Gordon Thomas, in his biography of Robert Maxwell, states that Safra and Maxwell had enjoyed a long-lasting friendship. They particularly enjoyed, Thomas writes, dining “on board the Lady Ghislaine when the yacht berthed opposite Safra’s home in Monte Carlo.”140 Their relationship was not all pleasure, however. According to Thomas, Safra allowed Maxwell to use Republic National Bank accounts to launder money coming from Eastern Europe.
When Maxwell was active in the Eastern Bloc, his primary base of operations was Bulgaria. There, as will be noted in more detail in chapter 9, Maxwell was deeply involved in the thorny Cold War issue of tech transfers – the often-illicit movement of high technology from the West to the Soviet sphere. This likely brought him into contact with Kintex, a state-owned trading company that had been organized by the Darzhhavna Sigurnost, the Bulgarian intelligence apparatus that was closely aligned with and ultimately answerable to the KGB. A CIA report on Kintex said it was a “central coordinator” of smuggling activities, with a “clandestine charter” to facilitate smuggling for Arab and Balkan drugs and arms traffickers and to “collect items of science and technology interest in the West.”141
Kintex was more than willing to deal arms to right-wing insurgencies as much as left-wing ones, with clients including those who opposed Soviet-backed forces. These included the Christian Falangists of Lebanon, the Grey Wolves of Turkey, and even the Contras of Nicaragua. Also closely tied to Kintex was Mohammed Shakarchi, a prominent Geneva-based currency trader and the owner of Shakarchi Trading. Shakarchi, who from his offices near the Zurich airport ran “the most sophisticated currency exchange and commodity trading operations in Switzerland” and courted state officials in Soviet-allied Bulgaria while being, at the same time, involved in the CIA’s covert support for the Mujahideen in Afghanistan. Between 1981 and 1989, a CIA front company called Argin purchased millions of dollars’ worth of rare currencies from Shakarchi, which were sold to raise money for the rebels.142
One of Shakarchi’s US partners was Capcom, a commodity-futures firm that “was created by the former head of BCCI’s Treasury Department … who capitalized it with funds from BCCI and BCCI customers.”143 This wasn’t the only familiar face engaging in funny banking with Shakarchi. A classified DEA report stated that Shakarchi’s currency-exchange services were “utilized by some of the world’s largest trafficking organizations to launder the proceeds of their drugtrafficking activities” and that part of his network included accounts at Safra’s Republic National Bank.144 Mohammed Shakarchi’s father, Mahmoud, was reportedly close to Safra.
Safra’s name can also be found in Jeffrey Epstein’s contact book, though the banker’s last name is misspelled as “Saffra.” There are two phone numbers listed for Safra and no addresses. Another individual in the book with ties to Safra, albeit through a rather circuitous route, is Michael de Picciotto. Picciotto, who had five phone numbers listed in Epstein’s contact book, has been associated with Engel & Völkers, the massive German real estate company and, since 2020, has served on the board of Aston Martin. He got his start, however, working at Union Bancaire Privée, a Swiss bank controlled by his family. He had joined as the managing director for their London offices in 1988 and eventually became “responsible for UBP’s global financial activities.”145
Union Bancaire Privée began life as Compagnie de Banque et d’Investissements of Geneva, founded by Edgar de Picciotto. Edgar, the uncle of Michael de Picciotto, came from a family with a long history in both banking and European diplomacy. The Picciotto family was fairly close to the Safras, and like Edmond Safra, Edgar de Picciotto was born in Lebanon. As their respective banking enterprises bloomed, the two became friends. In the late 1980s, when American Express disposed of Trade Development Bank, the Geneva bank that had formerly belonged to Safra, it was Edgar who bought it.146 The merger of Trade Development Bank and Compagnie de Banque et d’Investissements led to its reformation into Union Bancaire Privée.
Edgar de Picciotto was also, according to SEC filings, a member of the board of advisors to Quantum Industrial Holdings, a division of the complicated investment network of George Soros. Quantum Industrial Holdings held the majority of the shares of Quantum Industrial Partners, one of the advisors to which was George Soros’ brother Paul Soros. Paul’s son, Peter Soros, appears in Epstein’s black book with addresses in New York City and London and ten phone numbers.
Another item appearing in Epstein’s notebook that ties into this network is Aeroleasing. Both of Epstein’s books contain lists for the aviation company, for both its Geneva and Zurich locations.
THE MAINLAND SAVINGS CONNECTION
hen US arms began flowing to Iran at the end of August 1985, it was Adnan Khashoggi who advanced the initial capital – through his BCCI bank accounts – to put the thrust of the plan in motion. The initial “bridge financing” was $1 million, followed shortly thereafter by an additional $4 million.147 Khashoggi subsequently claimed that this $5 million, “plus an additional $2.5 million whose purpose was unclear” came from a loan provided by Roland “Tiny” Rowland, the well-heeled British tycoon, corporate raider, and member of the Clermont Club who was briefly discussed in the last chapter. While Rowland’s connection to Iran-Contra affair is well documented – and will be discussed shortly – he denied the validity of Khashoggi’s claims.
While this denial might simply be a case of Rowland trying to put distance between himself and the affair, it happens that shortly prior to the initiation of the arms transfers, Khashoggi came into $5 million via a surprising route: Mainland Savings, a Houston-based savings and loan. Mainland Savings, one of the S&Ls that collapsed spectacularly over the course of the 1980s, was plugged into a wider network of crooked land developers, organized crime associates, and other denizens of the murky world of covert operations.
Khashoggi’s ties to Mainland Savings dated back to 1977, when Mario Renda, an ambitious New Yorker with dreams of wealth and power, stepped off a plane in Riyadh, Saudi Arabia. He was then a partner in IPAD – the International Planners and Developers Construction Consortium – that hoped to gain a lucrative contract to build concrete homes in Jidda.148 Khashoggi, it was reasoned, would be the key to unlocking the deep pockets of wealthy Saudis and, after a meeting with Renda, the arms dealer committed himself to the venture. While IPAD’s ambitions were ultimately never realized, it resulted in a long-lasting relationship between Khashoggi and Renda.
