CHAPTER 8. CLINTON CONTRA
SEAL, THE SMUGGLER
On October 5th, 1986, the Enterprise took a mortal blow. At 9:50 AM, a C- 123K military transport aircraft took off from the Ilopango military base, carrying a stockpile of rifles, ammunition, and explosives in its hull. These were to be air-dropped into the Nicaraguan jungle for the Contras – but the plane never made it to its destination. It was instead shot down by Sandinista forces, killing three of the four man crew. The sole survivor, Eugene Hasenfus of Wisconsin, was subsequently captured. Under interrogation, he began to detail what he knew of the wide-ranging plot to arm the Contra rebels.
The first official communication surrounding the plane came through Felix Rodriguez, who alerted Samuel Watson, an aide to Vice President Bush, that an aircraft had gone missing. A day later, on October 6th, Rodriguez contacted Watson again with an update. Soon, Oliver North was bound for El Salvador. Meanwhile, cover stories were being drafted in a desperate attempt to provide an alternative explanation of events. Despite their efforts, North and the Enterprise were out of luck and, within days, congressmen were calling for inquiries into the crash, the FBI began nosing around Southern Air Transport’s Miami offices, and the press started to run stories about different aspects of their clandestine activities. It was all unraveling at a fast pace.
As with most things related to the Enterprise, mystery begat more mystery. Hasenfus, for example, had been hired to serve as a crewman on the doomed C- 123K by a company called Corporate Air Service, which was registered in Pennsylvania but had offices in Miami. Corporate Air was “revealed to be a phantom company,” and its Miami location was actually Southern Air Transport’s headquarters at the Miami Airport.1
The history of the C-123K was itself a tangled web. In 1983, it had been purchased from the US Air Force by Harry Doan, the proprietor of a Florida aviation company called Doan Helicopters. It had been picked up by the Enterprise in March 1986, via a front company called Udall Research Corporation. Udall, registered in Panama, was also involved in the construction of the airstrip in the Santa Elena region of Costa Rica. Papers recovered from North’s safe described Udall as an “operating company.”2
Udall was not alone in acquiring this C-123K from Doan. It had previously fallen into the hands of one Adler Barriman “Barry” Seal, the commercial pilotturned- drug smuggler and CIA asset. Seal had picked up the plane, used it for drug smuggling flights, and then returned it to Doan Helicopters in July 1985. Seal, importantly, was connected to the same criminal figures that had been woven into the covert Contra support network. Beginning in 1981, Seal had begun to ferry cocaine on behalf of Jorge Ochoa, one of the Medellin cartel’s founding members. In a few years, Seal’s Medellin smuggling had expanded considerably. With police attention mounting in his home state of Louisiana, Seal set up a new base of operations in rural Arkansas.
The location that Seal selected was the Intermountain Municipal Airport in Mena, Arkansas, near the Arkansas-Oklahoma border. Mena was a small, unassuming town; yet, throughout the 1980s, the area encircling the airport became a hotbed of intrigue. In 1989, journalist John Cummings, in one of the first articles written on Seal in Mena, wrote that “Seal had virtually taken over a local aircraft repair-and-modification operation at the airport, and the good citizens of Mena began to notice some strange goings on: landings at night, tight security around Seal’s planes, a hangar converted into a virtual fortress.”3 There were also sightings of what appeared to be airdrops, the construction of airstrips deep in the woods beyond the airport, and even darker rumors that whatever was happening was sanctioned by the CIA.
The report of the Kerry Commission on narcotics later stated that “[a]ssociates of Seal … were … targets of grand jury probes into narcotics trafficking.” Yet, these cases were dropped despite the “strong protests of State and federal law enforcement officials..… The apparent reason,” the report continues, “was that the prosecution might have revealed national security information.”4
Jack Anderson wrote in the Washington Post that, after Seal died in 1986, IRS investigators descended upon Mena and seized records and other documents from the smuggler’s offices there. The IRS was keeping its report “under wraps,” but Anderson relayed its name: “Contra Mena Connection.”5 The absence of a public release of this report allowed a comprehensive firewall to be set in place, permitting investigators to quietly detail the story of Seal and that of Iran-Contra.
That the plane shot down in Nicaragua had been used by Seal was written off as mere coincidence, with the intermediary figure, Harry Doan, acting as a convenient buffer. Unfortunately for the proponents of this narrative, the specter of Seal appears throughout the official documentation of the Iran-Contra case.
A May 1983 US Customs report noted that an aircraft piloted by Frank Moss and owned by his Hondu Carib aviation company was involved in drug smuggling linked to Barry Seal. As previously mentioned, Moss and his aviation companies were entangled, not only with the Enterprise’s Contra support efforts, but with repeat allegations of drug trafficking. Those allegations rang true in the case of this plane, tail number N90201, which made at least one airdrop of “large quantities of marijuana and cocaine at an isolated farm near Baton Rouge, Louisiana. The farm’s address Rt. 6, Box 282E in East Baton Rouge, Louisiana, belong[ed] to Adler [Barry] Seal…”6 Given Moss’ ties to Matta’s drug trafficking operations, it seems likely that Seal himself was part of these wider smuggling networks. It would also align Seal with the Cali cartel in addition to his earlier Medellin ties, which paints a complicated picture of the unstable alliances and power competitions that raged beneath the surface of this covert world.
Journalist Daniel Hopsicker, in his biography of Barry Seal, writes that he obtained documents from the trafficker’s widow which show that, in the 1980s, Seal was doing business with Summit Aviation. As mentioned in the previous chapter, Summit was controlled by the DuPont family, and was managed by Patrick Foley, a veteran of the CIA and Flying Tiger Line. It was Summit that had provided a small aircraft that was utilized for a bombing run in Nicaragua, while it was Foley who had recommended a drug-smuggling pilot to the State Department for the transportation of “humanitarian supplies” to the Contras. Foley, Hopsicker writes, was a “Seal associate whose name and number are in Barry’s files.”7
Summit was involved in the acquisition and trade of Beechcraft King Air, turboprop planes known for their flexibility and versatility. Seal, likewise, maintained his own King Air plane, and one, sporting the tail number N6308F, had a particularly interesting provenance. It was owned by Greycas Inc., a Phoenix, Arizona-based subsidiary of Greyhound Lines, the bus company. Greycas leased the plane to a company called Systems Marketing Inc., reportedly a subsidiary of another firm named Military Electronics.8 Systems Marketing provided the plane to Gene Glick, a real estate developer who, in turn, leased it to Seal.
