(EST PUB DATE) THE LEBANESE OPERATION

• Document Type: FOIA
• Keywords: IRAN CONTRA
• Keywords: SCANDAL
• Collection: FOIA Collection
• Document Number (FOIA) /ESDN (CREST): 0001474396
• Release Decision: RIFPUB
• Original Classification: U
• Document Page Count: 13
• Document Creation Date: June 22, 2015
• Document Release Date: January 10, 2008
• Case Number: F-2000-02383
• Publication Date: January 1, 1990

"Ops." 110 Each project received a code name in the
sequence. TH-1, TH-2, and North told the
Committees that the projects ' had -not -progressed
beyond the planning stage and, therefore;-he did not
seek -a :Presidential . Finding authorizing any ofy these
o erations'1S1J
North testified that he 'discussed- the Enterprise's
role in these projects with:Poindexter, but Poindexter
said he did not recall such a conversation.112_The
only :evidence that-the President knew of these sensi-
tive?projects appears in-a September 15,'-1986, memo-
randum from North to Poindexter. North asked Poin-
dexter to brief the President on certain 'initiative's,`
including one of the proposed joint U.S.-Israeli covert
operations. -An 'attachment to the memorandum which
North"suggested ,should be briefed to ..Casey :stated
that, "covert funds could be made available" for this
operation,' but the source of the funds.was not dis-
closed.113 Poindexter noted on the memorandum that
he approved North's -recommendation to brief the
President on these operations and that it was "done."
Poindexter testified that he did-not know or tell.the,
President that the*'covert funds referred to by North
were coming from the Enterprise.114 ~ ' '
The Lebanese Operation - -~~
Another initiative undertaken by North involved
the use of DEA and Israeli contacts to fund and equip
a force in -Lebanon. North described .the . proposed
force as part: of _ a "long term operation" to give the
United States some future military leverage on the
ground in Lebanon. i l s _; , - -
-.North-sent Poindexter a PROF note in June 1986
about Secord's progress in working with a Lebanese
group on a hostage rescue operation: "After the CIA-
took so long to organize and then botched the Kil-
bum effort, Copp [Secord] undertook to see what
could be done through one of the earlier DEA devel-
oped [Lebanese] Contacts. Dick [Secord] has been
working with Nir on this, and now has three people
in Beirut and a - 40-man .' .' .- force working for us.
Dick rates the possibility of success on this operation
as 30% but that's better than nothing." 118 In closed
testimony before the Committees, -North indicated
that the project was. never carried out even though
"we spent. a fairly significant amount of money
on -.'. [this additional]'DEA operation." 117
Peter Kilburn, a 60-year-old librarian at the Ameri-
can University in Beirut, was kidnapped, on Novem-
ber 30, 1984. U.S. sources believed that, unlike the
other hostages, Kilburn was being held by a criminal
faction in Lebanon. At one point in the fall of 1985,
North- had contemplated allocating Enterprise funds
to support an operation intended to free him.118 The
plan was terminated when Kilburn was murdered al-
legedly by agents of Mu'ammar Qaddafi shortly after
the American air raid on Libya in April 1986.
Chapter 23
Other Countries :
Otherzprojects :contemplated by--North involved
aiding -anticommunist; resistance-'groups around-'the
world.' North'told the Committees-that he"and.Direc--
tor Casey ."had seveial'discussions about'iriaking what
he. called 'off-the-shelf,"-self-,generating activities -that
would be able to do a number of 'these things. He' had
mentioned specifically an ongoing operation."-In-_addi-
tion, -North - testified, -concluded within my .own
mind- the: fact. .that it might-require [other ongoing]
operations [as -well]." 119 In ' testimony before the
Committees,' North explained his motivation for assist'
ing-resistance groups. -"We cannot be seen':" :-in-the
world today as walking away and leaving' failure in
our wake.t-We must be able to demonstrate, 'not-only
in -Nicaragua, but .' .. elsewhere - where . freedom
fighters have been told, we will support you, we must
be able-to continue to do so." 120 -.. ::..- ..