After IPAD fizzled out, Renda leveraged the contacts he gained through his introduction into Khashoggi’s inner circle and secured a position as the treasurer of Arab International Bank. Interestingly, in 1973, this bank had formed a joint venture with Lonrho, the corporate monolith controlled by Tiny Rowland.149 Arab International Bank’s specialty was certificates of deposits (CDs): it would use vast petrodollar reserves to shop CDs around the world, seeking out the locations that had the highest rates of return. Renda positioned himself front and center in these efforts, which provided him with the idea for his next venture. In 1978, he returned to New York City and formed Arabas Inc., a “one-man firm” that was intended to broker deposits, likely on behalf of Arab clients.150
The timing was fortuitous. Against the backdrop of early 1980s deregulation fever, Renda became connected to Martin Schwimmer. Schwimmer, rumored to be a money-launderer for the Lucchese crime family, managed the pension funds for several New York unions, including Teamsters Local 810, which was reportedly close to organized crime interests.151 A plan was then hatched: Renda and Schwimmer would begin brokering deposits of union pension fund money into S&Ls across the United States, collecting along the way commissions from lending institutions and fees from the unions. Arabas was renamed First United Fund, and soon Renda and Schwimmer were moving billions into a string of savings and loans.
By the end of the decade, Renda and Schwimmer had deposited money in 130 S&Ls, all of which collapsed. Renda’s CDs were linked directly to massive borrowing at each of these institutions, which were generally unpaid. In addition, quite frequently, the borrowing was carried out by an interlinked network of organized crime associates. That collusion was undeniable. Besides the accusations of Schwimmer’s involvement with the Lucchese family, Renda was rumored to have “controlled a lot of money being loaned for the benefit of Paul Castellano,” the powerful head of the Gambino family and, until 1985, the chairman of the Commission, the Mafia’s governing body.152 Notably, Castellano was one of several organized crime figures who were clients of Roy Cohn.153
Khashoggi stayed close to Renda throughout these developments. One notable example of this involved a mobster by the name of Lawrence Iorizzo, the president of the mob-linked Vantage Petroleum Company. Iorizzo was close to Martin Carey, the brother of New York governor Hugh Carey and oilman Edward Carey. Vantage had taken over Carey’s Petroleum Combustion International, which by that point had already carried out numerous dealings with Iorizzo. Iorizzo would later testify that Martin Carey had been involved in bootlegging gasoline with him and that the profits from these operations had been funneled into Hugh Carey’s re-election campaigns.154
Iorizzo, in other words, was clearly politically connected, and this was what had caught Renda’s attention. Renda had wanted to help Khashoggi, who at the time was struggling to get the proper permits to build a helicopter landing pad at his home just outside New York City. An associate of Renda by the name of Leslie Winkler “told Iorizzo that … Renda might be able to assist Iorizzo in getting a fat oil contract if Iorizzo used his powers of ‘persuasion’ in New York to help Khashoggi.… Renda said if Iorizzo could ‘remove these obstacles,’ Khashoggi would be most appreciative.”155
At the same time that they were concocting a way to get Khashoggi’s helipad up and running, Renda and Iorizzo agreed to embark on a classic bank bust-out scheme, akin to what Renda and Schwimmer were doing with the savings and loans. Renda would make deposits at a bank, which would then make loans to a Panamanian shell company controlled by Iorizzo – loans that would never be repaid.156 The shell company that Iorizzo used was called Houston Holdings, and it had been purchased by Iorizzo from Steven Sandor Samos, a lawyer who maintained a lucrative trade in off-the-shelf Panamanian companies.157 Iorizzo and Samos had been introduced by Renda’s friend Leslie Winkler, and one of Samos’ primary business associates was a Florida banker named Ray Corona – the partner of Leonard Pelullo in Sunshine State Bank.158
Samos also made an appearance in the Iran-Contra affair. Southern Air Transport purchased a Panamanian company called Amalgamated Commercial Enterprises, which it used to “purchase and maintain planes carrying supplies to the contras.”159 ACE was one of Samos’ off-the-shelf companies, and all of the company’s officers were employed by International Management and Trust Corp., a company run by Samos. Another noteworthy link involves how ACE utilized bank accounts at the Banco de Iberoamerica, a location that Samos was accused of using as a conduit for drug money laundering.160 Banco de Iberoamerica was a subsidiary of the Arab Banking Corporation, a major international bank headquartered in Bahrain that offered floating rate notes on the open market on behalf of BCCI.161
Among the S&Ls where Renda and Schwimmer were brokering deposits of union pension fund money was Houston’s Mainland Savings. This same S&L became embroiled in a series of overly complicated financial transactions with Khashoggi and a slew of business partners, the origins of which go back to 1974.162 That was when Khashoggi purchased a large tract of property adjacent to the Galleria, a major shopping hub in downtown Houston that had been developed with the aid of the Marcos family of the Philippines. Khashoggi acted as front man for Imelda Marcos on more than one occasion.163 Khashoggi let the land sit bare until 1979, when he was joined by Clint Murchison Jr., scion of the Dallas oil family. With $15 million in financing courtesy of Texas Commerce Bank, the pair embarked on an ambitious development plan.
The plans never came to fruition and, three years later, Murchison exited the scheme. Khashoggi began looking for buyers for the land and began cooking up other real estate schemes. One of these was in Aspen, Colorado, where he and a developer named John Roberts planned to purchase property using a $44 million loan from Commerce Savings, plus an additional $14 million from San Jacinto Savings. In a now-obvious pattern, this money disappeared into the black void of Khashoggi’s finances. What was left was a staggering debt owed to a string of banks and S&Ls.
Mainland Savings, flush with deposits from Khashoggi’s friend Mario Renda, offered an ambitious way out of these problems by purchasing Khashoggi’s Galleria-adjacent property for the grossly inflated sum of $68 million dollars. Of this, $22 million would be put up by Mainland itself, with the remainder provided by a loan from Austin-based Lamar Savings. The plan was: “The $30 million in prior loans from Texas Commerce Bank and San Jacinto Savings would be paid off. Khashoggi would buy $10 million in preferred stock at Mainland and use $12 million as a down payment to buy foreclosed loans real estate (called ‘cash for trash’), thus boosting its capital and keeping regulators at bay. That left $16 million for miscellaneous costs and Khashoggi.”164
A problem arose when Mainland could only get Khashoggi’s property valued at $55 million, short of the $68 million that they had originally hoped for. They were able to inflate the loan up to $58 million, which covered most of the debts and miscellaneous costs – except for the $10 million that was to be used by Khashoggi to buy Mainland stock and bad assets. Luckily for Mainland, Khashoggi had additional properties next to the Galleria-adjacent tract in question, which he had financed through S&L borrowing. Khashoggi was issued lines of credit by Mainland that were marked for developing those properties, but they were actually used to cover the missing $10 million. But there was something else: “On the same day, Mainland signed a $5 million letter of credit to Khashoggi.”165
The deal between Mainland and Khashoggi over these lines of credit was reached on August 1, 1985, just weeks before the arms transfers to Iran were underway. These transfers, of course, relied on a $5 million advance from Khashoggi. As Pete Brewton notes, the $5 million line of credit from Mainland vexed regulators and attracted the attention of the FBI. It was then discovered that Mainland’s executives had worked to conceal it from the S&L’s board of directors. Khashoggi later denied that the $5 million came from Mainland, instead claiming that Tiny Rowland had been the source of the funds. However, as mentioned, Rowland denied this. Mainland, for its part, insisted the money was a guarantee to Khashoggi for his purchase of $10 million in Mainland stock – $10 million, it must be reiterated, that was coming from Mainland itself.