According to Hopsicker, Glick “leased not just this but several other of Barry Seal’s planes and helicopters as well, during the time Seal was most active in drug and weapons smuggling. Other documents we uncovered revealed that Glick was also actively helping Seal purchase ocean-going vessels… ”9
Hopsicker reproduced an FAA form showing the leasing of the aircraft from Greycas to Systems Marketing. The form identified Systems Marketing’s vice president as a Leonard F. Lavoie. Press reports at the time suggested that Lavoie, at this time, was also affiliated with an aviation company called Skyways Travel & Tours, while his early career had revolved around Arizona real estate. During the 1970s, Lavoie had been the treasurer for the Halwin Corporation, which had been founded by a man named Allen Winter.10 Winter, notably, was a “known racketeer” who, prior to relocating to Arizona, had operated out of the Seattle area and had been particularly close to Dave Beck – Jimmy Hoffa’s mob-linked predecessor as president of the Teamsters union.11
Both Winter and Lavoie had previously worked for the major Phoenix, Arizona, construction firm Del E. Webb Development Company.12 Del Webb had developed major projects like Sun City, the famous retirement community; yet, what the builder and his company were best known for was their role in building and owning a number of Las Vegas casinos. Unsurprisingly, this brought him into close contact with organized crime interests, and to Bugsy Siegel and Meyer Lansky in particular – as well as to J. Edgar Hoover. According to Anthony Summers, Hoover – who rubbed shoulders with Webb at places like the Hotel Del Charro, a favorite haunt of mob-linked Texas oil bigwigs like Clint Murchison – appears to have protected the builder. “Hoover,” said Justice Department attorney William Hundley, “gave Webb a pass. He was his buddy.”13
Hundley added that “No bugs went in on Webb’s places.”14
It’s unsurprising, then, that Webb himself came to own a number of casinos – including the Sahara, which he had acquired with loans from major Wall Street entities like Lehman Brothers and Morgan Guaranty.15 He also ended up with the Thunderbird Hotel and the Flamingo, which means that the money of Del E. Webb Development Company had also freely mingled with that of the Moody family’s American National Insurance Company (ANICO).
That Lavoie appears in the chain of custody that delivered a plane from Greycas into the hands of Barry Seal illustrates, once again, the integration of organized crime networks into those of the intelligence community. It also makes one wonder if Gene Glick, the builder who acquired the plane from Systems Marketing before leasing it to Seal, was himself tied into Del Webb’s network.
Greycas itself was involved in large-scale financial crimes that also seemed nebulously linked to individuals in Seal’s orbit: it was bilked for truly massive sums of money by a prolific confidence man by the name of Sheldon Player. Hopsicker writes that: “Player would sell Greycas heavy machine tools, lease them back, and then pretend to sublease the expensive devices to end-users.”16 Sheldon would pocket the money – or perhaps move it on behalf of other parties – by siphoning it away into offshore bank accounts. According to Arthur Johnson, in his book Breaking the Banks, Player’s preferred offshore banker was Gordon Aiton of Bank Intercontinental Ltd.17 The true owners of Bank Intercontinental, located in the Cayman Islands, are unfortunately unknown, though Aiton himself was the Cayman’s former inspector general of banks.18
A second company controlled by Aiton, Investment Consultants Limited, was also involved in Sheldon Player’s activities. Intriguingly, Hopsicker reproduced a document from this very company, showing that Aiton was in communication with Barry Seal.19 The document in question concerned payments and insurance for Seal’s Lear Jet.
About a year after Moss’ airdrops at Seal’s farm, Seal had become a deeply involved in a curious DEA sting operation. What made this sting so odd was that its goal was propagandistic in nature: it was intended to produce concrete evidence of collusion between the Sandinistas and the Medellin cartel. In June 1984, Seal flew – allegedly – into Nicaragua, where he picked up a load of cocaine. The pickup was covertly filmed and photographed, but the ongoing DEA operation quickly derailed.20 General Paul F. Gorman of the US Military Southern Command, publicly announced that evidenced had been found linking the Sandinistas to drug traffic. However, corroboration that Seal indeed met with Sandinistas has never been produced. While Seal wasn’t named by Gorman, he was fingered in an exposé on the story published by the Washington Times.
This whole series of events raises a number of questions. The Southern Military Command had been linked to arms flows to the Contras, while the Washington Times was owned by the Unification Church – the China Lobby-aligned sect that, at the time, was involved in private fundraising for the rebels. As Peter Dale Scott and Jonathan Marshall note in their book Cocaine Politics, Seal and the photos from this odd DEA operation were featured prominently in North’s notebooks and personal diaries at the time, and North had gone out of his way to acquire copies. One note recorded by North, based on a report from the CIA’s Duane Clarridge, stated that “DEA thinks CIA linked info to Gorman.”21 Did the Enterprise, or the CIA, or some other party, intentionally disrupt the DEA operation?
Barry Seal’s life was ultimately cut short by a hail of gunfire in Baton Rouge on February 19th, 1986. The official story is that the smuggler had been taken out by hitmen dispatched by the Medellin cartel, who had placed a bounty on Seal when it became known that he was involved with the DEA. It’s possible, however, that there were other actors in play.
