INQUIRY INTO THE MATTER OF BILLY CARTER AND LIBYA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00552R000101000002-9
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 261
• Document Creation Date: December 22, 2016
• Document Release Date: September 27, 2011
• Sequence Number: 2
• Publication Date: September 1, 1980
• Content Type: REPORT

Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
[002cmx TEE PBIRT]
98rs Co fossaa
Ed Su.iow
SENATID
J RzoRr
t No. 98
INQUIRY INTO THE MATTER OF
BILLY CARTER AND LIBYA
REPORT
TOGETHER WITH ADDITION_tL VIEWS
OF THE
COMMITTEE ON THE JUDICIARY
SUBCOM IITTEE TO INVESTIGATE INDIVIDUALS
REPRESENTING THE INTERESTS OF FORFIGN
GOVERNMENTS
UNITED STATES SENATE
SErrzMsts -- (legislative day, SEPIEMHSR -), 1980.-Ordered to be
printed
U.S. GOVERNMENT PRINTING OFFICE
68-0460 WASHINGTON : 1980
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
COMMITTEE ON THE JUDICIARY
[98th Congress)
EDWARD M. KENNEDY. Massachusett$, Chairman
BIRCH BAYS. Indians STROM THURMOND. South Carolina
ROBERT C. BYRD. West Virginia CHARLES McC. MATHIAS. Ja. Maryland
JOSEPH B. BIDEN. JIL. Delaware PAUL LAXALT. Nevada
JOHN C. CULVER. Iowa ORRIN O. HATCH. Utah
HOWARD M. METZENBAIIM, Ohio ROBERT DOLE. Kansas.
DENNIS DzCONCINI. Arisona THAD COCHRAN, MississtPPi
PATRICK J. LEAKY. Vermont ALAN K. SIMPSON. Wyoming
MAX BAUCUS, Montana
HOWELL HEYLIN, Alabama
SNORT SNEZDaIf, minorthv CM.., Couwsel
SunCOM I TINT TO IMESTS OF L VEST GAnEINDI G VALS REPREBENTING
BIRCH BAYH. Indiana. Chotr'P a' Vice (7hakvww
TROM THIIRMOND. South Carolina.
S
Islaad CHARLES MCC. MATHIAS. JR., Maryland
CLAIBORNE PELL. Rhode
ROBERT DOLE
DENNIS DECONCINI. Arizona . Kansas
PATRICK J. LEAHY. Vermont RICHARD G. LII(iAR. In"""'
MAX BAIICIIS, Montana Couneei
PsILIP W. TONE, 9pect?i
MICHALL DAv!DeON, Senate Legal Counsel
ROEZrT K. KILLS!. Deputy Senate Legal Counsei
(II)
r.::p:'. J.. _. y... ~. i ?,.i.rM , 2:.,c.'.c..?. ~, ,~e?m'i^. ',.-r-SJ.'.34 -?;....t) ..~.. _...:,A-.. Z . -~" ':_ . 3rra~.,r.'~w+W- ..tV i:?:.,..da.A_. ....
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
TABLE OF CONTENTS
Acknowledgement . . . . . . . . . ... . . . . . . . . . i
Preface . . . . . . . . . . . . . . . . . . . . . . . .
I. LIBYAN CULTIVATION OF A RELATIONSHIP WITH
BILLY CARTER AND WHITE HOUSE REACTIONS:
MARCH 1978 - OCTOBER 1979 . . . . . . . . . . . . . . 1
II. THE MIDDLE PERIOD: HOSTAGES, OIL, PAYMENTS
AND INTELLIGENCE . . . . . . . . . . . . . . . . . . . . 48
III. JUSTICE DEPARTMENT INVESTIGATES BILLY CARTER
AND ARRANGES REGISTRATION, APRIL 1980 -
JULY 19 80 . . . . . . . . . . . . . . . . . . . 107
Conclusions . . . . . . . . . . . . . . . . . . . . . . . 147
Additional Statements
Senator Thurmond . . . . . . . . . . . . . . . . . . . . 170
Senator Pell . . . . . . . . . . . . . . . . . . . . 179
Senator Mathias . . . . . . . . . . . . . . . . . . . 182
Senator DeConcini . . . . . . . . . . . . . . . . . . 187
Senator Dole . ... . . . . . . . . . . . . . . . . . . 190
Senator Baucus . . . . . . . . . . . . . . . . . . . . . 202
Senator Lugar . . . . . . . . . . . . . . . . . . . . . 206
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
ACKNOWLEDGMENT
The Members of the Subcommittee would like to
express their appreciation and gratefully acknowledge the
high standard of professionalism and personal integrity of
the Special Counsel, Philip W. Tone, and make known their
respect for his leadership, judgment, and dedication to
duty.
The Members would also like to express their
gratitude to the staff for the many long hours of dedicated
service that enabled the Subcommittee to responsibly
advance the Subcommittee's investigation in a professional
manner, and would like to take this opportunity to commend:
OFFICE OF SENATE LEGAL COUNSEL
Michael Davidson, Senate Legal Counsel; Robert K. Kelley,
Deputy Senate Legal Counsel; Paula A. Sweeney, Assistant
Senate Legal Counsel; Charles Tiefer, Assistant Senate
Legal Counsel; Kenneth S. Kilimnik, Legal Assistant;
Deborah Howard, Legal Assistant; Nancy L. Bradshaw, Staff
Assistant; Barbara Laboch, Staff Assistant; and Cheryl G.
Brown, Staff Assistant;
SENATE STAFF
Marcia N. Atcheson, Counsel to Birch Bayh (D-Ind.); Linda
Rogers-Kingsbury, Staff Director; Dennis Shedd and Joseph
R. Barker, Counsel to Strom Thurmond (R-S.C.); James H.
Thessin and David L. Johnson, Counsel to Claiborne Pell (D-
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
x
R,I.); Nancy F. WolicT, Counsel to Dennis DeConcini (D-Ariz.);
Charles R. Tetzlaff, Counsel to Patrick J. Leahy (D-Vt.); Ann
Leigh, Advisor to Max.Baucus (D-Mont-); Michael R. Klipper,,
Counsel to Charles MeC. Mathias, -Tr. (R-M.); Jonathan G.
Thacher; Ccraisel to Robert Dole (R: Kan.) ; and Jeft T. Bergner;,
Advisor to REchasd G. Lugar (R-Ind.);
COBS
Thomas K. McQueen, Consultant and Assistant to the Special
Counsel; William. B. Ttirnerr, Counsel and Consultant; John J.
McDermott; Director of Investigations and Consultant; and
Joseph R. O'Rourke, Consultant; and
DETA= AND OTHER ASSISTANCE.
Edward C. Messinger., Accountant; John R.. Tipton, Evaluator;
Alan M. Bennett, Evaluator; and Joseph W. Jacques, Auditor;
Carolyn C. Drake, Research Assistant; Audrey J. Fan, Staff
Assistant; Katherine C. Shepherd, Staff Assistant; Joette P.
McCutcheon, Staff Assistant; Benjamin R. Baker, Jr., Staff
Assistant; and G. Frederick Glass, Senate Intern.
The Subcarrrnittee notes and joins the special acknowledg-
ment, which its counsel, Philip Tone, Michael Davidson and
Robert Kelley, wish to express for the work of Thomas K. McQueen,
Paula A. Sweeney, Charles Tetzlaff, and Charles Tiefer, in the
preparation and editing of this report.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
The Subcommittee of the Committee on the Judiciary
was established by'-an order of the Senate on July 24,-1980,
for the purpose of investigating the activities of individuals,
representing the interests of foreign governments. The
Subcommittee-was directed to determine the extent and scope
of the investigation, and to submit a final or interim
report to the Senate no later than October 4, 1980. On
August i9, 1980, the Subcommittee agreed to the scope of
its investigation, concentrating in the limited time available
on Billy Carter's activities with respect to Libya and our
government's handling of that matter.
The Senate envisaged that the Subcommittee would
proceed in a nonpartisan manner. This is symbolized by the
fact that, alongside Senator Bayh as Chairman, Senator
Thurmond, as the Ranking Minority Member of the Subcommittee,
would serve as its Vice Chairman. The Senate also provided
that subpoenas would be issued by the Subcommittee upon the
cosignature of the Chairman and Vice Chairman, or on the
signature of either of them at the direction of the
Subcommittee. The Chairman and Vice Chairman were able to
agree on the issuance of all subpoenas; it has not been
necessary to put to a vote any issue with respect to the
issuance of subpoenas or the conduct of the investigation.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
To further ensure the nonpartisan quality of the
investigation, and its integrity and thoroughness, the
Subcommittee retained a distinguished special counsel,
Philip W. Tone. Our debt to him is acknowledged elsewhere.
The Senate also authorized and directed Michael Davidson,
Senate Legal Counsel, and Robert K. Kelley, Deputy Senate
Legal Counsel, to work with the Subcommittee, and thereby
provided the Subcommittee with the services of the Office
of Senate Legal Counsel, a nonpartisan office which serves
the entire Senate.
The Subcommittee has heard 23 witnesses during 11
days of public hearings. The number of pages of testimony
taken at public hearings totals 2,226 pages. The staff has
additionally taken the testimony of 35 witnesses at depositions;
there are 2,646 pages of deposition transcripts. The public
hearings will be published and the depositions will be made
available to the public as soon as possible.
The report which is being issued today is a full
statement of that part of the evidence the Subcommittee has
.received which may be released to the public. The intention
of the Subcommittee is to provide as much information as
possible to the public so that it may see the basis for the
conclusions which follow.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
The Subcommittee has determined to designate this
report as an interim one, even though the effort has been
made to make the factual statement. and the conclusions as
complete as possible. The Department of Justice is
continuing with investigations that may produce additional
relevant information. Members may also wish to recommend
that the Subcommittee pursue additional areas within its
mandate. The Subcommittee cannot say, therefore, with any
assurance, that the final chapter has been written.
Of particular importance in this respect is the
inquiry and prospective report of the Office of Professional
Responsibility of the Department of Justice. We will
evaluate the findings of the Office of Professional
Responsibility before determining whether the Subcommittee
should take any further action. We are today forwarding
this report to the Justice Department for such assistance
it may provide to the Office of Professional Responsibility
in its investigation of related matters.
As may be expected, a number of individual members
have additional views on the difficult issues considered by
the Subcommittee. As the Chairman and Vice Chairman of the
Subcommittee, we are confident, nonetheless, in our conviction
that the agreement to the conclusions which follow is a
significant achievement of the Subcommittee.
Birch Bayh Strom Thurmond
Chairman Vice Chairman
(v)
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
I. LIBYAN CULTIVATION'OF A RELATIONSHIP WITH BILLY CARTER,
AND WHITE HOUSE REACTION: MARCH 1978 - OCTOBER 1979
Libya-U.S. Relations and the People-to-People Plan
Since Colonel Mu'ammar Qadhafi and his fellow officers
seized power in Libya on September 1, 1969, relations between
that country and the United States have ranged from cool to
unfriendly on a wide spectrum of political issues. Qadhafi's
ruling group believed that American and British influence
had prevented Libya from playing its rightful role in the
struggle against Israel. They moved to change that by
closing foreign bases in Libya in 1970, acquiring arms, and
supporting anti-Israel and revolutionary causes as well as
terrorist activity. By mid-1970, high level contacts between
the United States and Libya had virtually ceased. In 1973
the United States reduced diplomatic representation in
Libya to the level of charge d'affair :s, and under the
terms of the Arms Export Control Act, disapproved sales to
Libya of weapons and of products which could add significantly
to Libya's military capability. Of most importance to the
Libyans, in light of subsequent events, this action blocked
the delivery of eight C-130's, which Libya had previously
contracted to purchase. 1/
Despite the ban.on military sales, commercial transactions
continued. 2/1n particular, United States crude oil imports
from Libya grew substantially from 4 percent (153,000 barrels
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
i
a day) of total U.S. imports in September, 1973 to 9 percent
(557,000 b/d) in December, 1977. 3/
The United . States,. in turn, exported industrial
products to Libya,:most notably nine 727s and one 707 aircraft,
but even these exports encountered difficulties. By early
1978, Libyan support for terrorism, its virulent opposition
to the Camp David accords, and a changing political climate
in the United States led to a further State Department
reassessment of sales to Libya. In January and February,
1978, the State Department recommended that a license to
export two 727's to Libya be turned down, and it constrained
Lockheed's ability to service eight C-130's acquired by
Libya in 1971. On March 5, 1978, the State Department
requested controls on sales of heavy tractors having a
military capability, four hundred of which the Oshkosh
Truck Corporation had already contracted to sell to Libya.4/
Against this background of strained relations, the
Libyan government doubted that there could be much improvement
in Libya's official relationship with the U.S. government.
As a result, the Libyan government decided to minimize
direct contact with U.S. officials, and to go directly to
the American people in order to modify U.S. policy, using,
among other methods, invitations to prominent U.S. citizens
and business organizations and attempts to involve itself
in the U.S. political process.5/Ahmad al-Shahati, head of
the Libyan Foreign Liaison Office, was said to be running
the program. Libyan officials hoped that by establishing
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
good relations with private businesses and other U.S.
organizations, Libya would be able ultimately to get U.S.
weapons systems, valuable technical systems, and other
goods they desired, including the C-130's. The United
Stats$ was aware that Libya was pursuing this approach..-
In 1977, the Libyan "People-to-People's effort was
initiated with visits of two U.S. groups to Libya. The
first Libyan delegation to visit the United States came
in late April, 1977, and, according to a Libyan account,
"met with leading personalities from American universities,
cultur.l, social and religious organizations and trade
unions and made efforts to contact the Black Muslim
organizations which are now established in many states". 6/
The Libyans stated that the delegation "succeeded in estab-
lishing new relations with Americans, especially in the
state of Idaho, where several receptions were given in its
honor and attended by representatives from the- Democratic
and Republican parties." 6/
Billy Carter Receives Libyan Invitation
The invitation to Billy Carter to visit Libya seems
to have been an extension of these efforts. In March,
1978, Mario Leanza, an Atlanta, Georgia real estate broker,
traveled to his native Italy, and spent time with his
nephew in the town of Catania in Sicily. 7/ Toward the end
of his five-week. visit, Leanza was introduced to a Sicilian
corporate lawyer, Michele Papa. In the early 1970's, Papa
had founded the "Sicilian-Arab Association," which promoted
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
cultural exchanges and trade between Italy and Libya. 8/
Papa told Leanza that if he could get Billy Carter to come
to Libya. Leanza,.ac,ould make a lot of money. 9/ Upon
Leanza's return to Atlanta, Papa called him numerous
times 10/ and wrote that he had "spoken with my Arab
friends..';'.., L invi.te you with the brother of President Carter
to Libya at. my expense. You won't waste your time." 11/
Leanza did not know Billy Carter. 12/ He discussed
the chatter with Thomas L. Jordan, another Atlanta real
estate broker, and they called Papa and told him Jordan
knew Billy Carter. Papa informed Leanza that Gibril
Shalouf, former,. Libyan Ambassador to Italy, was coming to
the United States, 13/ and in late June, 1978, Shalouf
met Leanza and Jordan in Atlanta. 14/*/ Through a string.
of acquaintances, Jordan then arranged a meeting between
Billy Carter and Shalouf, **/ which occurred in Billy Carter's
service station on July 4, 1978. In general terms, Shalouf
invited Billy Carter and others to visit Libya at Libyan
expense. Billy Carter expressed gratitude for the invitation
but probably did not accept it at that time. 16/
*/ Although both Leanza and Jordan recall the date of this
meeting as early July, the fact that they met with Billy on
the Fourth of July weekend indicates the initial meeting
with Shalouf occurred in late June.
**/ Jordan asked William McBrayer, a trade association
lobbyist, to call Floyd Hudgins, a Georgia State Senator,
on Jordan's behalf. McBrayer contacted Hudgins, who then
spoke with-Jordan.. Hudgins called Randy Cpleman, and they.
arranged-the meeting,,--'5/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
5
On July 22, 1978, Jordan sent Shalouf a mailgram
with a tentative list.of participants for a trip to Libya,.
and asked for a $50,000 advance to "defray expenses." `Shalouf
called to express anger at the request for money and at.
Jordan's having put anything in writing. 17/ Eventually,
Shalout did give Leanza $3,000 in cash for his and Jordan's
"expenses." */ 18/
to September, 1978, Shalouf apparently met with
Billy Carter a second time, **/ and during this period,
Billy Carter received a more formal invitation to come to
Libya. 21/ Billy Carter called Donald Carter (no relation)
a realtor and longtime friend of the Carter family from
Gainesville, Georgia, to invite him to come with him to
Libyan pointing out that Libya needed American goods and
services, and that the Libyans had substantial monies to
invest in American real estate. 22/ Donald Carter sought
a briefing by an international affairs specialist and was.
advised that the Libyan regime was antagonistic to the
Camp David accords and could try to use Billy Carter to
embarrass the President. Don Carter attempted to dissuade
Billy Carter from going, but did not succeed. ***/
*/ The payment was made in Rome, when Leanza was returning
from Libya. It appears that neither Billy Carter nor Randy
Coleman knew of the $50,000 request or the $3,000 payment. 19/
**/ Jordan and Leanza recall this meeting; Billy Carter and
Coleman do not. 20/
***/ Donald Carter was briefed by Peter White of the Southern
Center for International Studies in Atlanta, Georgia. Both
Donald Carter and White spoke to Charles Kirbo, President
Carter's 1,=epso(ial attorney, about Billy Carter's planned -=:-
.trip, but ?sirro does not`recall telling President Carter.. 23/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
Carter, */.was alerted in August or early September, 1978,
Secretary to President Carter and a close friend of Billy
Libya. In some way, Phillip J. Wise, Jr., Appointments-
learned before Billy Carter's trip that he was going to.
Through several channels, some in the White House
Personnel in White House Learn of Billy Carter's Plans
that Coleman--and Billy Carter were planning a trip
o Libya. **/
Phillip Wise is a friend of Billy Carter's and has known
him for-; 15- years: :His -parents see -Billy-:Carter: often and. he
and Billy have many mutual friends and acquaintances . Wise
an
has .. had`' telephone- contacts- with both -Billy- Carter and-Coleman
and, in addition, Billy Carter's calls to the President
during business hours are-,cleared through Wise's office...
Wise also sees Billy Carter when he visits the President
in the Oval Office-, and he and Billy, "usually carry on. a.. . -
conversation... at least part of the time he's waiting."
The subjects cover a "range of topics," including what
Billy's been doing lately and politics. Wise was unable
to recall the substance of any of-the-.conversations except
one. 24/ .
**/Karl Inderfurth recalls Wise contacting him, and William B.
Quandt, also of the NSC staff, recalls Inderfurth contacting
him, as discussed below. There is no direct evidence as to
how Wise learned of the trip. Wise states to the best of
his recollection that he first became aware of the trip
after it began, from press accounts. He does not recall
arranging briefings prior to the trip; Billy Carter denied-
speaking to anyone in the U.S. government about the trip
prior to it, including Phil Wise and Quandt. 25/
White House records show telephone calls by someone
in the Presidential party, while traveling, to the number
for the Best Western Motel in Americus, at which Billy Carter
often received and made calls, on July 25, July 30, and
September 2, 1978. Also, Phil Wise's call-back log indicates
that on September 19, Coleman called and left Billy Carter's
service station as a return number. The log entry carries
the notation "talked." Wise assumes he returned the call
of September 19, but he does not recall the substance of
any conversation. 26/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
Wise called Karl Inderfurth,. Special Assistant to
Naticura,~ Security Adviser,. Z.bigniew Brzezinski,. asking
bin to eaST Cal-en art to discuss the trip,. and providing, a~.
phone r err... Tasdvr'fU-rt1i contacted. Coleman at that
nom. I$ng a to or f3:Fteen; minute coaszeasatto=,,
C ' o r x e r * s t a t e d t h a t a trip w a s p l a n n e d t o L b a a
asked ,abut ti-S'., ZCrli toward Libya- 2T/
Th er'fur^ subsequ?errtl]y asked: Wd lhtaN B.. Quandt of
the 1 at Qnarl, Se eur ty? C'auncil staff toa b:rd of C o lemam
about U..S..-Libyan re-iations~ as pregaratfom far, a. trip,
telling- Quandt: that he. waa_ relaying. a.. request by Wise'.. 281
Quandt. spoke to- Coleman: two or` three times:,, describing.
Libyan. involvement: irr, terrorist activities and the resulting
concern of' the U.S:.. government. Quandt told Colemam that
in light. of the Camp David negotiations scheduled for early
S'eptember',; 19'7'&,, C'olonea. Qadhafi,, head. of the Libyan govern-
ment,. might attempt to use, Billy Carter"S' presence. in,
Libya to embarrass the United:: States or President. Sadat. of'
Egypt. 29/
Quandt.testi.fied that during. one call, Billy Carter.
came on the line', and.. told. Quandt that. he did not need.
anyone in, Washington- telling him how to conduct his-pr ivate
business. According to Quandt, Billy Carter also said that
he "knew, more, about.. Libya. than. all you. State Department
bureaucrats-Put together," ' and generally conveyed the
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
0
impression that, "he wasn't particularly appreciative
of any of the points. that I might have conveyed" to
Coleman. 30/
Sometime in. August or September before the trip,
Coleman also talked with Don Hester, acting Libyan desk
officer at the State Department, and James K. Bishop,
area officer in charge of North African affairs, to
inquire concerning the U.S. position on travel to Libya,.
mentioning that Billy Carter planned such a trip. 32/
/ Hester then told an official on the National Security
Coundil staff, either Quandt or Gary Sick. Jack Watson,
then Assistant to the President for Intergovernmental
Affairs, may have then called to inquire about Billy
Carter's prospective travel.
President Carter states in the August 4, 1980 "Report
of the President to the Subcommittee of the Committee on
the Judiciary, United States Senate" (hereinafter called
"August 4, Report"), that lie was not aware before the trip
*/ Billy Carter denies talking to Quandt, or making such
a comment, noting he had met only one Libyan. 31/
**/ Hester and Bishop told Coleman that there was no ban
on travel to Libya, and Bishop may have confirmed this
in a letter to Coleman. 33/
***/ Bishop and Hester recall Hester's call to an NSC
official, and Bishop recalls Watson's return call. Watson's
recollection is that he never spoke with Hester, and never
spoke with anyone about Billy Carter's first Libyan trip.
Hester has no recollection of talking with Watson, but
recalls informing Thomas V. Beard. 34/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
that his brother was going to Libya. On September 25,
the day t8e trip began, or S.eptember'26, possibly in re
sporise? to a' cable from- Eag:leton,- sent on September' 24-,,
Hester d-dfftadted Thomas V. Beard, Deputy Assistant to
of SiI] Carter' 's' plans- and
the Pies derit; riforth rig. him
recomriending that Billy Carter be briefed upon his arrival
in Lib$t*. -Beard contacted Susari Clough,: the- President'`s
personal secretary, because he "was worried about (the
trip) politically (and) was worried about how it would
look in the Jewish-community and every community in this
country."' 36/ He indicated that the State Department
wanted to know whether the trip was official. 37/ Clough
then asked President Carter whether he knew his brother
was en route to Libya, and he answered negatively. 38/
Clough also contacted Sybil Carter about the trip. 39/ */
Clough then talked to Beard, and discussed the
proposed contents of a State Department cable. '/ Beard
relayed the desired contents of the cable to the State
Department, including a description of the trip as private
and a request that Billy be briefed. 4.2/ On September 26,
the State Department sent Eagleton a cable asking that he
brief Billy Carter on U.S.-Libyan relations. 43/ Accounts
of the trip appeared immediately in the U.S. press. 44/
V/ Clough inquired whether Billy Carter had left already,
and Sybil Carter told her he had. 40/
Beard recalls this; Clough recalls talking to Inderfurth
-about'. sending the cable. 41/
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
Billy Carter Travels to Libya
On September 25, Billy Carter and Randy Coleman,
accompanied by six Georgians and Shalouf, flew to Tripoli
with a stopover in Rome, arriving September 27. 45/ -They
were met at the airport by Shahati, and by.Eagleton, the
U.S, Charge d'Affaires in Libya. 46/ / During their
four-day stay, the Georgian group visited Libyan farms,
schools, and housing projects, and attended a series of
meals, receptions, and meetings. Some business discussions
took place 49/ and various gifts were received. Billy
Carter received four gold bracelets, a ceremonial sword,
a serving platter and a silver saddle as well as some local
currency for spending money. 50/
Eagleton and Billy Carter were together on several
occasions during the visit. Carter and other Georgians
were guests at a reception at the U.S.. Embassy on one
occasion. 50a/ Billy Carter gave Eagleton assurances
that he would not become involved in political discussions
with the Libyans. Leanza recalls that at a dinner at
which the Libyans mentioned the C-130's, Billy Carter,
*/ Several days before Billy Carter's arrival, Shahati
Told Eagleton the President's brother was coming. On
September 24, Eagleton cabled the State Department, in-
forming it of Billy Carter's imminent trip and requesting
details. 47/
On September 27, Eagleton first learned the time
that the group was about to arrive when Shahati called
to tell him, about an hour before arrival. 48/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
who had been drinking alcoholic beverages, stated that
he would try "to do something about it." Billy Carter
denied this in his testimony. There is no other evidence
that Billy Carter discussed the C-1.30's. Eagleton recalls
that although the Libyans raised political issues, Billy
Carter was not drawn into any political discussions. 51/ */
During the course of the trip Billy Carter learned.
that the Libyans were planning to send a delegation to
the United States in the near future. The Libyans' trip
was described as a trade mission and goodwill tour.
Billy Carter then invited the Libyans, in a general way,
to come to Georgia. 52/ On October 1,'Billy Carter re-
turned to the United States. **/
*/ Leanza recalls that the C-130 issue was raised at
dinner one evening. Jordan heard Shahati make a political
statement involving either the C-130's or a condemnation
of President Carter's peace efforts on. behalf of Israel
and Egypt, but no other discussion about aircraft.
Eagleton recalls that "as far as (Billy Carter's) public
expressions are concerned, I can verify that he refrained
from being drawn into political issues even though these
were raised a number of times by the Libyans." Eagleton
cable, 8/2/80. Carter labeled "completely untrue" Leanza's
statement about C-130's. Leanza's recollection, when
related to the FBI in 1979, became a focus of the Justice
Department investigation.
**/ On October 8, a week-long so-called "Peoples Conference",
'a _continuation of Libya's efforts to approach directly the
American people, began in Libya. 53/ A large contingent of
,Americans, attended, many of whom had been briefed on U.S.-
Libyan relations by the State Department at the request
of Richard Shadyac,a registered foreign agent for Libya
and counsel to the Libyan Embassy. 54/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
During Billy Carter's visit to Libya,,Eagleton sent
cables to the State Department describing Billy Carter's
schedule, his "restraint" from political comments, Eagleton's
briefing of him, the Libyan press coverage, and the impact
of the visit. 55/ At least three of the cables were.provided
to the White House, possibly to Beard and, through him, to
Clough, who placed at least two of them in President Carter's
personal files. 56/. A copy of one cable, dated October 1,
was sent by President Carter to Billy Carter on October 11,
with a handwritten note from the President: "To Billy, you
did a good job under the 'dry' circumstances." 57/ This
cable was classified "confidential," but had nonetheless been
sent originally in plain text and had not been encoded. 5$/
Billy Carter Prepares to Receive Libyan Delegation
After Billy Carter's return, several meetings were
held to discuss in generate possible business opportunities
with the Libyans and the establishment of some sort of trade
group to do business with the Libyans. They were attended
by Billy Carter, Coleman, their accountant Donny Roland,
.Leanza, Jordan, Hudgins and Jimmy Murray, part owner and
manager of the Best Western Motel in Americus, Georgia, and
friend of Billy Carter's. 60/
On November 2, Billy Carter sent Shahati a written
invitation to visit Georgia. 61/ Billy Carter had his
*/ Subsequently, in response to requests under the Freedom
of Information Act, the cable was released to Jack Anderson
and Maxine-Cheshire-22
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
l i
son-in-law, Mark Fuller, and Randy Coleman work with others
to help coordinate arrangements and scheduling of the Libyan
visit, an4 8#..ly Carter paid their expenses for this advae
work. Lai To aid In these arrangements, an advance group '`of
Libyans cane ' to Georgia, in the group were Shalquf -and
Popular Organizations In the Libyan Office of General, People's
Congress. / M4rray, Shalouf, Coleman, and Georgia State
Senator Floyd Hudgins, a participant in the September,. 1978
Mohammed a l Bur Ci,head of the Department of Parties and-
trip, discussed possible business dealings in agricultural
products. 64/ Randy Coleman recalls that one of the Libyans
also mentioned the C-130's. 66/
On December 6,-on Billy Carter's instructions, Randy
Coleman called Bishop at the State Department seeking per-
mission to host the Libyan delegation. On December 12, the
Department wrote Coleman that it had no objection, but warned
that the "Libyans hope to use such contacts to influence U.S.
policy toward their country and the Arab world." 661 Coleman
discussed this statement with Billy Carter although Billy
Carter does not recall'it. 67/
After the visit of the Libyan advance delegation,
Billy Carter instructed Randy Coleman to call Phil Wise and
request a briefing on Libya in general and also on the status
of the C-130's. 68/ Coleman did so, possibly on January 5,
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
1979. / Either directly or indirectly, '*/ Wise had Quandt
arrange a briefing for Coleman, and Quandt asked Morris
Draper, Deputy Assistant Secretary of State for Near Eastern
and South Asian Affairs, to provide one. 71/
Draper called.Coleman and informed him that Libya had
ordered eight.,..C-13Q's, that since 1973.. the U.S. had not
allowed Lockheed to export.these planes to Libya, and that
this policy was not likely to change.. Coleman responded by.
saying that Georgians were interested because the aircraft
were sitting on a.runway in Marietta, Georgia. 12/.