It might be tempting to write the Mainland events off as a curiosity, another dead end in the hall of mirrors that is the Iran-Contra affair. There are, however, other ties between Mainland and Lamar Savings – the institution that loaned Mainland the bulk of the money for the Khashoggi deal – and the netherworld of BCCI and intelligence agencies. Besides Khashoggi, one of the major borrowers at both of these savings and loans was Mounzer Hourani, a Lebanese-American from Utah with extensive interests in Texas real estate.166 Hourani might have had intelligence connections. “A former high-ranking officer at Lamar Savings,” writes Brewton, “said that Hourani claimed to have ties to the Mossad.”167
Ties to Israeli intelligence or not, Hourani was certainly linked to Utah’s Orrin Hatch, who, as mentioned, was tightly connected to BCCI and to First American. Hatch stated that he had known Hourani “from the mid-1980s and was partly based on their shared devotion to the Mormon faith.”168 Hourani, meanwhile, told NBC News’ Mark Hosenball that he had joined with Hatch and BCCI insider Mohammed Hammoud on “various private schemes to free US hostages held by terrorists in Lebanon.”169
In 1986, Hourani was in hot water over his borrowing at Mainland, which by that point had collapsed and had been taken over by the Federal SavingS&Loan Insurance Corporation. Hatch appears to have tried to intervene directly, penning a letter to the federal institution stating that a possible “resolution” could be found with respect to Hourani’s problems.170 Four years later, as BCCI began to fumble toward collapse, Hatch once again acted as Hourani’s lobbyist. He reached out to the beleaguered bank requesting that they lend money to Hourani for a series of real estate ventures in Illinois, Minnesota, and Texas.171 Hourani himself then sent a proposal for financing. It is not clear if any proposed loans were ever actually provided.
Hatch has one more connection to figures in this saga. In 1985, during the peak of his Mainland borrowing and the initiation of the Iran weapons sales, Khashoggi arrived in Salt Lake City, Utah, with grand plans to build “two goldcolored 43 story office towers that would dwarf the nearby Mormon Church office building, the tallest structure in town.”172 Khashoggi had been a presence in Salt Lake City since the 1970s, and this increased significantly during the 1980s. Yet, by 1987, construction on the towers had been abandoned and Khashoggi had fled Utah, leaving numerous unpaid loans and broken promises in his wake.
It was during this period, Hatch stated, that he had met Khashoggi. Details on their relationship are scarce, but, according to Hatch, their association was the senator “extending the courtesies he would to any big investor in Utah.”173
“A PAN-EUROPEAN PLOT”
A key aspect of the covert operations of the Reagan era that is frequently overlooked is that, with respect to the complex trafficking of arms to Iran, Oliver North and the Enterprise were dipping their toes into a much wider swamp of political and economic corruption, arms trafficking, and money laundering on a truly colossal scale. As the conflict between Iraq and Iran heated up, companies, banks, intelligence agents, and smugglers poured arms and military materials into both sides of a bloody war.
Despite laws barring such activities, the conflict in the Middle East was a boom time for many. For instance, there was the so-called powder cartel, a “pan- European plot” to move propellant powder for artillery and other armaments to Iran.174 At the top of this cartel was Bofors-Nobel, the Swedish arms combine that is now the Swedish subdivision of the massive UK-based defense contractor BAE Systems. Bofors had a close relationship with Iran that predated the revolution. In the early 1970s, the company entered into a business agreement with the country to build an armaments factory. Relations between the two were suspended following the revolution. However, a dip in Bofors’ balance sheet, a product of the downsizing of the Swedish military, led the company to embark on the lucrative path of embargo busting.
Moving propellant powder to Iran required numerous partners, complicit shipping agents, and payoffs to officials. The primary mechanism for coordinating this network was the European Association for the Study of Safety Problems in the Production and Use of Propellant Powders, a public relations group organized and set up by Bofors and other European weapons manufacturers following a series of disastrous plant explosions.175 This provided a convenient cover for these various arms merchants to come together, arrange the logistics for weapons orders, disperse the proceeds, and even inflate prices of their wares.
The Bofors powder cartel made extensive use of Italian companies for arranging shipping and payments. Soon, Italy had become the primary locus of this subterranean arms trade. In an October 1990 exposé in Euro-money magazine, the role of the French arms manufacturer Luchaire in the trafficking of arms to Iran was dissected.176 Luchaire had two subsidiaries based in Italy, SEA and Consar, which were used to arrange the movement of weapons through the Islamic Republic of Iran Shipping Lines. The ships would log false destinations and then make their way to Iran via secret routes. The arms loaded on these ships were not only sourced from Luchaire, as SEA and Consar acted as intermediaries for numerous European companies involved in the trade.
One such firm was Defarm, which was actively collaborating with Bofors in the illicit movement of propellant powder.177 The founder of Defarm was Nicola Dubini, who had cofounded Consar before he sold it to Luchaire. Another firm was a Portuguese arms brokerage called Defex, described in testimony as having a “close relationship” with Richard Secord, after having been introduced by Thomas Clines.178 It became one of the companies utilized by the Enterprise. According to Albert Hakim, Defex sourced weapons from Eastern Bloc arms manufacturers and merchants, which were then purchased and resold to the Contras.