In April 1986, =North asked Secord and his partner
Albert Hakim to use $100,000 from the Lake Re-
.sourdes=Swiss - accounts -'to-'purchase :'conventional
radio phone equipment for donation' to' - a political
party in a , foreign country. _On April 29, two repre-
sentatives of-a U.S. manufacturer met in Miami with
Secord' and brie of Secord's associates, and the pur-
chasing agent for the political party. At the meeting,
the purchasing agent agreed to buy $100,000 of the
radio equipment, and Secord-upon North's request-
arranged for the Enterprise to wire this amount to the
manufacturer.
TheErria
Another of North's -projects involved the purchase
by the Enterprise of the M/V Erria, a small coastal
freighter. of Danish: registry used to transport -goods
between Europe and the Middle East. The Erria; built
in -1973, was small, ' only.163 tffeet long, and weighed
710.tons.121 Before its purchase,:the Erria.was owned
by its captain, Arne Herup.122
In 1984 and 1985, the Erria was used to run-weap-
ons to the Persian. Gulf 'and then to Nigeria and
Central America. Because of its Danish registry, the
Erna, was able to escape the scrutiny of customs
officials. IF" "When we ended up needing a ship to
perform a certain .task," recalled North, "there was
nowhere to get one on short notice, and so this orga-
nization [the Enterprise] produced it practically over-
night." Poindexter testified that Secord offered the
ship because the Department of Defense could not
provide 'a ship--suitable for the -covert operation.123
According to North, Casey -said "we can't find one
anywhere else, get a ship. It didn't cost the taxpayers
of the. United States a cent." 124 The money came
from the Iran arms sales and other Enterprise funds.
The Erria first came to the attention of the Enter-
prise in April 1985, when it carried arms purchased
through Secord to the Contras. En route to Central
APPROVED FOR RELEASE
DATE: NOV 2007
 Chapter 23
America, the Erria came under surveillance by an
unidentified "fishing boat" which Captain Herup as-
sumed was Cuban.12s Herup took evasive action and
brought the cargo successfully to a Central American
country. 126 Herup's actions impressed Secord's asso-
ciate, Thomas, Clines, and. when North needed a ship
in April 1986, for covert operations, Clines suggested
to Hakim that the Enterprise purchase the Erria from
Herup, and keep him as Captain. . .
?? Hakim bought the ship for. $312,000 through
Dolmy Business, Inc., one of the Panamanian compa-
nies owned by the Enterprise, on April 28, -1986.127
Herup was asked to remain as captain for at least six
months, with Danish agent Tom Parlow of SA Char-
tering.' continuing as the ship's agent. Hakim and
Clines told Herup that-they were working for the
CIA and that at some future date they might ask him
to transport. technical equipment for covert oper-
ations. They promised that when the project was fin-
ished, the ship would be returned to Herup at no cost.
The Proposed Charter to the CIA for a
Covert Operation
"'.The first mission North contemplated for the Erria
was for an extended covert operation. On April 28,
1986, Secord sent a KL-43 message to North propos-
ing that the CIA' charter the vessel for that purpose:
".- ..? Abe, [Hakim] still in 'Copenhagen with our
lawyer' finalizing purchase of ship. Deal has been
made after three days of negotiation. The Danish cap-
tain is up and eager for the mission-he now works
for us. We are asking ... [of the CIA] for firm fixed
price contract of $1.2 million for six months. He will
probably balk at this price ..."lzn . -
As Secord predicted, the Agency felt the rate was'
excessive (several times the prevailing rate for similar
assets). and it balked at chartering the ship. In addi-
tion, the CIA' informed North that it was not interest-
ed on technical grounds and that it did not feel that
security-could be maintained because of the ship's'
previous, use by North's associates to ferry arms to
Central America. The' Agency indicated that Tom
Clines'-,involvement was a negative factor of major
_ --;
proportions. 12!