Libyan Visit and Billy Carter's Attempted Commodities
Dealings
A large group of Libyans, including a dance group,
made the trip to the United States, with Georgia as the first
of a number of stops. Billy Carter and a group of Georgians
met the Libyans at the Atlanta airport on January 8, 1979.
The next evening, Billy Carter hosted a reception for the
Libyans which was attended by several hundred people, including
*/ Extracts from the call-back log of Phil Wise contain an
entry for Randy Coleman dated January 5, 1979, shortly before
the arrival of the Libyan delegation in Georgia. Coleman
.recalls receiving a briefing about C-130 sales prior to the
arrival of the Libyan delegation. Wise does not recall men-
tion of the Libyan delegation visit in a telephone conversa-
tion with Coleman in early January, 1979. Draper does not
recall the date of the briefing but believes it was the second
half of January, 1979. 69/
/ Wise does not recall arranging the briefing. Quandt
does not recall whether he was asked to arrange the briefing
by Wise, Inderfurth or someone else in the White House. Since
Coleman asked Wise for a briefing, and someone in the White
House asked Quandt to give Coleman a briefing, a fair infer-
ence is that Wise passed Coleman's request, directly or
indirectly, to Quandt. 70/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
15
Lillian Carter and Ruth Carter Stapleton,, Billy Carter's
mother and sister,. respectively.. 73/ At the reception a
petition. supporting: the formation of a Libyan-Arab-Georgian
friendship, society was. circulated, with Billy Carter the-.first
to sign. / During the Libyans' visit, Billy Carter. took
them t d meet the Governor of Georgia, 15/ conducted a tour
of the Carter family peanut warehouse, and hosted several.
Libyans overnight at his home. 76/
Billy Carter, through Randy Coleman and others,, con-
tinued to pursue possible business dealings during the Libyan
delegation's visit. Early in that visit, Coleman called Bert
Lance, former Director of the Office of Management and Budget
and friend of President Carter, to obtain the name of someone
knowledgeable in commodities and foreign trading. 77/ Lance
suggested Robert L. Schwind, an Atlanta attorney and a friend
of Lance. Schwind recalls meeting with. Coleman at Coleman's
hotel room in Atlanta on the day of the reception. Coleman
said he represented Billy Carter and that the Libyans were
interested in buying Georgian commodities. Schwind talked
with Shahati about commodities later that evening at the
reception, and the next day with Coleman and Burki at
Coleman's hotel. **/
31/ The society's goal was variously described as improving
Libyan-U.S. relations, insuring that products exported to
Libya were of good quality, and making loans to Libyan
students. The Libyans h V talked of funding the society with
$1 million from Libya. 7 /
/ Coleman recalls first meeting Schwind the last or next
to last day of the Libyan visit. 73/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
16
businessman; Murray; and Roland. The group held a number of
meetings at the Best'Western Motel in Americus, and various
Out of these discussions emerged a group consisting
of Billy Carter; Coleman; Arthur Cheokas, an Americus, Georgia,
members of the group pursued the sale of commodities with the
Libyans. To this end, a list of commodities that the group
was prepared to sell was made available. 79/- In February,.
1979, Coleman and Murray met with Schwind and an associate
at the Hilton Hotel in Macon and it was agreed that Schwind
would send samples of commodities which could be purchased
from the Gold-Kist Corp., I/ to Burki at the Libyan Embassy
in Washington. 80/- The group had their own agreement as to
how any prospective profits would'be divided, with Billy
Carter securing at least 50 percent. 81/ In addition, Schwind
wrote Coleman a letter dated March 5, 1979 confirming a 50/50
split on commissions, with Schwind taking care of Bert Lance
out of his share and Coleman compensating Billy Carter out
of his share. 82/ **/
*/ The Gold-Kist Corporation is a conglomerate which is a
large commodity dealer in the Southeast. Since September,
1977, it has leased Carter Warehouse.
**/ In this March 5, 1979 letter, code words were used with
Libya referred to as "SANDBOX," Billy Carter referred to as
"THE MAN," and Bert Lance referred to as "B.L." Bert Lance
states that he had no knowledge of this letter nor did he
have any commission agreement with Schwind. 83/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
17
President Carter Aware of Brother's Problems
During the period of the Libyans' visit, Billy Carter's
concern for President-Carter. Billy Carter's hosting of the
Libyans attracted considerable publicity, particularly because
public statements, health, and finances became matters of
he was quoted as making a number of remarks viewed by some
as anti-Semitic. Press accounts concerning these remarks
received White House attention, as almost a dozen items on
Billy Carter appeared in the White House press summaries in
January and February. */
In January, President Carter, both directly and through
his press secretary, Jody Powell, disassociated himself in the
media from some of Billy Carter's statements and activities. '/
*/ White House press summaries included: (1) 1/11/79,
review of television account of Billy Carter's claim that
Atlanta Mayor Maynard Jackson did not meet with the Libyans
because of pressure from "the Jews;" (2) 1/12/79, "Billy
Carter, who is guiding a group of Libyans around Georgia,
denies that he is making the trip for personal gain. The
purpose, he says, is to improve relations between the U.S.
and Libya. The White House is embarrassed by the whole
affair, correspondent says. BC says 'there area (sic) a hell
of a lot more Arabians than Jews.' Atlanta Journal, January 10,
1979, criticizes Billy's remarks."; (3) 1/13/79, "Billy says
President knew of Libyans' visit in advance and never objected
(TV). Justice Department asks Billy to clarify his relation-
ships with the Libyans (TV). Philadelphia Inquirer and
Los Angeles Times criticize Billy on January 12. Baltimore
Sun says 'Billy Carter's anti-semitic mouthings while in the
employ of Libyan agents are an outrage.'"
**/ The White House press summary for 1/15/80 notes: "President
tells NBC-TV that he hopes the American people realize he has
no control over his brother and that it would be 'counter-
productive' for him to publicly censure Billy for his remarks."
The New York Times, 1/12/79, reported that "Jody Powell, the
White House Press Secretary, publicly denied that the President
shared any of Billy Carter's views that could 'be interpreted
as being anti-Semitic.'"
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
President Carter stated, in the August 4 Report, "Billy
visited with the Libyans and made a number of controversial
statements..... Billy's remarks received wide attention and
were roundly criticized by the American press and public.
I publicly deplored some of these comments myself." 84/
Also, on or about January 26, Dr. Zbigniew Brzezinski,
Assistant to the President for National Security Affairs,
was informed by an aide that Billy Carter had been advised
by Clinton Murchison, a wealthy businessman and-owner of the
Dallas Cowboys, and Irving Davidson, a lobbyist, to register
as a Libyan agent and that Carter had said he intended to do
so. 85/
'/ Murchison met Billy Carter when Murchison and Irving
Davidson, who worked for him, and Carter and Coleman were
all in Miami for the Super Bowl. Coleman recalls Murchison
had completed some construction work for Libya, and was at-
tempting to recover from the Libyans $200 million due him.
Coleman recalled that Murchison had built army barracks while
Billy Carter thought Murchison had built an air base. 86/
Coleman recalls that Murchison offered Carter a 1 percent
commission of the recovered money. 87/ Both Carter and
Coleman recall that they were not interested in the proposal;
Carter recalls a discussion with Murchison, but does not re-
call meeting Davidson. 88/ There is no evidence that Billy
Carter assisted Murchison in any way.
Davidson told W. Alan Roy, Libyan Desk Officer at the
State Department, of contact with Billy Carter; Roy told
Gary Sick of the NSC staff. Sick wrote Brzezinski a.memor-
andum dated January 26 that Billy Carter had discussed Libya
with Murchison and Davidson, that Murchison was on his way
to Libya to discuss an air defense system; that they suggested
Billy Carter register as a foreign agent and he said that was
exactly what he intended to do. 89/ Davidson does not remem-
ber any discussions with Billy Carter or Coleman about Libya. 90/
It would appear from the absence of any mention of this subject
in the memorandum that Roy, Sick, and Brzezinski were not told
that Murchison had proposed that Billy Carter assist him in
collecting the money due him from the !ibyans.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9 9
In early February, Billy Carter accompanied some of
the Libyans to Washington., D.G., as a ,guest of Shahati and
Build, .here a discussions was held with Burki regarding the
possibility of dealing In agricultural products with the
, While in Washington, Billy` Carter attendeda
Libyans. 21
reception at the Libyan Embassy !/ where he asked W. Alan
Roy, Libyan. Desk Officer at the State Department, about the
status of "those Boeing airplanes." Roy assumed that he was
referring to the Boeing 727's and replied that they had
already been transferred to Libya, to which Billy Carter
responded, '}good." 92/ *'/
*/ The Libyan government has called its diplomatic estab-
lishment in Washington, D.C. the Libyan People's Bureau since
September 1, 1979. We have called it, for this report, for
convenience and because most of the witnesses called it
that, the Libyan Embassy.
**/ In 1978, the Commerce Department had questioned the value
.for U.S. foreign policy of commercial export controls, and
at the end of May, 1978, it and Boeing requested State Depart-
ment reconsideration of the sale of Boeing 727 aircraft to
Libya. In response, the State Department initiated its recon-
sideration in late June, 1978. At this time, the State
Department decided to withdraw its objections to the export
of two 727's if certain preconditions were met. The precon-
ditions were: (1) that Congressional opponents be satisfied,
and (2) that Libya provide written assurances on the civil
use of the aircraft. By the end of October, these conditions
had been satisfied, and, in addition, Libya signed The Hague
Convention on Hijacking, a step away from its support of ter-
rorism. The State Department advised the Commerce Department
on November 2 that it no longer objected to the sale of these
two 727's.
With the decision on the 727 aircraft as precedent,
on December 22 the State Department indicated no objection
to a proposed sale of three 747 aircraft to Libya, and a
license was granted by the Commerce Department on January 8,
1979. The State Department hoped that these aircraft deci-
sions would not only be commercially advantageous, but would
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
told his brother ..that he- had, come to Washington to go., to the
In an interview . at-. that_._time,. Billy Carter said that he,, had
Also, while in.Washington, Billy Carter apparently
stopped in at the White-House and spoke to President. Carter.
Libyans' reception., that he.. was "friends with the Libyan
people," and that it was a goodwill mission. 93/ / After
his Washington visit,. Billy Carter then went to New York,C.ity
to attend.a United Nations reception. While there, Billy
Carter accompanied Shahati in appearances on two television
shows3 'Good Morning America," and the "Stanley Siegel
Show." 96/
As President Carter recalls, at this time the "members
of our family were also concerned about some of (Billy
Carteris) personal problems." 97/ Throughout the period from
November 1978 to February 1979, Billy Carter was drinking
heavily, and in January and February, 1979, was suffering
(Continuation of '/ on the previous page)
also open opportunities for more constructive dialogue on
issues dividing the two countries. 92b/ In the interim, on
'September 25, the State Department had decided not to oppose
the sale to Libya of Oshkosh trucks, after they had been
reconfigured so they could not be used as tank carriers.
There is no evidence that Billy Carter had any role in,
or influence on, the decisions affecting either these trucks
or the aircraft.
*/ Around this time, a State Department official detected
the beginning of a heightened sensitivity by the White House
and NSC-to matters concerning Libya, and attributed this to
the publicity surrounding the visit of the Libyan delegation. 94/
By the middle of March, the White House had informed the Stater
Department of its objection to senior level State Department
visitors to Libya in_thenear fut,ure. 95/
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
21
losses of memory. In late February, 1979, Billy Carter was
suffering losses of memory. In late February, 1979, Billy.
Carter was admitted to the hospital in Americus, Georgia,
for alcoholism and acute bronchitis; he remained there for-,
11 days. "then, on March 6 or 7, he admitted himself to the'
Long Beach Naval Hospital, in Long Beach, California-, for
treatment for alcoholism. 98/
Billy Carter's Financial Difficulties
Also in this period, Billy Carter's financial diffi-
culties, which had been developing over a long period, became
acute. As early as 1975 and 1976, he had been experiencing
financial problems. His expenses exceeded his income, which
derived principally from three sources: his fifteen percent
partnership interest */.in the Carter Warehouse, his salary
as manager of that warehouse, and his service station profits.
As of December 31, 1976, he had a capital deficit with the
warehouse business--in effect, a debt--of $125,728. 100/.
When Jimmy Carter became President on January 20, 1977, he
vested control of his majority interest in the warehouse
business in his trustee, Charles Kirbo, an Atlanta attorney.
Billy Carter continued as manager until September, 1977.
In 1977 and 1978 his income substantially increased as a
result of public appearances and product endorsements. 100a/
*/ Carter Warehouse has three partners: President Carter,
with a 62% interest; Lillian Carter, with a 23% interest; and
Billy Carter, with a 15% interest.' 99/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
22
In mid-1977, Billy Carter and Kirbo discussed Billy
Carter's buying the warehouse, but no deal was made. 101/
Instead, in September, 1977, Billy Carter quit as warehouse
manager. He borrowed from Carter Farms, wholly owned by-
President Carter, to pay off his debt to the warehouse.....This
debt was added to his other borrowings of $115,748 in 1977
and $84,510 in 1978, and to a mortgage of $100,000 on his
home and 58 acres of land in Buena Vista, Georgia. 1Ola/
Billy Carter's income from personal appearances began
to diminish after his return from his trip to Libya in
October, 1978, and almost ceased in early 1979, due to his
association with the Libyans and his problem with alcoholism,
leaving him with heavy debts and limited income. */ In
early, 1979, President Carter was aware of Billy Carter's
financial problems. On February 22, 1979, he discussed with
Hamilton Jordan, White House chief of staff, "the problems
with Billy--his health and his prospective additional visit
to Libya." / The next day, President Carter noted that he
*/ Tandy Rice, who, as head of Top Billing, Inc., managed
Billy Carter's public appearances, attributes the decline in
requests for his appearances to his alcoholism. Billy Carter
and President Carter attribute it to the Libyan controversy.
Since the problems occurred contemporaneously, their effects
are not readily separated. 102/
**/ From this note and subsequent notes by President Carter,
it appears that Billy Carter told President Carter that he
was considering a second trip to Libya. In February, the
State Department had learned of a proposed trip by Carter to
Libya, departing on April 1, and so informed the Embassy in
March. The Atlanta Constitution had carried a story about
this proposed trip on February 28. 103/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
14 P4044 PR #011 f fN t #49 w44
994P OW 91 P1990#4 ' ' 11 q 1 pq 49 ppy~ tq WQP4 944
WORM o +114 -1 R
4ffqlRftfq IM? em f toy R#hq IP PR WMIR of
H 4,111 4 041 Rf f4f 4I POI 19F #' f! W11441 V WRY
R4 4 H1TR, W04 94P OP 44 99 R4 POP HH qR#
f 0 W9414 0 8 401 so OP4 99 for PP9040 I
%ftor
O
I R *14 49 OPORROW PhO 0111Y P4rV@
~~~~~1~ti.P P had
9 9 .4 8 9} qq;;Or 4016M 5QQ- DO
..0 04
N
0100i 04, 0 P404 W49 k 0 bQ0491 Pompty 94- -40 in sign mr- 0 wo
O fAt t ! P$00 WAN 40
for M4040- g
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
understand the tax consequences of the proposed land
sale. 106/ */ On March 1, 1979, Billy Carter closed a deal'
with Kirbo which gave him temporary financial respite. The
real estate parcel was sold to Carter Farms, and, in return,
Carter Farms assumed the property's mortgage, paid off Billy
Carter's debt to Carter Farms, and paid off other creditors
of Billy Carter's.
The Inception of the Oil Negotiations and Other Events
of Early 1979
During the commodities discussions with the Libyan
delegation, a conversation with Burki had initiated Billy
*/ On February 24, President Carter noted that he had talked
to?Bert Lance, who was "to visit Billy this coming week, to
encourage him to take care of his health, his finances, and
to stay away from Libya for a while.'.' Lance subsequently
visited Billy Carter in Americus Hospital; told him that he
needed medical help and that he was in no shape to be off
traveling to Libya, or, for that matter, to any other country;
and may have talked to him about his deteriorating financial
condition, emphasizing that he needed to get well first.
Lance recalls that he probably called President Carter back
after his visit to inform him of it, mentioning that he did
not think Billy Carter would be in a position to make any
trips to Libya, at least in the near future. 107/
/ The purchase price was $317,583.98. The balance of the
'Poole mortgage of $63,654.16 was assumed by the purchaser,
leaving a balance of $253,929.82. Of this, $166,010.91 went
to paying off Billy Carter's debt to Carter Farms. The rest
went to other creditors.
Concurrently, Billy Carter gave Kirbo an option to
purchase his fifteen percent interest in the warehouse. This
option terminates January, 1981, and has not yet been exer-
cised. The purpose of the option is to simplify matters if
the warehouse were sold to a third party. 108/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
25
Carter's and Coleman's interest in oil dealings. Burki ad-
vised Coleman that Shahati wanted to see Billy Carter in
Rome. M/ From Bert Lance, Coleman had gotten the name of
a knowledgeable London banker. 110/ While Billy Carter
was in the hospital, Coleman, at his direction, traveled
to Rome on March 6, accompanied by Cheokas. 111/
In Rome, they met Shalouf; he advised that they should
not try to trade in more than one commodity with the Libyans,
and they chose oil'because it was easier to deal with and
more lucrative. 112/ :Coleman later met with Shalouf and
Shahati and discussed the possibility of obtaining an oil
allocation. Shahati said that he could foresee no problems
but would need to return to Libya and check. 113/ During
Coleman's meeting with Shahati, Coleman called Sybil Carter,
who called Billy Carter, who called Coleman back, and Billy
Carter and Shahati had a.brief conversation. 114/ Coleman
and Cheokas returned, visiting Greece, then stopping to dis-
cuss the oil business with the London banker recommended by
Lance. 115/
In a move that became important for his oil dealings,
Billy Carter maintained contact with Jack McGregor during this
V/ Coleman recalls Lance naming a banker; Lance recalls
mentioning the Bank of Commerce and Credit International.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
period. McGregor, an old friend of Billy Carter's, */ was
the executive vice president of Carey Energy Corporation,,
whose long-standing difficulties with Libya were being.
resolved in 1979 through Carey Energy's being acquired by
Charter. Oil, a large conglomerate headquartered in.
Jacksonville, Florida.**/ After the acquisition, McGregor
*/ Jack McGregor had taken an interest in Billy Carter when
he was darter's lieutenant in the Marine Corps in the late
1950's. About 1970, after Jimmy Carter was elected Governor
of Georgia, they resumed contact. In January 1979, McGregor
and Ed Carey, the owner of Carey Energy Corp., saw press
accounts of Billy Carter and the Libyan delegation. They
speculated on, but decided against, contacting Billy Carter
to repair their relations with Libya.
/ Carey Energy Corp., together with the Standard Oil
Company of California, had built a refinery in the Bahamas
which was about 50 percent dependent on supplies of Libyan
crude oil. In the early 1970's, Carey withheld payments
from Libya, Libya then withheld all crude, and Libya ulti-
mately brought an action in the Bahamas for liquidation of
Carey. As a resolution of the difficulties, in early 1979,
earnest negotiations began for Charter Oil to acquire Carey.
After an attempt to save Carey by employing the services of
former Senator James Abourezk failed, initial papers for
acquisition of Carey by Charter Oil were signed in mid-March,
1979.
Allegations have been made in the press that Billy
Carter's oil deal with Charter Oil was engineered by Robert
.Carter's
as part of a larger scheme to influence the U.S.
government to deliver planes to Libya.
The Charter Company, in its statement on contacts with
Robert Vesco, and Raymond Mason, Chairman of the Charter
Company, deny that Billy Carter's name was ever brought up
or discussed in conversations with Vesco. 116/ Mason also
denies that Vesco interceded with the Libyans during the
acquisition of Carey Energy, 117/ or that Vesco ever received
any fee from Charter. 118 /
Further exploration of this area would be beyond the
scone of this investigation; the Judiciary Subcommittee on
Improvements in Judicial Machinery has been authorized by
the Committee on the Judiciary to investigate- the.Department
of Justice's handling of various allegations-,- against-`the
Administration and Rob-e-rt Vesco, and upon receiving the Charter
Company's " statement , this Subcommittee Asked? that: Subcommittee-- to'
Pxnlore Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 ~`- Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-947
was retained as a'consultant to Charter Oil. 119/ In early
1979, McGregor became concerned about Billy Carter's health
and behavior, and urged him to seek help. They stayed-
in.-touch during Billy Carter's treatment in Long Beach Naval::
Hospital. 120/, In one phone conversation during this period,
Billy Carter indicated to McGregor an interest in doing
business in Libyan oil. 121/
Oil April 3, President Carter called Billy Carter, and_
told him that it would be a mistake and embarrassment for him
to go to 4ibya any time soon. Billy Carter said it would take
awhile to plan a trip even when he did want to go, and that
he would clear it with President Carter before he made that
decision. 122/ Billy Carter urged his brother to meet McGregor.
That day, President Carter sent Billy Carter a letter, stating
that a visit to Libya in the near future "would create severe
problems for us because of their threats against Sadat and
because they are fighting in Uganda for Idi Amin." In the
letter, the President also noted that he expected to see
McGregor, 123/ who was scheduled to participate in a White
House conference on hospital cost containment on April 4.
McGregor arrived before the conference's start, met
Phil Wise, and was taken into the Oval Office for a nine-
minute conversation and picture-taking session. President
Carter thanked McGregor for helping Billy Carter. McGregor
then offered his opinion that Billy Carter's troubles would
not be over after he left the hospital since.he would face
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Billy Carter left Long Beach Naval'Hospital on
April 26-,_ 1979--and met McGregor in Washington later the same
day. Billy Carter told McGregor that his income from ap-
pearances had dried up, that he faced legal expenses from
the Curran investigation, and that he faced mounting debts.
McGregor felt Billy Carter had diminishing possibilities for
obtaining loans. 126/**/ Billy Carter mentioned again that
someday he might be interested in doing business with the
President Carter was pleasant and non-committal. 125/
Billy Carter Seeks Oil Deal and Loan
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
substantial financial prbblems and legal expenses from the
Curran investigation.., McGregor suggested the need for a.
legal defense fund for Billy Carter, and offered his help.
Libyans in oil. 129/ Billy Carter then returned to Georgia,
where he was a subject of the Curran investigation.***/
McGregor also discussed a legal defense fund with Wise. 124/
**/ They explored the idea of forming a legal defense fund,
but Billy Carter was not enthusiastic. 127/
McGregor had approached former Senator James Abourezk,
thinking that he would be sympathetic to Billy Carter because
of his difficulties resulting from pro-Arab statements.
Abourezk, who had met Billy Carter casually-at several social
affairs, contacted three banks in South Dakota without
success. 128/
***/ Inquiries by the Department of Justice concerning the
Carter Warehouse began in fall, 1978, and continued through
1979. On March 21, 1979, Attorney General Griffin Bell
appointed Paul Curran as special counsel to investigate the
warehouse finances. Subpoenas were issued to Billy Carter
and his wife early in May 1979, and on May 19, 1979, Billy
Carter testified before the Curran grand jury. 130/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
The Libyans invited Billy Carter to Rome to discuss
the oil dealings about which Coleman had inquired in
March. ,111,/- Approximately one week prior to leaving, Billy
Carter told Coleman that he intended to ask the Libyans for -
a $500,0000 loan 132/ Billy Carter said that there might be
"politidal fallout," but that he needed-the money. 1331 In
June, l9Ts,.as reflected by telephone records subpoenaed by
the Subcommittee, *1 Billy Carter and Coleman flew to Rome
for a weekend. They met Shalouf, Shahati= and All el-Houderi,
who was then Shahati's deputy, and who now heads the Libyan
People's Bureau in Washington, D.C. 134/ Shahati told
Billy Carter and Coleman that he foresaw no difficulties with
*/ Pursuant to subpoenas issued by the Subcommittee, various
telephone records of subscriber information and long distance
toll calls were obtained and analyzed. Records were.made
available for differing periods by separate telephone companies.
Included were records of two home telephones of Billy Carter
(from July 1}79 to July 1980); the home telephone of Randy
Coleman (from September 1978 to July 1980); the telephone at
Horizon Farms, Plains, Georgia, used almost exclusively by
Coleman (from September 1978 to July 1980); the office tele-
phone at the Best Western Motel in Americus, Georgia used
frequently by Billy Carter, Coleman and Jimmy Murray regarding
matters considered in this investigation (from August 1979
to July 1980); the home and office telephones of Jack McGregor
(from January 1980 to July 1980); the office telephones of
Charter Company of Jacksonville, Florida (from November 1979
to December 1979); the office telephone of Thi-Cal Trading
Company, Bakersfield, California, operated by George Belluomini
and Ronald Sprague (January 1978 to July 1980). These records
reflect the fact of a telephone call being placed in which a
connection is made, even though the party being called may
then be unavailable to speak.
**/ Coleman's home telephone was used to call Italy on
June 14. Billy Carter's passport reflects his passing through
U.S. Customs in New York on June 17, 1979.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
an oil deal, so long as certain qualifications were met..*/
Billy Carter was also told that there should be no problem
with the loan, and that he would be advised later. 136/
Finally, Billy Carter was invited to Libya to attend the
tenth anniversary celebration, which was scheduled for the
following September.
Upon returning from Rome in June 1979, Billy Carter
contacted McGregor and met him in Washington on June 26 and
27. McGregor testified that Billy Carter told him that he
thought he could get an allocation of Libyan crude oil
because the Libyans liked him and felt responsible for the
financial trouble he had incurred as a result of his pro-Arab
statements and Libyan ties. McGregor recalls Billy Carter
stating that-the Libyans knew that his paid public appear-
ances and endorsements ceased following the extensive publicity
of his friendship with Libya, and that they expected nothing
of him in return, knowing he had no influence at the White
House. 137/
McGregor suggested several oil companies for which
.Billy Carter could seek oil, including Charter Oil Company,
a subsidiary of the Charter Company. McGregor said that
Libyan crude oil suited Charter's refinery, that he had been
impressed with the way Charter handled the acquisition of
*/ The qualifications were: (1) the Libyans would deal
only with oil companies directly, not through brokers, so
Billy Carter would have to be paid by the oil company he
represented; (2) the oil company would have to be one that
was approved by the Libyans; and (3) it would have to meet
certain standards to be set by the. Libyans. 135/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
31 .-
Carey Energy, and that Charter was a southern company-which
had shown a willingness to take public relations risks. Billy
Carter decided to go with Charter. He informed McGregor that
he was dealing with Shahati and Houderi, and asked McGregor
to have McGregor's friends at Charter Oil get in touch with
them to confirm their friendship with him. 138
In July, McGregor called Jack Donnell, President of
Charter Oil'-with the idea of Billy Carter obtaining.additional
Libyan oil for Charter. Donnell turned the matter over to
Lewis Nasife, President of the Charter Crude Oil Company,
another subsidiary of the Charter Company. 139/ Nasife
checked with officials of the Libyan National Oil Company
and its marketing arm, Brega Marketing, who confirmed that
Billy Carter's chances of getting an oil allocation were
good. 140/ 'lasife explains that Libyan oil is distributed
through three channels, one of which is through the government
hierarchy for political reasons such as promoting the Libyan
image in other countries. Nasife believes Billy Carter's
allocation would have come through this channel. 141/
In August, McGregor set up a meeting for August 17 at
Billy Carter's home, attended by Nasife, McGregor, Billy
Carter and Coleman. At the meeting, Billy Carter told Nasife
that he had strong contracts for approximately 100,000 barrels
*/ Hereafter in this report, no distinction is made between
Charter Company and others of its affiliates. They are treated
as one and are referred to as "Charter" or "Charter Oil."
**/ LNOC
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
per day; and that should Libya embargo oil to the U.S.,-
Billy Carter's contracts would be an exception to that.em-
bargo. 142/ He said that this was .a straight business deal,
with any commission to be paid to him in the United States. lam/
Subsequent to the meeting, Nasife sent Billy Carter two
letters dated August 21, 1979, one summarizing their dis-
cussions and setting forth the tentative agreement between
Billy Carter and Charter, the other suggesting guidelines
in negotiating the supply agreement with the Libyans. 144/
Meanwhile, in late July, Burki visited Plains and
told Coleman and Roland that Billy Carter's accountant and
lawyer should come to New York to discuss a loan. 145
Shortly thereafter, on or about August 5, 1979, Billy and
Sybil Carter, Coleman, Roland, and Helen Medlin, an Atlanta
attorney, */ flew to New York; the next day, Coleman, Medlin
and Roland flew to Washington with Burki and another Libyan. 147/
There they went to a Washington hotel, where they were intro-
duced by Burki to a Libyan banker named Saudi, and discussed
a loan for Billy Carter. The discussion lasted fifteen to
thirty minutes. Coleman said that Billy Carter wanted a
$500,000 loan. Medlin recalls saying the loan could not be
made directly by the Libyan government because of Billy Carter's
status as the President's brother, and because she believed
it would be contrary to U.S. law. The banker asked for a
assistance on the loan a week or two before the-trip.to"New.
him in the Curran investigation. .Billy Carter sought-Medlit'.$
/ Medlin worked for the Atlanta firm of Howard and Gilliland.
-- -- , . --- t- ------__4-
York. 146/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
financial statement and a list of collateral. After
the meeting, Burki told Medlin negotiations would continue
when Hilly Carter came to Libya at the end of the month.