Behind these moves were various European banks, some shadowy and others well known. On the shadowy side, there was International Bankers Incorporated, which issued lines of credit to SEA and Consar.179 The Italian branch of International Bankers Incorporated was located in a building owned by the scandal-plagued Banco Ambrosiano, which had been set up by Jean-Maxime Lévêque in 1982. Lévêque had previously been the president of Crédit Commercial de France, a sizable French bank that, incidentally, had lent Adnan Khashoggi large sums for his Salt Lake City ventures.180 The major shareholders of International Bankers Incorporated included the Saudi businessman Akram Ojjeh, a friend of Adnan Khashoggi’s, and Robert Maxwell.181
More well-known was the French merchant bank Banque Worms, which was nationalized by the Mitterand government in 1982. During the period when the French state owned the bank, it held 23 percent of Luchaire and aided in financing the flow of arms and powder.182 Joining Banque Worms in these efforts was a renowned Italian bank, Banca Nazionale del Lavoro. The interactions were complex, as R. T. Naylor has described in Patriots and Profiteers:
Bank Melli [the Iranian bank handling their side of the financing] would order its Italian correspondent banks to issue LCs [lines of credit] on behalf of Luchaire’s Italian subsidiaries, which sent them to Italy’s Banca Nazionale del Lavoro.… BNL would use the original LCs as security to issue their own LCs in favour of the Luchaire parent firm in France. That firm sent the LCs to Banque Worms for negotiation. When the goods were loaded up on board ships, Banque Worms would present its LCs to BNL for payment, and BNL would do likewise with the correspondent banks of Bank Melli. The use of back-to-back letters of credit was a simple but effective device for breaking up the money trail.183
London was another major hub for these activities, with various arms merchants playing a role in the flow of weapons as far back as 1981. Chief among these were Ben Banerjee, an arms dealer and owner of BR&W Industries, and his close associates Michael and Leslie Aspin. According to Die Welt, Banerjee and Michael Aspin were involved in negotiations between Oliver North and several representatives from the Iranian government in 1984 over the sale of $264 million worth of TOW missiles. Subsequently, evidence was entered as part of a British court case that showed that Banerjee’s BR&W Industries did indeed attempt to move 1,250 TOW missiles to Iran, which were obscured in customs invoices as “lift trucks.”184
These customs invoices were handled by BCCI, and they were “accompanied by telexes and letters on BCCI stationary of a nature and type ordinarily used by BCCI, showing BCCI providing counter guarantees and letters of credit involving the ‘lift trucks.’”185 What is more, according to Michael Aspin’s brother, Leslie, these TOW missile sales were indeed part of North’s operation. Leslie Aspin further claimed that he and North had opened three joint bank accounts at the Paris branch of BCCI to launder money for these sales and that one of these accounts was under the name “Devon Island.” The Senate subcommittee investigating BCCI learned that BCCI Paris did indeed have a Devon Island account, but they were unable to acquire internal documentation for this branch.
The use of suspect invoice techniques, such as classifying TOW missiles as “lift trucks,” seemed to be a habit of Michael Aspin’s. In the early 1980s, he was working closely with a British arms dealer named Leonard Hammond, who also manufactured machine gun parts through his company, Delta Engineering. Hammond and Aspin used Delta Engineering to move machine guns to the Middle East and Africa, with a particular focus on South Africa. By 1981, they were moving arms to Iran.186 Frequently, these arms flows were mislabeled on invoices as “hydraulic lifting tools.”
Aspin and Hammond had a particularly close relationship with Kuehne & Nagel, a large German freight-and-logistics company.187 When the arms dealers moved a thousand rifles to South Africa in 1980 – invoiced as “hi-lift hydraulic machinery spares” – K & N’s subsidiary Air Cargo handled the freight. In 1981, K & N worked with Aspin and Hammond in moving weapons destined for Iran. K & N, according to Aspin, played a role very similar to that which BCCI would later play in moving TOW missiles in 1984. He told Spiegel that “the management of Kuehne & Nagel knew about the illegal arms transports, planned the routes with necessary intermediaries, issued documents and change information.”188
In 1981, right as these operations were being developed, Kuehne & Nagel was acquired by Tiny Rowland’s Lonrho.189 Were these two events connected? It is impossible to say for sure, but there is reason to suspect that this was the case. As previously mentioned, one Lonrho freight cargo subsidiary has been identified as a participant in Edwin Wilson’s covert activities in Libya on behalf of the Shackley network. Lonrho obtained K & N shortly after the loss of that cargo company.
In addition to Italy and the UK, Belgium was a major node in this wideranging European network. Of particular interest are the allegations made in the ATLAS dossier, a confidential report drafted by the Belgian Gendarmerie in November 1994. ATLAS makes a series of startling accusations concerning an entity that they describe as “the Nebula” – a network of Belgian businessmen, politicians, and criminals who were involved in arms trafficking, diamond smuggling, drug running, and the like. At the center of the Nebula was Felix Przedborski, a businessman and Belgian diplomat who, since 1978, lived in Costa Rica, where he maintained dual citizenship.
There is a small, but steady stream of press reports independent of the ATLAS dossier that have linked Przedborski to various forms of corruption. Notably, in 1978, Italian police found drugs in a vehicle belonging to the Costa Rican embassy, with one of Przedborski’s employees at the wheel. That same year, one of Przedborski’s close associates who was serving as Monaco’s diplomat to Costa Rica, was arrested in connection with drug trafficking.190
When the Costa Rican newspaper La Nación published a series of articles probing Przedborski’s connection to various criminal enterprises – based largely on reports already published by European journalists – “Don Felix,” as he was known, responded litigiously. In the end, La Nación’s journalist, Herrera Ulloa, was charged with criminal defamation and forced to pay Przedborski “a fine equivalent to 120 days’ wages.”191
The ATLAS dossier names numerous individuals in Przedborski’s network. Among these were his son Daniel, a Geneva lawyer who was poised to take over his father’s complex. Interestingly, Daniel Przedborski, from 1984 through 2019, had worked at the law firm of Pierre Schifferli – Bruce Rappaport’s attorney who, as mentioned, had been head of the World Anti-Communist League. Documentation from several lawsuits suggests that Daniel worked directly on some of Rappaport’s affairs.
