 you conveyed that information to Gen. Russo? 

4 A Yes, sir, that is correct. 

5 Q And he said, okay, in essence? 

6 A Well, by the time Gen. Russo got involved, we had 

7 already established the price and given it to Gen. Register, 

8 his boss. Gen. Russo was picking up the mission several 

9 days later. That was already something that had already — 
that event had already passed by the time Gen. Russo took 

So then later there was a question of the MOIC 

Yes, sir, several weeks later. 

And you had to go back with it to Russo the next 

Yes, sir. 

— since he had taken over, and say we have to 

19 adjust this price to $3469 — 

20 A Yes, sir. 

21 Q — because of the MOIC. And what did he say then? 

22 A Gen. Russo wanted to know what in the hell a MOIC 

23 was. Neither one of us knew what it was at the time. We 

24 had to have a detailed technical explanation provided of 

25 exactly what this small electrical apparatus was going to 

tcj 



10 


that ev 


11 


over. 


12 


Q 


13 


device? 


14 


A 


15 


Q 


16 


time— 


17 


A 


18 


Q 




578 



uNCUssra 



28 



1 do. 

2 Q So ultimately once the discussions took place and 

3 he learned about what the MOIC was, did he say, okay, in 

4 essence, this is all right? 

5 A Well, of course he did. The objective was that we 

6 had to go back to the Agency to tell them that additional 

7 funding was required which, as you may recall, caused a lot 

8 of consternation at the time. 

9 Q And that was not the only time, I guess. 

10 Q That's true. That wasn't the only time that we 

11 changed the price on them, based again on information being 

12 fed from the field up to the leadership. 

13 Q Now was there some — were you aware of some 

14 discussion between the people at, let's see, who was it, 

15 Col. Lincoln or Mr. Chris Leachman, and Gen. Russo about 

16 $3469 being too low a price? Are you aware of any 

17 discussions they had with them, or arguments? 

18 A Sir, I don't recall that Col. Lincoln or Chris 

19 Leachman ever talked with Gen. Russo. They did speak with 

20 me, and one of the generals at Missile Command did speak 

21 with Gen. Russo; but the discussions on pricing that Mr. 

22 Leachman and Col. Lincoln had were always with me. I don't 

23 think either one of those, Chris Leachman or Col. Lincoln 

24 ever talked to Gen. Russo about prices, not to my knowledge. 

25 Q Are you ^WATf of the discussions that Col. Russo 



aware ot tne discussions 

ilMSIFIED 



579 




29 

1 did have with Lincoln and Leachman's boss, the General? 

2 A Sir, I was generally aware I think that Gen. Russo 

3 generally had a discussion with the Deputy Commanding 

4 General at Missile Command, and I am generally aware of what 

5 the outcome of that discussion was. 

6 The outcome was that there had been a lot of 

7 technical discussions on the whys and wherefores of 

8 different years and different prices of different shipments, 

9 and Gen. Russo said he did not want the bureaucracy to run 

10 the risk of damaging the mission, and he was going to leave 

11 the prices as set. 

12 Q So did you hear of what price the General at 

13 Missile Command was advancing to Gen. Russo? Did you have 

14 any knowledge of that? 

15 A I know it was one of the higher prices, but not 

16 specifically the details. 

17 Q And Gen. Russo said in essence, it is $3469? 

18 A Roger. By that time we had already gone through 

19 several other iterations on changings in price, and Army 

20 ancillary costs. I think Gen. Russo was a little bit 

21 concerned about changing truth, and just kind of said let's 

22 leave it be and let's go with what we have now. 

23 MR. KREUZER: Okay. Thank you. 

24 EXAMINATION ON BEHALF OF THE SENATE SELECT COMMITTEE — Resumed 

25 BY MR. SAXON: (Resuming) 



liNCHtSSIflEO 



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UimSSIFIED 



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Q All right. Major, I think it may be helpful from 
the outset to have you elaborate a bit on something I asked 
you about previously, which we will spend a good of time 
discussing, and that is the 




Off the record a minute. 

[Discussion off the record.] 

BY MR. SAXON: (Resuming) 
Q Back on the record. 

A Sir, just briefly, and if I get too elaborative, 
just cut me off, not knowing where you need the — 




the result of Secretary of 
the Army's concerns that there were a large number of 
classified programs and activities going on in the Army over 
which he did not have full visibility. Some of these 
concerns were accentuated by the fact that there had been a 
Department of Justice investigation of some ODCSOP, Office 
of the Deputy Chief of Staff for Operations. 

Q Would that have included what we have come to know 
as "Yellow Fruit"? 

A Yes, sir. As a result of the outcome of the 

'" T 



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UNWSIFIEO 



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investigation, several Army colonels were received in 
ODCSOP, and the Secretary did not feel he had as full 
visibility as he should over some of the details of the 
classified operations. 




A Ves, sir, that is ^^^^^^^^^^ 
Q You said it was "the"^^^^^^^^^^B for 

handling transfers to the CIA, and requests from the CIA. 

In your j udgment, would it have been the only, or the 
Ifor such requests': 
A Sir, it was the exclusive office! 




Q Were you there at the time it was created? 

A Yes, sir, I was. 

Q And you had dealt with that office? 



JNCiraFIED 



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ONMSIHED 



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Extensively, on a daily basis for almost 
Iby the time we got to September — or by the time 
we got, excuse me, to January 1986. 

Q And to make sure I understand what you testified 
to earlier this morning, I believe you told us in the 
interview in April that there were a few instances in which 
transfers to other agencies would go outside of the 




A Yes, sir. As a matter of fact, with respect to my 
whit e world jo b, I think I want to separate my dealings with 
the ^^^^^^^^^^^^^H exclusively concerned my black world 
job. And although I worked on other covert activities, 
there were other established DoO and DA channels for 
receiving these support requests, and I in no way interfaced 

the^^^^^^^^^^^^^^^^^^^^^^fon those 

Q So it is perhaps possible that transfers to other 
agencies went^^^^^^^^^H-excuse me, that transfers went 
f roa OA to other agencies without going^^^^^^^^^^H But as 
far as you know, no blac k world or covert transfers took 
place to the CIA outside^^^^^^l Is that correct? 

A No, sir. 

I think it is also important — I would like to 
elaborate just very shortly — to say that on the requests 




OmSSIFIED 



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33 

wh ere we did provide Army material to other agenciesi 

they were always done 
with Army General Counsel's written support, and always with 
a written approval of the Secretary of the Army. 

Q And you did not follow those procedures in this 
case? Is that correct? 

A No, sir. The procedures involved in supporting 
the TOW missiles and the HAWK parts went outside all of 
these established channels. 

Q And at the time the TOW requirement was imposed on 
who was the hea^^^^^^^^^^^^^^^^^^^^^^^H 

Sir,^^^^^^^^^^^^^^^^^^^^^^^^^p'as the 
head. 

Q Roughly, when did he depart? 

A Sir, to the best of my knowledge, he left just 
about the time I did in the early spring of 1986. 
Q And who was his replacement? 

A gentleman, I can't remember his name . 
Would that be I 
Yes, sir. 

If you would, start at the beginning of your 
involvement with and knowledge of the TOW missile 
requirement, wherever that would have been, in January. And 
if you would, simply walk us through what happened, how you 
found out, who called you, and who said what, what you did, 



mmmii 



584 



UNCIASSIFIEO 



34 



1 et cetera. 

2 A Sir, my involvement began on a Saturday morning in 

3 late January. I believe it was around the 20th of January. 

4 Col. Lapasota, who was the Executive Officer to the Army 

5 Deputy Chief of Staff for Logistics, Gen. Register — 

6 Q And that would be Gen. Benjamin Register? 

7 A Gen. Benjamin Register, yes, sir. 

8 Q And spell Lapasota. 

9 A L-a-p-a-s-o-t-a. He is now Gen. Lapasota. He is 

10 now Chief of Planning and Operations in the Office of the 

11 Deputy Chief of Staff for Logistics. 

12 Q Excuse me. You said Colonel? 

13 A Col. Lapasota, then, is now Gen. Lapasota, and he 

14 is now the Chief of Plans and Operations for ODCSLG. 

15 Q And he called you? 

16 A He called me at the behest of Gen. Register. He 

17 said Gen. Register is in his office, and he would like you 

18 to leave your house immediately and come directly into the 

19 office to see him. 

2 I immediately went into the office. I got there 

21 about 30 minutes later. Col. Lapasota did not know why Gen. 

22 Register wanted to see me, except that the DCSLG office was 
2 3 activated, and Col. Lapasota was acting as the support 

24 officer, which was his normal role. 

25 I went in to see Gen. Register with the doors 



UNWSIFIED 



585 



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Q Let me ask, for the record, while there are a lot 
of things you told us in April were unusual about the TOW 
and HAWK missile request, I believe you also told us that it 
was not unusual for you as an Army Major to be dealing with 
the Deputy Chief of Staff for Logistics, or other senior 
people at DCSLG. Is that correct? 

A Yes, sir, that is correct. I dealt with Gen. 
Russo daily, and I saw Gen. Register frequently. 

Q Okay. Continue. 

A Gen. Regist er said that that morn ing| 
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^H Gen. 
told both of us that that morning he had received from Gen. 
Thurmond — 

Q And that would be Gen. Maxwell Thurmond? 

A Maxwell Thurmond, the Army Vice Chief of Staff, 
had received from him a priority requirement to assess Army 
capability to provide about 4000 TOWs to the CIA on very 
short notice. At the time, it was within just a couple of 
days. 

The requirement was so urgent that Col. Lapasota, 
although he knew nothing about my mission, had been 
instructed to have a plane on standby down at the field down 
at Ft. Belvoir to take me any place I might need to go in 



UNKASSIFIED 



586 




8— 

1 support of this mission. There was some thought on Saturday 

2 I might need to go down to Army Missile Command Headquarters 

3 to expedite support of the mission. 

4 Q And where is Army Missile Support? 

5 A That is at Redstone Arsenal, Alabama. 

6 Q And that is also referred to as MICOM? 

7 A Yes, sir. MICOM is the common abbreviation for 

8 Missile Command. 

9 Q All right. Continue. 

10 A The requirement, as Gen. Register conveyed it to 

11 me, was again to provide about 4000 basic vanilla TOWs. A 

12 vanilla TOW, for the record, is an old model of an Army 

13 tactically operated optical wire-guided missile, which is a 

14 missile at that time that had a range of about 3000 meters 

15 and was kind of a "tank killer" as it were. 

16 Gen. Russo said, I am going to wait in my office. 

17 He says, do you have any points of contact at MICOM? I had 

18 said, yes, I knew Col. Lincoln from a previous mission that 

19 I had worked on, who was the Chief of the Army's TOW Project 

20 Management Office, the office responsible for dealing with 

21 contractors' design and development of missiles. 

22 I called Col. Lincoln. I got in touch with him on 

23 Saturday. 

24 Q Now before you go into your discussion with Col. 
2 5 Lincoln, let me back you up a moment and ask you what the 

.5' 




587 



u^WmHUVIIS II.U 37 

1 specific guidance was that you received from Gen. Register 

2 in terms of how this transaction should be handled, who 

3 should you tell, what kind of notes, et cetera? 

4 A The guidance I got from Gen. Register was one that 

5 the entire DoD staff that was involved in this was a very 

6 tiny handful of people; that it was as sensitive a mission 

7 as I had ever worked on; that I was to keep paperwork to an 

8 absolute minimum; and to keep the number of people I 

9 involved to an absolute minimum necessary to accomplish the 

10 mission. 

11 Q Were you asked if in fact it would be possible for 

12 you to deal with a single individual at Redstone? 

13 AX believe that I was, sir. And although we 

14 thought that was initially capable, it turned out not to be 

15 true as time went on. 

16 Q And were you shown any reguests in writing from 

17 the CIA, on CIA letterhead, as you would have normally had 

18 for one of your reguests? 

19 A No, sir. As a matter of fact. Gen. Register said 

20 a major departure from our normal procedure would be that 

21 thare would be no staffing paperwork on this mission. 

22 Rather, that I would deal with the same principals that I 

2 3 deal with to get a mission approved; but I would do all of 

24 it by verbal coordination. 

25 Q Did Gen. Register say from whom Gen. Thurmond got 



!'WTOFI£0 



588 




38 

1 this requirement? 

2 A Not at that time, sir; but I understood clearly 

3 later on that it came dovm from the Office of the Secretary 

4 of Defense. 

5 Q At what point do you think you would have been 

6 told that? 

7 A Oh, about the time we started to discuss the 

8 pricing issue. I was very well aware, as we started to 

9 discuss the pricing issue, that those decisions and 

10 requirements were coming from the Office of the Secretary of 

11 Defense, and I knew that Gen. Powell was acting for Mr. 

12 Weinberger. 

13 Q Correct me if I approach something like putting 

14 words in your mouth, but is it safe to say that while this 

15 request was unusual in many regards, that from the outset 

16 there was no doubt about its legitimacy or that it was 

17 passed on by appropriate Amy individuals at the highest 

18 levels? 

19 A Sir, there was never any doubt in my mind. I was 

20 dealing with people who I had heard their names frequently, 

21 and the people within the Army I was dealing with I had 

22 dealt with extensively for 2-1/2 years by this time, so 
2 3 there were no surprises, no new faces, and I certainly 

24 attached legitimacy to the mission because of that. 

25 Q Tell us then about your conversation that first 



i^'"*^^siFii^n 



589 




- .« 39 

1 day with Col. James Lincoln at MICOM. 

2 A Sir, Col. Lincoln, who I will just refer to after 

3 this as the TOW Project Manager, the TOW PM, said that that 

4 was an unusual thing, because here I have Gen. Register the 

5 DCSLG of the Army waiting in his office for me to see 

6 whether or not we can provide about 4000 TOWs on very short 

7 notice, as early as within three days. For the record, this 

8 was a very, very short window to make such a major 

9 assessment of support capability. 

10 Col. Lincoln said he would go into his office. He 

11 said he would have to do this strictly from a records' 

12 review; that it was almost impossible otherwise than that to 

13 assess it in such a short time. But he went into his 

14 office. I provided to him a stock number for the basic 

15 vanilla TOW. 

16 Q And where did you get that stock number? 

17 A I got that from a fellow in the DSLG missile 

18 office who was working with me that Saturday. 

19 Q That would be a civilian named John Hill? 

20 A Yes, sir, that is correct. And it was from that 

21 stock number that we determined the price, which we also 

22 gave to Col. Lincoln. 

23 Q I believe you told us that Mr. Hill was called in 

24 by Gen. Register to do a check of existing inventories to 

25 see whether — 



590 




,ji.iii ,n I. 40 

1 A Worldwide, 

2 Q — the need could be met. 

3 A Yes, sir. 

4 Q And to provide you with specific stock numbers for 

5 the basic vanilla TOWs. Is that correct? 

6 A Yes, sir, that is correct. 

7 Q But that is more or less the extent of Mr. Hill's 

8 involvement? 

9 A That was his only involvement with me, sir, after 

10 that. 

11 Q Okay. So you gave the stock number for the 

12 vanilla TOW to Col. Lincoln? 

13 A Yes, sir; that is correct. 

14 Q And then what happened? 

15 A He called me back sometime after lunch, I would 

16 suspect before 2:00 o'clock as I recall, and said, Chris, it 

17 looks like we can do that. He said, I want to get my 

18 regular folks in here on Monday morning, he said, but he 

19 said, it looks like we can do it. He said, it looks like 

20 I'v« got enough stocks. 

21 He had told me, at that time, that he thought they 

22 were down at Anniston Army Depot, a depot several hours 
2 3 distant from Anniston. 

24 Q Anniston Army Depot is within Alabama, and 

25 Redstone — 



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1 [Simultaneous question and answer.] 

2 A — in Alabama, and Anniston Army Depot, for the 

3 record, belongs to Missile Command Headquarters. It is one 

4 of their subordinate activities. 

5 I went up and Gen. Register, who was still waiting 

6 in his office — it was my understanding he was waiting to 

7 give the answer back to the Army leadership at that time. 

8 Q At that point when Col. Lincoln first got back to 

9 you to say he thought the requirement could be met, you did 

10 not know that the shipments were to be split into the three 

11 orders? Is that correct? 

12 A That is absolutely correct, sir. 

13 Q Nor did you have any reason at that stage to know 

14 that a safety modification, or MOIC, would be needed? Is 

15 that correct? 

16 A No, sir. 

17 Q Okay. Continue. 

18 A Once I had told Gen. Register what Col. Lincoln 

19 had advised me concerning, Gen. Register gave me a beeper 

20 and asked me to stay very close hold the rest of the 

21 weekend. He had Col. Lapasota have the plane on standby, 

22 which also was to remain throughout the weekend, and asked 

23 me, should I leave the house at any time, to let him know. 

24 There were no more events that weekend. We picked 

25 up the mission on Monday when two things happened, both on 



592 



fflissra 



42 



1 Monday morning. One was that al 

2 ^^^^^^^^^^^■from the CIA called me on the phone and asked 

3 me if he could come over and visit me in my office. 

4 Q Had you ever had any dealings with him prior? 

5 A Yes, sir. I had had some extensive dealings with 

6 ^^^^^^^^^^■^■^ ^^^ 

7 I knew him well. He came over to see me, told me he was the 

8 Agency action officer for the project on which 1 had been 

9 briefed on the weekend, and he knew all of the details 

10 concerning what I had worked for Gen. Register on on 

11 Saturday. And again, based on my normal dealings with the 

12 Agency, I then fully understood that he was the main 

13 participant. 

14 Q At that point, did this operation have a code 

15 name, or a nickname? 

16 A It didn't then, but I developed one very shortly 

17 for it. 

18 Q 

19 A 

20 Q 

21 that neuBe? 

22 A To tell you the truth, I looked out the window and 

23 it was snowing the day we gave it the name. I wanted 

24 something very innocuous that would not attract attention. 

25 Q For the record, when we get to the HAWK repair 



And that was what? 

I developed it and called it "Project Snowball." 

Was there any particular reason why you gave it 




mbL 



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1 part condition, did you also provide that its name? 

2 A Yes, sir, I did. 

3 Q What was that name? 

4 A I provided the project a name called "Crocus." 

5 Q And why did you name it that? 

6 A Because at the time when I looked out the window, 

7 there were crocuses blooming. I know that's very amusing, 

8 but — 

9 Q Okay, to go back to your discussions with 
^^^^^^H continue. 

11 A Sir, that morning^^^^^^^Hat that time alerted 

12 me that the first shipment could be as early as just a few 

13 days from that, and asked me that day to work on weights and 

14 cubes for a variety of different aircraft, including a 

15 Boeing Commercial 707, an Air Force C-140, and a number of 

16 other civilian and military aircraft. There were 2ibout five 

17 all together, as I recall. 

18 The environment became very dynamic at that point. 

19 He also wanted me to determine the capability of the runway 

20 down at Anniston to support these different type of 

21 aircraft. That particular factor we learned very guickly 

22 could not support some of the bigger aircraft, and within a 

23 very short time we had decided that if we were going to do 

24 any outloading of missiles, we would do it out of the 

25 Redstone Airfield, which was big enough to acconunodate all 



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1 of the different variety of aircraft. 

2 Q All right. We will be told by you later, I 

3 assume, that these missiles were not actually airlifted, but 

4 in fact went by truck. But we so understand now, in the 

5 beginning the plan was for them to be airlifted out of 

6 Anniston Army Depot? Is that correct? 

7 A Yes, sir, that is correct. 

8 Q Then you promptly ascertained that, given the type 

9 of aircraft the CIA contemplated, that would not be 

10 possible? 

11 A Not for all of the types of aircraft; that is 

12 correct, sir. 

13 Q And so at a later date, and perhaps we will get 

14 into it further in the chronology, but at a later date the 

15 decision was made that these would be transported to 

16 Redstone from which the airlift would take place? 

17 A Yes, sir ; that is correct. Also, on my first day 

18 with^^^^^^^^^l because we had dealt before on issues and 

19 he always knew that we priced things for him, he wanted to 
2 know what it was going to cost. 

21 He and I compared notes that morning on what — 

22 since this was the first time that I had received a support 
2 3 request without a piece of paper specifically discussing the 

24 details of it--I was just doing the basic thing that any 

25 good action officer would do, which was comparing the stock 



m 




595 



1 number that I had and the terminology out of the Army Master 

2 Data File, and I said^^^^^|is this what you want? I said, 

3 this is what I got from the DCSLG on Saturday morning, and 

4 we ascertained that same day that, yes, that was what he 

5 wanted . 

6 So after that particular discussion was done, I 

7 have now called back Col. Lincoln to work on weights and 

8 cubes and airfield problems. Gen. Russo calls me up and 

9 said, Chris, he said, I've been talking to Gen. Register 

10 about you. He said, why don't you tell me all about this 

11 project. 

12 Q This is Gen. Vincent Russo? 

13 A Yes, sir, the Army Assistant Deputy Chief of Staff 

14 for Logistics. 

15 Q And at this point, this is his first involvement? 

16 Is that right? 

17 A Yes, sir. He had been away on a TDY trip when 

18 this mission got started. For the record, it was normally 

19 he that I dealt with day to day on these kinds of missions. 
2 Q And it was in his absence that you — 

21 A Dealt with Gen. Register, which was the exception 

22 rather than the rule. 

2 3 Q Okay, what did you and Gen. Russo discuss? 

24 A Gen. Russo gave me a dump of what Gen. Register 

2 5 had told him had transpired from Gen. Register's end. Then 



wssife 



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1 Gen. Register says, Chris, could you tell me about what you 

2 have been working on? So I brought him up to date both on 

3 my discussions that weekend with Col. Lincoln, as well as my 

4 discussions earlier that same morning witf 

5 I told Gen. Russo then that I had unresolved 

6 business to go work on. That is, to get the weights and 

7 cubes done on these various types of aircraft. Also, that 

8 particular morning I got back to^^^^^^^^^Hand asked him 

9 if he wanted me to work with the FAA in getting them 

10 clearances for a contract airplane, and he declined that 

11 offer that morning, but said he would reserve the right to 

12 do that later. 

13 Q Before we go further, let me clarify for the 

14 record or make clear what would have been your normal 

15 process in handling a requirement such as this. Now we've 

16 establish ed that it did not go throughthe^^^^^^^^^^^^ 
^^^^^H If it gone the^^^^^^^^^^^^^PVwho 

18 were some of the individuals you would have dealt with? 

19 A Off the record? 

20 MR. SAXON: Yes. 

21 [Discussion off the record.] 

22 BY MR. SAXON: (Resuming) 

23 Q Okai 

24 A 
25 




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I had several principals — I will keep their names 
office the record — that I dealt with. They had a singular 
requirement that any request to us had to be in writing. 
One of their principals signed that request. It then went 




^^^^^^^^^1 would then call me to come down 
and get them . 

^^^^^^^^^^^^^^^^^Hwould even us a request 
he felt that it wasn't proper for the Army to support, but 
he was exercising oversight for the Secretary of the Army in 
that regard. Briefly, before I got a request that killed 
people to work on, those requests had gone up to be 
personally reviewed by the Vice Chief of Staff of the Army, 
and the Vice Chief of Staff of the Army would give! 

^guidance as to whether the memo was to go to the 



p^mmw 



598 



mmiB 



48 



1 Secretary for signature, which required also Chief of Staff 

2 review, or whether it was to go to the Under Secretary and 

3 required a Vice Chief of Staff review. 

4 ^^^^^^^^That was called a "concept approval." So when 

5 ^^^^^^^^^^^Hgave me an agency request to work on that 

6 involved things that killed people, it already had something 

7 called an Army Leadership Concept Approval. 

8 Once I had worked on a request of this particular 

9 sort, a whole host of folks got involved routinely in 

10 helping me staff the action. One of them was the Office of 

11 the Director, Military Support, DCSOP, and that is 

12 abbreviated DOMS, D-O-M-S. That again stands for the office 

13 of the Director, Military Support. 

14 They looked at this issue for readiness. There 

15 were a number of cleared individuals down there that looked 

16 at this for its impact on readiness. If they would not give 

17 us a chop, that would normally stop the action right there. 

18 Q Did that ever happen? 

19 A There had been a number of times where readiness 

20 became an issue and affected how we supported an Army 

21 mission. Generally, I might add, that via classified 

22 telephone, if the Agency was contemplating anything big, 

2 3 that they felt, and they were pretty well experts at this, 

24 if they felt there was a tendency for a mission to have an 

25 impact on Army readiness, they would scope it out by 



B 



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1 

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11 

1 

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1 

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1 

19 

2 

2 

2 

2 

2 

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classified telephone first. 

Q So you're saying before a written request came 
over, someone in I guess IDSB would call you, say here's 
what we're thinking about, and in fact you would not only 
tell them what the preliminary action was that you had, but 
you would check stock numbers, availability, price, et 
cetera? 

A Yes, sir, that was routine. Normally, if we told 
them it was going to have a negative impact on Army 
readiness, they would back off. That would normally at the 
Agency site kill an action before it ever got here. 




600 



ONClASSiFIED 



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iNGUSSlFlED 



^y -', T! V 



601 




And were these for routine kinds of items? Or did 
you ever use this process to handle fairly sensitive 
matters, or sensitive transfers? 




mi^ssTO 



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52 

So I guess the answer 
is, yes, that we had used this sort of system on other 
occasions to support urgent requirements. Some of those 
enforcement agencies have frequently asked us for same-day 
support. So we were used to not being bureaucratic. We 
were used to being fast and efficient. 

Q In the r oughly three years previous that you had 
spent in this job,^^^^^^^^^Hbeen asked by the CIA for a 
TOW missile, prior to this requirement? 

A No, sir, 1 

Q Now I interrupted. If you would, go back and 
con tinue whe re you were in the chronology. You had talked 
witt^^^^^^^^^Hon Monday morning. Vou had spoken to Gen. 
Russo. Where are we? 

A Yes, sir. We diffused slightly when you asked me 
to go through for the record our normal staffing procedure. 
We are now back to the Monday morning after the second day. 
I'm now working wi th MICOM in getting details on 
weights and cubes ready foi^^^^^^^^^Bat the Agency. I'm 
keeping Gen. Russo informed on a daily basis. The 
requirement that Monday was to support an upload of 1000 
missiles as early as the coming Saturday, the 29th of 
January. 

That changed at the last minute. Although we had 
MAC support — this is, for the record, Military Airlift 



yitUSSIfiED 



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Mmmis 



53 



1 Command, abbreviated MAC, we had MAC support lined up for 

2 that Saturday and we dropped it at the last minute, causing 

3 some consternation. 

4 Q Now when you first got with Mr. Hill and got the 

5 stock number and model numbers, you looked up the price 

6 yourself, I believe, in the Army Master Data File. Is that 

7 correct? 

8 A As a matter of fact, that's correct. 

9 Q For the record, now, why don't you take a moment 

10 and tell us about the MOF, what is it, how is it used, et 

11 cetera. 

12 A Briefly, the Army Master Data File is a compendium 

13 updated monthly with prices and national stock numbers of 

14 items in the Army's wholesale supply inventory. 

15 Q Without the pictures, is it more or less the 

16 Army's Sears Roebuck Catalog? 

17 A That is correct. It is a numerical catalog 

18 published on microfilm, and it comes out monthly. Briefly, 

19 it gives you the formal nomenclature of an item in 

20 abbreviated form, as well as some other codes to assist you 

21 in ordering the item. 

22 It is important, for the record, that the price 

23 that is published in the MDF is normally not a price that 

24 the manufacturer charges the Army, but it's something called 

25 a "standard price" which some Army folks at the Army catalog 



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mSSIHED 



54 



1 data activity sit down and come up with this price based on 

2 last contract price, and other Army ancillary costs. So it 

3 is designed to allow the Amy supply system to operate not 

4 at a loss. 

5 Q And does it list items according to their last 

6 seven numbers of the item's full stock number? 

7 A Yes. That is important. The items that are in 

8 there are listed based on a catalog number assigned. I 

9 think in regards it has interest to this particular hearing 

10 and committee. The items that are in there are not in any 

11 particular sequence. That is, you won't find eight 

12 different models of one item together in catalog data 

13 activity because as years and months go by, the next 

14 available number off the register is assigned to the next 

15 new item. 

16 Q They are then in chronological sequence? Is that 

17 correct? 

18 A Well, you wouldn't be able to tell that, though, 

19 because when you look up an item, when you look up the last 

20 Sevan numbers, the NINN, it's called the NINN portion of the 

21 stock number, N-I-N-N, the National Inventory Identification 

22 Number, and that is the only number that is in sequence. 

23 Q Just so this is clear. If I wanted to look up a 

24 TOW missile, I don't have in my hand a catalog, a hard-copy 

25 catalog and turn to page 12 and find 5, or 8, or 10 TOW 



WltffilFlEO 



605 



mmim 



55 



1 missiles listed according to the variation of the TOW and 

2 out to the side, the price? Is that correct? 

3 A That is correct, sir. 

4 Q Now that data is in the MDF, but it's on 

5 microfiche. Is that correct? 

6 A That is correct, sir. 

7 Q And it's about 40 pages on microfiche? 

8 A That is also correct, 40 microfiche pages with 

9 literally thousands of individual pages of detail on the 

10 MDF. 

11 Q And as you've indicated, they're not listed in 

12 sequence according to groupings of the items, so I would 

13 have to go throughout the many pages of the MDF to find all 

14 of the TOW missiles listed and all of their prices. Is that 

15 correct? 

16 A Yes, sir. But it would be literally impossible 

17 for you to do that without knowing the stock numbers. You 

18 would have to know the last seven digits of the stock 

19 numbers of other TOW missile models to find then. 

20 Q Now how would someone like Mr. Hill have known to 

21 find the last seven digits of a basic TOW, or a 71 Alpha? 

22 A Well, to start with, John had some documents that 

23 listed a model number and a stock number for a basic vanilla 

24 TOW. He also had some stock numbers and models for other, 

25 more advanced items, but that wasn't what we were asking 



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1 for. 

2 John's only question that Saturday morning was, 

3 did I want one that worked, or did I want a training round? 

4 Q And what did you say? 

5 A John, I said, I want one that works. And he said, 

6 you mean you're going to shoot it at something and you want 

7 to penetrate something? And I said, that is correct. So he 

8 did not then work on a training round for me, which he told 

9 me had another, different stock number. 

10 That was kind of the scenario that took place as 

11 John Hill and I worked out the stock number. We are still 

12 only up now to the second day of this event. 

13 Q Just for the record, when Hill gave you the stock 

14 and model numbers and you looked up the price in the MDF, 

15 just so we have this at this point for the record, what was 

16 the price as you found it in the MDF for the basic TOW? 

17 A It was $3179. 

18 Q And as far as you know, until we complicate things 

19 further in the chronology, that was the correct price for 

20 what you thought was the requirement? That is, it was a 

21 basic vanilla TOW? 

22 A Yes, sir. Although the MDF does not use the words 

23 "basic vanilla TOW." In fact. Guided Attack Missile is the 

24 nonabbreviated nomenclature. 

25 Q One more background item for the record. You told 



UNiASSIFIED 



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lifiASSinED 



57 




1 us earlier about 

2 A 

3 Q Within the CIA, which you have dealt with. I 

4 believe you told us in April when we interviewed you that in 

5 fact you had been instructed by the CIA only to deal with 

6 ^^^^^^V^s that 

7 A That is correct, even to the point where they 

8 wanted to have a direct call in to the Office of the 

9 Director of Logistics, CIA, should one of their agencies or 

10 subordinate departments try to get in contact with the Army 

11 for support without going through that office. 

12 Q Did you ever deviate from their instructions to 

13 deal exclusively with! 

14 A Yes, as a matter of fact I think it is important 

15 for the record that on this particular case of supporting 

16 TOW missiles and HAWK parts t hat at the beginning , in 
addition to avoiding the Army^^^^^^^^^^^^^^lfrom the 

18 DoD end, I was also asked to avoid dealing with my usual CIA 

19 counterparts. 

20 This also became urgent later on when I needed 

21 some document numbers for some supply requisitions to 

22 support some of these parts and pieces, and I was unable to 
2 3 get those document numbers from the Agency's Director of 

24 Logistics because they did not want lower level people 

25 involved in this mission that worked at the Agency. 

11 




608 






IStASSIRED 



58 



1 Q All right. At this point, before going further 

2 into the chronology, did you know what the destination of 

3 the TOWs was to be? 

4 A No, sir, I did not. 

5 Q Now you indicated clearly you did not )cnow it was 

6 Iran. You knew they were going to the CIA? 

7 A Yes, sir, and I — 

8 Q Did you know where the CIA was going to have them 

9 shipped from Anniston at that point? 

10 A No, sir, I did not; although that was a matter of 

11 principal concern to me. I was normally responsible for 

12 follow-on shipments in many cases for the Agency, and should 

13 they have been using a DoD transportation system, then I 

14 absolutely needed to know what the point of demarcation was. 

15 They told me that they had intended at some point in this 

16 project, which I knew early on that they intended to lift 

17 these off from a particular post, and that that was going to 

18 be done, and the Agency was going to assume management 

19 control for this and would not need my assistance, nor would 

20 they need support of the DoD transportation system. 

21 Q I believe you told us previously that within 

22 roughly the first 48 ho urs you did know that they were going 

go ^°^^^^^^^^^| Is 
24 A Yes, sir. 
2 5 Q And what is| 

it&incci 




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Mfmm 



A For the record, and this is clas sified 
information, that 




^^^^^^^^^^^^^^ That is 
classified at the Secret level. 

Q I believe you told us — as is in fact this whole 
transcript — I believe you told us that you did three things 
in those early days in trying to find out what the 
destination was. Would you tell us what you did? I have in 
mind — 

Yes, sir. I can recall I talked, number one, with 
who was the Agency Action Officer. He 




You asked him where these were going? 
Yes, pointblank. I involved myself with him, 
because Gen. Register, the Army Deputy Chief of Staff for 
Logistics, a sked me could I find out where they were going. 
^^^^^^^Bsaid he was not able to tell me, but he would 
ask^^^^^^^^^^^^^^^^^^^^|answer to me 
no, I can't tell you. 

Q So initially you asked, yourself, where they were 
going; and then later — 

A Yes, sir. Then later I was asking for Gen. 
Register. That one was pursued up_to_the level of Mr. 
sl 



HMplsiCQiricn 



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60 




1 ^^^^^^^^^^^^^^^^^Hboss the Agency for 

2 mission. 

3 Later one it became more urgent because I wanted 

4 to make sure concerning incidents with the FAA, or the 

5 Department of Transpo rtation, that I knew where they were 

6 headed once they 1« 

7 Mr .^^^^^^^^^^^H who was the Agency Action 

8 Officer principal on the ground al^^^^^^^^^^Hassured me 

9 that they would be out of the U.S. borders within hours, and 

10 he was going to assume responsibility. I told him, though, 

11 that as in all cases in the past that should an accident 

12 happen before that plane got across the boarders, if he did 

13 intend to airlift them out o^^^^^^^^^^Hthat I was the 

14 guy responsible for dealing with other government 

15 departments, so I had a concern right up until the time that 

16 ^^^^^^^^^^^Hcalled me back to tell me the shipment was 

17 over the U.S. borders and gone. 

18 Q And did^^^^^^^^Hever tell you what the 

19 destination was going to be once it left? 

20 A No. He said he could not do that. He knew I was 

21 concerned about it right up to the end. 

22 Q And I think the third way you e ndeavor ed to find 
2 3 out where these were destined was to call! 

24 Tell us about that, and tell us who she is. 

25 A 



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On this particular matter, I needed some backup in 
case something went wrong with the shipment, and I tolc 
nonnally^^^^^^^^^Hmilitary traffic management command of 
the Army normally would be involved in tracking the shipment 
in case anything happened to it. ^^^^^^^^^^B was also 
unable to tell me, or could not, would not tell me where the 
shipment was going. 

Again, Z told^^^^^^^^^^Bkeeping me out of the 
picture, that this was very much of a concern for me 
because ^^^^^^^^^^Bshould anything happen to it anyplace 
within the Continental U.S. borders, that I was quickly 
going to have to come up with a story. And I was very 
concerned about not having it already in the system, which 
we had done at almost all other shipments that moved within 
the U.S. borders. 

Q Normally the people with whom you dealt, your 
points of contact whether for transportation purposes or at 
the Agency, they normally did tell you these things? 

A They didn't tell me on all shipments leavingl 
^^^^^Vwhere they were going, but on any number of very 
critical missions I had been involved frequently in putting 



NmsiriED 



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62 



1 things in the defense transportation system for them. This 

2 was one of the most sensitive requests we had ever worked 

3 on, and certainly I was more concerned than I would be on 

4 shipping toilet paper or some other innocuous type of 

5 supply. 

6 Q Okay. I think we can return to the chronology 

7 then and see where we are. We are on day two. What happens 

8 next? 

9 A I think that I can move you rapidly forward to the 

10 end of the week. We got from^^^^^^^^3the weights and 

11 cubes on different types of aircraft. Later that week he 

12 told me to be ready to ship that Saturday, the 29th, up to 

13 1000 missiles. 

14 That involved gathering together some Air Force 

15 pallets. He wanted them put on Air Force 463L pallets. For 

16 the record, that is a standard Air Force pallet to fit in 

17 MAC type aircraft. 

18 We gathered that equipment together and hauled it 

19 down to Redstone Arsenal. We removed the missiles from 

20 Anniston, brought them up under guarded convoy to Redstone. 

21 Q At that point you had determined that you needed 

22 to use Redstone. Why was Redstone selected? 

2 3 A Redstone was picked because of the length of the 

24 runway, which was sufficiently large to accommodate any type 

25 of aircraft. Even as late as two days before the mission. 




613 



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63 

1 ^^^^^^^^^1 could not tell me what sort of aircraft would 

2 come in on the 29th of January of support the mission. 

3 Q Now you told us that you laid on a MAC airlift 

4 capability. 

5 A We laid on a MAC airlift capability. MAC again 

6 declined to tell us what type of aircraft, only that they 

7 would see sufficiently a goodly number of aircraft brought 

8 in there to haul out the thousand missiles. 

9 We had also provided to them our weights and cubes 

10 on the different sorts of aircraft. 

11 Q Now is getting MAC airlift capability something 

12 that is easily done? 

13 A No, sir. For the record, MAC typically requires 

14 for a routine mission two weeks' notice to permit them 

15 efficiency of operations and proper scheduling. They can 

16 support an emergency crisis mission within 72 hours, and 

17 almost nothing can be done unless you give them 48 hours 

18 notice. That is simply because they have all their aircraft 

19 fully committed, and within the 72-hour time frame they've 
2 got everything committed even to emergencies. 

21 So we did not cancel. I had gone all the way down 

22 to Redstone arsenal the afternoon before the 29th of 

23 January, and we literally cancelled at the very last minute 

24 wher^^^^^^^^fcalled me on the telephone and said, not 
2 5 this time; come on back home. 



V 



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64 

1 Q Is that something that took place to the 

2 consternation of the MAC folks? 

3 A So much to the consternation, that the next time 

4 that we needed them, we were unable to get them on short 

5 notice. 

6 Q They simply said no? 

7 A They simply said, hey, guys, give us the proper 

8 notice in accordance with the regulations. 

9 Q And they viewed their rescheduling for meeting the 

10 first requirement as an opportunity cost? 

11 A Well, it was a severe opportunity cost. As a 

12 matter of fact, because MAC has to account — all of these 

13 missions are charged to someone. And a loss of several 

14 thousands of dollars, a very large sum of money actually in 

15 terms of $30,000 to $60,000, was lost in opportunity cost 

16 for MAC because of this shortfall, and because that aircraft 

17 again could have been laid on to support another mission. 

18 That mission was simply lost. That would be the 

19 cost to the Air Force of not being able to support another 

20 mission. 

21 Q Let's see if we can get you adequately on the 

22 ground at Redstone with everyone you need to know. We're 
2 3 talking about 1000 missiles, and they were shipped from 

24 Anniston Army Depot to Redstone. How did they travel from 

25 Anniston? 







615 



ONCIiSSIFIED 



65 



1 A They traveled from Anniston to Redstone by truck 

2 convoy. 

3 Q Was that commercial truck, or military convoy? 

4 A Sir, I don't know at this point. I know that I 

5 asked Col. Lincoln to lay all that one. I do know that at 

6 my request they had an extra empty truck in case of a 

7 breakdown, and all of the convoy was guarded fore and aft. 

8 Q So you were on the ground ready for the missiles 

9 to go forward? 

10 A Well, with some problems. We had a couple 

11 problems. One of them was that at the last minute — one of 

12 the requirements of Gen. Russo, the Army Assistant Deputy 

13 Chief of Staff, had laid on early in the requirement is that 

14 although he was very uncomfortable with no paperwork to 

15 support the mission request, he wasn't going to "do nothin'" 

16 as he said, without seeing some money. 

17 Q Is that when he told you, "no tickey, no laundry"? 

18 A Right in that time frame. The reason was was that 

19 we had had several what I call aborted promises on this 

20 business of getting the paperwork over. We had been told at 

21 the beginning that the mission was all approved at the 

22 highest levels. 

unl ike^^^^^^^^^^^^^^V where 

24 money came with the support request — that is, the guarantee 

2 5 of funds in writing — we didn't have any guarantee of funds. 



ONCmiFIED 



616 




66 

1 It had been a sticking point in the early days of the 

2 mission. So — 

4 of funds from the agency? 

7 the fund sites to be charged. So when this mission aborted, 

8 the idea was that over to my office, and one of the 

9 counterparts left behind me, was going to come the paperwork 

10 before we executed. That didn't happen that afternoon that 

11 I was on my way to Redstone. I was already in-air, but the 

12 piece of paper was supposed to come over to the Army's 

13 office. 

14 It didn't come. 

15 MR. KREUZER: When you say the papers identified 

16 Mn the fund sites which were to be charged? 

17 THE WITNESS: Well, what that means is there 

18 were — I don't want to go into details; they are highly 

19 classified — how the funds were identified were clearly 

20 identified on the piece of paper. That is, there was no 

21 question in anybody's mind, either at the Army level or the 

22 Agency level, what particular pot of funds were to be 
2 3 charged. 

24 MR. KREUZER: Who provided the fund sites? 

25 THE WITH£SSi -.Ihq5Q«,qAP^jj^Hnj41y and typically 



C 





617 



UNCLASSIFIED 



67 



1 out of the Office of the Director of Logistics, CIA. Once 

2 again, on this particular request, it was highly unusual. A 

3 first, well, not a first, but a rare event. 
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^K Agency 

5 principal, was going to provide us the fund site directly. 

6 And that had not happened by the afternoon that I had gone 

7 to Redstone to execute the first planned phase of the 

8 mission. 

9 BY MR. SAXON: (Resuming) 

10 Q And how were you informed that the certification 

11 of funds was not available, and that the mission should be 

12 aborted? ^^^^^^^^^__ 

A I talked t(^||^|^^^^H But he had a second 

14 reason. He told me that the real reason that day that he 

15 was aborting the mission was that they could not get follow- 
on transportation from^^^^^^^^^B That was the real 

17 reason given to me. That proved later on for us to be a 

18 sticking point. We were literally after the 29th of 

19 January, until we actually physically executed early on 

20 Valentine's Day, the 14th of Febru^ . , we were literally 

21 delayed a day at a time while we tried to line up the 

22 follow-on transportation support. 

2 3 Q Were you told that the Agency was having trouble 

24 getting the funds because of external problems? 

25 A Yes, sii 




k 



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KUSSIFIED 



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Who told 



that? 




Q Was he I 

A Yes, sir, he was at that time. 

Q And what did he tell you? 

A He told me that he was having a lot of difficulty 
getting these funds. He was very apologetic. He and I — he 
is a very professional, capable individual. He had a lot of 
consternation himself about how bumpy it was going. 

Q Did he tell you where the Agency was getting the 
funds, and with whom he was having to deal? 

A Well, he told me he was dealing with 
also an Agency principal in terms of getting the release of 
the money. 

Q Did he ot^^^^^^^^^Hever tell you that the White 
House was involved in the funding? 

A Yes, sir, he did. As a matter of fact, that was 
discussed extensively during these periods of delays. 

Q Which? Witf 

Both ^^^m^^^^^^^^^^^^^^^^^H and 
it was simply that the White House was the decision maker on 
release of the funding; and that, a 1 though ^^^^^^^^H was 
apparently the man going over to deal with the White House 
principals, that ' f _ LTJC Ji* " -' 'IC J< 1 11^ - -^ 1-T "-' ^^° ^^^ going 





619 



ifiiusm 



69 




to give^^^^^^^^^^^^Hthe release. Andl 

2 had said to me that the minute that^^^^^^^^^B gave him the 

3 release of funds, that I would get them. He obviously 

4 wanted to be done with this as quickly as possible. 