148/ 4/ The group returned to New York, where they met
McGregor, and then to Georgia. 150/
Billy First Responds to Justice Department In-
vestigation
The conclusion of the arrangement with Charter Oil
apparently caused Billy Carter to make his first response
to the Justice Department investigation. That investiga-
tion had begun in January 1979. In that month, as noted
above, r;ewspapers had reported that Billy Carter was
hosting a reception for the Libyan delegation to Georgia,
and that there were proposals to form a "Libyan-Arab-
Georgian Friendship Society". The press also described
his trip to Libya in September 1978. These newspaper
stories came to the attention of the Registration Unit
of the Internal Security Section in the Criminal Division
of the Department of Justice, which routinely monitors the
news for activities of persons potentially subject to the
registration requirements of the Foreign Agent Registration
Act (FARA). 151/
*/ Coleman told the Libyan banker that Billy Carter wanted
a ten percent loan for five years, with his real estate
as collateral. 149/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
Based on those reports, Joel S. Lisker, deputy
chief of the Internal Security Section and chief of-the
Registration Unit, with the approval of his superiors,
sent a letter of inquiry to Billy Carter to determine
whether he'was obliged to register as a foreign agent. 152/
Receiving no response, Lisker wrote a second letter
which also went unanswered. On March 23, 1979,
Lisker called John Parks, an attorney for Carter, who
told him that he had written a proposed reply letter
for Carter, 154/ but Lisker received no such letter.
On April 16, 1979, Lisker requested that the Federal
Bureau of Investigation interview five participants in
Billy Carter's 1978 trip to Libya and in the proposed
friendship society. 155/ The FBI conducted the requested
interviews, including one of Coleman and two of Mario
Leanza. 156/ Leanza recalled Billy Carter saying in
*/ It is unclear when he learned of the inquiry letters.
Receipts for the letters were signed by Coleman and by
Frances Irlbeck, Billy Carter's secretary, who in the
ordinary course of business gave such letters to Sybil
Carter. Billy Carter does not recall receiving the
letters. However, the Justice Department inquiry had
been made public the day after it began, January 13, and an
allusion to the inquiry letters, partially confused with
the simultaneous Curran investigation, was made by the
host in an interview of Billy Carter on "Good Morning
America" on February 7, 1979. 153/.
Approved For Release 2011/09/27: CIA-RDP90-00552 R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
Libya that he would help the Libyans get airplane
deliveries from the United States,.157/ and this
became the focus of Lisker's subsequent investigation.
No interviewee mentioned any prospect of Libyan financial
aid to Billy Carter, or oil deals,'or any other deals.
involving Billy Carter, and Lisker's investigation did:.
not go into Billy Carter's finances. 158/. Following
these interviews, Lisker inquired at the Department
of State beginning August 31, and then at the Department
of Commerce about deliveries of planes to Libya. His
inquiries continued through April, 1980. Lisker was
told by the Department of State that it had not been
influenced or contacted by Billy Carter. Lisker con-
cluded from government records and interviews that
there were no indications Billy Carter had influenced
the executive branch's decision-making on planes for
Libya. 159/
During McGregor's meeting with Billy Carter on
June 26, McGregor asked if he had received Justice Depart-
ment foreign agent inquiry letters. When Billy Carter
.said he had, McGregor suggested he have his lawyers
send a letter to the Justice Department, and Billy Carter
responded positively. On August 20, 1979, three days
after Billy Carter concluded his arrangement with Charter
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
Oil, he wrote the Registration Unit that he was "now
considering whether to take certain actions which might
require my registration as an agent for another govern-
merit," and that he wanted registration forms. Lisker
sent him forms but Carter did not respond. 160/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
Sensitivity in the White House About Billy Carter's
Libyan Connection
As discussed above, during the visit of the Libyan dele-
gation, President Carter had publicly disassociated himself
from certain controversial statements made by Billy Carter,
and from February to April, President Carter had made various
efforts to, dissuade Billy Carter from making a second trip
to Libya, During spring and summer of 1979, there were
indications of sensitivity by some in the White House about
Billy Carters Libya-related activity. 161/
One area of sensitivity was that of aircraft for Libya.
In February 1979, Libyan troops had been observed in Uganda
supporting Idi Amin's army in fighting against the Tanzanians
and anti-Amin forces. Libya had used some of the C-130's
acquired before the 1973 ban and some of the Boeing 727's
owned by Libyan Arab Airlines to move supplies and possibly
as many as 1,500 troops. These planes were also used in
evacuating some of the 400 to 500 Libyan troops who were
wounded in the fighting. */ 162/
As a corollary to the November 2, 1978 decision to allow
sales of 727's to Libya, the Commerce Department in early
January 1979 granted Boeing a license to export three Boeing
747 aircraft to Libya. This export was not expected to take
* There is no evidence that two 727's sold in 1978, which were
the only two planes for which the Libyans had given specific
assurances on non-military use, were used in this airlift.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 -- Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
place until 1980. Under Secretary of State for Political
Affairs David Newsom testified that when reports of Libya's
military use of 727's were confirmed, "it left the State
Department with no alternative but to regard the 747's for
Libya then being manufactured as having 'potential significant
military application."' 163/
Vance and Deputy Secretary of State Warren Christopher
indicate, as reported in the August 4 report,"that in their
deliberations concerning the export of 747's there was no indi-
cation that Billy Carter was a factor one way or the other in the
formulation of White House views on this matter and that the
export permission was denied solely for policy reasons unrelated
to Billy Carter." 164/ Brzezinski states that "at no time
was my attitude on U.S. policy toward Libya affected, in any
direction, by Billy Carter's activities." 165/
Although policy considerations were ultimately decisive,
two Commerce Department officials expressed opinions, as
reported in the August 4 report, that there was concern in some
quarters in the White House that allowing export of the 747's
would erroneously be attributed to Billy Carter. A contem-
poraneous Commerce Department document states that "Secretary
Vance is also under pressure from the White House to take
punitive action against Libya because of the use of U.S. origin
aircraft in the Uganda operation, and because of the charge
that licenses for Boeing 727's and 7'47's were approved
through Billy.Carter's influence." 166/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
39
In addition, the White House's sensitivity about Billy
Carter's Libyan relationship was reflected after the announcement
of his second trip to Libya. As noted above, during his June
trip to Rome */ he had been invited to visit Libya during its
tenth anniversary celebration of the September revolution.
On July 16, 1979, he announced in a television appearance
that he intended to visit Libya. 168/
A White House memorandum of July 17, 1979 to Brzezinski
from his aide, Robert Gates, indicates that Billy Carter's plan
to visit Libya again had come to the attention of Susan Clough,
the President's secretary, whose conversations with Jody Powell
and Gates about the trip were reflected in the memorandum. **/
169/
According to the Gates memorandum, Clough and Jody Powell,
the President's Press Secretary, were both "very worried"
about "adverse. publicity." Clough requested that Brzezinski
"send a memorandum to State (which has heard about the trip and
is already questioning how to treat Billy) telling them to
treat it strictly as a visit by a private citizen and to extend
only such assistance as is consistent with such a trip." 171/
A memorandum to the Department of State was signed by Brzezinski,
advising that the State Department and U.S. Embassies should
treat Billy Carter's trip as a private one. 172/ On Beard's
*/ Coleman recalls first hearing of that invitation several
months later. 167/
Neither Clough nor Powell have any recollection of the
matter.. 170/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
instruction, Roy communicated to the Embassy in Tripoli that he
had received informal but authoritative guidance from the White
House that the upcoming trip was to be regarded as a private
visit, and that the Department should maintain a low profile.
173/
Gates recalls that Clough wished to have a copy of the
Brzezinski memorandum to give to Powell for use with the press.
Gates also had the impression that the President was unaware
of Billy Carter's intentions, and Gates suggested in his memor-
andum to Brzezinski that Brzezinski propose a joint recommen-
dation from himself, Clough and Powell to President darter that
try to dissuade Billy Carter.
Gates' suggestion.
Billy Carter's Second Trip
Dealings
In late August,
tenth anniversary
174/ Brzezinski did not act
to Libya and Pre-November
Billy Carter traveled to Libya, to attend
celebration of the September 1, 1969
revolution that brought Qadhafi to power. He was accompanied
by his wife, his son Buddy Carter, Jimmy, Murray and his wife,
and several friends, and was joined later by Coleman. 175/ Billy
Carter met with Shahati and gave him the August 21, 1979 letter
of agreement with Charter telling him that Charter Oil would be
the company he represented. Shahati thought Carter would be all
right. */
* Billy Carter passed that news to :1?cGrego_ in a telephone con-
versation while he was still in Libya, as refelcted in Billy
Carter's home telephone records, which show a call to.Jack
McGregor' s home on -September 11 and a call to Libya on. September
12. 176/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
41
During his stay, Billy Carter attended various ceremonies.
He recalls Frank Terpil, currently under indictment for fire-
arms violations, interpreting for him at a military parade.
Billy Carter was photographed in the company of terrorist
leaders and a number of representatives of radical governments.
176a/ Billy Carter stayed the last two weeks specifically to
see Qadhafi but he*never saw Qadhafi. While in Libya, Billy
Carter also saw the American Charge, Eagleton, several times
and was his guest on a social occasion. 177/
After three weeks in Libya */ Billy Carter returned to the
United States.. When he arrived, he called McGregor to tell him
that the oil deal was "going along pretty good." 178/ Telephone
records suggest, however, that after an immediate round of.tele-
phone calls to McGregor there was little or no activity with
regard to the oil deal until after the Iranian hostage crisis
began. / On October 23, Billy Carter and Coleman went to
New York City for Billy Carter to appear the next day on the
"Today Show." 179/
While in New York City, Billy Carter and Coleman met with
Mansur Kikhia, then U.N. Ambassador from Libya, who "had
expressed a desire to talk to [Carter]." 180/ Kikhia
mentioned an article that had appeared in the New York Times
*/ Billy Carter's passport indicates he arrived August 28 and
left September 18.
**/ McGregor was called from Billy Carter's home telephone twice
on September 28, and from the Best Western Motel office telephone,
which Billy Carter often used, on October 1, 1979. The next
calls to McGregor and Charter Oil appear November 28 and 30,
respectively.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
on October 1, 181/ written by William Safire, connecting him
and John White, Democratic Party Chairman, at a meeting in
Washington. Kikhia was extremely upset that the article
might embarrass White. Kikhia wanted Billy Carter to convey
to the President, if he would, that Kikhia would apologize if
the article embarrassed the Administration. Kikhia said that
his meeting with White had been a chance meeting at a motel,
terrace in Washington. 182/
From New York City, Billy Carter and Coleman went to
Washington, where they went to the Libyan Embassy and met with
Dr. All E1-Houderi, head of the Libyan People's Bureau in the
U.S.; who was the only Libyan in the U.S. with whom Billy Carter
had contact on both the oil and the loan deals. 183/ During
that time, Billy Carter believed that Libya would let oil.
contracts in January, and he recalls pursuing that matter at that
time, 184/ and specifically recalls discussing both deals with
Houderi, who said they were coming along all right. 185/
Following their return from Washington, Billy Carter or
Coleman apparently remained in touch with the Libyan Embassy
in Washington in late October. In November, they also may have
given some consideration to a continuing effort to arrange a
*/ .As reported in that article and elsewhere, a grand jury in
New York has been investigating an alleged Libyan bribery scheme
in which a meeting between White and Kikhia.in Washington played
a significant role.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
43
commodities deal with Libya.*/
White House Aware of Justice Department Investigation
During fall 1979, prior to the Iranian hostage crisis, the
White Houa had learned, through the State Department, of devel-
opments regarding Billy Carter. Thomas Beard, who had brought
word of Billy Carter's first trip to Libya from the State Depart-
ment to the White House staff, did the same for his second trip to
Libya in September 1979. Also on August 31, Lisker contacted
the State Department seeking documents about Libyan aircraft
sales and on September 4, W. Alan Roy, the Libyan desk officer at
the State Department, told this to Beard.A memorandum from
Newsom to Christopher dated August 31, 1979,.drafted by an unknown
person, suggests an earlier contact and suggests the White House
first broached the subject and gave instructions:
Subsequent to the Justice request, Tom Beard of
the White House staff contacted NEA (Near East-South
Asian Bureau) concerning Carter's present trip to
Libya. Beard stated that a Justice request for
documents involving Carter would probably be
forthcoming and inquired concerning information on
file. Informed that NEA was aware of no information
of a negative nature, Beard advised that the
*/ As discussed above, early in 1979 Schwind and Coleman had dis-
cussed a commodities deal with the Libyans. While in Libya in
September 1979, Coleman had had Schwind send a telex to the Libyan
Foreign Liaison Office in Tripoli concerning Gold-Kist's ability
to supply agricultural commodities. 186/ Schwind attempted to
assist Billy Carter and Coleman in a November 1979 sale of Moslem-
killed poultry through a London broker to Arab countries but
prices were too high and adequate quantities could not be obtained.
187/ Telephone records suggest that these efforts continued from
August to November 15 but then subsided.
**/ Beard recalls the conversation; Roy confirms Beard's account
and dates it at September 4.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
Department should follow routine procedures
in this case.
From the FBI interviews in spring and summer, 1979,
the Justice Department had learned that Shalouf brought a
gold-mounted saddle to the United States with the stated
intention of giving it to President Carter. The Libyans had
given a silver-mounted saddle to his brother. On August 29,
1979, Lisker called the White House gifts unit to ask if such
a saddle had been received, and was told it had not. 188/
On September 19, a more formal inquiry letter was sent to Lloyd
Cutler, as Counsel to the President. Cutler forwarded the
Justice Department letter to Michael Cardozo, Deputy Counsel. 189/
Cardozo instituted two lines of inquiry within the White House
prior to preparing his response. First, he inquired of Clough,
who checked with President Carter by sending him an inquiry
note. 190/ President Carter wrote "no" on the note, and Clough
told Cardozo. Cardozo also inquired of the White House gifts
unit and learned there were no records of receipt during the
-Carter Administration of any gift from Libya. On October 16,
Cardozo wrote the Justice Department a letter advising that there
was no record of such a gift. 191/ Further investigations by the
Justice Department traced the saddle only to delivery to the
Libyan Embassy in Washington. 192/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
Although U.S. relations with Libya were at a low
ebb, on June 17, Under Secretary Newsom met with
Major Jallud, Qadhafi's deputy in Tripoli. The frank-
ness of the meeting, despite the absence of tangible
results, encouraged further contacts in October. Then
Vance met with Libyan Foreign Secretary Turayki on
October 3 at the U.N. General Assembly to discuss
U.S.-Libyan relations. Vance and Turayki agreed
that discussions between the two countries should
continue and, later in the month, designated Newsom
and Kikhia, respectively, as the points of contact.
During the last week in October, around the time
when Kikhia met with Billy Carter, Newsom arranged
to meet with Kikhia on November 8. 193/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
Situation on the of Hostage Crisis
Thus, on the eve of the Iranian hostage crisis,
Billy Carter had been discussing business with the Libyans
at many meetings in the previous year without closing the
deal in commodities or oil that had seemed close but was
always out of reach. Since June, he had been discussing
a loan deal with the Libyans, which would relieve his
pressed financial condition. His discussions on these
subjects had been with the highest ranking Libyan diplo-
mats dealing with the U.S., particularly Shahati, Houderi,
and Kikhia. The imperfect but objective evidence of
telephone records suggests that oil negotiations had
become quiescent.
Important Libyan officials had devoted considerable
time to cultivating the relationship with Billy Carter,
although no evidence has been found that he had done
anything concretely useful for them. In October, according
to his testimony, their U.N. Ambassador gave him a message
about the John White matter to be conveyed to President
Carter.
In January 1979, the Administration had been
embarrassed by Billy Carter's controversial statements
while hosting the Libyans, from which President Carter
had had to disassociate himself publicly. In February,
?arch, and April, President Carte? had tried to dissuade
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
his brother from a second trip to Libya; ultimately,
Billy Carter had nonetheless gone back to Libya.
During that same period, Billy Carter's Libyan
relationship.was undoubtedly an irritant in the
export license degisionma'_cing.process. In August,
the White House monitored that second trip, and was
aware of the Justice Department's investigative
inquiries at the State Department and the White
House gifts unit.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
II. THE MIDDLE PERIOD: HOSTAGES, OIL, PAYMENTS AND
INTELLIGENCE
The Hostage Crisis
On November 4, 1979, Iranian militants seized the
U.S. Embassy in Teheran and took 65 American hostages,
confronting the United States with an historic challenge.
The Administration immediately undertook an international
campaign to mobilize world public opinion and "generate
pressure on behalf of the safety and, if possible, the
release of the hostages." 1/ Despite anti-American demonstrations,
some violent, in other Islamic countries, the United States
sought the support of Islamic countries in this effort.
According to State Department officials and the
National Security Council staff, the appeals to the Islamic
countries included efforts to have Libya "join in with all
the other voices" opposed to the hostage-taking. On
November 8, four days after the seizure, Undersecretary
Newsom met with Libya's U.N. Ambassador Kikhia in New York
and requested Libya's support. However, while Libyan
officials offered private expressions of disagreement with
the hostage-taking, public messages from Tripoli continued
to support the Iranian militants. 3/
On November 15, Libya's Foreign Minister Turayki
publicly urged other Moslem nations to boycott trade with
the United States to protest the freeze on Iranian assets.
Undersecretary Newsom condemned such statements when he
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
spoke with Libyan Ambassador Kikhia again on November 16. 4/
On November 17, 18 and 19, Charge Eagleton conveyed a similar
message to Libyan officials in Tripoli 5/ and recommended
that Libya's Charge, Houderi, be called in "at a fairly
high level" to hear a similar message.
Billy Carter is Contacted
The President and Dr. Brzezinski 10/ recall
during the- third week of November First Lady Rosalynn Carter
sought Billy Carter's. assistance on the hostage issue. The
First Lady recalls making a telephone call from Camp David
to Billy Carter the evening of November 19, 1976. As stated
in White House Counsel's letter to Subcommittee Counsel of
September 29, 1980,
[hier recollection of the conversation is that
she asked Billy whether he thought that his
Libyan friends might of of help in connection
with the release of the American hostages in
Tehran. Her recollection is that Billy Carter
replied that he thought the Libyans might be
of help.
Billy Carter's recollection of the conversation is that
Rosalynn Carter "asked me did I think I might talk to some
A cable with this recommendation was received at State
by Under Secretary Newsom and the Bureau of Near Eastern
and South Asian Affairs. According to Newsom, he had already
spoken with Ambassador Kikhia in New York. Inasmuch as
Newsom had already approached Kikhia and there had been
three different approaches in Tripoli, Newsom concluded
that "the message had gotten home" and thus no specific
action with respect to Eagleton's recommendations was necessary. 7/
At this time, State Department officials had met on
several occasions with Houderi and had developed a "good
working relationship." 8
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
of my friends in Libya about helping with the U.S. hostages
in Iran and I said yes and that was basically the conversation.
The First Lady informed the President of this conversation
either that evening or the next morning and suggested that
Billy Carter's Libyan friends might be helpful in the hostage
situation. On the morning of November 20, the President
asked Brzezinski to explore this further with Billy Carter.
Early the morning of the 20th, before the President
talked to Brzezinski, Billy Carter drove from home to the
Best Western Motel, from whence he called the Libyan
Embassy but was unable to reach Houderi. The motel
office phone was immediately used to call the White
House. 15/ ***/ The President made his call to Brzezinski
*/ While the First Lady's logs do not contain an entry for
a November 19 call to Billy Carter, White House records
reflect a call1from Camp David to Billy Carter's residence
at 10:57 p.m. _
**/ Brzezinski was not clear whether the First Lady actually
asked Billy Carter to arrange-for a meeting with Libyan
officials. Brzezinski also testified that he did not "involve"
Billy Carter in the hostage situation because by the time 14/
he contacted Billy Carter, Billy Carter was already involved.
***/ Best Western telephone records reflect a 9:40 a.m.
call to the Libyan Embassy and a seven-minute call at 9:45
to the White House from the office telephone. White House
counsel advise that they have no record indicating to whom
the call was made or whether it was completed.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
51
from Camp David at 10:21 a.m.-that morning, 16/ According
to Brzezinski, the President said "that Mrs. Carter had
asked Billy Carter if Libya could be helpful on the hostage
issue, and asked me to follow-up with Billy." 17/ White
House records also show a call from Camp David to the Best
Western a few minutes later, at 10:29 a.m. The Subcommittee
was unable to identify either the white House recipient of
the Best Western call or the Camp David caller to Billy
Carter. Billy Carter then unsuccessfully tried to reach
Houderi for a second time at 10:42 a.m.
As a result of his conversation with the President,
Brzezinski called Billy Carter at 10:50 a.m. "to ask him if
he could somehow be helpful in getting Libya to take a more
constructive posture on the hostage issue. I asked if he
knew Houderi, and I said that I would be happy to meet
Houderi personally to discuss the importance of Libya disassociating
itself from the kidnapping."19 / Subsequently, the White
House was called again and a third unsuccessful attempt to
reach Houderi was made.
*/. Billy Carter has some recollection that he spoke with Rosalyn
Carter on the morning of the 20th, although he could not reca He
conversation. 1/ White House counsel have advised counsel for
the Subcommittee that the call was placed by someone other than
the President, and that the President's logs do not show a call
by him to the Best Western Motel office or to Billy Carter on
November 20.
**/
Best Western records.
.***/ Best Western records. In addition to the calls from
Rosalynn Carter and Brzezinski described in the President's
Report, Billy Carter may have had three additional conversations
with someone at the White House or Camp David on the morning
of November 20.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 " Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
Arriving in Washington late that afternoon, Billy Carter
proceeded directly to the living quarters of the White House,
and called Brzezinski's office to leave word of his arr_ival. .28/
When Brzezinski returned-the call, */ Billy Carter said
that he would be glad to help but "wanted to speak.to Secretary
(of State) Vance and get his permission" before he "got
involved between two governments." ?2/ Brzezinski subsequently
called Vance to inform him that "a contact with the Libyans
through Billy Carter was being explored." 23/ He recalls
Vance commenting that this initiative "might well be worth
?/ a try." 4 Vance also remembers talking briefly with
Brzezinski, but recalls expressing skepticism about the
prospects of using Billy, but indicating that he would not
object. 25/
At Brzezinski's request, Vance called Billy Carter
at the White House residence on November 20 and indicated,
in a brief conversation, that the State Department would
have no objection to his contacting the Libyans and urging
26/
their support for the release of the American hostages.
Billy Carter says Vance "told me I could talk to them. I
would not say he gave me a green light. He said it was
fine with them, so I set up an introduction." ?Z/ Billy
Carter again tried to reach Houderi and this time learned
that Houderi was not in town, and would return the following
Brzezinski's telephone records document a 5:33 p.m.
call to Billy Carter. ?l/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
53
week. Billy Carter then informed Brzezinski that a meeting
would be possible the following week. 2_8/ */
Before returning to Georgia on November 20, 1979,
Billy Carter saw the President when he returned from Camp
David. The President's dictated note of November 20 states,
"Billy was at the White House, having come up at Zbig's
invitation. I told him and Zbig to get together and discuss
what message we might pass on to the Libyans. 3-0/ Billy
Carter recalls that the President also called him the following
evening, November 21, 1979, "to see if everything was all
right." 31/ ***/ On November 22 during the week intervening
between the White House approach to Billy Carter and the
subsequent meeting, the Libyan Foreign Secretariat issued a
formal statement that "in our view the hostages should be
release-3." 32/ Two days later the U. S. Charge was
sutnmoned to the Foreign Minstry in Tripoli and told that
the November 22 statement was of-f.icial -Libyan policy
*/ Brzezinski's telephone logs reflect a 7:43 a.m. call
from Bil'ly' Carter ?and a 7:44 p.m. call to Secretary Vance.
Coleman was also trying to locate Houder.i.. 29/ Coleman's
telephone records show an 8:06 p.m. call to the Embassy and
an 8:08 p.m. call to an embassy employee, Mohammed Tarhuni,
in'Alexandria, Virginia..
**/ White House records indicate a call from Camp David to
illy Carter's home on November 21, 1979. White House
counsel has advised counsel for the Subcommittee by letter
of September 29, 1980 that the President's telephone logs
indicate that the President called Sybil Carter.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
54
and that Libya would try to use its good offices to seek
the release of the hostages. 33/ Since neither Billy Carter
nor Brzezinski had spoken to Houderi or any other Libyan
official about the hostage situation before November 22,
there is no reason to believe that these Libyan statements
were the result of the decision to use Billy Carter'in the
hostage-matter.
Brzezinski was aware of Newsom's and Eagleton's
contacts with the Libyans 34/ but neither he nor, apparently,
anyone hlse at the White House involved in using Billy
Carter discussed the State Department initiatives with the
officials involved.. 35/
Both Brzezinski and the President have described
their views regarding efforts to aid the hostages at the
time the White House approached Billy Carter on November 20,
1979. Brzezinski states "we all felt strongly that we owed
it to the hostages to try every conventional and unconventional
approach, even if there were only a slim possibility of
success." 36/ The President similarly asserts that
my major preoccupation was the release of the
hostages, and I was ready to try any channel
that could help us reach this goal. The
Muslim community places great importance on
family ties, and I believed that a request
arranged with Billy's participation would be
regarded as coming more directly from the
President and might supplement the efforts
already being made through normal State
Department channels. I recognized there was a
risk of criticism in asking Billy to help but
I decided to take the risk. 37/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
Brzezinski conceded that the use of Billy Carter was not
the product of otherwise inadequate lines of communication
to Houder i. 38/
At the time of the November 20 approach to Billy
Carter, Brzezinski was aware of Billy Carter's Libyan visits,
of his opting of a Libyan delegation and of the Department
of Justice FARA investigation. "We had knowledge that
Billy was seen as a friend to them, perhaps excessively
friendly .,.." 39/ As early as January and September
1979, Brzezinski "had a general knowledge of some controversy
on the subject, including claims by some columnists that
Billy Carter was an agent, and Billy Carter's statement to
the effect that he wasn't, and he felt that he shouldn't,
have to register". 40/ Brzezinski had been informed of
*/ Brzezinski did not recall having seen a memorandum,
dated January 26, 1979, from Captain Gary Sick of the NSC
staff reporting an account of a conversation in which Billy
Carter was urged by an acquaintance to register as a Libyan
agent. During his testimony, Brzezinski questioned the
significance of this memorandum which:
involves a report to me by a member of my staff
that a member of the State Department reported to
him that a registered Israeli agent reported to
the Department of State officer that he had said
to Billy that he ought to register as an agent,
and Billy responded that he should. I did not
consider that exactly to be first-hand information. 41/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
White House staff concerns about Billy Carter's Libyan
activities in a memorandum from his special assistant in
July 1979. 42/
Brzezinski denies having had any knowledge,
about Billy Carter's financial situation or financial overtures
to the Libyans. 43/ The President knew about.Billy Carter's
Libyan relationship and has been aware of his brother's
bad financial circumstances since early in 1979.
The Subcommittee found no evidence that the possibilities
that Billy Carter was a foreign agent and that he had a
financial relationship with Libya were considered in deciding
to use Billy Carter in the hostage matter. Furthermore,
*/ The President's knowledge of this relationship at this
time is stated in White House counsel's letter of September 29,
1980, as follows:
As of November 20, 1979, the President knew that
Billy Carter had visited Libya on two occasions and
had been a host at a reception in Atlanta for a
Libyan Trade Mission that had visited the United
States in January 1979. He may also have known that
Billy Carter had arranged for a Libyan official to
appear on a morning television show and had performed
other public relations functions in connection with
the Trade Mission's visit. He was also aware of
press reports that the Department of Justice had
initiated an investigation as to whether Billy Carter
was obligated to register under the Foreign Agents
Registration Act. He did not know of Billy Carter's
efforts to obtain a loan from the Libyan Government,
nor did he know of any business dealings between
Billy Carter and Libya, including specifically,
Billy Carter's efforts to obtain an increased allocation
of Libyan oil for an American oil company or such
efforts as he may have pursued in the commodities
field.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
57
neither Brzezinski nor anyone else at the White House during
the week between November-20 and 27 sought additional information
concerning the nature of Billy Carter's relationship or
possible financial arrangements with the Libyans, either
from intei3.i.gence agencies or from others at the White
House, the Department of Justice, the State Department or
from Billy Carter himself.
November 27 Meeting
On November 26, Billy Carter and Coleman began driving
to Washington. Along the way, they telephoned the Libyan
Embassy and requested a meeting with Houderi the following
day. */ Upon their arrival on November 27, Billy Carter
and Coleman went directly to the Libyan Embassy. There,
they met with Houderi and, after a general conversation,
Billy Carter asked if Houderi would "meet with Dr. Brzezinski
about the Iran hostages." 44/ Houderi said he would have
to check with his government. The two Georgians then went
to the White House living quarters and Billy Carter called
Brzezinski's secretary to announce his arrival. Iouderi
later called to say that he would be available that afternoon,
and Billy Carter informed Brzezinski the meeting was set.
*/ A five-minute call at 3:43 p.m. was charged to Billy
Carter's telephone from Jonesboro, Georgia, an Atlanta
suburb.
45/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
Billy Carter recalls that Brzezinski said the meeting would
be at 4:30 and he "would like me to attend." 46/
Billy Carter and Coleman */ met Houderi in the waiting
room and the three proceeded to Brzezinski's office for the
meeting. 52/ The meeting lasted about twenty minutes. 53/
Brzezinski, Billy Carter and Coleman agree that the meeting
was informal and general. Brzezinski and Houderi discussed
their mutual university ties to New York, and Brzezinski.
then asked Houderi for Libyan help in securing the release
of the American hostages. 54/ Billy Carter does not recall
that Houderi asked for any favors from the United States,
or that Brzezinski discussed any possible U.S. policy
*/ There was some variance in testimony concerning Coleman's
attendance at the meeting. Apparently Brzezinski had never
heard of Coleman and was unaware that Billy Carter had
invited him to the meeting. Brzezinski was surprised to
see Coleman, but "[s]ince this was a session in which an
outside party was already present," he did not want to
create a social scene. 47/ Brzezinski also testified that
Billy Carter identified Coleman as his associate but "I had
no idea... Randy Coleman was a business associate...."