These are not the only familiar faces that appear in the dossier. In a list of banks used by the “Przedborski Group” for money laundering is Republic National Bank, with a note beside it stating that “in this bank it is a certain Safra who would be responsible for special transfers.”192 This, of course, refers to Edmond Safra, thus directly linking the Przedborski Group to Contra support operations and to Republic National. The ATLAS dossier further links the Przedborski Group or Nebula to these support operations: “It is said that some of the weapons of Irangate would have been transferred to the Contras of Nicaragua by this network.”193
ATLAS identifies one of the lesser-known members of the Nebula as Bruno Goldberger, a purported real estate broker from Brussels. It adds that Goldberger worked “for a certain Globus Group,” but the investigators who penned the document stated that they were unfamiliar with this entity. This was likely the Bulgarian state-owned trading company Globus. In Evil Money, Rachel Ehrenfeld cites a DEA report from 1989 that states that Globus “was formerly known as Kintex” – the Bulgarian firm tied to Safra’s friend Mohammed Shakarchi and, possibly, Robert Maxwell.194 The DEA report states Ehrenfeld recounted that “Globus transmitted Middle Eastern drug money to Switzerland via Shakarchi.”195
Przedborski’s time in Costa Rica overlapped with the country being used a major hub for the Enterprise’s pro-Contra efforts. The ATLAS dossier charges that, while he was serving a diplomat, Przedborski had embarked on a major business venture: the construction of a “tourist real estate project” in the Santa Elena region of Costa Rica.196 Intriguingly, North was also using the dense jungles of Santa Elena as cover for secret airstrips that were used for Contra support flights.197
Other connections to the Enterprise’s operations can be seen via another bank mentioned as being part of Przedborski’s network. This was Geoffrey’s Bank in Belgium, described in the dossier as a conduit for arms-smuggling payments. Geoffrey’s Bank had also been intimately connected to some of Roy Cohn’s suspect business activities (see chapter 4). Geoffrey’s Bank was controlled by Arno Newman, a friend of Cohn’s, and his son, Geoffrey, for whom the bank was named. According to Belgian journalist Willy van Damme, the Newmans were closely connected to Pierre Salik, a clothing manufacturer with close ties to Israel’s Mossad.198 Salik, importantly, was named in the ATLAS dossier as a member of Przedborski’s core group: it states that Salik’s daughters “were promised in marriage to the two sons of Przedborski,” though this never took place for reasons unknown.
A frequent visitor to Geoffrey’s Bank – and a close associate of both the Newmans and Pierre Salik – was Jacques Monsieur, described as one of Europe’s biggest arms dealers.199 Like Salik, Monsieur was close to Israeli intelligence. For instance, in 1986, Belgian authorities recovered documentation outlining his contacts with both Mossad and Iran. When he was arrested in Turkey in 2002, in part for having sold “embargoed American spare parts and aviation technology to Iran,” numerous press reports identified him as having been an active participant in the Iran-Contra affair.200
Willy van Damme writes that Monsieur’s introduction to the world of arms trafficking came through a partner of the Newmans named David Benelie. As noted in chapter 4, David Benelie was really David Azulay, the brother of Avner Azulay.201 Avner, a former Mossad agent, is best known as the business partner of the notorious commodities dealer Marc Rich, who himself worked closely with Israeli intelligence. Azulay was put in charge of the Marc Rich Foundation, the philanthropic appendage of Rich’s empire. The foundation has maintained
Rich has other ties to individuals and entities that populate this netherworld. There are rumors – albeit ones that are difficult to substantiate – that he was close to fellow oil trader John Deuss, who retained the services of Ted Shackley while Shackley was running his “private CIA.” There are more demonstrable ties between Rich and Rappaport’s Inter Maritime Bank and BCCI. In 1984, for example, the Rothschild Bank in Zurich loaned Rich the astronomical sum of $50 million Swiss francs. The managing director of the bank at that time was Alfred Hartmann, the money manager for Inter Maritime and a frequent BCCI front man.202
To complete the circle, the report of the US inquiry into BCCI states:
[quote]Marc Rich remains one of the most important figures in international commodities markets, and remains a fugitive from the United States following his indictment on securities fraud. BCCI lending to Rich amounted to tens of millions of dollars. Moreover, Rich’s commodities firms were used by BCCI in connection with BCCI’s involving in US guarantee programs through the Department of Agriculture. The nature and extent of Rich’s relationship with BCCI requires further investigation.203]/quote]
Others named in the ATLAS dossier as involved in Przedborski-linked arms trafficking suggested Przedborski’s group had close connections to the heights of Belgian political power. Featuring prominently among these names was Paul Vanden Boeynants, a meat-packing magnate who had been prime minister from 1966 to 1968 and again from 1978 to 1979. In the interim period, he served as Belgium’s defense minister, where he presided over a series of controversial arms deals and a weapons buildup. An adamant cold warrior, Vanden Boeynants moved among the webs spun by groups such as Le Cercle and the World Anti- Communist League.
Vanden Boeynants had a particularly controversial relationship with Roger Boas, another figure whose name appears extensively in the ATLAS dossier. Boas oversaw the Belgian weapons manufacturer ASCO, which profited handsomely during Vanden Boeynants’ years as defense minister. De Morgen reported that “as soon as the politician came to Defense in 1972, his company had probably not missed a single defense contract. ASCO … saw its profits increase tenfold in the 1970s.”204 Many of these deals bore the unmistakable signs of corruption, and allegations of bribes and kickbacks, embezzlement and money-laundering, harassment and intimidation often followed in their wake.205
There were also the accusations that Vanden Boeynants and Boas made use of a highly connected call girl ring headed by Fortuna Israel, better known as “Madame Tuna.” According to De Morgen, Madame Tuna was placed on the payroll of one of Boas’ ASCO subsidiaries, where her job title was listed as “decorator.”206 This ring had connections to other familiar faces. Madame Tuna, it seems, was also an associate of Adnan Khashoggi, who reportedly called upon her services for help in obtaining lucrative contracts through subterfuge and blackmail. Boas was reported to have been introduced to Khashoggi and Akram Ojjeh – an investor, alongside Robert Maxwell, in International Bankers Incorporated – by the madame herself.
A direct line between this network of connections and the early 1980s flow of weapons to Iran may well exist. Named in the ATLAS dossier as a member of Przedborski’s group was Abraham Shavit, Boas’ general manager at ASCO. The dossier describes Shavit as the “right arm of Roger Boas.”207 Shavit was well connected in Israel. For instance, in the 1970s, he served as the president of the Manufacturer’s Association of Israel and, afterward, had a stint as the chairman of El Al, Israel’s chief airline company that was involved in CIA-Mossad airlifts in the 1980s, including Operation Moses, and has also operated as a front company for Israeli intelligence. He was also reportedly a former Israeli intelligence officer and a close associate of Manuel J. Pires, a CIA-employed arms trafficker.208 Pires would later be identified as one of the Enterprise’s middlemen in the Iranian arm sales.