As Daniel Hopsicker reported, rumors have abounded that the source of the hit was really the CIA, or Oliver North, or even George H.W. Bush. It was alleged, for instance, that Seal had considerable evidence of the Vice President’s sons, George W. and Jeb Bush, receiving a large amount of cocaine.22 Bob Thommasson, a Louisiana State Police officer, told Hopsicker that the FBI had taken charge of the crime scene and removed boxes from the trunk of Seal’s car – boxes that contained “very very compelling documents and tapes.”23
There is also the question of the weapon used in the hit. It had been sourced from Jose Coutin, the owner of a gun store and fashion boutique in Miami.24 Coutin had been one of many CIA-trained Cuban exiles, having served in Brigade 2506, though it is unknown if he participated in Bay of Pigs. In the 1980s, he was deeply involved in Contra support activities – and had been flipped into acting as an FBI informant. Through the information that he provided to the Bureau, we know that he was acquainted with a number of key players. These included the principals of Frigorificos, the Colombian cartel front company contracted by the State Department; the CIA and cartel-linked rancher in Costa Rica, John Hull; Tom Posey of Civilian Materiel Assistance, the militia-special forces group tied to the Enterprise and to John K. Singlaub; and Jack Terrell, the early Iran-Contra whistleblower.25
Barry Seal’s untimely death didn’t put an end to the goings-on in Mena, however. Russell Welch, a state police investigator who had been monitoring Seal, noted that in 1987 there was a spate of “new activity at the [Mena] airport with the appearance of … an Australian business … and C-130s had appeared.”26
There were in fact two Australian companies, Southern Cross Aviation Inc. and Multi-Trade, that had set up shop in Mena in the immediate post-Seal years.27 Southern Cross was an aircraft ferrying company with an apparent specialty in moving C-130s, while Multi-Trade was an aircraft interiors business. The two shared several common principals, who in turn took an active interest in the aircraft being stored at Mena. One of Multi-Trade’s executives, a former Australian air force pilot named Glen Conrad, held a stake in one C-130 that he subsequently sold to a company in Florida called African Air Trans Inc. Florida business records show that African Air was owned by Henry A. Warton, a fairly well-known pilot and smuggler with known ties to the CIA. African Air Trans Inc. is mentioned again in the next chapter as the C-130 it bought was tied to another CIA-linked company, E-Systems.
In December 1988, the C-130 took off from Mena, destined for somewhere in Africa. It was seized by US Customs in Florida. Press reports from 1991 state that the plane had been “accused of violating regulations on trafficking arms,” and that Warton’s company was actually a dummy front set up to obscure the real owner. The plane had actually been acquired, the article continues, by “an unnamed Israeli living in Panama who set up a fake American corporation and mortgage on the aircraft to ‘cover his ass.’'28
Several years later, in the summer of 1991, another C-130 linked to Mena met an odd fate. It crashed on a runaway in Luanda, the capital city of Angola, killing all onboard – including Chuck Hendricks, a 34 year old aircraft mechanic from Arkansas.29 Hendricks’ parents, who lived in Mena, set out to learn what happened to their son, only to be confronted with a web of mysteries. The C-130 had been owned by a Delaware company called CZX Productions, and the crew had been hired by a German firm called Unitrann International. Both of these companies, in turn, were controlled by a shadowy German aviation specialist named Dietrich Reinhardt.
Reinhardt’s name will be instantly recognizable to those familiar with the Iran- Contra affair. One of the companies he controlled, St. Lucia Airways, had been utilized by the Enterprise to ferry weapons to the Middle East. According to Albert Hakim, St. Lucia was a CIA proprietary firm.30 If Reinhardt was involved with aircraft from Mena as late as 1991, it seems that whatever was taking place in Arkansas was an ongoing operation.
DOWN IN ARKANSAS
Hot Springs, Arkansas, was, to quote Roger Morris, the “Geneva of organized crime in the 1920s and 30s. It’s where the barons, the gangster bosses came to meet.”31 That association certainly continued through the decades. Influence over the city, considered a neutral territory for the different, often-competing criminal gangs, families and outfits, was held by Owney Madden, a New York gangster whose distinctive nickname was “The Killer.” Madden was reportedly something of an ambassador for Meyer Lansky and counted among his close associates Frank Costello, who popped up in Hot Springs from time to time. New Orleans crime boss Carlos Marcello was reported to have held significant influence over Hot Springs as well.
There is some evidence, albeit circumstantial, that a young Bill Clinton might have had contact with these forces while he growing up in Arkansas. The man that Clinton had often referred to as “the most commanding male presence in his life” and a “father figure” was his uncle, Raymond Clinton.32 Outwardly, Uncle Raymond ran a profitable car dealership, but he was also known to have engaged in various vices and backroom wheeling and dealing. According to a former Arkansas FBI agent, Raymond “ran some slot machines that he had scattered about town,” while close business associates have admitted that the car dealer had “considerable dealings in the underworld.”33
Along the way, Raymond began to collect political power. He cultivated ties to the state’s Democratic Party, but also political figures in surrounding states, like Alabama’s George Wallace.
These ties paid off in a big way for Bill Clinton in 1968. It was a big year for Bill: he had just won a Rhodes Scholarship to Oxford University in the United Kingdom, and he was on the verge of being drafted. Being shipped off to war in Vietnam would have derailed Oxford entirely – and so Uncle Raymond leapt into action. Using his political connections, he was able to secure for Bill a draft deferral.34
Uncle Raymond tended to crop up at opportune moments such as these, where Clinton’s political destiny seemed to hang in the balance. In 1974, when Bill embarked on his first political campaign for Arkansas’ House of Representatives, Raymond arranged for a $10,000 loan for his nephew from the First National Bank of Hot Springs. While Bill would lose the race, two years later he secured a position as Arkansas’ Attorney General. This was the springboard for his next venture, the 1978 campaign for governor. This campaign was a success, thanks in no small part to loans and donations from Arkansas’ economic elite. Here, once again, one could find the name of Raymond Clinton.
In addition to the assistance provided by Uncle Raymond and his friends, Clinton may have had other benefactors who helped shape his early political education, if not his career itself. There are hints, rumors, and intimations of a relationship with the CIA during the 1970s, particularly during his year at Oxford, which had been secured with the aid of Raymond. A former CIA officer told Roger Morris and Sally Denton that he had seen Clinton’s name on a list of informants used by the Agency’s Operation CHAOS – the surveillance program aimed at the anti-war and civil rights movements. Another officer stated that “part of Clinton’s arrangement as an informer had been further insurance against the draft.”35 Reportedly, Clinton was regularly debriefed by the CIA, who he supplied with information concerning activist groups on British campuses.
The underworld figures like Barry Seal who haunted Mena seemed to always operate with much less than six degrees of separation from Clinton during his time as the state’s governor. In his 1999 confessional expose, Cross-fire: Witness in the Clinton Investigation, former Arkansas policeman turned personal driver and security guard for Bill Clinton, L.D. Brown, recounts how Clinton encouraged him to seek out a post at the CIA.36 Clinton allegedly went so far as to edit the essay Brown wrote for this employment application. The essay topic was drug smuggling in Central America. Upon receiving his application, the CIA put Brown in touch with none other than Seal.