(emphasis supplied.) 48/ Billy Carter waned Coleman
included in the meeting "as a witness" 49 because it would
.be best to have "somebody there in case I was doing something
illegal." 50/
Coleman recalls that "when we met Dr. Brzezinski at
the door ... he didn't want to let me in and Billy said I
could come in or something. Dr. Brzezinski wanted to know
who I was and was I concerned in this ... and I think Billy
made the statement that 'he is with me' ...." 51/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
changes. 55/ However, Coleman stated that Brzezinski told.
Houderi
(t]hat any differences of opinion could be
discussed maybe at a later date. Mr. Brzezinski
even gave him his phone number and told him to
please be in touch with him if they were able
to do anything with the hostages and if he had
any problems that he felt like that they
should start talking about face to face in the
neaI future.
Brzezinski believes he expressed hope that U.S.-Libyan
relations 'Would improve and said that he would be available
to Houderi if Houderi had anything further to say. 57/
Neither Billy Carter nor Coleman took an active part
in the session. Although Coleman recalls Houderi taking
notes, 58/ Brzezinski neither took notes nor recorded by
memorandum what he termed a "primarily exploratory" conversation. 59/
Brzezinski described the purpose of the meeting:
It was to underline to Mr. El-Houderi that
which had been communicated first to all
privately to the Libyans by the Department of
State, and secondly, to underline to him that
which was known more publicly, namely that
this was a matter of the highest importance,
one to which this country was attaching great
significance, one which the President tlwas
deeply and personally involved in.
He also characterized the meeting as "peripheral" and "not
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
60
a terribly important initiative" among the efforts'to release
the hostages. 61/ */
After the-meeting, about dinner time, Billy Carter
saw the President and spoke about the meeting. Billy Carter
recalls saying only that the meeting with Houderi had occurred
and was a good one, without discussing Libya or the hostage
crisis. The President's dictated note of November 27 gives
a more detailed account of the meeting, which may have come
from Brzezinski. 64/ The President writes:
Billy had the Libyans' Charge come over to
meet with Zbig. The meeting was a very good
one. I think for the first time the Libyans
have ever been in the White House since I've
been here. They promised to do everything
.possible with the students and with Khomeini
to get the hostages released. We told them
that we would like to have better relationships
with the Libyans and with the government
itself. 65/ .
Although the meeting was not "private" and was an
"essentially semi-public" session,66/ Brzezinski apparently
did not inform others on the NSC staff about it. t l/ Other
*/ Brzezinski also testified that "[tio me this activity
was marginal at best. To him [Billy Carter] it was his
first and I suspect only venture into international diplomacy,
and therefore it probably loomed somewat larger on the
scale of things for him than for me." 2/ According to
Libyan experts consulted by the Subcommittee staff, the
Libyans would perceive Billy Carter as having some entree
to the powerful in the U.S. by virtue of the presence of
Billy Carter and Coleman at the November 27 meeting. L3_/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
61
than his general conversation with Vance on November 20
about possibly using Billy Carter as a go-between, Brzezinski
did not inform the State Department. Apparently, Brzezinski
discussed Billy Carter's efforts only with the President,
probably duringa morning briefing on November 28. 70/ **/
The State Department, however, learned of the November 27
meeting on November 29 when Charge Eagleton cabled Qadhafi's
response to Brzezinski's November 27 message, 72/ ***/ and
when Libyan Desk Officer Roy visited Houderi at the Embassy.
Neither Houderi nor Qadhafi, however, mentioned Billy Carter's
role in and attendance at the meeting to State Department
officials. These officials and members of the NSC staff
remained ignorant of Billy Carter's and Coleman's presence
*/ Although Brzezinski has no specific recollection, he
testified that he was confident because of his usual practice
that he informed Vance after the meeting. 68/ Vance has no
recollection of being informed. 69/
**/ For example, Jody Powell participated in meetings and
discussions of the hostage situation in November and December
.1979 but does not recall being aware of Billy Carter's role
in the November 27 meeting. 71/
***/ The cable related Qadhafi's expressed desire for closer
U.?.-Libyan relations; his opposition to the hostage-taking;
his observation that the Libyans had already intervened
with the Iranians; and his cooperation in having sent a
Libyan delegation to meet directly with Khomeini. The NSC
staff also received the Eagleton cable. 73/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
62
at the meeting until their participation was reported in
the press. */ 74/
The evening of November 27, after the meeting, Houderi
picked up Billy Carter and Coleman at the White House and
the three dined together. 77/ The following day, November
28, a series of calls to Jack McGregor, Charter Oil, and
the Libyan Embassy began. **/ As Billy Carter and Coleman
drove through Virginia to Georgia, they placed two calls to
McGregor, the second having a six-minute duration.
Billy Carter denies telling McGregor of the Houderi-Brzezinski
meeting. 81/ The purpose of the calls, according to McGregor,
was to urge McGregor to reach Lewis Nasife at Charter Oil
and have him contact Houderi for assurances that Billy
Carter would receive extra oil allocations. 82/
*/ Although he does not recall it, it appears that Phillip
Wise knew of Billy Carter's and Coleman's involvement in
the November 27 meeting. 75/ Coleman remembers Wise asking
Coleman and Billy Carter what they were doing in the White
House on November 27. "I told him that we were setting up
a meeting with the Libyan government and Mr. Brzezinski,
and he said, 'I don't want to know anything about it.' and
he turned around and walked back in his office." 76
**/ Between Billy Carter's and Coleman's October 24 meetings
with Kikhia in New York and Houderi in Washington in mid-
November, Best Western and Horizon Farms telephone records
reflect nine calls to the Libyan Embassy.
***/ The McGregor calls are the first appearing on telephone
records of. Carter, Coleman and the Best Western since October 1.
The dramatic increase in phone contacts is illustrated
by comparing this period with preceding months. A review
of Billy Carter's, Coleman's and the Best Western office's
telephone records reflects two August, 1979 calls to Jack
McGregor contemporaneous with Billy Carter's August 17
meeting with Nasife. One call was made to Charter Oil when
I
i
n
ng.
Nasife prepared a letter memorializing this meet
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
63
McGregor and the Libyan Embassy were each called .
from the Best Western office on November 29. On November 30,
Billy Carter's and Coleman's telephone contacts began with
a call to the Washington office of Charter Oil at 9:40
*/ followed almost immediately by a call to McGregor's
a.m.
residence / and a call to Dr. Brzezinski.
(Continuation of ***/ on previous page)
September,_ McGregor was called once while Billy Carter was
in Libya (from the Best Western, September 11, 1979) and
three tines after Billy Carter and Coleman returned. In
October, there was a single call to McGregor from the Best
Western and none to Charter Oil. Thereafter, the Subcommittee
found no evidence of any calls to McGregor until November 28.
The first call to Charter after August 21 came on November 30.
Coleman described his telephone contact with Hoyderi to
see about Billy Carter's loan as a weekly event. 78/ While
Billy Carter and Coleman were told that the loan and oil
deal had keen approved as early as May, 1979, they knew
they would have to wait for the deal until December
when the contracts were signed, _., and Coleman recalls
especially in the Fall we were pushing for the loan
... The financial situation was getting pretty tight at
home for Billy people pushing him for money. So yes, we
talked about the loan frequently." 80/
*/ The Charter Oil call is the first appearing in telephone
records since August 21. It appears on Best Western records.
**/ The Best Western office telephone records for this
phone also show a call at 9:52 a.m., between the Charter
and McGregor calls, to the White House Travel Office. Coleman
testified that Jimmy Murray, owner of the Best Western, had
contacts with the White House Travel Office. 83/
***/ Billy Carter does not recall placing this call. 84/
Brzezinski originally recalled "no further conversations
with Billy Carter" from November 27 until March, 1980. 85/
By virtue of a subsequent record search he now confirms the
November 30 telephone call from Billy Carter. 86/ Although
he has no clear recollection either of the substance or
duration of the conversation, he believes Billy Carter
called to inquire if the November 27 meeting had been helpful.
Billy Carter did not recall the conversation. 88/
87/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 - ----- Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
U.S. Embassy Burned
The U.S. Embassy in Libya was burned in a mob action
on December 2, 1979. 89/ The White House immediately condemned
the Libyan government's complicity in the action, and Libyan
Charge Houderi was summoned to see Assistant Secretary
Drapek and Under Secretary Newsom shortly thereafter. 90/-
A State Department working group was set up to monitor
events in Libya and to advise upon and implement U.S. policy
in Libya during the crisis. 91/
On December 3, 1979, a call was initiated from Billy
Carter's residence to the White House. This call may reflect
a short conversation Billy Carter had with the President to
learn whether Eagleton and his wife were safe. 2-2/ The
Embassy incident apparently also caused concern among those
involved in the Charter Oil negotiations. Several calls
were placed to Charter Oil and Jack McGregor. Coleman
believes he and McGregor discussed whether the Embassy
attack would upset the oil deal. 93/ */
*/ Coleman, from the Horizon Farms telephone, called Billy
Carter at 2:05 p.m.; Charter Oil in Washington, at 2:07
p.m.; McGregor's home at 2:09 p.m.; and McGregor's office
at 2:10 p.m and 3:38 p.m. on the same day. In addition,
calls were placed from the Best Western to Charter's Washington
office and to the Libyan Embassy. Coleman believes he
probably called the Embassy but thinks Houderi was away. 94/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
On December 6, the President decided to deliver his
own message to the Libyans. According to his daily notes,
after the staff had discussed "our altercation with Libya",
the President instructed Brzezinski "on very short notice
to summon Houderi. 95/ The President may have instructed
Brzezinski during one of two meetings at 7:31 a.m. and 9:00
a.m. or in'--4 phone call later that morning to have the
Libyan Charge come tc the White House. Brzezinski arranged
the time for the meeting, 11:00 a.m., with the President
through Phillip Wise, the President's Appointments Secretary. 96/
While Brzezinski's telephone logs do not reflect a call to
Houderi, Brzezinski states that he invited Houderi "on an
urgent matter" that morning but did not tell him that he
would be meeting with the President. 97/ */
*/ On the same morning there were calls between Billy
Carter and Washington. These calls are recorded as follows:
at 10:06 a.m. on Dcr:cember 6, a call was placed from the
Best Western office to the Libyan Embassy, followed immediately
by a 10:08 a.m. five-minute call to the White House. This
call coincides with a "10:10 Billy" message in the call-
back log of Phillip Wise, who that morning arranged the
11:00 a.m. Presidential meeting with Houderi and Brzezinski.
Wise spoke with Billy Carter less than an hour before the
meeting. Billy Carter (in his second depcsition) and Wise
(during the public hearings) recall that the only subject
of conversation was a Warm Springs, Georgia, hospital and
task force. 98/ Wise had twice testified previously (in
depositions) that he did not know which "Billy" the message
on December 6 referred to. 9g/ Within the next hour, Billy
Carter also called Meadows Motors in Manchester, Georgia
(10:14 a.m., 2 min.); McGregor's office (10:36 a.m., 2
min.); and the Libyan Embassy (10:39 a.m., 1 min.) from the
Best Western office telephone.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
At 11:02, Brzezinski took Houderi to see President-
Carter. 100/ As his dictated note of December 6 indicates,
during the ten-minute meeting the President asked Houderi.
to thank Qadhafi for his assistance with the hostages and::
and then told him that the "attack on our Embassy was inexcusable
and very serious to us." 12Y The President added that if
the Embassy issue could be "resolved successfully with an
apology, a commitment to replace or repair the Embassy, and
his (Qadhafi's) assurance that our diplomatic personnel
would be protected -- under those circumstances that we
would try in every way to improve consultations with Libya
and long-range relations with them."104/
After the meeting, Houderi returned to Tripoli, but
before he left he called the Libyan Desk Officer, Alan Roy,
and hinted to Roy that he had a message from the President
to Qadhafi that would allow him to return to Washington
with "good news."105/ Brzezinski also apparently had an
additional conversation with Houderi later that day, although
he does not recall its substance. -
*/ Unlike the November 27 meeting, the December 6 meeting
was attended by a secretary to take notes and to produce a
synopsis/transcript of the interview.1Q1/ There is a classified
memorandum of conversation for this meeting. 1021
**/ Brzezinski's phone logs show a call from Brzezinski to
Houderi at 11:39 a.m. and a return call from Houderi at
3:10 p.m.106/ This call followed the third call that day,
at 2:22 p.m., between the Best Western office and the Libyan
Embassy.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 r.r: r^.M, MWi. n. , u:a>.9cer'v:Mre+JA .. ~.., _...,_virri=__.~.-....,._.=....,,-,?a~ititesdxn, ,..ui. v.:...+?, w,.,.,. -.. - "..', ',w. :ri.S .dS,fl~+.'a:w:+ yaWOMYU- ""?i(ihx _
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
67
Brzezinski testified he recalls "specifically mentioning
to ... and briefing" Secretary Vance about the Presidential
meeting "that very afternoon" of December 6. 2Q1 Vance,
indicated he first became aware of this meeting after the
fact. He also recalls speaking with Brzezinski about the
December 6 meeting, sometime after it occurred, but is not
sure whether he first learned of the meeting in this
conversation. 108/
On the afternoon of the December 6 meeting, calls
were placed from the Best Western to the Libyan Embassy and
to Charter Oil in Jacksonville, to McGregor's office and
then to Charter Oil again. **/ Charter Oil's telephone
records reflect a 5:11 p.m. call to McGregor's office in
Bedford Village, New York.
Libyan Response and the December 12 Meeting
On December 10, after Houderi had returned to Libya,
Colonel Qadhafi was interviewed by a member of the Western
press. In the course of the wide-ranging three-hour interview,
Qadhafi said Libya had received assurances that U.S.-Middle
East policy would shift toward "a more neutral posture"
*/ Neither of the White House meetings with Houderi discussed
thus far, nor a third on December 12 between Houderi and
Brzezinski, were ever mentioned at the regular high-level
meetings on the hostage crisis held during November and
December, during which Libyan relations occasionally were
discussed. 109/
**/ Best Western telephone records. Billy Carter, Coleman
and McGregor all deny that they were contemporaneously
aware of the meeting in the White House. 110/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
68
during the President's second term in office. According to
a New York Times report of December 11, Qadhafi stated:
"we have received these assurances in the.last few days.
through unofficial but reliable channels from President
Carter. We interpret them as meaning a more neutral American
posture in the conflict between the Arabs and Israel." 111/
The New York Times December 11 story on the interview
also carried a White House disclaimer asserting that "the
U.S. remains committed to a comprehensive peace in the
Middle East. This involves continuity and not a fundamental
change in policy." 112/ Although State Department officials
had not been involved in preparations for the December 6
meeting or in the meeting itself, they were asked to assist
in drafting the Administration's disclaimer. 113/
Houderi returned to Washington on December 12 and
again met with Brzezinski to convey.a personal message from
Qadhafi concerning the Libyan position on the holding of
hostages, Libyan responsibility for the burning of the
Embassy, and future U.S.-Libyan relations. */
*/ B zezinski's records show a meeting from 4:35 to 4:50
p.m. 114/ According to Brzezinski, Houderi conveyed Qadhafi's
continuing distress over the hostage situation; noted that
messages and a Libyan delegation had been dispatched to
Khomeini; acknowledged Libyan responsibility for the attack
on the U.S. Embassy in Tripoli; promised remedial steps;
and called for closer highlevel communications between the
United States and Libya. Houderi further conveyed Qadhafi's
hope for a "more even-handed U.S. policy toward Libya." 115/
Brzezinski reiterated the importance to the Islamic world
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
Billy Carter played no role in this meeting, nor did
he figure in the December 6 meeting. 118/ Though Brzezinski
cannot recall specifically informing Vance of the December 12
meeting, he stated that "[ilt was not my practice not to do
so, and I am therefore confident that I either showed him
the transcript or recapitulated the conversation to him" at
some time. L_19/ Vance does not recall such a briefing. _t/
Vance's impression is that he was not being kept informed
of these events on a regular basis. 122/
Shortly thereafter, on December 15, Charge Eagleton
returned to Washington for discussions and new diplomatic
instructions on Libya. He returned to Tripoli on December 31.
Continuation of */ on previous page.
of promptly and peacefully resolving the hostage issue but
did not acknowledge or respond "to any of the specific
points" that 11Houderi raised in the course of their
interview. This conversation between Brzezinski and
Houderi was recorded by a secretary.
Some State Department officials apparently learned of
the December 6 and 12 visits to the White House informally
as a result of the Libyans' frequent conversations with
Libyan Desk Officer Roy. 120/ As noted earlier, NSC staff
also indicated that there was no mention of Houderi's
visits to the White House during high-level discussions on
Libya held in early and mid-December.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
123/
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
The Oil Negotiations and the $20,000 Payment
Billy Carter, McGregor and Coleman testified that
they were not aware of the December 6 and 12 meetings when
they occurred. 124/ Nonetheless, on December 12, as on
December 6, shortly after the meeting Billy Carter and
Coleman were in communication by telephone with the Libyan
Embassy and McGregor. The following day two calls were
placed to the Libyan Embassy, **/ one each to McGregor's
office, on to his home and one to Charter Oil in Jacksonville,
all within an hour. ***/
*/ Best Western telephone records reflect a three-minute
call at 1:03 p.m. to the Embassy followed by a call at 1:07
to McGregor.
**/ From the Best Western at 1:06 p.m. for four minutes
and from Horizon Farms at 1:40 p.m. for two minutes.
***/ Best Western telephone records. These were one minute
calls. McGregor's home and office were called on December
14 from the Best Western office telephone at 8:20 a.m. and
12:10 p.m., for four and six minutes, respectively. The
Billy Carter home called the Best Western at 8:24 a.m. for
a five minute conversation. A call to an airline and a
3:18 p.m. call to Billy Carter's home from the Best Western
followed. Billy Carter's home phone was used to call the
Best Western again at 3:40 p.m. for one minute and Coleman's
home at 4:09 p.m. for three minutes. Calls were placed
from the Best Western on December 15 and 17 to the White
'House Travel office, possibly by Jimmy Murray.
Billy Carter associates the calls on the 10th through
the 14th with the knowledge that the Libyans would let the
oil contracts in early January and that Nasife was preparing
to go to Libya to negotiate Charter's contract. Billy
Carter recalls telling Houderi about this time of the importance
of Houderi meeting with Nasife.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
J .L
Billy Carter and Coleman came to Washington for the
day on December 18 and went to the White House. White
House records disclose that a White House car took them to
the Libyan Embassy at 2:45 p.m. L2-6/ Billy Carter testified
he visited Washington two or three times in December 1979
on campaign matters. He had no specific recollection of
the dates of the other December trips to Washington. He
"normally stopped" at the Libyan Embassy when he came to
Washington. 128/
Billy Carter knew that Houderi was planning to return
to Libya after Christmas. During the meeting at the Embassy
on December 18, plans for Coleman to accompany Houderi to
Libya were discussed..129! Coleman was being sent at Houderi's
suggestion to make personal contact with the Libyan oil
officials at this critical contract negotiating time. 130/.
Houderi told them again that the oil deal and loan had been
approved, that he didn't know what the holdup was, and that
he would keep them posted. 131/ Coleman told Houderi that
if the oil deal came through, Billy Carter wouldn't need
the loan because "Charter had told us that once they got a
contract they would give us an advance [on the commission]." 132/
*/ White House records also disclose that a White House
car took them to the Carter-Mondale Campaign Headquarters
at 1413 K Street at 10:45 a.m. that same day to discuss
campaign activities. 127/
**/ Billy Carter says Houderi.personally apologized to him
for the December 2 attack on the U.S. Embassy. He assumes
it occurred at this meeting, having no specific recollection
of an earlier meeting in Washington that month.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
**/
 They returned to Georgia that evening, and Billy Carter.called
McGregor's home that same evening.
On December 19, Coleman called Billy Carter's home
at 8:19 a.m. and the White House at 9:09 a.m. Subsequently,
three calls were made to the Libyan Embassy (at 10:16 a.m.,
4:04 p.m., and 5:50 p.m.), and the last Embassy call 'was
immediately followed by a call to McGregor's home (at 5:52
P.M.)? **/ The Embassy was called three more times on the
21st and McGregor was called twice.
Coleman described the telephone contacts from November 28
to mid-December as an anxious round between the Libyans,
McGregor and Charter Oil trying to get the oil deal put
together before the annual contracts were signed.
The phone calls later in the month were efforts to arrange
for Nasife to meet face to face with Houderi as a way to
secure additional oil supplies for Charter. Coleman said
many calls were inquiries by McGregor to find out from
them, "if anything had happened, if we had heard anything."
136/
*/ This latter call may have been to Chip Carter regarding
his Christmas visit to Plains, Georgia. 134/
**/ Best Western telephone records.
***/ Best Western telephone records.
****/ Nasife stated that Charter's Libyan contracts expired
in March 1980 rather than at the end of 1979; however, at
the end of 1979, amendments to the supply contract were
negotiated and signed.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
J
Billy Carter called McGregor after the December 18 Embassy
visit to inform him of Coleman's imminent trip to Libya
with Houderi. 137/ McGregor remembered little about the
phone calls but explained that the purpose of his conversations
with Billy Carter after the middle of the month was to be
informed of Coleman's plans for his upcoming visit to Libya.
AS the time grew closer for Coleman to leave for
Tripoli, the number of phone contacts increased. -**/ The
expectation of Coleman and Billy Carter, if not McGregor,
was that jandy and Houderi would meet with Nasife in Tripoli
138/ */
*/ McGregor stated that as a consultant to Charter he was
not aware that negotiations on oil supply contracts took
place in December. However, he had known about Nasife's
upcoming trip to Libya and knew from Nasife himself that
his trip was delayed.
Whether McGregor had any financial interest in the
prospective oil deal is in dispute. According to Coleman,
McGregor had told him on several occasions that he should
have a commission, but Coleman referred him to Billy Carter.140
For his part, Billy Carter stated that compensation was
never formally discussed. However, he "had intimated to
him [McGregor) that he would probably get something." They
never talked about percentages. 141/ McGregor himself
flatly denied any financial interest. 142/ In fact, as he
remembers, in December 1979, he considered Charter, not
Billy Carter, as his "client." 143/ Carter indicated that
he saw McGregor as a middleman between himself and Charter
and that McGregor was assisting Billy as a favor to him.
**/ On December 26, the Best Western office phone was used
to call McGregor, the White House, Eastern Airlines, Charter
Oil, New England Petroleum Corporation in New York (the
Charter number for either Nasife or McGregor in New York
City), and, on three occasions, the Libyan Embassy, preparatory
to Coleman's December 27 departure.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 --- Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
to discuss oil, contract-%. Nasife, however.., never showed. up
in Libya and they also missed each other-in-London.--. 145/
The $20,000 -Payment,
On the, way. _from "Geor%ia.t.o Libya on ,December 27,
1979 Coleman went to the Libyan Embassy in Washington and
l7
picked up a check for $20,000 payable to Billy Carter. 146/
By this_,,t,ime",.i,n ,a],ate ,December ,, BillyCar ter.says both he
and Cole mar~'h,ad; asked Houderi or an advance on the loan,' 147/
although -it is not clear`-when they first raised- the subject.
Coleman came to Washington en route to ,Libya and met
Houderi at the Embassy, 149/ and,ElRam-Ram, the "financial
man" at -;the .Embassy, brought.-.the check. 150/ Coleman asked
for an envelopes -addressed It;- and ,sent the check.: to Billy
in care of the Best Western Motel in Americus, Georgia. 151/
5
2/
Billy Carter deposited_the.:`check on December. 31,,1979, 1
and also told - .Jimmy Murray : he :had received-money. 153
Coleman-'said he;--presumed the money was~an.advance on the.--c.,-.w;-
loan, but _he: didn =.,t know and didn't.-ask Billy Carter-,what
it was for. ::154/ __',Billy Carter said he understood .the,-money .
.was an advance Ton`the..:Loanbecause loan negotiations had.
not been completed. 155/ He 'also said he _did `.not- know
*/ . Billy- Carter j had not :made.:the .request for the advance.
at the time of."the,=December-`18 meeting. He could not,r.ecall
which of the calls to the Embassy on December 19, 21 or.26
related to the advance but thought it could have been as
late as the 26th. 148/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
75
whether the advance would be granted until Coleman picked
it up in Washington. 156/ */
Later on the 27th Coleman
**/ flew to New York.
There, he was met the following day by Houderi and they
proceeded to Libya via Londcn. 168/
*/ Billy Carter testified before the Subcommittee that the
T20,000 was not reimbursement for expenses. 157 According
to the testimony of Lisker and Richard, and their memorandum
of interview, Billy Carter told them in the June 11 interview
that the money was partial reimbursement for a $40,000
advance Carter had made in connection with their visit in
1979. Carter testified that he had not so stated. The
Subcommittee credits Lisker and Richard.
Coleman di15not know whether the money was reimbursement
for expenses. Jimmy Murray stated that Billy did not
tell him the money was reimbursement for expenses. 159/
Donald Roland also concurs that neither Billy Carter nor
Coleman represented the money as reimbursement.
**/ Coleman testified that he paid for his trip to Washington
and Billy reimbursed him, 161/ .and that liouderi paid for
the rest of the trip. 162/ During the trip, Houderi mentioned
that he had been called to the White House on December 6 by
President Carter to discuss the attack on the U.S. Embassy
in Tripoli. He also-said he had delivered a message to the
President from Qadhafi. Coleman16ys that was the first
time he learned of the meeting. He says Houdle~ri, did
not discuss his conversation with the President. //
Coleman believes the President knew Houderi to be a friend
of Billy Carter, because Billy Carter had introduced
Houderi to Dr. Brzezinski as his friend. 165/ Billy Carter
does not recall either Coleman or Houderi telling him of
the December 6 meeting and believes his first knowledge
came from his reading the President's statement in August
1980. In any event, if Coleman did relate his conversation
with Houde i to Billy, Billy "did not put any significance
on it..." rf66/ Billy Carter was aware of Houderi's trip to
Libya in I67ember (6th through 12th) but did not know its
purpose.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 .~..... Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
On their arrival in Tripoli on Saturday, December 29,
Coleman met with Ahmed Shahati, who told him the oil deal
had been approved. Shahati told Coleman he would have an
appointment with the Secretary of Oil on the following
Wednesday, January 2. 1-69/ He also said the Libyans had
begun a new policy in which oil contracts would be renegotiated
on a quarterly basis rather than annually in December. 170?/
On December 31, the Best Western office telephone
was used to call Charter Oil three times and McGregor eight
times. Billy Carter was attempting to get word to Nasife
that Coleman was then in Tripoli at the Libyan Palace
Hotel. It was also decided that Coleman should try to have
a telex--sent to Charter from the Libyan National Oil Company
(LNOC) to Charter Oil. This telex would assure Charter
that its crude oil allocation from Libya would soon be
increased due to the efforts of Billy Carter, and would
invite Charter officials to Libya to negotiate the terms of
such allocations. 171/ Coleman was called at the hotel
that same day from the Best Western office and his home.
McGregor recalls being consulted about the contents of the
telex which Coleman would request and that he spoke with
Coleman during the day on December 31, 1979. 17.2' The
telex from the Libyans was never forthcoming however.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
On January 1, Billy Carter was traveling for campaign
purposes, and, in his absence, Jimmy Murray and Coleman's
wife kept in touch with Coleman. On the morning of
January 4, Billy Carter called the Libyan Embassy from
Tennessee. 173/ The next day, Coleman learned that the
oil minister had been fired and would not be replaced by
Qadhafi for three or four weeks. -**/ 177/ Oil negotiations
would have to begin all over again. 178./
Houderi had returned to the U.S. a few days earlier,
as Coleman learned through phone calls from home.179 /
Coleman was surprised because he considered Houderi his
"connection" and he "was supposed to be making all the
arrangements." 180/ Despite the setbacks, when Coleman
returned sometime between January 8 and 10, 181/ he
reported that the oil deal was still in the works. 182/
*/ Calls were placed from the Best Western to the Libyan
Palace Hotel on the afternoons of January 1, 2 and 4. Billy
Carter was in Nashville, Tennessee. Billy maintained telephone
contact with Murray, however, making two calls to the Best
Western on January 2 and three on the 4th. A call was also
placed to the Libyan Palace Hotel from Randy Coleman's home
telephone on January 4.
Coleman spent most of his time in his hotel room awaiting
phone calls.' He says there was no discussion of C-130's,
other aircraft sales or business arrangements, other than
oil. 174/ Billy Carter concurs and says he doesn't believe
Coleman talked to anyone about the loan. 175/ Coleman met
with Eagleton at the embassy and played cards almost
nightly. He told Eagleton he was in Libya to discuss the
Arab-American Dialogue being planned for the United States
in the Spring. 176/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 On January 8, Billy Carter made another trip to
Washington, D.C. on campaign business and visited the
Libyan Embassy. At that time, Houderi told Billy Carter
about the change in oil ministers. Later that month he,
assured Carter that he knew the new oil minister much
better than the old one. Although they had missed the
normal time for contract negotiations Billy still felt
things were coming along "pretty good" and that he would
get an allocation. 183/
Billy Carter's First Department of Justice Interview
In late October 1979, Philip B. Heymann, Assistant
Attorney. General for the Criminal Division, urged Lisker to
interview Billy Carter. Lisker and FBI Special Agent Richard
Fugatt interviewed Billy Carter at the Best Western Motel
in Americus, Georgia on January 16, 1980. Both Lisker and
*/ At 9:23 a.m. on January 9, a five-minute call was
placed from the Best Western Office to the White House, and
at 9:30 a.m. a White House car took Billy Carter to
Washington National Airport. Billy Carter's telephone
-records reflect a call to the Libyan Embassy that afternoon
from Atlanta. 184/ The following day, Best Western records
reflect a call to the White House at 9:32 a.m. and Phil
Wise's call-back log records a "9:45 a.m." call from "Billy
Carter" identifying the Best Western office telephone
number.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
19
Fugatt took notes. Billy Carter described his invitation
to Libya, his September 1978 trip, the visit of the Libyan
delegation to Georgia in January 1979 and his second trip
to Libya in September 1979. He also said that after his
first trip he
on the Libyan
of State,
had contacted Phil Wise to request information
aircraft from an official of the Department
Lisker and Fugatt prepared a
from their notes and recollections.
that interview ***/ agree with each
memorandum of the interview
**/ Their accounts of
ocher and with their
interview notes and memorandum in most but not all respects.