Prior to the Enterprise’s operations, in January 1983, ASCO’s Malta branch was involved in the transfer of “aircraft parts, weapons and ammunition” to Iran via a contact at Bank Melli.209 Two ASCO Malta invoices for these show that the shipments were underwritten with a line of credit from BCCI’s branch on Brompton Road in London. According to Gary Sick, one of ASCO’s liaisons to Iran for these types of arrangements was the arms dealer Hushang Lavi – one of the witnesses who claimed to have inside knowledge of William Casey’s October Surprise activities.210
GUNS FOR IRAQ
Support for the Iran weapons arrangements was not universal within the Reagan administration and dissenting voices rippled through the corridors of powers. While such dissenters were unable to stop the virtually uncontrollable cascade of events, many of these individuals used the fallout from the scandal to concentrate their political power. Chief among these was George P. Shultz, President Reagan’s Secretary of State. During the inquiry into the activities of the Enterprise, Shultz turned over significant documentation to investigators and provided detailed testimony. The official Iran-Contra report states that Shultz used the opportunity afforded by the scandal to “to regain control over counterterrorism policy. Following a strenuous bureaucratic struggle, Shultz persuaded President Reagan to prohibit arms transfers to Iran and to announce that the Department of State would take the lead on such counterterrorism and diplomatic matters in the future.”211
Shultz testified that he only had fragmentary knowledge of the arms sales and that he had learned fairly late that they had taken place. Senate investigators found, however, that Shultz was far more knowledgeable about what was taking place than he had initially let on. Likewise, he had knowledge of the Iran sales far earlier than what he testified. Nonetheless, the record showed that his opposition to the sales was consistent. What is not mentioned, however, is that Shultz had interests involving Iran’s bitter enemy – Saddam Hussein’s Iraq.
Early on in his tenure as secretary of state, Shultz dispatched Donald Rumsfeld, who at the time was working as an executive in the private sector, to Iraq to meet with Saddam. The first of these meetings took place in December 1983, with a follow-up meeting in March 1984. Declassified documents illustrate the purpose of the visits was to move the US and Iraq toward normalizing relations, despite official condemnations of Saddam’s use of chemical weapons.212
Shultz, however, had other things on his mind when he dispatched Rumsfeld. Before he had become Secretary of State, Shultz had been an executive at the construction giant Bechtel. Prior to Bechtel, he had served in multiple positions in the Nixon administration, first as Labor Secretary, then as the Director of the Office of Management and Budget, and finally as Treasury Secretary.213 He was not the only Bechtel figure high up within the Reagan administration. Caspar Weinberger, who had served alongside Shultz in Nixon’s OMB, had also moved to Bechtel. Shultz and Weinberger carried on a multi-decade feud that spilled over into the Reagan administration. Weinberger, unlike Shultz, was a major booster of the Enterprise and had played a role in the Iran weapons transfers.
Bechtel, in the early 1980s, had launched an ambitious, multibillion-dollar project in the Middle East that sought to establish an oil pipeline that would move crude from Kirkuk, Iraq to the port of Aqaba, Jordan, on the banks of the Red Sea. A now-declassified memo from Rumsfeld, sent to the State Department during his December 1983 trip stated that he had “raised the question of a pipeline through Jordan. He [Saddam] said he was familiar with the proposal. However, he was concerned about the proximity to Israel as the pipeline would enter the Gulf of Aqaba.”214
Weighing heavily on Saddam’s mind was Israel’s Operation Opera in June 1981, when Israeli military aircraft bombed an unfinished nuclear power plant. The Iraqis would be on the hook for sizable loans connected to Bechtel’s project, and the possibility that Israel might destroy the pipeline would place a major burden on Iraq’s wartime finances.
The Bechtel pipeline negotiations became something of a boondoggle, rife with subterfuge and intrigue. It intersected in odd ways with the Iran-Contra project, and formed something of a parallel – if not an entirely opposing – operation. In the spring of 1984, Iraq and Jordan agreed to grant Bechtel a contract for pipeline construction that was dependent on several conditions. These included $500 million in financing from the US government; an agreement that American oil companies would take a sizable chunk of the oil moved by the pipeline; and that not only Bechtel, but American banks and the Export-Import Bank, would be involved in the guarantees for the project.215 As Alan Block points out, the rationale for these demands was simple: put the US government and American businesses on the hook for the project, and they would act as a buffer against Israel.
The agreement operated smoothly until Iraq made an additional demand. It wanted “a ‘force majeure clause’ that would free Iraq from its obligation to pay interest on construction loans in the event of Israeli aggression.”216 With this demand threatening to derail the whole project, an interesting figure interjected himself into the middle of the negotiations: Bruce Rappaport, Casey’s good friend and a BCCI insider. Interestingly, one of the directors of Rappaport’s Inter Maritime Bank, until 1979, had been a former consultant for Bechtel.
Rappaport wanted a discount on oil transported by the pipeline in exchange for guarantees from Shimon Peres that Israel would leave the pipeline alone. To sweeten the deal, Rappaport was prepared to grant Israel a portion of his profits from this oil deal. The deal with Israel would require two elements: a written security guarantee and an insurance fund for the pipeline set up by Israel. Israel, through Rappaport’s intercession, agreed to the former but not the latter, and so the tanker magnate reached out to the Reagan administration for leverage over Israel. He turned to two attorneys he was close to, Samuel Pisar – the powerful attorney whose client list has included Armand Hammer and Robert Maxwell – and E. Robert Wallach. Wallach, in turn, brought Rappaport to the attention of Reagan’s Attorney General Edwin Meese. Meese, in turn, managed to bring the National Security Council into the mix, which believed that US government entities like the Overseas Private Investment Corporation could be used to organize the insurance fund.
Several years of torturous negotiations began, with Rappaport acting as a back channel between the US and Israel. One letter, written by Peres, was passed from Rappaport to Wallach to Meese and stated that the Israeli politician would discuss the matter with Shultz himself. It was ultimately for naught. The NSC backed out of the project under the leadership of Admiral John Poindexter, curiously one of Oliver North’s chief allies and a major player in the movement of arms to Iran.