5 Q And between January 18th and February 13th, I 

6 think you told us in April that the price changed a couple 

7 of times, for some reason. What was the reason? 

8 A The price on the missiles changed for a variety of 

9 reasons, sir. The first and most important reason was that 

10 after the delay on 29 January, the very first reason that 

11 the price changed is that we now have a large guard force 

12 assembled. 

13 My directions to Col. Lincoln were not to leave 

14 these weapons unguarded at any time, thinking about the 

15 possibility of an accident or civilian mayhem. 

16 Q So they were physically on the grounds somewhere 

17 at Redstone? 

18 A In a secure area, under a detailed guard. Now of 

19 course the cost of feeding and housing a guard force and 

20 paying them 24 hours a day, all of these folks were under 

21 contract labor from Anniston. The salaries and the housing 

22 and the feeding, the TDY costs basically, all became my 

23 responsibility on the 29th of January. 

24 Q And that was unanticipated, because the 

25 expectation was that they would lift off. 



mmssm 



620 



<AVC^F/fO 



70 



1 A Was that we would drive them up and deliver them 

2 on the 29th. So the first time that the price changed was 

3 on the ancillary costs that we had earlier quoted. And we 

4 quoted a new figure on the ancillary costs. 

5 Other events, to try to keep them short, it was 

6 about two weeks after I first got involved with Col. Lincoln 

7 that George Williams, his deputy, called me up and told me 

8 that although they had originally told us, yes, they could 

9 support the requirement for about 4000 basic TOWS, that they 

10 did not feel that they could supply that many now after 

11 actually checking the record and looking at the condition of 

12 the items in storage at Anniston. And in fact he told me 

13 that they needed to add a MOIC to about 2300 of these 

14 missiles. 

15 Q All right. Let's take this point in the record to 

16 talk a minute about the problem with the basic TOW, the 

17 flyback problem, what a MOIC is, et cetera. 

18 A Okay. The reason that 2300 of these missiles had 

19 to be fitted with a MOIC was just this simple. The Agency 
2 did not want any items that were not in condition Code A, 

21 Alpha. Condition Code A was an Army condition code that 

22 basically told anybody that was requisitioning the item or 
2 3 using it that it was in brand-new condition and would work 

24 as per the manufacturer's specifications. 

25 Other condition codes indicated a degraded 



HNCttSSra 



621 



UNMSIFIED 



71 



1 condition in materiel, and in the particular case of these 

2 2300 missiles George Williams told me they were in Condition 

3 Code N. In the case of these Condition Code N missiles, 

4 George had explained that these still were brand-new 

5 missiles, but what happened over the case of thousands and 

6 thousands of firings, that there had been a problem with two 

7 or three flybacks. 

8 A flyback is a particular case where a young 

9 soldier with a guided TOW missile system had fired a TOW 

10 missile and it had not gone forward to hit the target, but 

11 had in fact come back on the ground where the young soldiers 

12 firing the weapon were. 

13 Although this had only happened two to three times 

14 out of literally a production run of a third-of-a-million 

15 missiles, it so concerned the Army, the risk of death or 

16 injury to a young Army soldier, that they had taken entire 

17 lots of these missiles. They had determined that what had 

18 caused the flyback was a faulty electrical circuit on these 

19 missiles that rarely, but unpredictably, would fail. 

20 The missile ordnance inhibitor circuit was a 

21 modification developed by the engineers to prevent the 

22 flyback. 

23 Q And that's a "MOIC." 

24 A And so the Army Missile Command had said that 

25 unless this MOIC was applied to certain lot numbers of these 



UNCUSSIFIED 



622 



WUSSIflED 



72 



1 missiles, that they had them all classified in Condition 

2 Code N, even though they were brand-new and in fact all of 

3 them might have fired without any problem at all and gone 

4 and hit the target as they should have. 

5 Q Who manufactured the basic TOWs that we're talking 

6 about? 

7 A Hughes Manufacturing Company. 

8 Q Was there a point at which they realized that they 

9 had this problem with the TOW and took some action with 

10 regard to subsequent missiles manufactured? 

11 A I want to say for the record that a number of 

12 things happened. Number one, my knowledge of what Hughes 

13 Manufacturing did with missile and ordnance inhibitor 

14 circuits greatly expanded after November '86 when I learned 

15 in great detail all that transpired. But even back in the 

16 early February time frame, I knew that Hughes also was 

17 manufacturing a MOIC. I'll go on later to what they did 

18 later on. 

19 But Hughes was manufacturing a MOIC, and they were 

20 delivering so many a month to Anniston Army Depot to outfit 

21 and modify these basic vanilla TOW missiles. 

22 Q And the depot in Anniston actually had an assembly 

23 line— 

24 A Which they periodically ran. They periodically 

25 ran this assembly line to outfit the missiles. 



UNCbtSSIFIED 



623 



UNCUSSIHEO 



73 



1 Q So they had been doing that prior to Snowball? 

2 A Yes, sir, they had, on an intermittent basis. 

3 They had about a thousand already on hand outfitted with 

4 this MOIC, and the reason was that they frequently engaged 

5 in FMS sales of these basic vanilla TOWs, and they were 

6 outfitting them with this MOIC before they were selling 

7 them. 

8 I didn't know all those details, of course, when 

9 we talked to Col. Lincoln on 29 January, but by the time we 

10 got to two weeks later, George had told me that what made 

11 them in Condition Code A was this $300 MOIC. He came up 

12 with that price for that item. That's what he needed from 

13 me. 

14 Our conversation that day went something like 

15 this: Needless to say, I was very concerned that we had a 

16 delivery schedule set up now. I didn't talk about tha^ 

17 earlier, but for the record the delivery schedule that 

18 ^^^^|had set up with me in the early days of the mission 

19 was to take delivery of all of the 4508 missiles within a 

20 six-week period, approximately two weeks apart, with the 

21 first shipment to be a thousand. That clearly meant to me 
2 2 that the other 3 500 were going to be divided at two-week 

23 intervals and shipped later. 

24 When George Williams called me to tell me that now 

25 the delivery dates are in jeopardy that the Department of 



624 



yNOASSIFIED 



74 



1 Army has conunitted itself to, I was concerned. I said, 

2 George, can we in fact modify the missiles in time to meet 

3 the next deadline in two weeks? He said, yes, we can do 

4 that if you will provide more money for ancillary costs and 

5 money to pay for the modification. 

6 So Ge orge and I at that time, I told him I would 
go forward to^^^^^^^^^^^^H at the CIA to get more funds. 

8 I did do that and, after some difficulty and consternation, 
^^^^^^^^^^^^■did swear to me that he would get more 

10 funds, and to proceed with the retrofit. Also, Gen. Russo 

11 and I talked in detail about this at the time. 

12 Q Let me back up on a couple of things you 

13 mentioned. First, in terms of quantities of TOWs, I believe 

14 it is correct that the first number that you were given was 

15 4000? 

16 A About 4000 was given to me by Gen. Register, as 

17 passed down to him through the DoD leadership. 

18 Q At what point did that increase to 4500? 

19 A Within just a couple of days of me giving the 

20 first initial price quote tc 

21 Q And at what time did it go from 4500 to 4508? 

22 A Also somewhere in the very early days of that 

23 mission. There was never any explanation for the other 8. 

24 We at the Army level asked^^^^^^^^Hwhy on such an 

25 important mission were we screwing around with the number of 



mmim 



625 



mm&m 



""iiLNLVIHHI 



1 "8"? There was never any adequate explanation provided for 

2 that. 

3 Q Did it become a bit clearer when the second 

4 shipment came to the number of 508 TOWs? 

5 A No. I could speculate on why that was the number. 

6 I would rather not speculate. 

7 Q Okay. In terms of the MOIC, in layman's terms is 

8 it safe to say that if the rocket does not launch within a 

9 certain period of time, the MOIC shuts it off? 

10 A Ifes, sir, that's correct. The idea is to prevent 

11 a flyback. That was the principal, the gut reason for the 

12 MOIC, to prevent an accident. 

13 Q And the third thing, before you continue. You 

14 were given the MOIC price of $300 by whom? 

15 A By George Williams, the Deputy Project Manager in 

16 the TOW office at MICOM. 

17 Q And was that a precise price, or a rough price? 

18 A George and I understood that day, since he knew 

19 that I was going forward, I told him external to the Army, 

20 although he didn't know where that was, to get funding 

21 approval that we had to be straight. So he was taking that 

22 as a price that I was going to go and obtain funding on. 

23 And that was the price to put the MOIC on, and put the 

24 missiles in Condition Code A. 

25 Q And for the record, did DA ever learn that that 



UNCbftSSinED 



626 




76 

1 was a little bit below the actual price? 

2 A yes, sir. DA learned that in November and later 

3 of 1986 that in fact the price should have been closer, I 

4 believe, to about $350. 

5 Q $352? Does that sound about right? 

6 A Yes, sir; that does sound right. I was with Col. 

7 Lincoln when we both learned that in November of '86. 

8 Q And you mentioned that you did at some point 

9 receive a certification of funds from the CIA. I believe 

10 that was 13 February. Is that correct? 

11 A About half an hour before I got on the plane to go 

12 to Redstone for the second scheduled liftoff, again it would 

13 have been aborted. I wasn't planning that day on getting on 

14 the plane to go, unless we saw the letter. 

15 Q And was that the first piece of paper received 

16 from the Agency on Snowball? 

17 A As a matter of fact, sir, it was. 

18 Q And what would you say the total package of 

19 paperwork from the Agency comprised? 

20 A At that point, that single piece of paper simply 

21 said that X number of millions of dollars was provided to 

22 the Department of Army, to Ma j . Chris Simpson, in support of 
2 3 Project Snowball. It did not have a word on there about 

24 delivery dates, places, nomenclatures, missiles, or anything 

25 else. bj&iM^ .<• 




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UifkASSiriEO 



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Q And I believe you told us — what I had in mind — I 
believe you told us in April that the total package of 
paperwork that you saw from the Agency was four letters 
certifying funds, three for TOW shipments and one for HAVfK 
repair parts, plus a HAWK repair parts' list? 

A Yes, sir. That is the sum total. Besides the 
letters of certification of funds, the HAWK repair parts' 
list at that time as I recall was about 14 field typed 
pages, and that was the sum total of paperwork that I got 
from the Agency on those two missions together. 

Q Okay. Was there a point early on in which you 

if the purchaser needed launchers for the 




A Oh, absolutely. 

Q Tell us about that conversation. 

Q Col. Lincoln's office, besides supporting the 
Army, also supports a whole hos t of FMS co untries. I 
believe there's something^^^^^^^^^^^H countries besides 
the U.S. that have bought TOW missiles from America. 

Typically the purchasers on FMS cases bought 
launchers to go with the missiles. I went back at his 
request to ask^^^^^^^^H did he need launchers. This was 
a logical thing to ask. He said, no. When I went back to 
Col. Lincoln, that was another issue that I had forgotten 
earlier, Col. Lincoln said, well, that limits down the 



ONCIiSSIFIED 



628 



UNCLASSIFIED 



78 



1 places that we're supporting. 

Q Did you as)<^^^^^^^^^P if the recipient had 

3 launchers? 

4 A Yes. As a matter of fact, the answer was, yes, 

5 they did. Col. Lincoln did surface, which he should have 

6 done and did do professionally, because he said that they 

7 were concerned about keeping a record of what country got 

8 them because of flyback problems and other deterioration of 

9 lots. 

10 Weapons, missiles, for the record, are a lot like 

11 drugs. They deteriorate over time, and the missile command 

12 keeps precise track of customers so that they can notify 

13 them immediately of any changes in condition on the 

14 missiles. 

15 Q Or in case of a recall? 

16 A Yes, exactly. ^^^^^^^^Hsa id that any of that 

17 sort of information he wanted Col. Lincoln to feed to me, 

18 and that I was to feed it to him through my office. So we 

19 declined to give Col. Lincoln at his request the ultimate 

20 destination of these items. 

21 Q Vfhen you found out that the country did not need 

22 launchers because they already had them, did you then 
2 3 speculate on who was to receive them? 

24 A Yes, sir, I did speculate. And of course it was 

25 pure speculation cm,f^J2art, only. 



part, I 




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What countries did you speculate on? 
I had speculated that they might be 




We had conflicts going on in a lot of parts of the 
world where the U.S. had interests. 

I had been asked I know by the House Committee, 
John, in late December would I have speculated they were 
going to Central America? I would have said, that would 
have been one place I would not have speculated simply 
because with that U.S. signature stamped all over those 
weapons in an area we weren't supposed to be in would have 
drawn an awful lot of attention to us. 

Q You said early on that you were not told that 
these shipments would take place in three increments. When 
did you find that out? Was that when^^^^^^^H talked to 
you? 

A Later that week, right. Gen. Register knew 
nothing about that that first Saturday. In fact, all he 
knew was that we might have to support the mission in as 
early as 72 hours, the whole mission. 




630 



ONCUSSIFIED 



80 



1 Q When you found out about the requirement for the 

2 MOIC, did you brief Gen. Russo on this development? 

3 A Immediately. I, as any good action officer would 

4 be on a very important mission, I was concerned about the 

5 change in truth. You know, we had gone from two weeks 

6 earlier to yes, we can support the mission; to now we can't 

7 support the mission without more costs and more time. That 

8 was critical. 

9 And I got to him that same day, and he said, let 
10 me know what the CIA says when you go over and talk toJ 

^^^^^^^^^^^^^^^^^Vwas very concerned. Shortly after 

12 this MOIC problem became known. Gen. Russo asked me to 

13 prepare a message and send it down to Col. Lincoln. Now 

14 this is an open message via the Army AUTODIN system. It 

15 establishes a printed record of some guidance. 

16 The guidance was that we had got some quotes from 

17 MICOM of what it was going to cost to do these 

18 modifications, and Gen. Russo wanted me to tell Col. Lincoln 

19 in this message, which I did — he released it personally — 

20 that we understand the following costs have been incurred to 

21 dat«,* we understand the following costs are to be incurred. 

22 No additional costs will be incurred without prior approval 
2 3 from this Headquarters. 

2 4 That sort of guidance went down as a result of all 

25 that meeting. But the basic decision was since my — and I 

II 



"1L*8SIFIED 



631 



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12 

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15 

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18 

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24 

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^imssim 



81 




called Col. Lincoln up shortly thereafter to give him the 
go-ahead, to say we've got the funds. 

Q You talked to^^^^^H and he said, yes, we can 
pay? _ 

to^^^^^^^^^^^l This now a 
funding issue. I did get back to^^^m^^^^^^Hlater that 
day, but the first and most important guy was the guy who 
was controlling the money. That was the Assistant Director. 
You have to keep in mind that| 
and 

and it was important first to make sure that he 
was going to fund this. 

Q But you went back with him after you talked with 
Mr. Williams and found out the MOIC was necessary, and that 
it would be — 

A Absolutely. That all happened like all at the 
same time. 

Q ^^^^^^^^^^^^^Hsaid yes as to — 

A He didn't say yes, right away. He came back to me 
I think within about 24 hours to tell me that, as displeased 
as he was about the change in the truth, that he would in 
fact— he did at that time mention to me that this was 
critical not to have any more changes in the truth, which we 
weren't done with yet anyway, but neither one of us knew 
that, he said, because the White House was controlling 




632 




82 

1 approvals in the changes on the funding. 

2 Q All right. Let's go to the next complicating 

3 factor of the replacement costs. 1 believe somewhere about 

4 the second week of things, Col. Lincoln raised that issue 

5 with you? Is that correct? 

6 A Yes, sir, he did. He called me up and he said he 

7 had been studying — this is a conversation exclusive of the 

8 MOIC — Col. Lincoln called me up to say, Chris, he said, I've 

9 been studying this business of these missiles, he said and, 

10 he said, here we're going to take almost 4500 missiles out 

11 of the wholesale inventory, he said, which is a large 

12 percentage of our wholesale stock. 

13 He said, I cannot take and buy a new state-of-the- 

14 art missile for $3169, plus the MOIC, it was still in 

15 materiel, and he was telling me that the price to buy a new 

16 missile was something over $8000. And, he said, I really 

17 feel we ought to be charging a higher price. 

18 Q So when he talked about the price for a newer 

19 missile, he was still talking about a basic TOW? 

20 -dft* ^^' Mell, the term "basic TOW" applies to a basic 

21 I^Pbiich has an old model warhead on it. The new models of 

22 the TOW, called ITOW and TOW-2, have a more advanced warhead 

23 on them that will penetrate a greater degree of armor, and 

24 also the more accurate killing range. 

25 At the time that Col. Lincoln raised this issue 

B] 




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UNusm 



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with Be, I went to Gen. Russo with our pricing regulation. 
And this is a formal request, now, from an Army full Colonel 
who is the Army's principal manager of TOW missiles not to 
be taken lightly, and we didn't take it lightly, we took it 
very seriously. I got out the pricing regulation — 

Q That would be AR37-60? 

A Right. The Army's regulation on pricing for 
materiel and services. I showed Gen. Russo that the 
regulation said that on items no longer in production, the 
basic TOW had not been produced since 1976 by Hughes 
Manufacturing; that on items no longer in production, that 
the Army pricing regulation did not allow us to charge any 
more than the last price paid. And that last price paid, 
which we now know to be an error, but what was published in 
the AMDF as the last price paid was $3169. It turned out 
that the last price the Army paid was something higher than 
that on the last contract in '76. 

Q But as best you knew at the time — 

A As best all of us knew, both at MICOM and at DA 
ay office, we knew that that was the last price. 
\,' Russo was concerned enough about the price that he 
called one of the lawyers — I can't remember whether it was 





UNObtSSiFIED 



634 



UNCliSSIFIED 



84 



1 Q You told us in April it was Tom Taylor. 

2 A Too Taylor, though, came in to discuss the Economy 

3 Act. What Gen. Russo was concerned with was not so much 

4 what the regulations said on pricing, but also was that 

5 particular regulation in the particular paragraph I was 

6 quoting him, was that the proper vehicle for transferring 

7 the weapons to the Agency. 

8 Q Now when you make a transfer to the Agency, you 

9 use the Economy Act? 

10 A Yes. That has been the standard legal statute 

11 cited as the basis for transferring weapons and materiel to 

12 the Agency. 

13 Q And had you in your previous 2-1/2 to 3 years had 

14 occasion to use the Economy Act? 

15 A As a standard. That was the standard statute 

16 for — not the only statute. I mentioned to you in April that 

17 we also used the Leasing statute to transfer materiel. That 

18 was things we were going to get back, though. 

19 Q And Tom Taylor was familiar with the Economy Act? 

20 4K'A Very familj 
21 

22 Q And did the Economy Act permit DA to charge the 

2 3 CIA replacement costs? 

24 A No, sir, it did not. It required that we charge 

2 5 the standard price plus incremental costs, incremental costs 




UNCmSSIFIED 



635 



UNCUSSIFlEi 



85 



1 balnq ancillary costs related to physically picking up and 

2 moving materiel, and labor and handling costs, so to speak, 

3 and transportation. 

4 Q And by "standard price" you mean either the last 

5 procurement price, or the price published in the AMDF? 

6 A Exactly. 

7 Q And in most cases, that would be the same? 

8 A Normally the last published standard price would 

9 be the last manufacturing price paid, plus some Amy costs 

10 added into that. 

11 Q Did you ever ask^^^^^^^^| f or the record, for 

12 your record at that time, whether the Economy Act was being 

13 used? 

14 A Yes, as a matter of fact. We established that in 

15 the very early days, within probably the first 72 hours of 

16 getting together on the mission. 

17 Q And when you asked him that, did he then ask| 

^^^^Hto verify that? 

19 A That is correct, sir. We did that, again, because 

20 ^^4^ "°^ have the standard piece of paper that normally 

21 waM0K cite the basis for asking for Amy support. So I 

22 wanted to make sure there weren't any glitchesT Me~wore______ 

2 3 doing the same thing with the basis for transfer that we 

24 were doing with establishing a nomenclature and a price. We 

2 5 were making sure that our two interests were..^gual. That 



ONWSIFIEO 



636 



OilUSSIFIED 



86 



1 is, .that I was providing what he wanted in accordance with 

2 how he wanted it. 

3 Q And when you and Gen. Russo and Tom Taylor had 

4 some discussions after Col. Lincoln raised the issue of 

5 replacement costs, did Tom Taylor ever give his legal 

6 opinion that you could not charge replacement costs? 

7 A Yes, sir, he did. 

8 Q And did you communicate that back to Col. Lincoln? 

9 A Yes. And he was unhappy with that decision, but 

10 he said he knew we would have to live with it, then. 

11 Q Before we get to that discussion, did Gen. Rusao 

12 at this time then go to Gen. Colin Powell to discuss this 

13 issue? 

14 A No, sir, I don't believe he did at that time. 

15 Q Did he do that at a later point on replacement 

16 costs? 

17 A He may have. My memory is fuzzy on that right 

18 now, sir. That is something I'll have to go back to my 

19 notea to look at. I think what is important is, though, 

20 ^^^K¥>c« I got back to Col. Lincoln—I do think, for the 

21 i^Hpi, Gen. Russo wanted to charge a higher price. He said 

22 it was a dam shame, if I might quote him, that we couldn't 

23 charge a higher price. He said, but Chris, it doesn't look 

24 like the regulations allow us to do anything other than 

25 charge the old standard price. 



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1 He also said, for the record — and he said, and 

2 anyway, he said, the other thing is that he said, we're not 

3 exactly giving away a brand-new state-of-the-art missile 

4 with 100 percent of its useful life left. He said, these 

5 lot numbers, as I understand it, he said, at the end of — 

6 some of them are 15 years old, and some of them only hav 
^^^^^^^^H of life 

8 He said, what we've got here is an old missile 

9 with a limited range that is 

10 ^^^^^^^1 So Col. Lincoln is not exactly trading one for 

11 one. He said, he's going to get a brand-new state-of-the- 

12 art missile with a very long extended life and, he said, so 

13 he's not exactly, you know, losing^^^^^^^^Bof his 

14 inventory. 

15 But he still was unhappy that we weren't going to 

16 be able to put back into the Army wholesale inventory the 

17 same number of missiles that we took out. 

18 Q Did you ever get a sense of whether the Army 

19 leadership itself was happy with that decision? 

20 „>: A Hy interface with the Army leadership daily was 

21 G«i|^° Russo, and he would normally reflect to me what the 

22 feelings of the leadership were. I got no feeling from him 

23 at all at any time in this that there was anybody above him 

24 that was unhappy with that. 

25 MR. SAXON: Let's go off the record a moment. 




IFIEO 



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1 [Discussion off the record. ] 

2 [Whereupon, a brief recess was taken.] 

3 BY MR. SAXON: (Resuming) 

4 Q Major, while we were off the record I think that 

5 you in fact said you did recall that when the issue of 

6 replacement costs came up and you, Tom Taylor, and Gen. 

7 Russo had some discussions and conferred about this issue, 

8 that in fact Gen. Russo did see Gen. Powell at some point? 

9 A Yes, sir; that is my recollection. 

10 Q Tell us about that. 

11 A Sir, after Gen. Russo went to see Gen. Powell, the 

12 issue was he was going to clarify with Gen. Powell that the 

13 Economy Act was the proper basis for transfer. Gen. Powell 

14 got back to him and assured him that that was a proper basis 

15 for the transfer. 

16 After that particular meeting. Gen. Russo ceune 

17 back and met with me that same day. I was waiting while he 

18 went to see him. 

19 Q So Russo and Powell had a face-to-face meeting? 

20 ^Kr They had a face-to-face meeting to discuss that 

21 ^4|p|^* Once that had been accomplished — that is, that we 

22 had clarified that that was the proper statute — at that 

23 point we became locked in on our decision that since the 

24 Economy Act pricing rules were very clear in the Army 

2 5 Recfulation AR37-60, there was nothing to do but charge the 



UNWSIFIED 



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1 last published standard price. 

2 As I recall, the one other thing that Gen. Russo 

3 asked me to do on that was to verify with Col. Lincoln that 

4 the standard price published was a correct price, and we did 

5 that. At that point, we went forward. 

6 He weren't done with the pricing issue yet, of 

7 course, on the basic TOWs. It only was a few days later in 

8 this dynamic environment until George Williams called me up 

9 to tell me the truth was changing again; that although he 

10 had committed himself to outfitting 2300 basic TOWs in 

11 Condition Code N with a MOIC, it turned out now that Hughes 

12 could not manufacture the MOICs fast enough to meet the Army 

13 deadline of having these missiles ready within a short 

14 number of weeks. 

15 Q Are we into the third week, now? 

16 A Yes, we are sir, more or less. 

17 Q Before we go into the issue of the changing the 

18 warhead, after Gen. Russo met with Gen. Powell and the issue 

19 of r^laceaent costs was put to rest, did you communicate 

20 *^^0**^^ ^° ^°^- Lincoln? 

21 ^SP'^ '^* BAB^ dayr sii^« 

22 Q And at any point in that time, or was it later, 

23 when George Williams asked you if the customer would prefer 

24 the ITOW, the improved TOW missile? 

25 A That came up when the next discussion surfaced. 



ame up wnen the next disc 

ONCmFIED 



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l'«SUSSIfl£D 



\ ilWILILII 

90 



1 Th« discussion came up at the time when we found out — excuse 

2 me. I want to say to correct the record here, again I kept 

3 notes on this, that discussion either came up at the time 

4 that the Condition Code N surfaced, or it came up later when 

5 we retrofitted some ITOW missiles. I'm not precise now. I 

6 could go back and check for you and look at my notes. 

7 Q I understand, although I don't think it's material 

8 as to precisely when it came up in connection with this 

9 issue. 

10 A The substance of the issue was that George 

11 Williams asked me to go back to the customer, and the whole 

12 issue was we didn't have enough of Condition Code A basic 

13 vanilla TOWs right now to support the short requirement. 

14 Could I go back? We offered the other missiles to 

15 the Agency. I did that ^°^^^^^^^^B ^^ came back very 

16 quickly after checking with^^^^^^^^H|and turned them down 

17 and said, no, all they were interested in was the basic 

18 vanilla TOWs. 

19 Q So they were offered an improved product — 

20 ^^IC' ^^^ ITOWs — 

21 ^1^ — ^^^ they would have been at a higher cost. 

22 A Yes, sir. And it would have been at those costs 
2 3 that Col. Lincoln was quoting. It's important, again for 

24 the record, that both the ITOW and the TOW-2 were still in 

25 production, and we would have then been able to charge 




641 



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1 replacement costs. Under the Army pricing rules, if an 

2 items is still in production, you charge the latest 

3 replacement cost for it. 

4 Q And as opposed to $3169, or with the $300 MOIC 

5 $34 69, what would we have been talking about? 

6 A $8000 to $11,000, depending on the configuration 

7 of the improved TOW model charged. 

8 Q Okay. Now Mr. Williams gets back to you and says, 

9 we don't have enough MOICs because Hughes can't manufacture 

10 them fast enough. What alternatives did you discuss with 

11 him? 

12 A Okay. The principal alternative that he offered 

13 to me at that time was that he had some ITOW missiles 

14 sitting out at the Iowa Army Ammunition Plant, and he said 

15 they had a rocket motor on them that would do the job. And 

16 it was the rocket motor that was the faulty part of the TOW 

17 missile, not the missile head. 

18 Q Now TOW is really two parts? 

19 A It's in two parts, sir. It's a warhead, and a 

20 SbH|| motor, held together by six little screws. It's that 

21 ^Hbi. All the complicated part of the mechanism is the 

22 rocket motor. 

23 He said he had some other rocket motors that he 

24 could retrofit for me. He wanted my assurances that I was 

25 willing to do that and was willing to pay for the costs of 



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hauling the missiles from Iowa to Anniston, which now you're 
talking about going from the State of Iowa to the State of 
lower Alabama, and the costs of separating the missile and 
the warhead and retrofitting the motors on. Also, you had 
the cost of taking the old rocket motor off the faulty 
missile. 

So you had a lot of work here. I went up to 
discuss that whole proposal — that was one of the proposals 
he offered me, John. As I recall, there were a couple of 
other ones that day. 

Q Did you take that proposal tc 

A I took it to Gen. Russo first. To tell you the 
truth, I was alarmed ab out taking any more changes in the 
truth ^o^^^^^^^^^^^H especially since I had been 
admonished only a few days earlier not to come back any more 
with any more changes in the truth. 

But I went up and told Gen. Russo all that we were 
doing. I think he had, one concern he had was, he says, 
what are we going to do with these ITOW warheads? Now this 

improved part of the mechanism. I told him I had 
gcVVVn— I got back with George Williams, and then George 
Williams says, I believe I have a potential FMS customer for 
these warheads without any rocket motor at all. 

It was some Middle East country at the time that 
we did business with regularly. I don't know yet whether we 




wismm 



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hav« sold those now. A lot of time has passed since all 
that event took place. But Gen. Russo bought off on the 
concept, subject of the ability of the CIA to pay for it. 

George had given me some ballpark figures on costs 
to do the retrofitting. I went back toj 
with this. Once again, we had umbrage, and disgust, and 
dismay, and he told me once again he would have to go, and 

8 he really didn't know whether he could do it or not, but he 

9 would see-- 
Q He would have to go where? 
A He would have to go ^°^^^^^^^H^ ^^° would then 

again have to go deal with the White House. He again urged 
me that he was having to deal with the White House on each 
change in truth — meaning that he , ^^^^^^^^^H has having to 

15 do that. But that is, the Agency was being forced to go to 

16 the White House on any changes. And he said, please, let's 

17 make sure these incremental costs, he said even let's pad 

18 them a little bit in terms of add a few more thousands of 

19 dollars on th«a so we don't have to go back in for $10,000 

20 ord^OfOOO out of a half a million. 

21 jfe'- As I recall, the figure to do that work was about 

22 $400,000 in incremental costs. In the end,] 
2 3 did agree to fund all of that, and I called back George 

24 Leachman — Chris Leachman and George Williams, and told them 
2 5 to proceed. 




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94 

Once again, they had conunitted themselves that 
they could get the work done in time. I would mention that, 
although back in late January we thought we might be all 
done with this mission as early as the end of February, by 
the time we had got to the business of agreeing to retrofit 
missiles, three-and-a-half weeks had already passed. But 
we're still leaning forward in the foxhole, so to speak. 
That is, it is still being ready to support it a day or two 
ahead at a time. 

Q We are between the first and second shipments? 

A Yes, we are. We've passed the first shipment at 
14 February. The business in retrofitting the missiles 
probably took place, as I recall, about the third or fourth 
week of February. 

Q Now when you — I guess you got approval froml 




A Yea. He told me he couldn't get the money right 
away. That was an issue at the time. He said, I can't get 
the paperwork to you right away, he says, but I'll give you 
The agreement that he and I had, and again a 
in of high honor and good standing with me as he had 
worked on many complex things with me and had never let me 
down, said if for any reason we can't get this additional 
money from the White House, or the mission aborts, or both, 
he said, I will personally make this money available to you 



^n* p«pez 

j4b ' 



yNCtlSSlFlED 



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1 out of other funds. 

2 Since he was a man of honor, I told Gen. Russo I 

3 was going to go ahead and take his word, even though we 

4 didn't have the piece of paper. And Gen. Russo I think 

5 asked me at the time, well, has he ever let you down before? 

6 And I said, no, never. And on that basis, the credibility 

7 of a good man, we went ahead. 

8 Q To your knowledge, was that the amount of money 

9 which MICOM puts at $377,000 which they committed out of 

10 their own operating budget? Do you have any knowledge of 

11 what I'm referring to? 

12 A Yes, sir, that is the ficfure. And that is the 

13 message. I said, about $400,000, but that is the figure. I 

14 would mention for the record that the only reason that MICOM 

15 had to fund that out of their general budget, we told them 

16 early on in this mission — that message went out in late 

17 February, mid- to late February— that as soon as they billed 

18 us, we would pay them within 30 days. That was our 

19 agM«B«nt with them, which is the standard government 

20 )M^El*9 arrangement between all agencies. 

21 Wip It was not until late May, early June, that they 

22 actually saw fit to bill us. The fact that they carried 

2 3 those expenses out of their own operating budget was really 

24 a fault of the billing mechanism at MICOM and not the 

25 Department of Army. I would mention again for the record 



mmm 



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uNciissm 



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1 thst^ once we presented the bills to the Agency, they were 

2 paid extremely promptly. 

3 Q For what it's worth, would you have any knowledge 

4 of the fact that to this date they have not been reimbursed 

5 that $377,000? 

6 A That does not sound correct to me. I know that 

7 when I had left there, that every bill that they had 

8 presented to us had been paid, as presented, and that 

9 bill — again I would have to look at the figures, John, but 

10 a recollection of mine is that the incremental costs that 

11 they did bill us for we had paid by the time I had left. 

12 MR. KREUZER: Could I just interject here? 

13 At any time in this process did any fund citing, 

14 or billing, or any similar type financial activity come from 

15 or originate with, or involve Army Materiel Command? 

16 THE WITNESS: Not on Project Snowball at all. In 

17 fact, for the record — I mentioned this in my testimony in 

18 April — early on Col. Lincoln surfaced a concern with me that 

19 he 4^ tn't want to be working on this very complex and 

20 4^^^Hp*** project without having the AMC leadership 

21 dHHld. He said, if we would not get AMC headquarters 

22 involved, that he was going to ask Gen. Burbules, for the 

23 record the Commander of Missile Command. 

24 I went to Gen. Russo with that, and he called 

25 while I was in his office and talked to Gen. Thompson, who 



llNCIISSiFI! 



647 



UNCLASSIFIED 



97 



1 is th« four-star General in charge of Army Materiel Command, 

2 and told him that I was working with Col . Lincoln on a very 

3 quiet project and appreciated his good support, and that 

4 issue then was laid to rest. 

5 That was the only involvement throughout this 

6 project with Army Materiel Headquarters. 

7 MR. SAXON: Let's go off the record a moment. 

8 [Discussion off the record.] 

9 BY MR. SAXON: (Resuming) 

10 Q Major Simpson, when the approval from the Agency 

11 came for the retrofitting and transportation, did you 

12 communicate that to the folks at MICOM? 

13 A Yes, sir, I did; the same day. 

14 Q And did there come a time shortly thereafter when 

15 you had a conversation with Mr. Williams, the Deputy Project 

16 Manager-TOW, about changing the price yet again to take into 

17 account that in essence one-half of the missile was going to 

18 be an improved version? 

19 A Yes, sir, we did have such a conversation. 

20 ijKMJk And did you agree that you would take that forward 

21 aflHpla what could be done? 

22 A Yes, sir, I did; although I told them, personally 

23 I was against changing it. I remember that conversation. I 

24 may have had it with Col. Lincoln, or it may have been with 

25 Chris Leachman, but one of the three principals in the 




648 



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93 



1 offic*. I said, guys, I'm not willing to even surface that 

2 issue to the DSLOG, unless you want me to do it. 

3 Q Did you — 

4 A And — Oh, I'm sorry. 

Q Did you talk toj^^^^^^^^Habout it? 

6 A I did not talk to^^^^^^^^Babout that at all. 

7 I don't believe the Agency ever got involved in that. I do 

8 know that Col. Lincoln did do what I asked him. I was so 

9 disgusted at this point with the events that had transpired, 

10 I have got many other missions going on, and I think that 

11 the concern was I just didn't have time every day to deal 

12 with a changing set of ground rules. 

13 I said. Col. Lincoln, if that issue is going to 

14 get surfaced to the DSLOG level, I said, it needs to be done 

15 from the MICOM end; and I do know that that did happen, that 

16 Col. Lincoln went to one of his bosses, one of the Generals 

17 at MICOM, and they did call and talk to Gen. Russo. 

18 Q I know that a lot of these particular details are 

19 hard to recall, but my notes from when we met in April 

2 1 n 0r >te that when this issue was raised and you had these 

21 dt^iusions, I think you said with Mr. Williams, that he 

22 said the rocket motor on the ITCH had a longer range, and 

23 that he wanted to be paid more for the improvement? 

24 A I do recall that he did say that. 

25 Q And my notes reflect that you talked tc 




i-nuu 



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VNCUSSIFO 



99 



1 ^^^^^^H and he said that he really could care less that 

2 something along the lines that if they wanted to give him a 

3 better one, fine, but he didn't order it so he wasn't going 

4 to pay for it. 

5 A Sir, I do recall that. Now my memory is 

6 refreshed. That was what was discussed. 

7 Q Now at this stage, I think we have even another 

8 complicating factor. That is, that discussions began to 

9 focus on a different stock number for a basic TOW with MOIC. 

10 What can you tell us about that? 

11 A Another conversation in these days of changing 

12 environments and facts was that George Williams called me up 

13 to say that they had done some more study, and they now have 

14 surfaced the fact that there is a new stock number for MOIC. 

15 I guess the gist of his conversation was to the effect that 

16 the $3169 purchase price for the MOIC, plus the $300 MOIC, 

17 had turned into a price that all of us now know never 

18 existed, and it was somewhere on the order of about $8000. 

19 Q All right. Let me see if I can — 

20 dF'^ I^ ^ could help you, I cc- ^ walk you through what 

21 2Ml|p|lly happened back in those years in the late '70s. 

22 g Good. 

23 A In the late '70s after the flyback problem 

2 4 surfaced, at that time Hughes was making a later version, I 

25 would say a later production run of the missile. 




650 



UNMSIFIED 



100 



1 Q of the basic TOW, still? 

2 A Of the basic TOW. They redesigned the design, 

3 because the MOIC that was being provided to Anniston to put 

4 on was kind of like a slap-on modification. The engineers 

5 at Hughes redesigned the basic configuration of the 

6 missile — 

7 Q To build the MOIC in it? 

8 A To build the MOIC right into the system. It was 

9 kind of a quick-fix engineering. But now it is part of the 

10 assembly process of a brand-new item. That particular 

11 missile — which there's some doubt at MICOM whether that 

12 should have ever happened — was now coming off the production 

13 line and given a new, different stock number by the Army. 

14 Q As a new item? 

15 A As a new item. And the price was around $8000, as 

16 recall. 

17 Q Would it have been $8435? 

18 A That sounds like a figure I remember. 

19 I tried to argue with George at the time that that 

20 n^^Klwve been true for a missile that came off the 

21 pJHBtlon line years later, I said, but are any of these 

22 15-year-old missiles that you're giving me, were any of them 

23 priced to the Army at $8439? 

24 And George said, no. And I said, well, as far as 

25 I'm concerned, an old missile with a MOIC welded onto it 



UNCLASSIFIED 



651 



*WSS/f/fD 



101 



1 datH^ at MOIC, I said, is it, or isn't it costing the Army 

2 $300 to do that? And he said, it is. I said, well, I'm not 

3 willing to give you any more money for that, and I'm not 

4 willing to surface that issue, either, up the chain of 

5 command . 

6 Q Okay. Let me review what you've just said. After 

7 the flyback problem was created, Hughes began to manufacture 

8 the TOW missile with the MOIC in it, which MICOM chose to 

9 classify in the AMDF as a new item and gave it a new 

10 national stock number, and a new price, the price of $8435. 

11 A Yes, sir; that's correct. 

12 Q So that if someone at Anniston Army Depot, which 

13 we understand to have happened, were to have been told "we 

14 want a basic TOW," and it were to have a MOIC, they could 

15 look in the AMDF and, whether this should be the case or 

16 not, could find a legitimate price for a basic TOW with MOIC 

17 of $8435? 

18 A They could do that, although there was some 

19 r«ir«l«tion at MICOM that there was never actually a price 

20 idHi^*^ approximated the AMDF price; that it was something 

21 o4^H^ihan that price, but it was a price higher than, 

22 considerably higher than the basic vanilla TOW with a MOIC 

23 in it. 

24 Q But if they used the computer system that existed 

25 at Anniston Army I^ypct ATf* ff^iiFikP^-if-ili? number for a TOW 





652 




102 



1 wiHit MOIC, they would get~ 

2 A The model number. They would have got a $8439 

3 price, yes, sir. 

4 Q And as you walked through this with MICOM, what we 

5 were doing was not involving those missiles at all, but 

6 taking the missiles purchased by the Army for $3169 and 

7 simply welding the $300 MOIC on? 

8 A Yes, sir; that's correct. 

9 Q But the two items did have different national 

10 stock numbers? 

11 A A basic vanilla TOW with a MOIC did. 

12 Q And did anyone at DA level with whom you were 

13 dealing realize that when you put a MOIC on a basic TOW, 

14 according to the AMDF, that it had a different national 

15 stock number and therefore a different price? 

16 A No, sir; no one at DA did, at that time. I know 

17 that Gen. Russo late in November of '86 ceune to the 

18 conclusion that, gee, if we had only known. 

19 Q And at this point, up until this point, no one at 

20 l^^K^Q^^v? 

21 ^9P ^° °"^ ^^ MICOM ever told us all these details. 

22 This wealth of data that we have just discussed all surfaced 

23 during the November-December '86 time frame. 

24 Q How did this come to Mr. Williams' attention? 

25 A When yeuwsijt^ibow did this come, sir? 




653 




103 

1 Q Back in late February. He brought this to you. 

2 How had it come to his attention? 

3 A I'm not quite sure, sir. Through one of the 

4 people that works for him. He never revealed those details 

5 to me. 

6 Q At this point, you took this information, I 

7 believe, to Gen. Russo. Is that correct? 

8 A Yes, sir. 

9 Q Did he then have a conversation with Gen. 

10 Burbules, the head of MICOM? 

11 A Sir, he may have had that conversation with th« 

12 Deputy Commanding General. I believe that Gen. Burbules may 

13 have been away. He may have had it with Gen. Burbules. 

14 That is possible. One of the principals there at MICOM, 

15 either the Commander or the Deputy Commander. The issue was 

16 discussed. 

17 Q As to whether to pay the $3469 — 

18 A Or some other price. 

19 Q And did anything change? 

20 Mgk Nothing changed. Gen. Russo told me that — he 

21 clflBl ■« up to his office. We were meeting almost daily on 

22 this project—and told me that the issue of price had come 

23 up. He said, I was worrying about the mission being hurt, 

24 damaged, or otherwise deteriorating because of all of the 

25 changing stories. He said, I couldn't see really how we 



yrmsiFiED 



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104 

could charge more than $3469. And, he said, I told the 
General that he spoke to, he said, the price is going to 
rest as it was. 

Q And at some point did you get back with 

in this time frame, and he told you he didn't 
want any more changes? 

A Well, by the tine this conversation that Gen. 
Russo had with the Commanders at MICOM was going on, we had 
already gone^^^^^^Hwith three more changes. I mean, 
those changes that we've already discussed. I think he 

11 would of just about had apoplexy had I gone back with 

12 another change. ButHJUJ^^^^^^and I have worked together 
for several years. If I had actually had a change, I think 
he would have done his best to accommodate me. 

Q When ^^^^^^^^^^H| expressed, at whatever point, 
some dissatisfaction that things kept changing, did you 
communicate that back to Col. Lincoln? 

A Yes, sir, I did. As a matter of fact, that was 
what led to when Col. Lincoln and I discussed the business 

was not willing to surface another change in the 
txVH to the Ainny leadership. I says, as far as I'm 
concerned, you know, that needs to come from the MICOM 
level. I thought, let you guys go up and face the lions and 
explain why the truth keeps changing. 

Q And was that his phrase? Col. Lincoln told you 




IS that hxs phrase? Col. 

Mm\m 



655 




105 

1 that the truth kept changing? 

2 A No, that was my phrase for him. I said, 

3 geezuschrist, you know here we are. When we told you the 

4 first day that the highest levels of the Army leadership 

5 were looking at this, you know, why couldn't we be straight 

6 the first time. I said, now we've gone through three 

7 different changes, and the truth keeps changing. I pointed 

8 out, even on the MOIC business that when they had asked me 

9 for the money to pay for the 2300 MOICs, I said, nobody even 

10 bothered to check with Hughes at that time to see if they 

11 could meet the deadline scheduled. I said, you find that 

12 out later. 

13 So I guess my point from an action officer's 

14 viewpoint was, I was frustrated by what I saw as kind of 

15 loose coordination. It was my opinion that any more of 

16 those changes in the story needed to be surfaced from their 

17 level to the Army leadership. 

18 Q Now let me go back quickly and clean up one or two 

19 1004^ ends that may have been left on the first shipment 

20 i^^^Kj^tually took place on the 14th of February. 

21 ^^Bm^ ^ y°" alluded to earlier, these did not actually 

22 get airlifted from Redstone? 

2 3 A No, sir, they did not. 

24 Q Tell us what happened with regard to that plan? 

25 A Sir, briefly, because of the period of 29 January 




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to 13 February that we were changing the delivery date one 
day at a time because of delays and problems with follow-on 

from ^^^^^^^^^^^^^^Hl^^H asked 
the afternoon of the 12th of February, could I get with MAC 
and see if they would support us on the 14th. I said, no. 
Hell, no. 