****/
*/ Billy Carter later testified that Randy Coleman, not if
he, contacted Phil Wise about aircraft deliveries to Libya.
**/ From his contemporaneous written notes, Lisker prepared
g -draft interview memorandum, which he sent to Fugatt.
Fugatt made corrections and additions and finalized the
memorandum as the FBI Interview Memorandum of Billy Carter,
1/28/80. Lisker testified that the memorandum was accurate.
***/ Given by Lisker in testimony before the Subcommittee
and by Fugatt in an interview.
****/ Lisker and Fugatt disagree over whether they informed
Billy Carter of his constitutional rights. Fugatt recalls
that they gave him his rights; Lisker recalls that they did
not give him a full rights warning.
B th Ticker and Fuaatt recall Billy Carter mentioning
0
1861
a contact with Frank Terpil, who is currently under indictment
for firearms violations. Lisker recalls Billy Carter saying
that Terpil had called to ask if he were interested in a
deal to sell machine guns. Neither of their sets of handwritten
notes reflects a discussion of Terpil.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 .... ,v~ _.~_ ... Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
Their account differs from Billy Carter's in significant
respects. The chief difference is that Lisker and Fugatt
state that they asked Billy Carter in several different
ways, without limits as to time, both (1) what he had received
from the Libyans, and (2) whether he had, or expected to
have, any "relationship" with the Libyans. U9-/ The interview
notes and memorandum do not show. questions and answers
relating to cash payments other than the small sum given
for spending money on the first trip. Lisker states, however,
that his whole purpose in going to Georgia to interview
Billy Carter was to find out Carter's relationship with the
Libyans, so, of course, he asked about that relationship
and about what Carter had received. Billy Carter did not
recall the specifics of the conversation, but testified
that he was asked only what he had received from the Libyans
in this trip and in their visit. */ All agree that Billy
Carter did not tell of his arrangement with Charter Oil,
his loan negotiations, or of his receipt in December 1979
of $20,000 from the Libyans.
Lisker was interested in Billy Carter's request for
information on Libyan aircraft and on February 4, 1980
*/ With respect to Frank Terpil, Billy Carter recalls that
Terpil was not discussed at the January
but was first discussed at the June 11,
16,
1980
1980 intervi?I,
interview. /
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
H1
requested that the FBI interview Phil Wise. FBI Special
Agent Carter Cornig arranged an interview through the White
House Counsel's office, after Wise informed that office.
that he had received a message from the FBI.
191/
The day
before the interview, Wise consulted with Doug Huron of
that office, and Michael Cardozo, Deputy White House Counsel,
in preparation for the March 14 interview. Huron also
informed Lloyd Cutler, White House Counsel, of the request.
Cutler toad him to check with the State Department about
contacts by Billy Carter and Huron did so. 193/
As Cornig had requested, in preparation for the
interviews Wise had his secretary Nell Yates, search Wise's
telephone call-back logs for any calls from Billy Carter
during August and September 1978. Wise told Cornig he had
no records or recollections of calls from Billy Carter
concerning aircraft during that period. Cornig was not
told that Phil Wise's log noted a call by Coleman on September 19,
1978, annotated with the word "talked." **/ 194/ Cornig
prepared an interview memorandum, which was received by
Lisker on March 17.
*/ Huron recalls talking with Wise the day of his FBI
interview. Wise recalls only speaking to, and not meeting
with, Cardozo.
**/ The White House provided the Subcommittee with information
from White House records reflecting calls to the Best Western
Motel in July and September, 1978. Wise's record search
was confined to his own call-back log, which is maintained
by Yates for his use in returning calls he does not receive.
Wise states that this log is "not perfect" and there may be
calls which he does not receive and which are not recorded. 195/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
On March 20, Lisker requested a reinterview of Wise.
On the same day, Billy Carter called Lisker at his Washington
office. **/ Lisker recalls a call from Billy Carter on
March 24 during which they discussed an article by Seth
Kantor in the Atlanta Constitution regarding the Justice
Department investigation.
Apart from the uncompleted Phil Wise reinterview and
several other lesser leads, Lisker's investigation seemed
to have been completed. and he had not found any basis for
requiring Billy Carter to register under the FARA.
Accordingly, Lisker had told his superiors that if the
remaining leads produced no significant results, the case
should be closed without legal action. 197/ Heymann had
told this to Attorney General Benjamin Civiletti in February,
1980.
Loan and Oil Negotiations Continue with Coleman's
Trip to Libya
As discussed above, Coleman had returned from Libya
in January 1980 without having succeeded in obtaining an
*/ Lisker had wanted Wise to be questioned about the period after
Billy Carter's first trip, not about August and September,
1978, but through an error in paperwork, the time period
had been misstated. A cover note to the FBI interview
memorandum noted that the agent had experienced a delay of
2 1/2 weeks in arranging an appointment. For this reason,
when the reinterview was assigned to a new agent, Lisker
warned him to beware of additional delay by Wise. 196/
Billy Carter's telephone records.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
83,
oil allocation. On his return, Coleman recalls that McGregor
sought to have him set up a meeting between officers of
Charter Oil and Houderi. */ 198/ No such meeting was ever
arranged. Coleman called the Libyan Embassy frequently
about the deal, because the Libyans had promised to let him
know as soon as the oil minister was settled in. He recalls
"I was not going to let them forget it ... I was being a
thorn in their side. **/ 203/ On January 27 and 29, and
In November, Billy C15~er and Coleman had tried to
arrange such a meeting. Now, Charter wanted to "find
out what was going on because no contracts hjj been signed
and here it was the middle of January." ..0/ The Charter
officers, did not cont ct Houderi themselves because they
did not know him. 201' McGregor recalls little about this
period other than that in February or March,' 1980, Billy
Carter called again and requested that he ask Nasife to
call Houderi for assurances that the oil allo2a02~on was
forthcoming. McGregor relayed that message.
**/ January telephone calls from Horizon Farms and the
Hest western office were made to the Libyan Embassy January 14,
15 (four calls), 16, 18, 23, 25 and 29. McGregor was called
from those telephones three times on January 14 and twice
on January 16.
On February 4, Randy Coleman called Wise at the White
House as reflected in the Best Western telephone records
and Wise's call-back log.
The Best Western office telephone was used in February
to.call the Libyan Embassy on February 15, 18 (two calls),
20 (four calls), 21 (three calls), 25, and 27 (two calls).
Calls were also placed to George Belluomini's home on February 19
and 20; to Ronald Sprague's office on February 19, 20 and
25; and to the Libyan U.N. Mission on February 25 and 27.
Billy Carter was in California visiting Belluomini at this
time and charged his home telephone for a call to the Embassy
on February 20 from Bakersfield, California. Billy Carter
recalls that Coleman was having trouble finding Houderi and
had called Frejeh at the Lil ~jn U.N. Mission, whom he knew,
trying to contact Houderi.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
February 4, 5, 10, 19 and 27, Coleman called the Libyan's
Foreign Liaison Office in Tripoli to speak with one of
Shahati's assistants, Mukhtar al-Jamal.
Meanwhile, Billy Carter spent January and February
on the campaign trail. 206/ In February, he sought additional
assistance in closing the deal. Billy Carter had known
George Belluomini, a wealthy farmer and importer from Bakersfield,
California, since 1977. 207/ In late June 1979, Carter had
told Belluomini of his dealings with the Libyans and the
chance to obtain a crude oil allocation. Carter had also
said he did not know anything about oil or how to handle it
financially. 208/ Belluomini suggested that Ronald Sprague,
his son-in-law and financial consultant, could help, and
offered to introduce Billy Carter to Sprague. 209/ In mid-
to late-February 1980, while in California, Billy Carter
met Sprague and told him that he needed assistance and that
Belluomini had offered Sprague's services. 210/
Billy Carter's February California trip was followed
by a campaign stop in Oklahoma. On March 3 he flew to
Washington and spent the night at the White House with the
President. 211' **/
*/ Jamal took over Mohammed Burki's position in the Foreign
Liaison office about this time and became Coleman's contact
in Libya on the oil deal after his return from Libya in
January. 2 /
**/ The Libyan Embassy was called from the Best Western
office phone on the morning of March 3, 1980
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 G
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
The following morning, Billy Carter went to the
Libyan Embassy in a White House car. Billy Carter knew
from his conversations with Coleman that the negotiations
were stagnant. 212./ He spoke with Houderi about Jamal
having taken over the oil deal. Billy Carter returned
to Buena Vista that evening.
In early March 1980, **/ Sprague and Belluomini
visited Billy Carter in Buena Vista and, at Billy Carter's
request, Belluomini and Sprague agreed that Sprague would
accompany Coleman to Libya for the purpose of negotiating a
loan, or acquiring a crude oil allocation, or both. 215./
Sprague understood that if a loan were obtained, it would
216/ As with the December-
be paid back with oil commissions.
January Libya trip, the planned March 1980 trip was preceded
by a flurry of telephone calls to Houderi at the Libyan
**/ After the meeting, Billy Carter was taken by Libyan
car to the Carter-Mondale Campaign Headquarters. He
testified he had gone to the Embassy in the first instance
because the White 2H3use car could not drive him to the
campaign office.
***/ George Belluomini says 2t14ey went to Buena Vista,
Georgia on March 8, 1980.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
Embassy to set up Coleman's and Sprague's trip, as well as
calls to McGregor.
On March 19, Sprague met Billy Carter and Coleman in
Washington, D.C. Billy Carter took Sprague to the White
House for an introduction to and picture with President
Carter. **/ 17/ Sprague, Coleman, and Billy Carter then.
went by White House car to the Libyan Embassy to pick up
visas for Coleman and Sprague and the two left for Libya
that night. 219/
In Tripoli, Sprague and Coleman met first with Jamal,
whom Sprague understood to be the second highest official
after Shahati in the Foreign Liaison Office, then, on March 23,
with Shahati. 220/ Coleman told Shahati that Charter had
asked Billy Carter to help it acquire up to 100,000 bbl/day
increase in its oil allocation, and Shahati said that he would
*/ After Billy Carter's March 4 visit to the Libyan Embassy,
calls were placed from the Best Western office phone to the
Embassy on March 7, March 10, four times March 11, twice
March 12, three times March 13, three times March 14, March 15,
and March 17. Coleman's home called the Embassy March 15
.and the Horizon Farm telephone was used March 17. McGregor
was called from Coleman's home March 10, from Billy Carter's
home March 11 and from the Best Western twice on March 13
and once on March 17. Billy Carter also called Phil Wise
on March 24 from the Best Western office as reflected in
the motel telephone records and Wise's call-back log.
**/ Sprague states that the President did not ask where
they were going, and that he told no one in Libya about his
White House visit.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
87
try to help but would have to talk to the Libyan Oil Minister.
They also discussed a loan for $500,000. Shahati said he
would arrange a meeting with the bank to negotiate one. He
mentioned that the loan would probably be paid through what
sounded like "Wolff Bank" in New York or some other Libyan
bank affiliate. 221/ -/
Ord March 26 or 27, they met with Shahati, who said
that there was a problem discussing the matter with the
busy oil minister, and that the increased oil allocation
223/ Shahati asked for
would be around 50,000 bbl/day.
some type of paper to show the oil minister that Billy
Carter represented Charter. Coleman telephoned Billy Carter,
and asked him to have Charter send the Libyans a telex
confirming that it would accept an increased crude allocation.
On March 31,:Billy Carter called Nasife, requesting a telex to
assure the Libyans Charter was interested, and scheduling a
225/ **/ Nasife had another officer
meeting with Nasife.
send the telex to Coleman. 226
224/
*/ There is a UBATH Arab American Bank in New York City in
which the Libyan Arab Foreign Bank (LAFB) holds an equity
Woelflein
position, and whose president is Kevin G. Woelflein.
reported "no payment to or for the benefit of Billy Carter
from LAFB's account or any LAFB affiliate's account22with
the Bank ... from March 31, 1980 to the present."
**/ Best Western telephone records reflect two calls to
Charter on March 27 and another March 31.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
On April 1, Billy Carter and Jimmy Murray drove to
Jacksonville in the morning, and met with Nasife. Billy
Carter tried to get Nasife to reaffirm the August 21, 1979
letter agreement and to raise the oil commission minimum
rate from the original figure of 5 cents per barrel. 227/
Nasife told Carter the telex had been sent to Coleman, and
confirmed the agreement.- While they did not raise the
minimum, they agreed to renegotiate it should the crude oil
become available. Upon his return to Georgia that evening,
he returned a telephone call from Brzezinski. Their conversation,
in which Brzezinski said he had learned of the oil negotiations,
is reported in detail below.
The March Intelligence Report
On March 26, 1980, Admiral Stansfield Turner received
an intelligence report which concerned Billy Carter. 228/
The report "bore on Billy Carter's commercial dealings with
an oil company and Libyan efforts to exploit them," 229/
and indicated "that Billy Carter was attempting to assist
.an oil company in obtaining an increased allocation of
Libyan oil.,, 230./
Portions of the report had previously been brought
to the attention of "other U.S. intelligence officers..." 231/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 ~.__~.. Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
0y
and one of those officers had asked to see a copy of the
full report. 232/ Turner-said that
[tjhey looked on. this as a counterintelligence
problem, that is, that somebody was trying to
exploit unidentified persons and that this
left the country vulnerable. The question
was, should we take an interest in that because
We have responsibility for the counterintelligence
Unctions gr.this country outside its geographical
limits. 2 / Turner's testimony concerning
tb ;reasons for the intelligence officer's
r.e est.and that the element in which the
ot~L.icer =-served -would have shared the full
report.with the FBI coincides with the statement
of the intelligence officer who made the request. 234/
decision was made, however, to provide the full
report directly to Turner, rather than to the intelligence
element which had requested it, because the President's
brother was involved. Turner agreed to that procedure. 235/
If, according to Admiral Turner,."it had developed
that this was a counterintelligence case we should pursue,
i.e., that there was some evidence that an American was
trying to 'undercut our own government," the FBI would then
have received the full March intelligence report "since
they do all the work in the continental United States and
we do all the work outside, and this obviously was going to
cover both spheres." 236/ The intelligence officer who requested
the full report was in regular contact with FBI officials
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
90
on matters of mutual interest involving Libya. He stated
that, had he received the full version, he would have proposed
to his superior that this report be provided to the FBI, as
he believed it would have been of use. 233-/
Turner made two decisions on the handling of the
full March intelligence report after he received it.
First, he decided that the intelligence element which had
requested the full report should not receive it. He also
decided that the report should be shown to the President
because:
I perceived this as a piece of information
which indicated that the President might well
be in contact with somebody who was the target
of a foreign government that was trying to
influence him, and I therefore felt it was
advisable that the President be aware of this
.... 23.E
Turner did not consider asking for a briefing on what the
CIA or the intelligence community knew about Billy Carter's,
involvement with the Libyans. 239/ Nor did Turner
consider consulting with the CIA General Counsel or with
the Attorney General on the question of whether a law
enforcement issue was raised because "[t]here just didn't
*/ Turner testified: "I didn't see anything in the
intelligence report that warranted that. I didn't look on
this as an intelligence issue."
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
yt
seem to be any law enforcement issue involved in this at
all, and from reading just this one intelligence report.."
At the time he received the March intelligence report,
Turner's knowledge of Billy Carter's involvement with Libya
did not extend beyond public sources. Although the press
had covered the investigation as early as January 1979,
Turner did not know that Billy Carter was the subject of a
Justice Department investigation under the Foreign Agents
Registration Act in March 1980. */ Turner stated, however,
that his actions might have been different if he had been
aware that Billy Carter was currently the subject of an
investigation under the Foreign Agents Registration Act. **~
In any event, Turner decided that the March intelligence
Turner described his knowledge:
I don't believe I felt I had any greater knowledge
-of that than the general public pretty much, that we
all knew Billy Carter had made a trip cr more to
Libya, that he had entertained Libyans in Georgia,
that there had been a great deal of publicity about
his relationships with Libya, but I found nothing--
well, unusual isn't the right word, but I found that
I knew nothing of a-great secretive 24n t~ure about
this that would add to that store.
According to Turner:
It would not have changed my judgment this was not
an intelligence issue, but it would have told me I
had an intelligence report that should have then
gone to the law enforcement agencies of the country
because it would have contributed to something that
they were doing in the law enforcement field. 243/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9 `.....
report was of direct concern only to the President and that
he would approach the President on this matter through
Brzezinski. 244 _
Turner also vaguely recalled that, at the same time,
he decided not to notify the other intelligence element of
the-report. Instead "I just sent word to them, forget it,
I am handling this." 2461 Turner said that he never thought'
to notify Billy Carter of the intelligence information,
since he aid not consider this to be his "responsibility as
an intelligence officer." a4.l/
On March 31, Turner took the full intelligence report
to Brzezinski. He told Brzezinski that the report involved
the President's brother and "it is something the President
ought to see." 248-' He also told Brzezinski that "I would
like to leave [the report] with you to transmit to ... [the
President] and return to me." At that point, Brzezinski
This approach was based on several considerations:
One is that I report to the National Security Council
as a normal matter. Second, the issue, it seemed to
me, here was the President, and whether the President
was going to be subject to being present with somebody
who might be under the influence of a foreign power,
and therefore the important thing was to advise the
President that a personal relationship of his could
involve foreign influence. And therefore, I was
taking it to the President, not 245 Brzezinski, per
se. He was a channel thereto. ..
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
took it, glanced at it. He asked me some
question about it., I forget, there was some
hesitancy in his mind as to how he might read
it or something: like that, and I explained
that to him, and I think the converses ion
*
lasted, 45 seconds or -- very brief. _~ 249?/
Brzezinski recalled that Turner said
he had a piece of information which he wished
to share with mer which he felt I ought to
know about, which he felt I should bring to
the President's attention, that it was just
for him and for nee, and he gave me that
information. 251
Brzezinski, however, did not recall that Turner requested
the return of the report, "because if he had asked me that
and I had recalled it, I would have returned it to him
expressly. As you know, I did not return it to him expressly."252/
After meeting with Turner, Brzezinski reflected upon how to
best proceed with the information he had received. He
stated that
[I] reached a decision that I would serve the
President better if I first admonished Billy
Carter in a general sense about possible
improprieties stemming from his commercial
dealings and lending themselves to exploitation
by a foreign power, hear his answer, and then
report on that to the President. 25
*/ Turner made a memorandum of his March 31 conversation
with Brzezinski which states: "I delivered an intelligence
report concerning a relative of the President. Brzezins 250
agreed to show it to the President and return it to me.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
Brzezinski called Billy Carter, told him he had
information about the oil dealings and admonished him about
embarrassing the President. Before turning to the details
of the call, it is to be noted that in the August 4 Report,
Brzezinski asserted that he telephoned Billy Carter "on the
afternoon of the day on which I read the report," which was
March 31, 254/ and that it was the following day, which
was April 1, when he advised the President on the issue of
Billy Carter's activities with the Libyans. 255/ Brzezinski
also testified at a deposition that the sequence and timing
consisted of a telephone conversation with Billy Carter on
March 31 followed by Brzezinski's report to the President
on April 1.
256/
Brzezinski's recollection at his deposition of the
time of his conversation with the President was consistent
with his handwritten note, dated April 1, reading "Billy
Carter/Libya." 257/ Brzezinski testified that he prepares
these notes as memory joggers to assist him in covering the
necessary topics in his meetings with the President on any
?particular date.
Billy Carter, however, recalled speaking with Brzezinski
after he returned from meeting with Charter Oil officials
in Jacksonville, Florida, on April 1..2_58/ The date of the
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
95
meeting between Billy Carter and the Charter officials in
Jacksonville has been well established as April 1.
Telephone toll records and White House records also support
Billy Carter's recollection of the timing of the call. **/
*/ Billy Carter and Jimmy Murray drove to Florida in the
morning, met with Lewis Nasife, had lunch with him and
returned to Georgia. While in Jacksonville, Billy Carter
called his wife at 11:06 a.m. and arranged to meet her and
friends arriving from out of town at the Best Western in
Americus that evening. He had not previously heard about
and was not then informed of a telephone message to call
Dr. Brzezinski. 259/ Billy Carter returned from the Jacksonville
meeting, went to the Best Western Motel and received a
message that Brzezinski had called. 260/ Billy Carter
returned the call and said it took two or three minutes to
get through to Brzezinski and that "[firom the noise in the
background I assumed he was not at the White House.
Whether he was at his home or somewhere, it sounded like
several people talking in the background." 261/
Billy Carter also had a message to call Jack McGregor,
who.aidec4 Billy Carter in initiating the deal with Charter
Oil. 262 / Telephone records further indicate four telephone
calls:at 6:59 p.m., from the Best Western office, and at
8:09 p.m. and 10:47 p.m., from Billy Carter's home to
McGregor and at.11:35 p.m. from McGregor to Billy Carter.
These calls were all very brief, indicating missed connections,
and according to both Billy and McGregor the only conversation,
between the two that took place was at 11:35 p.m. Both
remembered this two-minute conversation as a report on the
Jacksonville meeting.
**/ White House records indicate th t Brzezinski left his
office at 3:35 p.m. on March 31. 263! There is no record of
a~telephone conversation with Billy Carter on March 31 or of
the transfer of any later calls coming into-the White House
to Brzezinski's residence. 26' However, White House records
do show that an incoming call was transferred to Brzezinski's
residence at 6:50 p.m. on April 1. 265./ Telephone toll records
from April 1, 1980 also show a. seven-minute call to the White
House at 6:48 p.m. from Americus, Georgia, charged to Billy
Carter's home telephone in Buena Vista, Georgia.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
At the public hearing, after having reviewed this
material and Billy Carter's testimony, Brzezinski adhered
to his previous testimony that he had called Billy Carter
before talking to the President. Brzezinski testified that
he unsuccessfully attempted to reach Billy Carter on March 31,
but apparently did not speak with him until April 1. */ He
also believed.that he reported on the matter to the President
on April 2 rather than April 1. 267/ Regardless of the
timing of the calls, therefore, Brzezinski was certain that
the sequence of conversation was such that the President
did not learn of the telephone call to his brother until
after it took place. 268/ Brzezinski explained that he
would have used his April 1 handwritten note at "the next
day's [April 2] briefing reminding me to raise that issue."
269/
Brzezinski stated that
[i]t is quite possible, and I think the evidence
suggests it, that Billy did not call. me back the
same day as I had thought, but the following day,
and therefore I deferred reporting on that item to
the President, especially since that morning of
April 1 we were really pressed, enormously pressed
with events which were not only significant, but the
implications of which were very uncertain at
moment, and yet extraordinarily critical.
**/ On April 2, there was an eight-minute conversation at
9:39 a.m. between the Best Western office and McGregor's
office. McGregor denied ever knowing of the Brzezinski
call or7a0nything related to government knowledge of Billy's
deal. Billy stated that he does not recall telling
McGregor about the matter but "could have." Donny
Roland, Billy Carter's accountant, was present in the Best
Western office for the Carter-Brzezinski and
tasked with Billy about it afterwards. Billy Carter
discussed the Brzezinski call with his wife and Randy Coleman.
He "may have" told Jimmy Murray and "probablyy, told Donny
Roland but did not recall telling Nasife. 273/"
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
97
Brzezinski's logs show that he talked with the President at
7:30 a.m. on April 2 before leaving for a vacation. 274/
Brzezinski summarized his telephone conversation
with Billy Carter as follows:
[I]n the course of my work, a lot of information
flows across my desk, and I have recently seen
some information which seems to indicate that
you are engaged in an oil transaction, that
you are seeking a larger allocation of oil
from a foreign country, I probably said Libya,
for an American company .... And I just want
to tell you that in whatever you do in your
business activities, you ought to be mindful
of the possibility that such activities could
be exploited by a foreign power to the detriment
of this country, to the embarrassment of the
President, and that you should be extremely
careful in what you do and bear that very much
in mind. 275/
Billy Carter has a similar recollection of this
conversation. **/ He could not specifically recall whether
Brzezinski indicated that the information he was conveying
had come from an intelligence report, but he added "I know
*/ There is no indication in the logs of the topics discussed.
White House counsel have advised Subcommittee counsel in
their letter of September 29, 1980, that the President's
recollection is that Brzezinski informed 'him in a single
conversation of the existence of the intelligence report
and the call to Billy Carter.
**/ Billy Carter testified:
Dr. Brzezinski told me that he knew that I was
talking about a business arrangement between Charter
Oil and Libya and that he thought it would be
politically embarrassing to my brother if I
continued. 276/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
I thought that he had to get it through some intelligence
route to know about the phone call or the telex but I cannot
277
recall specifically whether he said it or not." arter and
Brzezinski agree that Billy responded by telling Brzezinski
to mind his own business.
Brzezinski asserted that, throughout his telephone'-
conversation, "I was very careful in making certain that
nothing I said to Billy Carter could convey to him the
source of the information." He added that
(t)his can be done by people who are experienced
in dealing with intelligence information. I
can say to you without, I hope, sounding boasting,
that I have dealt with intelligence information
for several years. I have access to information
which is of unique character by virtue of my
position, and I think I know how to handle it
and how to protect it, and I think that it is
not unfair to say that there is probably no
one in the White House who is more sensitive
to excluding people who should not know from
sensitive information than I. 281/.**/,
*/ Billy Carter responded to Brzezinski's warning by telling
Fim "it was not any of his business what I was doing, I didn't
know why he called, I was doing something that was my business." 278/
Brzezinski agreed with this account and characterized Billy
'Carter's response as "somewhat less than gracioL's, and it was
fairly emphatic in substance and in tone." 279/ Brzezinski
then concluded the conversation by repeating his "basic message"
to Billy Carter. 280/ .
**/ In his testimony, Brzezinski also asserted that the purpose
of intelligence information is to provide the basis for
intelligent action. The acquisition of intelligence information
is not to stock filing cabinets." 282/
Although Turner had told Brzezinski that the intelligence
in ormation "was just for him and for me. 283/ Brzezinski,
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
Brzezinski recalled informing the President about
both the intelligence report and the telephone conversation
following his telephone conversation with Billy Carter. */ 287/
Once he had reported this information. and conversation to the
President, Brzezinski did not consider taking further steps
to warn Billy Carter about dealing with the Libyans. Brzezinski
stated that he was confident that he would learn of any further
national security matters involving Billy Carter through normal
intelligence channels. 290/ In addition,
[i]nsofar as the followup with Billy Carter
is concerned, while his reaction to put it
mildly, was less than affirmative, I did not
feel that it was necessarily conclusive. A
person will often react strongly to a piece of
advice and then, on further thought, will change
his course of action. 291/
(Continuation of **/ on previous page)
by his own account, did not consult with anyone else --
includ.ing Turner -- before calling Billy Carter. Nor did
Brzezinski, who has stated that, as early as November,
1979, he had "general knowledge that the Department of
Justice was investigating [Bi11y Carter's] relationship
with the Libyan government," 84/ request any further
information from Justice on the nature of Billy Carter's
activities before he called the President's brother.
Brzezinski did not recall seeing at the time any additional
intelligence information concerning Billy Carter's involvement
with Libya. 2 In addition, Brzezinski did not consider
asking for an assessment by intelligence agencies or the
Department of Justice on Billy Carter's Libyan connections
prior to his call to Billy Carter.
*/ The President then "commented and said that I had done
the right thing in doing what I did." 288/ The President's
statement of August 4, 1980 offers a similar account of the
conversation with Brzezinski.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 -..,-.._?.. Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
It is unclear what finally happened -:o Brzezinski's
copy of the March intelligence report. In contrast to
Turnerts testimony, Brzezinski had no recollection that
Turner ever requested that the report be returned. Nor was
he able to recall how he did dispose of the report. Rather,
he concluded that in this case "I assume -- in fact, I have
reason to be confident that it was burned'...." 292/ */
Brze;inski subsequently. requested an additional copy of the
March intelligence from Turner when the White House was preparing
its July 22 public statement on the Billy Carter-Libya matter.
*/ Brzezinski continued:
I in all probability placed it in my out box
for disposal under the usual procedures which
are that if there is any action taken on it by
me in writing, it will be filed in my system.
If there isn't, and if copies exist elsewhere,
it would be destroyed as a sensitive document. 293/
**/ As a result of this request in July 1980 Turner also
prepared a memorandum:
First thing in the morning on 21 July 1980, Dr.
Brzezinski called me 4 different times. He wanted
to know about an intelligence report I had given him
some months before that Billy Carter was dealing
with the Libyans in trying to get an increased
allocation of oil supplied to some American oil
company.
a. I established from my own logs that I had delivered
such a report to him on the 31st of March and asked
him to return it to me. I had no record that he
(sic) he returned it and my recollection was that he
did not.
b. Arranged for him to get a new copy of the report. 29,9/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
Billy Carter's Receipt and Disposition of $200,000 101
While Br.zezinski was calling Billy Carter to tell
him to stop dealing with the Libyans, Sprague and Coleman
were in Libya continuing their negotiations.*/ On March 30,
Sprague and Coleman had met with Mohammed Layas, Assistant
General Manager of the Libyan Arab Foreign Bank (LAFB).. 295/
According to Sprague, Layas said that his bank did not
ally make loans as small as $500,000 but they were
willing to do so in this instance because Billy Carter was
a friend of the Libyans and because Shahati had called the bank. 296/
Terms for the loan were negotiated,**-/ with the funding to
be through Bankers Trust of New York ***/ or some other lending
*/ Coleman was contacted frequently at the Libyan Palace
Hotel, where he and Sprague stayed. Coleman's home and
Best Western office telephone records reflect twelve calls
between March 25 and April 7. Best Western phone records
reflect two March 27 calls to Charter Oil as well as one on.