Despite this failure, in 1986, Rappaport received a sizable sum of money. Shultz concocted a plan to elicit a $10 million donation from the Sultan of Brunei for the Contras. Elliot Abrams was dispatched to handle the money transfer, and he provided an account number at Credit Suisse bank in Geneva for the deposit. It was presented as an account for the Enterprise’s Lake Resources, but when the money was transferred, it ended up in an account controlled by Rappaport. It was later written off as a mistake, with several numbers in the account flipped around and thus “coincidentally” depositing the money with Rappaport. Rappaport, for his part, would deny that he ever received the money – though some of his top personnel, as well as Bert Lance, later told Alan Block that Rappaport had indeed received the funds. Lance stated that the money was used for “pay-offs,” while Jerry Townsend – a CIA officer who worked for Rappaport – said that Secord had personally asked him to try to recover the money.
The Bechtel pipeline negotiations were unfolding against a backdrop of what has been described as a geopolitical “tilt” designed to “draw Iraq permanently into the camp of America’s Gulf allies.”217 A key component of this tilt was the expansion of lines of credit provided to Iraq that were arranged and guaranteed by the Commodity Credit Corporation (CCC), a New Deal–era public corporation set up to provide financing and protections for the US agricultural sector. Ostensibly, the CCC credits to Iraq were to be used strictly for agricultural purchases, with the US adding additional nonagricultural credits via the Export- Import Bank, the same entity involved in the Bechtel pipeline negotiations. The primary bank used to issue these credits was the Atlanta branch of Banca Nazionale del Lavoro (BNL) – the Italian bank that, as mentioned earlier, was working with Banque Worms in financing arms transfers to Iran.
In 1989, BNL-Atlanta was raided by the FBI, and revelations soon followed that the bank had been providing massive loans to Iraq that were “far in excess of the amounts reported to the Federal Reserve.”218 These loans, in turn, were being used by Iraq to purchase weapons. Beside the CCC-guaranteed lines of credit that were mixed in with BNL’s lending, the possibility was raised that the CCC itself – with or without its knowledge – had acted as an underwriter of arms deals. An investigation into what was dubbed “Iraqgate” led to the verdict that there was, in fact, no conspiracy on the part of the CCC and the Reagan administration to arm Iraq. Yet, the overlap in time with the Bechtel negotiations and Donald Rumsfeld’s trips to Iraq seems to paint a different picture.
The Export-Import Bank is just one direct connection between the CCC/BNL affair and the Bechtel pipeline negotiations. Another was the connection that came from Rappaport himself – his close associate at Inter Maritime Bank, Alfred Hartmann. Hartmann, mentioned earlier in relation to the loans provided to Marc Rich, also maintained a high-ranking position at BNL. Given that Hartmann tended to appear at banks as a representative of BCCI, this may indicate a relationship between BNL and BCCI. Indeed, in 1991, the New York Times reported that BNL-Atlanta had been receiving massive transfers of money from BCCI and its subsidiary First American Bankshares.219 These transfers, which were happening at the same time as the Iraq loans, appeared to have been made in order to keep the BNL branch afloat.
In the US Congressional hearings that investigated Iraqgate, the relationship between BCCI and BNL’s Italian leadership was further elucidated. According to a written statement provided by the head of BNL’s North American operations, BNL’s former managing director, A. Ferrari – who resigned in 1981 after his membership in the notorious P2 Masonic lodge was revealed – had been close to “Pakistani nationals connected to BCCI.”220 The statement further identified Ferrari as a close friend of Roberto Calvi, the head of Banco Ambrosiano who wound up dead under exceedingly murky circumstances. It also added that Ferrari and the head of BNL’s international division, A. Florio, had worked closely with the corruption-plagued Vatican Bank. Finally, the statement charged that Ferrari and Florio exclusively handled BNL’s “relationship with people like [Ghaith] Pharaon and Marc Rich.”221
BCCI and BNL appeared together again in relation to a strange firm called Allivane International Group, which was described in a UK parliamentary inquiry as a “ghost company.”222 Allivane was, like BNL, a participant in the Bofors-led powder cartel that moved propellant powder, munitions, and weapons parts. At the same time, Allivane was participating in multiple illicit weapons deals with Iraq, and, by 1993, the company’s leadership was wanted for questioning in the US in relation to the BNL-Atlanta loans.223 Leaders included Allivane’s founder, Terry Byrne, who had previously worked at a company called International Signal and Control and, before that, a “New Jersey firm called Rexon Corp.”
Rexon was subsequently placed under investigation for, among other things, providing artillery-fuse parts to Iraq. International Signal and Control, meanwhile, had been founded by James Guerin who was linked, by the UK inquiry, to the Chilean arms dealer Carlos Cardoen, and who between 1984 and 1988 provided minerals used in munitions to Iraq.224 Ari Ben-Menashe, the former Israeli intelligence officer, has charged that Margaret Thatcher’s son Mark Thatcher was also close to Cardoen and had used this connection to broker the sale of armaments to Iraq. At the time, Thatcher was living in Texas, where he had cultivated contacts that included former Senator John Tower.225
While the relationship between Allivane and BNL remains vague, what is certain is that BCCI was working closely with both companies. It reportedly held several different accounts at BCCI during the mid-1980s and, in 1987, BCCI was “prepared to ensure the sale of 50,000 sets of fuses” by Allivane.226 Invoices obtained by British parliamentarians further indicated a business relationship between Allivane and a company called Space Research Corporation, which had been tied in other reports to Allivane’s successor Rexon Corp, to Carlos Cardoen and Mark Thatcher, and to BCCI.227
Space Research Corporation is best remembered for the man behind the company: Gerald Bull, a Canadian-born engineer and artillery expert who, prior to his 1990 assassination in the doorway of his Brussels apartment, had designed weapons systems for the Iraqis and the Chinese. He had also brokered the sale of arms to South Africa. Yet, his most famous effort was Project Babylon.
Commissioned by the Iraqi government, Project Babylon was intended to construct a series of space guns, based on Bull’s earlier designs for launching satellites into orbit. These guns would be used to fire projectiles high into the atmosphere or near-earth orbit in order to reach targets far beyond the range of normal artillery equipment.