Seal was far from being the only affiliate of Oliver North running a Contraconnected operation in Arkansas. Terry Reed, who had worked for North since 1983, claimed to have been put in touch with Seal by North and established a base just 10 miles north of Mena – in Nella, Arkansas – where “Nicaraguan Contras and other recruits from Latin American were trained in resupply missions, night landings, precision paradrops and similar maneuvers,” according to Alexander Cockburn and Jeffrey St. Clair.37
Reed charges that another figure in this circle (with particularly close ties to Seal) was Dan Lasater.38 Lasater was the ultimate Little Rock operator. During the day, he was renowned for his lucrative bond brokerage business, Lasater and Company; while, after nightfall, he had a reputation as a party animal. Lasater was plugged into the world of Arkansas cocaine, something he shared with his close friend, Roger Clinton. Roger was, of course, the brother of then-Governor Bill Clinton. It was revealed during the course of the Whitewater investigations that Roger Clinton had even spent several years working for Lasater.39
Just like his close friends, scandal seemed to follow Lasater. In 1977, his private jet turned up in Las Vegas with Jimmy Chagra, a prominent drug trafficker, onboard. (Two years later, Chagra contracted hitman Charles Harrelson to assassinate Federal Judge John H. Wood Jr. in San Antonio, Texas.)40
Several years later, in 1984, Lasater purchased a ski resort in a remote northern corner of New Mexico. According to journalists Denton and Morris, Lasater “was given free rein to use Bill Clinton’s name commercially to help promote the isolated development.” They continue:
Undercover law enforcement agents later found the resort a center for drug running, what US customs called a “large controlled-substance smuggling operation and large-scale moneylaundering activity.” While Lasater held “Arkansas Week” at the resort with Governor Clinton’s endorsement and entertained politicians from Santa Fe as well as Little Rock, local New Mexico sheriffs were hearing reports from Angel Fire reminiscent of Mena – strange nighttime traffic, sightings of parachute drops, even hikers’ accounts of a “big black military-type cargo plane” seeming to come out of nowhere and swooping low and almost silently over a deserted mountain meadow near the remote ski area.41
Rumors of drug trafficking, money laundering, powerful military connections and the shadowy presence of military activity grew throughout the latter half of the 1980s and into the early 1990s. A tantalizing early reference to an “Arkansas project” connected to the Iran-Contra affair can be found in a legal declaration drafted by Daniel Sheehan in connection with the lawsuit he brought against the Enterprise on behalf of journalists Tony Avirgan and Martha Honey.42
This “project” was reportedly a scheme to set up a training facility for anti- Communist insurgents – in this case, Laotian tribesmen. A key witness in Sheehan’s lawsuit, Gene Wheaton, identified some of the backers of this project as Rick Wade, a private citizen from Alaska; William Bode, a State Department employee whose name appeared in Oliver North’s personal notebooks; and Vaughn Forrester, an assistant to the pro-Contra Congressman William McCollum; and CIA officer Carl Jenkins. “Some managers of the Daisy Air Rifle Company,” writes Sheehan, “provided property in western Arkansas for the training camp.”43
That there was interest in training Laotian tribesmen for anti-communist purposes isn’t as strange as it might sound. In the early 1980s, prior to the spin-up of the Enterprise, the National Security Council ran an off-the-books operation aimed at supporting Laotian anti-communists that was financed via private donations to a slew of POW-MIA groups.44 Many of the donors – including Nelson Bunker Hunt and Ellen Garwood – would subsequently emerge as major private donors to the Enterprise. And much like the case of private donations to the Contras, money for the Laotian operation moved through familiar banks. One of these was none other than Seoul branch of BCCI. This money, as reported in a memo by Senate investigator John Mattes, “was used to arm Laotian resistance groups in a covert network ‘run by members of the NSC.’'45
Rick Wade, the private citizen named by Wheaton, had been active in the POW/MIA movement, and was likely connected to the NSC’s operations. During the 1980s, he had developed contacts with aides to Vang Pao, the Hmong opium warlord that had been so close to Ted Shackley and his team a decade prior. He became a lobbyist for the Hmong in Washington and elsewhere, and would meet with figures like Ellen Garwood and Robert Owen in order to garner materiel support for the tribesmen.46
Gene Wheaton himself is an intriguing figure. A former Army criminal investigator and intelligence agent, Wheaton was on the periphery of the internal core of the Enterprise, and was thus privy to many covert operations unfolding during the 1980s.47 His name appears within North’s notebooks alongside those of Carl Jenkins, the CIA officer who had served under Shackley at JM/WAVE and in Laos.
Wheaton and Jenkins were close friends and business associates – they were both attached, at one point in the mid-1980s, to an air freight company called National Air Cargo – and it was through Jenkins that Wheaton found himself enmeshed in the world of the Enterprise. Jenkins, as mentioned in chapter 6, was connected with Charles Haynes and Vaughn “Bobby” Ross via a web of companies likely linked to covert operations. Ross, in turn, was a close associate of Barry Seal.
Attempts to investigate Clinton’s role in these sorts of operations and more broadly in the Iran-Contra affair were scuttled by Clinton’s confidantes, who consistently denied he played a role in the scandal. According to the Wall Street Journal, former IRS investigator William Duncan teamed up with Arkansas State Police Investigator Russell Welch in what became a decade-long battle to bring the matter to light.48 Yet, of the nine separate state and federal probes into the affair, all were shut down.
Duncan would later say of the investigations, “[They] were interfered with and covered up, and the justice system was subverted.” A 1992 memo from Duncan to high-ranking members of the attorney general’s staff notes that Duncan was instructed “to remove all files concerning the Mena investigation from the attorney general’s office.” The attorney general, serving under George H.W.Bush, at that time, was William Barr. As mentioned before, Barr had been a former CIA officer before then joining the Agency-linked law firm of Shaw, Pittman, Potts & Trowbridge.
Reed alleged that one of the CIA’s point men in the Arkansas operations was a man who claimed to be the general counsel for Southern Air Transport and went by the name Robert Johnson. Johnson seemed to give Governor Clinton his marching orders, and was particularly incensed when Bill’s wayward brother, Roger Clinton, was busted in 1985 for peddling cocaine. As previously mentioned, Roger’s penchant for cocaine was one he shared directly with Lasater, who testified that the two had frequently indulged in the drug together.