North. persisted. in his efforts to have the CIA lease
the ship.. He then enlisted Poindexter's help. In, a May
14.. memorandum; -Vincent' M. Cannistraro of the SC
staff urged. Poindexter- to take the. matter. up with
Casey:. ,_
~Status of Ollie's Ship.._Ollie -has offered the use of
a Danish vessel for [a covert operation]. He. first
offered' CIA a six month lease. CIA told mei that ,t
they thought it' was too expensive, and thecost
,,.
and time, involved in' refitting the vessel for (the]..,
mission :made the alternative option . . . more
attractive. Ollie then offered to [perform the mis-
_ sion] using his own resources. [C/NE] has told
me that because of the alleged involvement of
one Tom Clines (who was involved with Wilson
and Terpil), CIA will have nothing to do with
the Ship. 129
In the end, Casey supported Clair George's deci-
sion that the ship was not suitable for Agency use.
The Odyssey of the Erria _- -
On May 9, 1986, the Erria commenced its oper-
ations under its new owners, the Enterprise. The ship
was to travel to pick up technical equipment. for a
covert operation. . .
On May 16 Herup was ordered to abort the mission
and return to Larnaca, Cyprus..The new plan for the
ship was to pick up any American hostages released
as a result of the DEA initiative. En. route to Lar-
naca; Herup received instructions to take up a posi-
tion off the coast of Lebanon and to await further
directions. 13
As described earlier in this Chapter, the DEA hos-
tage ransom plan failed. Accordingly, after a 48-hour
wait, Hakim ordered the ship to sail on; to Larnaca.
On June 5, Herup received instructions to head for
Gibraltar, but at the last moment the ship was divert-
ed to Cagliari, Sardinia. From -there, he was told to
take the ship to Setubal, Portugal, to await an arms
cargo from Defex. The cargo at Setubal was not
ready for loading, and Herup was instructed to return
to Copenhagen, where he arrived on July 4.131 ' '
The Erria then was ordered to Szczecin, Poland,
where. it arrived on July 10. The cargo it picked up
was marked "machine parts," but actually consisted of
158 tons of Communist-bloc weapons, including AK-
47 assault rifles, hand grenades, mortars, and a variety
of ammunition.132 The shipment was ? consigned to
Energy Resources International, an Enterprise compa-
ny. -
- The Erria's next stop was Setubal; Portugal, where
on July 19, it loaded an' additional 222 tons of arms
from Defex Portugal in the presence of Parlow and
Clines.133 Herup was told to set' his course for a
Central American port. According to Hakim, the total
cargo, which. he called the "stranded' shipment," cost
$1.7 million; 134 Secord placed the cost. at about $2.4
million.135. En route to Central- America;' Parlow
called Herup and told him to stop the ship:. Congress
was in the process of repealing the Boland Amend-
ment. The vessel sat in the water for 4 days. Captain
Hemp then was ordered to return to.,Portugal;_ where
he" was met by'Clines.13 s
The Enterprise decided to find a buyer- for the 380-
ton cargo, of arms now on board the Erria: Defex sold
the arms to an intermediary for $1.2 million. The
intermediary, in turn, sold the cargo' for $2,156,000
(including transportation), 137 to the CIA, which did
not want to deal with the Enterprise because of
Clines' involvement. The arms were transferred from
 Chapter 23
the Erna to another ship on September 20 for deliv-
138
ery to the CIA.
Hakim and Secord continued their efforts. Herup
was ordered to take the now-empty Erria to -Haifa,
Israel, where it was to receive a new shipment *of
arms. So as not to run afoul of the Arab boycott, the
name of the ship was altered to read, "Ria," and false
entries were placed in the Captain's log. On October
13, at Haifa, Herup loaded a crate containing -eight
tons of Eastern Bloc arms that Nir had promised for
the Contras. The captain also had been told he was to
pick up pharmaceuticals for Iran. No pharmaceuticals
were loaded. ... ;
Herup was then ordered to go -to Fujairah in the
Gulf of Oman. The-Iranians had promised North two
Soviet T-72 tanks, but after the Erria waited 6 weeks
in the Gulf, the plan failed to materialize. On Decem-
ber 9, -Herup was ordered to open the. Israeli crate.