When I went back to him with that, he said, well, 
we're really in a jam, he said, because now we have the 
follow-on transportation for^^^^^^^^^Hand we can't 
change that. He said, how are we going to get these 
missiles? 




We called and talked and I said, 
do you think w e can truck so mething from — 
we had hauled stuff before f ron^^^^^^^^H f rom Redstone, 

Redstone l^^^^^^^^^Psaid , 
get ahold of my favorite trucking company and see if they 
fiiake it in the time frame. 

And that was Baggett Transportation? 
A Yes, sir. That was Baggett Transportation, 
called me back shortly that same day and said Baggett can do 
it. Where do they need to go? And I did some dealings with 




the Baggett dispatcher, and we got them guided into our 



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remote area at Redstone where the missiles were being 
stored. 

The upshot of all of it was that I was listed as 
the consignor from Redstone^H^^^^^^^^^^^f Actually, they 
were never told at Redstone that they were going 
that's 




Again, there would have been no reason in the 
white world for TOW missiles to go to, 




Q For the record, are you aware that Baggett 
Transportation has as its slogan "Don't Mark It Rush. Tag 
It, Baggett!"? Have you ever heard that? 

A No, sir, I'm not. 
''4:Q Well, for the record that's true. 

*- All right. You're on the ground at Redstone on 13 
February. Baggett, I believe, arrived around 6:00 o'clock 
p.m. Is that correct? 

A Yes, sir, that is correct. 

Q Then you started loading around 7:00 o'clock? 



!!H8l«lfiE0 



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1 A Yes, sir, and it took us until probably about 1:30 

2 in the morning to finish this. This is a very complex 

3 procedure, because it isn't just throwing boxes on trucks. 

4 Because of the nature of the cargo, each box of missiles and 

5 each box had one missile in it — 

6 Q There were 1000 boxes? 

7 A 1000 boxes that are a crate that are about 4 foot 

8 long and a foot length by width. It was a foot square, and 

9 about 4 foot long, and weighed a lot of pounds, and it had 

10 to be blocked and braced. So you actually have carpentry 

11 work going on on each different box. Plus, the weight heul 

12 to be equally distributed within the trucks. 

13 Q Were there 90 tons, for shipping purposes? 

14 A That sounds correct. 

15 Q And was an MI company helping load the trucks? 

16 A Yes, sir; it was an MI company that was stationed 

17 at Redstone Arsenal . 

18 Q And about what time did the last truck arrive? 

19 A Sir, as I recollect, about 1:30 in the morning. 
^^ im^ Then I believe you told us in April that you and 

21 atff^^lM&chm&n left about 2:00 o'clock to go to your 

22 respective places to get a little sleep, and came back 

23 around 7:00? Is that correct? 

24 A Yes, sir. And the objective of meeting again at 

25 7:00 was to have me sign a sh_ip£ing_ document, a DoD shipping 

T 



i sign a snipping docum« 

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document that he had prepared for me. 

Q And that's 7:00 a.m. in the morning, the 14th? 

A Yes, sir. 

Q And that dociiment was signed; and did you keep all 
copies but one? 

A Yes, sir, I did. 

Q And you had carried down with you, I think, an 
individual from the Agency? Is that correct? 

A Yes, sir. 

Q Who was that ? 

name was^^^^^^^^^^^H They were 

12 reluctant participant in the witnessing of this first load, 

13 but Gen. Russo had asked me to make sure that legal 
ownership for these missiles was transferred at Redstone. 
The purpose of ^^^^^^^^^^^^^^^^^Halso known alias 
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^H his 
purpose was to accept signature responsibility. And if 
anyone wanted to look at the reco rd, the retained r eceipts 
in ay office show that^^^^^^^^^^^^^^^^^ from 

20 CXA||ld sign for those missiles on the morning of the 14th 

21 of^ftbruary. ^^^^ 

2 2 Q And you got a receipt from^^^^Halso attesting 
2 3 to his receipt of the documents which DA had received in 

24 affecting the shipment? Is that correct? 

25 A Sir,^^^^^^^Hkept none of the documents from 




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th« DA shipment from Redstone^^^^^^^^^^^^^ If your 
notes show that, they're in error. He kept no documents at 
all. 

Q Okay . And once the mission was completed, did you 
ca 1 l^^^^^^^H to 

Yes, sir, I did. I also called Cen. Russo. 
youcal]^^^^^^^^^^^^ 

Sir,^^^^^^^^^Kind I talked. Whether it was 
that day before I left to go back to Washington, or that 
morning down at Redstone, I did talk to him right in that 
time frame. 

Q To tell him that everything had gone well? 

Yes, sir. 

And did you talk tc 

At length; y es, sir. 

Did you tell^^^^^^Hthe transfer had taken 




A 

Q 

A 

Q 
place? 

A And at about what time^^^^^^^Hbxpect the 
trucks. They had been due in at about 2:00 a.m., or 2:00 
p.^^ Saturday afternoon, when they left. That was what the 
dl^ll^cher had told me for Baggett. 

Q m^^^^^^^^l promise to call you and tell you when 

the trucks got there? 

sir,^^^^^^^^^^^^^Hdid do 
And what' 




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A ^^^^^^^^^^^^Oi^^^^^^^^Hsaid, the trucks 

2 that you were sending me have arrived safely^^^^^^Hsaid, 

3 all is well. I got one more call on that operation, and 

4 that was from^^^^^^^H^^^fthe following Monday to tell me 

5 everything had lifted out and had gone successfully. 

6 Q He was tht 

7 A Yes, sir, he was. 

8 Q And did he say something like, not only did they 

9 lift off, but they're now over the borders? 

10 A Yes, sir, he did. 

11 Q And would that be the first time when you knew for 

12 sure these were destined to go outside the United States? 

13 A Sir, that was the first time I knew for sure, but 

14 even from the early days from the mission, from the first 

15 three days, I knew that they were going outside the country- 

16 I was 99.5 percent sure, because we were waiti ng for fo llow- 

17 on transportation by air from| 

18 There would have been no us* for those within our 

19 bordara. 

20 -^ Q And did you ask^^^^^^^Hat that point if he 

21 uali KXC for the airlift? 

22 A Yes, sir, I did. 

23 Q What did he say? 

24 A As I recall, he told ne he used a private 

25 contractor. Again,! ik^MA^t^Uk £K>BCMrB«(L about defense 



U 




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1 transportation channels. The reason for asking about 

2 MAC was to make sure that DoD was off the hook. Once he had 

3 told me that he had not used MAC, I knew that we were clear 

4 and free. Really, that was the end of it for the first 

5 phase of our mission. 

6 MR. KREUZER: Did he mention who the private 

7 contractor was? ^ 

8 THE WITNESS: No, sir. And I don't want to 

9 speculate on who it was. They used a variety of private 

10 contractors. ^^^ 

11 MR. KREUZER: That was what day? What day did^^f 

12 ^^^^Htell you that they had airlifted out? 

13 THE WITNESS: 17 February, sir. I say that, 

14 because I got a call the following Monday. Friday was the 

15 14th. I was told Monday that everything was gone. 

16 BY MR. SAXON: (Resuming) 

17 Q Let me cover — this is somewhat out of the 

18 chronological sequence — but one additional item on the issue 

19 of Congressional notification. 

20 ^^Bk" ^ believe there was a point at which Department of 

21 tlilpktBy civilian and military leadership continued to be 

22 concerned about the issue of Congressional notification, so 

23 that there was a memorandum drafted which went to Gen. 

24 Powell on this issue. Is that correct? 

25 A Yes, s ir. As a matter of fact , I believe that I 




663 




113 

1 drafted that memo for Gen. Russo. Gen. Russo and I 

2 discussed a rough outline of what he wanted to say. I went 

3 and typed it. He hand-carried it up, and he brought it back 

4 down to me, and it had some notes written on the margin of 

5 the finished memo that said it had been discussed with Colin 

6 Powell. 

7 Later, that memo went up one more time. Later in 

8 the spring, Maj . Gen. Powell left and Admiral Jones took 

9 over as the aide to the SECDEF, and it went up once again to 

10 let Admiral Jones look at it. 

11 Q And a memo copy I think of that was provided to 

12 Gen. Arthur Brown, the Director of the Army Staff, Gen. 

13 Kavasa, the Executive Assistant to the Secretary; and to 

14 Col. McDonald. Is that correct? 

15 A Yes, sir, that is correct. It also went to Maj. 

16 Gen. Sutter. 

17 Q And how do you know that? 

18 A Because, sir, I hand-carried that document all 

19 around, at Gan. Russo 's request. 

20 ^ra And did you also give a copy, or show a copy, to 

21 ToJilliylor? 

22 A Yes, sir, I did. 

23 Q Now in the context of Congressional notification, 

24 I believe you told us in April that the day after Tom Taylor 

25 gave you a copy of Mrs. Crawford, the General Counsel's, 



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meBorandum to the Secretary on this issue; that you had a 
face-to-face session with^^^^^^^^^Vin which you gave him 
a copy of the Act itself. Is that correct? 
A That is true, sir. 
Q Do you recall what you told him? 

MR. SAXON: Could we go off the record? 

[Discussion off the record.] 

MR. SAXON: Where did we leave off? 

THE REPORTER: "Question: Do you recall what you 
told him?" 

THE WITNESS: Sir, the questio n then wa s, do I 
recall from my face-to-face meeting with^^^^^^^^^lon the 
notification issue what was discussed? Yes, I do. 

I took a copy of the Act that Mr. Tom Taylo r from 
Army General Counsel had copied for me to give tol 



BY MR. SAXON: (Resuming) 
Q Which Act was this? 

A This was the 1986 Intelligence Authorization Act, 
addressed the requirement of notification to Congress 
■ore than a $1 million shipment was involved of arms 
outside the borders. 

^and I then addressed the fact that it 
was really his General Counsel's responsibility to advise 
the leadership on the requirements. 






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And, I said, but I don't have any face- to- face 
dealings with the General Counsel of the 




about a day later, it could have been 
the same day again, these things fuzz together, he got bac)c 
to me and told me to get out of it, and that the Agency was 
handling it. He assured me of that, because I was concerned 

about it. 

^^^^^^^^^^^l^^^l w i th 
^^^^^^^^^^^^^^H with 
although a lot of very senior people in the Defense 
Department were dealing with the issue, nobody had really 
told me it had be en done. I said, this is a very important 
thing.^^^^^^^Hl said, I don't want somebody to get in 
trouble later on it. And he assured me it was being taken 
care of. 

Q And did you communicate that back to Gen. Russo? 

A Sir, as I recall, I did. I'm sure I did. 

Q Before we go to the second shipment and any 
particulars on it, let me ask you about one or two things 
you told us in April. 

You mentioned earlier your boss and predecessor, 
Lt. Col. Jeffrey Stevens, who I think retired on June 30, 



25 1985. You said that he 



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ONCUSSIFIED 



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Q Also for the record, do you have )cnowledge of any 
efforts by the Department of the Army to divert funds or 
weapons or ammunition from shipment to any other country to 
divert that to the contras in the time you were at DSLOG? 
[Pause. ] 

A There were never any efforts by me, that I know 
about where I was actively involved in diverting anything to 
go to the contras — "diverting." I want to be cautious on 
that word. 

Q Were there efforts by others of whom you had 
knowledge? 

A No, sir. And I don't want to open a can of worms. 




Q And did any of those take place after October of 
1984 during which time the Boland Amendment would have been 
in effect cutting off all U.S. Government funds in any 
naiB*r for the aid and support of the contras? 

%. k It is possible that that happened. Once again, 
though, because of our large Armed Forces down there in 

23 Central America, y ou know, for me to ship something toi 

24 ^^^^^^^^^^^^^^^^^^^^^^^^^^^Hi-n 

25 not, could not, and did not have to be construed as an 



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MR. KREUZER: What's the long title of "MTMC"? 

THE WITNESS: Military Traffic Management Command. 
It's the Army major command that is responsible for shipping 
things entering into the Defense Transportation System, 
which is a combination of planes, ships, et cetera, that 
covers the world-wide sphere. 

MR. KREUZER: And MTMC would provide the — 

THE WITNESS: Well, MTMC might provide it. MTMC 
again is just the Army leg of a defense system, meaning that 
you've got MAC aircraft and Navy vessels all part of it. So 
in terms of things I might have been involved in shipping 
south for the Agency, they were common, going to known U.S. 
addresses through the Defense Transportation System. 
V. BY MR. SAXON: (Resuming) 

•* Q For the record. Major, is it safe to say that you 
had no knowledge after October of 1984 that anything you 
were involved wii 




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ONCUSSIFIED 



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I would say again for the record that I was never 
in three years there ever asked by the leadership of the 
Army or the Defense Department ever to do anything illegal; 
never. 

MR. KREUZER: Can you describe to me the terminal 
point at Tegucigalpa which received materiel via the MTMC? 

THE WITNESS: Roger, just picture a large port, if 
you would, to look at Bayonne, New Jersey, where you've got 
ships coming and going. You've got trucks hauling cargo 
off. You've got authorized people coming to sign for 



Typically, if we ship something down there, it was 
care of the U.S. Embassy. That was a typical address to 
ship things care of. Also, some of the shipments went care 
of U.S. MILGROUP. 

MR. KREUZER: Do we have a command there at the 



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oiUSSIFIED 



1 port? 

2 THE WITNESS: You've got a representative down 

3 there. MTMC is represented down there by an office. Again, 

4 I don't know the details of how it's constructed, but 

5 Military Traffic Management Command has an office for 

6 southern command down there. Exactly how it is staffed and 

7 operated, I don't know. 

8 MR. KREUZER: And that is located in a port? 

9 THE WITNESS: I don't know where the office is in 

10 terms of where the office is in Central America. I know I 

11 used to have an AUDAVON number to call the Colonel if I had 

12 any problems with the Port. Also, he would call me if he 

13 was having problems. But in terms of for me to say today, I 

14 don't know precisely where the office is. 

15 MR. KREUZER: What are the names of some of the 

16 people down there with whom you would speak from time to 

17 time? 

18 THE WITNESS: I would have to go back and look at 

19 my notes. In my notes, there is a record of the Colonel. 

20 ^11^^^ °"^ single point of contact I dealt with exclusively, 

22 MR. KREUZER: But you don't remember his name? 

23 THE WITNESS: No. I know he was a full Colonel, 

24 and he was the MTMC Southern Area Commander for Southern 

25 Command in the '84-85 time frame. That should be easy for 



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NWSIFIED 



1 somebody to track down. 

2 MR. SAXON: Let's go off the record a second. 

3 [Discussion off the record.] 

4 BY MR. SAXON: (Resuming) 

5 Q Major, if we can now, let's focus on the second 

6 TOW shipment. I believe that on February 17 you got a call 

7 f rom^^^^^^^^H who said to be ready for the second 

8 shipment within the next couple weeks. Is that correct? 

9 A Yes, sir, it is correct. 

10 Q And did you then call Col. Lincoln? 

11 A Yes, sir, I did. This was a smaller shipment this 

12 time. Dave only wanted about 500 missiles this tine. 

13 Q Was it "about 500," or was it 508? 

14 A It could have been. I think it was 508. 

15 Q And when you called Col. Lincoln, did you tell him 

16 you needed another shipment of widgets for Project Snowball? 

17 A That's precisely the words I used with Col. 

18 Lincoln, sir. Col. Lincoln's main concern at this time was, 

19 keeping in mind we already have all this history behind us 

20 ofaill this trial and tribulation on pricing and 

21 adidEltlcations on widgets, and he says: Chris, he says, my 

22 main concern is this guard force, he said. Are we going to 

23 be able to lift off? He said, I would rather you get do*m 

24 to the point where you know you're going to take delivery on 

25 them within 48 hours and, he said, I'll bring them up here 



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1 just before the delivery. 

2 Q Had he concluded that he could get the TOWs to 

3 Redstone in three days? 

4 A Yes, sir, he did. 

5 Q So he was going to wait, really, until three days 

6 prior to the delivery date? 

7 A Yes. It turned out, though, that we had them up 
3 to a little bit longer than that. He was concerned about 
9 glitches, and he got them up there a little bit earlier. 

10 But the second shipment was set up precisely as the last, 

11 except with one difference. 

^mm^m^^^^^did me to try to get MAC 

13 aircraft. He decided that the cost for the ground 

14 transportation was so cheap compared to the use of a MAC 

15 flight, that he said economically it made lots of sense, as 

16 long as we had the two-day notice, for follow-on 

17 transportation. 

18 ^^^^ So he built the driving time from Redstone ^o^^H 

19 ^^^^^^^into his factor ing when he sta rted negotiating for 

20 fe^ow-on transportation^^^^^^^^^Hfor the second 

21 shl^nt. 

22 MR. SAXON: Let's go off a second. 

23 [Discussion off the record.] 

24 BY MR. SAXON: (Resuming) 

2 5 Q To go back to the number of 508 missiles, did you 



UNCIil^inEO 



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UNCUSSIFIEO 



125 



why there was such an uneven, or 



1 ever inquire 

2 curious number? 

3 A Yes, sir, I did. 

4 Q And what did he tell you? 

5 A The answer was that they were working from a fixed 

6 sum of money, and that was how the numbers had worked out. 

Q ^^^^^^^^^^H told you, then, at some point to 

8 Baggett Trucking again for this shipment. Is that right? 

9 A Yes, sir, he did. As a matter of fact, that was 

10 early on in the second equation. 

11 Q And did everything go down on the second shipment 

12 more or less as the first, except for the fact that there 

13 was no Agency representative present? 

14 A There were two other factors. The second shipment 

15 was identical to the first, with these major differences. 

16 One is that we were delayed nearly six weeks before we 

17 executed the second phase. It was into early May, as I 

18 recall, around the 13th of May. It may have been a little 

19 bit later, but early in May. 

20 The stress! 
^^^^^^^^^^^^^^f was that one day at a time were being 

22 moved forward — tomorrow we're going to do it; tomorrow we're 

23 going to do it. We'd fall through. Tomorrow we're really 

24 going to do it. That had been a lot of stress on us as we 

2 5 moved forward the six weeks from late February to early May. 




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1 But in terms of the execution of it, the execution 

2 of the second phase went very smoothly indeed. I by now had 

3 orders to leave DSLOG and go to Denver. I had set it all 

4 up , th ough . I had made the same arrangements with^^^^^^^H 

5 ^^^^fthat I had previously. Colonel Armbright out of my 

6 office went down to watch the loadup and see the execution 

7 of it, and there is a lot of paperwork to handle when you're 

8 acting as the consignor for tons of explosive shipments. 

9 Q This was Col. Larry Armbright? 

10 A Col. Larry Armbright. 

11 Q What was his position? 

12 A He was called the Logistics Accounts Coordinator 

13 in DSLOG. 

14 Q And once you left, did Col. Armbright more or less 

15 take over and do the things that you'd been doing on 

16 Snowball? 

17 A He did on the third shipment on Snowball, sir. 

18 Crocus was essentially finished, except for a very few small 

19 hang-on details when 1 left. But Col. Armbright fully 

20 ajd^rutcd the third phase of Snowball after my departure, and 

21 h« *«x«cuted the on-ground phase of the second part. 

22 Q And he went down, I think you told us before, on 

23 May 19th to Redstone? 

24 A That is the correct date, sir. I had said earlier 

25 the 13th, but I meant the 19th. 



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ONCLASSIRED 



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Q And was there any reason why an Agency 
representative did not go that time? 

A They begged off; plus, we already had their funds' 
certification up front, and they had agreed to sign a 
document as soon as Col. Armbright got back. The DSLOG 
leadership had no problem with that, since everything had 
worked smoothly the first time. 

Q On the first shipment when the Agency 
representative went down, what kind of credentials did he 
have? 

A Sir,! 




Q So if we talked to anyone in the course of this 
investigation at Redstone and they saidl 




Q Now did you get a call from Col. Armbright on the 

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morning of May 20th telling you that everything had gone 
okay? 

A Yes, sir, I did. 

Q And that meant that the missiles had departed by 
truck to — 

A With no incident, yes, sir. 

Q — towarc 

Now did this end your involvement with the TOWs, 
except for the billing? 

A Yes, sir, it did. 

Q And more or less at this point. Col. Armbright 
took over and handled the third shipment of TOWs. 

A Yes, sir, that's correct. 

Q The charges from MICOM that had to be paid back 
before you left came to approximately what amount? 

A Sir, as I recall, about $5.5 million. 

Q Would $5.6 million sound about right? 

A Yes, sir, it does. 




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Q Now do you have any )uiowledge of what actually 
transpired with I guess the first and second shipment of 
TOWS, and any shipment and payment for the HAWK repair parts 
before you left in terms of getting monies from the Agency 
to the proper command? 

A Sir, the HAWK parts were not paid for when I left. 
They had been shipped and received successfully. 

Q So let's confine your answer then to the TOWs, the 
first and second shipment. 

A I did receive payment for the first and second 
shipment of HAWKs from the Agency. What happened was, as I 
got closer to departing, I kept calling Chris Leachman. He 
finally got me a bill together for this roughly $5.6 
million, which covered again the costs of the missiles and 
the ancillary costs MICOM billed us for. 

I hand-carried that bill over to^^^^ 

and he 

said, I will have checks for you within just a few days, and 
h«9ttd. And he asked me to come over and get those from 
hflR^ I 





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Now to your knowledge, did MICOH ever receive 
their $5.6 Billion? 

A As a matter of fact, they got it very cpiiclcly; 
because from the day that our classified courier hand- 
carried the checks over — this was all within a couple of 
weeks of me getting the bill until we had the payment back 
from the Agency — within 30 days of Chris Leachman presenting 
us his bill, we had the checks on their way to MICOM. I 
know they were received, because before 1 left DSLOG in late 
June of '86, and they were billed in late M ay, they bad , 
their money down at MICOM,! 




Q And when you left in late June, that would be the 
extent of your knowledge? 

A That was the extent of the monies that had been 
paid to us, and I did know it, because until I left I 
exclusively handled the billing and the payments. 

Q But whether those checks were properly deposited, 
th«y were properly — 

Don't know. But I know that they have 
lily arrived down there prior to my departure. 
MR. SAXON: Okay. I'm ready to go to the HAWK 
repair parts. 

Roger, do you have anything on TOWs? 
MR. KREUZER: No. 




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BY MR. SAXON: (Resuming) 

Q On the HAWK repair parts, as I understand it in 
early March of 1986 Gen. Russo called you up to his office 
and introduced you ^°^^^^^^^^^m ^^ ^^^^ correct? 

A Yes, sir, that is correct. 

Q And how did he make that introduction to you? 

A He said, Chris, this isj 




So he said, "This 
Now he is in his office, the ADSLOG's office. 
"Chris," he said, "We're going to follow the sam e rules on 
this project that we did on Snowball." He said,! 

though, this time has a list for us of a whole bunch 
of things that we need your help with." 

Jl And he physically had in hand the list of what? 

Which he handed to me, a list of 14 Xeroxed pages 
b««Ji field-typed by somebody — when I say "field 
typed," because the typing was a little erratic, a lot of 
misspellings, and skipped spaces; it was not a professional 
piece of work. But there was no agency stationery listed. 
It was plain bond paper with typing on it of stock numbers, 




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1 n^lKlatures, quantities, and prices. 

2 ' Q Do you recall how many line items of repair parts 

3 there were for the HAWK missile? 

4 A I want to say, sir, there were about 248. I know 

5 that at the end the numbers varied between 235 and 2 50 as we 

6 massaged the list. And again. Gen. Russo explained the 

7 rules. No paperwork. The recjuest is going to come over. 

8 No written staffing memo. And the urgent requirement on 

9 this one, which was almost impossible, was that we give 

10 ^^^^^Hback an answer within two days: Could ve support all 

11 those things on that list? 

12 Q So you were asked to ascertain within 48 hours 

13 whether the Army had and could supply these 234 items? 

14 A Yes, sir. A brief transcription of what followed 

15 that same day. This is probably early afternoon. I went 

16 down to my office and by 4:00 o'clock that day Col. 

17 Armbright and I had figured out that at least eUsout 14 

18 different Army and DIA Commands were involved, and we said 

19 it,.)q^„*'3*olutely Impossible to deal with so many different 

• " ■ ■<■ 

20 ii^H^in such a short time. 




21 '^^^B^ ^^ that point, I made the decision to go to the 

22 major' command level. Again, even though Gen. Russo's 

23 guidance was "minimum number of people," I just decided that 

24 the time frame was so compressed — and I went up to tell Gen. 
2 5 Russo I was doiilGLilaaJti, I told him that I had gone to a 




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trusted point of contact at DLA, 

Q DLA is the Defense Logistics Agency? 

A Defense Logistics Agency. They're headquartered 

at Cameron Station, Virginia. 



And you went also to AMC? 
To a gentleman,! 
And AMC? 
Yes. 

And that stands for Army Materiel Command? 
Yes, sir. It's the Army Materiel Command. These 
are the two principal commands in the Amy, in the defense 
agency, for managing materiel at the major level. 

Q Okay. Before we get into those discussions with 
the individuals at DLA and AMC, let me back up. When you 
were meeting with Gen. Russo anc^^^^^^^^^H did| 
tell you who your point of contact would be at the Agency? 
A Yes, sir, he did. 
Q Would that also have beer 
h Yes, sir, it was. 

Did you say anything to^^^^^^^^labout the use 
airlift on the HAWKs and whether anything needed to 
be done differently? 

A Yes, sir, I did. As a matter of fact, once he had 
identified to me that^^^^^^^^H was the action officer, I 
immediately the*|«jr#M:eA ttnii'MrtlAnL"*' the tarnished 






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relationship that the Army had created out of my office with 
MAC, and said that I wasn't anxious to damage these points 
of contact again, and that in fact MICOM — or that MAC 
legitimately had complained about the way we had processed 
this. 

said,^^^^^^^^^^^^^Btold me was 

the issue. I said, can we do better this time? I said, 
because if we're going to need MAC — and again that was the 
scenario, that^^^^^^^^f f elt we would be using MAC at some 
point in the process, I said, we had to do a lot better. I 
said, we could not afford to continue to damage the 
relationship by faulty planning. And they said they would 
do better. That is more or less how we left that that day. 

Q All right. When you contacted the folks at DLA, 
you you with^^^^^^^^^^^^^^^^^^^^^^^^^H Is 
that correct? 

A Yes, sir, that is correct. 

Q And did you contact an operation there at OLA 
callec^^ 

A Sir, that's not quite the right word. It's called 




Q And then at AMC, the Army Materiel Command, you 
contacted|d|i:|.)niiiari^^^'th£._name of J 




M' 





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fussra 



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AMC. That's such a giant 
headquarters, I thought I'd narrow you down to where he is 
out of the thousands of people there. 

Q But ultimately, I believe you dealt on a day-to- 
day basis with two other individuals at AMC. Is that 
correct? 

A One other individual at AMC headquarters, sir, and 
two other individuals at MICOM. The other individual that 




11 picked up the mission fromi 



Q And were the other two individuals John Chapman 
and Bill Reyer, R-e-y-e-r? 

A Yes, sir, they were, at MICOM in the HAWK Project 
Manager's Office at MICOM. 

Q At Redstone Arsenal. 

A Yes, sir, at Redstone Arsenal. 

Q And did you give these individuals the list and 

24 tell them to start working the requirement? 

25 A Yes, svi-. .Qli^ ^ i^A '^£fy short time constrain/^. 



DNWn 



688 



LASSIFIED 



140 



1 I wasn't able to have nearly the tight control over 

2 paperwork I had on the previous mission. I gave Xeroxed 

3 copies of the lists to both DLA Headquarters and to AMC 

4 Headquarters, and what AMC did that same day that I had got 

5 the list is they Data-FAX'd a copy of it down to MICOM 

6 Headquarters. A Data-FAX, for the record, is a telephone 

7 transcribing system that gives you an almost exact copy out 

8 of the telephone wires about 15 minutes later. 

9 Q And I believe you physically went to AMC and Col. 

10 Armbright physically went to DLA? 

11 A yes, sir. We split the mission up again. 

12 Q And what instructions did you give to any of the 

13 people with whom you dealt in terms of how this was to be 

14 done, records, number of people involved, et cetera? 

15 A Well, I couldn't give the same instructions to AMC 

16 that have been given to me. I tolc^^^^^^^^^^Hthat we 

17 wanted to limit the number of people to the absolute minimum 

18 number possible. I said, let's consider this matter 

19 classified at the Top Secret level, I said, but we have to 
2 handle some of it as a white world mission. And that was 

21 how we decided to hand it. 

22 Again, those operational decisions day to day were 

23 mine. It was easiest to protect the materiel by pretending 

24 that this was a regular, normal white world operation; that 

25 there was a li|^ pJ^J-tems^thatAMC needs, not tying it to 



mmm 



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D 



141 



1 DSLOG right away, just get down there. We need inunediate 

2 capability to assess this list of items. That's how it was 

3 done, as a white world type action. Although^^^^^^^^^^^^f 

4 understood that the entire operation was a highly classified 

5 operation. 

6 Q I believe you told us in April that within 48 

7 hours Chapman and Reyer had identified all but 20 items on 

8 the AMDF. Is that correct? 

9 A Yes, sir, that is correct. 

10 Q And did Simpson — excuse me, did you then call 

11 ^^^^^^^^^^H within 2 4 hours saying that you could meet the 

12 requirements but you would have to revise some of the stock 

13 figures? 

14 A Not only some of the stocJc figures, sir, but some 

15 of the prices as well. It would appear that some of the 

16 prices that the fellows had were years old, and there were 

17 some very material changes in the prices on several of the 

18 items. ___^_______ 

19 Q Did you ever ask^^^^^^^^H where he got his 

20 list? 

21 A Yes, sir. That became of material interest 

22 because Mr. John Chapman, the technician, technical engineer 

23 we will call him, at MICOM was very concerned about it. He 

24 said, based on the list that had been provided, he said, he 

25 kept detailed ,i;fip5rds on all sales of HAWK missile systems 



igMcords on all sales or 



690 






142 



1 to all U.S. customers worldwide. He said, based on such an 

2 extensive list, he thought that other parts, too might be 

3 near the end of their useful life. He said if I could give 

4 him the serial numbers of the systems, he could look them up 

5 on his records and provide us even better support. 

6 He was concerned when I would not give him that 

7 data. Obviously I went back to^^^^^^^^^Hasking for it, 

8 and he simply would not give it to me. 

9 One other issue, too. Unlike the first project 
where they did yield to prices, ^^^^^^^^^^^^H on the 

11 second project that money was an absolute tight constraint. 

12 There was a fixed amount of money for the project. And as 

13 the prices had gone up on some items, some of the investing 

14 that^^^^^^^^^^Hand I did on widgets, there's 239 

15 different lines items, had to do with some items cost more 

16 than he had originally intended. And some of them got cut 

17 down. 

18 That happened. There were other items that were 

19 cheaper. All of that entered into the equation. 

20 Q Now is it correct that with the people you were 

21 working with, ultimately all but seven items were 

22 identified? Does that sound right? 

23 A Sir, that does sound correct, to the best of my 

24 recollection. Some of the items have simply been typed in 
2 5 there. I had some generic nomenclature on the list that 



mimm 



691 



UNCLASSIFIED 



143 



1 ^^^^^H had given me. Between the nomenclature and various 

2 parts of the stock number, Mr. John Chapman, through 

3 excrutiatingly detailed detective work was able to put 

4 together the right part by process of elimination. 

5 Q Did Chapman and Reyer ever ask you if a customer 

6 was actually going to use this stuff? 

7 A Yes, sir, they did. 

8 Q And what did you tell them? 

9 A As a matter of fact, I believe that I told them 

10 that we were going to use this, and use it right away, and 

11 that it had to work. It had to be in condition Code Ac. 

12 That was the issue. 

13 Q Let me ask you about propositioning at one 

14 location. You indicated these items in the inventory were 

15 scattered around at different depots. Is that correct? 

16 A Yes, sir, that is correct. 

17 Q What was the prepositioning issue? 

18 A There were two issues. First of all, the real 

19 reason for the propositioning was that I felt, having talked 
2 ^°^^^^^^^^^B that he was only going to get two days' 

21 notice again, like we had on the phases of Snowball. 

2 2 Having had two three years of experience at this 

23 business, I realize that with — I think we had nearly 27 

24 different locations involved, and that was 27 different 

25 locations belonging to I believe 9 different major commands 



UNCIA»ED 



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24 



of the Army and the Defense Department. 

Q Was there that one Air Force Command involved? 

A Yes, as well. In addition, and I felt that that 
was certainly going to test Murphy's law terribly if we 
tried to get that successfully done in 48 hours. 

recommended ^°^^^^^^^^^^^^^^| that 
preposition. I said, I'm going to need money to do that. 

Q And that simply means to consolidate them all into 
a single location? 

A Yes. My plan had been to consolidate them. I had 
tried to find out fron^^^^Bwhere we were going to ship 
things out of. He was very close-mouthed, but he finally 
consented to the fact that, well, somewhere arounc 




The issue on the propositioning was this: I want 
to see^^^mH^^^HHto ask him if he would fund this 
effort. Now keep in mind, I have no letter yet certifying 



2 5 funds. 



UNCUtSSIFIED 



693 



UNKSIFIED 



145 



1 Q Was that the reason you did that, because DLA 

2 insisted that they would not preposition unless they had 

3 funds? 

4 A Well, yes. But the Army wouldn't, either. 

5 Neither of the two agencies would. The Amy AMC 

6 headquarters wanted a certification from me that I would pay 

7 this bill, and I had told John Chapman and Bill Reyder that 

8 based on other dealings I had had with the people I was 

9 dealing with, that we could get delayed on this weeks at a 

10 time. 

11 Well, once the costs are incurred, somebody wants 
to bill .^^^^^^^^^^^^^Hagain a gentleman word, 

13 promised me that even if the mission aborted he would 

14 provide me our expenses covered for the Army activities. He 

15 said, I'm not going to pay you for the daily activities. 

16 And, he said, since they won't do it without a specific fund 

17 site — AMC was willing to do the work without a specific fund 

18 site as long as I certified the ability to pay the bill. 

19 Again, because I was dealing with long-time 

20 contacts, they trusted me. DLA would not do it without a 
fund but^^^^^^^^^^^^Hdid agree to do he 

22 could. What he could do was that each of the DLA depots he 

23 had the items at that depot segregated on a pallet and 
2 4 marked for my special project. 

25 Q So the repair parts were prepositioned in 



UNCLASSIFIED 



694 



2 A For all of the Army spare parts which, I might 

3 mention, was a large chunk of the materiel. The DLA part 

4 was a smaller portion both in dollars and volume. 

5 Q So they were not propositioned, but they were 

6 separated out — 

7 A And in fact, sealed up in plastic and everything 

8 else. They were basically ready to ship. That was a lot of 

9 work. 

10 Q And when the parts were prepositioned, were there 

11 some items that had not arrived? 

12 A Well, they the parts were propositioned, to start 

13 with as we prepared to proposition, we found out that items 

14 that had been listed on DoD inventory records, keeping in 

15 mind that you're going to look at a record one day, and 

16 records are made as of cutoffs, that some of the items that 

17 other items had come in or gone out of the shelf since the 

18 last inventory update, and we had to change some other 

19 quantities and figures based on what we were finding on the 

20 shelf as we pulled things. 

21 That wasn't the last preposition. That wasn't the 

22 last change, John. 

2 3 Because once we determined what was on the shelf, 

24 I made up a list for Gen. Russo of critical items. John 

25 Chapman and Bill Reyder talked to me at length about Army 



UNCWSSiFlEO 



695 



ONusm 



147 



1 capability to have another item manufactured, and what was 

2 the average demand time. 

3 So, for an example, I might list an item that the 

4 Agency may have asked for three of widget X. Widget X is 

5 only used once a year by the Army. So we would give two 

6 away and keep one, because we felt a year was long enough to 

7 obtain some more items for the stock. 

8 Q All right. Let me ask you a question or two about 

9 readiness, then. Did there come a point at which you put 

10 together a matrix on readiness, with availability in the 

11 inventory, manufacture time, and so forth? 

12 A Yes, sir, I did that. And I kept detailed notes 

13 on that in my office. The list is a working, worn-out 

14 document at this point, but it is still there for the 

15 record. It shows how the numbers changed, and we lined 

16 things through, and marked "not available." 

17 Other items we substituted, as I recall, or 

18 provided higher assemblies on probably 10 percent of the 

19 items. The Agency did pay us our asking price for the 

20 higher assemblies as the replacement item. 

21 So besides the seven that we couldn't find — sir, 

22 it was a very dynamic list. 

23 Q Let me ask you about Pre-Phase II PIP configured, 

24 or product improvement program conficfured HAHKs versus the 

25 issue of interchanqeabiJlity^^^)Bb.ua|igycplain that a bit for 




696 



<iiiim\m 



148 



1 me? 

2 A Sir, the term Pre-Phase II configured was a term 

3 used by MICOM to describe generically all of the parts that 

4 the Agency was asking for. The Phase II Product Improvement 

5 Program at MICOM took the Army HAWK missile system and gave 

6 it modern electronics, and a much more accurate guidance 

7 system, radar guidance system. 

8 Q Now the HAVnc system, for the record, essentially 

9 involves three things, as I understand it: the radar, a 

10 pilot system, and a computer. Is that correct? 

11 A Yes, sir, that is correct. Plus the fourth part, 

12 the missile itself. 

13 Q Continue, then, and tell us about this 

14 modification. 

15 A The modification is very important in 

16 understanding this whole project. Project Crocus, because 

17 when the electronics were changed on the HAWK missile system 

18 and the electronics were completely overhauled, cables, 

19 sizes, whole subassemblies and major assemblies were pulled 

20 out and replaced by whole different items. 

21 The end result was that after the Phase II Product 

22 Improvement Program was done, and you have a system now 

23 called Post-Phase II configured, you could no longer take 

24 hundreds of your repair parts that fit in the old system and 

25 put them in the new system. 



UNCLASSIFIED 



697 




149 

1 Q Now this was not true of all parts, but it was 

2 with some? 

3 A A majority of them. A majority of the parts now 

4 were new state-of-the-art products, and the new ones also 

5 would not fit in the old ones. It was because the 

6 electronic configurations themselves were changed. 

7 When the subject came up of asking for Pre-Phase 

8 II PIP configured items, MICOM offered to retrofit. That 

9 is, for the layman, bring all of the old systems back to 

10 their depot at Letterkenny, overhaul them, and for the sum, 

11 as I recall of about $600,000 a system completely overhaul 

12 and bring up to state of the art, and plus they offered at 

13 the same time to go over the entire system and check the 

14 useful life of all the parts to make sure that we basically 

15 had a completely Class A condition code system. 

16 Q And in fact was it not the requirement that we 

17 were trying to do that for all of our allies who had the 

18 HAWK system? 

19 A Yes, for two reasons. One is to bring all of our 

20 folks to state of the art. Two is to reduce the terrible 

21 expense of inventory that was being caused to be maintained 

22 in two separate inventories for two different systems. Plus 
2 3 the newer one obviously gave the owner a capability to have 
24 a better defense. 

2 5 Q Did you ever go to^^^^^^^^^H with this proposal 



ONCLASStFIED 



698 



W4SSIHfB 



150 



1 that the entire system be reworked? 

2 A Oh, yes, sir. As a matter of fact, we studied 

3 that carefully enough that we even offered him a specific 

4 time that it would take. He came back and absolutely 

5 rigidly declined that. 

6 Q Now if I understand what you're saying, the 

7 proposal from the people, Mr. Chapman, Mr. Reyer, others 

8 with whom you spoke, was that for not a whole lot more money 

9 the entire system could be rebuilt, rather than simply 

10 tinkering with it with some of the old parts that were 

11 provided by the Agency? 

12 A Yes, sir. And Mr. Reyer had another concern that 

13 fit in with this. He felt, based on the list provided, that 

14 whoever had put it together didn't know precisely what they 

15 were doing, because he felt too many of some parts had been 

16 requested, but not enough others. Some of the parts that 

17 had been requested he said would have indicated that another 

18 part had failed, but he said they didn't ask for that part. 

19 And he was concerned that we weren't going to get a good job 

20 done based on the list that was provided. 

21 Q Did he tell you that whoever put the list together 

22 lacked technical capability? 

23 A Yes, sir, he did. Mr. Chapman, who is an 

24 engineer, told me that. 

25 Q And what did^^^^^^^^H tell you when you went to 



lat did^^^^^^^B 



m 



699 



(iNMsm 



151 



1 him with this proposal? 

2 A Well, to start with, John, at the time that I went 

3 ^°^^^^^^^|B ^^ ^^^ list, and this was after Mr. Chapman 

4 had told me that he felt it wasn't technically proficient, 

5 we asked him to go back and have it reviewed at the source 

6 of origin, and asked him if we — we even offered to provide a 

7 technician to go to the site to look at it, and that also 

8 was declined. 

9 John Chapman felt that one of their expert 

10 technicians would do a better job than whoever had put the 

11 list together. ^^^^^^^^^H declined that, and told me at 

12 that time that he had no capability to go back to the source 

13 of origin and get the list modified. 

14 We were still concerned at that time about the 

15 missing seven items that we couldn't identify. We didn't 

16 know whether they were critical, or not a critical part for 

17 the record. It is a part that you have to have to fire the 

18 system accurately, and you can only be missing one critical 

19 part and a whole system won't work properly. 

20 So we were very concerned about the seven missing 

21 items that we couldn't identify, not knowing whether they 

22 were critical or not. But we clearly established that we 

23 had no means^^^^^^^^^H^B to go back to the of 

24 origin and get the list modified or corrected. 

25 Q And did Chapman actually ask you for the 



UNCLASSIFIED 



700 



UNMSIFIED 



152 



1 destination so he could then look up the stock numbers of 

2 the user's system and know what parts would be useable? 

3 A Yes, sir, he did do that, and that was declined. 

4 Q And did you also ask^^^^^^^^^l why you couldn't 

5 just provide the customer with new parts? 

6 A Yes, sir, I did. 

7 Q And what was the response there? 

8 A The response was that he wasn't interested in 

9 that. There may have been more, John, now but that whole — 
10 we had that conversation as clear as a bell, but all of the 

details — as recall, to help^^^^^^^^H|^^V was telling 

12 me was that they had Pre-Phase II PIP configured radars, and 

13 that these were to replace broken items or damaged items, 

14 and he intended to use them as they were and didn't want to 

15 wait. That was the issue, the waiting time. 

16 As I recall, it was six weeks a system, although 

17 they could do several at once, to modify the radar systems 

18 at Letterkenny after receipt of shipment. 

19 Q Let me ask you a question about the pricing on the 

20 HAWK repair parts. Did you instruct Chapman and Reyer to 

21 follow the standard price on all parts with the idea of 
2 2 being that neither the Army nor DLA lost money? 

23 A Yes, sir, I did. As a matter of fact, that was my 

24 general guidance to both MICOM levels, and we let them 

25 manage. The data fed up through their lower commands to the 



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major headquarters, and then we went over and picked up the 
prices that they provided to us. 

Q And you paid the prices the commands gave you, 

A Yes, sir. But when we say "we paid," we preferred 
fund certification in a message that I wrote myself in April 
that certified to the commands every penny, and we provided 
specific fund cites. 

I do know that at the time I left, we had not been 
billed. I am further aware that even when I came back to 
first testify to the FBI, that we had not yet got a bill 
from either of the Commodity Commands for the items shipped 
on Project Crocus. 

Q On Crocus, dic^^^^^^^^^Htell you to wait until 
everything was priced out before he sought to get the funds? 

A Yes, sir. I might mention that in the early days 
of this project^^^^^lwas keeping up with me. I was also 

to him,^^^^^^^^^^^^^^H about the 
environment every day where some times are not on the shelf, 
some substitute, some hire assemblies. 

He said, I'm not even going to go for it. He 
said, I'm just going to flat tell the people I'm dealing 
with, ^^^^^^^^1 and Company, that we're not ready to take 
delivery on this until you get more concrete on where we 
are. It was kind of at the point where I had items 
prepositioned at Redstone Arsenal ,^^^^^^^^^^H and at the 



UNCLASSIFIEO 



702 



UNCLASSIFIED 



154 



1 DLA Depots, and we had counted items and priced them that 

2 then we got pretty close on the price. 

3 He did bring to me before we made the shipments 

4 the funding authorization for all the money that I had asked 

5 him for, plus about 3.5 percent of the gross total to cover 

6 a statutory Army requirement which covers packing, crating, 

7 and handling costs, which he objected to paying, but he paid 

8 anyway. So he provided us early on, and it is no fault of 

9 the Agency that the bill had not been paid by November. 

10 Q Did you ever have a discussion with Tom Taylor of 

11 the General Counsel's office regarding Project Crocus and 

12 the amount of money involved, and Congressional 

13 notification? 