Johnson reportedly told Clinton that he was “Mr. Casey’s fair-haired boy” and that Arkansas had been the CIA’s “greatest asset.” Johnson went on to deliver to Clinton the following message: “Mr. Casey wanted me to pass on to you that unless you fuck up and do something stupid, you’re No. 1 on the short list for a shot at the job that you’ve always wanted. You and guys like you are the fathers of the new government. We are the new covenant.”49
According to Terry Reed, who witnessed these happenings, he would later learn that Robert Johnson was none other than William Barr. These allegations place Barr’s use of the alias Robert Johnson in an interim period where little is known about Barr’s activities – he had served as Deputy Assistant Director for Legal Policy in the Reagan White House until September 1983, and then had joined President Bush’s Justice Department in 1989. As previously discussed, it was between the months of September and October 1983 that Casey’s pre-Enterprise support for the Contras began moving in a concrete way, and it was also in this same period that Manuel Noriega had entered the picture. The answers that Barr provided to the Senate Judiciary Committee states that between 1983 and 1989, he had returned to the CIA-linked firm of Shaw, Pittman, Potts & Trowbridge, and in 1985 had become a partner at that firm.50
As for Roger Clinton, after he was released from prison in 1986, he went to work at Calumet Farms, a Horse Farm in Lexington, Kentucky.51 Calumet’s owner, J.T. Lundy, had been a longtime friend and business partner of Lasater, who was something a big name in the inner circle of Lexington’s elite. Lundy boasted his own roster of organized crime contacts. One figure who flickered in and out of Calumet was Robert Libutti, a brash “New Jersey gambler, racehorse consultant” and associate of the Gambino crime family.52 All in all, it was an interesting environment for a politician’s brother out on parole who was ostensibly seeking to clean up his act.
Just across the street from Calumet were a pair of curious horse farms. One was owned by Nelson Bunker Hunt, of the Dallas Hunt family, who had been one of Oliver North’s prominent private Contra donors. Next door was Murty Farms, purchased in 1984 by fellow Texan – and fraternity brother of Nelson Hunt – George Aubin.53 Aubin was part of the savings and loan crowd down in Texas, and was something of a mentor to a mega-borrower named John Riddle. Besides looting S&Ls, Riddle had a taste for aviation, which was expressed through his ownership of a company called First Western Airline. According to Ari Ben-Menashe, First Western “was used as a cutout by the Israelis and the CIA to transport American arms to the Middle East.”54
Additional information about the Mena operations was provided in a deposition given by the controversial Iran-Contra whistleblower Richard Brenneke. His allegations, made in the summer of 1991, were recently summarized in a lawsuit filed on behalf of Linda Ives, the mother of Kevin Ives. Kevin’s body was found, along with that of his friend Dan Henry, on train tracks near Alexander, Arkansas, under exceedingly strange circumstances.55 According to this summary, Brenneke claimed that he had flown “10 to 12 flights of a C-130 into the Mena, Arkansas, airport” and “took guns and paramilitary forces from Mena to Panama.”56 Cocaine was being flown back from Latin America to the Mena airport, where it was dispersed to, among others, representatives from New York City organized crime.
One of the most fascinating parts of Brenneke’s allegations is that he moved money that had been paid by the organized crime figures for the drugs into accounts in a Panamanian bank held in the name of International Fund for Mergers and Acquisitions (IFMA), a company where he was acting as vice president. IFMA was reportedly not only utilized by the CIA, but by Michael Harari, Mossad’s man in Panama, to launder money and arrange arms shipments in Latin America.57 The company’s president was Ramon d’Onofrio, a businessman with a long track record of shady deals and bankruptcies.58 A New York Times article identified d’Onofrio as a business associate of Alfred Buhler, a lawyer from Lichtenstein, who was reported by the paper as being protected by the CIA itself.59
Another d’Onofrio business partner was Charles Hurwitz, the bigtime corporate raider who, from his humble beginnings as a prominent commodities trader Bache & Co., had developed extensive holdings ranging from the Kaiser Aluminum Corporation to Arkansas real estate to the United Financial Group (UFG), the largest S&L in Texas.60 Hurwitz filled UFG’s asset sheets with junk bonds peddled by Drexel Burnham Lambert, which also owned a 10% stake in the S&L. This wasn’t Hurwitz’s only involvement with the Drexel Burnham junk bond kings: a sale of $450 million worth of junk bonds were sold to help a Hurwitz company, Maxxam, take over California’s Pacific Lumber.61
UFG was subsequently bought by the New York bonds trader and financier Lewis Ranieri, who appears in Jeffrey Epstein’s contact book with eight phone numbers and two addresses listed. Ranieri is best known for his role in developing the first market for mortgage-backed securities.
Hurwitz, while he was still riding high on Drexel’s runaway junk bond train, developed several business ventures with the mob-linked S&L bigwig from Louisiana, Herman Beebe.62 As mentioned in the previous chapter, Beebe had, during the 1970s, owned a warehouse where explosives destined for Cuban exiles were stored – explosives that were meant to be moved by Barry Seal, prior to a Customs sting.
Herman Beebe had a tendency to appear at the same S&Ls where Mario Renda could also be found. Renda, as noted in the previous chapter, was Adnan Khashoggi’s friend with a penchant for seeding fraudulent borrowing with Teamster pension fund deposits. A list of banks controlled or suspected of being controlled by Beebe from a 1985 Comptroller of the Currency report included Mainland Savings of Houston. This is the same S&L where Renda had brokered deposits and where Khashoggi had involved himself in an aforementioned series of bewildering deals. Were Renda and Beebe operating in concert?
A smoking gun is hard to discern, but the two both hung out – and arranged deals – at the La Costa resort in Southern California. La Costa, as noted in chapter 1, had long been a mob hang-out; it had been built with the aid of Teamster pension fund loans, and Burton Kanter was listed as the resort’s agent at the time it was incorporated.
Beebe had other potential ties to Iran-Contra. The same Comptroller of the Currency report that named Beebe-linked banks also listed Palmer National Bank in Washington DC.63 If Beebe did control Palmer, it was hidden. The bank’s founder was Stefan Halper, a DC bureaucrat who had held various positions within the Nixon, Ford, and Reagan administrations. Halper’s father-in-law was Ray Cline, the old OSS and CIA veteran who, at the time, was working with John Singlaub of GeoMiliTech.
