CHAPTER 6. A PRIVATE CIA
CHANGING TIMES
During the Watergate affair, Henry Kissinger appeared as something of an outsider, even though he had entered the administration as a favored intellectual scion of the Rockefeller-dominated “Eastern Establishment.” His positions on the easing of tensions with the Soviet Union, arms reduction, and opening to China put him out of step with the robust, semi-covert network of spooks, lobbyists, power brokers, and businessmen who were oriented toward the Nationalist Chinese, toward rolling back the Soviets through military means, and increasing defense budgets. Until the Watergate scandal, the lines seemed starkly drawn. But, as time wore on, the battles between liberal reformers and hardliners reached a fever pitch, and certain lines seemed to bend and blur.
Kissinger, in particular, appeared to have undergone something of a geopolitical reorientation, retooling his commitments to reflect the new power bloc. In the latter part of the 1970s, he took up a post at the Center for the Institute of International Studies. As Jerry Sanders has noted, the Center and its partner organization, the American Enterprise Institute, “set themselves up in competition with such august bodies as the Council on Foreign Relations and the Trilateral Commission.”1 The Center’s director was Ray Cline, an old China Lobby hand, OSS veteran (having served in the China theater alongside notables such as Paul Helliwell, E. Howard Hunt, and John K. Singlaub), and a high-ranking CIA officer. Cline had been a consistent critic of the Nixon-Kissinger policies of detente and opening to China.
To acclimate properly to his new affiliations and associates, Kissinger adopted a harsh line on the ongoing arms reduction talks with the Soviet Union. It was indicative, he said, of a “defeatist consensus” accepted by the “traditional establishment.”2 By this point, a robust network of New Right activist groups, think-tanks, advocacy groups, and their conservative backers had formed to push back against detente policies and arms reduction, calling instead for an increase in military spending and more hawkish orientation toward the Soviets. Many of these were organized from classic centers of power like the American Security Council, an entity described as the “heart and soul of the military-industrial complex,”3 the Committee on the Present Danger, the Heritage Foundation (where Robert Keith Gray maintained a post), and the AFL-CIO.
New groups such the Conservative Caucus, the Coalition for Peace through Strength, and the Free Congress Foundation also dotted the landscape, drawing on money unleashed by philanthropies such as the Scaife, Olin, and Koch foundations. Other active players in this world included Reverend Moon’s Unification Church, which was tied very closely to the China Lobby and to the KCIA. Two of the Unification Church’s top US allies were Ray Cline and Alexander Haig.4 Managing a sizable portion of the Unification Church’s promotional campaigns and serving in a secretarial role in many of its front groups was the political direct-mail mastermind Richard Viguerie. A member of the George Town Club, Viguerie was associated with numerous groups during this period, carrying out work on behalf of the Conservative Caucus and the various anti-disarmament campaigns launched by organizations such as the Committee on the Present Danger and its allies. All of these activities were run from Viguerie’s headquarters, a building he owned at 7777 Leesburg Pike in Falls Church, Virginia. It was a location that came to play a fundamental role in the world of Ted Shackley, Edwin Wilson, and Thomas Clines.
Reformist efforts, nevertheless, continued to build. One such reformer was Admiral Bobby Ray Inman, who had risen through the ranks to become director of Naval Intelligence in 1974. He followed this with stints as head of the Defense Intelligence Agency, the National Security Agency, and then, briefly, as deputy director of the CIA under William Casey. Inman privileged signal intelligence – intelligence acquired via electronic means as opposed to human intelligence gathering methods – and had a strong distaste for what he perceived as waste, inefficiency, and redundancy within the intelligence community. He was also seen as a something of a moderate, a counterpoint to those fixated on covert operations and assassination programs such as those favored by Shackley and his clique.