March 31. Billy Carter was maintaining contact with McGregor
in Coleman's absence from his home and the Best Western in
twelve calls between March 26 and April 4. McGregor's
office telephone records likewise reflect calls to Charter
Oil.
**/ The terms were: a five-year loan, with interest-only
payments the first two years, and the balance to be paid in
three equal installments over the last three years, the
loan to be collateralized.
***/ James M. Collier, Vice President of Bankers Trust
Company (BTCo), which deals extensively with LAFB, reported
that "(s)ince March 31, 1980, no payment to or for the
benefit of Billy Carter ... has been made from LAFB's account
or any LAFB affiliate account with BTCo." 298/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
facility or liaison of the bank. 299/ On April 1, Coleman
and Sprague met with Jamal and Layas, who said the terms of
the loan had been approved by the bank, and that the loan
would have to be secured by Billy Carter's real estate. 300/.
On April 2, Sprague flew back, meeting Billy Carter
in Atlanta April 3. 301/ Sprague told Billy Carter that to
complete the loan, he needed a preliminary title report of
his properties and an appraisal of them. 3A2/ Billy Carter
told Sprague that he needed a loan quickly because the IRS
was 'pressing him for a payment of about $130,000 by April
16, and had threatened him with a lien against the 60 acres
that surrounded his house. 303/ He told Sprague to send a
telex to Libya regarding the loan, which Sprague did on
April 7 and again on April 11. 304/ Sprague called Coleman
at the Libyan Palace Hotel from Bakersfield on April 5,
1980, to ask if the crude confirmation had been sent to
Charter. Coleman told him it had not. Sprague also reported
that Billy Carter had approved the terms and conditions of
the loan. Sprague was instructed by Coleman. to proceed as
directed by Billy Carter. 305/
Coleman stayed another week in Libya after Sprague
left. At some point, Coleman recalls Shahati telling him
that the loan had been approved but that there would be
some delay in the paper work. 306/ Coleman told Shahati
that Bii i`,' Carter needed the money right away for ,io,zse
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
payments and taxes.
307/
Coleman recalls mentioning an
advance on the loan, and Shahati told him to go home, wait
a week, and a "substantial advance" would be in Washington
for him to pick up. 308/ He also recalls being told at
some point that the new oil minister had approved the increased
allocation for Charter, but that under a new oil policy,
allocations would have to be approved by a 30- or 40-member
309/
subcommittee, and that would take several weeks or months.
Coleman flew back to the United States and waited,
then called Louder i at the Libyan Embassy **-/and was told
to come to Washington. Coleman did not mention the advance
on the telephone. He flew to Washington, went to the Embassy,
and picked up a check for Billy Carter which the Libyans
said had been there for three days. 2-11/ The check was
drawn on the Libyan Embassy's bank account in the amount of
$200,000, dated April 7, and carried the notation "loan." 312/
Houderi also told Coleman that the loan was being handled
through a New York bank and Coleman should henceforth deal
directly with Jamal in Libya on the subject. 313/ Coleman
*/ McGregor, but no Charter Oil officials, recalls learning
of the delay after Coleman's return. 310/
**/ Best Western office telephone records reflect calls to
the Embassy on April 10 and 14. These are the last calls
to the Embassy on Billy Carter's, Coleman's, and the Best
Western's telephone records.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
brought the check to Billy Carter, who deposited it on
April 15 at the People's Bank of LaGrange, Georgia. 314/
Billy Carter then transferred funds to other checking accounts
he held.
Bank records subpoenaed by the Subcommittee show
that Billy Carter began writing a large number of checks on
his bank accounts so quickly that some of his checks were
315/
rejected for insufficient funds. He paid off numerous
bills. */ In April, 1980, the IRS placed a lien on his
house and 58 acres in Buena Vista. Billy Carter paid the
IRS $45,000 for back taxes, but this did not result in
removal of the IRS lien. The $200,000 was almost completely
paid out in the following four months. **/
In April and May, Coleman recalls continuing to talk
to officials in Libya at the Foreign Liaison Office by phone
*/ He paid $3,122 to his attorney, John Parks; $5,000 to
Coleman for salary and reimbursement for expenses; $5,000
to his accounting firm; $7,380 to American Express; $10,339
on his home mortgage. He also repaid three loans; $15,145
to the Bank of Manchester; $7,428 to the Citizens Bank of
Americus; and $27,500 to Donald Carter. He also paid state
and local taxes of about $2,635, and various household and
living expenses and insurance charges. 316/
**/ As of Auqust 14, 1980, he had a remaining balance of
fIl, 700. 317/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
318/
about the oil deal and the loan Billy Carter was seeking.
He was told by Jamal during those calls that the loan was
delayed by "paper work," and that the oil deal would be
settled by June. Coleman was also asked by Jamal to assure
that certain telexes had been sent to Libya. 319/ During
those months, Billy Carter and Coleman remained in touch
with Sprague. **/ As they had never told him of the $20,000
received in December and did not mention the $200,000
received in April. 320/ Instead, they urged him to continue
sending telexes to Layas in Libya about the loan. In addition
to his April 7 and April 11 telexes, Sprague sent telexes
on April 14 and May 2: He appraised Billy Carter's real
estate on April 18. 321/ Eventually, in July, when Sprague
learned about the $200,000 from a newspaper article and
inquired of Coleman, Coleman told him that "you weren't
supposed to know." 322/
In April, Billy Carter also talked to Nasife, but
contact faded. ***/ McGregor says that by that time, he
*/ Randy Coleman's home telephone records reflect April 30
and May 37 calls to Mukhtar al-Jamal's Tripoli office.
**/ Telephone records reflect nine April and eighteen May
calls between Billy Carter, Coleman, and the Best Western
in Georgia and Sprague, Belluomini and their business in
California.
***/ Best Western office telephone records reflect April
15, two May 9 and July 1 calls to Charter Oil in Jacksonville.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
106
pessimistic about the deal being concluded because
had become pes by a glut. McGregor
the tight world oil supply had been replaced with Billy Carter during April and May,
continued to talk w
1980, to ask about the deal. 323/
May 30, Billy Carter arrived in Bakersfield,
On Y
here his son was staying with Belluomini while
California, w 324/ Meanwhile,
on the Carter re-election campaign. --
working
the last recorded phone call - to the Foreign
on June 1, in
in Libya, Coleman says he was told that the
Liaison office
of L:.byan diplomats had made the situation
U.S. expulsion 325/ In the
"touchy," and he should sit back and wait. in to the
Carter finally came
following two weeks, Billy
Justice Department and admitted his financial dealings with
the Libyans.
*/ Randy Coleman's telephone records.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
JUSTICE DEPARTMENT INVESTIGATES BILLY CARTER
AND ARRANGES REGISTRATION, APRIL 1980 - JULY 1980
Attorney General's Handling of Intelligence Information
Up to April, 1980, Attorney General Civiletti had
*
given the case little attention - and knew little of the
**/
fruits or directions of the investigation. - In particular,
he "assumed [and] expected" that "in April and May, [the
investigators] were pushing ahead in whatever avenues and
imagination and creativity that they could," 3/ and with
regard to checking of bank accounts or Internal Revenue
Service records for indications of Libyan payments, his
"thought [in April, 1980] would be that they would have
done that. They would have done that long ago. Done that
in January [1980]." ***/4/ - Thus, he was unaware that,
because Lisker had no leads suggesting Libyan financial
involvement, Lisker was not investigating Billy Carter's
*/ In mid- 1979 to late 1979, either as Deputy Attorney
General or as Attorney General, Civiletti became aware that
the Criminal Division was making inquiries about Billy
Carter. In January and February, 1980, Civiletti received
brief notices of plans to interview Billy Carter and Phil
Wise. In March or April, Civiletti became aware of a news
leak concerning the Billy Carter investigation. 1/
**/ Civiletti noted in September, 1980, after much more
contact with the case, that "having reviewed the file for
purposes of the testimony, having skimmed through it ..:
there was a lot in the file that I was never advised of,
informed of, briefed or detailed." 2/
***/ "[O]ne of the principal issues or elements they would
be looking in a [FARA] investigation would be evidence of
any nature or kind relating to control or direction or
subservience. And they would naturally be scouring the
evidential field for that." 5/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
In April, 1980, an official delivered to the
Attorney General two documents containing intelligence
information bearing on Billy Carter. One document indicated
that a transfer of money might be made by the Libyan
Government to Billy Carter. 6/ The other document bore
upon Billy
and Libyan
Carter's commercial
dealings with an oil company
7/
efforts to exploit them.
documents and returned them
delivered them; the meeting
Civiletti was told
sensitive,
and secret,
Civiletti read the
to the official who had
took three or four minutes.
information was highly
and that it had a very high
8/
classification, but he was not told to withhold it from
others in the Justice Department. */9/ In addition,
Civiletti did not explore with the deliverer whether there
were ways relatively more,-or relatively less, advisable-
for using the information. 11/
*/ The deliverer "did not say, and I (Civilettil wouldn't
have accepted it if he had said it, it would be my judgment
that you can't tell the Deputy Attorney General or you
can't tell the head of the Criminal Division or you can't
tell Joel Lisker or one person or another. That would not
be appropriate for him." 10/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
The Att j ey General neither retained the documents
nor made any written record of the visit. His decision not
to use the information was made without the knowledge of
the contents of the investigative file 12/ or of other
intelligence information that existed within the
Department.!-3/ In fact, other intelligence information had
been received within the Department in November and
December, 1979, to the effect that Billy Carter was
negotiating with regard to Libyan oil allocations and a
loan from Libya, and this information might have been
delivered to the Attorney General if he had called for all
available intelligence information regarding Billy Carter
and Libya.- When this information, the April information,
*/ The FBI had information from the intelligence channels
as early as November and December, 1979, that Billy Carter
was trying both to negotiate a loan from the Libyans and to
arrange for a Libyan crude oil contract on behalf.of the
Charter Oil Company. However, that information was received
incident to the conduct of a completely separate FBI investigation
and was not given to the Registration Unit of the Department
of Justice until late May to early June, 1980. At that
time, it was furnished along, and contemporaneously, with
the first information available to the FBI that Billy
Carter had actually received payments from the Libyans.
Upon receipt of this information, Lisker was convinced of
Billy Carter's obligation to register as a foreign agent.
The details of the treatment of the FBI information from
November and December, 1979, have been explored by the
Subcommittee and they indicate no favoritism or special
treatment for Billy Carter.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
U
and additional intelligence information were finally
brought together in June, 1980, investigators made use of
it by confronting Billy Carter with the assertion that they
knew of the payments he had received from Libya.
After receiving the intelligence information in
April, Civiletti told Assistant Attorney General Philip B.
Heymann that he had been informed of highly sensitive
intelligence information regarding Billy Carter, without
describing its substance, and instructed Heymann not to
close the investigation until Heymann had received that
information and evaluated it. 14/
Because of its classification, the
information
received by Civiletti in April cannot be directly described
in this Subcommittee report. However, evaluations of that
information by attorneys in the Justice Department can be
noted. Civiletti's evaluation differed from the evaluation
of his subordinates. He believed that "the information
could not be used in the investigation in any way consistent
with high principles of security, so long as there was no
other source for the information." 15/
In contrast, after subsequent review of the
information, Heymann stated that "had I been Attorney
General, I would have made some of it available in the form
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
of leads and not the rest." 16/ Lisker agreed with that
assessment. 17/ As to the effect of the withholding,
Lisker testified that if he had received both documents,
the result of the case would not have been different but
"[]e would have moved everything up a couple of months." 18/
Civiletti stated his expectation in April was that
other information would come in. He testified that he
"thought if the transaction went through it would kick up
dust. If monies were paid, whatever, there would be
deposits made. There would have been bills paid off. There
would be talk about Billy being flush again. And we would
19/
pick that up in our investigations."
However, that expectation did not come true. Billy
Carter deposited his $200,000 check from the Libyans on
April 15, and used the money rapidly to pay off debts.
None of Billy Carter's creditors -- including the Internal
Revenue Service -- provided leads to Lisker. Thus the
Criminal Division did not find the Libyan financial
involvement through the "dust" from Billy Carter's receipt
and expenditure of the $200,000 in early April. It in fact
learned of it much later through intelligence sources.20/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
The Attorney General stated, as a second reason for
not disclosing the information indicating that a tranfer of
money might be made by the Libyan Government to Billy Carter
his concern that any use of that information might cause
the contemplated transaction to abort.
Continuation of the Investigation
After Civiletti told him not to close the case,
a close, and "indeed within two weeks we were off on another
lead." 22/ On May 29, 1980, Civiletti called Heymann,
anticipating an inquiry about the Billy Carter case at a
scheduled press conference. Heymann told Civiletti he
could tell the press he felt the case was taking too long.
In the press conference Civiletti said that the case "has
certainly taken longer than I think appropriate." 23/
Heymann had not yet been given the intelligence information
that the Attorney General had seen in April. Heymann read
newspaper reports of Civiletti's.comment, and the next
morning Heymann called Lisker and asked if the case could
be closed in two weeks.
*/ Civiletti's example of the effect use of such information
might have was that the investigators might "go to banks,
for example, and Billy's bank officer calls up Billy and
tells him look, the FBI has just been here looking for
money you received or whatever. Billy could put two to two
together and say I had better lay low and not go through
with any financial transaction with Libya, and that might
have affected the investigation substantially." 21/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
That same day, May 30, Lisker learned of intelligence
information indicating that Billy had received or was
receiving funds from the Libyan Government. 24/ At that
time, he was also furnished with information that the FBI
had had from intelligence channels as early as November and
December, 1979, that Billy Carter was trying to negotiate a
*
loan and an oil deal./ He advised Heymann of the new
information. Heymann advised Deputy Attorney General
Charles Renfrew, who in turn advised Civiletti.25/ Upon
receipt of this information, Lisker was convinced of Billy
Carter's obligation to register as a foreign agent.
On May 31, after learning of the information just
described, Civiletti requested that the intelligence
information he had seen in April be made available to the
Justice Department for use by the Criminal Division.
Civiletti recalls making the request because "[n]ow that we
had multiple sources indicating the transfer of funds to
Billy Carter, I felt the initial intelligence information
could be given...." 26/ On the morning of June 4,
Civiletti met with Heymann and provided him with the documents
*/ This information was described above.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
114
shown to Civiletti in April and now redelivered to him.
Heymann subsequently arranged for the documents to be seen
by Lisker, by Mark Richard, Deputy Assistant Attorney
General, and by John Martin, the new chief of the Internal
Security Section.
The problem of how to use the intelligence information
in the investigation without compromising sources was considered
and discussed. One solution to the problem that Civiletti
discussed with Heymann at their June 4 meeting was calling
in Billy Carter, confronting him, and seeing if he would
admit receiving the Libyan payments. Civiletti understood
that this was one avenue among others which the Criminal
*
Division would be considering.- Five days later, on June 9
Heymann met with Richard, Martin, and Lisker to discuss the
case. According to Lisker, as corroborated by his
handwritten contemporaneous note, Heymann suggested personally
confronting Billy Carter with the Criminal Division's knowledge.
While Heymann characterized the idea of an Assistant Attorney
*/ Civiletti discussed the same idea that day with his
aide, Victor Kramer. Heymann's account of the June 4 meeting
.does not mention confronting Billy Carter. 27/
**/ Lisker and Richard recall the suggestion. While Heymann
does not recall it, he does not dispute that he could have
made the suggestion. Since Heymann recalls neither the
June 4 nor the June 9 discussions of contacting Billy Carter,
there is no evidence as to whether the June 4 discussion
caused him to raise the idea on June 9. 28/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
115
General confronting a target as "unusual," Civiletti noted
several instances of other kinds of direct confrontation by
senior departmental officials. */ 29/
Grand Jury Considered and Billy Carter Comes In
At this time the Criminal Division began considering
use of a grand jury in two separate contexts. First, as
previously noted, following the March 14 FBI interview of
Wise, Lisker requested that the FBI reinterview Wise. The
reinterview request was not acted upon until May, when
Special Agent Clay Blackman called Wise's office four times
over a two-week period to set up a reinterview appointment.
Wise did not return the calls. Blackman told Lisker of
his difficulties with Wise. ** / 31/ On May 30, Lisker told
Heymann he might need a grand jury, and might have to call
what Heymann termed "White House people" into it, and
Heymann gave his approval. 34/ On June 2, Lisker
telephoned Wise's secretary; he recalls leaving the
*/ Lisker said, with regard to Heymann's suggestion that
Heymann confront the target, that it had never been done
before. 30/
**/ Wise's log records calls by Blackman on May 14 and May
27. Blackman's notes also record calls on May 15, May 28,
and Blackman also called on June 2. Blackman was told by
secretaries each time that Wise was out or in meetings;
several times they said Wise would get back to him. 32/
Wise contends that during this time he was awaiting guidance
from the White House counsel's office, and was preoccupied
with other matters. 33/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 n Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
message that if Wise would not talk to the FBI agent, he
might have to talk to a grand jur 35/
Y-- That day, June 2,
someone from the White House counsel's office contacted
Blackman and arranged an interview with Wise, which occurred
on June 4. 36/
Neither Wise nor his secretary Nell Yates recalls
any message from Lisker concerning a grand jury. 37/ As
Wise explains the timing of his return call to Blackman,
when Wise first found out that another FBI agent was calling,
he contacted the White House counsel's office again. When
that office recontacted him, he was told to set up an
interview, and he then called the agent. 38/
In the interview, Wise was asked if he recalled, or
his records reflected, any calls from Billy Carter during
the period from September, 1978, through January 11, 1979,
concerning Libyan airplanes. Wise indicated that he did
not. Blackman was not told that Wise's call back log contains
an entry for Randy Coleman dated January 5, 1979. Also,
Wise was asked the hypothetical question of what Wise would
have done if Billy Carter had called and sought a briefing.
Wise replied that he would have referred Billy Carter to
the NSC. */
*/ Wise wrote a memo to the file on the meeting in which he
states that he told the agent he would have referred Billy
Carter to the Administrative Assistant to the NSC. Blackman
wrote an interview memorandum in which he states he was
told only that Wise would have referred Billy Carter to the
NSC; based on that memorandum, e does not recall the mention
of "Administrative Assistant." Further investigation was
difficult when a body such as the NSC was named; in contrast,
Lisker rapidly learned of the Quandt briefing once.-Wise, in
a subsequent interview, named specific persons.- 40/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
117
The second context for the consideration of proceeding
before a grand jury was the need to investigate the leads
from intelligence sources concerning Libyan payments to
Billy Carter and the Charter Oil deal. On June 9, Heymann,
Richard, Martin, and Lisker met and considered use of a
grand jury for that purpose. At the meeting Heymann and
Lisker favored proceeding by civil means, while Richard and
Martin favored use of a grand jury. Heymann recalls that
use of a grand jury was being seriously considered on
June 9 and remained under serious consideration by the
Criminal Division through June 27,41,
On June 10, Billy Carter contacted the Justice
Department. Billy Carter's activities immediately prior to
this contact were as follows. As discussed above, Coleman
recalls that after being told by the Libyans in April and
May of delays in the oil and loan deals, on June 1 he was
told to sit back and wait. On June 2, Billy Carter and
Sprague flew to Tennessee to discuss business deals, and
Billy Carter went back to Georgia on June 5. 42/ On June
2, as described above, Lisker recalls leaving Phil Wise a
message that if he did not make himself available he would
be called into a grand jury. On June 9, Billy Carter visited
his attorney, John Parks, who had previously advised him on
foreign agent registration. Parks recalls that while
discussing other legal matters, Billy Carter mentioned that
he had business transactions "hanging fire" because the
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
people involved kept hearing about the Justice Department's
investigation. Carter asked if Parks would mind finding
out about the investigation. 43/
Parks called Lisker on June 9, and Lisker returned
the call. Lisker recalls Parks telling him that Billy
Carter wanted to know if there was going to be a grand
jury./ 44/ Lisker told Parks that he could not discuss
*/ Parks does not recall the subject of the grand jury.
Billy Carter testified that he asked Parks to call because
he had discussed appearing in the programs Nashville on the
Road and Hee Haw, and wished to resolve his status before
becoming involved in these programs. 45/
Reg Dunlap, who is responsible for booking guests on
Nashville on the Road, states that on May 13 Billy Carter
was appearing on another television show for which Dunlap
books guests, Pop Goes the Country. Dunlap states Bill
Turner, Dunlap's associate, recalls making a casual
statement to Billy Carter that day that Nashville on the
Road would be in Daytona Beach, Florida, in the fall, and
that Billy Carter should come down with his wife for the
show. Billy Carter's response was off-hand, to the effect
that he would look into it, and Turner does not recall
Billy Carter mentioning that he was being investigated.45/
Sam Lovullo, who produces Hee Haw, recalls seeing Billy
Carter in Nashville in may or June, 1980. he does not
recall discussing a future booking of Billy Carter, but
Billy Carter had been on the show several times, and Billy
Carter might have said, "When are you going to have me
back?" Lovullo recalls no mention of Billy Carter being
investigated.47/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
119
the matter with Parks, and that Billy Carter should call
him. 41/ on June 10, Billy Carter also contacted
-
Brzezinski, telling him he would be in Washington on June
49/
11, and they agreed to meet on that day.
The next day, Billy Carter called Lisker and told
him he would be meeting with Brzezinski the next day and
would like to set up a meeting with Lisker as well. He
told Lisker he had prospects for business deals, and that
he had seen that Attorney General Civiletti announced in a
news conference that his investigation was taking too
'O/ They agreed to meet on June 11. Lisker and
long.
Heymann then arranged for the FBI to conduct a surveillance
of Billy Carter during his day in Washington, in case there
was a chance to Qbserve him receiving payments from the
Libyans. */51/
*/ In the FBI, this request was checked with Director
William H. Webster, who approved it on condition that the
agents conducting the surveillance not enter the White
House. The surveillance produced nothing of interest. 52/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
At 2:10 p.m. on June 11, Billy Carter was
interviewed in the Justice Department's Federal Triangle
Building by Lisker and Richard. Lisker began by reciting
what Billy Carter had said on January 16 that he had
received from the Libyans (a list which had not included
any payments), and Lisker asked if that was still accurate
and if there had been anything else. After Billy Carter
said, at first, that there was nothing else, Lisker said
that his sources of information suggested that was not
accurate. Lisker recalls that Billy Carter then stated
that he had asked for a $500,000 loan from the Libyans and
had gotten $200,000; that he had gotten a payment of
$20,000 sometime after the January 16, 1980 interview, 53/
as partial reimbursement for $40,000 in out-of-pocket
expenses in connection with the reception for Libyans in
Atlanta in January, 1979; and that he had an arrangement
for brokering oil for Charter Oil. 54/ Richard confirms
Lisker's account, which is recorded in a contemporaneous
interview memorandum. -
*/ Lisker drafted an interview memorandum which was typed
June 12. 55/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
121
Billy Carter states that his recollection of the
56/
June 11 interview "may not be clear or entirely accurate."
He recalls telling Lisker that he wanted to make full
disclosure, 57/ and denies that he said the $20,000 was
partial reimbursement for expenses incurred during the
visit by the Libyans in January, 1979. 58/
During the interview, Billy Carter complained of
government harrassment, citing the IRS as an example. He
said that Brzezinski had called him, had indicated that he
knew about the Charter Oil deal, and had said that it could
be politically embarrassing to the administration and that
Billy Carter should back off from it. 59/ Billy Carter
left the interview at about 3:30 for his appointment at the
White House with Dr. Brzezinski.
Civiletti is Briefed and Talks to President
After the interview, Lisker and Richard immediately
arranged to brief Deputy Attorney General Charles Renfrew
on the meeting, to raise several concerns: the break in the
case from Billy Carter's admissions; the possibility that
Billy Carter would complain to the President of harassment
by the Justice Department; and Brzezinski's disclosure to
Billy Carter. 60/ After a short meeting, Renfrew arranged
for the three of them to brief Civiletti immediately in
Civiletti's office.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
122
.In that briefing, Richard told Civiletti that Billy
Carter had acknowledged a $200,000 loan and a $20,000 re-
imbursement, and told Civiletti about the FBI surveillance
of Billy Carter that day. 61/ Then Richard informed
Civiletti that he and Lisker were very concerned that
Brzezinski may have disclosed information of the most
sensitive type, and, recognizing that they had a
responsibility for investigation under the espionage laws,
they wondered what the nature of the disclosure was, and
62/
what steps, if any, should be taken to investigate it.
Lisker and Richard recall that the Attorney General
discounted the possibility Brzezinski had disclosed
intelligence information. 63/ Civiletti told them he
understood from the person who had brought him intelligence
information in April that he was the only one who received
this information. Civiletti also told them that Brzezinski
had sources in the Departments of Commerce or Energy and in
the oil industry itself which may have accounted for his
knowledge of the Charter Oil transaction. 64/ Richard
recalls that his "initial concern about [Brzezinski's]
possible breach of security was allayed to some extent by
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
the Attorney General's statement." */ 65/ Lisker's was
not. 66 Subsequently, while Lisker discussed with Martin
the possibility of an, investigation of Brzezinski, no
actual steps were-taken until the Office of Professional
Responsibility (OPR) took jurisdiction of the matter..-
Civiletti asked Lisker whether he felt prepared to
bring a case right then to compel Billy Carter to register,.
and Lisker replied that he wanted to do further investigation
and that he did not have a sufficient case to bring an
injunction suit. This led to a general discussion of leads
and further avenues for investigation. They discussed
interviewing Randy Coleman. Lisker said that he had advised
68/
Billy Carter to register, and that he would do so again.
*/ Civiletti's recollection on this subject is vaguer than
that of Lisker and Richard. He recalls that he said that
the information given by Brzezinski to Billy Carter might
have been from the same intelligence documents received by
the Justice Department in April, but the information also
might have come from many other sources from which Dr.
Brzezinski regularly receives information. As for whether
the matter would be investigated, Civiletti does not "know
that I focused on that very hard. But I certainly do recall
Mark [Richard] and perhaps Joel [Lisker] even chiming in
and saying they were concerned about it. And I expected,
as with any other thing, if the Criminal Division is
concerned or interested in a matter, they will pursue it,
My standing directions are to pursue all leads vigorously
and soundly." 67/
*/ On July 25, 1980, OPR opened an investigation of the
handling of the Billy Carter case by the Justice Department.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
At this point, Richard and Lisker recall a comment
by Civiletti. Richard recalls that he may have told
Civiletti that they were considering taking the matter
into the grand jury, and that Civiletti said "let's wait
ten days and see what happens," or "let's wait five days
and see what happens." 69/ Lisker recalls Civiletti
saying, "don't do anything for ten days." The sense of the
statement was not that Lisker should stop the investigation,
but rather Lisker should not make a disposition (such as
going to a grand jury) in that time period. 79/ Lisker's
.recollection is corroborated by his contemporaneous statement
to an FBI official that the Attorney General had decided to
wait for approximately ten days prior to deciding what
future action the Justice Department should take regarding
*/ 71/
Carter's registration under the FARA. -
Civiletti recalls that Lisker had said that the
evidence was not there for bringing civil suit, and so
"right at that moment there was not any question about
further action in disposition or decisions to be arrived at
at that point.... Billy Carter was coming in for a reinterview,
*/ This statement to the FBI official is described below.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9 --
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
and the most that I could have said with regard to ["]what
happens over the next week or few days["] or ["]let's see
what happens hereafteri"] was in response to, or at the
close of the meeting when Lisker said he was going to ask
Billy Carter to register." 72/ Civiletti asserted positively
that he never directed or suggested that the investigation
in any way be delayed or deferred, 73 which is consistent
with Lisker's sense that Civiletti's words concerning
deferring disposition of the case, not deferring the
investigation.
That same day, Civiletti had telephoned Phillip J.
Wise, Jr., at 11:05 a.m. to make an appointment to see the
President to discuss nomination of judges. 74/ Wise does
not recall anything other than talk about judicial
nominations from that conversation, nor does Civiletti.
Wise recalls that normally an appointment by the Attorney
General with the President could be arranged within seven
to ten days, 75/ and, in fact, the appointment was made
for June 17. Civiletti does not recall if he knew that
afternoon that he would be seeing the President within ten
days, but he considers it unlikely that he knew the
specific date. 76/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
The weight of the evidence indicates that Lisker's
recollection is largely correct: his independent
recollection is clear, and it is supported both by a
contemporaneous statement he made to an FBI official, and,
*
in large measure, by Richard's recollection. - Moreover,
Civiletti told the Subcommittee "that the Attorney General
has the right, the duty, the responsibility to do whatever
is right with regard to an investigation, and that means
**/ 77/
convene a grand jury or stop a grand jury...." -
*/ Lisker's recollection was independent in that it was
given without knowing that the FBI official had
memorialized his statement. The FBI memorandum was not
found until three weeks after Subcommittee staff first
questioned Lisker, and Lisker had no prior knowledge of it.