Palmer was also where the National Endowment for the Preservation of Liberty, the Contra fundraising apparatus set up by Spitz Channell on behalf of the Enterprise, held its bank accounts. According to internal NEPL documents acquired by Pete Brewton from the National Security Archives in DC, the NEPL maintained accounts at only one other bank: Irving Trust, the New York City-based commercial bank. Irving Trust was also the major financier, alongside Drexel Burnham Lambert, of Charles Hurwitz’s Pacific Lumber takeover.64 Irving Trust which subsequently be purchased by Bank of New York with the aid of Bruce Rappaport. Bank of New York and Rappaport’s Inter Maritime Bank (IMB) would become intertwined when the stake held by BCCI in IMB was purchased by BNY.
Irving Trust also maintained a branch in Little Rock, Arkansas. In the late 1970s, an intern at this branch was James T. Riady, the son of a prominent Indonesian banker and businessman named Mochtar Riady. Together, the Riady family, originally from China’s Fujian province, and their close relationship with another giant of Arkansas business, Jackson Stephens, would become crucial to understanding what exactly was happening in Arkansas during Clinton’s time as governor.
BANK BUILDING
he last time we encountered Jackson Stephens, he was aiding BCCI’s takeover of First General Bankshares – later rechristened as First American Bankshares – and its subsidiary, National Bank of Georgia. He had been brought into the fold through his friendship with one of NBG’s big shareholders who had been courted by BCCI, Bert Lance, who Stephens had brought to Arkansas with some of BCCI’s representatives for negotiations over the purchases.
When Lance began searching for buyers of his NBG stock, BCCI wasn’t the only interested party that he brought to Stephens’ attention. There was also Mochtar Riady, a politically-connected Indonesian banker and financier who commanded the Bank of Central Asia, “the third largest private banking firm in Indonesia” that held some $100 million in assets.65 In the years to come, the wealth of Mochtar and his son, James Riady, would swell into the billions, all marshaled under the auspices of an umbrella corporation called the Lippo Group. Their meteoric ascension was thanks in no small part to the strategic partnership the Riadys had with Jackson Stephens and Stephens Inc., which developed soon after the Indonesians dropped out of the NBG purchase.
How Riady first entered the picture is telling. According to various press reports, Riady had been introduced to Stephens by Bert Lance, while Lance had first come into contact with Riady through an introduction made by Robert B. Anderson, a once-well regarded figure in politics who had become a specialist in offshore banking. Anderson and Riady, meanwhile, had been brought together several years prior by an unnamed executive from New York City’s Chemical Bank.66
Chemical, at the time, had established a significant presence in south-east Asia: it had opened branches in Hong Kong; maintained business operations in Singapore; and in Indonesia, it had embarked in a joint venture with the Riady family. Chemical Bank would ultimately maintain a long-running alliance with Riady interests. In 1988, their joint venture expanded when they teamed up with Royal Bank of Scotland and Jardine Fleming (a Hong Kong partnership between the merchant houses Jardine Matheson and Robert Fleming & Co.) to set up the Multinational Finance Corp, or Multicor. According to Mochtar, Multicor was set up first and foremost to “expand Bank Central Asia’s financing channels and financing capabilities.”67
While Riady was toying with buying into National Bank of Georgia, commentators and regulators began to suspect that something else was afoot. One common concern was that Riady wasn’t acting alone, and that he was serving as a front for Indonesian political interests that hoped to gain political and economic leverage in the United States.
Interestingly, in this same period, William Casey had a series of dealings with Indonesian interests. These activities later came back to haunt Casey during his confirmation hearings for the CIA, when he was questioned if he had failed to register as a foreign agent for Indonesia.68
When he was working in the private sector as an attorney for Rogers & Wells – a time discussed extensively in chapter 6 – Casey took on as clients a complex of interrelated Indonesian interests.69 There was Pertamina, the country’s state-owned oil company, and the Ramayana Indonesian Restaurant in New York City. There was also Indonesian Enterprises Inc., a holding company that had been set up for the restaurant. Pertamina was the major interest in this holding company, holding all of its Class B stock. Indonesian Enterprises issued Class A stock, in turn, to various banks and oil companies that were doing business with Pertamina.
Holders of Class A stock included Bruce Rappaport’s InterMaritime Bank, which was engaged in a convoluted succession of fraudulent tanker chartering deals with Pertamina.70 Elias Kulukundis, mentioned previously as a close business associate of Edward Carey, was also involved in these chartering activities. Investment capital from Kulukundis and Rappaport further mingled in the tanker companies of a “mystery man” named Steven Davids-Morelle, whose Tankers International Navigation Corporation joined Pertamina’s tanker chartering and in the purchase of Indonesian Enterprises Inc. stock.
Was there any sort of connection between Casey’s relationship with Indonesian interests and Anderson’s encounter with the Riadys? The picture is murky, and records of Anderson’s own Indonesian activities isn’t readily accessible. What is certain, however, is that Anderson was another member, alongside Rappaport, of Casey’s “Hardy Boys” clique, which is certainly suggestive that some sort of collusion was taking place. Furthermore, the list of Indonesian Enterprises, Inc.’s Class A stockholders includes Dresser Industries – the Texas oil concern closely intertwined with Bush family interests – where Anderson had sat on the board of directors.
It is worth diving a little deeper into Anderson’s biography before returning to Stephens and Riady, because it is both an illustrative case of high-level political corruption and also intersects in numerous ways with key figures in this ongoing history. With a background in law, Anderson had served in a number of mid-level bureaucratic positions in Texas in the 1930s, including stints as the state’s Assistant Attorney General and as the state tax commissioner. In 1937, he became the general counsel for the W.T. Waggoner estate, headquartered in Vernon, Texas. The Waggoner estate was a large ranching empire that extended its reaches into banking and various other industries, real estate development and the like.
The Waggoner family, like many of the great Texas clans, was a source of political clout, and Anderson was soon found mingling with the Texan elite. One impressive early encounter was his purchase of the KTBC radio station, which he then sold to Claudia Alta “Lady Bird” Johnson, Lyndon Johnson’s wife, in 1943. It subsequently became a major source of revenue for the Johnson family. Anderson also acted as a lobbyist for powerful Texas oil interests, and was particularly close to early industry giants like Sid Richardson, Clint Murchison, and the Bass family. He could also be found at the helm of the Mid-Continent Oil and Gas Association of Texas, which brought together a wide range of businessmen involved in all different aspects of oil production.