In 1976, Task Force 157 was on the chopping block. For Inman, “it was an expensive unit of dubious benefit to the Navy.”5 There were also the rumors and hints that TF-157, via Wilson, had become embroiled in covert operations quite different from its stated mandate. In 1975, for example, Wilson entered into a series of curious business arrangements with Bernie Houghton of Nugan Hand, a bank headquartered in Australia whose management consisted predominately of supposed former US intelligence officials.6
Houghton himself was no stranger to the circle of individuals around Wilson, having worked in Vietnam in close proximity to the primary operators in Shackley’s secret wars.7 At the time that Houghton was meeting up with Wilson, the Nugan Hand Bank appears to have been involved in brokering the sale of arms to paramilitaries in South Africa. The financing of the arms was arranged through a web of banks such as Nugan Hand’s Hong Kong subsidiary. Yet, when it came to purchasing and shipping the arms, Houghton and his partner, Michael Hand, turned to Edwin Wilson. According to an official Australian government report on the criminal activities of the Nugan Hand Bank:
There was a number of meetings between Wilson, Houghton, and the others over a relatively short period of time. Subsequently, under the cover of Task Force 157, Wilson placed an order for something like “10 million rounds of ammunition, 3,000 weapons including machine guns, M-1 carbines, and others.” The shipment is believed to have left the US from Boston. The End Users’ certificate indicated that [Wilson’s TF-157 front company] World Marine was the US purchasing agent while the middle company or buyer’s agent was an Australian company but not Nugan Hand. The name given as the buyer was Portuguese, and was a name that had been used previously and possibly after by World Marine in other unrelated covert operations.8
Rumors also abounded that TF-157 and Nugan Hand were complicit in the destabilization of the Australian government of Gough Whitlam, which was considering closing the CIA’s satellite monitoring station called Pine Gap. Alarms about Whitlam’s intentions were raised in the halls of the CIA by none other than Shackley; according to Victor Marchetti, a high-ranking CIA officer, Whitlam “caused apoplexy in the White House … a kind of Chile [coup] was set in motion.”9 Likely with these and other incidents in mind, Inman determined that TF-157 was “out of control.”10 Wilson attempted to negotiate with the naval intelligence chief, suggesting that if TF-157 were shut down, perhaps another, more effective organization should be set up (with Wilson getting the lucrative contracts to run it, of course). Shackley also attempted to intercede, suggesting to Inman that shuttering the program and firing Wilson would be the “loss of a major intelligence asset. Inman told Shackley that if he found Wilson so valuable, he could put him back on the CIA payroll.”11
TF-157 was ultimately shut down, and Wilson was, by all appearances at least, out of the job. At that same moment, events were taking place that would ultimately lead to Wilson’s downfall. In December 1975, shortly before Inman’s decision to dismantle TF-157 began, Wilson met a former CIA operative named Frank Terpil. Terpil ran a company called Intercontinental Technology, a subsidiary of Stanford Technology – a firm that would feature prominently in the Iran-Contra affair.12 Stanford’s owner was Albert Hakim, an Iranian businessman who acted as a back channel between Iran and Israel.13
By the time he met Terpil, Wilson was already familiar with Hakim, as they had been introduced by Richard Secord. Terpil proposed to Wilson a business venture that involved scouring weapons and other sensitive technologies for the government of Muammar Gaddafi in Libya. Terpil had been trading with Libya through a partnership with a Pennsylvania businessman named James McElroy. McElroy, according to Peter Maas, “had been one of the first entrepreneurs to cash in on money-flush OPEC oil nations in Africa and the Middle East. McElroy began supplying them with everything from Pampers to pistols. Gradually Libya became one of his big customers, and from Pampers, it was more and more pistols.”14 But what the Libyans hoped to score, from Terpil and Wilson, was heavier equipment: “C-4 plastic explosives and a Red-Eye Missile.”15
With the approval of Shackley and Clines, Wilson went to work in Libya. The operation quickly expanded into a training program for Libyan fighters. To carry this out, Wilson and Terpil set up a cover company called Inter-Technology and several other export firms. Former CIA officers like Kevin Mulcahy were brought in to run them, while the secret training school was staffed by former Green Berets.16 Among the trainers was Eugene Tafoya, “a beefy, acne-scarred thug, widely disliked by his comrades, who after a few glasses of ‘flash,’ the Libyan equivalent of bathtub gin, would boast about all the people he’d blown away behind enemy lines in Vietnam.”17 Soon enough Tafoya was working as a hitman for Wilson and was outsourced to the Libyan government for an ultimately ill-fated assassination plot against political dissidents living abroad.18 All the while Wilson reported information back to Shackley and Clines and, reportedly, to the SAVAK – the Iranian intelligence apparatus under the Shah – as well.
At this point, Shackley’s star was continuing to rise within the CIA. In January 1976, George H.W.Bush was made President Gerald Ford’s director of the CIA, and Shackley was made assistant deputy director for Operations. His coveted position was director of central intelligence, and he fully expected to serve as Bush’s successor: “Shackley had been tapped to become CIA director if Gerald Ford had been re-elected president.”19 This, however, never came to pass. Ford didn’t win the election and was instead succeeded by President Jimmy Carter. Bush was ousted from his position as director of central intelligence and replaced by a reformist, Admiral Stansfield Turner.
Turner came from outside the world of the CIA. A career military officer, he was a former schoolmate of Carter’s and was selected to reorganize the CIA. Large swaths of the Agency dedicated to undercover operations and special warfare were systematically removed, fundamentally changing the character and culture of the CIA. Shackley held on for a while, compartmentalizing what remained in the directorate of Operations and hiding it from the watchful eyes of Carter and Turner.
In 1979, Shackley retired from the CIA to dedicate himself to a series of private business ventures. In reality, these ventures were components of a private intelligence network that he had been designing over the course of several years. The long-term plan was to use this private CIA as the foundation for a rollback of Carter’s reforms, when a Republican president would inevitably succeed him. This private network, unsurprisingly, quickly found itself embroiled in a series of international scandals.
Much of Shackley’s network was bankrolled with money provided by Wilson. According to FBI memoranda, published as part of a later report by the Congressional Committee Investing the Iran-Contra affair, Wilson provided Clines with a loan to organize a company called International Research and Trade (IRT), which acted as a corporate umbrella for two other Clines-owned companies. These were System Services International (SSI) and API Distributors.