**/ Heymann, on the other hand, "regarded the decision [on
choosing civil or criminal proceedings] as [his] to make,
not a decision for the Attorney General, not a decision for
the Deputy Attorney General, although they had the right to
overrule [him] by going through certain formal, arduous,
and embarrassing procedures." 78/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
After the briefing by Renfrew, Richard and Lisker,
Civiletti does not recall receiving further information on
the case, apart from a brief mention by Heymann that he
favored civil rather than criminal treatment of Billy
Carter. */ 79/
On June 17, Civiletti met with President
Carter and White House Counsel Lloyd Cutler for twenty-five
minutes to discuss judicial nominations. 80/ Civiletti
then asked to speak to President Carter alone, and Cutler
Civiletti spoke to the President about his upcoming
trips and the functioning of various divisions of the
Justice Department. Then, according to Civiletti, Civiletti
told President Carter that the Billy Carter matter was a
* */
case of the kind which they could not discuss.- He then
*/ Sometime after June 4 Civiletti met Heymann and commented
that he did not think he should discuss the Billy Carter
case with the President. Heymann agreed. 80/ Also, on
June 13, Civiletti lunched with Webster. WWFiile Webster had
the Billy Carter case on his agenda, neither Webster nor
Civiletti believe they got to it. 81/
**/ Civiletti has said that a "spur" for him to talk to the
President was his awareness, from what Renfrew, Lisker, and
Richard warned him on June 11, that Billy Carter might be
complaining to the White House and thereby creating what
Civiletti termed "smoke."
However, as Cutler testified, 83/ Civiletti did not
mention such a concern either to the President or to Cutler,
who would handle White House complaints about Justice
Department cases. When asked in his press conference on
July 25 why he spoke with President Carter on June 17,
Civiletti said nothing about the possibility Billy Carter
might be complaining to the White House. 84/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
128
told President Carter that in his view the President's
"brother was foolish and should have registered long ago."
The President asked what was likely to happen if Billy
registered under the Act, and Civiletti replied that if he
told the truth and registered under the Act, that it was
his "understanding that the general practice in the Justice
85/
Department was not to prosecute."
President Carter dictated a note for June 17 which
states that Civiletti "told me that Billy ought to acknowledge
that he was an agent. There would be no punishment for
him. But that Billy was unwilling to do so because he claims
he was not an agent of that country." Civiletti testified
that he had not told the President that there would be no
86/
punishment to Billy if he acknowledged he was an agent.
In the August 4 report, President Carter stated that the
"Attorney General did not inform me of any detail as to the
conduct of the investigation. What he told me about the
Department's insistence that Billy file a registration
statement and the Department's standard enforcement policy
was essentially the same as what the Department's lawyers
were saying to Billy's lawyers, as Mr. Cutler's attached
statement shows." 87/ */
*/ The discussions between the Justice Department attorneys
anci Billy Carter's attorneys, and the reporting about those
di~;cussions by Cutler to the President, are described below.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
129
Billy Carter See Brzezinski and Cutler
On June 11, after Lisker and Richard interviewed
Billy Carter, and while Lisker and Richard were briefing
the Attorney General, Billy Carter went to the White House.
There, he informed Brzezinski that the Department of Justice
was questioning him regarding his relationship with Libya.
Billy Carter asked whether there were any national security
reasons why he should not disclose his role in November,
1979, in arranging Brzezinski's meeting with Houderi on
the hostage issue. */ Brzezinski then had Cutler join
him, and they both confirmed that they saw no reason why
such information should be withheld. When Billy Carter
indicated he had attended the Justice Department interview
without a lawyer, Cutler advised Billy Carter to obtain
one, and Cutler and Billy Carter went to Cutler's office. 88/
Cutler recommended several lawyers, including Steven Pollak
and Henry Ruth, who had been counsel for Hamilton Jordan
during an investigation begun earlier of his drug charges.
Bil.ly Carter chose Pollak and Ruth, whom he and Cutler
called. 89/
*/ There is no evidence that any executive official ever
told Billy Carter he could not disclose his role; that
appears to have been, for whatever reason, his own idea.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
Billy Carter then left Cutler's office and went to
Phil TnTise's office, where Wise recalls his inquiring as to
where his brother was. While Wise was looking for President
Carter, Billy Carter remarked to Wise that he had just
hired "Hamilton's" (Hamilton Jordan's) attorneys. By this
time President Carter had been located on the tennis court,
and Billy Carter went there. */ 90/ Then, Billy Carter
was taken by a White House car to Ruth and Pollak's office. 92/
During a one-hour consultation, he retained Ruth and Pollak,
and then went to the airport to return to Georgia. 93/
After Billy Carter had left the White House, Lisker
called Wise's office, leaving a message that Billy Carter
was due for a meeting at the Justice Department. Phil
Wise located Billy Carter in the car and advised him of
the message, and Billy Carter replied that his attorneys
were handling that. 94/ That evening, Pollak called Lisker,
and told him that Billy Carter had retained him, and that
'Billy Carter would not be returning to Lisker for further
interviewing; they agreed to meet'the next day. 95/
Billy Carter Agrees to Register
On the morning of June 12, Pollak and Ruth met with
Lisker and Martin at the Justice Department, who briefed
*/ Pres ant Carter has not described this meeting on
June 11 with his brother. 91/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
131
them on the case against Billy Carter. The Justice Department
attorneys told them Billy Carter had to register as a
foreign agent, and held out the possibility of criminal
prosecution. */ 96/ That day Cutler called Pollak, and
recounted Brzezinski's and Cutler's statements of the
previous day to Billy Carter that there was no national
security objection to disclosure. **/ This was the first
of a series of calls by Cutler to Ruth and Pollak, principally
motivated, according to Cutler, by a desire to be apprised
when the ca.3e would be publicly resolved to prepare a
White House reaction.
*/ On or about June 12, Lisker briefed an FBI official on
the interview of Billy Carter on June 11 and on the meeting
with Civiletti. Based on this briefing, the FBI official
drafted a memorandum to the FBI director which is the only
contemporaneous record of C9viletti's statement on June 11
concerning a ten-day wait. 97
**/ Cutler recalls this; Pollak does not. 98/
***/ Cutler testified: "I had three objectives, Mr.
Chairman, in the course of those conversations. The first
was to make sure, since I did not know, on the basis of my
conversations with Billy Carter, whether he had indeed
retained them as counsel..
The second was to follow up with them to be sure that
the November 1979 meeting, which certainly was comprehended
within a Justice Department question to Billy Carter about
any contacts with the White House about Libya, would indeed
be reported to the Department of Justice, as we had informed
him there was no objection to doing that.
And my third objective, as time went on, was insofar
as I properly could, without having any contact with the
Department of Justice about the matter, to be apprised of
when the case was about to be resolved in a manner that
would become public and which might require Presidential
~~andd/consult
comment, so that I could advise the President
with the white House press office what to do.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
Either that day, June 12, or the next day, Cutler
told President Carter of his meeting with Brzezinski and
Billy Carter, and that on his recommendation Billy Carter
had retained Ruth and Pollak as counsel. President Carter
responded that Cutler's recommendation of counsel was
correct and he was glad to hear his brother had retained
counsel. 100/ Several days later, on June 17, Cutler met
with Civiletti and President Carter, but as noted above,
the subject of Billy Carter was-not raised in Cutler's
presence. 101/
On June 25, Cutler met Pollak at a luncheon, and
reconfirmed to him that Brzezinski and Cutler had authorized
and encouraged Billy Carter to disclose the hostage matter
to the Justice Department. 102/ That day, Ruth and Pollak
met with Lisker and Richard. Pollak informed the Justice
Department attorneys that there was one matter that Billy
Carter had believed he was not free to disclose because of
a classification problem, which Pollak now wanted to disclose.
It concerned the release of the hostages, and was made at
the request of representatives of the United States government.
Pollak did not name Brzezinski or go into further detail; _
*/ Pollak recalls giving this information on that day, and
Cutler recalls Pollak telling him on June 26 that the Justice
Department had been informed of the November 1979 meeting
and had expressed no interest. Lisker's recollection is that
while Pollak hinted at some project Billy Carter was connected 13/
; i.th, he never did tell t isker ~rihst i' was.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
he was not asked for further detail. */
The next day, June 26, Cutler called Billy Carter's
attorneys and Ruth briefed Cutler. 105/ Cutler then wrote
a memorandum to President Carter, based on that briefing,
telling him that Ruth and Pollak were trying to persuade
Billy Carter to register without success yet. The memorandum
stated that the Justice Department attorneys intended to
recommend some action unless Billy Carter agreed by June 27
to register, and that Billy Carter's attorneys believed that
action would either be the convening of a grand jury, or a
civil suit. The m(:morandum also noted that "neither the
Attorney General nor anyone else in Justice has discussed
the timing or any other aspect of the matter with me. I
recommend against initiating any inquiry at this end." 106/
This memorandum apprised the President that Billy Carter
registration might not end the matter. Lisker and Heymann
*/ Lisker had known, prior to Pollak's statement, about
contacts between Billy Carter and Brzezinski in this general
context. He sought no more information because he understood
Billy Carter's role to have been initiated by the American,
not the Libyan, side, and so attributed to it no significance
in terms of evidence that Billy Carter was a Libyan agent.
Also, Ruth and Pollak did not furnish Lisker with a copy
of the April 7 $200,000 check until July 10, and they did
not furnish him with a copy of the $20,000 check until
after July 14. Lisker's impression prior to registration
remained that the $20,000 check had been received by Billy
Carter in the early spring of 1980, as Billy Carter had
told him on June 11. Accordingly, Lisker did not know
that the $20,000 had/been received the month after the
104
hostage contact.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
testified that in the June.12 and June 25 meeting, Ruth and
Pollak had been told that "even if we got a registration
statement, that criminal [prosecution) was still an open
avenue. 106a/ This testimony is consistent with the Justice
Department's eventual decision to file a civil suit even though
Billy Carter had agreed to register without one. Cutler told
the President that Ruth and Pollak believe "the Justice
Department lawyers would be satisfied with the filing of a
registration. However, there is some risk that registration
-
this late would not satisfy Phil Heymann...,, 106b/ */
Based on Cutler's memorandum, President Carter
called Billy Carter on June 28 to encourage him to cooperate
with his lawyers. Billy Carter said that his counsel were
in negotiations with the Justice Department, but that he
personally did not think that he needed to file a registration
statement. That day, President Carter dictated for his
records that "this can become an embarrassing incident
later on, particularly with American Jews." 17/
*/ Pollak recalls that it was his understanding that if there
was a full registration statement, Justice Department policy
would not call for prosecution for failure to register. Pollak
could not recall what the Justice Department attorneys had said
to support that understanding, or which meeting they said it
in, or which one said it. It is therefore not clear at what
point he arrived at that understanding, or what consideration
between counsel it was based upon. 106c/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 pproved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
J. 4.J
On June 30, Cutler called Ruth. 108/ Based on that
call, Cutler wrote another memorandum to President Carter,
saying that Billy Carter's lawyers described him as "very
'down and out' and in need of a friend," and that Billy
Carter's lawyers were unwilling to predict whether he
would register. Cutler added that registration was obviously
preferable, from Billy Carter's point of view, to a grand
jury investigation or a civil suit, and that the Justice
Department had now set a deadline of July 1 for Billy
Carter to register. _*/ 109/
President Carter received that memorandum on July 1,
and called Billy Carter. in a seven minute call, the
President urged his brother to register. The President
dictated afterwards for his records, with regard to Libya,
that his brother "has been acting as'their agent apparently.
But [Billy] considers himself to be singled out, especially
by Jack Anderson and Safire -- which is probably true." 110/
Later that morning, President Carter informed Cutler that
he had called his brother, who seemed to be receptive and
that the call might have done some good.111/ That afternoon
Cutler called Ruth and Pollak, who said that they were
meeting with Billy Carter the next morning for his final
decision, and Cutler informed President Carter of this. 112/
*/ This deadline was subsequently extended.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
The next day, July 2, Billy-Carter agreed to register;
his account, his principal desire was to avoid a lenghty'-
113/,
grand jury proceeding in Washington,'D.C. Pollak
called Cutler that day and told him Billy carter-naa-autnorizea
them (Pollak and Ruth) to negotiate his registration.
Civil Suit and Registration
During this period, the Justice Department`attorneys-
had been deciding how to resolve the case. On June 27;
Lisker, Richard, Heymann,' Martin, and- Stephanie' Smith,
special assistant to Heymann, met to `discuss' the- disposition
1 71
of Billy Carter's'case. The discussion canvassed both ' '
civil and criminal options, included-a'variety of considerations,
and proceeded without anyone mentioning any extrinsic--
influence or special consideratiori for Billy Carter as'the
President's ; . . - brother. The disposition of-civil'-suit 'and---
registration was 'decided upon in response-to a number -of
factors of which three stand out: (1) the weakness of 'the
case for prosecuting "Billy Carter, :who could . .:convincingly
contend 'that he never thought of himself _as being -under
Libyan control and thus that'hisfailure to_register-was?..
not criminally-willful; (2) the likelihood that..grandjury
proceedings-would last 'from six to eighteen months,.rduring,.
frustrated by grand jury secrecy;
(3)
the option left open
I.: if Billy Carter were come z
inc;
information from the
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
137
Criminal Division then after being compelled by civil suit
to register he could be subject to prosecution for filing
a false registration statement. */ 115/ On July 2, Lisker
completed a prosecutive memorandum, approved by Martin,
and Richard completed a shorter memorandum which were
furnished to Heymann, all supporting the recommendation of
civil suit and registration, and in a July 3 meeting Heymann
approved that option. 120%
On July 2, Ruth and Pollak met with Lisker and
Richard at the Justice Department. Ruth and Pollak indicated
that Billy Carter was willing to register. Lisker and
Richard indicated that they felt they needed the protection
of a court injunction, and so they would file a civil
suit, but that Billy Carter's attorneys would be free to
simultaneously file a consent to the entry of a judgment
against Billy Carter. 121/ On July 7, President Carter
met Billy Carter in Plains, where Billy Carter indicated
he was being harrassed by the government about Libya. 122/
*/ On June 27, as a follow-up to the FBI interview of
Phil Wise on March 14 and June 4, Lisker called Phil Wise,
and spoke to him on July 1. He asked Wise the hypothetical
question: to whom would he have referred Billy Carter if
Billy Carter had called about Libyan aircraft. Wise named
Inderfurth, Quandt, and Sick, all present or former NSC
staff members. 116/ Lisker then called Quandt and Inderfurth,
who told of their August 1978 briefing of Randy Coleman. 117/
It was not until after Billy Carter registered on July 14
that Lisker, in the course of unrelated inquiries at the
Department of State, was told first by Roy and then by 118/
Draper of Draper's January, 1979 briefing/of Randy Coleman.
On July 1, Wise also spoke to Pollak. _9
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
On July 8 or 9, while on a_flight with President Carter to
Tokyo, Cutler told him Billy Carter had agreed on July 2
to register, and he recalls President Carter being pleased. 123/
Ruth, Pollak, Lisker, and Martin again met on July 8,
10 and 11 to negotiate the contents of a registration
statement. 124/ On July 11, in an effort to avoid civil
suit, Ruth and Pollak appealed the Criminal Division's
decision to file suit. Pollak recalls that he intended to
take that appeal to whoever was the highest Justice Department
official made available to him. 125/ At the time Deputy
Attorney General Charles Renfrew was available rather than
Civiletti. Renfrew listened to presentations by the Criminal
Division attorneys and by Ruth and Pollak and upheld the
decision to file a civil suit. */ 126/
After the appeal to Renfrew, Ruth and Pollak called
Cutler, stating that they were in the final stages of
negotiations with the Justice Department concerning filing
of a complaint, consent judgment, and registration statement.
They asked Cutler to check with President Carter that
?Billy Carter had never discussed any specific U.S. policy
or action toward Libya with the President. 128/ Cutler
then called President Carter, then on Sapelo Island, who
said that he had some general family conversations with
Billy Carter in larger groups in which there were discussions
*/ j stated than had an appecil been taken to
~1.1C.tt1 r
him, then despite his June 17 meeting W4.fth President Carter,
he himself would have decided the appeal. 127/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
139
of Middle East policy, in which Libya might well have been
mentioned, but nothing specific about any particular-U.S~.
action or stance. 129/ Cutler called Ruth back and told
him this, and Ruth said that the court papers soon to be
filed would disclose two substantial payments to Billy
Carter, one in January 1980 of $20,000 and one in April
1980 of $200,000. 130/ Cutler told this to Jody Powell,
asking him to inform President Carter. 131/ However,
Powell recalls telling President Carter only that court
papers would be filed, not about the payments. 132/ President
Carter noted that day that "Lloyd Cutler called to say
that Billy had agreed to sign the Justice Department Consent
Order on revealing his relationship with Libya, which is
good news I think." 133/
July 11 was a Friday. On July 14, the following
Monday, the Justice Department filed its civil suit against
Billy Carter. Under the agreement between the Justice'
Department and Billy Carter, the Justice Department filed
a complaint against him. While Billy Carter neither admitted
nor denied the allegations in that complaint, he agreed
not to contest those allegations. The Justice Department's
complaint alleged that Billy Carter had "reached an understanding
to act within the United States as an agent of [Libya]."
Carter was alleged to have performed a number of activities
useful to Libya: hosting a Libyan delegation; escorting a
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
140
tour of Libyan delegates; participating in Libya's Tenth
Anniversary celebration; undertaking a propaganda campaign
including public statements in support of Libyan foreign
policy objectives; and agreeing to undertake the establishment
of the Libyan-Arab-Georgia Friendship Society.
As compensation for "making his best efforts" pursuant
to agreement with the Libyans, Billy Carter was alleged to
have received "substantial compensation," principally the
following: Libyan gifts; two all-expense paid trips to
Libya; "twenty thousand dollars paid ... on or about March
1, 1980;" "two hundred thousand dollars paid ... on or
about March 1, 1980;" and that Libya "held out" Billy
Carter "to the U.S. business community as a commercial
intermediary through whom U.S. business entities could
deal with Libya."
Since Billy Carter consented to the Justice Department's
request for relief, instead of contesting its complaint,
the Court issued an injunction requiring him to file a
"true and complete registration statement" and to comply
with the other legal duties of a registreed foreign agent.
Accordingly, Billy Carter filed a registration statement
for whose truth he vouched. The statement described Billy
Carter's first and second trips to Libya, his hosting of a
delegation, and other activities prior to March, 1979.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
The statement described Billy Carter's receipt of gifts,
expense-paid trips, and two monetary payments, $20,000 in
January 1980 and $200,000 in March 1980, both described as
loans which were "partial payments upon a loan of $500,000
requested by Mr. Carter." It described Billy Carter's
arrangement with Charter, but did not admit that the arrangement
was a form of Libyan compensation. Neither the complaint
nor the registration statement mentioned Billy Carter's
role in the hostage negotiations.
On the day of the filing Ruth called Cutler to
inform him of the disposition of the case. Cutler then
called Clough, and told her what had happened, asking her
to inform the President, and mentioning that the court
papers included references to some very large payments
that would attract public attention and criticism and
would require comment. 134/ Although Powell, on July 11,
and Clough,on July 14, had been told of the payments, and
Cutler had asked them both to speak to President Carter,
President Carter recalls that he had no knowledge of the
payments until July 15. */ 135/
*/ For whatever reason, the President's closest advisors
on the White House staff apparently did not consider it
necessary to inform President Carter immediately of the
payments.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
142
Attorney General Meetin .with-President not Disclosed-
Until July 25
After the filing of the complaint on July 14, repeated
71
inquiries were made by Cutler and the press before'either
President Carter or the Attorney General revealed their
and told him that the complaint and other court?pa':)ers,had-
thinks he identified as the Billy Carter matter.- He told
you and I have been unable to discuss," which Cutler also
been filed in a case which Cutler referred`to as "a'matter
in this case, to state that there had been no'contact
Civiletti he was informing the White House press office
that if it received questions about'any White'House role
between the White House and the Justice Department with'
reference to this particular investigation."'Cut ler-recalls
Civiletticonfirming that this was correct.
By the end of the week of July`14, President Carter
had approved the preparation of what became a statement-'o
July 22 which Cutler refers
o as the "white paper', which
*/ Civiletti recalls only that Cutler said something
about a case:about?which he knew nothin which was going
to be, or had been, filed that day. 137g
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
conversation of June 17. On July 14, Cutler called'Civi1'etti,
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
described the various Billy Carter contacts with the White
House as the White House could reconstruct them, and the
lack of any contact between the White House and the Department
of Justice concerning the conduct of the investigation. 138/
On July 18 or 19, Cutler recalls having a conversation
with President Carter about the importance of preparing a
White House statement about the Billy Carter matter. 139/
President Carter did not then tell Cutler about the June 17
conversation with Civiletti. On July 21, as the white
paper was being prepared for release, Cutler checked with
Civiletti the statement in that paper that at "no time,
however, has there been any contact in either direction
between the White House and the Department of Justice
concerning the conduct of this investigation...." 140/
Civiletti confirmed that that was correct. 141/
On July 22 or 23, during preparations for Civiletti's
press conference on July 24, Civiletti visited the Justice
Department's Public Information Office. John Russell, who
was acting at that time as the office specialist on the
Criminal Division and the Billy Carter case, recalls
Civiletti asking him what was happening. He told Civiletti
that there had been numerous inquiries about two points
concerning the Billy Carter case, one of which was whether
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 .' Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
there had been discussions between the White House and the
Justice Department on that case. Civiletti responded,
"not by me." */ 142/ Following normal procedures, Russell
then drafted proposed answers to anticipated press questions,
for Civiletti's use in preparing for the press conference.
Among these questions and answers were the following:
Q
Did you, or anyone else in the Justice Department, discuss
the Billy Carter case with any White House official, especially,
Lloyd Cutler? A. No." 144/
On July 24, at his press conference, Civiletti was
asked as his first question, "Did you or your colleagues,
Mr. Renfrew and Mr. Heymann ever talk to the President or
any other White House aides about the Billy Carter case?"
Civiletti replied, "No." 145/ Civiletti explained the
following day'that in making that answer, he drew a distinction
between a substantive discussion about the conduct of an
investigation and the brief conversation of June 17 with
the President. However, as.posed, the question does not
distinguish discussing from briefly conversing; it asks
simply whether Civiletti talked. In the hearings, Civiletti
said that his answer to that question was "wrong," that it
was a "serious mistake" and that he regrets it. 146/
*/ Russell recalls this. Civiletti does not specifically
recall such a discussion, but acknowledges that it could
have occurred.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
Meanwhile, in the course of preparing the July 22
white paper, Cutler had asked Clough to retrieve for him
any notes relating to conversations with Billy Carter,
relating to Libya, if there were any such in the notes
which President Carter dictates each evening. She completed
typing those notes, and gave them to President Carter to
review on July 24. In the early evening of July 24, President
Carter called Cutler and read the account he had dictated
of his June 17 meeting with Civiletti. He asked Cutler to
look at the note the next morning and to talk to Civiletti
about it, and then to come back and talk to him. Cutler
recalls the context of the conversation was that this was
certainly something that would have to be disclosed. 147/
That evening, at a social gathering, Cutler told
Civiletti of the dictated note that the President had just
read to him, and told him that this would certainly have
to be disclosed. Civiletti immediately recalled the conversation
with the President on June 17. The next day, Civiletti
reviewed the transcript of the July 24 press conference,
and discussed the matter with Victor Kramer, with his
press assistant Robert Smith, and with Heymann and Renfrew.
That afternoon, he revealed the June 17 meeting at a press
conference. 148/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
That day, Robert Smith notified Powell that Civiletti
was issuing his statement on the matter. Powell told
Cutler, and they discussed with President Carter the fact that
Civiletti had gone ahead without consulting them directly
about issuing the statement. 149/ Subsequently, Civiletti
himself called President Carter and told him of the press
conference, and President Carter, Civiletti recalls, agreed
it was the right thing to do. 150/
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
CONCLUSIONS
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
CONCLUSIONS
. 147
It has been an.objective of the Subcommittee to
agree.on a . set of,conclusions. While there will _be._anumber.. ,..
of additional statements, the members of the Subcommittee
agree to the ..foll.owing
Libyan officials went to considerable trouble and,
.-..--.
expense in establishing-_and maintaining. a. relationship-with
Billy Carter. _..The,.initial .contact was ..the .-result of,-,persistent
efforts and adevious.series of personal contacts.,aided by
the participation.of an important Libyan official,..-,,:The
relationship was -thencultivated not only through-personal.,.
participation ,.by-_important Libyan officials and .expense-paid
trips but by holding.out the prospect of -a highly. lucrative
oil commission arrangement and a large loan, as well as. the.:.....,
actual transfers of large sums of money.
The Libyan plan. to establish .a relationship ,with-_ _
Billy. Carter. may. have. received its original impetus.-.from
the Libyan program aimed at influencing U.S. policy through
people-to-people, contacts, which is described earlier in
this report. Enlisting .Billy Carter ..as.a .spokesman -supportive
of Libya and-its,policies and conduct-might have been-
viewed as aid to Libya's public relations effort.rt_Billy.
Carter'.s usefulness for.this purpose soon ended,..however,
and surely did not extend beyond early 1979, when it became
apparent that he would not be effective as a salesman of
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9 3
the Libyan cause to the American people. Other purposes
must have remained, because the remarkable relationship
between important Libyan officials and the brother of the
President of the United States continued, and the Libyans
eventually conferred substantial pecuniary benefits upon
him and held out to him the possibility of even greater
financial rewards.
To a large degree the other possible Libyan purposes
must be left to inference. Among the diverse advantages
the relationship may have provided for the Libyans were an
avenue by which communications between them and the
President might be facilitated should the opportunity and
need arise, a means of embarrassing the United States or
the President at an opportune time, and, perhaps,
opportunities to obtain through friendly conversations with
Billy Carter insights into the personality of the President.
We can assume with some assurance that the Libyan purpose
in creating and maintaining the relationship was to benefit
the Libyan government and Libyan policy.
The Subcommittee believes that operation of the
Foreign Agents Registration Act in this instance served the
valid objective of requiring public disclosure. The
Department of Justice correctly rejected the view that
Billy Carter's oil commission arrangement with the Charter
Crude Oil Company was an ordinary commercial arrangement.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 -- Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
Rather, the arrangement with Charter was the basis for a
benefit which the Libyan government could bestow on Billy
Carter whenever Libya concluded that its needs would thereby
be served. The Subcommittee also believes that the payments
totaling $220,000 by Libya to Billy Carter are additional
indicia of the influence or control by Libya over him.
This is so whether the payments are viewed as compensation
for services rendered or to be rendered by Billy Carter for
Libya, or as a major financial obligation which Billy Carter
must satisfy to a nation whose interests are often inimical
to ours.
II.
Billy Carter was repeatedly warned, by friends,
officials, and his brother, that his actions could embarrass
the United States. The potential for embarrassment was
increased by his failure to inform the government officials
whom he contacted, particularly those in the White House,
that he was negotiating for oil allocations and a large
loan from the Libyans and in fact received substantial sums
of money from them. Billy Carter was repeatedly advised
about the duty of a foreign agent to register, yet he failed
to register. His conduct was contrary to the interests of
the President and the United States and merits severe criticism.*/
*/ One product of the inquiry into this matter has been the
attention of the President to questions concerning official
dealings with members of the President's family. The Subcommittee
notes that yesterday, q?tober 1, 1980, the President issued
guidelines to theheac. of executive departments and agencies
on this subject. The Subcommittee has not had an opportunity
to consider whether any matter with respect to these guidelines
should be the subject of inquiry or comment by it.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
The Subcommittee concludes that the Justice
Department's investigation of Billy Carter would have
proceeded with considerably more dispatch if the Foreign
Agents Registration Act had provided authority for adequate
investigative tools, if the subject had been more
cooperative, and if relevant intelligence information known
to intelligence gathering agencies of the government had
been provided to the Criminal Division's FARA unit within a
reasonable time after it became available. It should be
noted, however, in considering the time consumed between
the opening of the file by the FARA unit in January, 1979,
and the registration and the entry of the consent judgment
on July 14, 1980, that some of the most important relevant
events did not occur until late 1979 and 1980. Nevertheless,
the case could have been brought to a conclusion substantially
earlier if any or all of the obstacles described below had
not been present.
The Act does not provide for administrative subpoenas
or civil investigative demands. Short of the commencement
of a civil action and discovery under the Federal Rules of
Civil Procedure, the only way to obtain information about
the activities of an uncooperative subject is to utilize a
grand jury, a drastic step that ordinarily will not be
taken unless some evidence of agency is available. It is
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
also noteworthy that FARA enforcement is given a low priority
by the Department of Justice and the staff of the FARA unit
is small in relation to the number of registrations and
investigations for which it is responsible, although there
is no direct evidence that these conditions were responsible
for any part of the delay in the Billy Carter case.
Billy Carter was not a cooperative subject. He
repeatedly ignored letters from the Department. When
interviewed in January, 1980, he did not disclose important
information, including his receipt of $20,000 from Libya on
December 27, 1979. Neither the payments, totalling $220,000
by April, nor the oil allocation negotiations were dis-
closed by him until June 11, and even then they were disclosed
only when the interviewers indicated they had other information
inconsistent with his initial denials. Even after disclosing
the payments, he asserted that the $20,000 payment, which
he later testified was a loan, was partial reimbursement
*
for advances on behalf of the Libyans.- Some delay in the
progress of the investigation is attributable to Phillip J.
Wise, Jr., the President's Appointments Secretary, who was
less cooperative than he should have been in returning
calls by an FBI agent seeking to reinterview him and professed
not to remember events relevant to the investigation which
he could reasonably have been expected to remember.
*/ Billy Carter denied that he so stated. Taz Subcommittee
credits, and the text reflects, the testimony of Lisker and
Richard, supported by a contemporaneous memorandum prepared
by Lisker.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
152
When the Attorney General failed to share the classified
information that came to him in April, 1980, with-any
trustworthy subordinate who had the necessary security
clearance, he did so without attempting to learn whether
the Department had available to it other information which
might have permitted it to make investigative use of the
April, 1980 intelligence. A call by the Attorney General
for information may have elicited the fact that the FBI had
information from intelligence channels. as early as November
and December, 1979, that Billy Carter was trying both to
negotiate a-loan from the Libyans and to arrange for a
Libyan crude oil contract on behalf of the Charter Crude
Oil Company. When brought together, these several items of
intelligence information might have been usable in the
investigation without compromising sources and were in fact
so used, together with other intelligence information, in
June, 1980, when investigators confronted Billy Carter with
an assertion of knowledge that he had received payments
from Libya.