14 A Sir, I'm sure that we did. 

15 Q I believe what you told us in April was that Tom 

16 Taylor told you that because the amount involved was greater 

17 than $4 million, then the Congressional notification issue 

18 that had been discussed on Snowball would also be operative 

19 with regard to Crocus. 

20 A Yes, sir, that is what I recall I told you. 

21 Q And do you remember talking to^^^^^^^^^^Blf about 

23 A Yes, sir. The modus operandi^^^^^^^^^^His that 

2 4 Crocus was going to be handled^^^^^^^^^^Hthe same way 

2 5 Snowball was. 



UNCLASSIFIED 



703 



UNCIASSIHE 



155 



1 Q «nd do you know if Gen. Russo again raised the 

2 issue with Gen. Powell? 

3 A Sir, as I recall, he did do that. Except that by 

4 this time, or right in the time when I'm a little fuzzy, 

5 Gen. Powell was getting ready to leave and Admiral Jones 

6 took over, and he may have discussed this with Admiral 

7 Jones. I know he went up to speak to the aid to SECDEF. 

8 Q The military assistant? 

9 A Yes, sir. 

10 Q and the word came back that the Economy Act 

11 governed these transactions, and the customer would notify 

12 the Congress? 

13 A Yes, sir, that was true. 

14 Q The customer here, the recipient agency being the 

15 CIA? 

16 A Yes, sir, that is true. And that did come back 

17 from the military assistant to the Secretary. 

18 Q Let me ask you what your reaction would have been 

19 if you had known that the ultimate destination of the HAWK 

20 repair parts was Iran? 

21 A Sir, as I told you on earlier missions, because of 
my with^^^^^^^^^^^^^^l and the people we were 

23 trying to arrest that were selling things to Iran, I would 

24 have — I am convinced that if Tom Taylor and the General 
2 5 Counsel had known that, he was very, very careful about 



UNCLASSIFIED 



704 



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guarding the interests of the Army and me. 




and I feel strongly 
that the minute that he would have )cnown about it, he would 
have been the first guy besides Gen. Russo that I would have 
told. And I feel that, had Tom Taylor )cnown that, that the 
course of events would have been different. 

Q Let's go back to the issue of readiness and ask 
you whether there was any depletion that would have been the 
result of meeting the requirement on HAWK repair parts, 
total depletion from their inventories? 

A Yes, sir. Some number of items that the Agency 
asked us for were not only in very low balance, but they had 
asked for a very low number. And again, when I met with 
Gen. Russo, John Chapman at MI COM had estimated they were 
trying to re fit^^^^^^H systems. 

Let's take the example of ^^^^^^^^^^^^^^H one 
of the items I recall that they asked for. This was an item 
you had to have to fire the missile system successfully. So 
then we had to make a decision, if we didn't give it to 
them, where are they going to be able to fire it? And 
obviously there wasn't any point then in giving them a whole 
host of items for "a" system, if they wouldn't give them the 



UNCLASSIFIED 



705 



UNCIA^IFIED 



157 



1 one thing that they had to have to operate it. 

2 So criticality did drive both what we were willing 

3 to support and what we didn't give them. We did cut down 

4 some critical items that were necessary not to deplete the 

5 entire stock, but it was a very complex matter. We did 

6 reduce the stock we provided on many items. 

7 On some, as we discussed in April, after we 

8 reduced the number we were going to give them, after an 

9 appeal on their part, we raised some of them back up 

10 somewhat. 

11 Q That was the appeal b^ 

12 A Yes, when he appealed. We didn't do that on all 

13 of them. On some of them we were just flat out that we 

14 wouldn't do that. 

15 Q And were there some items that| 

16 did not take because th^y were more expensive than the 

17 initially requestc „em? 

18 A Yes, Sii., any number of items. That was driven by 

19 the fact that he did identify to me, after we had done all 

20 his work and we had priced out the stuff, he'd come back 

21 with a list for me one day which should also be in my 

22 records, his working list, where he had chopped off the 

23 quantities I had offered and provided a reduced quantity. 

I said|H^^^^^^^^^^^^^^^^^^^^^^^^B I 




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1 telling me to change again. I was having visions of the 

2 same sort of snarl in Snowball. He said, Chris, it's 

3 simple. I have a flat fixed budget on this and, he said, we 

4 have to stay within the total dollars that I had when I 

5 started. And, he said, I have a few more dollars than the 

6 total package when I started, he said, but as prices have 

7 gone up and down on the replacements and the subassemblies, 

8 he said, I've had to alter the quantities. 

9 Q So it was your understanding that he had an 

10 absolute ceiling of money? 

11 A Yes, sir. It was very clear on this particular 

12 project. 

13 Q And I believe you told us in April that when the 

14 amount got up to over $4.1 million, he started getting 

15 excited? 

16 A Yes, sir, that is true. 

17 Q So would you take it that that was the amount of 

18 money that he had? That was the ceiling? 

19 A Sir, knowing how those folks worked, he might have 

20 had another $15,000 to $50,000, but I doubt he would have 

21 had any more than that. They normally when they were 

22 estimating Army support knew that our incremental costs were 
2 3 unpredictable, and they would normally add a certain 

24 percentage to account for variability. 

25 Q I'm not sure if I asked this before. I do 
il 



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understand that you told us that the price list, or the list 
of items that^^^^^^^^^Hinitially gave you came from 
overseas. Did you ever ask^^^^^^^^^^^^J overseas? Or who 
prepared it? 

A Yes, sir. That issue surfaced early on in the 
first few days of the Crocus Mission, because we couldn't 
read some of the items. It tooks hours and hours and hours 
that really the Taxpayer paid for, I say that because 
whether the Agency paid us or MICOM paid us, John Chapman 
who's an engineer and his assistant Bill Reyer are both 
engineers. These are highcut individuals who spent many 
hours deciphering through detective work this list. 




708 



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^aJ/BV Ja) 



UNGIASSIHED 



709 




The other issue was that I had never heard the 
White House's name mentioned in the three years I had been 
at DSLOG as controlling the decision on funding on a 
project. 




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Did you ever get into the issue wit^ 

about how the Agency was going to price these 
items once they left the Agency?_ 
A No, sir. 




Q So just for the record, no one ever told you that 
the White House was going to take the HAWK parts, for 
example, and simply multiply by 3.7 to come up with the 
figure that they would use for the pricing? 

A No, sir, I am not. I am certainly aware of it 
now, having read the papers and watched the news, but at the 
time it would not have entered my head. That was one item 
that did not, that they were going to resell the stuff. 
That was not their basis of operation. 

Q And to close the loop on the HAWK repair parts, 
they were transferred to "kelly Air Force Base? Is that 
correct? 

A Yes, sir. All of them were, initially. 

Q And then they were transported tc 

A By truck, yes, sir. 

Q And did you ever get a call from^^^^^^^^H saying 



UNCLASSIFIED 




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1 that everything had gone fine and they had lifted off? 

2 A Yes, sir, I did. 

3 Q Now let me ask you about — 

4 KR. KREUZER: Can I? 

5 MR. SAXON: Sure. ^-— _-«-. 

6 MR. KREUZER: Again on this call froni^^^^^^B when 

7 did he call you? 

8 THE WITNESS: Sir, without my notes--it's been 

9 enough months now--I would just have to tell you that 

10 generically based on the date that we executed this mission, 

11 we had two days, which we actually took about three-and-a- 

12 half when we were all said and done — even at the end, 

13 Murphy's law worked against us a little, and even with the 

14 prepositioning we still had eight different locations, seven 

15 at DLA and Redstone to deal with, and there were still, as 

16 we counted, a few items that didn't get to the assembly 

17 point. So it took us until about the end of the fourth day 

18 to get it all assembled atl 

19 And whatever day that was from — and I have a 

20 message in ray records, John, that you could look at that 

21 gave the execute date and time. I don't remember what the 

22 date is, but it's called "Support of Project Crocus." That 

23 was the same message that certified the funds, and it also 

24 listed everything we were asking for. The prices that are 
2 5 in that message are the prices that have been fed up to us. 



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4 

5 

6 

7 

8 

9 

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IX 

12 

13 

14 

15 

16 

17 

18 

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UNCLASSIFIED 



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It was about three days after that, Roger, that we 
got a call fromH^^^^^^^^^Hto tell us that everything 
had gone successfully. He declined to tell me how they had 
left. 

Once again I think, just in the news that has been 
made available to me as I've watched the testimony, it would 
appear as though I didn't get the whole story on how they 
left^^^^^^^^^^H because I was told that we were not using 
Defense assets, and that appears not to have been the case. 
BY MR. SAXON: (Resuming) 
Q Let me ask you about the HAWK radars. I believe 
you told us in April that the ANMPQ-48, the two rad ars t hat 
were requested on this initial list, werel 

^^^^^^^^^^^^^^^^^ Is that correct? 
A Yes, sir. 




Q And what was the price of one of those radars per 
item? 

A Sir, as I recall on the old one, and there's two 
different numbers that come to me months later, one is 
ANMPQ-46. I think the 46 was the earlier version, the Pre- 
Phase II PIP configured radar, and that the 48 was the later 



25 version. 



UNCUmiFIED 



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UNCLASSIHED 



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The older version was about $3.6 million a copy, 
as I remember. I can tell you almost anything you want. 
That was a very interesting saga as we went through that. 

Q AS I understand, the radars were not on the 
initial list itself. Is that correct? 

A No, sir, they were not at all. 

|^^H|^^^^HI|^^^HPsaid he to 
in essence, $7 million worth of radars. Is that right? 

A Yes. And I was benefited by two pieces of advice. 
I went up to seek advice from my old friend Tom Taylor. I 
said, Tom, tell me about this. And he said, Chris, for that 
amount of money, he says, you can't consider that part of 
the same request. He said, we've turned repair parts into 
multi-million dollar end items. He said, I think you need 
to tell Gen. Russo that this ought to be a separate request, 
so I want down to see Gen. Russo. He said, you 
|||^^l|H|HHHBtell that a request. 

And, he said, frankly--and Gen. Russo and I are both short 
now, both of us are leaving within a few weeks. Jyaj|^ 
[that needs ■ c ome ov _h r ough tht 
That's What we told||||||||||||msend 
put it on the piece of letterhead. 

Q As a traditional request through thel 






traditional reqxiest. And that's what Gen. 



traditional request. A 



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UNCUSSIFIED 



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1 Russo advised me. I called^^^^^^^^Hand told him that. 

2 He didn't have any problem with that. He said, fine. The 

3 next question was, go get some. 

4 Q He asked you if any were available? 

5 A And we found out very quickly that there were only 

6 two in the entire Army inventory stored at Letterkenny, the 

7 property of the Iranian Government, kind of up on blocks in 

8 cold storage so to speak for about seven or eight years. 

9 Q These were the ones that were part of the assets? 

10 A That were frozen at the time that Jimmy Carter 

11 froze Iranian-owned assets in the United States. 

12 Q And who told you that? Mr. Chapman? 

13 A John Chapman did. And it wasn't very long after 

14 that until he told me that it also took — he said, Chris, he 

15 said, you can't just tell me you want these radars. He 

16 said, there's a whole host of players involved. He said, 

17 you're going to have to get Treasury, State, and the White 

18 House. 

19 He said he didn't know all the names but I 

20 believe, John, that he gave me the name. It could have been 
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^Hin the 

22 the Judge Advocate General. One of those two gentlemen 

23 within a day or two had given me the names of the key 

24 players, and I had all of them. 

25 There were three different DoD offices, as well as 




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1 the Treasury Department, the State Department, and the White 

2 House. 

3 Q Was the Defense Security Assistance Agency also 

4 involved? 

5 A Yes, it was; the Director was; but there were 

6 other DoD offices, as well as that. I want to say that two 

7 critical names ring a bell: Diane Blondell and Sally 

8 Cummings, but I don't remember which place they were 

9 anymore. 

10 Q I believe Sally Cummings was at Treasury, and 

11 Diana Blondell was at DSAA. 

12 A Okay. There was another gal, though, that was a 

13 main player in this. That was the gal with the State 

14 Department. Anyway, I talked to the gal at the State 

15 Department. 

16 Q After you got these names either from Chapman or 

17 from Bathan you began to make your calls? 

18 A Yes. I called the gal at the State Department, 

19 and I also talked to two of the different people in the DoD 
2 agencies. I talked to somebody at the Defense Security 

21 Assistance Agency, and there was another office, and 1 want 

22 to say Office of Technology Transfer was the DoD level 

23 office that I talked with the Lieutenant Colonel in. 

24 He told me that he personally didn't have any 

25 trouble at all, but that he needed to know where they were 



wm\m 



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UNCLASSIFIED 



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1 going. Again, the Office of Technology Transfer, he says 

2 they sure aren't going to go back to Iran. That's what the 

3 guy in the Office of Technology Transfer told me. He said, 

4 we don't ever have any intention of giving these back. He 

5 said, I don't have any problem releasing them, but we need 

6 to run an interagency staff paper. The gal at the State 

7 Department told me the same thing. 

8 She also told me that day she was against 

9 releasing them, she said, because they were in the middle of 

10 negotiations with the Hague right then and there with Iran 

11 on release of all these assets and reparations. So she 

12 said, for the record I'm against it, she said, but I'm 

13 willing, she said, if the White House is going to support 

14 it, to be behind you. 

15 And, she said, what we need to do is have all us 

16 sit at a big table in one room — she says, we can do it over 

17 here in my office — and she said she knew these other 

18 players. All these names of these people were all connected 

19 together. They all knew each other. 

20 Q And this is Blondell you're talking about? 

21 A Hell, the gal at the State Department. I think 

22 that Diane was at the State Department, as I recall. She 

23 may have been at one of these. But the gal who was at the 

24 State Department, knew all the other players, was willing to 

25 help me run an interagency staff action so I didn't have to 



UNCtftSSlFIED 



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UNCUS5IFIE0 



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1 run all over the City. That is, we would sit all the 

2 players at one table and come up with a position paper where 

3 everybody would chop on it and I could take it away with me. 

4 To my consternation, about a day later Gen. Russo 

5 called me up and said he had had a call f ron^^^^^^^^| to 

6 complain about my doings. This was the first complaint I 

7 had ever had from Gen. Russo in three years. 

8 Q Now had you contacted ^^^^f^^^^H before you 

9 started making these calls to tell them what you were going 

10 to do? 

11 A After I had found out that they were available, I 

12 told^^^^^^Ha lot of work needed to be done to get them 

13 released. He told me to go ahead with that. I hadn't given 

14 him any details of it. He just said, well, go ahead and get 

15 ready to do that. 

16 Q As you understood it at the time, you were doing 

17 what was necessary to execute-- 

18 A Absolutely. And at ^^^^^^|request . 

19 Q So Gen. Russo called up to say thatj 

20 complained? 

A ^^^^^^^^^^^^^they were Iranian-owned. The 

22 radars are Iranian owned. I told him that there were a lot 

2 3 of people that needed to get involved to get them released. 

24 He said, go ahead and get that d one. 

25 The next thing I knew ,^^^^^^^H had called Gen. 




IT 



718 



UNCIASSIREO 



173 



1 Russo about my conduct and said the word had gotten back to 

2 him to the Agency that I was muddling around in this 

3 throughout the government, and to cease and desist 

4 immediately, and who in the hell gave me authority to do 

5 that? 

6 So I was a little bit concerned, and I told Gen. 

7 Russo was I was working ^^^^^^^^^| and I hadn't had any 

8 complaints from him. He knew that they were Iranian owned. 

9 So anyway, we ceased and desiste d for just a very few days. 

few days later, ^^^^^^^^^^^^^^^^^^^Hs ays, 

11 on the radars. He said, we need to get them inspected to 

12 see if they work. 

13 You can imagine how I felt, but I said we'll go. 

14 And John Chapman, in about two days, gave me an estimate of 

15 the dollars it took to get them inspected. That was one of 

16 the pieces of paper, John, that we did get from^^^^^^^H 

17 ^^^^^^^^^^1 was funding to go and inspect and fix some 

18 parts on the radar. There were some small parts that John 

19 Chapman felt would have deteriorated in the eight years. 

20 Q Let me back up a moment before we get to the 

21 testing of the radars and so forth. Do you recall your 

2 2 reaction when Chapman first told you that these radars, the 

2 3 two that were frozen assets, belonged to Iran? 

24 A Do I recall my reaction? I may have told you back 

25 in April, and I'm not sure anymore, I certainly was 



mmmiB 



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surprised. If you want to lead the witness a little bit, 
I'll help you lead me. I'd say that at that point there 
were glimmerings of wondering. 

I knew that we had a country that didn't want to 
participate in the modernization program. We had a list 
that we couldn't get to the customer on. I would have 
started narrowing my choices at that point, if somebody had 
asked me. To tell you the truth, the times were so busy I 
didn't have much time to do much idle thinking and 
speculation. 

Q Well, after^^^^^fcalled Russo, and Gen. Russo 

passed along his displeasure that you were checking around 
town, you communicated that back toj 

A Oh, he and I had a pretty frank one-on-one. 




I told him what I thought about all 
this. I said, fella, when you tell me you want something 
and you want me to go after it, I said, somebody in these 
places is a blabbermouth and, I said, I feel kind of at a 
disadvantage. 

I said, if you hadn't wanted me to go do it, I 
said, you should have told me that when I told you that I 
needed to get a lot of parties involved. 

Q And was it at that point that he told you just to 
kill it? 



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1 A He told me to kill it, and don't talk to another 

2 soul about it was the guidance at that time. 

3 Q So at that point you assumed that the radar issue 

4 was dead? 

5 A I did. 

6 Q Now a couple of days later, about four days later, 

7 you say he called you back? 

8 A He surfaces right back up again. 

9 Q And then he wanted two post-Phase II radars, I 

10 believe? 

11 A That was the next project. This caused great 

12 consternation and anger down at MICOM. I've got two 

13 engineers now that have worked literally hundreds of hours 

14 over a period of several months with me trying to do their 

15 damnedest. They've really pulled out every stop doing an 

16 outstanding job. 

17 John Chapman says, Chris, what in the hell do you 

18 want two post-Phase II configured radars for? He said, 

19 surely they can't work with any of these systems you've got. 

20 He said, are these going to the same country? 

21 I called^^^^^^^^fto ask him that. He said, I'm 
2 2 not going to address that. He said, treat this as a 

23 separate request. Of course, on its face it looked like all 

24 part of the same project. I'm going right to the same guys, 

25 the same time frame, same office of DA. John was really 



m\mi\m 



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1 mad. He went around and he found a couple of post-Phase II 

2 configured radars. One of them, as I recall, was being 

3 modernized for the Marine Corps, and we were going to give 

4 them a brand-new one off the manufacturer's assembly line 

5 and take the one that was being modernized. 

6 That was one of the two. I think we had one in 

7 stock. 

8 Q When you asked ^^^^^^H whether these were for the 

9 same customer-- 

10 A He just said, I'm not going to answer that. He 

11 never said they weren't. He just said, I'm not going to 

12 answer that. He never said they weren't; he just said, I'm 

13 not going to answer that. 

14 Q When he asked you about the two Post-Phase II 

15 radars, did you communicate that to Gen. Russo? 

16 A Yes. And Gen. Russo I think had the same concerns 

17 I did. He said, it didn't make any sense. He said all 

18 these so long had been 100 percent consistent; they didn't 

19 want anything to do with Post-Phase II configured items, and 

20 all of a sudden when we told them something Pre-Phase II 

21 wasn't available. 

22 And then we went a few more days after this 

2 3 scenario, John, and we dropped that issue, and we went right 

2 4 back to the Pre-Phase II configured radars. 
25 Q On the testing issue? 



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1 A Yes. We told them — one of the things I'm not sure 

^^^^^^^^^^^^^^^H knew, since he's an engineer or a 

3 HAWK person, is we told them there was no way to use any 

4 part of that Pre-Phase or Post-Phase II system with the old 

5 systems. I said, the electronics are completely useless if 

6 you have the old system. I said, it's not usable. And I'm 

7 not sure he understood that when he first came to us asking 

8 for that as an alternative. 

9 Q On the testing did you indicate that you would 

10 need certification of funds in order to go forward? 

11 A Yes, sir, I did. 

12 Q And that was provided? 

13 A And those were provided. And we did go forward 

14 and test them, and they were found out to be usable with 

15 only minor repairs required, less than a few thousand 

16 dollars. 

17 Q And the amount of money for the testing, I 

18 believe, was $24,000? 

19 A Yes, sir. I was going to say just under $25,000. 

20 Q Now I believe you indicated when you were making 

21 your calls around on the Pre-Phase II radars you talked to 

22 someone in the DoD Technology Transfer Office? 

23 A Yes. It's called the Office of Technology 

24 Transfer, sir. 

25 Q And he told you that it didn't matter what 



UNCL-ftSSIFI[D 



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1 negotiations were going on in the Hague, we weren't going to 

2 provide this to Iran. Did he say why? 

3 A Well, okay. By the time I talked to that Colonel, 

4 I knew that the State Department was against giving them up, 

5 period. They didn't want them taken out of the inventory. 

6 What the State Department gal told me was they were going to 

7 pay Iran for those things. There wasn't any thoughts on her 

8 part, either, to give up the radars to Iran. She didn't 

9 want the negotiations, which she said had reached a very 

10 delicate stage, to be disrupted. 

11 The Colonel said, I don't really give a rat's ass 

12 about the negotiations — I'm quoting him — he said, because 

13 we're never going to give those back to Iran. He said, as 

14 far as I'm concerned, if you give the money to the Treasury 

15 Department — there was an office over there that was kind of 

16 their representative to put money in for the reparations 

17 account — he said, as long as that money is in there, before 

18 those radars leave Letterkenny, he said, I don't have any 

19 problem with that. 

20 He also reiterated that the State Department and 

21 other DoD offices, including DSAA, the Defense Security 

22 Assistance Agency, needed to all be players. He said he 

23 felt that Mr. Weinberger's representative also would want to 

24 have a part in it, meaning somebody out of Mr. Weinberger's 

25 own office. 



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1 And he also, I think he also said the DUSD policy, 

2 and this is Deputy Under Secretary of Defense policy. 

3 Q When you were talking to the Colonel in the Office 

4 of Technology Transfer, you told us in April he said we 

5 weren't going to give them to Iran because they were our 

6 enemy? Is that right? 

7 A That, plus he said under the Arms Export Control 

8 Act — once again, I was very familiar with this Act; the 

9 Colonel was, too--under that Act, we weren't giving anything 

10 to Iran. Now we're here prosecuting people right and left 

11 in the Federal Courts for selling stuff to Iran. They were 

12 considered an enemy, and that was considered high 

13 technology, and that fell under the rules. The Colonel was 

14 very clear on that. That was stuff we didn't give 

15 nonfriendly countries. 

16 Q Do you recall Diana Blondell at DSSA telling you 

17 that if she was going to go forward in processing this 

18 request, that you'd have to get a letter from President 

19 Reagan? 

20 A As a matter of fact, I think that is what Diana 

21 told me. Different people that I h ad talked to around town 

22 had different views. When I called^^^^^Hand told him I 

23 would be happy to take care of that, I had no problem in 

24 picking up the phone and calling the White House^^ I^ had 

25 talked to other people over there in the past! 



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1 ^^^^_,^ 

2 I said, I will be happy to go and deal with 

3 the — because the Colonel knew who to call at the White 

4 House. The guy up in the Office of Technology Transfer, I 

5 was talking to all these people. Kind of it was a fluid 

6 sit. You know, I was calling one person, calling another 

7 one back. 

8 And when Diane did tell me that and I surfaced it 

9 ^^^^^^^^^H and just told him that I needed that, I said 

10 can we get that, or do you want me to go for it and get it? 

11 And that caused great consternation, too. He said, don't 

12 talk to anybody at the White House. Because I told him that 

13 I had somebody that would do it for us. And again, I 

14 thought he was interested in speed and accomplishing the 

15 mission. I'd heard the White House mentioned all along as 

16 the main party behind supporting the mission. It didn't 

17 seem to me, then, that they'd have any trouble supporting a 

18 piece of paper to come over to DSSA. 

19 But that was where he told me, don't do anything 

20 else on that. He said, we will do all of the required 

21 paperwork, all of the interagency stuff. 

2 2 Q At the time, did you find that curious? 

2 3 A Yes, I did. This was highly unusual. Never in 

24 the past — I had worked on other complicated matters for the 

2 5 Agency that did involve other government agencies, and I had 



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never had any problem going forward with them. Even in 
dealing with principals at other agencies — I would mention 
the Department of Transportation, the FAA, and other — they 
had never had any problem with me doing all the pieces to 
get a job done. That's because I was always doing them for 
Department of Army. J 




That is when they flat asked me to back out. 
Stop. Don't do any more. We will do all the requ ired 
coordination. When it's all f inished,^^^^^^^^Hwe will 
come and tell you to go release the items. 

Q Did Israel have any of our old radars on their 
HAWKS? 

A Sir, Israel was one of the FMS clients. I don't 
know specifically what they had. I would not have 
thought — I'm speculating; MICOM could give you a better 
answer today — I would have thought, being one of the closer 
allies, they would have been one of the first modernized and 
wouldn't have had any old items left. 

There were many countries that were fully 
modernized by the time that John Chapman and I talked. 

Q If they had any of the old radars, it would be 
possible, I guess, for the Agency to request the two new 
radars on the theory — 



yfiStSSSiBEe 



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1 A That would make sense. 

2 Q — that they could provide them to say Israel, and 

3 then Israel could sell the old ones to Iran? 

4 A Yes, sir. That would make sense. But I did not 

5 know any inklings of that at the time. 

6 Q Do you have any knowledge of efforts in late 1985 

7 to replenish Israeli stocks in either TOW missiles or HAWK 

8 missiles, whole systems? 

9 A Sir, I have done some work for Israel, but not on 

10 those two systems myself. And again, if we did any other 

11 work it was not done by our office after Jeff Stevens 

12 retired. 

13 Q Now I asked you from the outset about the issue of 

14 low-balling on price, and you answered no. Is it safe to 

15 say that the Agency on both the TOWs and the HAWKs wanted 

16 the lowest price possible? 

17 A Yes, sir. I am convinced of that. 

18 Q And do you think that on both, or on just the 

19 HAWKs, they had an absolute ceiling? 

20 A Sir, 1 didn't get the impression on the TOWs that 

21 there was an absolute ceiling, only because that I went back 

22 to get additional money and we got it even thoug h there was 

23 a lot of whining and sniveling. On the HAWKs^ 

24 was adamant at the outset that we were going to have to live 

25 within a fixed budgs 




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1 Q And it is quite clear from your testimony, I 

2 guess, that they wanted no substitutions with the TOW 

3 missiles to upgrade them to the ITOW? 

4 A That is true, sir. They didn't--well,| 

5 ^^^^^^^^^^^^^^ said one thing that will impact here. He 

6 said, we don't need anything more than that to meet the 

7 threat that we have. That was the reason for not needing 

8 anything bigger than that. 

9 Q At any time in your activities with Snowball and 

10 Crocus, did you have any dealings with the NSC? 

11 A No, sir, I did not. 

12 Q You do recall, however, ^^^^^^^^^^Hmentioned NSC 

13 a couple of times? 

14 A Yes, sir, I did. 

15 Q Did anyone else mention the NSC with whom you were 

16 dealing? 

A ^^^^^^^^^^^^^^Hmay 

18 Q Did Ms. Crawford or anyone in the General 

19 Counsel's Office have any input on pricing decisions? 

20 A Okay, anyone in the General Counsel's Office? Tom 

21 Taylor had the only input, and that was to advise Gen. Rasso 

22 that the Economy Act was the proper basis, as far as he was 

23 concerned. And that was true based on historical work, as 

24 WTll as the standard legal advice that had been provided to 

25 us for a long time. 



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The other fellow that had some input on the 
tricing w as| 

He too had been involved in reviewing many, many 
of the Agency's funding practices and had met extensively 
with their Office of the General Counsel. 

I believe^^^^^Hand 1 talked one or more times 
on pricing issues on these two projects, but it was only 
from the standpoint of was the Economy Act the propose 
basis? I think I was concerned because of the size of the 
project. These were multi-million dollar projects, not a 
little project. 

Q Let me ask you about the computer system used by 
MICOM and Anniston Army Depot. First in a general way. Do 
you have any knowledge about that system that they use? 

A Sir, I have to tell you I know nothing about it at 
all. 

Q Do you know that they have the same computer 
system, and that the MICOM system at Redstone feeds the one 
at Anniston? 

A Sir, I didn't know that. 

Q Then you wouldn't know that they essentially 
should have the same data in each? 

A No, but it sounds logical. 

Q Let me ask a specific question about readiness 
impact and depletion on the HAWK repair parts. I really 

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1 want you to help educate me here as to when — I have in mind 

2 a particular snapshot as to the readiness data. We have 

3 been told that at one point as the HAWK repair part issue 

4 was being worked, the data showed that if we met the 

5 requirement of 1034 line items in its entirety, that there 

6 would be significant depletion with regard to 43 items; that 

7 on 15 of the items there would be complete and total 

8 depletion from the existing inventories; and on 11 of the 

9 items it would be greater than 50 percent depletion — 

10 A Those are my notes, sir, and that is true. 

11 Q — and that on 20 of the items, it would not be 50 

12 percent, but would still be called significant enough to be 

13 classified as "significant depletion"? 

14 A Yes, sir. Those are notes that I prepared for 

15 Gen. Russo based on help from John Chapman at MICOM. 

16 Q Okay. Do you recall when those figures were in 

17 front of you, and when in the decision process these figures 

18 existed? 

19 A Well, they were in front of me before we put the 

20 final package together. 

21 Q If you can understand what I'm trying to ask, I 

22 understand that readiness data is a rolling set of figures, 
2 3 and that if you look at one set on one day, as items are 

24 used, as items come out of the pipeline, as items are 

25 relocated, the figures will change the next day, and even 




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the next day, and so forth. 

So let me ask it this way: At the point at which 
the decision was made to actually go forward and meet the 
requirement on HAWKs, what is your recollection as to 
depletion of items from the data you have in front of you, 
and that Gen. Russo had in front of him? 

A Without looking at the paperwork that I prepared 
in the matrix, which I kept all of that and I guess you have 
seen all of it. Gen. Russo's main concern was, was this 
going to have a major impact on U.S. Armed Forces? 

As I recall, the answer back from John Chapman was 
that it would have a minimal impact on U.S. Armed Forces 
because, he said, the parts lost would mainly afl 

that ^^^ 

^^ said we could have all 
those parts back in inventory. 

John Chapman was not greatly concerned about 
giving up many of the items, he said, because as he finished 
his modernization program, he said, we wouldn't be stocking 
any more of many of those items. And, he said, some of them 
if he could get the items modernized before the request came 
in, he said, then it is a moot point. 

Again, the whole idea of the modernization is to 
eliminate that expensive duplication of inventories. 

Q Was it his sense that there would have been some 




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1 impact on readiness, though, with regard to our FMS 

2 customers and availability? 

3 A Yes, there was. John felt that there would be. 

4 The final decision at the end that I participated in was 

5 that we were going to support this mission. 

6 Q And for the record, these FMS customers would be 

7 our allies and people we had chosen to sell to. 

8 A Sir, that is true. 

9 Q Do you have any idea? Did you ever provide any 

10 data as to which countries, and the extent of the impact? 

11 A No, sir. 

12 Q Would John Chapman have had that in front of him? 

13 A He should have had it handy, but keep in mind, 

14 John, on some of these items — let's say the 15 where we ran 

15 them down — he might have only got one request in every year- 

16 and-a-half. Some of the items were very low usage. Some of 

17 them cost $100,000 apiece. It was one that would wear out 

18 only through gross accident. 

19 There was one he had that might not ever have been 

20 requested in the next 12 months. So there was some, as you 

21 said, on the picture window look, the readiness issue was 

22 one of a lot of "ifs." If one broke somewhere in the world, 
2 3 one customer may have. His average demand had shown on many 

24 of those critical items that there was very low usage. 

25 Some of the items, too, that we ran down to zero 

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he was going to replete the inventory on in a very short 
period of time. That is, he was going to replenish it. So 
we worked a very tough set of decision processes. I think 
the major concern was the impact on the Army, and that was 
the driving factor in that there was determined to be no 
real impact on the Army. 

Q I understand that you did not go through thel 
Ion Snowball or Crocus, so you did not dea] 
At any point as you were working these requirements, 
did anybody think to ask whether the Joint Chiefs knew 
anything about this operation, or had approved it? 

asked^^^^^^^^^^^^^^ Vou know, I guess the 
first concern was that when I was dealing with the Defense 
Logistics Agency — that's a DoD-level agency — I felt 
uncomfortable about leavir 






I was instructedb^^^^^^^^^^Babsolutely not to 
deal with anybody in^^^^^^^^^^l And that was not even 
available for negotiation. Just "don't do it, at all." 

Q For the record, do you have any idea when the 
Chairman of the Joint Chiefs became aware that we were 
shipping these TOW missiles to Iran? 

A No, sir, I don't. When I left in June, if you had 
asked me at that time, I would have said that I'm not even 
aware that he is aware of it. Again, the list in the 



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1 Defense Department that I knew about was so small you could 

2 have fit it on half a piece of paper in terms of everybody 

3 that I knew that was involved. 

4 Q For the record, when you left in June he didn't 

5 know about it. 

6 A Okay. That's what I would have told you if you'd 

7 asked me, and I didn't think you did. 

8 Q When these matters became public, who within DoD 

9 did you talk to, or were you asked to brief, of whatever? 

10 A The fellow that called me was the aide to Gen. 

11 Kicklighter, and he called me at home. 

12 Q And who is Gen. Kicklighter? 

13 A He is currently Gen. Russo's successor. The's the 

14 Assistant Deputy Chief of Staff for Logistics, and 

15 designated as the new Director of the Army Staff. 

16 Q And did you ever speak to Richard Armitage, the 

17 Assistant Secretary of Defense? 

18 A No, sir, I did not. I have never spoken to him in 

19 my entire career. 

20 Q I believe you told us in April that you were later 

21 seen by agents of the FBI, and the investigators conducting 

22 the Inspector General's investigation? 

23 A That is true; yes, sir. 

24 Q Did you testify before the Tower Commission Board? 

25 A No, sir, I did not. 



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1 Q And were you met with by the Tower Commission 

2 staff? 

3 A No, sir, I did not. 

4 Q Have you thus far met with anyone from the 

5 Independent Counsel's office? 

6 A No, sir, I have not. 

7 Q At any point as you have gone through the phase 

8 after these matters became public, has anyone asked you in 

9 any way to change or alter your testimony, or change or 

10 destroy any records or notes? 

11 A No, sir. I think it is very important to 

12 reiterate what Gen. Russo and Gen. Kicklighter told me that 

13 first day in late November when I arrived here. They said, 

14 we want you to tell the story exactly like you remember it. 

15 And, they said, do your very best to help all those 

16 involved. Don't hold anything back. 

17 That was the advice that Kicklighter and Russo 

18 gave to me, and it has never changed. No Army person that I 

19 have dealt with has asked me to alter anything. 

20 MR. SAXON: I think those are all the questions 

21 I'v« got. 

22 Do you have anything further? 

23 MR. KREUZER: No. 

24 MR. SAXON: Let me say for the record to you, 

25 Major, that we appreciate your being here. The record 



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1 should show that Maj . Simpson is appearing voluntarily. We 

2 have spent a great amount of time with him in the previous 

3 interview, and a good bit of time today; and that you came 

4 today on fairly short notice. So we want to thank you for 

5 your cooperation with the Congressional investigations that 

6 have resulted from all this. 

7 We appreciate your candor and your forthrightness, 

8 and we simply wish for the record that everyone we have 

9 talked with had had the same spirit of cooperation with us 
10' and, likewibfc , exhibited the same degree of professionalism 

11 in working through these matters. 

12 Thank you, very much. 

13 THE WITNESS: John, I appreciate those comments. 

14 THE REPORTER: Will he be signing his testimony? 

15 [Discussion off the record.] 

16 THE WITNESS: I don't need to sign it. 

17 [Whereupon, at 1:45 p.m., the signature of the 

18 witness having been waived, the witness being present and 

19 consenting thereto, the deposition of Christopher Simpson 

20 was concluded.] 

21 * * * 
22 



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TRANSCRIPT 
OF PROCEEDINGS 



'united" STATES SENATE 

SELECT COMMITTEE ON 

SECRET MILITARY ASSISTANCE TO 

IRAN And THE NICARAGUAN OPPOSITION 



-iW4 



/87 



DEPOSITION OF MAJOR CHRISTOPHER SIMPSON 



UNCLASSIRED 



Washington, D. C. 
Wednesday, September 9, 1987 



PaitiaHy 



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try O. SMo. National Security Counc 800-336-6646 



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UHGkASSlEO 

UNITED STATES SENATE 

SELECT COMMITTEE ON 

SECRET MILITARY ASSISTANCE TO 

IRAN AND THE NICARAGUAN OPPOSITION 

DEPOSITION OF MAJOR CHRISTOPHER SIMPSON 

Washington, D. C. 

Wednesday, September 9, 1987 

Deposition of MAJOR CHRISTOPHER SIMPSON, called for 

examination at the offices Senate Select Committee, Suite 901, 

the Hart Senate Office Building, at 2:15 p.m. before DAVID L. 

HOFFMAN, a Notary Public within and for the District of Columbia, 

when were present on behalf of the respective parties: 

ROBERT W. GENZMAN, ESQ. 
Associate Minority Counsel 
JOSEPH P. SABA, ESQ. 
Associate Majority Counsel 

United States House of 

Representatives Select 

Committee to Investigative 

Covert Arms Transactions With Iran. 

JOHN SAXON, ESQ. 
Associate Counsel 
United States Senate 

Select Committee on Secret 

Military Assistance to Iran 

and the Nicaraguan Opposition. 

ROBERT J. WINCHESTER, ESQ. 
COL. JOHN K. WALLACE, III, ESQ. 
Office of the Secretary 
U.S. Army 



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I 

1 'I CONTENTS 

2 I WITNESS EXAMINATION 



Ma]or Christopher Simpson 

by Mr. Saxon 3 

70 
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I by Mr. Genzman 
4 I by Mr. Saxon 



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SIMPSON EXHIBITS IDENT'""-D 



Exhibit 1 



Exhibit 3 
Exhibit 4 
Exhibit 5 
Exhibit 6 
Exhibit 7 



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PROCEEDINGS 
Whereupon, 

CHRISTOPHER SIMPSON 
was called as a witness and, having been first duly sworn, 
was examined and testified as follows: 
EXAMINATION 
BY MR. SAXON: 

Would you state your name for the record, please. 

A My name is Christopher Simpson. 

What IS your current position? 

A My current position is the Finance and Accounting 
Officer for the Fitzsimmons Army Medical Center in Denver, 
Colorado. 

You are, are you not, a United States Army major; 
is that correct? 

A Regular Army major; yes, sir. 

Q Let me say for the record, Major Simpson, that we 
spent a good bit of time with you before. We interviewed 
you earlier this spring. You were deposed by the Joint 
Staffs of the two Committees, so if I make reference to our 
previous sessions or what you told us previously, that is 
what I have reference to. 



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1 'i This is really a continuation of the previous 

2 deposition, so I am not going to go through the record m 

3 terms of your background and all of the particulars, except 

4 :j to say, for any subsequent readers of the record, tnat at 

5 ; the time the Army, in mid-January 1986, received tne tasking 

6 to supply TOW missiles to a customer whom we now Know to be 

7 the CIA, destined ultimately for Iran, you were, I believe 

8 i It is safe to say, the action officer to work that 

9 requirement on behalf of the Deputy Chief of Staff for 
iO Logistics with the Army; is that correct? 

11 A That is correct, sir. 

12 Q You likewise worked a similar follow-on 

13 requirement for Hawk air parts up to a point at which you 

14 left Washington and were transferred to Colorado; is that 

15 correct? 

16 A Almost correct. The project on the Hawks was 

17 essentially finished when I left. There were only a few 

18 straggling little items left, but 97 percent of the project 

19 was completed. 

20 I, Q I think It is safe to say that the record from 
^1 your earlier deposition is pretty complete and detailed 
22 about both the TOW and the Hawk requirements, tne TOW 



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ow 1 I requirement, which you named Project Snowball, the Hawk 

2 requirement, which became known as Project Crocus. So we 

3 are not going to walk through the chronology with regard to 

4 either of those two. 

5 What I am going to do first is focus on some 

6 questions pertaining to the TOWs, dealing with tne pricing 

7 issue. 

8 : As we know now, the price that was established by 

9 the Army £or the basic TOW missile was $3469, which was 

10 arrived at by looking in the Army Master Data File, AMDF, 

11 and seeing a price for the basic TOW of S3169, and there 

12 came a time when the Army learned it was going to be 

13 necessary to outfit the basic TOWs with a safety 

14 modification or missile ordnance inhibitor circuit or MOI, 

15 which was estimated to cost !j300. So we added S3169 and 

16 S30u and got ^3469. 

17 Is that a correct recitation of how that figure 

18 was arrived at? 

19 A On the basic costs. Then we did add in ancillary 

20 costs for shipping, handling and some modification of items. 

21 That is what I refer to, the i)34by, as the price 
^2 that was charged, and I leave otf, for our purposes, for 



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1 , ease of discussion, the ancillary cost. There was also a 

2 price, we now know, m the AMDF, for a basic TOW, with MOIC, 

3 ^ and the Army Missile Command, MICOM, made the determination 

4 after MOICS had begun to be installed, that a new missile 

5 should go into the AMDF with a new national stock numoer and 

6 a new price. T^at price was thought to be $8435 for 

7 whatever reasons it was arrived at, and that was the figure 

8 I that went m the AMDX. 

9 ' So I will refer to the S8435 price as the one 

10 that the AMDF said was to be charged for a basic TOVJ with 

11 MOIC. 

^'^ I run through this explanation, in light of the 

13 fact that this is a follow-on deposition, in the interest of 

14 speeding up, getting to the points we want to cover. 

15 Let me ask you when you first learned that there 

16 was an AMDX price of S8435 for a basic TOW with MOIC? 

■l-^ A Well, I have to tell you that that was discussed 

18 in detail in November with Colonel Lincoln at the DCSLOG's 

19 office. 

20 ■, Q In November of 1986, after these matters became 

1 

il public — 

22 A November '86. 



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bw 1 Is that the first time at which you learned tnere 

2 was an AMDF price in that amount? 

3 A Yes, sir; that is true. 

4 Q From whom did you learn it, or how did you learn 

5 that? 

6 A I ac,tuaily learned it directly from Colonel 

7 Lincoln. Colonel Lincoln had some extensive paperwork with 

8 him up at the DCSLOG's office and was working out of my old 

9 office, which is a very small place about as big as this 
lu room and four people work in it. He and I spent about two 

11 weeks together between about two days before Thanksgiving 

12 and the 6th of December. And there was another colonel 

13 working with us. He's gone now -- but Colonel Wallace, if 

14 you could help me here. You were the fellow who worked 

15 up -- he went out to take command' at the Sharp Army Depot. 
it) he was assigned to the Log Accounts Office for a while. 

17 MR. SAXON: Let's go off the record. 

18 (Discussion of the record.) 

IS THE WITNESS: Colonel Chesnoe was the guy 

20 responsible for gathering all the details, and of course, 

21 Colonel Lincoln was on the phone about every 20 minutes 

22 getting more details to give to Colonel Chesnoe. There were 



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ow la lot of discussions between Colonel Lincoln and I at tine 

2 time. 

3 BY MR. SAXON: 

4 That's when you first became aware of that 

5 figure. 

6 Did Colonel Lincoln indicate to you when he first 

7 became aware of tnat figure? 

8 ' A No, sir, not really. I may have heard, at the 

9 time, in November, but I can't remember it now. 

10 VJhat instructions do you recall naving given 

11 anyone at MICOM with regard to price at the time wnen the 

12 requirement first came down and the pricing determinations 

13 were being made? 

14 A Well, the first time that we discussed price, 

15 Colonel Lincoln and I, was the first Saturday of the 

16 project, the 18th of January. We discussed price because we 

17 were comparing notes to make sure that what I was asking 

18 for, that he understood that he was going to look for, what 

19 I wanted. So of course, I gave him the stock number and a 

20 '' price. He looked it up, and he and I both confirmed that 

21 afternoon, that first day of the project that what I was 

22 asked tor was prices, his records and my records looKed 

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1 exactly the same, which would have been correct, since we 

2 were using the same catalog data to look at. 

3 Q I understand your answer, although it responded 

4 to a more general question than the precise one I asked. 

5 Let me ask it this way. Was there a point at 

6 which you dictated, not personally, but on behalf of the 

7 Department of Army Logistics Office, to anyone at MICCM, 

8 ! that this is the price we're using. This is the price we've 

9 agreed upon. This is the price you'll plug into your 

10 documents, your computations, your records, et cetera? 