SSI, registered in Bermuda, was later described by Shackley as “designed originally to be a trading company [for] securities.” According to his testimony during the Iran-Contra hearings, SSI did very little business.20 This was soon revealed to be untrue. API Distributors, registered as a Delaware corporation, was organized to act as a supplier for oil companies. One of its primary clients was Pemex, the Mexican state-owned petroleum firm. It set up shop in Houston, Texas, where it shared offices with Wilson’s Aroundworld Shipping. API had a tendency to bring into the fold old veterans of the Agency’s secret wars. Rafael Quintero and Ricardo Chavez, both old recruits who operated under the auspices of JM/WAVE, were put on the API payroll and dispatched to Mexico, ostensibly to work on the Pemex project.21
When questioned about his role in these companies, Shackley offered only vague responses. For SSI, he did some sort of unspecified work, while for API he “worked as a consultant, employee, office manager, trying to get the company off the ground.”22 He told the FBI that he had not played any role whatsoever in IRT, stating that he only had passing knowledge of this Clines-owned parent company. Despite Shackley’s efforts to distance himself, numerous figures associated with the private CIA – people like Clines, Wilson, and Richard Secord – “told the FBI and other government agencies that it was quite clear that Shackley was the boss.”23
Further evidence comes from the curious office arrangement of Research Associates International, the “consultancy and risk analysis” firm Shackley launched in 1979.24 Just as API Distributors shared office space with Wilson’s Aroundworld Shipping, Research Associates International shared offices with SSI and International Research and Trade.25 ___I’s staff included multiple Shackley associates from his CIA days. Directors of the firm included Jim Critchfield, Donald Jameson, and a mysterious “Mr. Ledbetter,” who may have actually been Calvin Hicks. If so, Hicks would have known Shackley from his JM/WAVE days.26
Research Associates International was formed with a specific focus on the oil industry, and it appears to have only had one, exclusive, client: John Deuss (deceptively spelled as “Dois” in the transcripts of Shackley’s Iran-Contra testimony). Deuss, through an expansive corporate web organized around Transworld Oil, moved in the murky world of oil trading where he worked with the likes of the infamous commodity trader (and Mossad asset) Marc Rich. Between 1979, when he first hired Shackley’s Research Associates International, and 1993, Deuss dominated South Africa’s oil imports, with Transworld Oil accounting “for more than half of South Africa’s oil purchases.”27 Aside from Deuss, the other giants of this trade – which was essential for the maintenance of the apartheid regime – were Marc Rich and Marimpex, a German oil-trading company. As will be noted later in Chapter 16, a former “girlfriend” of Epstein’s, Francis Jardine, later married John Deuss. Jardine accompanied Epstein to the Clinton White House in September 1994.
Shackley and Deuss intersected through Shackley’s massive web of contacts. The introduction between the two was made by Michael Corrie, then serving as president of Transworld Oil. Corrie had run Royal Dutch Shell’s Vietnam division, which was one of the major firms tapped by the US military to assist the war effort (though, ironically, a robust black market saw significant amounts of Shell petroleum routed to the Viet Cong). It was there that Corrie and Shackley became acquainted.28
There was also the interesting selection of attorneys by Shackley and Clines: the legal legwork for setting up Research Associates International, System Services International, and International Research and Trade was the prestigious Washington-based firm of Shaw, Pittman, Potts & Trowbridge.29 Terry Reed and John Cummings, in Compromised, wrote that the firm was “very much aligned with the CIA” and had “a history of providing criminal defense for intelligence agents.”30 One former CIA officer on the Shaw, Pittman, Potts & Trowbridge payroll at this time was William Barr, the future Attorney General for Presidents George H.W. Bush and, years later, Donald Trump. Barr had worked for the CIA from 1973 to 1977. He joined Shaw, Pittman, Potts & Trowbridge in 1978, but it is unknown if he worked on any of the accounts linked to this private CIA during his time there.
One lawyer at the firm who was known to represent these interests was Barbara Rossotti, who worked as Clines’ attorney. Rossotti’s name appears in FBI files in connection with what might have been the crown jewel of this entire complex, the Egyptian-American Air Transport and Services Corporation (EATSCO).31 EATSCO was owned by two corporate entities: 51 percent was held by Tersam, a Virginia company opened by an Egyptian intelligence officer turned businessman, Hussein K. Salem, and 49 percent was held by Clines’ SSI. Clines and Salem parked the headquarters of EATSCO at a familiar location: 7777 Leesburg Pike, the same building that was a hub for the emergent New Right networks of Richard Viguerie and his associates.32 To make these ties more compact, Salem was, throughout this period, living in the Ramada Inn located next to the 7777 Leesburg Pike.
According to Clines, the hotel’s bar was a CIA “watering spot.”33 EATSCO functioned as a middleman in arms sales made by the Pentagon to Egypt following the arrangement agreed upon during the Camp David Accords. It inserted itself between the respective militaries and the freight forwarders that were selected to move the cargo. From the get-go, it was clear that this was hardly a normal arrangement. Most Pentagon-related arms sales did not involve “any commercial concern like EATSCO,” which makes it somewhat unsurprising that EATSCO became implicated in a scheme to overcharge the Pentagon for the costs of the shipments.34
One of EATSCO’s men inside the Pentagon – who signed off on the immense prices being demanded by the company – was Richard Secord, the future Iran- Contra co-conspirator. When Wilson’s prosecutor, Lawrence Barcella, was put on the trail of EATSCO in the early 1980s, he was paid a visit by yet another future Iran-Contra conspirator – and close friend of Shackley and Clines – Michael Ledeen. According to the New York Times, Ledeen suggested to the attorney that “any alleged billing abuses might have gone for a covert operation.”35 EATSCO, in other words, might have been skimming Pentagon money and redirecting it to finance the activities of the private CIA.
