Patriots Pursuing Profits

By Ed Magnuson

When he testified on Capitol Hill as the first witness in the Iran-contra hearings, retired Air Force Major General Richard Secord portrayed himself as a patriotic private citizen recruited by the White House to help support the Nicaraguan contras after Congress had cut off U.S. Government assistance. Although Secord told his story without insisting on immunity from prosecution, last week he assailed the hearings in a Wall Street Journal column, calling the proceedings an "obscene spewing of information and misinformation" and an example of the nation's "periodic, spasmodic flirtation with self- destruction."

The general's ire may reflect his concern over the damage that recent testimony has done to his reputation. Last week several members of the congressional committees ridiculed Secord's claims that he was not in the arms trade for the money. Said Republican Senator Paul Trible of Virginia: "Secord and his companions were profiteers amassing huge sums over which they had complete control. They were also pursuing investments requiring millions of dollars. This doesn't rule out their being patriots as well. But to pose as selfless patriots alone is ludicrous."

Secord was not the only middleman who saw opportunities for profit in the Reagan Administration's private foreign policy ventures. Saudi Arms Merchant Adnan Khashoggi and Iranian Manucher Ghorbanifar earned lucrative commissions on the sales of U.S. weapons to Iran. Fund Raiser Carl Channell reportedly kept 35% of the private donations he solicited for the contras to bankroll his plush Washington offices, stretch limos and hefty payments to friends and associates. Even Oliver North, the superpatriotic National Security Council aide who ran the Iran-contra initiatives, cashed $2,000 worth of traveler's checks received from Contra Leader Adolfo Calero while purchasing groceries, hosiery and snow tires. Ironically, the often maligned contras apparently did not have the sticky fingers of some of their benefactors. Sources on the congressional committees say Calero was "meticulous" in keeping records of funds entrusted to him.

Much of the testimony at the congressional hearings has revolved around the question of profiteering. Secord admitted that he and his business partner, Albert Hakim, hold in Swiss bank accounts some $8 million generated by the Iran-contra "enterprise." He said he had no interest in keeping this money and would gladly give it to the contras as a memorial to the late CIA director William Casey. But meanwhile he has taken court action to keep U.S. investigators from acquiring the bank records of these accounts.

During last week's hearings, Republican Senator Warren Rudman of New Hampshire waved an invoice that, he said, showed that one of Secord's companies (East, Inc.) had billed another of his firms (Lake Resources) $100,357 for the salaries of private American pilots used in air-dropping weapons to the contras. This, said Rudman, meant that the pilots should have been getting $450 a day. In fact, according to Rudman and a witness, former CIA Agent Felix Rodriguez, the pilots were paid at most $150 a day, suggesting that East, Inc., earned about $35,000 on this transaction alone. Secord and his partners, declared Rudman, "were not only arms dealers, they were flesh peddlers."

A Secord associate, retired Air Force Colonel Robert Dutton, conceded under questioning last week that his boss had anticipated that his company would gain "long-term strategic benefit" from its dealings with Iran. "Business channels would be opened up because of the relations that were going to be made by Mr. Hakim and by Mr. Secord inside of Iran," Dutton said. Some committee investigators estimate that such future profits could have reached more than $1 billion.

Dutton, who managed the contra air-supply operation for Secord, was quizzed about a written proposal to sell all of the operation's assets to the CIA for $4 million after Congress voted last October to resume U.S. military funding of the contras. Secord had previously testified that the idea was Dutton's, but the colonel insisted last week that he had merely written down Secord's suggestions. The assets, which included five aircraft, warehouses, munitions, an airstrip in Costa Rica and several boats, had been purchased with private donations, foreign contributions and profits from the sales of U.S. arms to Iran.

Dutton said Secord had also considered a second option: leasing the resupply assets to the CIA. According to this plan, Secord's company would continue to carry out the airdrops to the contras under contract to the CIA. But Maryland's Democratic Senator Paul Sarbanes noted the proposal called for charging the CIA at least $311,500 a month, while the successful airlift at that time cost only about $100,000 monthly. "There is a built-in amount that would be considered profit," Dutton admitted. Said Sarbanes dryly: "A substantial profit."

Although Secord testified he had only $5,000 in his personal bank accounts, congressional investigators have amassed evidence that he and Hakim were planning several ambitious business ventures. Committee sources believe these new investments were to be financed from the $8 million in Iran-arms proceeds sitting in the Swiss bank accounts.

Senator Trible told TIME that the evidence includes closed-door testimony, bank records and documents outlining the proposed plans. It describes a complex project under which Secord and Hakim would be joined by two new partners, Don Morostica, a Sterling, Colo., stockbroker, and Larry Royer, a Decatur, Ill., businessman, in operating their holding company, Stanford Technology Trading Group International. The company would have four new subsidiaries. One, according to Morostica and Royer, would sell submachine guns and weapons built into briefcases to "Saudi and gulf states," as well as the contras.

These ventures were not just pipe dreams. Congressional investigators have acquired records showing that $250,000 was transferred from the Secord-Hakim accounts in Switzerland to a bank in Sterling, Colo. In addition, according to Trible, a financial adviser to Secord and Hakim signed a letter committing the two men to a $5 million investment in Washington State timberland. The plans were aborted when the Iran arms-for-hostages deal blew into a public storm. Hakim, who is expected to testify this week, will undoubtedly face pointed questions about how he and Secord could apply what some legislators consider public funds to their private purposes.

Another witness who can expect an uncomfortable turn in the spotlight this week is Assistant Secretary of State Elliott Abrams, whose role in directing American assistance to the contras was spelled out by Lewis Tambs, U.S. Ambassador to Costa Rica from July 1985 to January 1987. Tambs repeated what he had previously told the Tower commission: North had asked him to open a southern front against Nicaragua's Sandinistas. The orders came from a three- man "restricted interagency group," chaired by Abrams, that included North and Alan Fiers, chief of the CIA's Central American task force.

Tambs worked through a CIA agent (called Tomas Castillo but identified as Joe Fernandez) in his embassy to get Costa Rica to approve construction of a secret airstrip near the Nicaraguan border and persuade contras to move deeply into Nicaragua. The Ambassador insisted that Abrams "knew just as much as I did" about the southern-front activities. Abrams has denied to congressional committees that he knew of any such details. Fernandez, who was placed on administrative leave by the CIA late last year because of his contra involvement, told the committee in closed testimony that his superiors, including Fiers, knew of his activities. Said one source: "The committees are not finished with the CIA."

At one point last week Rudman questioned Tambs about all the higher officials who had "cut and run," refusing to take responsibility for the actions of their subordinates. "Do you feel you were being hung out to dry?" he asked. "No," replied Tambs, adding with diplomatic understatement, "I do feel field officers are not being backed up by their superiors. They are seeing their careers sacrificed."

With reporting by Michael Duffy and Hays Gorey/Washington