The ownership structure of Space Research Corporation was fascinating. In the late 1960s, it was jointly controlled by the Great West Saddlery Company and Arthur D. Little, the Boston corporate consultancy firm and think tank. The CEO of Arthur D. Little at the time was General James Gavin. In 1982, Gavin, along with Clark Clifford’s partner Robert Altman, joined the board of Financial General Bankshares. Great West Saddlery had been a defunct company taken over by Edward and Peter Bronfman – the nephews of Samuel Bronfman – and they transformed it into an investment vehicle.228 The acquisition of companies by way of Great West Saddlery was financed through Edper Investments, a holding company owned by the brothers. Edper, in turn, had been financed through the sale of Seagram’s stock held by Edward and Peter Bronfman.
When the Iraqgate scandal began to break in the early 1990s, attention turned to former Secretary of State Henry Kissinger because, in 1985, he had taken a spot on the international advisory board of BNL. Furthermore, Kissinger’s corporate consultancy firm, Kissinger Associates, counted the Italian bank as a client. Kissinger Associates, which had been set up in the early 1980s with seed money provided by a syndicate of large Wall Street firms led by Goldman Sachs, stacked its partner list with many prominent individuals. Lawrence Eagleburger held a spot at the firm from 1985 through 1989, right between stints as Reagan’s Undersecretary of State for Political Affairs and George H.W.Bush’s Deputy Secretary of State. Eagleburger had a long history with Kissinger, having served as his special assistant way back in the Nixon administration. Another Kissinger assistant from this period was Brent Scowcroft, who also ended up at Kissinger Associates before becoming Bush’s National Security Advisor in 1989.
Both Eagleburger and Scowcroft were linked by government investigators and by the press to BNL, despite their protestations that they had played no role in the Iraq weapons deals. “On three occasions between 1986 and 1989,” Rep. Henry B. Gonzalez of Texas recounted, “Mr. Scowcroft briefed the BNL board on international political and economic developments.”229 Once back in government, Scowcroft pushed for the expansion of the Commodity Credit Corporation’s Iraq program, and enlisted his underlings in the NSC to provide political pressure to ensure this came to pass.
Eagleburger, meanwhile, was identified as having been present at meetings between BNL managers and Kissinger Associates in 1987. Though he denied interactions with BNL, events during the year prior to this meeting suggest that Eagleburger was being less than honest. In 1986, LBS Bank, the US subsidiary of Yugoslavia’s Ljubljanska Banka, was set up in New York City, and Eagleburger joined the board of directors. Roughly 2 percent of LBS’ business was carried out with BNL, and it had even purchased some of the loans that the Italian bank had made to Iraq.230 Two years after it had opened its doors, LBS Bank was implicated in a money-laundering scheme connected to the transfer of high technology to the Eastern Bloc.231
Kissinger also had personal ties to George P. Shultz. As with Eagleburger and Scowcroft, the relationship between the men formed during the Nixon administration. Kissinger attested, “For decades, George and I talked practically every Sunday,” and that if “in a position to choose a president, I would select George Shultz.”232 When Shultz first accepted the position as Reagan’s Secretary of State, Kissinger was the first person he consulted.233 Reportedly, this consultation pertained directly to developing a roadmap for Middle East policy. It seems likely that the question of Iraq was among the subjects discussed.
Besides the personal relationship between Kissinger and Shultz, there was a line running from Kissinger Associates to Bechtel via William E. Simon, a director at the firm who had served as a consultant to the construction giant. He also served on the board of Tamco, a corporate concern of the Gouletas family, who are discussed in relation to Jeffrey Epstein in chapter 11, and was also connected to Covenant House and AmeriCares, discussed in chapter 10. Simon further maintained a position as chairman of an investment vehicle controlled by Suliman Olayan, a Saudi investor who had embarked on major joint ventures with Bechtel.234 Simon, too, had a long history with Kissinger. For instance, he had served as Shultz’s successor as Nixon’s Treasury Secretary, and while there he developed what Kissinger later described as an “affectionate comradeship” with the Secretary of State.235
Each of these facts is certainly suggestive. When put together, a portrait emerges of a network – wrapped inside the Reagan administration but extending beyond it into companies such as Kissinger Associates, Bechtel, and BNL – that was working to not only promote the “tilt” to Iraq but was actively aiding Iraq in its fight against Iran. Particular institutions such as BNL – and BCCI – appear to have worked both sides of the conflict, supplying money and logistical support for the flow of arms to Iran and Iraq alike.
Seen from this perspective, the Bofors-led powder cartel, which was interlinked with the activities of the Enterprise, was just one element in a truly international network of money laundering, backroom deals, and arms trafficking. This tapestry, in turn, was the backdrop for the dark maneuvers of factional infighting that cut across the governments of the countries involved.
To bring these matters full circle, it is worth turning to the matter, left unresolved in the official inquiry, of the ties of Kissinger Associates to BCCI. In 1986, a consultant with Kissinger’s firm, Sergio de Costa, was recruited by BCCI to aid in the takeover of a bank in Brazil.236 Before the ink had dried on the paperwork, de Costa began to lobby Kissinger Associates to take BCCI on as a client. He found an ally at Kissinger Associates in Alan Stoga, a former chief economist at the First National Bank of Chicago – an institution historically linked to Rockefeller interests. Stoga – who had reportedly attended the 1987 meeting with BNL where Lawrence Eagleburger was also present – later communicated extensively with BCCI principals and even, on a handful of occasions, met with them in person.
When the BCCI inquiry was underway, Kissinger Associates painted a picture in which Stoga had pushed for the firm to take on BCCI on as a client, while Kissinger had been more reticent. This narrative was shaped by the files and communiqués that the firm had turned over to investigators, indicating that Stoga’s talks with BCCI terminated in December 1988. Yet, the files turned over by BCCI itself complicated this picture: they showed that Stoga was still meeting with BCCI representatives a month later, in January 1989. Kissinger Associates stated that Stoga reiterated at this meeting that the talks could not continue, but BCCI’s files stated that, at the meeting, it “was established that it is in our interest for both parties to continue with conversations. As such, the door for an eventual relationship remains open.”237
With BCCI’s compounding notoriety and eventual collapse, a working relationship between the bank and Kissinger Associates was never cemented. Kissinger Associates did, however, make an “unofficial” recommendation for BCCI by referring them to the New York law firm of Arnold & Porter.238 One of the partners at Arnold & Porter, named directly on the referral to BCCI, was William D. Rogers, who had served beneath Kissinger in 1976 as the Undersecretary of State for Economic Affairs. Rogers had subsequently helped Kissinger set up Kissinger Associates and was serving on the board at the time that the Arnold & Porter recommendation was being made.