Indeed, rumors have abounded that EATSCO was covertly running arms to the Mujahideen in Afghanistan and to CIA-backed fighters in other Cold War hot spots. The fingerprints of Edwin Wilson seemed to be all over EATSCO. Journalists linked a series of major loans to SSI made by Wilson to EATSCO, while handwritten notes made by Eugene Tafoya – the former marine employed by Wilson for wetworks operations – made reference to the company.36 A securityequipment supplier used by EATSCO called Systems Engineering International Corporation was owned and managed by Donald Lower, the former manager of Wilson’s sprawling Virginia farm. Incredibly, Systems Engineering International – like all of the other companies in this complex – drew on the legal resources of Shaw, Pittman, Potts & Trowbridge and operated from an office located adjacent to EATSCO at 7777 Leesburg Pike.37
ODD CONNECTIONS
By the mid-1970s, Edwin Wilson had gained control of Joseph J. Cappucci Associates, an “international firm specializing in the protection of heads of state.”38 The company had been formed by US Air Force Col. Joseph J. Cappucci. He had been no stranger to the world of intelligence: during World War II, he had served as a counterintelligence officer for the Army Air Corps and, after the war, he became a liaison between the new intelligence apparatus of the Air Force and the CIA. He later served as the chief of the Air Force Office of Special Investigations.
How Wilson gained control of Cappucci’s company is not clear, nor is there a firm trail of records illustrating the relationship between the two men. What is clear, however, is that it was eventually folded into the byzantine web of the private CIA: Wilson sold his interests in Cappucci to the trio of Thomas Clines, Donald Lowers, and Neil Livingstone (mentioned in the last chapter in connection with Robert Keith Gray and the congressional page boy scandal). The money used to purchase Wilson’s shares reportedly came from “US government expropriation funds collected after an airline Livingstone and a partner had purchased was taken over by the Panamanian government.”39 The airline in question was Air Panama.40
Livingstone himself had spent time in Panama between 1976 and 1979, and there he had been associated with the notorious Mossad operative Michael Harari.41 Harari’s long and twisting career began with a stint in the Haganah, where he acted as a courier at just thirteen years old, later graduating from their elite fighting corps, the Palmach. After the formation of Israel, he joined the Israel Defense Force and was eventually recruited by Mossad. During the early 1970s, Harari led teams across Europe to hunt and target members of Black September, the Palestinian group responsible for the Munich Olympics massacre. Harari’s team had a tendency to leave a trail of dead bystanders and civilians in their wake. Despite this, he was eventually dispatched to serve as head of Mossad’s Latin American operations.
Over time, Panama became the primary site of Harari’s activities. Livingstone, in an article on the spymaster for the Washington Post, wrote that “Panama City had become an intelligence center … a sort of Latin American version of Beirut or Vienna.”42 Harari became particularly close to Manuel Noriega, then serving as head of the country’s intelligence service. Noriega maintained a convoluted intelligence web, simultaneously serving on the payrolls of the CIA and the Cuban intelligence directorate, the Dirección General de Inteligencia. “Noriega’s relationship with the DGI,” writes Livingstone, “became a valuable pipeline of information on PLO (Palestine Liberation Organization) activities for Harari and his superiors back in Israel.”43
By the early 1980s, Harari had been detached from the Mossad – at least in an official capacity – and was making a living as an arms dealer and security specialist for Noriega. José Blandón Castillo, a top Noriega advisor who testified to the Senate Foreign Relations Committee’s Sub-committee on Terrorism, Narcotics, and International Operations (also known as the Kerry Committee), accused Harari of running a “network” that managed a guns-and-drugs pipeline across Latin America.44 It was this same logistical network that laid the groundwork for the later Contra-support efforts.