He found only 600 well-used AK-47 assault rifles and
15 cases of ammunition-valued at approximately.
S 100,000-a cargo not worth transporting to Central
America. i s 9
77-026 0 - 67 - 13
After the revelations of the Iran-Contra covert op-
erations in November 1986, Clines or Hakim ordered
the Erria on December 14 to return to -Eilat, Israel,
where the crate of,weapons that had been received in
Haifa were unloaded. -
- :.The Erria returned to Denmark later in December.
Its missions on behalf of the Enterprise were at an
end.
The Erria was in a sense a metaphor for the other
operations of the Enterprise-ventures : that began
with ambitious expectations but accomplished noth-
ing.=But the fate of these ventures-'cannot obscure the
danger of privatization of covert operations . or the
fact that the participants in the Enterprise had auda-
cious plans 'for covert operations. Had the architects
of the other: operations been emboldened by success,
and not frustrated by failure, the Committees can only
conjecture, with apprehension, what other uncon-
trolled covert activities on behalf of the United States
lay in store. __ - :..
 Chapter 23
126. The commercial Bill of Lading shows the destination
as a Central American port; however, the true destination
of the cargo was a different Central American port. The
ship arrived at that port on June 2, 1985. ER0001-02.
127. Dolmy Business, Inc., was organized as a corpora-
tion under the laws of Panama, on September 11, 1985.
ER03-09; ER10-12. See also: the Memorandum of Agree-
ment and Bill of Sale covering the Erria. ER13-17; ERIS-
19.
127a. OLN Ex.-286.
128. C9605. Items for discussion at DCI meeting with
Poindexter on 5/15/86.
129. N43472 (Memo from Cannistraro to Poindexter
"Agenda for weekly meeting with DCI," 5/14/86.)
130. See summary log of the Erria, at ER0021; Erria log
book, at ER0023-30; and ship's position May 23-29, as re-
flected on page 14 of the Erria log book, at ER0031.
131. At this point, Albert Hakim and Dolmy Corporation
owed SA Chartering S32,000 for fuel and wages, and it was
for the purpose of collecting this debt that Tom Parlow
directed Captain Herup to return to Copenhagen. Parlow
sent a telex to CSF, stating falsely that SA Chartering had
the vessel impounded for non-payment of account. CSF
then promptly wired money to SA Chartering which was
drawn against Dolmy's Credit Suisse account.
132. Her-up, Int., 4/29/87 at 68; Staff memo on Coastal
Freighter Erria, 3/4/87, at 5; "National Syrian tied to
North." B. Sun, 4/20/87, at IA, 9A.
133. Staff memo on Coastal Freighter Erria, 3/4/87, at 5.
134. See Chapter 22-
135. SC4104, Secord letter to Liman and Nields, "Arms
Sales Profit Analysis." at 2.
116. Herup Int., 4/29/87, at 6-7.
137. Staff memo on Hakim/Secord ownership of Erria
arms cargo, 4/30/87, at 2;'C4803-C4807, H87. The CIA did
not get the whole cargo for that price. Some of the muni-
tions were diverted by the intermediary, for use by North
for other covert activities.
138. The transfer of the Erria's cargo took place in Cher.
bourg, France. Five of the ship's containers were destined
for one U.S. port, and 22 containers were destined for
another U.S. port. See loading diagram at ER34. The rele-
vant shipping documents, including cargo declaration, mani-
fest, identification of crew, etc., at ER35-42, ER43-4.
139. ER32. See also Herup Int., 4/29/87, at 10.
 Chapter 1.4
"Taken to the Gleaners": ---.-------.