11 A Generically speaking, I did do that sometime, 

12 weeks in the project, when we had already gone througn the 

13 addition of the MOIC and arguments over replacement costs 

14 for other models of items and arguments over their use of 

15 the Army pricing regulation. 

16 VJhen we got to the point where I told Colonel 

17 Lincoln, if there were to be any more changes in the trutn, 

18 that his chain of command would have to surface at my 

19 leadership. I was getting out of the changing of the price 
^0 I business with him. 

21 Q Let me ask the question again. 

^2 Did there come a point when you gave any 



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1 I instructions to anyone that said, this is the price that we 

2 ; will use? 

i 

3 A I never demanded that Colonel Lincoln charge a 

4 particular price, only that if we were going to change the 

5 price again, my boss was going to have to get involved. 

6 Q So t^e understanding from your standpoint is that 

7 once you and Lincoln discussed price and both of you saw in 

8 j your AMbF that 3169 was right, and you later both added 300 

9 and got 346^, that was the price from that point on? 

iO A Except for the items that we modified, which, as 

11 I understand it, was never shipped during my tenure there. • 

12 That was another change to the price that added more costs, 

13 but the base price we started with was 3169. It never 

14 really changed in the course of the project. And as I said, 

15 from the very first day, that was the price we had agreed 

16 on. 

17 Q All right. 

18 Were you ever — did you ever give anyone any 

19 instructions with regard to what price, if any, should 

20 appear in any transfer documents that went with the 

21 missiles? 

22 A Let me think back to all that long time age. I'd 

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1 ; have to tell you for the record, John, that I never gave — 

2 I understand Chris Leachman prepared the documents. I never 

3 gave him any specific instructions, but had I seen a price 

4 when I got down to MICOM on that evening of the first 

5 shipment of anything, other than 3469, I would have 

6 vigorously opposed signing the document, because I was 

7 looking for a record of accountability, just as I had on 

8 I many previous transactions. I was completely concerned 

9 about my liability to MICOM, so I wouldn't have accepted any 
iO other figure than what we agreed upon, but I never told him 

11 that that's the figure you will put in. 

12 Q Would you have had the same reluctance to sign a 

13 document, if you had seen it and it bore no price? 

14 A Well, that's an issue, because, as I recall, wnen 

15 I got down to MICOM, if there's a shipping document that I 
lb actually signed the morning after the delivery took place at 

17 about 7:00 a.m., and i looked at it first at about 2:00 a..-n. 

18 in the morning, we had finished the shipment and gone back 

19 to Chris Leachman's office, besides the fact, I believe, 

20 that nere was no price entered at the time. That's the best 

21 recollection, nearly a year and a half later. I just can't 

22 tell you, John, what I said at 2:00 o'clock in the morning. 



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Dw i except that there were enough details not filled in on that 

2 document, that he agreed that we would both come back at 

3 7:00 a.m. and finish completing it, that he would have it 

4 all typed up and would be ready for me, if I got in the 

5 office after 7:00 in the morning. When I came in at 7:00, 

6 it was ail finished. I looked it over and will have to 

7 confess that the thing I was really looking for was the 

8 1 number of widgets, that is, the number of TOW missiles in 

9 the price: 

10 I was not too concerned about fund codes or 

il signal codes or other technical data that would have been on 

12 there. 

13 Q I'm a big confused as to what you're telling as, 

14 because you say that you would have felt an obligation not 

15 to sign a document? 

16 A I would not have signed it. 

17 Q If there had been the incorrect price, meanir.g a 

18 higher price of Stt435, but for some reason, you wouldn't 

19 have felt the same as if there was no price whatsoever? 

20 , A I wouldn't have signed it with no pricing either. 

21 I wouldn't nave accepted a document, keeping in mind that 

^2 copies were going to stay at MICOM that would have not nad a 



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bw 1 price tilled in. I would not have accepted it. The only 

i 

2 way I would have walked away with that transaction 
! 

3 completed, is if the price had said 3469. 

4 Did you ever tell Chris Leachman tnat the price 

5 block on the transfer document, the DD1348 standard transfer 

6 document, was tp be left blank? 

7 A No, sir, I did not. 

8 I Q Did you ever tell them that there was to be no 

9 reference 'to price whatsoever on the 1348? 

10 A No, sir, I did not. 

11 The same two questions with regards to George 

12 l^'illiams. 

13 Did you ever have any discussion with Williams 

14 tnat the price block should be left blank or that there 

15 should be no reference to price? 

16 A No, on both counts. 

17 Same question as to Mr. Collier. 

18 Did you ever have any dealings with him? 

19 A I don't even know who Mr. Collier is. Never 
^0 I heard the name before. 

21 Q The same question with regard to Colonel Lincoln. 

^2 Did you ever make any statement to him aoout tr.e 



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1 price block on the 1348, that it should be left blank, tnac 

2 there should be no reference to price? 

3 A No, sir. And I tnink it's important to add for 

4 the record that well before the first shipment actually too.^ 

5 place. Colonel Lincoln established the division that would 

6 handle all the ^transfer paperwork for him on that matter. 

7 So on the morning that I actually left after the 

8 I first shipment. Colonel Lincoln was not even in the area. 

9 He had had to go on a trip and was out of the net the 

10 morning that Chris Leachman and I actually completed the 

il paperwork. 

12 Q I'd like to walk you through some documents at 

13 this point. The first document, which is really three 

14 separate iterations -- I am going to give you a chance to 

15 look at this. I 

16 MR. SAXON: I ask that that be marked as 

17 Deposition Exhibit 1. 

13 (Deposition Exhibit 1 

19 identified.) 

20 [ MR. SAXON: This is the Material Release Order, 
i 

21 MRO, that was prepared at Redstone Arsenal for each of the 

22 tnree shipments. The first one is for the first shipment of 



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bw 1 100 TOWs. The second is for 508 TOWs. The third one is for 

2 500 TOWs. 

3 If you look at the quantity blank, you'll see the 

4 number on the first one of 1000, and so forth, as I just 

5 represented it. 

6 If ypu look at the unit price blank, you will see 

7 that for the first shipment, it's $8435. The same price for 

8 \ the second shipment, and the third shipment, which was the I 
'i TOVv downgrade, was $8164. 

iu I would assume that you did not see this documenc 

11 at the time. 

12 A I have never seen these documents before today, 

13 John. 

14 So your answer, I guess, would be that you never 

15 knew that the people who prepared the first piece of paper, 

16 in order to task this requirement further from Redstone to 

17 Anniston Army Depot put in the 8435 price? 

18 A No, sir. I would not have known anything that 

19 would have been put in this document. 

20 !; MR. SAXON: Let me go then to the second exhibit 

21 and ask that that be marked. 
22 



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bw 1 I ^0m-m-^^- (Deposition Exhibit 2 

i 

2 identif ied. ) 

'! 

3 BVr MR. SAXON: 

4 This is something called an Ammunition Planning 
b Work Sheet. 

6 To s^ve us all time, I will direct your attention 

7 to the block that says "Quantity." This is 1000. In the 

8 I total price, if you do the quick division and drop the 

9 zeros, you' will see that the price was 58435 per TOW. 

10 This document. Exhibit 2, Ammunition Planning 

11 Work Sheet, was prepared at Anniston Army Depot. So tne way 

12 the prices went, MICOM, it was telephoned down to Anniston 

13 Army Depot. A hard copy then followed. They prepared the 

14 Ammunition Planning Work Sheet. 

15 Let me ask for the record if you have ever seen 

16 tnis before today? 

17 A John, I have not. 

18 Q • Then I take it that you would not know that at 

19 Anniston Army Depot, when they started working the 

20 requirement that they used the price of S3435? 

21 ; A No, sir, I did not know that. I might want to 

I 

22 add, to help you for the record in these proceedings, that 

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1 I when I went down to MICOM for the two shipments, I was 

2 ,j involved in, I saw no documents other than shipping 

3 i documents that I took away with me, which is in the records, 

4 and copies of the safety inspections that an on-site safety 

5 , inspector actually performed of the trucks. In other words, 

6 all the documents I actually saw, I kept, and were m my 

7 files when this matter all came to public attention. 

8 i Let's go to the transfer documents themselves, 

9 and I'll ask that you take a look at this. 

10 MR. SAXON: And that that be marked as Exhibit J 

11 (Deposition Exhibit 3 

12 identif ied . ) 

13 BY MR. SAXON: 

14 This is the first iteration of the transfer 

15 document. This was for the first shipment. 

lb If you look in the quantity block, you see 1000 

17 missiles. This was prepared at Anniston Army depot for 

18 transfer, as you can see, to MICOM. The unit price block 

19 bears the price of S8435. You indicated you did not see any 

20 documents. 

21 A I never saw this particular document. 

^2 Q Other than the transfer document that came wita 



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.bw 1 the missiles? 

2 A Right. This is not the one that I saw. The one 

3 that I saw, and I made sure that it had my signature on ail 

4 copies, and I kept ail of the copies but one. I think that 

5 IS important. Colonel Lincoln and I had established that as 

6 part of the plan of operation at the very beginning. Ue 

7 would only keep one single copy of the original copy, and 

8 I all the other copies I kept. So the only copy that he would 

9 have had down there that I saw had my name on it, was the 
lU signature. 

11 Q For the record then, you would not have know that 

12 when Array personnel at Anniston Army Depot prepared tneir 

13 version of the DD1348, they put in the 58435 price? 

14 A No, sir. 

15 MR. SAXON: We go to the next exhibit, which I 

16 ask be marked as Exhibit 4. 

17 (Deposition Exhibit 4 

18 Identified.) 

19 BX MR. SAXON: 

II 
^0 ■, I'll give you a chance to look at that. 

21 This was the DD1348 that was actually signed by 

^l Chris Leachman. In the photocopying, it cuts off the top. 



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1 but I will represent and cannot show you, that if we saw 

2 another fraction of the page, that the price bioc)^ tnere 

I 
I 

3 does not bear the price of S8435, but is, in fact, blani^. 

4 Let me ask you for the record, if you recall ever 

5 having seen this document? 

6 A I've, never seen it, and it was never discussed 

7 with me. 

8 i Is it that in some manner, as the missiles were 

9 physically transferred by baggage truck from Anniston to 

10 Redstone, the pricing document either gets changed or a new 

11 one gets created with, I think, no price, and it would ze a 

12 fair inference? 

13 A John, could you back up and say tnat sentence 

14 over. 

15 Q Sure. What the document seems to suggest is, 

16 tnat in some way, as they physically go from Anniston, with 

17 the transfer documents that bears the price of S3435, when 

18 ' they arrive at Redstone and the transfer documents which go 

19 with them, are either created or changed, the price ceases 

20 l' to appear on the price block? 

21 A John, I can't comment on what Chris Leachman did, 

22 but I think it is important to establish wnere I first iaia 



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bw 1 eyes on the missiies, and that is, they were out in secure 

2 i holding area, which has a federal policeman guarding it, and 

3 they were stacked up in crates under armed guard. The armed 

4 guards belonging to Anniston. This is out in literally a 

5 field environment. 

6 I unjlerstand your testimony. There are things 

7 that took place before you got on the scene or that you had 

8 I no knowledge of, and we appreciate that. I am simply 

9 showing yofu what the document trail itself shows, up to tne 

10 point at which you come on the scene. 

11 MR. SAXON: So I go to the next document, wnich -1 

12 would ask be marked as Exhibit 5. 

13 (Deposition Exhibit 5 

14 identified.) 

15 BX MR. SAXON: 

16 This is the DD1348 for the first shipment whicn 

17 you signed. I would ask you for the record, if that is your 
lo signature. 

19 A That sure looks like it. 

20 ' Q You'll notice. This is an enlarged version, but 

21 : on this form, the unit price block, likewise, is blank. 
z2 Now you testified a little earlier tnis 



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1 arternoon, that your recollection was that when you saw tne 

^. transfer document that, in fact, was blank. 

I 

3 A That's true. We recovered the copy that was in 

4 Colonel Emheiser's office. That should show the correct 

5 amount. I wish I could see that document today. 

6 Q The (iocument we just looked at. Exhibit 5, and 

7 the document we looked at. Exhibit 4 — help me, if you can, 

8 ^i understand what physically took place here. We have 

9 Leachman, 'apparently, signing for the missiles. VJe have nis 

10 signature on Document 4, Exhibit 4, 

11 When we get to Exhibit 5, and you were asked co 

12 sign for them, Leachman's signature is not there. 

13 Does that mean that you signed a new and 

14 different form, that a totally new one was prepared? 

15 A That is true. When I got there on the evening of 

16 the 13th of February, there was no document prepared for me 

17 to sign, and I do recall, and of course, Leachman should 

13 recall this, he asked me how I wanted to show this 1348, for 

19 example, the destinations, and the chargeable office, and 

2U who was to be the consignee. 

21 All those were by prior arrangement. I was the 

22 consignor, even though the shipment was going out of 



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1 Redstone Arsenal, and it was to go to a place that would be 

2 difficult to track, and there were reasons which we 

.1 

3 discussed in previous testimony, why they were listed as 

4 going to Oakland, but this was not prepared when I got there 

5 late in the afternoon of the i3th of February. It was done 

6 sometime before^ 7:00 o'clock the next morning. 

7 And if I understand what I think the documents 

8 I reflect in your testimony, in the normal course of business, 

9 you will not have endorsed or signed the sauue 1348 that 

10 Leachman did, but that simply reflected that they had taken 

11 possession on behalf of MICOM from Anniston Army Depot? 

12 A That's true. 

13 Q Then a new document would be created for your 

14 signature showing the transfer to you and that you had 

15 received them on behalf of the Department of Army Logistics? 

16 A That 13 correct, John. This is normal business, 

17 where they actually slip into the material and sign a 

18 document from the last consignor to the point of receipt. 

19 When you signed the 1348, which is Exhibit 5, do 

20 you recall any discussion at all between you and Leachman 

21 about the fact that the price block was blank? 

22 A Well, John, as I recognize as I discussed earlier 



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bv* I ' today, that block was blank when I first saw it. 

2 ' Q The question was, do you recall any question 

3 about the fact that it was blank? 

4 A John, at this late date, I would have to 

5 speculate on what we might have discussed about that. I 

6 just can't remejnber. I know I paid attention to that. 

7 That's about all I can remember on that subject. 

8 I Q Do you recall noticing the fact that it was 

9 blank? 

10 A Yes, I remember that. 

11 But your testimony today is that you simply don't 

12 recall whether you and Leachman ever discussed the fact tnat 

13 It was blank? 

14 A I'd have to guess, and I don't want to do that. 

15 Let me ask you then to go to the next exhibit. 

16 MR. SAXON: I am going to ask that be marked as 

17 Exhibit 6. 

18 (Deposition Exhibit 6 

19 identified . ) 

20 BY MR. SAXON: 

21 This is the transfer document, showing transfer 

22 from you on behalf of the Army to an individual who received 



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bw 1 them on behalf of the CIA, whose name has been blanked out 

2 in the declassified version of this document. 

3 Vou would know who that individual was, and in 

4 fact, when you first talked to us, you gave us his name. 

5 For reasons of trying to keep this at the lowest 

6 classification J.evel, it's not necessary to indicate who 

7 that is. 

8 Let me simply ask if this appears to be the 

9 document that you recall having signed showing receipt and 
10 if, in fact, that's your signature, and if it was used to 
il convey them to the CIA? 

12 A Yes, it does. 

13 John, I think there's something important here. 

14 That's why I was a little bit hesitant just a few minutes 

15 ago. 

16 I didn't remember signing a document that looked 

17 like this, with all these details left blank, and the very 

18 important data of the number of details that are missing. I 

19 guess that is because they were all cut off up at the top . 

20 i! This is the document that I actually signed. 

1 

21 What you have here, this particular exhibit, with the top 

22 cut off of It, and if you line them up, that is precisely. 



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1 
bw 1 and I have a very unusual signature, if you line them up, 

2 you will see that your Exhibit 5 and your Exhibit 5 are 

3 precisely that same signature on that one document. 

4 I think if you do that, you will see that they 

5 line up. 

6 All fight. Then tell us, if you would, who put 

7 the additional information in Exhibit 5 before the time when 

8 It was signed by the representative of the CIA. 

9 ' Did you personally -- 

10 A No, I typed nothing on this document. I 

11 obviously did not have an access to a typewriter down tr.ere. 

12 This is the document that I actually saw out at 7:00 o'cioci^ 

13 in the morning, the one with all of the data typed in it. 

14 That IS correct, sir. 

15 That IS your exhibit. 
16 

17 
18 
19 
20 
21 
22 



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pv 1 : Q I can assure you we did not put that material la 

2 there. 

3 A No. This is the one I remember, because the one 

4 I remember had the price on it is my memory of this 

5 particular document. And if we could see the rest of it — 

6 part of this dopument is cut off up at the top, which I 

7 think is an important omission. 

8 i But this is a part and a piece of the same 

9 document right here. 

10 Q I am even more confused now because you seem to 

11 be saying the document you signed had the price on it. 

12 A That is what I said to you earlier today. 

13 Q No. You told us on two occasions that the 

14 document you signed at MICOM had no price, and you 

15 distinctly said it was blank. 

16 A If you get the reporter to go back, I tnink you 

17 will recall that what I said was that I would not nave 
13 signed the document if -it nad no price in it. 

i9 Q No. You told us you would not have had the 

20 higher price, and I specifically asked you a second time if, 

21 in fact, you would have signed a document that had no price, 

22 A No. I think we need to go back and review cne 



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pv 1 record because that is not what we said. 

2 All right. Well, let me ask you now whether tne 

3 document you signed at MICOM when you took receipt of the 

4 missiles had a price or whether the price block on the DD- 

5 : 1348 was blank? 

5 A No, gir, it had a price on it as well as this 

7 other specific data that is listed here. 

8 I So you are suggesting that on Exhibit 5, that at 

9 the time you signed that, it had a price and in the form 

10 that It's in now, that it would have been altered and the 

11 price removed? 

12 A I think there is an even more simple explanation 

13 than that. I think that Exhibit 5 is only the lower naif of 

14 the same document. 

15 If you look at the exhibits, you can see that tne 

16 entire price block on Exhibit 5 — and I do apologize tor 

17 the fact that the very top is cut off — but every bit of 

18 the price block on Exnibit 5 is copied and it is completely 

19 blank. 

20 A Maybe I don't have the same copy you do, then, 

21 because these blocks aren't even printed here if you look up 

22 here at these blocks. 



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I 

pv 1 ' This is the price block. 

2 A But you notice that the price block is also 

3 blank, on Exhibit 6. The price is actually typed in above. 

4 That IS a different block in the supply business. The 

5 dollars and cents, if you look very carefully, John, this is 

6 just supply terminology. The price seen in Exhibit 6 is m 

7 the right place, and Exhibit 5 is missing data blocks. 

8 ■] I will see if we can find the copy from which 

9 that was made. 

lu A Exhibit b, for the record, is what I clearly 

11 remember signing, and what I remember signing is, as I 

12 discussed with you earlier, although I don't remember the 
"13 very same details, I remember clearly that we did discuss 

14 the price block. And as I said earlier in today's 

15 testimony, I would not have signed a document with no price 

16 on it, especially because there had been so much discussion 

17 of price up to this time. 

18 MR. GENZMAN: May I follow up with a question? 

19 Did you say earlier, sir, that these two documents are t.he 

20 ,1 same. Exhibits 5 and 6? 

21 THE WITNESS: Although I am not a handwriting 

22 expert, I recognize my own signature. I think if you line 



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,pv 1 these up and get the biocl<s ail tied together, m spite of 

2 the slight deviation you get trom copying machines, if you 

3 look at the way -- if you look at the way my signature on 

4 the end of the "s" flows over the words that says "Received 

5 document," I think you will see that they are precisely tr.e 

6 same document. , 

7 BY MR. SAXON: 

8 J I think if you look at Exhibit 5 down in the very 

9 bottom, at the lower right-hand corner, you will see the 

10 number 1 and the number 2, and it would suggest to me that 

11 this was copy 1, which was used for one part of the 

12 transfer, and that copy 2 then had additional information 

13 put on it. 

14 A But I am concerned. I did not sign two documents 

15 down there that day, John. I only signed one document on 

16 the 13th of February. 

17 MR. GENZMAN: If I could follow up, do you know 

18 what the 1 and the 2 signify? Are those back to back? 

19 THE WITNESS: Those are different copies. This 

20 • document typically comes in six copies, as I recall. 

21 MR. GENZMAN: Are they back to back so that it is 
i.2 a multiform? 



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pv i THE WITNESS: That is correct. They are bacK to 

2 back. 

3 MR. GENZMAN: With 1 at the top and 2 and 3 

4 behind? 

5 THE WITNESS: To tell you the truth, it's been a 

6 while since I ' vp been out in the field. I think that number 

7 1 is at the top/ but I am not positive. I do know that I 

8 I only signed one document. 

9 ' BY MR. SAXON: 

10 Q At MICOM at 7:00 in the morning? 

11 A At 7:00 in the morning on the 14th. 

12 Let me ask first if you know whether the DU forn 

13 1348 is a manifold document with various copies for various 

14 copies for different endorsements? 

15 A I do know that it is a manifold document and 

16 there are various copies for different endorsements. 

17 Second, where did the document which is Exhibit 

18 6, which was signed by a representative of the CIA, where 

19 was that signed? Physically, where was that signed? 

20 / A That was signed in Colonel Lincoln's office on 

21 the morning of the 14th of February. And as I recall, the 

22 gentleman that is listed there watched me sign the document 




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.pv 1 that Chris Leachman handed me. 

2 Chris Leachman thought that gentleman to be from 

3 the State Department and was there to observe all of the 

4 proceedings, so his presence there when we signed this 

5 document did not alarm him. That gentleman could confirm 

6 that I only signed one document from Mr. Leachman for that 

7 day . 

8 I Q Do you have any idea, if you signed one document 

9 -- forget about the price block for a moment, since we are 

10 limited by the fact that Exhibit 5 is cut off at the top, 

11 and clearly Exhibit 6 has more data in it -- do you know in 

12 what way that additional data was put on there? 

13 A Well, the data that I recognize was added on 

14 later. Some of these things are out of my office. They are 

15 classified by stamp. 

16 The special-handling stamp and the two secret 

17 stamps are all items that we added on at our office at the 

18 Pentagon, not put on by MICOM. The technical details frsm 

19 block 1, it's dated. It's supposed to be keypunched into 

20 the supply system for billing purposes. 

21 The numbers JXT are actually supposed to tell the 

22 Depo Systems Command where to send the depo interfund bill. 

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n 

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That IS the normal supply business. That data is actually 
essential in a shipping document m the government. 

Other than the gentleman's signature where it's 
blacked out with my name for Major Simpson, the special- 
handling stamps and the secret stamps, everything else tnat 
IS on this was ft MICOM. 

Again, I would mention, sir, that my story can be 
corroborated that at no timg during this transfer business 
from 7:00 'until 8:00 that morning was I alone. In fact, 
that gentleman who was with me who observed the proceedings 
and I left together, left the building and drove away 
together. We drove away in separate cars, but we went down 
to the parking lot together. I think that is important. In 
otner words, I was not by myself during these proceedings. 

MR. SAXON: I would like to go back, if we can, 
in the record and have you read back the earlier question 
about whether there was a price on the document that Major 
Simpson signed when he first arrived at MICOM. 

(The record was read as requested.) 

BY MR. SAXON: 
Let me ask you, to the best of your recollection, 
when you first saw tne DD-i348 and you were at Redstone 



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1 Arsenal for the first shipment, do you recall if the price 

2 block had anything in it? 
i 

3 A John, as I best remember, it was blank at 2:00 in 

4 the morning. That was tne first time I had actually seen 

5 it. That as well as other data was missing, and we agreed 

6 to delay the signing of it until the document was completed. 

7 ; So at the point at which the price block was 

8 i| blank, you did not sign the form? 

9 A ' That is correct. 

10 When you left, got a few hours' sleep, came back 

11 later in the morning but still early in the morning, at that 

12 point there was additional data typed into the 1348, and you 

13 signed it? 

14 A Yes, sir, that is correct. 

15 And your best recollection is that when you 

16 signed the 1348, there was a price in the price block? 

17 A Yes, sir, there was. I think it is important 

18 that when I left MICOM that morning of the 14th of February 

19 19b6 there was only one single copy of that shipping 

20 ;; document left at MICOM, and that was by my prior agreement 

21 , with Colonel Lincoln on minimizing the paperwork involved. 

22 Q What do you recall telling then Major General 



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pv 1 Russo about the question of price as regards whether 53469 

2 was the correct price? Were you the person who told him 

3 that that was the price that was agreed upon? 

4 A Yes, sir. General Russo, though, was privy to 

5 all the changes in the two from MICOM as well as ail tne 

6 add-on costs that surfaced, and as you and I discussed some 

7 months ago in testimony, his frustration with this 

8 - constantly changing procedure led to a message that I 

9 drafted over his office symbol, which he was the releaser 

10 on. 

11 It said that we understand that the costs 

12 incurred to date come to some figure which we are providing 

13 you and no additional costs will be incurred without a prior 

14 confirmation or approval by this headquarters. 

15 That is essentially the message, and I tnink you 

16 have seen that message before. 

17 To your knowledge, did General Russo ever have 
13 knowledge that a case could be made that $8435 -was the 

19 correct price for the basic TOW? 

^0 A Sir, General Russo and I never discussed a price 
like that. The only time that I know that someone otner 



21 



22 than me ever discussed price with him was that when General 



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pv 1 Burbules called him. 

2 Q So your answer would be, no, to your knowledge, 

3 he did not know that there could be another price of S8435? 

4 A Yes, sir, that is my answer, that he could not 

5 know that there could have been that price. 

6 Q And you are the person who provided that price to 

7 the CIA of $3469? 

8 I A Originally, sir, we started out with $3169. 

9 Later on v^e came up with a price of $3469; and even later 

10 on, other changes for later iterations. 

11 Q So I take that to be yes? 

12 A Yes, sir, that is correct. I was the guy that 

13 provided the price to them. 

14 Did your counterpart at the CIA ever tell you 

15 that they had a planning figure of $6000 that they were 

16 using? 

17 A No, sir, I don't recollect that they ever 

18 discussed a figure like that. 

1 

19 i Q Did your counterpart at the CIA ever tell you 

i; 

20 that they were going to be receiving $10,000 per missile? 

21 A No, sir, he did not. The only thing that might 

22 be of nelp to the committee here is that I sensed, wnen I 



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. pv 1 first provided that price to them, that that wasn't the 

2 price they were expecting, because the order came bacK and 

3 changed very promptly. 

4 We had started out with a requirement for about 

5 4000 missiles. Within a very short period of time — I am 

6 talking about just a day or two -- the order had risen from 

7 a figure of about 4000 to 4508, a very precise figure. And 

8 even at one time it waddled between 4505 and 4502, but it 

9 was an odd figure, slightly 4500. And by the end of the 

10 first week it had settled down and boiled down to 4508. 

11 But I just sensed that they were quick to come 

12 back with the change, and that was unusual in my dealings 

13 with the agency. Normally, when we went back and dictated a 

14 price for a project, they would either come up with more 

15 money or if the price was too high for them, they would come 

16 back and reduce sometimes the amount of support. But never 

17 had I nad occasion that when they got a price they came and 

18 promptly increased the order. 

19 So that was the only unusual thing about that 

20 mechanism. But they never actually discussed what price 

21 they were expecting. 

22 Q Did Colonel Lincoln ever indicate to you after 



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.pv 1 $3469 was agreed upon and you had made it clear that there 

2 i shouldn't be any further changes, did he ever indicate to 

3 you that he had learned that perhaps there would be a higher 

4 price that they should charge, although he understood they 

5 couldn't get it? 

6 A Sir,, Colonel Lincoln and I had had some 

7 discussions on higher prices, but they related to different 

8 { model numbers. 

9 Q So that really related to replacement costs? 

10 A Replacement costs. We did also have discussion 

11 which he and I in November disagreed with precisely the 

12 details as we were recalling what we had said and had not 

13 put on paper months earlier. 

14 But in November of '86, when we were going back 

15 over the details, it seems to me that I recall that we 

16 discussed something about the fact that he had surfaced the 

17 issue, and the rocket motors were changed on the later 

18 adaption that I understand was not shipped during my tenure 

19 and may not have been shipped at all. But the rocket motors 

20 ; came out of later production run. 

21 I There was some discussion. As I recall, he 

22 . wanted to raise prices for that later rocket motor; in other 



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1 • words, a Later-model rocket motor that might have had a 

2 higher production cost. 

3 Q To your knowledge, was your discussion between 

4 General Burbules and General Russo confined to replacement 

5 costs? 

6 A Sir, as I can best recollect, I can only tell you 

7 ' that General Russo called me up to his office and told me 

8 said, "Burbules has called me about price," and he said 

9 basically,. "I told him we can't screw around and ruin this 

10 mission -over bureaucratic maneuvering." He discussed with 

11 me the fact that he didn't see -- and he told Burbules how 

12 he could take up an old, beat-up missile near the end of its 

13 useful life that cost us S3169 to buy, add a S300 MOIC, and 

14 come up with any other price. 

15 That was all part of that generic discussion. I 

16 think they talked for some time. But I was getting kind of 

17 an executive summary of it. That's about all the details we 
13 discussed from the conversation with him. 

19 ;; At any point in that discussion did General Russo 

20 j| tell you what price Burbules was claiming MICOM should be 

i| 

21 I paid? 

!i 

22 ■ A No, sir. 



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-•vpv 1 i Q Were you briefed after General Russo talked to 

2 ' then Major General Colin Powell about the replacement cost 

3 i issue? I believe you told us before that he came back from 

4 the meeting in Powell's office and had asked you to stay and 

5 ' then briefed you. 

J 

6 ! A Yes, sir. And I believe those things run 

7 together, sir, all this long time later. I met with General 

8 Russo almost daily on this project, and I do know that twice 

9 a day he went to see Major General Powell. Twice he had 

10 come back to see Major General Powell. He briefed me after 

11 he would come back on what was said. 

12 Q Do you recall at what point General Russo !-.ad 

13 talked with General Powell about replacement costs? 

14 A No, sir. The conversations we had had with 

15 respect to his discussions with General Powell, as far as I 

16 can tell, focused on whether economy was a proper basis for 

17 transfer. We never discussed details about the prices. 

13 That is. General Russo never told me that General Powell and 

19 he had ever discussed any details about prices. 

20 ij So would your testimony be that you don't think 
jl 

21 j they did discuss replacement costs or price or that if they 

:i 

22 i did, you weren't made aware of it? 



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A The latter, sir. In other words, if they did 
discuss it, I wasn't made aware of it. 

If someone testified that you told them there was 
to be no reference to price on the DD-1343, would you take 
issue with that? 

A To the point that I would offer to take a lie- 
detector test. 

Q So your testimony is you never T.ade any stateTient 

to that effect? 

A . No, sir. 

Q For the record, did you ever receive what you 
would perceive as pressure in order to do anything that you 
would call improper with regard to price, particularly to 
come up with a low price for these TOWs? 
A No, sir. Never. 

MR. SAXON: At this point I am prepared to ask a 
few questions about HAWK repair parts. Joe or Bob, do you 
have anything more on the TOWs? 
MR. SABA: No. 
MR. SAXON: On pricing? 
MR. SABA: No. 
MR. SAXON: I am going to leave that subject. 



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2 1 BY MR. SAXON: 

3 i Q Before I go to Hawk repair parts and before I 

4 1 forget, let me ask a question one of my colleagues is 

5 .i interested in from a different area of the investigation. 

6 i Do you know anything about Phoenix missiles? 

7 i A Nothing, sir. Nothing at all. 

8 MR. SAXON: That takes care of his questions. 

9 ' BY MR. SAXON: 

10 . What I want to focus on with regard to the Hawk 

11 ground equipment repair parts is the ground readiness issue 

12 and any discussions you were a party to with anyone either 

13 at MICOM, particularly John Chapman and Bill Reyer, and then 

14 anyone either in the agency or your superiors, with the 

15 Department of the Army leadership. 

16 For the record, let me recount what we know to be 

17 the case: That is, that the Iranians -- unbeknownst to you; 

18 you simply knew that it was a customer — had asked the CIA 

19 ;l for 234 line items of repair parts in varying quantities; 

20 jj that that was transmitted indirectly from you to MICOM, 

21 I going through some intermediate steps; and that as they 

22 'I began to assess availability, the location of where these 



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Vpv 1 'i parts were, it's my understanding that they prepared a 

2 I document, which I will introduce as an exhibit in a few 

,1 

3 i minutes, which showed whether these items were available and 

4 j what the quantities were, what the replacement costs would 

5 be, and whether there was any readiness impact. 
i 

6 I MICOM officials have indicated to us and they 

7 ! indicated to the Department of the Army in the Inspector 

8 General's report that with regard to some 46 or 47 of the 

9 i items -- and there is some uncertainty as to which of those 

10 two numbers it was -- that there would be some potential 

11 readiness impact, and that was an initial determination made 

12 on, I think, the first day when they started working the 

13 I requirement, that if they were to provide them in the 

14 quantities requested, that on 46 of the items there would be 

15 some readiness impact. 

16 . As I understand it, there was then some back-and- 

17 forth whereby people at MICOM would say, "Well, we would 

18 prefer not to provide that many of this item." The ultimate 

19 M result was they didn't have to provide as many as initially 

20 j requested. 

21 So, from the 46, we peeled down that number, 

22 I based on reductions in quantities, in order to determine the 



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-^Vpv 1 i ultimate readiness impact. 

2 ' Is there anything that I have recounted, in the 

3 ■' interest of time, that you would take issue with? 

4 I A That is all essentially correct, John. I see in 

5 front of you one of the documents that I worked with. I 

6 1 don't see the worksheets that I had. There were a bunch of 

7 ; long ledger papers typed together. That was actually the 
3 i detailed readiness analysis of the 46-47 items. 

9 i _ MR. SAXON: Let me go ahead then to the next 

10 exhibit, which I believe will be Exhibit 7, and ask that 

11 that be marked. 

12 (Whereupon, Deposition 

13 Exhibit No. 7 was marked 

14 for identification.) 

15 MR. SAXON: I will give you a copy to look at. 

16 BY MR. SAXON: 

17 1 don't have any basis of knowing this from you - 

18 - but the individuals at MICOM indicate, and there is a 

19 !' handwritten note by MICOM at the top of page 1, that this 

i 

20 ji was faxed to AMC on 10 April '36 — I have no way of knowing 

li 

21 I whether you ever saw this document. So let me ask if this 

22 I appears to be something that you recall having seen? 



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"pv 1 :i A John, this is not the document I saw in its final 

2 form. I am aware that this particular document was faxed bv 

3 '■ AMC headquarters, the Office of Supply and Maintenance. 

4 , This was prepared from the original documents 

5 ^ that a gentleman from the agency had given me that same 

6 I afternoon that I got it. We had hand-carried that list from 

i 

7 I that gentleman to AMC headquarters. They prepared this 

8 . document over there at the headquarters and faxed it. 

9 ' I later got a copy of the document I had sent to 

10 MICOM, and the copies in my office we had retained were much 

11 more worked with this, with many additional details written 

12 : in. 

13 Let me make sure I understand what you just said. 

14 i Is it your understanding that this particular document, 

15 Exhibit 7, was prepared at AMC? 

16 A Yes, sir. 

17 Q It's my understanding that it was prepared 

13 physically at Redstone Arsenal, at MICOM, and then faxed into 

19 ji AMC. If you look at the handwritten note at the top, that's 

20 J! what it indicates. 

l' 

21 I A I won't dispute that, only that about one day 

22 I after I had taken over my list to John Rosenthal at AMC, he 



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gave me back a copy of this. I think the discussion at that 
time was that MICOM had all of the items on this list. I 
had just jumped to the conclusion that AMC had prepared it. 

But that's not so important as the fact that this 
isn't the work copy that was kept in my office on the 
project. We worked up a same copy so that John Chapman and 
I and Bill Reyer could work on it. 

My interest at this point is not what work 
product you have, but simply to show you that at MICOM, as 
you follow each item across, you see each item listed by its 
national stock number and a brief description, the quantity 
that was required, the quantity that was on hand, the 
location. Those codes indicate a particular depo or 
wherever that the item is located, the estimated replacement 
cost. 

And then under "Impact," the testimony we 
received from MICOM was that if the word "Yes" appears, that 
means that the potential was there for an adverse readiness 
impact if the quantities requested were provided. 

Now, let me specifically ask you what you recall 
about your discussions with John Chapman and Bill Reyer, and 
you can do it generally or you can break it up by individual 



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on the readiness issue. 

A Well/ John, I think it is important, before I 
discuss readiness, to take about two minutes and tell you 
that many of the figures that were provided on this list 
that were provided very quickly by John Chapman turned out, 
as we went to warehouse bins at depos to count things, 
turned out that there were other figures. Some quantities 
were greater and some were even less. Some weren't there at 
all. 

So this should not be represented as the final 
truth. 

Q And I don't think I represented it as that. But 
that is helpful to know. 

A John Chapman was the total professional as we 
worked on this. I think that he strongly and vigorously 
defended the interests of the Army throughout. He was 
concerned about readiness. 

I was concerned about readiness because readiness 
is always an integral part of our examination of the support 
of any project for the agency, and I believe it was at my 
instruction that he put out the yeses and noes on this. It 
could, however, have been General Russo's instructions. I 



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don't remember. Somebody from the headquarters, though, 
asked him to do this. 

The discussions got more detailed as we got 
closer to the end of the project, and again I am down to the 
copies, and they were left in my notes when I departed the 
office last June, the workpapers on the 46-47-odd items that 
General Russo and I personally massaged. It's a paper that 
measures probably two feet by 2-1/2 feet all put together in 
one piece. That showed, in addition to all of this data, 
production and delivery dates for placement of critical 
items . 

General Russo made the request for me to go back 
to John Chapman and obtain that data later on in the project 
when he was looking at the fact that supplying some of the 
critical items. 

I want to stop again and interject one more 
thing. We started out with just a plain yes or no on these 
impacts, but it came down to was the item critical to fire 
the weapons successfully. And, John, I think I recall that 
later on we even refined this impact further. 

So items that sometimes were listed as critical, 
yes, changed to not critical to fire the weapon 



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successtuily, ana we did not even give some of those. In 
other cases we may have depleted the supply, but John had 
said, yes, it was not critical. 

So another item on readiness that John and I 
discussed in detail was that most of these parts -- not all, 
but most of these parts -- we are requesting were not going 
to have any impact at all on U.S. Army readiness because in 
fact almost all these parts are something called pre-Phase 
II product improvement-configured. They could not be used 
in the modernized version of the system, which is what the 
U.S. Army had. So we were generic. 

He did say that there would be some impact on 
current FMS customers. However, the strong MICOM attempt 
was to get all the current customers for the Hawk system and 
then get them modernized, which would have made them also 
post-Phase II configured and would have in fact rendered 
this material obsolete. 

Can I help you any further? 
That's helpful by way of background. 

Now let me refine some questions from what you 
said. Do you recall there being any discussion — and I am 
going to confine these questions toward the later end 



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because, as you said, these were massaged, the numbers 

changed as they took a further look, they found some 

\ 
quantities and others. 

In any event, the initial column, with the 46 or 

47 on this April 10th document changes, so as you get toward 



6 .j the end of meeting the requirement, do you recall any 
J ^ 

7 I discussion with John Chapman or anyone else at MICOM at that 

■i 

8 1 point that if we met the requirement in the quantities 

9 I requested, there would be significant depletion of any items 



10 
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that were of critical importance? 

A The answer is, yes, John and I did discuss it. 
There would be significant depletion of some of the critical 
items . 



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John and I, by the way — John Chapman, that is, 
and Bill Reyer and I and John — never had a disagreement on 
what that perception of the truth was. And ray perception of 
what they were telling me. We were parties to the agreement 
throughout this project. 

All right. You indicated the discussion with 
John Chapman was to the effect that there would be 
significant depletion of some of the items. 

Do you recall a number as to how many items there 
would be? 

A I think we got down to less than 11 items at the 
end. And, again, some of those 11 items were, in fact, ore- 
phase two, if not all of them. 

Q All right, that gets more specifically to my 
question. Do you recall if any of them were common items 
for subsequent readers of the deposition? "Common items" 
means those items that were used on the pre-phase two and 
the post-phase two? Or, in layman's language, the old Hawks 
and the new Hawks? 

A John, I can't right now. But, again, if we can 
recover my working papers, it should show those details. I 
had those details recorded at one time. 



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Q But, in terms of your recollection now, do you 
recall if any of the less than 11 items were common use 
items? 

A I don't recall that they could have been. I 
would also tell you for the record that when I was up there 
in November, those working papers were still in the office, 
even though I'd been gone for six months. 

That is, the master worksheet that should show 
all fo the figuring on those parts. 

- Of the — let's assume that since you don't 
recall, but said some of them could be common use items, 
let's assume that there were some 




Do you recall any discussion of whether those 
less than 11 items, for which there would be some depletion, 
were in the high risk or critical category in terms of the 
firing of the weapon? 

A What I remember is that when we boiled finalists 
down to the 11, that all of those 11 were! 




All 11 were, is your recollection? 



Yes, sir. That's the reason we made the decision 



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to provide as many of them as we could. I could add that 
General Russo and I entered into some decision-making at 
this point on these items after Bill had given me the final 
data and before I got back to John Chapman, we had further 
massaged the data with the agency. 

It was at the point where we boiled down to the 
fact that there was going to be significant depletion of 
i t e m ^^^^^^^^^^^^^^^^^^^^^^^^^^^^1 
General Russo asked me to go out and get manufacturing data 
and find out when the replacements were going to flow back 
into the system. 

On some of them, John Chapman offered and it was 
critical to our decision-making process that even though 
there might only be three of an item in the entire Army 
inventory, that he might on] 




And so he could live with us on a small number of 
items taking all the inventory out of the system on the 
basis that there might not be any demand at all for any of 
those items over quite a long period. And he would expect 
that he would have been able to replace them through 
manufacturing replacement, except in a couple of cases — I 



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think on pre-phase two — he did not get any more orders in. 

And there was a problem there in getting a 
sufficiently large number of orders to give to the 
manufacturer. He was going to actually wait until they had 
another demand on some of his low demand items before he 
even went and ordered them. 

Let me see if I can synthesize what you're 
saying, because this is important. 

First, as to the number of items for which there 
would be significant depletion, do you recall it as being 
less than 11, or specifically 11? 

A Just about 11, John. It might have been 12. It 
might have been 10. But I remember our final list of items 
^^^^^^^^^^^^^^^^^^^^^^^^Hthat were to 



15 significant impact were about that many. 

16 I Q And bv 

17 ^^^^^^^that means they are important parts? 
No. If I can interject here, 




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Q On the one hand, you can say that the Army was 
doing a very good job of seeing to it that the customer got 
the parts they requested, since all 11, as you say, were 




DUt, ll^there was going to be significant 
depletion o^ some of these 11 parts from U.S. inventories, 
if any of them would come into use, the argument could be 
made then that we would be jeopardizing active Army units, 
could it not? 

A The argument could be made if you ignored the 
manufacture and replacement times that we had worked out on 
the items that we were significantly depleting. 

But, if you take into account manufacturing and 
replacement time and the very low demand on some of these 



18 I items, you could argue that the impact on actual readiness 



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was very minimal. 

Q Let me ask you if you recall the discussion in 
specifics oi 




just 



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because that's a significant item. But I don't remember any 
more details than that about it. 

Do you remember any discussions specifically with 
Chapman or Reyer about 

A John, I am sure we discussed it only because we 
discussed each and every item in detail over the weeks of 
the project. So, if John says we discussed it, he's 
absolutely right. 

But what we discussed I don't have the foggiest 
idea, jyst that I know we worked all these figures. 

Because, again, we had asked when we got down to 
critical items how long would it take to get items back in 
the inventory. 

Let me tell you what the testimony is that's been 
provided to us and see if any of this resonates and if you 
recall that any of this was made known to you at the time. 




Let me ask you if you recall a discussion to the 



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A Sir, all the items that we were going to 

significantly deplete were discussed at General Russo's 



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Was there any discussion with representatives of 
the agency that you did not want to provide some of these 
items? 

A YeS/ sir, there was. 

What was the resolution? 

A Well, if I could back up and add one more thing 
to give this question a little depth. John, on some of the 
critical use items, if there was going to be some depletion, 
would offer substitute items. A lot of that was done. 
There were quite a few substitutes provided. Some of them 
were on the critical use. items. 

Also, John was able to accelerate the production 
for me on a number of items. And, again, I just don't 
remember the on^^^^^^^^^^^^^^^^^Msut, 
got down to our final list. General Russo asked me to get 
back with the agency. That was his guidance. 