Harari, importantly, was in close contact with Duane Clarridge – the CIA officer who oversaw those initial efforts. Livingstone’s tenure at Cappucci was among the first of his post-Panama activities. A contract was signed with the Egyptian government of Anwar Sadat to train the presidential security forces. CIAtrained Cuban exile Felix Rodriguez, who had worked under Shackley at both JM/WAVE and in Vietnam, was brought in to oversee the operation. It was part of the arrangements being organized by Wilson and Clines that had produced the EATSCO deal. Both would later tell journalist Morgan Strong that deals such as these were being made through a kickback arrangement in which large sums of money were to be passed to Sadat via Hosni Mubarak in exchange for the contracts.45
EATSCO’s primary support apparatus in these various deals was Global International Airways, a Kansas City-based charter airline and cargo carrier founded in the late 1970s by Farhad Azima. An Iranian-born businessman, Azima had launched the company with the ostensible purpose of transporting “cattle from Nebraska to Iran, until the US cut diplomatic ties after the 1979 Islamic Revolution.”46 It was likely that much more than cattle were being ferried on these flights, considering that Azima was reportedly tied to the shah’s SAVAK.47 Azima launched Global International Airways with the aid of a “multi-million dollar loan from the Commercial Credit Corporation.”48 In the beginning, its fleet consisted of one Boeing 707.49 It quickly grew to be “one of the largest private air carriers in the world, with seventeen 707s, two 727s, and one 747.”50
Joseph Trento suggests that Azima was a front man for the private CIA, with Global International having actually been designed by James Cunningham, who had worked under Shackley in Laos as the manager of the CIA’s Air America.51 While this particular claim cannot be substantiated, there are hints that this network was present at Global International’s inception. For example, at least one of Azima’s pilots had previously worked for Air America. Even more suggestive of a connection is the source of Azima’s loan – the Commercial Credit Corporation. This was the commercial finance-and-lending subsidiary of the Control Data Corporation (CDC), a supercomputer firm that had operated as a high-profile defense contractor since its inception at the end of World War II. CDC would later make an appearance on the periphery of the PROMIS scandal, also known as the Inslaw affair (the subject of chapter 9).
Around 1976 – shortly before Commercial Credit provided Azima with the start-up capital for Global International Airways – Control Data Corporation hired Edwin Wilson as a consultant with the hopes of leveraging the spook’s contacts “to unload some outdated computers on Third World countries.”52 The arrangement between the two, however, seems to have been much greater than simple export affairs. Wilson was subsequently accused of having bugged the offices of the US Army Materiel Command in order to obtain “inside information … on bidding and procurement plans” on behalf of the corporation.53
Before Global International Airways went bust in the mid-1980s, Azima ran up huge debts with several financial institutions – most notably Indian Springs State Bank in Kansas, which underwent its own collapse in tandem with Global International. Azima had been brought on as a director for the institution, while its vice president, Anthony Russo, acted as a “financial consultant” for Global International.54 Russo had previously been a high-profile Kansas City criminal attorney, notorious for representing members of the Civella crime family. In the investigation that followed the bank’s insolvency, it was revealed that Russo had brought Civella interests into the fray. Their accounts at the bank, one state banking examiner found, were “habitually overdrawn.”55 Indian Springs also provided massive loans to the Dunes Hotel and Casino in Vegas, which was at the time under the control of Morris Shenker. Shenker had previously been Jimmy Hoffa’s attorney and was no stranger to suspect financial wranglings, as he had been intimately involved with the corruption plaguing the Teamsters pension fund. He personally guaranteed the loan from Indian Springs to the Dunes, while Azima had sponsored it. Global International was at the heart of these business transactions as the airline “had a contract with some Las Vegas hotel-casinos to fly junkets.”56
Clearly, this emergent network was like an octopus, with far-reaching tentacles reaching out in all directions and intertwined with seemingly legitimate businesses. The ghostly traces of this network’s presence could be found in all types of corruption. One strange nexus, touched on briefly by journalist Pete Brewton, was the complex of companies set up in Louisiana by Charles F. Haynes and Vaughn R. “Bobby” Ross.57 Ross was a pilot with a military service record, and Haynes was a “timber man.” In 1979, they formed Commercial Helicopters, which amassed a fleet of over thirty aircraft in just three years. The primary business of Commercial Helicopters was providing transportation to and from the numerous oil rigs that dotted the Gulf of Mexico. Yet, there is also evidence that the company had a strange, darker underbelly. Haynes and Ross, for example, leased helicopters from Flying Tiger Line, the company that was linked so closely to the China Lobby and to Anna Chennault and Robert Keith Gray. There were also connections to the network of ex-CIA operatives. Brewton notes that Commercial Helicopters “provided parts and services to a helicopter company in Guatemala” called Helicopteros de Guatemala.58
Helicopteros was managed by Carl Jenkins, a veteran of the CIA’s anti-Castro operations. Operating from outposts in Florida, Mexico, and the Caribbean, Jenkins had been the case officer for a number of important Cuban exiles, including Rafael Quintero and Manuel Artime – both of whom had reappeared in the circles that surrounded Shackley, Clines, and Wilson.59 Ted Shackley stated, during his questioning as part of the Congressional Iran-Contra inquiry, that he knew Jenkins and had last encountered him in the offices of Thomas Clines, which Jenkins was also using.60 Given the location and the time frame, this was likely API Distributor’s Houston offices, which, as mentioned earlier, were operating from the same offices of Wilson’s freight forwarder. Gene Wheaton, a close associate of Jenkins – and one of the early Iran-Contra whistleblowers – told Brewton that he had crossed paths with Ross, having been introduced by the “crowd around Ed Wilson.”61 The 2018 obituary of Ross states that he served a tour in Vietnam from 1969 to 1970, where he was a pilot in the 57th Assault Helicopter Company.62 During this same year, the 57th was tasked with providing “support to the Military Assistance Command Vietnam Studies and Observation Group in their mission to send reconnaissance teams into Laos and Cambodia to locate and interdict North Vietnamese Army (NVA) infiltration routes and their sources of supply.”63 Ross, in other words, was in direct proximity to the secret war in Laos, the CIA wing of which was being run by Shackley and his cronies.