At the urging of these deep-pocketed petroleum interests, Anderson was brought into the Eisenhower administration. In 1953, he was made Secretary of the Navy, and a year later he moved and became the Deputy Secretary of Defense. In 1955, he left government and took a position as president of Ventures Ltd., a Canadian mining company controlled mostly by American and British industrial and financial interests, before returning to the public sector again as Eisenhower’s Secretary of the Treasury. There, he arranged for lucrative tax relief packages for Texas oil. By 1961, he was back in the private sector again, this time managing his own business consultancy – the Anderson Group – located at Rockefeller Plaza. He also joined on as a limited partner at Carl M. Loeb, Rhoades & Co., the Wall Street brokerage firm that was closely interlinked with Bronfman interests (the Loeb- Bronfman connection will be discussed in chapter 11).
During his time with Loeb, Rhoades & Co., Anderson developed two important connections. The first was to Bank of America, which was central to the later development of BCCI. In 1964, Anderson joined forces with Bank of America and Belgium’s Banque Lambert to set up the World Banking Corporation, an offshore facility in Bermuda that was set up for dealing in the emerging Eurodollars market.71 That same year, he joined Bank of America’s council of advisors.
He also forged ties with Rockefeller interests. He had been connected to the Rockefellers during his time in the Eisenhower administration – if not earlier, given the presence of the Rockefeller family in Texas. Then, during the mid-1960s, he became an investment advisor for Standard Oil of Indiana. In 1969, this led Anderson, acting on behalf of Standard, to set up an investment consortium in partnership with Maurice Tempelsman, a major player in the international diamond market, that would push for American-led interests in the Congo.72
Tempelsman, interestingly, had ties to American intelligence. With numerous interests across Africa, he recruited veterans of the Agency to navigate that world. As Arthur Levy points out, “In the 1960s Tempelsman hired as his business agent the CIA station chief in Kinshasa, Larry Devlin, who helped put Mobuto into power and afterward served as his personal advisor”.73
There was yet another line leading from Tempelsman to Casey’s “Hardy Boys” that was independent of Anderson. According to Alan Block, one of Rappaport’s top lieutenants, Jerry Townsend, was a “former” CIA officer who had worked in Turkey, Zambia, and Burundi with Tempelsman. Block adds that “Tempelsman was part of Rappaport’s group, according to Townsend.”74
Then there were the ties between Anderson and the banking circles around BCCI. In the early 1980s, he was found on the board of the Paris-based Saudi European Bank, which was owned by the BCCI-linked Saudi European Investment Corporation N.V. Other principals in the Saudi European Bank included John Connally, the former governor of Texas and George Shultz’s predecessor in the Nixon administration as Treasury Secretary. When Connally was running against Reagan in the early days of the Republican presidential campaign against Carter, Bechtel had initially backed him before switching to support the eventual president. Connally, at that point, embarked on a voyage as a real estate developer, partnering with the infamously corrupt Ben Barnes – also a former Texan politician – in deals that involved tapping a slew of savings and loans for fraudulent loans.
The S&L connection to Saudi European was strong. Its board also counted with the presence of Charles Keating, whose American Continental Corporation and Lincoln Savings and Loan, pumped out bad loans at an astounding rate after the Reagan administration led the deregulation of the S&L industry. Keating and Connally were close, with the banker having served at first as Connally’s West coast finance chairman during his political campaign, followed by a shorter stint as campaign manager. Interestingly, one of Connally’s campaign workers, Joyce Downey, later went to work for Connally and Barnes before relocating to Arizona, where she worked as the office manager for John Singlaub’s US Council for World Freedom, the American branch of WACL.75 USCWF happened to be located next door to the headquarters of Keating’s American Continental Corporation.
In 1984, Keating’s Lincoln Savings invested $18 million into Saudi European’s holding company, the Saudi European Investment Corp.76 Keating then joined Saudi European’s international advisory board, while Saudi European began issuing lines of credit to Keating’s companies. According to a report in the Los Angeles Times, the “bank and its parent company acted as sham financiers and buyers in Keating’s efforts to book profits at Lincoln.”77 A subsidiary of Lincoln called Amcor Investments – which was involved in several complicated real estate arrangements with John Connally – sold an option it held to Saudi European in order to buy a “profits interest” in General Oriental Securities Limited, an offshore corporation set up by the corporate raider Sir James Goldsmith for takeover purposes.78 Goldsmith, as previously mentioned, was part of the Clermont Club and was also one of the main businessman, along with Robert Maxwell, sought out by Rothschild Inc. to help the elite banking family expand its influence in the US financial system.79
In December 1986, Keating, utilizing a subsidiary of his American Continental Corporation called Dungiven, organized a Bahamian investment corporation called Trendinvest.80 Joining the board of directors was one of the busiest man in shadow banking, Alfred Hartmann, who could also be found alongside Anderson, Keating and Connally at the Saudi European Bank. Among the other stakeholders in Trendinvest was Gesellschaft Fur Trend Analysen, a West German firm that specialized in computerized currency trading, and Royork and Company, a subsidiary of the Royal Bank of Canada. Through this offshore vehicle, Keating was able to funnel tens of millions of S&L money out the United States – money that, in the end, had to be paid back by the US taxpayer. Thus, the fact that Riady’s meeting of Bert Lance, and by extension Jackson Stephens, was made by Anderson, reveals the type of networks that enabled the Riady-Stephens partnership.
The story of Jackson Stephens is inseparable from Arkansas’ longest running and most prestigious law firm, Rose Law. Rose’s beginnings went back to the 1820s, when Arkansas was still a territory instead of a state. One of its founders was Robert Crittenden, a Kentucky-born lawyer who had been appointed by President James Monroe to act as the governor of the Arkansas territories. His partner was Chester Ashley, one of Arkansas’ very first senators. From these beginnings, Rose Law was woven into the fabric of the state itself, and remained closely tied to the Arkansas’ political and economic elite.