When we got down to the final days, before we 
agreed to preposition the thing, we were looking at the 
actual numbers on my worksheet of when does this item come 
back into production. 

And John had also given me -- it was on that 



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1 1 worksheet — the number of demands basically per year for a 

2 three-year period. 

3 I So» General Russo was able to see what we had on 

4 hand, what was being requested, what we were getting back in 

5 the inventory and when we would get a hold again. 

6 All that was on his work copies. And he said, 

7 Well, I don't think — generically, his comments were, I 

8 don't think we can give them all these things, and I want 

9 you to get^ back to them and pare this down. 

10 . Basically, the — 

11 I'm sorry? This is General Russo? 

12 A General Russo talked to me. He was very 

13 concerned about readiness. And, actually, we did cut things 

14 down in some vociferous arguments. I made some recommended 

15 cuts. Again, I'm doing the technical work now. And, again, 

16 I'm consulting with John Chapman, not doing it in a vacuum. 

17 We talked about some numbers that ought to be cut 

18 down. I went over and offered those to the agency and in a 

19 I vigorous session, we restored some of the figures. 

20 ; And, again, you have to keep in mind I'm kind of 

21 I the working official left to come up with the specific 

22 I number. And when I finally gave those all back to General 



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"^"^V/bc 1 Russo, I think the right word for his reaction to it was 

2 ! acceptance^ 

3 I Do you recall ifl 

4 \ specifically discussed with your counterpart at the CIA? 

5 A Sir, we discussed all of the critical use items 

6 that were going to be significant, in depth and in detail. 

7 I Q If the Iranians requestec 
I H^^^^^^^^^^^^^^H which we — show 

9 you that document in a moment -- would that mean -- and if 

10 all of these 11 or so were specifically discussed with the 

11 Ij agency, would that mean that they basically overruled your 

12 ij judgments on readiness and said you've got to provide them? 

i 

13 M A I wouldn't say that. Another item that entered 

14 .! into this factor in there near the end was, about the time 
1 

15 we came down to all the critical use items, John Chapman 

16 . started to challenge. And he did a very good job of this, 

17 I again, as I say. For the record, he vigorously defended the 

18 |i Army's interests. 

19 I' He challenged a number of these critical use 

20 I items, saying that only one of them was required per system. 

21 I And he was wanting me to get from my counterpart at the CIA 

22 I the actual numbered systems. 



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He also asked the specific question: Were all of 



these items going to replace broken parts and were all the 
systems currently being used. And he pointed out that he 
was at that time vigorously trying — that is, he, John 
Chapman -- was trying to get the actual serial numbers of 
the systems, which he said he could then come up with 
basically work data on and tell me whether or not they even 
needed all of these items. 

Again, I was unable to successfully get that. 
But that was part of the factoring of the decision. So John 

11 I was really a full participant in influencing me. 

12 ' But, the bottom line is it was basically left to 

13 I me to make the decisions on the actual numbers. And I 

14 ' didn't do it in a vacuum. 

15 Q Was there anything in your discussions with the 
agency abou^^^^^^^^^^^^^^|that 

17 ' different from the treatment of the other items? 

13 i' A Again, if you tell me it was a critical item, I'm 



19 
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kind of at a disadvantage without ray working papers. That 
would bring back a lot of details. 

But I don't remember anything specific at all 
about^^^^^^^^^^^^^Hwithout those notes. 




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And nothing in terras of your memory now? Nothing 
stands about^^^^^^^^^^^^^^Kt brea)(s 

of the category of the 11 or so? 

A No. 

I think you've answered this, but let me ask it 
specifically for the record. 

Was there anything on behalf of your agency 
counterparts that they said, that would suggest a greater 

by the in^^^^^^^^^^^^^^Hthan any other 

repair part? 

A No. But I think it's important to note that when 
I went to meet with John and with my counterpart at the 
Agency on my recommended reductions to his list, two 
significant items occurred at this time. 

One of them was that some of the substitutes I 
offered, he clearly had a price limit on this project. And 
he, himself, killed some numbers that I had offered on the 
substitutes — a substantial number in some cases were cut 
down. 

Again, I reiterate substantial. But that wasn't 
on the day I took the list over to him. He got back to me, 
as I recall, about 48 to 72 hours later with his cuts. And 



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1 ;j he physically came to see me in the Pentagon and brought 

2 'j back his cuts. 

3 11 He cut a large number of items. That was so he 

4 :l could, in fact, fund, he told me. And he did tell me, in 

5 i| fact, he was bumping up against the price ceiling. Then he 

6 I asked me to restore some of the other critical items. 

7 :l And I guess that, since I had the production 

■| 

8 replacement data and since I was talking to John pretty 

I 

9 regularly, I think that my mind set at the time was, you 

10 know, that the highest leadership of the Defense Department 

11 had already dictated our support on this. 

12 I And what we had boiled down to at the end is we 

13 I only had a small number of parts that were actually going to 

14 have a significant impact no the long-range. 

15 MR. SAXON: Let me ask you to look then at the 

16 next exhibit. 

17 I ask that this be marked as Exhibit 8. 

18 (Deposition Exhibit 8 identified.) 

19 ;| BY MR. SAXON: 
i; 

20 ■; Q This is what we were provided by MICOM as the 

21 1 final list of what they were given, of what they must 

22 I actually ship. 



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If you look at the cover sheet, it's from 
Headquarters DA to Headquarters MICOM. And the office 
symbol of DALO, the Department of Army Logistics Office. 

This was sent on the 23rd of April, 1986. Let me 
ask you first if you prepared this document or had anything 
to do with its preparation. 

A John, this looks very familiar. It's not that 
all the parts here -- there were technical instructions both 
before and after this list, but this looks like the format 
that I provided to John Chapman. 

Am I correct, in his representation, that this is 
the sort of Must Ship These list that DA provided to MICOM? 

A Yes. And I would mention that before we sent 
this, John and I had actually gone over all the details of 
the message over a phone. That is, we had gone down item 
No. 9, quantity of five, this is the price. 

In other words, this is extremely well-rehearsed. 
And I might add that before the date that this went out, I 
think it went out immediately, prepared about three weeks 

earlier and rehearsed in great detail with John. 

I 

I So that, if, for any reason, there was a 

' disconnect communication or anything else, he already had 



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working papers separate from the message that confirmed. 

This was kind of like the formal document of 
accountability, that is, the official DA instructions to 
ship. The details are on this message John had on the 



5 ' working papers, right down to the last item in the price 



Let me ask you for the record to look at page 2 



7 I of each of these two Hawk repair part exhibi 




Would I be correct then — 

Do we have the same page 2, John? 

Yes. 

Sorry . 




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A But I don't know what the details were. Again, 

my working papers, we may have found more of these items. 

There's an important omission here. Not to have 
the working papers that show how the decision process 
worked . 

Do you have any knowledge of the extent to which 

General Russo made anyone above him in the Army leadership 
aware of any readiness problem with the Hawk repair parts? 

A Sir, I wasn't privy to those discussions, if any. 

So, if he had, you weren't made aware of that? 

A No. But, again, speaking generically, it was 

General Russo' s habit to keep DCSLOG informed on all keys 
used. 

Q For the record, that would be Lt. Gen. Benjamin 

17 ! F. Register, the Deputy Chief of Staff? 

18 , A Now retired. 



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Q When you testified in your deposition on June 
1st, you indicated that the readiness impact on the Hawk 
repair parts which were provided, you thought, would have 
been confined to our FMS customers, today, you suggest that 



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"■"■'/be 1 I you recall that some of these 11 items probably were — and 

2 I don't want to be unfair. If I mischaracter ize this, so 

3 ! correct me — but you thought probably some of them were 

4 common use items. 

5 What can you tell me further on that? Do you 

6 have any specific recollection that any were common use 

7 items? 

8 A Mot on any specific item. Again, I keep coming 

9 back to my worksheets. I had kept detailed notes on how the 

10 decision process actually worked, and they should still be 

11 available; they were in November. 

12 And somebody, I'm sure, has them. 

13 Q I'm not sure if that's responsive totally. I 

14 understand if you don't have specific detailed knowledge, 

15 which means that you might not know if it was two or four or 

16 how many or whatever. 

17 To the best of your recollection, were any of the 
13 II items, which would result in significant depletion, 

19 common use items? 

20 A There may have been some, John. My memory is 

'I 

21 I just fuzzy on that. 

i 

22 I But the testimony I gave you in June is 



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esseatially correct. The impact on U.S. Army readiness by 
shipping pre-phase two Hawk parts was going to be minimal 
overall, and to narrowly focus on only a couple of parts. 

You can take a look at any Defense system and 
say, you know, a couple of parts missing. You know, have 
the manufacturer accelerate that production. 

Do you recall any statement by John Chapman or 
Bill Reyer to the effect that^^^^^^^^^K ^ if it 
were either not functioning or missing, woul 
[the Hawk missile system? 
A John, that sounds 

Again, I remember nothing specifically about 
that. But when we had boiled down, as I mentioned earlier 
today, to the small number of items, all of them| 
|to the successful firing of the weapon. 
Is that the same as saying that if it were either 
defective or a replacement were not available on any of 
these 11, that, in your judgment, it woul 








A .That was John's technical provision to me on all 
of the items we discussed, yes, sir. 

Was there ever any discussion that General Russo 



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should take this knowledge beyond the level perhaps of the 
DCSLOG and discuss it with the Chief of Staff of the Army, 
the Secretary of the Army or with General Powell? 

A I would tell you, in the discussions I had with 
John Chapman and Bill Reyer, they never discussed -- they 
knew I was discussing readiness issues with General Russo. 
They knew that because I had told them who was looking at 
it. 

They had not asked. That had come out in the 
course of reviewing the items, of changing the numbers. 
They never offered or suggested that I go to anybody else 
with readiness data. 

I understand that, although that wasn't my 
question. 

Did General Russo, to your knowledge, was there 
ever any discussion with General Russo knowing that there 
might be just under a doze n parts tha t were of sufficient 
criticality that they^^^^^^^^Ha Hawk missile system, 




19 ll that that level of knowledge should be carried to people 

20 'i higher in the Army leadership or, in fact, to OSD? 



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A Sir, General Russo didn't make me privy to that 

decision process. 



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Q There was no discussion that you had with him 

along the lines -- 

A I didn't recommend him going to OSD. Again, this 

was significantly differjnt than our normal projects. I was 
not even, in the course of normal events, able to take 
projects to the DCSLOG for signature if they were going to 
have a negative impact on readiness, because General 
Thurman's practice had been, over the years, not to approve 
things that negatively impacted on readiness. 

So, if this had been a normal request coming down 
through the Joint Staff, we would have probably recommended 
nonsupport of it. And that would have been the fornal staff 
paper going back up. 

But this was top-driven. So I wouldn't have 
offered to General Russo to go and take something to the 
Joint Staff or to the Secretary. I mean, I would have if it 
had been a different type of request. 

When you testified in your deposition in June, 

and don't misunderstand me in these questions, I'm not 
trying to show inconsistencies or pin you down. I'm simply 
trying to understand what your best recollection is now. 
Your testimony then was that there would have 



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been no more than about a half dozen items that there would 
have been significant depletion on that were of any 
critical ity? 

A I don't think my opinion changes any on that, 

some of the items out of that 11 or dozen. We left some in 
the inventory and, in fact, John Chapman's estimate was that 
he'd be able to have production come back on, even thougn we 
were significantly depleting his estimate of the impact en 
readiness was minimal. 

So the testimony from June is still the same. I 
think it was about half a dozen we were actually going to 
get down to it. There was a pretty long lead time to get 
the Army whole again. 

I've talked about as much as 18 months, I think, 
on a couple of items. So the testimony is the same. 

MR. SAXON: I think that's all that I've got, 
folks. 

MR. GENZMAN: Can I follow up on a couple of 
questions you just had? 

EXAMINATION 

BY MR. GENZMAN: 
^®9="ff*f§S^'¥ i'lfi^ct _on readiness, I may have 




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1 ] misheard you. But I heard you mention that with regard to a 

2 small number of items, there might have been the result of 

3 'I deadlining the system. 

4 I Can you define for us what "deadlining the 

5 ' system" means to you? 

6 . A Sure. Since I've been out in a few infantry 

7 ! divisions, deadlining tr.e system means that it can't 

1 

8 ; function as it's supposed to be by the manufacturer. 

i 

9 I In other words, we're back to the thing that Bill 

10 Reyer said, or John Chapman said: This is critical to 

11 \ successful firing of the weapon, to hit the target 100 
i 

12 , percent of the time. The Hawk missile system is highly 

13 i accurate when it's operating properly. 

14 Lots of parts on it though aren' t critical to 

15 successful firing of the system. If you lose one of those 

16 parts and you can't successfully fire it and hit the target, 

17 the guy out in the field unit is going to say he's deadlined 

18 that until he gets the part. He normally will deadline that 

19 I' if it is something that is missing. 

I! 

20 . Nonmission-capable supply. That's the term used 

21 I out in the field. And that's how it's put on the readiness 
22 



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Q With regard to the Hawk system, could you tell u; 

what the components of that system are so that we're clear? 

A Well, you've got a radar. You've got a computer, 

Let me just tell you, I think that the other part is the 
guidance system, but I'm not positive all these months 
later. I'm not really a field artillery guy myself, but 
there's three major components to it. 

How many launchers use that particular system of 

three components? 

A Well, I don't want to mix up Hawk with any other 

kind of system. A Hawk generically is like comparing a 
Chevy Cadillac to a Volkswagen. They are just two 
completely different models. You can't take any other 
weapon system and say it's like any other one, except that 
you might have some common use items in the DoD supply 
system, like the little rubber gasket or screw. 

Most of the items on that system are going to be 
unique. You might have some circuit boards or some other 
things. But most of the items are going to be unique to 
that system. 



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Q Let me try to focus what my concern is. As a 

2 J layman, I'm not sure how missiles can be launched as a 

3 result of deadlining what you call the system. 
I 

4 : A I don't know enough about the rate of firing the 

5 ] system. 

6 How many launches are connected to the system? 

7 I A You're only going to fire one missile at a time 

8 in one launch operation, basically. 
i 

9 '! Out of one system? 



10 



But the launcher isn't really the part that 




11 i breaks down, ^^^^^^ 

12 ! ^^^^^^^^^^^^iThose are where all the little parts are; 

13 'I that launcher is probably going to work time after time 

14 I after time. 

15 I don't think that too many of these parts have 

16 ! to do with the launcher. 

17 MR. SAXON: For the record, and I should have 

18 ii made this clear in this deposition, the 
19 

20 i; 



21 
22 




BY MR. GENZMAN: 

So, when you say a particular breakdown would 



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1 ;] deadline the system, you're referring to a given _^^ation 
I 

2 ,| which has these component parts and a launcher and more than 

3 I one Hawk missile? 

4 A Trying to speak generically, for any layman, you 
1 

5 would say that any part that would be missing or 

6 ■ inoperative, that you could not guide the system and land 

7 1 the missile on the target when you wanted to; then the 

8 system would not be operating as intended and it would be 

9 deadlined. 

10 Q The point I'm trying to make is whether or not a 

11 system controls one launcher, one missile or a hundred 

12 launchers or a hundred missiles. 

13 ' A No. One radar system will fire one missile at a 

14 time. That's really what it does. 

15 MR. GEN2MAN: That clarifies it for me. 
15 I have nothing further. 

17 MR. SABA: I'm all right. 

18 MR. SAXON: Let's go off the record a second. 

19 j (Discussion off the record.) 

l' 

20 I MR. SAXON: Let's go back on the record. 

21 FURTHER EXAMINATION 

i 

22 i BY MR. SAXON: 



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Major Simpson, it's ray understanding that in a 




7 :! 

8 

11 



Would that be your understanding? 

John, I think the easiest thing I could tell you 



i] is I'm not that technically proficient to give you a good 

12 i answer on that. 

:| 
ii 

13 I MR. SAXON: If my colleagues from the House have 

li 

14 ' nothing further, let me simply say on behalf of both of our 



15 



Committees that we thank you for your time today, for the 



16 time on two previous occasions you've spent with us. And 

17 i you've been very helpful to us as we've attempted to piece 

] 

18 this altogether. 

19 || THE WITNESS: Thank you, John. 

20 ij (Whereupon, at 3:50 p.m., the taking of the 



21 
22 



deposition ceased.) 



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CERTIFICATE OF NOTARY PUBLIC & REPORTER "^^ 

I, DAVID L. HOFFMAN the officer before whom 
the foregoing deposition was taken, do hereby certify 
that the witness whose testimony appears m the 
foregoing deposition was duly sworn by .-ne ; that 
the testimony of said witness was taken in shorthand 
and thereafter reduced to typewriting by me or under 
my direction; that said deposition is a true record 
of the testimony given by said witness; that I am 
neither counsel for, related to, nor employed by 
any of the parties to the action in which this 
deposition was taken; and, further, that I am not 
a relative or employee of any attorney or counsel 
employed by the parties hereto, nor financially 
or otherwise interested in the outcome of this action. 



Notary Public in and for the 
District of Columbia 



My Commission Expires 



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CUSSIFICATION 
remarks: 






NUnaER f SrCWATWe" 



DATE-TIME 



^RECEOEH 




remarks: ' ' -^ 



UPON RECEIPT OF THIS e.J,.„r.-. ■• ftLWHOm HUN»M 

C«1PT OF THIS f*SCI«ILE'«ESSAOE FOR FICitUP. AOOHmEE |'>i 

«"U£.T« TO «««OWLEOOE rScE^PT TO 0R,6,„*T0R AT TELSPHONE XUHij 



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Oeclassitied/Released onii_£c£^£g 
under provisions o( E 12356 
by K Johnson, National Security Council 



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1430000205562 
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1430010367228 
1430004848559 



2,002.00 
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1,287.00 



3,414.00 
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23 

24 

25 






DEPOSITION OF THOMAS C. SINCLAIR 



Thursday, February 5, 1987 



House of Representatives, 

Select Committee to Investigate Covert 
Arms Transactions with Iran, 

Washington, D.C. 



The select committee met, pursuant to call, at 10:40 
a.m., in Room 2226, Rayburn House Office Building, George 
W. Van Cleve, Deputy Republican Counsel for the House Select 
Committee to Investigate Covert Arms Transactions with Iran 
presiding. 



^■■l.a;;y Dec;;,ssifi,!-;/Release.^ on .^^gcfl? 

^''^^' ''^"cna. oecurity Coundl 
<• Johnson 






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14 



UltOEASSHlfiDr 



APPEARANCES 



1 

2 

3 

4 

GEORGE W. VAN CLEVE 
5 Deputy Republican Counsel 

for the Ho-ise Select Committee to 
° Investigate Covert Arms Transactions 

with Iran 
7 U.S. House of Representatives, 

Washington, D.C. 20515 
8 

9 HENRY SIMPSON 

Counsel for Baggett Transportation Company 
"•O 1700 First Alabama Bank Building 

Birmingham, Alabama 35203 
11 

12 Also present ; 

13 ROBERT L. NUNNALLY 
Executive Vice President/Treasurer 
Baggett Transportation Company 
2 South 32nd Street 

15 Birmingham, Alabama 35203 

16 
17 
18 
19 
20 
21 
22 
23 
24 
25 



mUHASSlElED- 



859 



1 

2 here- 
3 



mmm 

MR. VAN CLEVE: Let me do a brief introduction 



8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 



For the record, I am George Van Cleve, the 
Deputy Republican Counsel for the House Select Committee to 
investigate Covert Arms Transactions with Iran. 

Here today are Mr. T. C. Sinclair, President of 
7 Baggett Transportation Company — 

MR. SIMPSON: And Robert L. Nunnally, Executive 
Vice President of the Baggett Transportation Company, and I 
am Henry Simpson, counsel for Baggett Transportation Company. 

MR. VAN CLEVE: Let me make clear for the record 
that the witness is appearing today pursuant to a subpoena 
from the House of Representatives pursuant to House Resolu- 
tion 12, 100th Congress, first session, and has appeared and 
produced documents responsive to that subpoena. 
He is accompanied by his attorney, 
we very much appreciate your willingness to be 

here this .morning. 

The second thing I think we ought to have clear on 
the record is that given the nature of some of the informa- 
tion that may be discussed this morning, everyone who is 
here present at the deposition, including the reporter, has 
received appropriate security clearances and all portions of 
this transcript will be treated as a classified document. 
Did you have an openinq statement? 




860 



UNSumeir'' 



1 MR. SIMPSON: We are appearing in response solely 

2 to the subpoena. 

3 Baggett has undertakings with the Department of 

4 Defense concerning security, probably most of which is com- 

5 pletely unrelated to the task of this committee, but which 

6 we must observe and we are proceeding on the assurance that 

7 the transcript and all documents produced will receive the 

8 secret classified treatment upon counsel's assurance that it 

9 is permissible with that clearance for the testimony to pro- 

10 ceed. 

11 MR. VAN CLEVE: I would like to reiterate that you 

12 have my assurance on that. 

13 With that, I have not myself had an opportunity 

14 to review the documents that you have brought with you today, 

15 but I see that there is an index of materials that have been 
1g produced, and if I might just briefly make sure that I know 
17 what is in front of me — 

13 MR. SIMPSON: This is an index of material we have 

19 brought. It has not all been produced. Some of it, since 

20 it is financial statements you may think will clutter the 

21 record and be irrelevant. 

22 We have attempted to respond fully to the 

23 subpoena and that is an index of the documents we have here. 

24 MR. VAN CLEVE: I appreciate that. 

25 One of the things that we will do in the course of 



llNCLAil&lQEIL 



861 



wsmh 



1 the deposition is to go through and niark the various 

2 documents as exhibits to the transcript. They will receive 

3 the same treatment as classified material, as the transcript 

4 will until further action by the House committee. 

5 With that introduction, I wonder if I could ask 

6 Mr. Sinclair to go through the documents and tell me what we 

7 have here just in very general terms and then I am going to 

8 proceed to question you about the documents. 

9 (Discussion off the record. ) 

10 MR. VAN CLEVE: Back on the record, please. 

11 I would like to have a document that is labeled 

12 "Index of Materials Produced" identified as Sinclair Exhibit 

13 1, please. 

14 (Whereupon, the document referred to was marked 

15 Sinclair Deposition Exhibit No. 1 for identification.) 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 



uNHi mmL_ 



862 



10 

11 

12 
13 

14 



mmm 



r 



THEREUPON 

THOMAS C. SINCLAIR 
was called as a witness and testified as follows: 
EXAMINATION BY MR. VAN CLEVE : 
^ Q Mr. Sinclair, I would like to show you a copy of 

" Sinclair Exhibit 1 and ask you to please explain which of the 
' categories of documents shown on this index have physically 
° been produced for inspection by the committee today. 

° A All of the 11 items named in the index are in the 

room for inspection. 

Q Thank you very much. 

We have a large pile of computer materials which 
appear to be originals, and if I understood correctly, these 
are materials responsive to our corresponding with items 

15 4 and 5 on the production index? 

16 A Yes . 

17 Q And they are labeled, as I understand it, with 

18 appropriate numbers to show whether they respond to item 4 

19 on the materials index or item 5 on the materials index? 

20 A Correct . 

21 Q Thank you. 

22 As I understand it, you are willing to leave these 

23 with the committee — 

24 A Yes. 

25 Q Thank you. 



863 



UWSiii 



1 Turning then to item No. 1, the Baggett Transporta- 

2 tion Company organizational chart, I wonder if I might have a 

3 copy of that document to review. 

4 (Document proffered.) 

5 MR. VAN CLEVE: Could we mark a document labeled 

6 "Organizational Chart, Baggett Treuisportation Company, 

7 Birmingham, Alabama," as Sinclair Exhibit No. 2, please. 

8 (Whereupon, the document referred to was marked 

9 Sinclair Deposition Exhibit No. 2 for identification.) 

10 MR. SIMPSON: Let me just comment that that does 

11 have a date of July 30, 1984, which was the last written chart 

12 of this type that we developed. It is in some respects not 

13 current. 

14 MR. VAN CLEVE: I wonder if I might ask Mr. 

15 Sinclair — 

16 BY MR. VAN CLEVE: 

17 Q Looking at Sinclair Exhibit 2, could you indicate 

18 for me in what major respects this orgemization chart would 

19 not be current today, not necessarily specific lower level 

20 personnel, but either in terms of the overall structure or 

21 some of the people at the senior vice president level? I 

22 wonder whether those have changed? 

23 A No changes there. 

24 Q So this is substantially accurate as far as the 

25 current organization of the compeiny and its senior personnel? 






864 



UNIiUSSiaEil 



1' 



1 A Right. 

2 Q Turning now to item No. 2 on the schedule of 

3 subsidiaries, do you have a copy of that document present 

4 for us to examine? 

5 A Yes. 

6 MR. VAN CLEVE: Could we have a document entitled 

7 "Schedule of Baggett Transportation Company and Subsidiaries 

8 and Its Affiliates as of 1-28-78" marked as Sinclair Exhibit 

9 No. 3, please. 

10 (Whereupon, the document referred to was marked 

11 Sinclair Deposition Exhibit No. 3 for identification.) 

12 MR. VAN CLEVE: I have had an opportunity to briefly 

13 review Sinclair Exhibit No. 3 and at present I have no 

14 questions on that document. 

15 Turning now to item 4 on the index, the 

16 Department of Defense shipments manifest, this is described 

17 on the index of production as shipments listed by origin for 

18 years 1984, 1985, and 1986; shipments listed by destination 

19 for years 1984, 1985, and 1986. 

20 Could we have all of the materials marked within 

21 item 4 here identified as Sinclair Exhibit No. 4, please. 

22 (Whereupon, the documents referred to were marked 

23 Sinclair Deposition Exhibit No. 4 for identification.) 

24 BY MR. VAN CLEVE: 

25 Q Mr. Sinclair, I should have done this previously, 



XHm h LnddtMBjiwi 



865 



masmh 



' but I want to make sure that you are completely comfortable 

^ in answering my questions and, therefore, if at any time I 

•^ ask you a question and it is not clear or you are not sure you 

^ understand it, I hope you will stop me and ask me to explain 

5 the question. 

° Similarly, if at any point you feel a need to speak 

7 with your counsel, please go ahead and do that before you 

8 answer a question. 

9 With respect to the Department of Defense shipments 

10 manifest material now marked as Sinclair Exhibit No. 4, 

11 Mr. Sinclair, very briefly, sir, what is the purpose for which 

12 this material is maintained by Baggett Transportation Company? 

13 A We maintain a manifest of all shipments moved for 

14 all customers for our own records. 

15 Q And a manifest, so that I am clear on this, is 

16 exactly what? 

17 A The financial record of the company. 

18 Q A financial record? 

19 A Yes. 

20 Q So that a shipment manifest is what kind of 

21 document; what does it tell you as an official of the company 

22 if you review it? 

23 A That particular manifest tells me the origin, the 

24 destination of the shipment, the customer, the revenue pro- 

25 duced by the load, the number of miles it traveled. It 



imASSML. 



866 




'''S:\rM^^ 



10 



1 generally gives you all the information with respect to the 

2 movement that can be supported by other documents. 

3 Q That can be supported by other documents? 

4 A Yes. 

5 Q Does it tell you the nature of the cargo? 

6 A No. 

7 Q Is there other documentation maintained by the 

8 company that would identify the nature of the cargo, just 

9 purely for informational purposes? 

10 A I understand. 

11 The bills covering each shipment give you the 

12 Department of Transportation classification of that shipment, 

13 but not necessarily specifically what it is. 

14 Q Okay, but you do maintain — is that for 

15 reporting purposes to the Department of Transportation that 

16 you maintain a classification — 

17 A No, for compliance with their hazards material 

18 rule. 

19 Q So basically there would be a broad distinction 

20 between hazardous and non-hazardous materials? 

21 A Yes. 

22 Q If I might briefly sumraarize what I understand 

23 you have told me about the nature of the manifest, it will 

24 tell you as a company official and will tell me if I under- 

25 stand the various entries, the origin of the shipment. 



iiMp-i hmM 



867 



25 





i' 



11 



1 destination of the shipment, revenue produced by the shipment, 

2 the number of miles in the shipment, and the weight of the 

3 shipment? 

4 Have I got the basic purpose correct? 

5 A Yes. 

6 Q Is the format of these shipments manifest 

7 consistent throughout these documents? In other words, if 

8 we look at one page of this and I understand what is on here , 

9 I will be able to read the whole document? 

10 A That is correct. 

11 Q ' Looking at page 1 of what is marked Exhibit 4 , 

12 just to make sure I understand how this works, I ask you to 

13 read through the various columns for me and either say that is 

14 precisely what it tells you when it says origin or if it is 

15 destination and so on, if anything is abbreviated — 

16 A The document is a listing by destination. I believe 

17 I could make a more clear explanation with the same document. 

18 Q I will be happy to replace this then with a 

19 similar document. It appears to me that there are two sets of 

20 materials here. 

21 A All three of those are destination and all three of 

22 those are origin for three years. 

23 Q Are all the destination documents marked with 4-B; 

24 is that correct? 
A Yes. 



IMIAS^IEIOL 



868 



23 



B 





12 



Q And all the origin documents are marked 4 -A? 
A Yes. 

Q If we could ask you to look at the document and 
walk us through it. 
^ By the way, I appreciate your bearing with me. As 

" you probably can tell, 1 have never worked in a cargo 
business. 

A Exhibit 4-A that you have given me is a listing of 
^ all the shipments handled by our company in the year 1984 
'^ listed by origin. Those origins are listed alphabetically 
^^ by state of origin. 

The first shipment originated in Anniston, Alabama, 
and was destined for New Orleans, Louisiana. That shipment 
consisted of one load, had one PRO number — 
Q A load is a container — 

A Or a trailer or some other conveyance which is a 
complete load. And the PRO number is the weigh bill that we 
cut on each shipment we handle. 

Q If I might stop you there, the weigh bill, what 

20 does that tell you? 

21 A We have copies of those in the room if you want to 

22 see one later 
Q Okay . 

24 A The actual weight of that shipment is indicated 

25 as being 19,170. iW* tWife^cL 40(1 jai^^and produced a revenue 



lomiimL 



869 



13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 



wmB^ 



13 



^ of $540 

2 Q That is the precise statement that your company 

2 received for that particular shipment? 

4 A That is correct. 

5 Q Is there anything else that this document would 
g tell you other than what you have just described for me? 

A No. That is the extent of it 

Q Q Okay. Thank you 

g Looking now very briefly at a destination document, 

it appears to be set up in a very similar way, but simply to 
be listed or organized alphabetically by state, by destination 



^2 A By state and destination. 



Q So there should be an entry on this destination 
listing for every entry on the origin listing during a partic- 
ular year? 

A Right . 

Q If I understood what you said earlier. Exhibit 4 
is a listing of all the shipments by Baggett Transportation 
Company during that particular year, not just for a particular 
customer, but all the shipments? 

A No. This is for or related to the United states 
Government. 

Q Solely for the Department of Defense or for other 
government entities as well? Be as general as you like. This 
is all government-related shipments by Baggett Transportation? 



UMCLASSIEIEJL 



870 



6 



tl 





i' 



14 



1 A That is correct . 

2 Q That would include all of your subsidiary 

3 companies as well? 

^ A The subsidiary companies have nothing to do with 

5 the transportation company. This is solely the transportation 



company . 



7 Q And that is all you do in the way of freight 

8 moving? 

9 A Correct. 

10 Q So what we have here in Exhibit 4 , and correct me 

11 if I am wrong, is a complete listing of all shipments per- 

12 formed for the United States Government by Baggett Transporta- 

13 tion Company in a particular year and for the years 1984 

14 through 1986? 

15 A That is correct. 

16 Q Is there 2uiy law or regulation under which you 

17 might be either permitted or required not to show a shipment 

18 on this listing? 

19 A I am not aware of one . 

20 Q So that it is your testimony that if your company 

21 was involved in such a shipment for the government during the 

22 years 1984 to 1986, it will be reflected on these documents? 

23 A Yes. 

24 Q Thank you. 

25 MR. SIMPSON: If it is a U.S. Government shipment. 



871 



mmsiHEB''' 



15 



' according to the shipper's originating information; is that 

2 correct? 

3 THE WITNESS: We better go off the record. 
* MR. SIMPSON: He asked you if this was all 

5 shipments and it is, of course, not all the company's ship- 

° ments . It is all the shipments that was the government. 

7 THE WITNESS: That is what I said. 

8 BY MR. VAN CLEVE: 

9 Q If a private individual were to come to you — 

10 let me put it the other way around -- if someone were to come 

11 to you and ask you to make a shipment of material and stated 

12 that it was being done for a private individual, do you have 

13 any reason to inquire as to the actual identity of the shipper 

14 or do you accept whatever representation is made to you? 

15 A We hold ourselves out to serve the general public 

16 as well. 

17 Q So when someone says, "I have a shipment I would 

18 like you to move," it is not your responsibility to determine 

19 who actually is making that shipment, am I correct about that? 

20 A As far as the movement of the shipment and the 

21 authority to move it, we have no responsibility for it, but we 

22 do have some responsibility to our company to be assured that 

23 someone is shipping it who will pay for the movement so we 

24 can protect our position. 

25 Q From the financial point of view, but in terms of 

i iMoi ACQinrn 



872 



wm^fli^^' 



16 



' the precise identity — I am making sure I understand things 
2 here — suppose that an entity which gave its address as 
^ Geneva, Switzerl«md, and were represented by, say, a local 

attorney, came down to you and asked you to ship some material 
° it would not be a matter of particular concern to you what the 
^ precise identity of the Geneva company was? You would simply 

7 want to know whether you were going to get paid for the 

8 freight? 

9 A That is correct. 

"10 Q Is that true for the nature of the shipment? If I 
^^ came to you and told you this was spare parts for machinery 
12 and, in fact, I were moving some sort of hazardous material, 
is it your responsibility to determine whether or not it is 
hazardous material or can you simply accept my word for what- 
ever it is? 

16 A It is our responsibility to be aware of the nature 

17 of the commodity being transported and we require in any 

18 hazardous mater ia f'a^ c ur le J.fi gat ion on the bill, the extent 

19 of the hazard of that material. If someone lies and seals a 

20 trailer or container and simply falsifies the document in 

21 connection with it, we wouldn't be pleased about it, but we 

22 would have no way of knowing it. 

23 Q You don't actually break the seals, in other words? 

24 A We are not allowed to. 

25 Q Thank you for that. I see. 



873 



ijd^i^iiei' 



17 



1 Earlier there was some discussion about a particular 

2 set of shipments during the years 1984 to 1986. I may refer 

3 to that from time to time as the relevant period, and those 

4 will be the years that I mean if I do. 

5 Are those shipments marked in any way on Exhibit 

6 No . 4 ? 

7 A They are not actually marked, but you have 

8 Exhibit No. 5, which details those shipments. 

9 Q That is what 1 was abOtft to come to. 

10 '^^S<5 this is a general record that you have no mark- 

11 ings on it which would indicate one way or another whether 

12 particular shipments were of interest to the committee? 

13 A Correct. 

14 Q But those shipments you said are represented in 

15 Exhibit No. 5 would appear in Exhibit 4? 

16 A Some of those may be highlighted with a yellow 

17 marker. Some may be. I don't recall. I think maybe they — 

18 MR. SIMPSON: Off the record a minute. 

19 MR. VAN CLEVE: Off the record, please. 

20 (Discussion off the record.) 

21 MR. VAN CLEVE: Back on the record. 

22 Mr. Nunnally, referring to Exhibit 4, vbSHh 

23 we haVe been discussing with Mr. Sinclair, would you please 

24 explain the nature of this in conneCCiOfCfflth your company's 

25 overall business? 



ii&im^ou^ 



874 



mmsra 



1' 



1 MR. NUNNALLY: Exhibit No. 4, which is shipments 

2 listed by origin for years 1984, 1985 and 1986, is a summary 

3 of shipments that we moved for the Unites States Government 

4 embracing the full year and not a detailed manifest of each 

5 shipment. 

6 MR. VAN CLEVE: So, for example, just taking an 

7 entry from page 1 of a document marked 4-A, a listing by 

8 origin, there is an entry here that shows as the origin by 

9 name, Alabama; destination. Red Stone Arsenal, Alabama; and 

10 the number of loads as 23. 

11 It is your testimony that from this document, we 

12 cannot tell — correct me if I am wrong — whether or not this 

13 represents 2 3 loads that were carried as part of one shipment 

14 or 2 3 loads that were carried during the entire year of 1984; 

15 is that correct? 

16 MR. NUNNALLY: Yes. 

17 _ 

18 MR. VAN CLEVE: Gentlemen, we need to get this 

19 clear on the record. 

20 MR. SIMPSON: Go ahead. These are computer 

21 records and between the two of these gentlemen, we will get it 

22 straight. 

23 MR. NUNNALLY: You got two things — go back. 

24 MR. VAN CLEVE: Did I happen tl5*?B.ck an 

25 exeunple — 



ufJIitliviiliil^lE itf 



875 



UNfigi^FI^''' 



19 



MR. NUNNALLY: In this instance here, you have 
got the number of loads and the number of PROs is the same. 

MR. VAN CLEVE: What does that mean? 

MR. NUNNALLY: That there was one bill of lading 
for each shipment. 

MR. VAN CLEVE: The PROS means what? 

MR. NUNNALLY: Weigh bill number. 

MR. VAN CLEVE: How is it then possible for you to 
determine the connection between the number of loads and the 
number of PROs? 

MR. NUNNALLY: You can have a weigh bill which is a 
master which will cover more than one load of freight, so you 
could have one weigh bill representing six loads of freight. 

MR. VAN CLEVE: And how would that show up on this 
document? There would be an entry in the column for PROs 
that would say one and an entry in the load column that would 
say six; is that correct? 

BY MR. VAN CLEVE: 
Q Looking at page No. 34 of the first document 
marked as Subsection 4-A of Exhibit 4, the witness has drawn 
my attention to an entry in the first large group of entries 
on page 34 and I would ask you to read through the entire 
line just so we could have it clearly identified and then 
explain the significance of the connection between loads and 
PROS. 



UNtLASSMl. 



876 



l»!i*.SSiaHt 



20 



1 A The origin of these shipments was early. New 

2 Jersey with a destination of Charleston, South Carolina. We 

3 had 18 loads move during 1984 between those points. 

4 We had 15 PROs issued, which means that on some of 

5 the shipments there was more than one load on a PRO. There 

6 were 304,000 pounds of it moved, a total of 12,483 miles, and 

7 the revenue for the 18 loads was $22,672. 

8 Q Mr. Sinclair, say you had a shipment of 10 loads. 

9 Is there any particular requirement that it be on one weigh 

10 bill, three weigh bills, five weigh bills? That is just a 

11 matter of convenience; isn't it? 

12 A The government or the shipper determines that 

13 as a matter of convenience. If they are moving 10 loads in on^ 

14 day and can prepare one bill instead of 10 , we sometimes do 

15 that. 

16 Q Picking a shipment here at random, 4 -A, from by 

17 number Aledjama to Fort McClellan showing 31 PROs and 31 loads, 

18 we know whether or not those 31 loads moved at one time during 

19 the year or at 12 times during the year or for that matter, on 

20 31 separate occasions; is that correct? 

21 A Yes. 

22 Q So we want more detailed information about the 

23 movement of material. If we wanted that sort of information, 

24 would your compsmy records have it and if so, in what form 

25 would it be main 




877 



mmms' 



1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 



A Well, in two forms. In one form in the 
detailed manifest that Mr. Nunnally referred to, and number 2 
on the weigh bill documentation itself. 

Q I see. 

Does your company maintain those as company records? 

A Yes. 

Q That is voluminous material, I am sure. 

A Yes. 

Q And I entirely understand why you might have 
presented us with a summary today, but you do have the other 
records available if the committee should have need of them? 

A Yes. 

Q I very much appreciate your clarifying the nature 
of those entries. I think that will avoid some confusion down 
the road. 

MR. VAN CLEVE: Turning now to — on the index 
of materials produced to entry No. 5, Department of Defense 
shipments to^^H^B^^^^^^^^^ I ask that this be marked as 
Sinclair Exhibit No. 5, please. 

This is a computer printout sheet consisting of what 
looks like about a dozen pages. 

(Whereupon, the document referred to was marked 
Sinclair Exhibit No. 5 for identification.) 
BY MR. VAN CLEVE: 

Q Mr. Sinclair, looking, at. fijfiiibit No. 5, could you 





878 



1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 



mmm 



1' 



22 



please explain briefly what this document is? And if there 
are any headings on the computer sheets that appear to need 
some explanation, if you could explain them, i would 
appreciate that, for the record. 

A The subpoena we received specifically requested 
information on moving j^^^^^^^^^^^^^^^^^^^ to Kelly 
Air Force Base. 

Since we had previously received requests to 
produce records on 

we included both of those destinations on this 
printout' identified as 5, and this is the same three years, 
information from our system to those points and in the same 
kind of information. 

Q So we are clear on that, when you say from our 
system, you mean shipments by Baggett Transportation Company; 
is that correct? 

A Yes. 

Q And this in effect is a portion of the 
destination manifest that we were reviewing in Exhibit No. 
4 — this would be a summary of that? 

A It is a further breakdown. 

Q Relating to shipments either t 

Kelly Air Force Base^^^^^^^^^^^^^H is that 




correct? 



Correct. 



iUii£US£IEiCIU 



879 



1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 



MR. VAN CLEVE: Can we go off the record. 



23 



please . 



(Discussion off the record.) 
MR. VAN CLEVE: Back on the record. 
BY MR. VAN CLEVE: 
Q Mr. Sinclair, referring again to Sinclair Exhibit 
No. 5, I wonder if you might explain in a little more detail 
the nature of this document, where the shipments come from, 
where the shipments go to. 

A Did you want me to do that by page? 
Q No, sir, ]ust m general terms. You indicated 
previously that these were shipments from anywhere in your 
company's system. 

A In our system. 

Q By any shipper who uses your company to| 
Kelly Air Force Base[ 

is that correct? 
A Right. 

Looking on the first page here, to further 
identify that, you will see Laredo, Texas, to| 

llisted on there and on the back page, you might see 
Phoenix, Arizona ^^^^H^IJ^H^H ^^^^^^^^ which may 
have been government shipments, but was some commodity 
forj^^^^^^^^^H 
Q I understand, sir, and I appreciate that 

liwpuccicirn 




880 



mmm 



24 



1 explanation for the record. 

2 There are a couple of entries on this document 

3 that I don't believe were on the summary form, and just so 

4 that the record is clear, I wonder if you might please explain 

5 from the entry SHPCD to the right on the page. 

6 A That is the shipper code. 

7 Q That is the shipper code, this number, for example, 

8 021, looking at what appears to be page 1 of this document, 

9 that is the shipper code? 

10 A Yes. 

11 Q ■ The next column is the weight? 

12 A This is an internal figure having to do with our 

13 distribution of the money involved in that trip. 

14 Q Within the company? 

15 A Our employees and our drivers . 

16 Q So when this says BTC adjusted. Adj. Rev., 

17 that is Baggett Transportation Company, adjusted revenue? 

18 A Yes. 

19 Q It doesn't tell us anything about the 

20 shipment? 

21 A No . 

22 Q The lessor amount? 

23 A If the load was transported by an independent 

24 contractor working for us, this-tS Vhte* cWByjft of compensation 

25 from that particuLcur shipment that he received. 




ISSSBr 



10 

11 

12 
13 
14 
15 
16 
17 



881 



;VJ • h" 



i!unogiriL 



Q And the receiveLble amount? I assume that is the 
overall company charge for the shipment? 

MR. NUNNALLY: That is what we bill the vendor, 
the shipper. 

Q And the Baggett revenue should correspond in most 
cases with the receiver amount? 
A Yes. 
° Q Could you explain the circumstances under which 
' there would be a difference? 

MR. NUNNALLY: This system was devised at a time 
when we did inter-line certain freight with other motor 
freight carriers. 

In this instance, we would be the delivering carrier 
or the collecting carrier. We would collect the total line 
haul charges and the connecting line would bill us for their 
portion of the line haul charges and this would be the only 
instance where the delivering carrier would have a receivable 

18 list for the revenue 

19 MR. VAN CLEVE: Would that always be indicated by 

20 an entry under the lessor amount column or is that a separate 

21 charge? 

22 MR. NUNNALLY: We have not inter-lined freight in 

23 several years. This is an old program 

24 MR. VAN CLEVE: The question was, in any case, where 

25 there is a difference between the receivable amount and the 



lltlClilMFD,,, 



882 



25 



im/^iESi 



26 



1 Baggett revenue would there be an entry in the lessor amount 

2 column? 