Wheaton’s claim about the business affairs of Ross and Haynes included the allegation that Commercial Helicopters had, in fact, purchased API Distributors. Ross denied to Pete Brewton that this was true – but, oddly enough, Haynes formed a company called API Oil Tools & Supply. While this company, like Commercial Helicopters, was registered in Louisiana, the bulk of its business – leasing “power tongs, an oil drilling tool” – was located in Houston, Texas.64 Crucial financing for Commercial Helicopters and API Oil Tools & Supply came from Herman Beebe, the financial brain behind a network of banks and savings and loans that sprawled Louisiana, Texas, and other surrounding states. Beebe – who was later implicated in the massive collapse of numerous savings and loans in the 1980s – had long-standing ties to the criminal underworld, some of which went right to the top of the major American Mafia families.
According to Stephen Pizzo, Mary Fricker, and Paul Muolo, Beebe “had been arrested in a New York restaurant with East Coast Mafia boss Carlo Gambino and Florida boss Santo Trafficante” in 1966.65 He was further linked, by a number of law enforcement sources, to Trafficante’s close partner Carlos Marcello, the don of the New Orleans Mafia whose empire extended well into Texas. In 1972, US Customs agents and police raided a Shreveport, Louisiana, warehouse owned by Beebe; inside, explosives and rigging devices that were destined for anti-Castro Cuban groups were found.66 Though Beebe never faced charges in relation to the incident, numerous conspirators were arrested, among them a close associate of the Gambino family, Murray Kessler. Another was the pilot who had been hired to ferry the explosives – none other than Barry Seal, the infamous drug pilot who operated on the CIA payroll and who would later be implicated in running Colombian cocaine in conjunction with covert Contra-support operations. “Bobby Ross,” wrote Brewton, “was a longtime close friend of Barry Seal. ‘We grew up together,’ Ross said.”67 This raises the possibility that Seal was connected, at a very early stage, to Shackley’s network.
BUSH’S WEB
ournalist Pete Brewton, in his study of the savings and loan crisis, reported on the possibility that another – though perhaps related – private-intelligence network was also being formed during this period. The architect of this network was George H.W.Bush. Reportedly, Bush had expressed to Jimmy Carter his willingness to stay on as head of the CIA, only to be rebuffed. Bush subsequently returned to Texas and started anew, alongside his close associates and various business partners.
According to one of Brewton’s sources, Bush’s main ally was William Blakemore II, an oilman-rancher hailing from Midland, Texas.68 Buried deep in the voluminous materials compiled as part of official inquiry into the Iran-Contra affair is Blakemore’s name: he served as president of the Gulf and Caribbean Foundation, a “philanthropic” body used to move funds raised by private donors to the Nicaraguan Contras.69
Another source gave Brewton a different set of names: Walter Mischer, a Houston real estate mogul and banker (and friend of Blakemore), and his son-inlaw Robert Corson.70 In 1991, Corson was found dead in an El Paso motel after being indicted for money laundering and fraud. Those charges connected Corson to a succession of bizarre financial dealings that involved a string of saving and loans, as well as large mainstream banking institutions.71 Among the sources that Brewton cites is Richard Brenneke, an infamous CIA-adjacent arms dealer and money launderer who became a whistleblower for both the October Surprise and the Iran-Contra affair. “According to Brenneke,” Brewton writes, “Corson worked with him in laundering money for the CIA.”72 Interestingly, Brenneke’s moneylaundering activities were, according to Gordon Thomas, of immense interest to Israeli intelligence, which allegedly studied his methods with the aid of the PROMIS software. PROMIS, and Robert Maxwell’s intimate involvement in that operation on behalf of Israeli intelligence, is discussed in greater detail in chapter 9.73
Brewton, meanwhile, further suggests the possibility of Corson’s involvement with Israeli intelligence: “A Texas law enforcement official who has worked with intelligence agencies confirmed Corson’s work for the CIA. This officer said that Corson also did work for the Israelis but may not have known it, because there were several layers of cut-outs between Corson and the Israelis.”74
Given this possible connection not only to American but Israeli intelligence, there is perhaps significance to the fact that there were direct ties between Walter Mischer and Texas Senator John Tower – the George Town Club member whose activities in the late 1980s were intimately intertwined with those of Robert Maxwell. As will be detailed in chapter 9, Maxwell, an Israeli intelligence asset since the early 1960s, had helped place Tower himself on the payroll of Israel intelligence in the 1980s.