Arkansas, to quote journalist L.J. Davis, boasted a “ruling oligarchy, a small and relatively powerless middle class and a disenfranchised, leaderless populace.”81
Through the 1970s and into the late 1980s, a period which saw Stephens’ star rise in Arkansas, Rose was headed by C. Joseph Giroir. In addition to his status as a high-powered attorney, Giroir was a specialist in securities. In the 1960s, Giroir worked far from Arkansas, in the offices of the Securities and Exchange Commission in Washington, DC. While little is known about his activities in the capital, what is certain is that, when he returned to his home state, he brought with him an adamantly pro-business outlook and a drive for modernization.
Once settled at Rose, he went about upgrading Rose’s home-spun inclinations for the nascent information age. “He brought the firm billable hours, computers and high-premium securities work, then got in trouble with his side business – buying and selling banks while wearing too many hats for his shallow pockets, and using Rose lawyers to do the work.”82
One particularly controversial banking escapade in which Giroir was embroiled involved a string of borrowing from a fraud-riddled savings and loan in Pine Bluff, Arkansas, called FirstSouth. Regulators were intrigued by whatever relationship Giroir had with the S&L. While he was dipping into their loan basket, he had also become a stakeholder in First-South and was writing legal advice to the S&L on paper with a Rose Law letterhead.83 FirstSouth, by the time it collapsed in 1986, had doled out a big pile of loans that were never paid back. Among their biggest borrowers – and defaulters – was Clint Murchison Jr., the organized crime-linked Texas oil player.84
A small group of lawyers who worked under Giroir would later become powerful actors in state and federal politics and, while at Rose, they were involved with the firm’s strangest dealings. This group was composed of Webster Hubbell, who would become Associate Attorney General under President Clinton; Clinton’s future White House counsel Vince Foster; and the soon-to-be First Lady, Hillary Rodham Clinton. This trio, like their boss, had an appetite for shady business dealings. All three were partners in a company called Midlife Investors, which had been set up in the early 1980s by E.F. Hutton. “Hubbell, Foster and Rodham Clinton each kicked in $15,000 and named each other – rather than their spouses – as beneficiaries.”85 Through Midlife, the trio dumped money into companies being targeted by corporate takeover artists like James Goldsmith.
Clinton in particular liked to haunt the corporate boardrooms and offices, often spending more time working on business affairs than the daily law work demanded by Rose. As L.J. Davis writes,
She was only one of two Rose partners to act as a corporate director, serving at various times on the boards of four companies and earning $64,700 in 1991 from director’s fees alone. (Her 1991 salary from Rose was in the vicinity of $110,000; her husband earned $35,000 and got to live in a free house.) She was on the board of Wal-Mart, a Rose client that Stephens had launched on the road to glory. (Rodham Clinton also owned $80,000 worth of Wal-Mart stock.) She served Southern Development Bancorp, a holding company created to give development loans in rural Arkansas, which, according to the Washington Post, paid Rose somewhere between $100,000 and $200,000 in fees. In 1989 she joined the board of TCBY yogurt company, which occupies the tallest building in Little Rock. TCBY then proceeded to pay Rose $750,000 for legal work during the next few years.86
Such was the backdrop to the grand ambitions of Stephens and Riady for a sprawling business complex. Not satisfied with playing in Arkansas alone, the pair made a very early stop-over in Macau, where they bought up massive blocks of stock in the storied Seng Heng Bank, which allowed them to gain full control over the company.87 The sellers had been the trio of Cheng Yu-tung, Ho Yin, and Lu Daohe. Cheng had been the founder of two interlinked Hong Kong-based conglomerates, Chow Tai Fook Enterprises and New World Development Company Limited. Through these two large corporations, he had become one of the city’s richest individuals. Cheng was very close to Stanley Ho, another Hong Kong billionaire who held the monopoly over Macau’s casino industries. In 1989, Stephens and Riady, curiously enough, sold Seng Heng to STDM, a company controlled by Stanley Ho.88 Ho will appear again later, in chapter 16, as one of his close business partners, Ng Lap Seng, was a key figure in the so-called Chinagate scandal of the mid-1990s.
Cheng’s associate in Seng Heng, Ho Yin, is worth examining briefly. Like Cheng and Stanley Ho, Ho Yin was another Hong Kong-based businessman with numerous Macau holdings. What he was most infamous for, however, was his role in Macau’s illicit gold trade, which flourished due to international regulations governing gold markets from the end of World War II through the early 1970s. His particular largess derived from the ties he had cultivated with the nascent Chinese Communist Party, having made contacts with Mao and Zhou Enlai shortly after the revolution.89
His work managing funds for the Party earned him a spot among the so-called “Red Fat Cats,” and he even held a position on the Standing Committee of the Chinese National People’s Congress. In Macau, meanwhile, he ran multiple public companies and for a time served as vice president of the Macau Legislative Assembly. He also ran numerous businesses, including multiple banks, through which his gold trade flowed. Among these banks was Seng Heng. Until 1974, when gold trading was deregulated, “$40-50 million worth of gold passed through the narrow door of Seng Heng annually.”90 All in all, this made a very interesting purchase on the part of Stephens and Riady.
Seng Heng wasn’t the only bank the duo bought in 1983. That was also the year they began purchasing the stake held by Midland, Texas, oilman John Hendrix in the First Arkansas Bankstock Corporation (FABCO). As part of the deal, FABCO issued additional stock that could be purchased exclusively by Stephens and Riady; combined with Hendrix’s holding, Stephens Inc. and Lippo achieved control over FABCO as a joint venture.91 This takeover granted them control over a wide network of Arkansas banks that were held by FABCO. These included Worthen Bank & Trust Co of Little Rock, First National Bank of Hots Springs, the National Credit Corp of Pine Bluff, and the First National Bank of Mena.92
That the latter bank was located in the same town where the CIA had set up shop and where drug smuggling was taking place raises all sorts of questions.
However, at the same time, the acquisition of these banks was part of a wider effort by Stephens and Riady to build out an Arkansas banking empire. They turned to Joseph Giroir, the head of the Rose Law Firm, to lobby for changes in state laws that restricted the range of activities that bank holding companies could carry out.93 Giroir then purchased several banks, which were subsequently sold to Stephens and Riady. For his efforts, Giroir received money, a large block of Worthen stock, and a spot on Worthen’s board. Rose Law became counsel to Worthen, and the bank itself was transformed into something of a flagship for Stephens’ interests.