3 MR. NUNNALLY: It may or may not. It would still 

4 depend on whether or not an independent contractor or a 

5 company-owned vehicle addressed our p>ortion of a line haul. 

6 BY MR. NUNNALLY: 

7 Q But the last three entries basically represent, 

8 if I am not mistaken, the internal accounting between Baggett 

9 and either its companies from which it leases or inter-line 

10 transfers it makes; those are essentially internal accounting 

11 entries for the company; is that correct? 

12 A That is correct. 

13 Q Looking more particularly at this document, it 

14 appears that a series of notations have been made on the 

15 document. 

1g Were those placed there by your company? 

17 A No. 

ig Q By whom were these notations placed, if you Icnow? 

19 A I do not know. They were not there when you 

20 received them. 

21 Q That helps me; thank you, sir. 

22 Referring now to a series of shipments for which 

23 you were previously asked to produce documentation by the FBI, 

24 would these shipments all be indicated on this Exhibit No. 5? 
I believe there were 11 sucl 



U 




m. 



883 



UNtfSsm" 



T 



21 



1 A I believe that they are. 

2 Q You believe that they are. 

3 Do you have a list of those shipments here today? 

4 A Yes. 

5 Q May I see a copy of that, please? 

6 Is that an item on here? 

7 A That would be No. 7. 

8 Q No. 7 — I see. 

9 Could I see at this time, if we have not previously 
10 had it produced to us, item No. 7 in your index of materials 
H produced? 

12 A This is 1984. 

13 Q Okay. 

14 MR. VAN CLEVE: The witness has now presented for 

15 my excimination an additional series of computer sheets and 

16 what appear to be the weigh bills. 

17 THE WITNESS: The weigh bills. This is a duplicate 

18 of the sheets you already have. 

19 BY MR. VAN CLEVE: 

20 Q The computer sheets are a duplicate of Exhibit 5? 

21 A Yes. In addition, I have the weigh bills. 

22 Q And these are these objects, there appear to be 

23 about 50 of them, which say "U.S. Government freight weigh 

24 bill carriers' copy," and they appear to be on Baggett 

25 Transportation Company forms. 



umimEiL 



884 



missm 



28 



1 Could you ]ust briefly explain what it is you have 

2 just handed me, these weigh bill materials? 

3 A Yes. That is individual weigh bills covering each 

4 shipment contained on the Exhibit 5 sheet. 

5 Q Okay. 

6 A The documents supporting those entries. 

7 Q For the year 1984? 

8 A Yes. 

9 Q So that if we were to go through these weigh bills, 

10 we would then have all of the shipments made by Baggett 

11 Transportation Company for the U.S. Government from anywhere 

12 the Baggett system to ^^^^^^^^^^^^^^^^^^ for the year- 

13 1984? 

14 A Correct . 

15 MR. SIMPSON: Tom, does the company have 100 

16 percent of its weigh bills? 

17 Off the record. 

18 (Discussion off the record.) 

19 MR. VAN CLEVE: Back on the record, please. 

20 BY MR. VAN CLEVE: 

21 Q If I understood your previous testimony correctly, 

22 M^- Sinclair, these weigh bills are the supporting documents 

23 that are used to prepare the computer summaries that we 

24 have — 

25 A Used t2.E5,r£pare the^ manifest Mr. Nunnally referred 




885 



(uwsm 



29 



1 to, the complete numifest from which this summary was gathered 

2 Q Thank you. 

3 What additional information, looking just at the 

4 first weigh bill that you have shown me — what additional 

5 information would the committee gain from having the weigh 

6 bills that we would not be able to obtain by looking at either 

7 the manifest or the summary that you have prepared? 

8 A There is much more detailed information on here 

9 than is contained on that summary. 

10 Q Generally speaking, of what nature is the additional 

11 information? For example, there appears to be a general 

12 description of the cargo. 

13 A That is correct. 

14 Q Is there other information that would not appear 

15 on the summaries — not matters of detail, but other cate- 

16 gories of information? 

17 A Yes, the seal numbers, who issued the bill — just 

18 all kinds of detailed information that does not appear on the 

19 manifest. 

20 Q But if we wajit to know — in other words, if we 

21 want to know about specific shipments of specific cargo, then 

22 we probedjly will need the weigh bills; is that right? 

23 A That is correct. 

24 Q Okay . 

25 On that basis, I think they should perhaps be made 



I HMifH ovnUi r^u 1^ ■ 



886 



22 
23 



25 



imssiffiBi 



30 



1 part of the committee's record. 

2 MR. VAN CLEVE: Off the record, please. 

3 (Discussion off the record. ) 

4 MR. VAN CLEVE: Back on the record. 

5 For purposes of clarifying the record, because of 

6 the bulky physical nature of the documents that Mr. Sinclair 

7 has just made available to me , I believe Mr. Sinclair wanted 

8 to explain more fully exactly what these documents are and 

9 then I have a question or two about them. 

•)0 THE WITNESS: This is the weigh bill on each ship- 

1-) ment listed in Exhibit 5 containing all support documents of 

12 record in connection with that weigh bill. 

13 BY MR. VAN CLEVE: 

14 Q Thank you. 

15 And again so that I understand it, for every 

1g shipment on Exhibit No. 5, there is a corresponding weigh bill 

17 for each of the years 1984 through 1986? 

Ig A To the best of our knowledge. We could have made a 

ig mistake and developed one or something like that. 

20 Q I understand. 

21 Do you have a system of reference — I believe we 



started to talk about this in connection with -- this is 
item No. 7 — correct me if I am wrong — this is item No. 7 in 



24 your document production? 



That is correct, 



iiMrii<;siFo, 



887 



ornssm^ 



31 



1 Q Is this just 1984 or iS this all three years? 

2 A This is 1984. 

3 MR. VAN CLEVE: Could I ask that this be marked as 

4 Exhibit 7 for the Sinclair deposition and make this bundle of 

5 material that Mr. Sinclair has just handed me Exhibit 7-A, 

6 please, for the year 1984- 

7 Could I please have the corresponding material for 

8 1985, Mr. Sinclair? 

9 (Whereupon, the documents referred to were marked 

10 Sinclair Deposition Exhibit Nos . 7 and 7-A, respectively, 

11 for idehtif ication. ) 

12 MR. SIMPSON: With respect to that particular 

13 exhibit and 1985 and 1986, we do request if necessary access 

14 to it or copies, if necessary, and we will let you know if 

15 that is becoming necessary. 

15 MR. VAN CLEVE: I understand that and can undertake 

17 that we will msUce reasonable arrangements either for access or 

18 or reproduction of the materials. 

19 I understand that this is your company's currently 

20 only copy of the document? 

21 MR. SIMPSON: We have a copy of the face — 
MR. VAN CLEVE: On that basis, I can undertake that 

we will make arrangements either for reasonable access under 
proper security precautions or for some kind of reproduction. 






888 



umtfti^Rto^'' 



32 



1 BY MR. VAN CLEVE: 

2 Q I ask you now, Mr. Sinclair, to identify the 

3 remaining two piles of weigh bills for me in general terms. 

4 A The second group is the weigh bills covering the 

5 listing on the manifest for 1985 and the third group of bills 
g is covering those shipments listed on the manifest for 1986 . 

7 MR. VAN CLEVE: And the smaller of the two groups 

8 that Mr. Sinclair has just handed me is the materials for 

9 1985. I ask that it be marked Sinclair Exhibit 7-B. 

10 (Whereupon, the document referred to was marked 

11 Sinclair Deposition Exhibit No. 7-B for identification.) 

12 MR. VAN CLEVE: And now' I hand the reporter the last 

13 of the group of weigh bills and supporting documents that Mr 

14 Sinclair has tendered and ask it be marked Exhibit 7-C, 

15 representing the 1986 weigh bills and supporting materials. 
1g (Whereupon, the document referred to was marked 

17 Sinclair Deposition Exhibit No. 7-C for identification.) 

18 MR. VAN CLEVE: Thank you and I appreciate your 

19 cooperation with respect to the materials. 

20 BY MR. VAN CLEVE: 

21 Q On your index of materials produced, item No. 6 is 

22 a listing of customer codes to identify shippers in No. 5 
O'i above . 

24 Do you have a document that corresponds to that 

25 entry, Mr. Sinclair? 



UAICm^Mfl.. 



889 



gwiyissw 



33 



1 A Yes, but you have the only copy in the room with 

2 your exhibit picked up yesterday. 

3 Q Mr. Sinclair, that may be so, but I can assure you 

4 that if I have it, I am not aware of it. 

5 (Discussion off the record.) 

6 BY MR. VAN CLEVE: 

7 Q Mr. Sinclair, you have now tendered to me a document 

8 that contains a series of codes and customer codes and a date 

9 of 10-1-83. 

10 1 ask you to identify this document, Mr. Sinclair. 

1-1 Can you- identify it? 

12 A Yes. It is a listing of our coded customers 

■J3 giving the number of the code covering each company or entity 

14 that we do business with and having a code for miscellaneous 

15 companies or entities not covered by the specific code. 

16 MR. VAN CLEVE: I ask that this be marked as 

17 Exhibit 6 for the Sinclair deposition, please. 

18 (Whereupon, the document referred to was marked 

19 Sinclair Deposition Exhibit No. 6 for identification.) 

20 BY MR. VAN CLEVE: 

21 Q Mr. Sinclair, looking very briefly at Exhibit No. 6, 

22 I note it appears to carry a date of October 1, 1983. 

23 Are these codes still current? 

24 A Yes. As far as I know. I know of no change. 

25 Q So that if one takes Exhibit No. 5, the summary of 



iMM£»£l£Ik 



vn 



890 



MiSSIfliB'i' 



34 



^^^^Hf^^^^^^^^^^H transportation, and looks the column 

2 marked SHPCD. It should correspond to an entry on this code 

3 list; is that correct? 

4 A That is correct. 

5 Q Did you do any shipping for anybody t 

6 ^^^^^^^^^^1 during the years 1984 to 1986 for a customer who 

7 might be a coded customer and does not appear on this summary? 

8 A No , not a coded customer, no. As I told you, any 

9 not specifSSftiy-nawed would go into our miscellaneous code. 

10 Q Could I ask you to just briefly explain to me item 

11 No. 8 in your document submission, which is headed 

12 "Reproduction of Submissions to Fincince Center Covering 

13 Shipments in 5 above." 4^"" 

14 Could you explain what that is, what those materials 

15 are? 

16 A We were requested in the subpoena to produce 

17 records to indicate checks or payment — I don't remember the 

18 wording exactly — but what this does is indicate the method 

19 we use or collection and the payment received for the loads 

20 covered by Exhibit No. 5 and the weigh bills supporting it in 

21 No . 7 . 

22 Q I see. 

- - - - — ■* 

23 Do you have a document that represents those 

24 payments? 

25 A Yes. 



UNCUSSIFIED 



891 



mtssm, 



35 



1 Q May I examine a copy of that, please? Is this the 

2 entire document? 

3 MR. VAN CLEVE: Mr. Sinclair has just handed me a 

4 two-page document entitled "Public Voucher for Transportation 

5 Charges," which appears to originate in the Office of the 

6 U.S. Army and is directed to Baggett Transportation Company. 

7 I would like to have this marked as Sinclair 

8 Exhibit No. 8, please. Correction — apparently this is a set 
g of three pages of material. 

10 (Whereupon, the document referred to was marked 

11 Sinclair Deposition Exhibit No. 8 for identification.) 

12 BY MR, VAN CLEVE: 

13 Q Mr. Sinclair, is this one document? 

14 A Yes. 

15 Q It is one document — 

1g A Covering specific groups of weigh bills as 

17 indicated by the document. 

18 Q And how were these specific pages chosen, if you 

19 know? 

20 A They were chosen because they covered the weigh 

21 bills in question or the weigh bills we have been discussing. 

22 Q I see. 

23 Who asked you to show the payments corresponding 

24 to specific weigh bills, if you know? 

25 MR. SIMPSON: Was it your interpretation of the 



IMASSIBEL, 



892 





36 



1 subpoena ? 

2 THE WITNESS: That is correct. 

3 BY MR. VAN CLEVE: 

4 Q If you could for the record, describe to me why 

5 you chose these specific transactions, what item in the sub- 

6 poena caused you to choose these specific transactions? 

7 I am not trying to be difficult here. I just 

8 want to understand what you did. 

9 A I don't remember the exact wording of the subpoena, 

10 but it made reference to checks and so on and so forth. 

11 Q Right. 

12 A We assumed, since the subpoena made reference to it, 

13 that they were referring to the shipments they specifically 

14 requested to 

15 MR. VAN CLEVE: If we could briefly have a look, 

16 unless that copy is marked up for internal purposes. I want 

17 to make sure we have a clear record. That is what this is 

18 all about. 

19 MR. SIMPSON: Looking at it, it does say checks and 

20 those are ledger sheets and probably this was not specifically 

21 called for in the narrow interpretation of the subpoena. 

22 MR. VAN CLEVE: I note that Baggett Transportation 

23 has offered to supply the committee with documentation that it 

24 is counsel's view may not have been required by the subpoena 

25 and I would like to note that^s^PQJraciate that 



i to note that we apnrac late i 



893 



11 

12 
13 
14 
15 



wieLASSira 



r 



BY MR. VAN CLEVE: 
Q These specific ledger sheets, though, obviously only 
represent a small fraction of Baggett Transportation's con- 
tracts with the Federal Government; is that correct? 
A That is correct . 

MR. VAN CLEVE: Let me stop here and ask that this 
^ be marked as Sinclair Exhibit No. 8, please. 
^ (Whereupon, the document referred to was marked 

^ Sinclair Deposition Exhibit No. 8 for identification.) 
10 MR. VAN CLEVE: Back on the record. 

We have a document of three separate and 
apparently unrelated pages marked as Sinclair Exhibit No. 8, 
and I am now going to show this docxoment to Mr. Nunnally and 
ask him first to generally explain the document, what kind of 
a document is this, and then to explain some highlighting that 
"•6 appears on the document, again in gemeral terms, without going 
1^ through each specific transaction. 
18 MR, NUNNALLY: This is a reproduction of a motor 

"•9 freight carrier submission to the Government Finance Center 

20 for payment of transportation charges. 

21 We have highlighted several items on this, which 

22 represents the Baggett Transportation Company PRO number, 

23 and the government bill of lading number, and the amount of 

24 line haul charges. 

25 We were previously questioned by the FBI on a 



894 



y(ieiii.^H(t^T 



38 



1 specific movement, and this is — to^^^^^^^^^^^^ and this is 

2 the payment of our line haul charges for that movement. 

3 MR. VAN CLEVE: When you say a specific movement — 

4 thank you for that explanation — when you say a specific 

5 movement, do you mean one shipment of freight or a series of 

6 shipments of freight that were connected in some way? 

7 MR. NUNNALLY: They are a series of shipments 

8 moving within a given time frame. 

9 MR. VAN CLEVE: What was that time frame, if you 

10 know? 

11 MR. NUNNALLY: I would have to check back, but 

12 since they are all on the same submission, it is indicative- 

13 that they all moved within a given time frame. 

14 MR. VAN CLEVE: And would these transfers be 

15 shown on Sinclair Exhibit No. 5? 

16 MR. NUNNALLY: For calendar year 1986, yes, sir. 

17 MR. VAN CLEVE: Exhibit 5 covers only 1986 — 

18 THE WITNESS: Four, five and six. 

19 MR. VAN CLEVE: Exhibit No. 5 covers calendar 

20 years 1984, 1985 and 1986, so all the highlighted transactions 

21 should show up on Exhibit 5? 

22 MR. NUNNALLY: Yes, sir. 

23 MR. VAN CLEVE: If I understand correctly what 

24 that should mean is that all — we should be able to trace the 

25 payments to Baggett for freight movements that may be of 



895 



Mimiffi^ 



1 particular interest to the committee by looking between 

2 Exhibit No. 5 and the document that you have just described 

3 and identified. -.. 

4 MR. NUNNALLY: That is where we received payment 

5 for the movement. 

6 MR. VAN CLEVEt Would there be any freight that 

7 Baggett Transportation would move at the request of the United 

8 States Government that would not be shown in Exhibit No. 5 — 
^^m^^^^^^^l^^^^^H Is a complete 

10 freight requested by the United states Government or any enti 

11 ty of the government? 

12 MR. NUNNALLY: Exhibit 5 would embrace a shipment 

13 from the Baggett system to 

14 MR. VAN CLEVE: It would include a shipment at the 

15 request of any entity of the United States Government? 

16 MR. NUNNALLY: That is true. 

17 MR. VAN CLEVE: Thank you. 

18 Do you want to clarify your last statement? 

19 MR. NUNNALLY: I said from the system. 

20 MR. VAN CLEVE: Item No. 9 on the index of materials 

21 produced is a schedule of tariffs and tenders covering ship 

22 ments in No. 5 above. 

23 Could you briefly explain what that is, Mr. 

24 Sinclair? 

25 THE WITNESS: We are required to produce the 



IMliS^IElEII 



896 



2 



Mmsm 



' account of the United States Government either tariffs or 



tenders reflecting our charges for our particular service. 



and to be consistent in what we have interpreted this subpoena 



to say, we have included our publications and offers to the 
government which moved the same shipments you and Mr. Nunnally 
° have just been discussing. 
BY MR. VAN CLEVE 
Q I see. 

^ A Which is the authority for the making of our charge 
''' for that service, and where our rate that appears on the mani 
11 



fest recap and the freight bill Ccime from. 

MR. VAN CLEVE: Could we have this marked Exhibit 
No. 9, please. 

(Whereupon, the document referred to was marked 
Sinclair Deposition Exhibit No. 9 for identification.) 
16 MR. VAN CLEVE: I have no questions on Exhibit 

"•7 No . 9 

18 MR. SIMPSON: Counsel, it was just called to my 

19 attention that the heading on our Sinclair Exhibit 1 on 

20 Exhibit 5 states, "Department of Defense shipments to 

21 ^^^^^^^^^^HB| and I think Mr. Sinclair testified that 

22 includes not only the Department of Defense, but all shipments 

23 including those of — for instance, I just saw one from 

24 Thiokol Chemical, not only the Department of Defense 

25 MR. VAN CLEVE: We appreciate that clarification 

UNilASSieEDL 



897 



41 



1 Item 10 on the list of materials produced is headed drivers 

2 logs. 

3 BY MR. VAN CLEVE: 

4 Could you explain what that entry represents, Mr. 

5 Sinclair? 

6 A Still in the same vein of what the FBI asked for 

7 and our interpretation of the subpoena, it would have indicate 

8 that there was an interest in the route of travel. 

9 So we brought some of the logs covering some of 

10 the same shipments that we have previously been discussing. 

11 Q And could you explain why you brought some of the 

12 logs covering some of the shipments? 

13 A We brought the logs still in our possession 

14 covering the shipments moving in 1986 and pointed up to us 

15 by the FBI. 

16 The reason we only have logs for some is that we are 

17 only required to retain driver logs for a period of six 

18 months, so we can give you only those within the past six 

19 months. 

20 Q Thank you for that explanation. 

21 MR. VAN CLEVE: Could we have this set of logs 

22 headed "Driver's Daily Log," and running something on the 

23 order of half a dozen pages — counsel, would you like to 

24 examine it? 

25 MR. SIMPSON: Let me examine it. 



UlU)UU£::;:a- 



898 



MitSteftKI^' 



' (Document proffered.) 

2 MR. VAN CLEVE: Let me have this marked, please, 

3 as Sinclair Exhibit 10. 

^ (Whereupon, the document referred to was marked 

5 Sinclair Deposition Exhibit No. 10 for identification.) 

6 BY MR. VAN CLEVE: 

7 Q For purposes of the record, Mr. Sinclair, can you 

8 identify these documents, please? 

9 These are company records, aren't they, and who 

10 prepares them and how are they maintained? 

11 A This is a driver's daily^log which is prepared 

12 by each driver for each calendar day during his total employ- 

13 ment as a driver. 

14 Q And what sort of information does it provide for 

15 the company? 

16 A It indicates the origin and destination of the logs 

17 on a daily basis indicating the periods of time that the 

18 driver was on duty, not driving, driving or in a sleeper berth 

19 the points that he made stops in the course of that 2 4 -hour 

20 period, the number of miles he traveled and the total time 

21 he was on duty during that day. 

22 Q Thank you. 

23 Let me just take a look here . Just a couple of 

24 questions, Mr. Sinclair, for purposes of the record. 

25 I notice that down below on what appears to be sort 






899 



•mmm 



43 



1 of a time chart there are a series of entries that are hand- 

2 written by the drivers. 

3 Are they required to make entries at particular 

4 points? Are these off-loading and on-loading points or how 

5 are the specific times chosen? 

6 A They are required to make an entry at each duty 

7 change, status change. 

8 Q What is a duty change /or a status change? 

9 A Going from driving to stopping at a truck stop, 

10 when he goes from driving to on duty not driving, any time 

11 his duty status changes, he is supposed to indicate the point 

12 of change. 

13 Q Would that include stopping for a cup of coffee 

14 at a truck stop? 

15 A If it was over five minutes. 

16 Q And does the company expect its drivers to be 

17 pretty careful about filling out these records? 

18 A Yes. 

19 Q And, therefore, with respect to these specific 

20 records, it should be possible to trace the precise route of 

21 a truck for that particular shipment by looking at these 

22 entries? 

23 A Yes. That was our purpose in including that. 

24 Q I notice that on a number of occasions, just to 

25 choose an example here, there is a driver's daily log for 



900 



Mmnw' 



44 



1 November 4, 1986, Doris and David Humphries were the driver 

2 and co-driver, and it appears from the handwritten entries 

3 here that they reached^^^^^^^^^^^^^^^B at about 1:00 

4 o'clock in the afternoon and later that day, there is an entry 

5 saying unloading, later that day the truck went t 
^^^^|B and to 

7 Why would the truck continue to ot he r^^^^| points 

8 after having made a dropoff in 

9 A It would be coming back or he would subsequently 

10 be dispatched to another destination. 

11 Q It could happen either way? 

12 A Yes. 

13 Q There is no way to tell from these sheets, really? 

14 A No. The reason I asked you to let me look at it, 

15 sometimes the driver will indicate empty and loaded. 

16 Q Is there anything else that you would like to tell 

17 the committee cQ)Out the kind of information that could be 

18 obtained from these drivers' daily logs? 

19 A That is cibout it, his activity for that day. 

20 Q Okay . 

21 Is this report filed simply with the company or 

22 with any other agency? 

23 A It is filed with the compemy and required to be 

24 maintained for six months for the purpose of controlling a 

25 driver's duty hours and driving time as regulated by the 



901 



22 



mmm' 



Department of Transportation. 

Q I see, and that is essentially a safety regulation, 
is it not, sir? 
A Yes. 
Q Thank you. 

Item No. 11 on Sinclair Exhibit No. 1, the 
index of materials produced, is the driver's trip reports and 
did you bring some documents responsive to that with you 
today, sir? 

A Yes, the same shipments we have been talking about 
all the time, we pulled some of the trip reports because there 
again they appeared to be interested in the route of traffic. 
Q I appreciate that. 

MR. VAN CLEVE: Could we have this marked as 
Sinclair Exhibit No. 11, please. 

(Whereupon, the document referred to was marked 
Sinclair Deposition Exhibit No. 11 for identification.) 
BY MR. VAN CLEVE: 
"•9 Q What information can be obtained from these 

20 driver's trip reports, Mr. Sinclair, if you know, that would 

21 not be obtainable from the driver's daily log; what sorts of 
things, just in general terms? 

23 A The specific highway route of travel, the miles he 

24 traveled on that highway in each state, and the fuel he 

25 purchased by state and by the number of gallons. 



ii&icu&GiCiro^ 



902 



1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 



mmm 



46 



Q I notice that there has been some highlighting 
done on the documents. 

Was that done by your company, sir? 
A I don't know. 

Q Do any of the witnesses here today know? So we 
don't know if the highlighting was done by your company before 
production? 

A I would assume so because in each case it highlights 
[trip, which we had them looking for. 
MR. SIMPSON: We expect so, but these two people 
didn't do it, but we do know that they are the destinations, 
on each is highlighted and it appears to be in 



MR. VAN CLEVE: Okay. 
Let's go off the record for a minute. 
(Discussion off the record. ) 
MR. VAN CLEVE: Back on the record. 
BY MR. VAN CLEVE: 
Q Mr. Sinclair, you mentioned previously that the FBI 
had been in touch with Baggett TreUisportation in connection 
with certain shipments that had occurred, I gather, prin- 
cipally during 1986 or all during 19^^if *^9e*Know? 
A All during 1986. 

Q I see , and did the FBI indicate to you what the 
nature of those shipments might have been in terms of the 



903 



1 

2 
3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 



19 
20 
21 
22 
23 
24 



ONSIil^l»EDL 



47 



type of material or anything else about them, just in general 
terms? 

A No. 

Q Independent of that, do you personally have any 
knowledge about the shipments that the FBI expressed an inter- 
est in? 

A No. 

Q When those shipments were made, were they arranged 
through the normal channels for which material of that type 
might be shipped, in other words, if it was Army material and 
they wanted it moved from Red Stone arsenal to somewhere in 

I was that to your knowledge handled in a 

normal manner? 

A As far as I know, it was. That could be 
established again maybe by referring to the documentation. 

Q But there didn't come a time when someone came to 
you and said, "We have a special shipment we would like to 



"IS make from Red Stone tol 



A No. 

Q So before November 1986, there again to be press 
disclosures with the fact that the United states had apparent- 
ly shipped various forms of weapons to Irem, did you have 
knowledge of that? 

A No. 



25 Q I take it- V^'y^e.skioments had been handled through 



(imMifli; 



904 



vmmm 



^'^ 48 



1 normal channels there would not have been any basis using 

2 your company's records for you to have any knowledge of that? 

3 A There would not. 

4 Q For completeness purposes, if you wouldn't mind, 

5 I have a couple of sort of unrelated questions that I want to 

6 ask you. Please understand it is simply to have a complete 

7 record. 

8 with respect to each of these individuals, I would 

9 like you to tell me if you have ever met or spoken to this 
10 person. 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 





Oliver North? 


A 


No. 


Q 


John Poindexter? 


A 


No. 


Q 


Robert McFarlane 


A 


No. 


Q 


Michael Ledeen? 


A 


No. 


Q 


Richard Secord? 


A 


No. 


Q 


Thomas Clines? 


A 


No. 


Q 


Albert Hakim? 


A 


No. 


Q 


Richard Gadd? 



IIMJlSSIfltlL, 



905 



13 



wstmm 



1' 



49 



A No. 

Q Robert Dutton? 

A No. 



^ Q William Langton? 

5 A No, 

6 Q Robert Mason? 

A No. 



8 Q Very briefly, Mr. Sinclair, with respect to the 

^ subpoena, I am not going to read the whole thing to you, but 

^^ this is a subpoena to Baggett Transportation Company, 

^^ Incorporated, and it asks you to produce all materials rela-^_:d 

^2 to the company's transportation of weapons or supplies arrange^ 

by the United States Department of Defense, the CIA, NSC 

"''* staff, Stanford Technology Trading Associates, Inc., Albert 

"IS Hakim, or Richard Secord or their agents or employees 
16 I take it you have done that , you have produced 

"•7 all materials that your company has that is connected in any 

18 way with the transportation of weapons or supplies for any of 

19 those persons; is that correct? 

20 A Yes. 

21 MR. SIMPSON: I would have to say that as far as we 

22 know, there are none. We have complied with the subpoena, 

23 but we haven't produced anything that meets what you have just 

24 read. 

25 We don't know of any transportation that was 



906 



mmm 



il' 50 



1 arranged by, is that the terminology? 

2 MR. VAN CLEVE: Yes, arranged by the Department of 

3 Defense. 

4 MR. SIMPSON: I am sorry. We have two different 

5 subpoenas. 

6 MR. VAN CLEVE: I am sorry. I am looking at what 

7 I thought was the correct subpoena. 

8 MR. SIMPSON: The one I was reading from didn't 

9 mention the Department of Defense. 

10 MR. VAN CLEVE: Okay. 

11 THE WITNESS: One was to produce records and the 

12 other — 

13 MR. VAN CLEVE: I understand. One is for Mr. 

14 Sinclair's appearance on behalf of the compciny and the other 

15 is a subpoena with respect to company records. But again just 

16 for purposes of completeness, you have produced all materials 

17 relating to the company's transportation of weapons or 

18 supplies arranged by the Department of Defense; is that 

19 correct? 

20 THE WITNESS: Yes. 

21 BY MR. VAN CLEVE: 

22 Q By the CIA; is that correct? 

23 A We have reproduced all of the records shown in 

24 this index of materials produced covering those items 

25 previously discussed when we entered those — 



907 



mmm' 



51 



1 Q I understand, but that was not my question. I need 

2 to ask you the question in this way: Have you produced for us 

3 all materials relating to the company's transportation of 

4 weapons or supplies on behalf of the Central Intelligence 

5 Agency? 

6 A As far as we know. 

7 Q The same answer with respect to the National 

8 Security Council? 

9 A Yes. 

10 Q Or any of its employees or consultants? 

11 A Yes. 

12 Q I take it since you say you have never met any of 

13 these individuals, Albert Hakim, Richard Secord, or their 

14 agents or employees, all transportation of weapons or supplies 

15 to Kelly Air Force Base? 

16 A Yes. 

17 Q From the period January 1st, 1984, to December 15, 

18 1986? 

19 A That is correct. 

20 MR. VAN CLEVE: We appreciate that and we 

21 appreciate your appearance before us this morning, and with 

22 that, unless your counsel has ciny statement he would like to 

23 make for the record, I think we can adjourn the deposition. 

24 MR. SIMPSON: No statement. We have discussed 

25 access to the records for production. 



IIMPI ACCJOf [L, 



908 



mmm 



iT 



52 



1 MR. VAN CLEVE: We have and I might also indicate 

2 to you, Mr. Sinclair, that it may be necessary, based on the 

3 examination of the several hundred pages of documents which I 

4 personally have seen for the first time this morning, it may 

5 be that there will be some additional questions that we would 

6 need to ask of you or someone from your company, and so I want 

7 you to be aware of that possibility. 

8 With that, I think we can conclude the deposition 

9 for today. 

10 (Whereupon, at 12:30 p.m., the deposition 

11 concluded.) 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 

25 _. 

:.o .^ ...of.Aq 



909 



Dotson/drg 



1 
2 

3 

4 
5 
6 

7 
8 
9 
10 
11 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 



UIWSfffflF 



ennv >.» / «- ^ rfTin 



//^/:5- 



a^ 



DEPOSITION OF JOHN K. SINGLAUB 

Wednesday, April 29, 1987 

U.S. House of Representatives, 

Select Committee to Investigate Covert 

Arms Transactions with Iran, 
Washington, D.C. 

The committee met, pursuant to call, at 9:00 a.m., in 
Room H-139, the Capital, Kenneth M. Ballen (Staff Counsel of 
House Select Committee) presiding. 

Present: Kenneth M. Ballen, Staff Counsel; Robert K. 
Kelley, Counsel for John K. Singlaub; and Charles Kerr, 
Associate Counsel, United States Senate Select Committee on 



Secret Military Assistance to Iran. 



Partially Declassified/Released on (~'{?>- \ 
under provisions of E.O. 12356 
by N. Menan, National Security Council 




43i|^ 



3^^i 





910 



nmwsF 



1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 



Whereupon, 

JOHN K. SINGLAUB, 
was called as a witness by Counsel for the Select Committee, 
having been first duly sworn, was examined and testified as 
follows: 

EXAMINATION BY COUNSEL FOR THE SELECT COMMITTEE 
BY MR. BALLEN: 

Q How long did you serve in the Armed Forces of the 
United States? 

A A little over 35 years on active duty. 

Q What, in general, were the areas that you served 
in functionally? Did you serve in intelligence work? 

A Yes, I have had some intelligence assignments. 
Most of my assignments have been operational. In World War 
II, I served with OSS, volunteered out of a parachute 
regiment serving OSS and worked with the French Resistance 
in Europe, and before the war was over, I went out and worked 
with the Chinese in resistance against the Japanese. I had 
an intelligence assignment ^^^^^^^^^^^after World War II 
for cUDOut three years. I then went back into operational 
areas. 

During the Korean War, I had two tours, one tour 
w a s ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^k r u n n 1 n g 
the covert and clandestine operations^^^^^^^^^^^^^^H. My 
second tour I was an infantry battalion commander. I went 



Ui^miU 



911 



UUffliiWSf' 



'' through the regular school system of the Army, and in the 

2 Vietnam War, I was head of the joint conventional task force 

3 called MAC SOG, standing for Studies and Observation Group. 
* Q Since retiring from active duty, could you tell us 

5 about when you became associated with the World Anticommunist 

6 League and your role with them? 

7 A I had not heard of the World Anticommunist League 

8 until 1980, when I was asked to come to Australia, to Perth, 

9 Australia, to speak to a meeting of the Asian People's Anti- 

10 communist League, which is one of the regions of the World 

11 Anticommunist League. I did speak to that group the end of 

12 November, 1980. 

13 The following year, I was invited to attend a 

14 meeting of the World Anticommunist League. 

15 Q What position do you hold with United States Council 

16 for World Freedom? 

17 A I am the chairman for the United States Council for 

18 World Freedom. For two years, from September, 1984, to 

19 September, 19 86, I was chairman of the World Anticommunist 

20 as well as chairman of the U.S. Council. 

21 Q In May, 1984, General, did you receive a request 

22 from Fred Ickle, Under Secretary of Defense? 

23 A Yes, I did. 

24 Q What was the request 

25 A To ask me to head a panel to examine the 



\m 



912 



UNeUMikT 



1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 



countersurgency program in El Salvador. 

Q What were the panel's recommendations after that 
period of study? 

A Generally the recommendations were tol 




Q Do you know Felix Rodriguez? 

A Yes. I have met him on several occasions. 

Q Where did you meet him? 

A In El Salvador. He explained to me on one meeting 



!iie^.^im 



FT 



913 



1 

2 
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4 
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6 
7 

e 

9 

10 
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UlfBtSSPEF 



that we had met previously, but he didn't tell me where that 
was, and I don't remember where that was. 

Q What conversations did you have with him when you 
met him in El Salvador? 

A Well, very limited conversations. He attended a 
meeting that I had requested! 




Q What was the discussions that you had at this meet- 



ing? 




Q When did you have this conversation? 

A I am going to refer to my chronology here. 

I believe that was in the end of March of 1986. 
BY MR. KERR: 

Q Your traveling companion at that time was Barbara 
Studley? 

A Yes. 

Q Was El Salvador the only country you visited? 

A I visited Costa Rica immediately preceding that, 
and before that, Tegucigalpa in Honduras. 



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BY MR. BALLEN: 
Q In January, 1985, you traveled to| 

A Yes. 

Q Were you ir 




A Yes. 

Q At that time, did you present to' 
proposal from Geomilitech Consultants Corporation to sell 
MK-37 torpedoes 

A No. I think, if I stated that on an earlier visit, 
I had -- not having had a chance to look at my past records or 
visit any other notes, I visited^^^^»twice that year, once 
in January and again in July 





Q Before we get to the July visit, let me ask you 
about the January visit. Did you discuss with 
on that visit! 

A I have to say that I ajn not certain whether I 
spoke to^^^^^^^^lon that subject at that time. I am not 
certain that I spoke to^^^^^Hthat visit on that subject. 
I did discuss that subject with him on some of my visits. 

Q Did you have any discussions with] 

on that visit in January on the contribution 




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make to the Contra cause? 

A Yes, I did. It IS my recollection that I did on 
that trip. I have to say that I have made so many trips 
there that I am really not firm in my mind on which ones 
that I brought up this subject, but it was my recollection 
now that it was on the January trip that I first mentioned 
this subject to 

Q Did you request of him a specific amount of money 
for the Contra cause? 

A It was — I told him we needed $10 million and 
that I hoped to get at least five from his government, and I 
was going to ask another government for five million. 

Q Had you informed Oliver North prior to this trip 
you had? 

A No, I did not mention it to him prior to going, to 
my recollection, but I definitely did brief him afterwards. 

Q You had met Oliver North and had dealt with him 
prior to January, 1985, is that correct? 

A Oh, yes. 

Q Now, did you present to 
three options in which he would make the contribution to the 
Contra cause? 

A Yes. 

Q Did you tell him that he could make a direct deposit 
into a Contra bank account 




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A Right, that was one option. 

Q Did you tell him that you could open an account 
for the monies that way? 

A No. I said I would be willing to receive, meet 
his representative any place m the world, the free world, 
and receive whatever instrument and then deposit that and 
under that option I would be willing to give him an accounting 
of exactly how that money was spent. That WaS an advantage 
over the first option, where he would deposit it. 

Q That would be the second option you presented to 
him? 

Q The third option, did you present tha 

^^^^^^^^ the excess could be 
applied for the Contras? 

A I don't believe that I mentioned^H^^^^^^Bat the 
first meeting with him, because I really wasn't aware of that 




And I at the time said one of the ways in which you 
could make this contribution would be to allow me to approach 
a vendor and see if they would be willing to share the profit 
with the Contras. And in this case, you would simply have a 
single payment from your budget with the commission being 



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split. 

Q And you had no particular transaction in mind when 
you -- 

A Not at that time, no. I did not have it in mind, 
but I did -- I had been approached by 

Iwhen I s-j.d, "Is there anything 
that I can do to try to help you in the United States?" 
And they had both sa: 




Q Did you discuss with^^^^^^^^^^B'^^'^^'^9 that visit 
that you could arrange for a signal to be sent to them from 
the United States Government to assure them this would not 
conflict with U.S. Government desires? 

A Yes, I did. I said that if they had a need to 
determine that I was not acting totally independent of U.S. 
policy, I thought I could arrange some kind of a signal to 
be given by someone in the administration to indicate that 
it was, in fact, the policy of this administration to support 
the Contra cause. 



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1 Q And did you also state that it is your understanding 

2 the adminiSTration would be pleased if. 



^^^^^^^^^^^^J ma d e 

3 this contribution? 

4 A Yes. I referred to several of President Reagan's 

5 speeches in which he had compared the support to the Contras 

6 to support received by our revolur.ists from France and Holland 

7 and Spam, and that in view of the fact the President was 

8 anxious to do this, I was confident that he would be pleased 

9 if they made a contribution of this type. 

10 Q What authority. General, did you have to tell^^H 

11 ^H^^^^Hyou could arrange for a signal from the administra- 

12 tion? 

13 A I had no authority. I have to say that I acted on 

14 my own, based upon my previous contacts with Oliver North, 

15 which indicated he was operating with the blessing of the 
15 administration, and I felt that through him I could arrange 
17 this type of signal. 
■J8 I knew that there were others in the government 

19 who were sympathetic to these efforts. It was, after all, 

20 the administration's policy, as expressed not only in the 

21 public speeches of the President, but in the appeals to the 

22 Congress, to provide aid that had been turned down. While 

23 I admitted this was a defiance of the congressional edict, 

24 it was still the administration's policy to provide help to 

25 the Contras 




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Q And what had Oliver North specifically told you 
prior to^^^^^^^^^^^^^^^|in January that led you to believe 
that he would be willing to send a signal t 

A I don't think he told me anything. 

Q Didn't you ]ust tell us that you were confident, 
from your conversations witu him, that a signal could be 
sent? 

A Well, I was confident that it is the policy of the 
administration to support the Contras and that what he was 
doing in this regard had the blessing of the President. 

Q And what, to your knowledge, at that point in time, 
was he doing in this regard? 

A He was -- from my point of view, he was the 
recipient of getting information that I had and was passing 
it on to his superiors about the work that I was doing to 
support Adolfo Calero and the other members of the Nicaraguan 
Democratic Resistance. 

Q General, let me ask you this question: In October, 
1984, you were aware of the fact that the Congress of the 
United States voted a cut-off in U.S. aid to the Contras. 

A Right. 

Q After that time — now you are 

Lto make a contribution and stating 
that you could get a signal from the United States Government 
that this would not conflict with administration policy. You 




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just stated that you had some contact with Oliver North, 
and the question I have for you is: By making that statement, 
did you not put the credibility of the U.S. Government on the 
line in 

A I don't know what you mean by that. 

Q You told^^^^^^^^^^^fthat you could arrange for a 
signal to be sent from the United States Government, that 
they would not oppose or they would approve your request to 
solicit aid? 

A Right. I wanted to do that in the event that they 
required it so as to indicate I was not acting as a con artist 
trying to get money out of them for some elicit purpose. 

Q That is just my question. General. Where was your 
authority to represent to 

A I didn't have any authority, I was acting on my own, 
because of my very close personal long-term relationships 
with the individuals involved. Some- of these go back more 
than 30 years. 

Q I understand that, General. 

A Yes. 

Q What I don't understand, I guess, is this, you had 
said to them that you could arrange for a signal to be sent 
from the United States Government. How did you know that 
you could do that? 



I didn't. 



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MR. KELLEY: I think he has answered that. 
I MR. BALLEN: I will move on. 

MR. KELLEY: He did answer that. 

MR. KERR: He certa"inly did not answer the question, 

MR. KELLEY: Do you want to go back? We want to 
answer it. 

THE WITNESS: I want to be as open as possible. 

MR. KELLEY: You did answer it. Say what you said. 

THE WITNESS: In the' course of the conversation, I 
was concerned when they, asked questions about the Congres is 
against this, we have worry about what the Congress thinks 
because we depend upon the good will of the Congress. I 
said, that is true, but I assure you that it is the adminis- 
tration's policy to provide help to the Contras. And they 
also raised the other concern about their fear of public 
knowledge of this would cause them to have problems with 




MR. KERR: We understand what motivate 
to ask you for that kind of information. What we don't 
understand is what caused you to believe that you had the 
capability of having a signal sent to them. Why did you think 
that you could send a signal, the U.S. Government would send 
a signal for you tol 



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THE WITNESS: Let me make sure you understand. No 
one told me to make that trip. No one asked me to do this 
and that they would give a signal. 

MR. KERR: Why did you think nonetheless they would 
send a signal? 

THE V'lTNESS: Because the President is so clearly 
interested in helping the Nicaraguan Freedom Fighters. 

MR. KERR: This was merely a matter of inference 
or suntiise? 

THE WITNESS: That is right. I didn't know how this 
idea would be received when I got back. It occurred to me 
when I was there and had this opportunity to raise this issue, 
I had been concerned about how to raise money, and it occurred 
when X was there that maybe this is a place -- I learned, 
for example, they had at that time something like 




I have given personal recommendations to 
that government about how to better their relations with our 
government. 

BY MR. BALLEN: 
Q Let me ask you a specific question in this regard, 
which is the following: You knew, you were drawing an 
inferrence that the administration supported the Contras. 
The important fact, though, which you raised with the 




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1 is that congress passed a law in the interim, in October of 

2 1984. What led you to believe that the administration still, 

3 after the Boland Amendment was passed, was interested in you 
* or in any way soliciting funds? 

5 MR. KELLEY: I want the General to answer it, but 

6 I want to point out, and I am not being combative, I want to 

7 b- helpful, I think he said two or three times the President 

8 of the united States was making speeches and indicating that 

9 he was supporting aid to the Contras. 
But you answer it on your own. I think he said 

11 that two or three times. 

12 MR. BALLEN: There is a big difference between 
saying support of the Contras and saying that the United States 
Government, after this law was passed, was willing to have 

15 you go and solicit funds from third countries. 

16 THE WITNESS: Well, I explained to them that I was 
not a representative of the United States Government, that I 
was.acting as a private citizen, and I knew the attitude of 
our President, which had been made clear, and that I thought 
this was an opportunity where they could be helpful in the 
anticommunist cause, where they could be helpful in terms of 
doing something that would have the approval of the President 
without irritating the Congress. I recognized that there 
was this dichotomy of interest here. 

But they knew my position with respect to the 



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administration, that I was not a member of the administration, 
that I was a retired officer and a friend ofl 



MR. FEIN: Could I ask ]ust two clarifying points. 
I don't want to interrupt, but I am trying to clarify in my 
own mind -- I won't unless you -- 

MR. BALLEN: I don't mind. 

THE WITNESS: Let me say I had great anxiety after 
I initiated this conversation that I might not be able to 
get a signal or they might think it was a lousy idea back 
here in Washington. But if I could get them to say yes, if 
we are assured that this isn't going to irritate your 
government, I figured there was some way we could get that 
signal back to them through their ambassador here, I 

or in some other way 
that they wanted to make sure that I was not acting without 
some kind of blessing from the White House. 

BY MR. BALLEN: 
Q Let me ask you this -- did you want to ask some- 
thing? 

MR. FEIN: In your own mind, when you spoke with 

did you make any distinction between what might 
be called humanitarian assistance that might be the product 
of whatever they paid, as opposed to military or paramilitary 
assistance? 