Mischer’s ties to Tower came through Mischer’s position as something of a political kingmaker. Mischer, according to press reports, had a “virtually unrivaled ability to raise cash for politicians,” and he lent his talents to both Democrats and Republicans.75 While he could often be found backing Democrats like Lloyd Bentsen, he had also “long been a backer of Republican John Tower.”76
Mischer’s rise to the heights of Texan political power came through extensive holdings in construction, manufacturing, real estate and banking. According to his obituary, Mischer, during World War II, had worked as a project manager at Stone & Webster, a major East Coast engineering concern that had become a major defense contractor that, among other things, designed and built the laboratories utilized for the Manhattan Project. During this time, he worked with the company to construct “naval bases in the Caribbean.”77
After the war, he became entangled with a web of development companies, the most important of which was the Mischer Corporation, which he owned until his death. The Mischer Corporation “own[ed] thousands of acres of prime development land in the Houston area, while affiliated companies do street paving and sell air-conditioning units to home builders.”78Another Mischer company, organized in partnership with his close friend and colleague Howard L. Terry, was Marathon Manufacturing, which produced heavy industrial equipment. Marathon specialized in oil equipment and offshore drilling platforms, having acquired one of the leading companies in this field, R.G. LeTourneau Inc., in 1970. LeTourneau’s first offshore oil platform had been built for Zapata Petroleum, the CIA-linked oil company founded by G.H.W. Bush.79
In 1979, Marathon was purchased by Penn Central, a company that, along with its then-owner, Carl Lindner, will be discussed at length in chapter 10. As a result, Mischer and Terry ended up with a significant chunk of Penn stock.80 In 1986, the pair sold their Penn stock to the tune of $106 million. The most important node of the Mischer complex was Allied Bancshares, a sprawling holding company that Mischer controlled and which owned numerous banks across Texas. Allied’s board was stacked with Mischer’s close contacts, and provides an inside look at his sprawling “old boy’s network,” a network quite possibly utilized by Bush after his ouster as CIA director.
Among Allied’s board members was the aforementioned Howard Terry, as was Gerald Smith, who was something of Mischer’s “right-hand man.”81 Smith’s own banking interests extended beyond Texas and into Louisiana, with apparent ties to organized crime and intelligence. Smith was co-owner of a bank with Herman Beebe, the S&L fraudster and mob insider discussed earlier in this chapter.82 Beebe’s own networks of banks and S&Ls were reportedly financed with heavy loans from Allied.
During the 1980s, Allied’s co-chairman was one of Mischer’s longtime associates, Houston investor Jack T. Trotter. Trotter is described in a 1987 issue of Texas Monthly as having been a “[b]ehind the scenes player in setting the course of the Houston business community” with an “enormous network” of “people he has made rich by his deals.”83 Trotter maintained a decades-long business relationship with the powerful Duncan family, lorded over by the patriarch John H. Duncan Sr.84 Duncan Sr., in the late 1960s, was a director of the Bank of the Southwest – the Texas banking institution discussed in the previous chapter as being linked to a number of CIA funding conduits. Trotter and the Duncan family embarked on a number of business ventures with Gerald D. Hines, another Houston developer and Mischer associate whose impact on Houston can be seen in his ambitious construction projects, including the headquarters of Shell and Pennzoil, as well as the Galleria shopping district (a location that, as we will see in the next chapter, may have played a role in land speculation schemes linked to Iran-Contra).85 Perhaps significantly, Hines will be encountered again in Columbus, Ohio, as the developer and owner of the building where Leslie Wexner parked his tangled web of real estate and other holding companies, including companies mentioned that were mentioned by Columbus police in connection with the murder of his company’s tax attorney.
A final Allied director worth mentioning is George A. Butler, then the senior partner at the powerful Houston law firm of Butler, Binion, Rice, Cook and Knapp. Alongside Trotter, he maintained a spot on the board of the Gulf Resources and Chemical Corporation of Houston. Gulf Resources had been founded with the aid of Joseph Patten, a general partner at Bear Stearns. Another Bear Stearns partner named Raphael Bernstein maintained a place on the Gulf board well into the 1980s.86 Considered a major national security concern due to the role it had played in producing the bulk of the US’ lithium supply – essential for, among other things, nuclear weapons – Gulf Resources achieved notoriety in the 1970s when the company’s president, Robert H. Allen, smuggled funds via a Mexican subsidiary and bank to Nixon’s Committee for the Re-Election of the President. These funds were then utilized by the Plumbers to finance the Watergate break-ins.87 Allen would, at one time, serve as the campaign finance chair for one of John Tower’s senate campaigns.
The movement of the Gulf Resources money towards its ultimate destination was largely facilitated by Bill Liedtke, the founder and president of Pennzoil. Along with his brother, J. Hugh Liedtke, Bill was one of George H.W. Bush’s original business partners: they had formed part of the original group that created Zapata Petroleum. In 1959, Bush and the Liedtkes “decided to split Zapata into two companies,” with one half becoming Zapata Offshore, and the other half becoming Pennzoil.88 A 1976 Senate Committee on Interior and Insular Affairs report lists Bill Liedtke as a director of the Bank of Texas.89 This was almost certainly the Continental Bank of Texas – headquartered in the (Gerald Hines-designed) Shell Plaza in Houston – which had been formed in 1973 through a merger between Continental Bank and the Bank of Texas.90 The President of the merged bank was Gerald Smith, while the chairman was George Butler. The presence of these two Mischer cronies is no accident, as Continental Bank of Texas was operating under the umbrella of Allied Bancshares.