The ' Iran Initiative- Continues*
The United States had taken a firm position in
Tehran. Although offered two hostages, McFarlane
had refused to deliver the remaining HAWK parts
unless all the hostages were released first. But this
was to be the last show of toughness by the United
States: just 2 months later, the United States delivered
the same HAWK parts after obtaining the release of
only one hostage.
The Iran initiative continued until public reaction
following its exposure in November 1986 forced its
cancellation. -Before then, some of the players had
changed: a new channel to Iran (the "Second Chan-
nel")1 with a new Iranian emissary was found; Nir
was cut out of the negotiations; and Secord and
_:Hakim - took. his place. More missiles were sent to
Iran, where they went to the radical Revolutionary
Guard. But fundamental problems remained, and the
Second Channel turned out to represent the same
Iranian leaders as did the First. Channel. In the end,
the United States secured the release of another hos-
tage but three more were seized, at least one allegedly
at the instigation of one of the Iranians with whom
the U.S. negotiators had dealt earlier. Despite this,
however, the U.S. negotiators agreed not only to se=
quential release of the hostages biut also to seeking the
freedom ? -of the convicted Da,va terrorists from
. prison in Kuwait.
The Bartering Continues
The deadlock in Tehran did not end Manucher Ghor-
banifar's role as an intermediary. A strange interde-
pendence had developed among the parties: Iran still
wanted the remaining HAWK parts and other high
technology weapons from the United States; the
United States wanted the hostages; Israel wanted
direct or indirect relations with Iran; and Ghorbanifar
wanted to be paid.
Ghorbanifar had borrowed S15 million from Saudi
entrepreneur Adnan Khashoggi to finance the
HAWK parts shipment and Khashoggi, in turn, had
borrowed the money from his financiers. But only
one pallet of HAWK parts had been delivered in
"'Our guys . . . they got taken to the cleaners." Secretary of
State, George P. Shultz, testifying at the public hearings, 7/23/87, at
184.
Tehran and Iran -refused to pay. Ghorbanifar could
repay his debt to Khashoggi only by inducing the
United States- to ship the rest of the parts.
Only days after the Tehran mission ended, Ghor-
banifar was on the phone with an-Israeli official seek-
ing a meeting. Ghorbanifar blamed the failure of the
Tehran trip on internal rivalries within the Iranian
Government and complained about Robert McFar-
lane's refusal to accept the offer to release two hos-
tages for;the HAWK parts. The Israeli official restat-
ed the U.S. position: there could be no further discus-
sions unless- all.the.hostages were released first.2
Shortly afterward, CIA consultant George Cave
was in communication with the Second Iranian, who
also wanted the remaining HAWK parts delivered.
The Second -Iranian claimed that Iran controlled the
hostages and that if all the parts were delivered, two
hostages would be released. When the HAWK radars
were -delivered,..the two remaining hostages would be
freed.3 The parts; :however, would -have to be deliv-
ered first and the hostages would follow=the mirror
image of the U.S. position. Cave rejected this proposi-
tion-all the hostages would have to be released
before any of the parts could be delivered.4 The par-
ties remained far apart.
Iran Discovers the Overcharge
By the end of June, Iran had raised another reason for
refusing to pay - Ghorbanifar and release the hostages:
The Iranians--had obtained a "[m]icrofiche of factory
prices" that "does not compare w/ prices charged."'
On June 30, - Cave spoke by telephone to the
Second Iranian -who complained that the Iranians had
a microfiche price list showing the true price of the
HAWK parts and that they had been overcharged by
600 percent. s The same day, Ghorbanifar called CIA
official Charles Allen and told him that while he was
being blamed for the overcharge, his markup was
only 41 percent.?
The sensitivity of the Iranians to overcharging had
been known to the Americans for some time. In a
December 4, 1985 PROF note to John Poindexter,
Oliver North warned that the Iranians were unlikely
to release the hostages in a "single transaction" be-
cause they had been "'scammed' so many times in the
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