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THE WITNESS: Well, I explained that I was actively 
involved in raising humanitarian assistance through the U.S. 
Council's efforts in the states, but that in order to buy the 
weapons systems they needed to defend themselves, they eeded 
to have money deposited in a foreign account from which they 
could buy on the international arms market. 

And in my discussions, I said that I would also 
accept contributions of arms in kind if that was easier for 
them to do. 

BY MR. BALLEN: 
Q Were you aware prior to October, 1984, of meeting 

^with North, Adolfo Calero, and Hunt, offi cial s 

No, I don't think I was aware of it. I have 
subsequently been informed that meetings had taken place, 
because I was told in one of my meetings when I met with 




Q He told you that? 

A No, Adolfo Calero did. 

Q When did Adolfo Calero tell you that? 

A I believe that was in March of 1985. 

Q under what circumstances did he tell you about that 



A Well, I was with Adolfo Calero] 



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Q That was in March of 1985? 
A Yes. 

Q Now, General, you arranged a shipment of $5.3 
million worth of arms to the Contras, is that not correct? 
A That is correct, yes. 
Q Were you aware that that shipment was addressed to 



A Yes. 

Q Did he subsequently deliver that shipment to the 
Contras or keep it in his control? 



He delivered it to the Contras, as it was needed. 




How long did he 

1 can't answer that. 

How do you know he delivered it to the Contras? 

Well, because I saw some of the weapons in the 
hands of the Contras, and on later visits and conversations, 
the head of the military said how delighted he was with the 
quality of the weapons and so forth. 
Q When was that? 



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■ A I think that was on the August visit of 1985. It 
may have been on a subsequent one, but I do know they did 
get them and that they were pleased with the high <^ity. 
Q When you say they got them, they got all the 

weapons? 

A NO, I can't verify they got all of the weapons. No, 

I can't verify that. But I do know they -- 

Q But in August, 1985, they were using them at the 



time? 



Yes. 

I apologize for jumping back and forth. On j^ o ur 

did 




trip 

you present three options 

MR. KERB: This would be 

MR. BALLEN: ^^^^^H X ^ ^orry 
THE WITNESS: I am not sure whether or not I 
presented three options for payment, because at that time I 
did not know of any weapo ns systems or other things being 
purchased by^^^^ron^rican 
Most of the aTquisitioI^lKl'as through government-to- 

government negotiations. 

I did, however, say that they could make an in-kind 
contribution because they had a lot of weapon systems that 
we would like to have had that they are making there, plus 
this same first jwo options either deposit directly m 



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bank efccount, or I would meet their representative 
any place, take their instrument, deposit it and be able to 
give them an accounting. 
BY MR. BALLEN: 
Q Who did you talk w: 

A I spoke toj 




No, not at that time. 

Q When you returned to Washington after your trips, 

you told us earlier you briefed Oliver North at the White 
House. 

A That is right. 

Q When would that be, sir? 

A It is possible I briefed him at Rancho Mirage on 
that trip, because that trip -- let me just check some other 
papers. Okay. 0(^_may have been on the 8th or 9th -- 8th of 
February. I came to Washington on that date, but I saw Oliver 
North on the 22nd, 23rd of February, 1985. I came back 

land went almost inunediately to Miami. Of course, the 
meeting over the weekend was the first weekend in February, 
and I came to Washington, D.C. on the 8th or 9th, or 7th. 



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Q Did you brief Colonel North at that time? 

A It was my policy to brief him as soon as I returned. 

I had these other meetings right after I returned, so I would 
usually schedule a visit to Washington if I had something 
to pass on to him. 

Q And did you -- 

A But, you know, in this case, I am not certain. I 
aon-t have any records that would indicate I saw Oliver North 
at that time. And I may have delayed it knowing that I was 
going to see him later in the month at Rancho Mirage. 
BY MR. KERR: 
When did you return to the United States? 

On the 30th. 

Of January? 

Of January, yes. 

YOU don-t have a record of meeting with Colonel 

North on the 5th of February, 1986? 
A Let me check. 

No. My records show I was in Florida. 
Q Vou don- t remember a meeting with colonel North in 

Florida, is that right? 
A No, I don't. 

BY MR. BALLEN: 
Q in February, when you met with Colonel North, wl^ 

did you tell him about the ^rip^to 



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A I told him tKvhiie, that I had made this overa"-^ 
and that while they at^terested in providing help, they had 
some anxieties. I expbted what those were, about not 
wanting to irritate the!ngress or that it had to be done 
in a way that would not '"public , and I explained that these 
options for making the glents were offered, or contributions 
in kind, if that was preTa'^ble, and that they were to let me 
know if they wanted me t^y to arrange for some kind of a 
signal. And he indicated; thought that that could be 
arranged. 

In other words ,''*mebody from -- that was known to 




from the White House, couldjo and meet wi 

and just acknowledge the fai^'^that they knew that I had made 
the trip and that I had appPached their officials. I thought 
that that would be an adequae indication that I was not 
operating independent of theWhite House. 

Q Colonel North said le would be willing to provide - 
A Yes. But he said In would have to check it out 
with his boss and that he had somebody in mind that could do 
that that was recognized as a spokesman for the White House 
in those areas. 

Q Did he specify who .lis boss was he was going to 
check It out with? 



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A I am not sure whether he indicated. . It was my 
assumption that it was Bud McFarlane. 

Q Did at that time he talk to you about the Nicaraguan 
war ship approaching North Korean waters? 

A I don't remember. I can't place that m the time 
spectrum. He did at one time brief me on that. 

Q And what did he say on that? 

A He said that there was a ship that either had or 
was to acquire a load of weapo 




Q Did Colonel North ask you to discuss this with 
anyone 

A I believe I told him that I was qoinq to have a 
meeting with 




Q Did you report to Oliver North on what 



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A Yes. 

Q What did you tell Oliver North^^^^^^Htold you? 

A That he would pass on this information to his 
superiors 

Q Did Colonel North tell you the supplies on this ship 
were coming from Iran arms? 

A My recollection is not complete on that. It does 
occur to me that he said they were North Korean arms that 
were sent someplace, rejected, and the ship had returned. 

Q Were the arms destined for Nicaragua? Did he tell 
you that? 

A The intention was if the ship could be scuttled and 
seized that — 

(Discussion off the record.) 

THE WITNESS: If your question was did Oliver North 
say the ship was en route to Nicaragua — 
MR. BALLEN: Yes. 

THE WITNESS: I don't remember that. I remember 
it was the intent of this operation, if it were to take place, 
to have the weapons made available to the Nicaraguan Freedom 
Fighters as opposed to the Nicaraguan Government. I believe, 
I say my memory is hazy on this, and I made no notes. I 
believe that they were destined for Nicaragua, and the object 
was to prevent them from being delivered to the Sandinistas 
and take control of them so they could be delivered to the 



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Nicaraguan Freedom Fighters. 
BY MR. BALLEN: 
Q Did you tell Colonel North at this time that the 

[was willing to help the Nicaraguan Resistanc 

in other ways? 

A Yes, I believe that I did, that I had the impression 
that they were anxious to be helpful to the Nicaraguan Freedom 
Fighters. 

Q And that impression occurred as a result of your 
trip you had ]ust completed? 

A Trips, right. I had several trips. 
Q Let me focus specifically on your trip of January 
[in 1985. Did that impression you formed occur as 
the result of that trip? 
Yes. 



And did you report that to Lieutenant Colonel 



A 

Q 
North? 

A Right. Yes. 

Q And did you report that in the context of asking 
him to send a signal to| 

A Yes. 

Q Did Lieutenant Colonel North ask you to approach 
Adolfo Calero with reference to the ship that we have been 
discussing that was entering South Korean waters, passing 
by those waters? 



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A I don't remember. I don't remember. 

Q Did you have any further discussions with North 
after — after you informed him of^^^^^^^^^^^^Bwillingness 

Ion this matter, did you have any further 
discussions with him, with Colonel North or^^^^^^^^^^^Jon 
this matter? 

A No. 

Q Did you in your conversations briefing Colonel 
on your in^^^^^^^^^^^^^^^^^^^^^^Hinform 
of your third option, the diversion option? 

A 

Q Yes, sir. 

A No. 

Q How about 

A Yes. 

Q -What did you say to Colonel North? 

A Well, I said that — told him that I knew that 
*as interested in buying some weapon systems 




and that I thought that it might be possible that one of the 
contractors could share their commission with the Contras if 
we approached them in the right way. 

Q How did Colonel North respond to that? 

A I don't remember his specific response. Generally 
speaking, he was noncommittal when I would report these 



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visits, and that was understandable. But he was receiving 



o 

' information basically from me, and there was not a lot of 



I made no effort to find out what he was going to do with the 
information. My obligation was to present him with what I had 
^ done and let him carry the ball. 
" Q Why was that your obligation, sir? 
' A Well, I was not, in my view, acting irresponsibly, 
° I wanted to be sure that government officials who were obvious 
' ly in support of the Nicaraguan Freedom Fighters knew every- 
thing that I was doing in that area, and Oliver North was the 
obvious point of getting that information into the system. 
''2 He had been my contact on Central America before the Boland 
'3 amendment and remained so afterwards. 

14 Q General, did you in May of 1985 have a conversation 

15 with a reporter from the Washington Post? 

16 A I don't remember. 

17 Q Did you tell the Washington Post that you had 

18 raised almost $2 million outside the United States for arms 

19 for the Nicaraguan rebels? 

20 MR. KELLEV: Could you perhaps give him the date 

21 and reporter that wrote this story? Maybe that would help. 

22 (Handing an article to witness.) 

23 THE WITNESS: No. I doubt that — I can't remember 

24 having said that, and I must say that any conversation that I 

25 had with Peter Stone, who is the reporter of this article. 



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iLAOuii %L.U 

^ has been very antagonistic. I consider him an unreliable 

2 person. I had minimum conversation with him, and I think -- 

3 the many times he has quoted me when, in fact, I did not say 
^ what he claims I said -- he is a totally unreliable reporter 

5 BY MR. BALLEN: 

6 Q Let me just ask you a yes or no question. Did 

7 you tell him that you had raised $2 million outside of the 

8 United States? 

9 A I can't imagine that I did. 

10 Q So your answer would be no? 

11 A No. 

12 Q General did you — 

13 A Let me make a distinction there. There has always 

14 been question of raising money outside of the country, and 

15 I did not admit that I was doing that, but that — there was a 

16 mechanism within the FDN to do that, and that money was being 

17 raised outside the country by the FDN and deposited in one of 

18 their overseas accounts against which they hoped to draw for 

19 the purchase of arms . 

20 Q General, in that seune interview, did you tell Mr. 

21 Stone or anyone else from the Washington Post that the United 

22 States, drive by the United States Council for World Freedom 

23 was bringing in $500,000 a month for the Contra cause? 

24 A No. I think that — 

25 Q Your answer would be no? 



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A The answer would be no, but I remember how I was 
surprised to read the figure, and I remember how it came 
about, and that is the statement by Adolfo Calero, which I 
said I have to accept, he said a certain amount of money had 
been raised over a given period of time of ten months, I 
believe. So this reporter at the time said, "Well, if they 
raised $5 million over ten months, that is a half a million 
dollars a month, is that right?" 

And I think I said, "Well, that arithmetic is 
correct. " 

Q You never told him the United States Council for 
World Freedom was bringing in $500,000 a month? 

A No, no, I did not. 

Q On February 26, 1987, there was an article in the 
Washington Post written by Ben Wiser which quoted you as 
saying that you had raised more than $10 million for the 
Contras in humanitarian and other aid. Did you tell Mr. 
Wiser that? 

A Yes. 

Q Is that true. General, had you raised $10 million? 

A Again, I get back to the same statement that I made 
before, that I was unable to make any estimate of how much 
money we were raising because most of the activity was in 
in-kind contributions, but that Adolfo Calero had estimated 
that we had raised approximately $10 million in the public 



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sector — private sector in the efforts that I was coordinat- 
' ing. That included working with the other conservative 
** organizations in the United States. 

Q How much money in 1985 did the United States 
Council for World Freedom raise for the Contras? 

A I don't know. I would give you the same answer 
Q Do yon know your financial statement showed 
$279,612.49? 
' A That's quite possible, yes 

'^ Q Referring to 1986, how much money did the United 
" States Council for World Freedom raise for the Contras? 
^2 A I don't know. 

13 Q Would it surprise you if your financial statement 

14 showed $280,798.38? 

15 A No. 

16 Q Does that seem like a correct figure? 

17 A It probably is, yes. Again, I have to say that an 

18 awfu-l lot of the contributions were in-kind. People would pay 

19 directly to a vendor rather than paying through the U.S. 

20 Council 

21 Q Isn't it a fact. General, the in-kind contributions 

22 that you raised were in late 1984 for a shipment of medicines 

23 to the Contras? 

24 A Well, that is true. There was a large shipment 

25 several shipments in 1984 of medicine. After the humanitarian 



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aid bill was passed, we de-emphasized that as not i . .^ 
necessary . 

Q But apart from the shipment of medicines that 
arrived in approximately December of 1984, were there any 
other in-kind items that you were personally responsible for 
raising for the Contras? 

A Yes. There were shipments of outboard motors, 
small boats — 

Q Didn't you buy those boats in the United States, 
General? 

A Yes. 

Q Did you buy those boats with money raised by the 
United States Council for World Freedom? 

A Yes. 



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Q So those would be as part of the transportation 
equipment that is shown on the United States Council for 
World Freedom's statement; is that right? 

A That is right. 

Q Go back to my question then; what in kind con- 
tribution other than medicine in late 1934, were you 
responsible for raising for the Contras? 

A I repeat my statement -- outboard motors. 

A What was the value of the outboard motors? Those 
were not 

A Those dollars were contributed directly from the 
donor to the boat shop in Miami, to provide them, and 1 think 
that was $12,000 to $15,000, something like that. 

Q General, in addition to that, the outboard motors 
that you have specified, the medicine in December 1984, what 
other in kind contributions were you responsible for raising 
for the Contras? 

A Well, I believe that there were some other medical 
supplies and a jeep ambulance that was purchased by a group 
in Louisiana that was delivered directly to Mario Calero's 
warehouse. I think there were donations of medicines that 
were taken. We had paid for transportation or negotiated 
free transportation to move it from Michigan to New Orleans, 
another shipment to Miami. 

Also, some collected at Fort Meade and transported 



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MR. KERR: What was collected at Fort Meade? 

THE WITNESS: Medicine and medical supplies. 

BY MR. BALLEN: 
Q When was this? 
A I think in early 1985. 

Q Were any 

A Excuse me. I was acting -- what we did is, I 
sent a doctor down to make a survey and set up a system of 
updating the lists of medicines needed, and then we would 
distribute this to other organizations around the country who 
had expressed an interest. 

A lot of the clothing was being purchased from 
surplus stores by local groups of CMA and trucked to New 
Orleans. 

MR. KERR: What role did you have in that? 
Did you work with Mr. Posey? 

THE WITNESS: Yes, I met several times with 
Tom Posey to try to convince him that his efforts to provide 
military advisers who were crossing the border into Nicaragua 
was a counter productive effort and that he ought to concen- 
trate his efforts and his energy on collecting non-lethal 
supplies, and arranging to ship them down. I also did this 
with Bill Murray of Dallas, who collected gift packages. 

He would send them down, try to send them 
down to arrive before Christmas. He did this in 1985 and 



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1986. I read recently there are 20,000 of these gift packages 
supposedly Christmas gifts, that are still in the warehouse 
yet in New Orleans, waiting to be shipped down, as well as 
a large number of freedom fighter friendship kits that 
my organization is arranging to send down. 
BY MR. BALLEN: 

Q General, in December 1984, did you say to any 
reporter working for Time Magazine that you had raised $500,00|0 
a month for the Contras for the FDN since May? 

A This gets back to the same quote. I forget who 
the reporter was that made the initial computations based on 
Calero's statements. 

Q General, let me refer to an article that appeared 
in the Washington Post on December 10, 1984, by Fred Hiat, 
"Retired General John K. Singlaub, President of the World 
Anti-Communist League, said he and others have raised about 
$500,000 a month from the wealthy U.S. citizens and groups 
since Congress cut off funds for CIA-backed Contras fighting 
the Nicaraguan Sandinista-backed government." 
Did you tell him that? 

A Yes. I don't remember, to be frank, but I do 
remember that that figure was raised as a result of Adolfo 
Calero saying the private sector, lead by General Singlaub, 
has raised $500,000 over the last 10 months, and somebody 
then divided that up and said, "That is $500 a month; is 



that correct?' 






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And I repeatedly said, "If Adolfo Calero said that 
is his estimate, I accept it." 

The trouble is, as you know, once you make a 
statement and it gets in somebody's computer, anybody else 
in the world can call up that and the same lie can be told 
over and over again, and any efforts to correct it never 
seem to be attached to the same statement. 

Q General, in Sep^mber and October 1985, do you 
recall being interviewed by 'Common Cause Magazine"? 

A No. Who is the reporter? I might know the name 

MR. KERR: All I have is the magazine article. 
The article said you were interviewed in Tucson following your 
speech to the River Rats. "While being interviewed in Tucson 
in 1985, after a speech to the River Rats " 

THE WITNESS : I remember speaking to the River 
Rats. The River Rats is a veterans organization of Air Force 
Vets who fly the jet aircraft in the Red River Valley of 
Vietnam. 

What is that month? 

MR. KERR: The article was published in the 
September-October issue of "Common Cause Magazine." 

THE WITNESS: What year? 

MR. KERR: 1985. 

MR. KELLEY: Maybe you want to put a question about 
what the article says? 



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MR. KERR: Do you recall telling a reporter from 
"Common Cause Magazine" that "In the last year we have raised 
tens of millions of dollars for arms and ammunition and 
millions more for non-military supplies"? 

THE WITNESS: No, I don't remember that. 

MR. KELLEY: Let the general take a minute and 
read the whole thing here. It might refresh his recollection 

MR. KERR: Sure. 
(Brief recess.) 




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THE WITNESS: I remember this interview. I think 
it was a woman, because I recognize the picture there. I 
am confident that I did not say I raised tens, plural, of 
millions, but 10 million. 

MR. KERR: Did you tell the reporter you had raised 
$10 million? 

THE WITNESS: I don't — I remember at the time 
hearing about this article. I don't think I ever saw it. 
I don't take "Common Cause Magazine." 

MR. KERR: You did give the interview to "Common 
Cause Magazine"? 

THE WITNESS: She did not indicate she was working 
for "Common Cause" or I doubt that I would have given the 
interview to her, and I remember someone who was present at 
that interview telling me about this article, how that woman 
misquoted what I had said. And I am confident that I did 
not say that I raised tens of millions of dollars. It may 
be that I said tens of millions of dollars have been raised 
outside the country. That is the statement — again, getting 
back to Adolfo Calero's statement. 

MR. KERR: You, yourself , did not take credit for 
having raised that money? 

THE WITNESS: No. 

BY MR. BALLEN: 
Q General, did you tell anyone from "Time Magazine" 



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in May of 1985 that contributions raised in cash and in kind 
were up to $500,000 a month? 

A No. I think that gets back to the same statement. 

Q All right. That is fine. 

General, did you have a conversation with anyone 
from 'U.S. News and World Report" in or about September 1985 
where you had said that the United States Council for World 
Freedom along had sent several million dollars worth of goods 
to the Nicaraguan insurgents? 

A Yes, I probably did. 

Q 



Had 



you sent several millions of dollars worth of 



goods? 



A Yes. 

Q What were the several million dollars worth of 
goods — the medicines in 1984, what was their value? 

A Again, I don't know except the doctor who did 
the analysis for us said that the one aircraft load contained 
a million dollars worth of medicines. But when I tried to 
pin him down as to how do you estimate that, he said it 
would sell for that etmount of money. 

Q Had he sent one aircraft load down to 

A He went 

Q Who is the doctor, please, general? 

A He is the head of Tom Dewey Institute in New 
York, whose name I forget right now. He is also head of 



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another organization called Intermed, offices in New York. 
I could get that information from our files in 
Pheonex. He gave us several leports. We paid for his trip to 
go down and survey the situation on both the northern and 
the southern front, and make estimates of what was needed. 

He also made several trips to select the medicines 
from World Medical Relief in Detriot, and earmarked 

Q Did he tell you the value of the medicines he had 
sent down to the Contras? Did he specifically tell you the 
value of the medicines that he had furnished? 

A He gave an estimate. When I challenged him to it, 
I said, well, how do you know that it is worth several 
million dollars? 

He said, well, the stuff that was loaded on such 
and such a plane, he was confident was worth a million dollars 

Q Did he specifically tell you that the value of the 
medicines that they had shipped down to Nicaragua 

A Medicines and medical equipment. 

Q was worth several millions of dollars? 

A Yes. 

Q General, referring back again to the Benjamin 
Wiser article in the Washington Post on March 20, 1987, 
did you say to Mr. Wiser that you had told Oliver North of yo^r 
proposed diver sion^^^^^^^Hand they had replied that it 
would probably work? 



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A Yes. 

Q Yet you told us earlier today that he was, Oliver 
North, was noncommital? 

A Well, I said he was generally noncominital . 

Q Which is it? Was he noncommital or did he say that 
the diversion would work? 

A I honestly can't remember what his reply was, but 
my recollection is that it was some noncommital answer, it 
was probably somthing in a casual way. It was not a specific 
proposal and I think he was -- Wiser was trying to establish 
,hen he camato me that I am the one that gave Oliver North 
the idea of diverting arms profits to the Contras. 

Q Wasn't it you who had told Mr. Wiser that? 

A No, absolutely not. Absolutely not. No. He 
came to me with the story that someone had told him that I 
am the guy that set this whole thing up, and I was trying to d^ 
sme damage control, or I would have never talked to a reporter 
at that time. But when he told me that someone had said that 
was the guy that had the whole brainstorm of this thing, 
I said, well, that is simply not true. And the only thing 
that could be construed as that is one of the options that I 
had presented tc^^^^^^^^^^^B when I asked them for money 
was the possibility that a vendor would share the commission 
with the Contras, if we had the right one. 

Q General Singlaub, did you ever tell any reporters 



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from the New York Times in October of 1986, that you had raise 
between some $10 and $12 million for the Contras? 
A I don't remember that. 
Who was the reporter? 
A Jeff Gert and Wayne King. 
, Q I don't remember ever speaking to those people. 
Q Are you aware of another report in the Times where 
Joyce Downey, the executive director of the United States 
Council for World Freedom, on October 13, an article by Robert 
Rineholt, said that the council had provided between $10 
to $25 million in cash and in kind aid to the Contras? 
A What is your question? Am I aware of that? 
Q Yes. 
A Well, I am now, but I was not aware of it at the 

time. It gets back to the same figure that has been 

Q Okay. 

A quoted. 

Q Now, general, in early 1985, or at anytime in 
1985, did Barbara Studley approach you as to your role with 
the Contras? Did she question you about that? 
A Yes. 

Q And at that time did she ask you why you were 
prominent in the media, or words to faat effect, in substance? 

A Yes. She expressed concern because I was listed 
as a consultant to her firm and because the media seemed to b« 



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concentrating their attention on my fundraising efforts, 
that this was creating problems for her with some of her 
clients who did not want to do business with someone who was 
so actively involved in providing help to the Nicaraguan 
Freedom Fighters. 

Q Did you tell her at that time that William Casey 

and Oliver North 

MR. KELLEY: Can you per»as just ask the general 
what did he tell her? 

MR. KERR: No, we are going to ask 

MR. BALLEN: No, I am going to proceed in this 



fashion. 



MR. KELLEY: I thought you might get a better 



MR. KERR: Why don't you ask him? 
MR. KELLEY: Okay. 
BY MR. BALLEN: 
Q General, did you tell Barbara Studley at that time 
in response that William Casey and Oliver North had given 
you the responsibility to act as damage control for the 
Nicaraguan private manufacturing program? 

A I do not believe that I ever said that, because 

it certainly is not true, but 

Q Let me ask the next question. 

Did you ever tell Barbara Studley that you were 



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given this role by Oliver North and William Casey soecifically 
because "you could take the flack"? 

A No. I do not believe that I said that. 
Q Let me ask you the next question. General. 
Did you ever tell Barbara Studley that it was very important 
for you to be highly visible in the media because press 
reports had already started focusing on Oliver North? 

A No, I don't believe I ever said that either, 
although the general subject was a part of the discussion when 
she expressed concern about my high visibility. I had to 
point out that my high visibility in fundraising was essential 
to the success in raising funds, and that there were some 
benefits. 

Q In fact. General 

MR. KELLEY: Can you let the General say what 
he said? He hasn't had a chance to answer what he said. 
MR. BALLEN: He has had a chance to answer. 
MR. KELLEY: No. Every time you go on to the next 
question- — he is in the middle of telling you what he said. 

THE WITNESS: I can understand how she might have 
assumed that this came from somebody above, if she heard 
it from other sources, but I did point out in the discussion, 
I said, it is not possible to raise money without having 
some visibility, you have to give a speech or you have to 
write letters, you have to communicate, and in the course 



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of doing that you admit that you are raising money for the 
Contras or you don't get it, and that there were some benefit 
to this to include benefits in terms of morale for the 
freedom fighters. This had been expressed. They appreciate 
sor.eone was willing to admit publicly that they were helping 
them.. And in that discussion, I might very well have pointed 
out that if there is a single lightening rod for all of this, 
it makes it easier for others who want to have less visibility 
in doing what they are doing in support. 
BY MR. BALLEN: 

Q Did you tell Barbara Studley at that time or at any 
subsequent time that Williaun Casey and Oliver North had asked 
you to hire a public relations firm in order to promote your 
efforts in fundraising? 

A I know thati never mentioned William Casey as 
having given me any instructions, because Bill Casey was 
so adamant. 

Q So your answer to the question would be no? 

A The answer to that is no. 

MR. KELLEY: I think the answer to that is no 
with respect to Mr. Casey, but you haven't answered with 
respect to Mr. North. 

THE WITNESS: To Oliver North, he never asked 
me to get a public relations firm, but one was recommended 
to me by Rob Owen, and I know that Rob Owen had had contact 



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with Oliver North, and it is my belief, as I reflect on this, 
that Rob Owen recommended Carter Clews, and it was Clews 
Communications that was eventually hired to help manage 
the media problems that I was having here in Washington, that 
it was considered a friendly public relations firm and one 
that would be trusted. 

Whether he specifically mentioned Oliver North, 
I don't remember, but he was one of my contacts with Oliver 
North after I started avoiding going to his office or calling 
him direct. 

BY MR. BALLEN: 

Q Did he suggest to you that this public relations 
firm be hired, Mr. Owen? 

A Yes. He is the one who introduced me to Carter 

Crews. 

Q Did he suggest to you that you should hire this 

public relations firm? 

■ A I think, yes. I had expressed concern about my 
inability to respond to media inquiries, most of which were 
generated in the Washington area, and in discussing this 
with my board of directors, they said, well, perhaps we 
should hire someone to take your inquiries here and have a 
consistent answer. And in my search for one, Rob Owen 
recommended Carter Crews and brought Carter Crews to my 
hotel and introduced him to me, and therafter I hired 



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Crews Communications to take the press inquiries here in 
Washington. 

Q What date was that? 

A I can't answer that specifically. I don't 

I am sure that Crews Communications could orovide that 



answer. 



1985? 



MR. KERR: Can you give us an estimate? Wa? it 



THE WITNESS: I think 198 5. 

MR. KERR: Early 1985? 

THE WITNESS: No. 

MR. KERR: Can you do better than that? Summer, 
Fall, Winter, Spring? 

THE WITNESS: Okay, let's see, it was probably in 
the summer, because the first time I used him was for the 
September conference that I hosted in Dallas, Texas, of 
the World Anti-Communist League. And he handled the press 
on t-hat for me. And thereafter -- and immediately before 
that, he worked with a fundraising firm they had also hired 
for that conference. 

BY MR. KERR: 
Q What firm was that? 

A I was afraid you were going to ask that. It is a 
firm well known firm here in Washington that had a sub office 
in Dallas. I would have to get that name. Carter Crews 



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I am sure could tell you what that was. 

Q Who had recoitunended the fundraising firm? 

A Perhaps Carter Crews, but I am not sure of that. 

Q Who paid Carter Crews' fees? 

A The U.S. Council for World Freedom. 

Q If we go through your financial statements for 
1985 and 1986, we will see items on that? 

A Yes. It may have come out of — the payments 
for his work in Dallas probably were covered in the budget 
and reports of that conference. That was a separate account. 
It was called the Walker Conferencing Account, and that was 
held separately — it was a $300,000 budget, as I recall, and 
about $25,000 went to the fundraiser and a few thousand to 
Carter Crews for handling the media. 
MR. KERR: Thank you. 
BY MR. BALLEN: 

Q Apart from that payment to Carter Crews, what 
were your total payments to Carter Crews and your media in 
1985? 

A I can't remember that for certain. I remember 
the last report we had, we still owed him and were paying off 
so much a month. We owed him over $6,000 at I think the end 
of 1986. 

Q Do you recall how much you paid him in 1984? 

A No, I don't remember. Those would be in the 



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records. Those would be in the records. 

Q Did Oliver North ever ask you to serve as damage 
control with the press? 

A No. 

Q Did William Casey ever ask you to do so? 

A Absolutely not. 

Q You mentioned a second trip 




Well, I don't like the t 
Did you travel to 
Yes, I did. 

Did you travel with Barbara Studley on that trio? 
No, I did not. 

Did you carry with you a letter from the Israeli 
Government appointing you as the representative for the sale 
of^^^^^ 

A No, I don't believe that I carried that with me. 
Q Did you receive such a letter, sir? 
A I knew that one had been received. It was received 
at the Office of GMT here, and I was told that I had been 
given thit authority by the Israeli Government. This came 
in subsequent to my visit to Israel in April of 1905. 

Q The letter came subsequent . tOj your visit to 
Israel in April 1985? 



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A I believe so. Although I am not even certain of 
that. It was about that same time, March, April time frame. 

Q When did you travel to Israel, sir? 

A I went to Israel in -- entered Israel on the 16th 
of April and departed on the 21st of April 1985. 

Q Who did you meet with when you went to Israel, 
officials from the Israeli Government? 

A I don't remember all of their names at that 
time, but I did meet with the guy that signed that letter 
who was head of procurement, Colonel Roiter, and he arranged 
for me to visit a lot of the Israeli defense industries. I 
also met very briefly with the Minister of Defense. I met 
with several retired military officers who helped arrange 
my visit. 

I was looking at the variety of weapon systems 
being produced by the Israelis. 

Q Let me ask you this question. Did Mr. Roiter 
talk, to you about the| 

A Yes. 

Q Had you had any prior discussions with him on 

[prior to your trip to Israel in April 

1985? 

No, no. The only Israeli official I would have talked 
to would have been Colonel Simhoney, who wa^ the defense 
attache here, Orie Simhoney. 



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llfBBISSSMeET 



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Q Did Mr. Roiter at that time indicate to you that 
you would be, or GMT, an exclusive representative onl 



A Yes. 

Q Was that confersation as a result of -- were you 
aware of that before you went on your trip to Israel, that 
you would be the exclusive representative or GMT would be? 

A My recollection is, yes, I knew about it in 
advance. Although that was just one of a variety of weapon 
systems that GMT was getting exclusive rights or representativ 
rights. 

Q Did you have any discussions prior to that 
time with 

Ifrom the Israelis? 

A No ; my recollection is it was on the July trip 
that I made arrangements for GMT representatives to meet 
with the appropriate of f icials^^^^^^^^vto discuss this. 
I was there^^^^^^Hand I think I set up visits for^^^f 
[for Barbara Studley and some experts from 





Israel, 



the! 



Prior to July, though, you had not discussed with 

That is correct. 

When you went in July to visit the 



officials at that time, did you raise with them the option 



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oif diverting money to the Contras in connection with the 



A I certainly did not mention it to the people 
that I set up -- that I talked to abouti 
The only person that I mentioned that to was' 

when I discussed this idea of the possibility 
of sharing commissions. 

MR. KERR: You indicated you said that to him 
in January 1985. Now we are in July of 1985. Did you 
meet with him again and mention it again to him? 

THE WITNESS: Actually, I met with him several 
tines, and I discussed this subject, but I — in that year 
I think I was there two or three times, and I don't remember 
specifically on which visit I discussed that. 
BY MR. KERR: 

Q Let me come at it a different way. Do you 
recall discussing with ^^^^^^^^^^^^^H — his name 
what? 

A ^^^^^^^^ 

Q With regard to^^^^^^Hdid you ever mention to 
him thatyou were interested in selling thesaj 
and that they could be used as a device for generating 
contributions to the Contras? 

A Quite frankly, I don't remember if I — my 
recollection, the first time I mentioned that possibility 




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was on my -- the first time when I was thinking in terms 



capabilities that they were asking about. It was not until 

I that knew about^^^^^^^^^^^H And 
don't remember if I mentioned that in my visit in -- I 
know that I called on him every time I go ^o^^^^^l because 
he is an old friend, I have called on him and discussed 
a variety of subjects. 

Q Since that time you are aware of, are you not, 
that GMT had discussed the sale of] 

lot from Israel but other sources? 

A Yes. 

Q You are aware, are you not, that 
in recent history, late 1986, early 1987, have expressed 
concern that the pricing of HHH[|^^^^^^| would include 
monies for the Contras? You are aware of that, aren't you? 

A No. 

Q You are not aware of any letters going from 
to ^l^^^^^^^^^^^^^^^ladvising no 
in and no desire to use the sale of^^^^^^^Hin 1986 and 
1987 as a device for generating money for the Contras or any 
other resistance movements? 

A No. 

Q You never discussed that matter with General 



Schweitzer? 



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i 





53 



A No. 

MR. BALLEN: I would like to mark this as 
Cominittee Exhibit Number 1. 

(The following document was marked Singlaub Exhibit No. 1 
for identification:) 

COMMITTEE INSERT 



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tWKiSSlFl' 



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BY MR. BALLEN: 

Q I would like to show you what is a two-page 

exhibit ttet has been marked Committee Exhibit 1, and ask you 
if you recognize this document? 

A Yes, I do recognize it. 

Q How do you recognize it, sir? Have you seen 

it before? 

A Yes . 

Q And when was that? 

A I am not sure. Certainly in 1985 I was told 
about it. I believe I was shown this before my visit in 
11985. 

Q Did you bring it with you tc 



A I don't remember whether I did or not. I should 
have, but I don't remember taking it with me. I don't 
remember presenting it to anyone. I believe that I may have 
had it in the event they wanted to know if I had this. 
All I did on that trip was to set up appointments with the 
appropriate officialsl 





Q YOu said that is all you did on the trip? 
A Yes. I was there for another purpose. I mean 
with respect to GMT business, that is all I did. What 



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I know about^^^^^^^Hyou can stick in your eye. I didn't 
want to get involved in a technical discussion! 

Q In a statement in this letter, we understand -- 
let me strike that. 

Let me go back to an earlier part of your 
testimony. You testified that you had not had any dicussions 

t he^^^^^^^^^^^^^^^^Ho f f i c i a 1 s 
transaction prior to July of 1985. Would that be a fair 
statement? 

A That is correct; yes. To the best of my 
recollection, yes. I don't think we knew about this until 
after my January visit. 

Q General, in the spring of 1985, did Adolfo Calero 
approach you about purchase of arms for the FDN? 

A Yes. 

Q Did he say he had $5 million available for the 
purchase? 

A Right. 

Q And at that time, did he tell you North had 
arranged for other arms to be supplied to him and the FDN? 

A I am not sure whether it was Adolfo Calero who 
told me that, but I knew that others had arranged for 
arms, yes. 

Q Did he tell you that North had specifically 



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arranged for arms? 

A No, I don't, I can't — I don't recall a 
specific conversation in which he said North had arranged 
it. 

Q Did he tell you that General Secord had arranged 
for the shipments of arms to him? 

A The answer is generally, yes. I, in fact, met with 
General Secord and Oliver North and Adolfo Calero. Adolfo 
Calero and I went to Oliver North's office on one occasion 
and John Secord was there. 

Q When was that, sir? 

A I eun not sure I can answer that, but I believe 
it was after the shipment that I arranged for had been 
either started or had arrived. So that would put it in the 
sununer of 1985. 

Q Prior to that time, when Adolfo Calero apprj^c)ched 
you in the spring of 1985, stating they had $5 million 
available to purchase arms, had he told you that General 
Secord had previously supplied him with arms? 

A I don • t remember . I honestly can ' t remember 
whether he had mentioned Secord. I know that he had gotten 
other arms. I don't remember whether I knew of Secord 's 
operation before that meeting in Oliver North's office. 

Q Did he tell you that Secord was response for 
raising for the Contras between $15 and $25 million in 



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in donations? 

A No. 

Q Did you approach Barbara Studley in reference 
to your desire to purchase these arms? 

A Yes. 

Q And did you subsequently have a meeting with 
Adolfo Calero and Barbara Studley concerning the purchase 
of the arms? 

A Yes. 

Q Who else was present at that meeting? 
When would it be? Let me back up. I aim sorry. 

A If that is important, I might be able to look it 
up in some documents here. 

MR. KELLEY: While he is doing that, let's 
take a short recess. 
(Brief recess.) 



UNCUtSSIHEO 

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(Back on record.) 

THE WITNESS: The answer to the question when did 
I meet with Barbara Studley, Adolfo Calero and Sam, as we 
have named him — I guess you have his real name, which 
is Werner, C-1-o-t-s. It was in April 1985. 
BY MR. BALLEN: 

Q Why do you guess we have his real name? 

A Well, I have given it before. 

Q To whom? 

A Oh, I guess that was to the independent counsel 
people. Werner Clots is the man who arranged for the 
shipment of arms. He is the professional arms merchant. 

Q When did you give that name to the independent 
counsel? 

A In an informal hearing before the grand jury. 
Because it came out, it was mentioned in the grand jury 
hearing. 

Q Now, sir, in regard to that meeting, was North 
present at that meeting? 

A No. 

Q Where did the meeting take place? 

A To my recollection, it took place in the Sherton 
Carlton Hotel at 16 and K. 

Q General, who had introduced you to Mr. Clots as 
you know him? 




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A I didn't meet with him until the meeting with Barbara 
Studley and Adolfo Calero, but General Graham, Daniel Graham, 
had told me that he knew of a very reliable, honest arms 
dealer who had worked with him when he was the director of 
EOA and earlier when he was Deputy Director of CIA, and he 
gave me the name of this individual. And I said, well, I 
would appreciate it if you would introduce him to Barbara 
Studley. So Barbara Studley met him through Daniel Graham. 

Q When was this? 

A I believe that was in early 1935. 

Q Prior to your con'^ersation with Adolfo Calero 
on the $5 million available for arms for the Contras? 

A Yes. 

Q And why at that time did you ask General Graham 
for reliable arms dealer or for any arms dealer? 

A Well, because you need bullets and guns to fight 
wars and the Nicaraguan Freedom Fighters were in such a 
conflict, they were running out of ammunition. I mean, 
I had been talking to Adolfo Calero since 1984, ad I have been 
working with him 

Q When you asked General Graham for a reference, an 
arms reference, did you know at that time that Adolfo 
Calero had money available to purchase arms? 

A No. I don't remember — I don't remember whether 
I knew that they had it or how much they had, I wouldn't 



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remember. I do know that I had discussed with General 
Graham how does one go about contacting an international 
arms dealer who can get weapons from the Soviet Bloc? That 
was one of the things I had introduced into the discussions 
was the -- and convinced, I believe, Adolfo Calero and 
Enrique Bermudez we ought to use Soviet designed weapons 
rather than U.S., so that as units defected to the Contras, 
the Contras would be able to supply additional ammuniton -- 
in other words, standardize on the Soviet weapon systems just 
for the logistical advantage that that would have. I asked 
General Graham, since he had been in CIA more recently than 
I had, if he knew how to go about this, and he said, well, 
there are a lot of these guys, but here is one that is really 
good and you can trust him. 

Q When, sir, approximately was that? 

A Either late 1984 or very early 1985, like 
February or March of 1985. 

Q That was before the time Calero had approached 
you stating that he had $5 million available for purchase 
of arms? 

A I believe it was, I don't remember when I learned 
what he had available. I know he was in the process of 
raising money. I knew as early as late 1984 he had a 
mechanism in the FDN for contacting people around Latin 
America that were sympathetic, raising money, and this was 



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being kept in an overseas account. The assumption at that 
time was eventually we are going to be able to use that 
money to buy weapons, and on my March visit to the Nicaraguan 
Freedom Fighter camps is when I brought up the subject of 
standardizing on the 

Q March 1985? 

A March of 1985, yes. Is when we restandardized 
that, and then talked in terms of packages, grouping 
weapons, buying them so if we bring in a thousand men you 
will have a need for a thousand rifles, but then you also 
should also have some RPG-7s in a given quantity and some 
mortars and various support weapons that would go with thc.t. 
Bermudez and I spent several hours discussing this arrangement 
and I think that it was — Adolfo Calero was on that visit 

I discussed this with Enrique, and came 
upwith a list of what they needed. By that time it was quite 
clear the number of people volunteering to join the freedom 
fighters was increasing and we needed not only anmuniton but 
we needed additional weapons. 



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62 



Q This was in March of 1985? 

A March of 1985. 

Q Were you aware of the fact that Calero had purchasec 
at that time $10.9 million worth of Soviet made arms for the 
Contras? 

A I learned at some point, I think later, that they 
had already had arms on the way, yes. 

Q Did you learn that they had purchased at that lime, 
in March of 1985, $10.9 million worth of arms for the FDN? 

A No, I did not learn that figure until much later. 

Q When did you learn that figure? 

A I don't remember the exact date, I can't place 
it in time. I later learned that they had only $15 million 
and that the — a little over $15 million available in their 
accounts overseas, and I knew that the 5.3 that they made 
available to me was the last. 

Q And you knew that from conversations with Adolfo 
Calero? 

A Yes. 

Q Referring to your meeting in April with Werner, 
Calero and Studley, what was discussed at that meeting? 

A I think it was basically to get his, Werner's, 
agreement that the list that we had could be provided, that 
he could provide it, and a firm statement of price. 

Q And what list did you present, what was on the list: 



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mmm 



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Do you have any documents that we requested last time that 
you wish to make available to us? 

A I don't remember which documents were requested, 
but I have some documents here. I have the list here. 
Q Do you want to show that to us? 
A Yes. 

Q We also requested the ship's manifest. 
A I think I have that, too. In fact, this whole file 
is a file that had been maintained for me by GMT, and I asked 
for it the other day. So I don't have it — it has got the 
whole thing here, the report from the man that rode the ship 
and the manifest, the masters report, and so forth. 

Do you want me to answer the question so he 
can write it down? 

Q No. wny don't you at this time turn over 
those documents and we can talk to you about them. 
A Okay, 

Just give him the whole file? 
MR. KELLEY: Why don't you record that we are 
providing you a file of documents that is labeled "General 
Singlaub shipment, 20 June 1985." There is a number of 
documents in there. 

Do you have copies? 

THE WITNESS: Thatts my only copy. 

MR. BALLEN: We will provide you a copy 



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These are documents turned over, we assume, in 
reply to a subpoena served in March of 1987. 

MR. KERR: So we all understand, these are not 
documents that come from your own files, these are documents 
made available to you by GMT; is that correct? 

THE WITNESS: Those are my files. I wanted to 
make sure that there was a distinction between my ac*-.ivities 
with the U.S. Council, so I was acting as an individual 
on this, not as chairman of the U.S. Council. 
BY MR. KERR: 

Q This was maintained by GMT? 

A It was maintained by GMT for me. 

Q You would direct what documents went into it? 

A Yes. 

BY MR. BALLEN: 

Q Sir, when was this file given to you that you 
have produced to us? 

A I had that file when we met before. 

Q In your personal possession? 

A Yes. 

Q With you? 

A I did, yes. Well, no, I don't think I had — 
in the office. I had it in my possession. I think it was 
in my BOQ room at Fort Myer, the date we met. 

Q That would be in March of this year? 



Yes. 



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Q You said the file was maintained by GMT? 

A Right . 

Q When did you obtain the file from GMT? 

A I forget what day I first met with you or 
whether I met — no, I met with the FBI first. When I 
got notification that I was going to meet with the FBI 
I stopped by that office and asked them to puU that file. 
I took it with me the day I met with the FBI, they did not 
ask for this. 

Q So it was at that time, some time this year, after 
you met with the FBI, but prior to meeting with us, you asked 
GMT for the file? 

A That is correct. 

Q Now, sir, you said there was a list presented 
to Werner at the meeting in April. Would that be correct? 

A Yes. 

Q I will show you — we will mark this as Committee 
Exhibit 2. 

(The following document was marked Singlaub Exhibit No. 2 
for identification:) 

COMMITTEE INSERT 




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