At the time that Bush was purported to have been organizing his own private intelligence web, he was also making his own forays into the world of banking. On February 23rd, 1977, the New York Times reported that he had “been elected a director of First International Bancshares,” a large Houston bank holding company.91 At the same time, he was appointed to the board of its largest holding, First International Bank, and its London merchant bank subsidiary, First National Bancshares Ltd. Russ Baker, in his history of the Bush family, writes that “First International was not your friendly neighborhood bank. Rather it was a Texas powerhouse whose principals reached well beyond banking into the netherworld of intelligence and intrigue.”92 It was particularly close to Saudi interests, which at the time were investing heavily into Houston real estate and industry, a by-product of Texas oil interests taking hold in the Middle East and the Gulf states. FIB reportedly held a “revolving line of credit for Salem bin Laden,” while multiple sources have linked it to the Bank of Credit and Commerce International – a powerful and deeply corrupt institution detailed in the next chapter.93
Joe L. Albritton, the longtime chairman of Washington, DC’s Riggs Bank, maintained a post as director of First International. Riggs was described by the Wall Street Journal as having “had a longstanding relationship with the Central Intelligence Agency,” and maintained accounts for a number of infamous figures. Among these was Prince Bandar bin Sultan, the Saudi ambassador to the United States from 1983 to 2005 whose contact information would later appear in Jeffrey Epstein’s contact book.94 In early 2005, Riggs pleaded guilty to money laundering charges resulting from an extensive Justice Department inquiry into the bank’s activities.95
Sitting alongside Bush and Albritton on the board of First International was John Murchison of the Murchison oil family. John Murchison was less known that his counterparts, Clint Murchison Sr. and Jr., but was by no means less prolific when it came to oil and gas holdings and other business concerns. Interestingly, in 1982, John’s son John Murchison Jr. was appointed to the board of Gulf Resources and Chemical Corporation following the firm’s takeover by a shadowy British businessman-turned-“tax exile” in Switzerland named Alan Clore.96
First International appears to have been closely linked to Ling-Temco-Vought (LTV), a major Dallas-based defense contractor that provided the US military with, among other things, light attack aircraft during the Vietnam War. John Murchison was listed among the directors of LTV, as was the independent oilman Edwin L. Cox, also found on the board of First International.97 In 1970, LTV’s board was run by a prominent Texas businessman named Robert H. Stewart III, who, two years later, would organize First International as a holding company for First National Bank and serve as the institution’s long-running chairman.98
Much like Walter Mischer, Stewart was incredibly connected both economically and politically. The 1970 New York Times announcement of his takeover of the LTV board notes that Senator John Tower was his “very good friend.” That same article attributes the following quote to Stewart: “I’ve always been on the conservative side of politics. Some people refer to me as being a little [to] the right of Louis XIV.”99 He maintained positions on the boards of numerous major corporations, including a position as a director at Pepsi from 1965 through at least 1995. Between the 1960s and 1970s, he was affiliated with Braniff Airways, which for a time was a subsidiary of LTV. During the 1980s, Mischer served on the board of this same aviation company.100 One important corporate connection for Stewart was his presence at ARCO, formerly known as Atlantic Richfield, in the 1980s. This was the petroleum company of Robert O. Anderson, a close associate of the Rockefeller family who spent time at the Council on Foreign Relations at the same time as George H.W. Bush.101
The precise relationship between Anderson and Bush is hard to pin down – but one telling episode involves Atlantic Richfield’s role in developing the expansive Trans-Alaskan pipeline system. Service for Anderson’s companies was provided by the aviation companies of Phil Bergt, which included Interior Airways and later Alaska International.102 In 1974, a young George W. Bush traveled to Fairbanks, Alaska, where he took a job working for Bergt. When asked by Russ Baker how exactly the younger Bush came to be in his employ, Bergt stated that it was as a favor to “someone from a Houston construction firm.”103 This becomes all the more curious when considering Bergt’s claims that Alaska International became embroiled in intelligence work after the election of President Carter – in other words, right when Bush was purported to have been setting up his intelligence network. These were off-the-books operations, Bergt told Baker, “after Jimmy Carter went in, gutted the CIA, and almost ruined them.”104 He further alleged that his connection to the Agency persisted into the Reagan administration, and that his company had provided support to Southern Air Transport during the Contra years.
W ho was the individual from the Houston construction firm that brought W. Bush to Bergt’s attention? It’s impossible to say, but one possibility is that it was Walter Mischer himself. Nothing directly linking the two men has yet been found, but they both shared a mutual association with Robert O. Anderson. In the early 1950s, Mischer began accumulating land near Lajitas, a small town in West Texas near the US-Mexico border, and Anderson followed suit in the 1960s by setting up his Big Bend Ranch. By the early 1980s, the two joined forces, with Anderson selling half of the ranch’s ownership to Mischer with big plans to “syndicate the land” and sell “shares to selected colleagues in the Texas establishment.”105 Throughout this whole period, Anderson maintained an intriguing business contact: Clermont Club member Tiny Rowland, a figure that, as will be discussed later in this chapter and elsewhere in this book, was tied to American and Israeli intelligence services, and played a rather murky role in the Iran-Contra affair. First introduced by the shadowy tanker magnate and billionaire Daniel K. Ludwig, Anderson had sold his ownership of the British Observer to Rowland in 1983.106 Several years later, Anderson departed ARCO to focus on his private company, Hondo Oil & Gas. According to the New York Times, the company was “equally owned by Mr. Anderson and the British conglomerate Lonrho P.L.C.” – a global corporate empire overseen by Rowland.107