The Subcommittee concludes that the investigation
was honestly and conscientiously conducted by the Criminal
Division. Moreover, we believe the disposition of the
Billy Carter case as a civil rather than a criminal
proceeding was the result of an honest judgment on the
merits by the officials who participated in that decision.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
There is no evidence that either the investigation or
disposition of the case by the Criminal Division was skewed
in favor of Billy Carter because he is the brother of the
President.
IV.
The Subcommittee has found no evidence that the
decisions of the Department of Commerce and the Department
of State with respect to export licenses for aircraft or
motor vehicles sold to Libya were made other than on the
merits of the proposed licenses. Nor has the Subcommittee
found evidence that the White House attempted to alter
those decisions by reason of any act of Billy
*
Carter.- Although concern may have existed in some
*/ There was testimony by one witness who was~a member of
the Carter party on the first trip to Libya that during a
dinner at which the Libyans mentioned the C-130's Libya had
ordered from the United States, Billy Carter, who had been
drinking, said he would try "to do something about it."
Billy Carter denied this in his testimony. In January,
1979, Randy Coleman, Billy Carter's assistant, received a
briefing from Morris Draper of the State Department (and we
believe the evidence shows this was arranged through Wise)
on the status of the C-130 aircraft for which a license for
export to Libya had been denied. The Subcommittee has
found no evidence of further activity of Billy Carter with
respect to C-130's.
A conversation between him and Alan Roy on the subject
of 727's is described in the August 4 Report and was confirmed
by Roy's testimony before the Subcommittee. The Subcommittee
has found no evidence of any other conversations about
727's in which Billy Carter participated or of any activity
by him with respect to 747's. The Subcommittee has found
no other evidence of activity of Billy Carter with respect
to export licenses for aircraft or motor vehicles.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 154
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
quarters that a decision to grant an export license might
erroneously be,attributed. to, Billy Carter's influence, it
has not been established that any decision was affected by
such a concern.
V.
In April, 1979, the President had made-one of several
attempts to dissuade Billy Carter from making a return trip
to Libya by stating. in a letter to him that such a trip
"would create severe problems for us because of their threats
against Sadat and because they are fighting in Uganda for
Idi Amin." Billy Carter nevertheless announced in July,
1979, that he intended to return to Libya. There was some
sentiment among White House staff personnel favoring advising
the President to try to dissuade Billy Carter from making
the trip, but the President does not recall receiving advice
from any staff member concerning Billy Carter's planned
trip to Libya. The President did not make a further effort
to dissuade Billy Carter from making the trip. Neither
did the President make a public announcement disassociating
himself and the administration from Billy Carter's visit to
Libya, an omission that was exacerbated by Billy Carter's
attendance at the celebration of the tenth anniversary of
the Libyan Revolution, which was also attended by terrorist
leaders and a number of representatives of radical governments.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
Nor did the President send an appropriate similar private
*
message to the Libyan government.- The Department of
State was instructed, however, that the trip should be
**/
treated as a private one.
*/ Special Counsel to the President, in a letter dated
September 29, 1980, responding to questions submitted in an
earlier letter by Subcommittee counsel, states in this
connection that the President considered Billy Carter's
trips to Libya to be "strictly private visits involving no
governmental function or purpose"; that in February, during
the Libyan visit, the President had disassociated himself
from certain of Billy Carter's public remarks, and had
stated he had no control over what Billy Carter said or
did; that the President was aware of the American Charge's
report that Billy Carter had avoided political comments;
and that
Under the circumstances, the President did not
feel that any further announcement by him or
private statement to the Government of Libya
was called for. There was no evidence available
to the President before July 14, 1980 to indicate
that the Libyan Government viewed Billy Carter's
trips as being other than private visits or
that the Libyan Government believed Billy Carter
was at any time speaking for or acting on behalf
of the President in connection with such trips.
**/ In July, 1979, an aide wrote Dr. Brzezinski a memorandum
making two suggestions: (1) that Dr. Brzezinski join with
Susan Clough and Jody Powell in urging the President to
attempt to dissuade Billy from making the trip; and (2)
that the Secretary of State be advised by memorandum that
Billy's second trip to Libya was a "private one" and should
be treated "strictly as a personal visit by a private citizen."
Dr. Brzezinski followed only the latter suggestion, and
there is no evidence that anyone pursued the first. As for
the treatment of Billy by the State Department on the second
trip, he was not met at the airport in Tripoli by the Charge
d'Affaires or invited to a reception at the U.S. Embassy,
as he had been on the first trip. He talked to the Charge
several times and was a guest of the Charge on a social
occasion.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
The Subcommittee recognizes the difficulty of
dissuading Billy Carter. However, the Subcommittee concludes
that having failed to dissuade him from returning to Libya
the President should have either issued a public statement
or sent a private message to the Libyan government,or both,
that Billy Carter did not represent the United States and
that the Libyans should not expect to gain any influence in
the United States by cultivating their relationship with
him.
VI.
The decision to involve Billy Carter in the hostage
crisis was made and carried out in haste. The decision was
made despite the known facts that diplomatic initiatives
already underway to persuade Libya to take a position on
the seizure.of the hostages had borne some fruit and that
relations between the Iranians and Libyan leaders were
strained because of the Iranian belief that the Libyan
government was responsible for the murder of a Shiite
religious leader. The reasons for the decision are stated
by the President and Dr. Brzezinski in the August 4 Report
and in the testimony of Dr. Brzezinski before the
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9 ..._
Subcommittee.*- There is no evidence that in making the
decision consideration was given to a number of negative
factors which the Subcommittee believes should have been
given careful consideration. They include the following:
(a) A predictable effect of using Billy Carter
would be to confer a measure of presidential condonation on
**/
his relationship with the Libyans.-
*/ While referring to the August 4 Report and the testimony
for a full statement of the reasons, we note the following
from the President's statement in that report (p. 10):
At that time my major preoccupation was the
release of the hostages, and I was ready to
try any channel that could help us reach this
goal. The Muslim community places great
importance on family ties, and I believed that
a request arranged with Billy's participation
would be regarded as coming more directly from
the President and might supplement the efforts
already being made through normal State
Department channels. I recognized there was
a risk of criticism in asking Billy to help
but I decided to take the risk.
Dr. Brzezinski, in his statement in the August 4 Report,
? described the efforts to isolate the radical groups in Iran
internationally, to obtain expressions of disapproval from
all other nations, and to induce Libya to take a more con-
structive position. He also described the gravity of the
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
iJa
(Continuation of footnote from previous page)
situation. With reference to involving Billy Carter, Dr.
Brzezinski stated (pp. 4-5):
Because of the cool nature of U.S.-Libyan
relations, it was not unreasonable for us
to hope that an approach through Billy Carter
might dramatize and underline U.S. deter-
mination to forge an international consensus
condemning Iran's illegal action. Given the
somewhat unconventional style of Col. Qadhafi
himself, there was reason to suppose that a
more direct approach would have more impact,
especially if it could be conveyed credibly
as a personal appeal from the President
himself, reinforcing the efforts of the
State Department.
In addition, he stated (p. 5):
The warm reception given him in Tripoli in
the course of his last trip indicated that
the Libyans might be somewhat more receptive
to an approach initiated by him. At that
time we felt we should use any means to
influence constructively the resolution of
the hostage issue.
**/ As the President was aware, the Department of Justice
has been conducting a FARA investigation of that
relationship since early 1979.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 `-- Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
(b) Another predictable effect would be to enhance
Billy Carter's stature and prestige with the Libyans. It
was likely that they would attach significance to the fact
that the relationship between the brothers was such that
the President would involve his brother in an important
matter of state.
(c) Serious questions concerning Billy Carter's
judgment, his lack of concern for whether his conduct would
embarrass the President or the country, and his primary
concern for his own self interest had been raised by his
previous conduct in establishing his relationship with the
Libyans and maintaining it in the face of admonitions from
the President.
(d) The enhancement of Billy Carter's importance in
the eyes of the Libyans might be exploited by him for his
own economic advantage. This possibility was made more
serious by the financial difficulties that, as the
President knew, Billy Carter was experiencing.
The Subcommittee believes that full and careful
reflection leads to the conclusion that the decision to use
Billy Carter in the hostage crisis was ill-advised in light
of those risks and the available means of communication
between our government and that of Libya.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
IbU
VII.
As events showed, Billy Carter's telephonic
communications concerning proposed transactions involving
Libya from which he would receive economic benefits
'increased dramatically immediately after the November 27,
1979, meeting and continued at a relatively high level. On
December 27, 1979, the Libyan government paid him $20,000.
On April 7, 1980, he received another $200,000. The Libyan
government appears to have held out the promise of an
increased oil allotment well beyond that date.
Whether there was in fact a relationship between
these events and Billy darter's involvement in the hostage
situation is a question that perhaps only the Libyan
officials could answer. The appearance of a relationship
that arises from the circumstances is, however,
unfortunate.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9 - "??
When Admiral Turner decided to furnish the intelligence
report received by him in March, 1980, only to Dr. Brzezinski
with the request that it be shown to the President, he
denied another intelligence element missing portions of the
information, which were unknown to it and which it had
requested. He thus decided that the information had no
utility for intelligence purposes. In so doing he did not
consult with the other intelligence element, which had
called for the missing portions but had not received them;
he thus preempted the professional judgment of the other
element that the information combined with the missing
portions might have an intelligence use and indeed may have
been referred to the FBI./
Admiral Turner also decided not to refer the information
to the Attorney General based on his view that the information
was not useful for law enforcement purposes. Admiral Turner
made these decisions without calling for other information
that might have been available within the intelligence
community, and in fact was available. That information
might well have had a material bearing on both decisions.
*/ When intelligence information was obtained in March,
1980, which bore on Billy Carter's commercial dealings with
an oil company and Libyan efforts to exploit them, it was
brought to the attention of the FBI and other intelligence
elements with certain key aspects deleted, consistent with
Attorney General approved procedures pertaining to the
protection of the privacy of United States citizens. The
FBI recipient, unaware of the relationship of the expurgated
report to the Billy Carter investigation, did not seek the
deleted portions. It is the Subcommittee's view that the
implementation of those procedures should be examined by the
Department of Justice and the intelligence agencies.to
insure that vital intelligence information reaches appropriate
U.S. officers who have law enforcement, as distinguished
from an intelligence, responsibility.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
IX.
Dr. Brzezinski testified that after receiving the
intelligence information from Admiral Turner on March 31,
1980, he spoke to Billy Carter by telephone and then reported
both the information and the telephone conversation to the
*
President.- The President's recollection is also that
Dr. Brzezinski told him in a single conversation of both
the information and the telephone conversation. If these
recollections are accurate, then Dr. Brzezinski (a) took it
upon himself, without consulting the President or appropriate
intelligence officials, such as the Director of the FBI, to
do an act outside his normal functions as National Security
Advisor that should have been done, if at all, only with
their authority, and (b) kept to himself significant information
about the President's brother for nearly two days, during
which time he had met alone with the President at least
once on an occasion when Dr. Brzezinski's handwritten note
hows he intended to discuss it.
*/ Dr. Brzezinski received the intelligence report from
Admiral Turner at about noon on March 31. His initial
account of the sequence was that he called Billy Carter the
afternoon of March 31 and advised the President the following
day (according to the August 4 Report) in an early morning
meeting (according to his deposition). A handwritten note
dated April 1 and stating "Billy Carter/Libya" was prepared
by Dr. Brzezinski for the meeting that morning. At the
public hearing, having been advised of telephone records
placing his conversation with Billy Carter on the evening
of April 1, Dr. Brzezinski testified that he must have
talked with the President about the matter the morning of
April 2, during his morning meeting with the President that
day, rather than April 1, because he was sure he had spoken
to Billy Carter before mentioning the matter to the President
and reported to the President in a single conversation.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
The Subcommittee concludes that communicating a
portion of the intelligence information to Billy Carter,
the subject of the information, carried with it the"
significant risk that sources could have been compromised. It was
Dr. Brzezinski's belief that he was not compromising the
sources. It will be recalled that Attorney General Civiletti
determined that the same intelligence information, and
another item of intelligence information as well, were so
sensitive that he should not communicate any portion of the
information to his most trusted subordinates, who had the
requisite clearance for receiving classified information.
Communicating the information to Billy Carter also involved
the risk that he would take measures to make his activities
more difficult for FARA investigators to discover and, in
the event of a civil or criminal action, more difficult for
the government to prove.
It is to be noted that within two weeks after receiving
Dr. Brzezinski's admonition, Billy Carter accepted $200,000
from the Libyan government.
The Subcommittee reaches no conclusion as to whether,
once having communicated the information to Billy Carter
and admonished him to desist, and he having rejected the
admonition, the President or Dr. Brzezinski should have
made further efforts to dissuade Billy from the oil enterprise.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
X.
The'Subcommittee questions the judgment of the Attorney
General in withholding the substance of the intelligence
information contained in the two items received by him in
April, 1980, from a subordinate with knowledge of the case
and the requisite security clearances and trustworthiness.
The Subcommittee believes it likely that at*least some of
the information could have been used in some manner and in
some degree by law enforcement personnel without compromising
the sources. The Attorney General did not have knowledge
of the facts which had been developed in the investigation
and should have consulted with someone who did before
making his decision. A judgment as to the usefulness of
the intelligence information, and whether it could have
been used without jeopardizing sources and methods, could
have been best made by or in consultation with a person who
knew the facts thus far developed in the investigation,
and with the assistance of an intelligence expert.
The Subcommittee believes that the Billy Carter case
would have come to an earlier conclusion if the Attorney
General had shared the information with a subordinate having
knowledge of the case.
The Subcommittee finds persuasive the evidence that
the Attorney General did direct his subordinates on June 11,
1980, to take no action for ten days, by which he meant
that no step should be taken toward disposition, such as
presentation to a grand jury, but not that investigative
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
activities should be halted. The Subcommittee makes no
determination as to the reason for that direction. It is
to be noted that within the ten-day period he held the
conversation with the President described in the next Conclusion.
The Subcommittee concludes that the direction to the Justice
Department attorneys did not affect the manner in which the
Criminal Division completed the investigation.
XI.
The Attorney General talked with the President about
*
the Billy Carter case on June 17, 1980.-/ The Subcommittee
In a press conference on July 24, 1980, the Attorney
General denied that he had talked to the President about
the Billy Carter case. The evidence indicates that denial
was not based on a misunderstanding of the question or a
failure to recall the June 17 conversation with the President.
On the night of July 24, the Attorney General learned from
Lloyd Cutler, Counsel to the President, that the President
had made a memorandum of the June 17 conversation. The
Attorney General testified before the Subcommittee that
after the press conference he was troubled by having made
the denial and added, "But, while I like to think I would
have corrected my press statement even if I had not spoken
to Mr. Cutler, I cannot assuredly state that, since on the
night of the 24th Mr. Cutler and I did talk." On July 25?,
in another press conference, the Attorney General corrected
his denial of the previous day and reported the June 17
conversation with the President. In his testimony before
the Subcommittee, the Attorney General said, "My conversation
with the President was in my mind absolutely proper. My
statement to the press on July 24 was wrong. I rectified
the mistake the very next day, but I must and I do accept
the responsibility for the error.
The Subcommittee notes that the President stated in the
August 4 Report that he did not recall his conversation
with the Attorney General concerning Billy Carter when
checking and approving the White House statement of July
22; in which it was stated that there had been no contact
concerning the conduct of the investigation between the
Department of Justice and the White House. The President
further states that his memorandum of the June 17 conversation
was e nong notes he had dictated during June and July but
his secretary, Susan Clough, had not finished transcribing
until after July 22, and that he discovered the June 17
memorandum in reviewing those notes early the evening of
July 24. He immediately notified Cutler, who had not known
of this June 17 conversation and who advised the Attorney
General of the memorandum later that evening.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
concludes that it would not have been.improper for the
Attorney General to advise the President of significant
information received by the Department of Justice about
Billy Carter's activities promptly upon the receipt and
analysis of that information. As pointed out in Conclusion
XII, below, the President should receive significant information
relevant to the exercise of his constitutional responsibilities
with respect to both foreign relations and law enforcement,
even if that information pertains to a member of his family.
The Subcommittee also concludes, however, that the
Attorney General should not have made, in that conversation,
what amounted to a prediction that criminal proceedings
would not be instituted if Billy Carter registered, when
the question of whether to bring criminal proceedings had
*
not yet been determined- by those in the Department of
Justice who were familiar with the facts of the case and
primarily responsible for that determination. It should
also be noted that, although the alternative of criminal
*/ Lisker testified in his deposition that "even if we got
a?registration statement, that criminal was still an open
avenue." Lisker Dep. 8/27/80, p. 14. He and Heymann testified
before the Subcommittee that Billy Carter's attorneys were
so advised in the meetings between counsel on June 12 and
25, 1980. Hearing, 9/14/80, pp. 49, 183-T. Lloyd Cutler's
Memorandum for the President of June 26, 1980, states that
Billy Carter's lawyers believe "the Justice Department
lawyers would be satisfied with the filing of a registration.
However, there is some risk that registration this late
would not satisfy Phil Heymann ....
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
prosecution seems to have been carefully weighed in the
Billy Carter case, the history of the Department's enforcement
of FARA since the amendment of the Act in 1966 to provide
for a civil remedy has been that,. when a subject has
registered, a criminal prosecution has not been brought.
XII.
Prior conclusions have treated the officers of the
Executive Branch separately. Their actions have some C~:i
similarities. One is that the Attorney General, Admiral
Turner, and Dr. Brzezinski all made decisions about the use
of intelligence information without calling for the facts
available to the organizations they head, or to the government
generally, which may have enabled them to make more fully
informed judgments. This unwillingness of key officials to
draw on the talents and knowledge of the organizations they
head is a matter of significant concern to the Subcommittee.
In saying this we recognize that from time to time
circumstances may arise in which top officials with
intelligence responsibilities, including the Attorney
General, could reasonably conclude that the responsible
treatment of intelligence information, including the
protection of vital sources and methods, require that they
take direct and individual action with the information they
receive. While we have in the Conclusions above stated our
views as to this case, we do not wish to prejudge the
f" ice ase sJ 1~:Ct
1n ta t genre
l~Y tli`' i::~r,f _. L'_(.I7i 0 ~.
may ar.se in the future.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
A second similarity is that while the Attorney
General and Dr. Brzezinski handled, in quite different
manners, the information they received, their treatment of
the information had one important element in common. The
President has the constitutional responsibility to conduct
the foreign policy of the United States, as well as the
responsibility to take care that the laws are faithfully
:_executed. The Assistant to the President for National
Security Affairs advises with respect to the President's
foreign policy responsibilities, and the Attorney General
is the President's principal legal advisor. By himself
neither possesses the range of responsibilities which the
President has and which were implicated in this matter.
Yet, neither saw it to be his responsibility to present to
the President for decision the issues arising from the
intelligence information each had received. Both Dr.
Brzezinski, by not consulting with the President before
calling Billy Carter, and the Attorney General, by not
informing the President of the intelligence information
'brought to him in April, acted to protect the President
from taking personal responsibility for the proper course
of conduct in a situation which involved both foreign
policy and law enforcement aspects.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
XIII.
The Subcommittee has not undertaken a thorough
study of the several legislative problems identified
during the course of the investigation. These problems
are as follows:
(1) The inadequacy of the civil investigative pro-
cedures available under FARA prior to the filing of suit,
and the need for provisions for civil investigative demands
or administrative subpoenas, which, as a matter relating to
implementation, is an appropriate subject for consideration
by the Committee on the Judiciary.
(2) A possible need for improved procedures for
coordination and centralized availability in the intelligence
community of information gathered for either intelligence
purposes or national-security-related law enforcement. and
usable for the other purpose, which is an appropriate
subject for consideration by the Select Committee on
Intelligence.
(3) A possible need for improved coordination and
clearer allocation of responsibility between the National
Security Council and the State Department, a subject that
has received and will no doubt continue to receive the
attention of the Committee on Foreign Relations.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
ADDITIONAL VIEW
The unanimous Report and conclusions o t e Subcommittee
represent a non-partisan judgment that the conduct of the highest
officials in the Carter Administration falls far short of the
standards the American people have a right to expect from their
government. In my view, this conduct properly deserves censure.
The facts in the Report unmistakably demonstrate that
these officials--the Director of Central Intelligence,; the
National Security Advisor, the Attorney General, and the White
House--followed a clear pattern of misconduct throughout this
entire episode. That misconduct was consistently one of seeking
to soften and delay the impact on American public opinion of
Billy Carter's Libyan connection and of slowing the normal workings
of U.S. law enforcement and intelligence agencies.
it is clear from the evidence that Billy Carter intended
to use his relationship with the President for monetary gain.
Influence-peddling is always to be condemned. In the American
political process, even the appearance of having influence up for
sale merits condemnation. This Administration did little or nothing
to prevent that appearance. When hard evidence began to come in,
it ducked and dodged until its hand was forced by the operation
of the Foreign Agents Act and the spotlight of public opinion.
In the final analysis, as the distinguished jurist, Justice
Brandeis said, "Sunlight is the best disinfectant." To its
d.i.scr:c'..it, the Admini=tration, for too !cng, tried to keep this
Matter in the dark. Yvi"-2-r the Sub==,it-cF-.e's Rep~~rt today, that
policy is coming to an end.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
171
FACTUAL ANALYSIS
Director of Central Intelligence, Admiral Turner
Admiral Turner,. in diverting important intelligence relating
to the exploitation of Billy Carter by Libya from professional
elements in the intelligence community, and in carrying it to
Dr. Brzezinski, took that information out of intelligence channels
placed it exclusively, in White House hands where it was dealt
":L' quietly by a telephone call to Billy Carter. Admiral Turner
also failed to take what should have been normal actions for one
holding the responsibilities of the Director of Central Intelligence.
He did not assemble all information in the U.S. intelligence community
on the Libya-Billy Carter tie and provide it, with analysis, to policy
makers. Nor did he refer the March intelligence report to the /
for law enforcement purposes. It should be emphasized that Admiral
Turner conceded in his testimony that if he had known that Billy Carter
was the subject of a Foreign Agent investigation, the intelligence
report should have gone to the law enforcement agencies.
National Security Advisor Brzezinski
Once he received the intelligence information from Admiral Turner,
Brzezinski telephoned Billy Carter to make him aware that others had
learned of his oil dealings and to warn him of the possible political
consequences for the President. As the Subcommittee has unanimously
agreed, this was outside Brzezinski's role as the national security
advisor. Thus, in effect, Brzezinski_ acted as a political trouble-
shooter, trying to keep Billy Carter from derma-ing the standing of
the President.
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
Attorney General Civiletti
Attorney General Civiletti withheld critical information from
the attorneys who were working on the investigation, and forced
those attorneys to discover the information for themselves. Although
Civiletti eventually gave the information to these attorneys, it was
only after they had uncovered it for themselves. We cannot be certain
what would have happened if Lisker had not chanced upon the information.
Given Civiletti's rationale for withholding it, Civiletti might still
be sitting on the information, waiting for an "additional" source to
happen along. This scenario is very likely'because FARA cases rarely
receive information from intelligence sources. Anyone knowledgeable
of FARA investigations, such as Civiletti, had to realize that the
chances of "additional" sources developing were very slim.
The unavoidable irony is that while Justice Department attorneys
were waiting for an "additional" source to come along, Billy Carter
by Dr. Bzenzinski
was given the information/and thus, the opportunity to cover his
tracks. It is interesting that while Civiletti claims the information
was too sensitive to be given to his staff attorneys, who had clearances
for this material, Brzezinski felt that he could give the information
to Billy Carter without risking the sensitive sources. Certainly one
of these two men misunderstood the sensitivity of this intelligence
information.
Attorney General Civiletti is also guilty of impropriety arising
out of his conversation with the President concerning Billy Carter's
.i.r ~ i%~ _ja._L:i;1 cull,o was accl ..'?'`?` i it was Carefully
planned by Civiletti. He discussed with his staff the idea of talking
to the President. By asking White House C.oursel Cutler to leave the
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
room, he insured that no one would overhear the conversation.
Civiletti claims he raised the topic of the investigation simply
to tell the President that he could not discuss the case. To accept
such an explanation, we must be willing to assume that had Civiletti
not raised the case, the President would have pressed him for facts
concerning the investigation.
the the
After raising/issue of/Billy Carter investigation, Civiletti
added that he thought Billy was foolish not to register and in ,
response to a question from the President, added that if Billy were
to register he would not be prosecuted. This additional comment is
crucial. Even if the Attorney General acted properly in raising the
case to insure that it would not be discussed, it was not proper to
inform the President of the status of the investigation and to predict
its disposition.
This impropriety was then compounded by Civiletti's subsequent
concealment of the conversation. After talking with the President,.
Civiletti did not inform anyone in the Justice Department. On four
separate occasions, Civiletti denied that he had any contact with
the President. On July 14 and 21, Civiletti confirmed to Cutler
that there had been no contact with the White House. This denial
formed part of the basis for the July 22 statement by the White House,
which disavowed contact between the White House and the Department of
Justice. That statement is incorrect; and Civiletti must share
responsibility for at least part of the inaccuracy.
Before the July 24 press conference, a Justice Department press
as.;istant asked about any White House contact and Civiletti's response
again indicated there had been none. Finally, at his press conference
on July 24, Civiletti was asked, "Did you or your colleagues, Mr. Rerrtfre,.?r
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
174
and Mr. Heymann ever talk [emphasis added] to the President or
any other White House aides about the Billy Carter case?"
Civiletti responded, "No."
On.].y after Civiletti became aware that there were notes of
conversation did he finally admit that he had talked with the
President. When Civiletti finally admitted the contact, he claimed
that his response on July 24 was based on a "lawyer-like" distinction
concerning that the term "discussion" means. While this distinction
is questionable even on its face, it is made more suspect because
the original question did not use the word "discussion." The question
asked on the 24th was broad enough to cover any occasion when
Civiletti talked with the President, as he had on June 17.
Civiletti now admits that his answer on the 24th was wrong.
While I agree, I feel that his misstatement has greater importance.
Because Civiletti has been less than truthful about the conversation,
we must closely examine the rest of Civiletti's story. The normal
presumption of veracity given to an official in Civiletti's position
is seriously damaged, if not rebutted, by his admission that he has
'misstated' facts about the investigation. With this in mind, it
is unrealistic to ask the subcommittee and the American people to
accept, on faith, that Civiletti's actions were unquestionably proper.
Because Civiletti initially concealed his conversation with the
President from the press, other events in this investigation are
cast in a new light. It becomes more difficult to assume that
CiVii_etti' s instructions to Lisker to "Take no action for ten days"
were as innocent as Civiletti would have us believe. It renews
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
doubts as to why the Attorney General spoke with the President on
June 17. Even if the whole incident regarding his change of stories
to the press is considered in the best light for Civiletti, it
creates the undeniable appearance of impropriety. If Civiletti
has forfeited his right to a favorable interpretation, the inference
is much more serious.
White House Involvement
It is impossible to decide the full role of the White House in
the Billy Carter affair. We do know that the White House asked
Billy Carter to participate in overtures to the Libyans in November
of 1979 and that Billy first received money from the Libyans shortly
thereafter. While there has certainly been testimony and evidence
to indicate that the two events are related, the record is not fully
conclusive.
Although the Subcommittee has received the August 4 report from
the President, there has been little corroborating testimony for that
report. Unfortunately, perhaps for the President as well as the Sub-
committee, a lack of memory by certain White House staffers has hindered
our inquiry. Therefore, this Subcommittee is not in a position to
determine when, and to what extent, persons at the White House had
knowledge of the specifics of Billy Carter's dealings with the Libyans.
A few comments on this lack of memory are necessary. Phillip
Wise has shown a disturbing lack of memory for a person who has the
responsibility for scheduling nearly every minute of the President's
ti~m.e. This concern is further aggravated by the discovery that as
we fill in his memory gaps, the facts disclose incidents which Wise
robahly would prefer not rereir,L-r. Fire , -4.7,n dr-es not reC.a l 1
~.
Ls,
Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
 Approved For Release 2011/09/27: CIA-RDP90-00552R000101000002-9
4 1, 176
asking anyone to brief Billy Carter or Randy Coleman before their
first trip to Libya. Yet, Mr.Inderfurth and Mr. Quandt, who
worked at the National Security Council, told the Subcommittee that
that they had briefed Carter and Coleman at Wise's request. Wise
also has no recollection of Carter's or-Coleman's involvement in
the hostage negotiations; nor does he remember even seeing either
of them in the White House during that time period. However, Coleman
says that he did see Wise at the White.House. Wise also had trouble
remembering whom the name "Billy" referred to when it appeared in
his call-back logs, until the Subcommittee produced a phone company
record indicating that Billy Carter had phoned the White House at
precisely that time.
Perhaps the most critical lapse of memory concerns the phone
message from Lisker on June 2. Wise fails to recall the-specific
message from Lisker, but he does admit that he finally set an
appointment with the FBI on that day. Lisker clearly remembers
calling and leaving the message that unless Wise made himself
available for an interview, a grand jury would be used to obtain
his cooperation. Lisker's story is corroborated, in large part,
by others in the Department of Justice who testified that Lisker
had received permission to use the grand jury threat against Wise
only a day or two before June 2.
While a certain lack of recall is to be expected in any inquiry,
it is very unfortunate when the other person sitting next to the
lJV has the saute l