THE QADDAFI CONNECTION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90-00965R000402830043-1
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 19
• Document Creation Date: December 22, 2016
• Document Release Date: February 7, 2012
• Sequence Number: 43
• Publication Date: June 14, 1981
• Content Type: OPEN SOURCE

STAT
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i., 1RTICLE APPEARED
OIL PAGE__52:___y
By Sermons M. Hersh
Ing plant for the production of assassi-
nation weapons; to have themselves
helped Qaddafi plan political assassi-
nations; to have recruited dozens of for-
mer Green Berets to teach Libyan sol-
diers and Arab terrorists how to handle
volatile explosives-how, for example,
to turn ashtrays into weapons of terror;
to have illegally shipped arms explo-
sives to Libya with the aid of forged and
fraudulent State Department export
NEW YORK TIMES MAGAZINE
14 June 1981
ive years ago, two- former,
operatives of the United
States Central. Intelligence
Agency - Edwin P. Wilson-!
and Frank E. Terpil - made
a business deal with Col.
Muammar el-Qaddafi,. the:
ruler of Libya. In essence,.,
the former C.I.A. men, who had be-
come partners in an export-import
business, agreed taselLColonet Qaddafi
their accumulated years of American ;
intelligence-agency contacts, experi-
ence and expertise. Theirs was a prod
uct that could not be purchased on the
open market. The colonel, who boasts
of supporting terrorism in the Middle
East, Europe and Africa and who has
been attempting to set up his own new
federation of Arab and Moslem states,
was willing - and able; because of his
vast oil wealth -to paydearly.
As a result, the twor Americans, ac-
cording to Federal investigators, have
made millions of dollars aiding Qaddafi
in his drive to export terrorism and
build his own. Middle Eastern power.
Under cover of their export-import
business, Wilson and Terpil are said to !
have helped Libya set up a manufactur-'
certI$cates and to have involved other past C.I.A. leaders who seem unable to
former C.I.A. employees in their face fully the implications of the case. It
projects, tells of a basic inability of the Govern.
Informatloet about the Qaddafi con- meat's investigative and law-enforce-
nection has been known by the Govern- meat agencies, disrupted by internal jeal-
ment since the fall of 1976. It was then ousies and feuding, to perform effective-
that- Kevin P. Mulcahy, at the time a, ly. It suggests that a moral climate exists
partner of Wilson and Terpil, ap- inside and on the edges of the intelligence
proached the C.I.A. and the Federal community which results in the subver-
Bureau. Of. Investigation with grave sion of national goals to personal gain.
d
bt
b
h
l
ou
s a
out t
e
egality and ethics of Ed Wilson was running what
his company's business dealings with, amounted to an updated version of the
Libya. Mulcahy, a former C.I.A. em military-industrial complex in which
ployee who had spent six months. inside. former. C.I.A; and military employees
the ? Wilson-Terpil - operation, would have put.their Government experience,
spend hundreds of hours, over the next contacts and knowledge to use for large
f
ew years, providing the Government
with firsthand knowledge.
-Kevin Mulcahy has now decided to
tell his story publicly for the first time.
He's tired of waiting for this segment of
his- life to end. He wants to be listed
again lathe telephone directory, to hold
a driver's license In his own name, to
vote, to own property, to stop living as
if be-and not Wilson and Terpil - had
been indicted for wrongdoing. He.feels
he is forced now, in effect, to give his
testimony in the pages of The New York .
Times.. The essentials of his account
have. been verified where- possible
through secret documents and in inter-.
views with key members of the State
Department, the Justice Department,
the F.B.I., the United States Attorney's
office in Washington, as well as.with
Stansfield Turner, the former head of
Central Intelligence, and other high
C.I.A. officials.
- ^
The Wilson-Terpil case is a story of
Americans who meet secretly in bars and
board rooms to arrange the illegal sale of
electronic-spying equipment and terrorist
Seymour M. Hersh, a former New York weapons, and of Americans who train as-
Times reporter, is now at work on a ssssioe abroad. It is a story of an old-boy
book about Henry Kissinger to be pub- network of former C.I.A. operatives and
personal monetary gain, regardless of
the damage they will do to their own
country. Such men have worked in
league with a number of American
manufacturers who have specialized in
working for the C.I.A. and other intelli-
gence agencies in supplying military
goods and highly classified technical
equipment. Questions that should nor-
mally be asked - Are the sales offi-
cially authorized? Are they legal? Do
-they jeopardize national security? -
are not. Senior Government officials, in
recent interviews, acknowledge that
American expertise is being trans-
ferred abroad in unprecedented fash-
ion. The phenomenon, known in the bu-
reaucracy as "technology transfer," is
one apparent result of the declining mo-
rale inside the intelligence community
and the increasing profits available.
These officials say that nations such as
Chile, South Korea, Brazil, Argentina,
Taiwan, South Africa, Iraq and Paki-
stan have been able to purchase the
very latest American equipment and
technology in communications, mili-
tary arms, computer science and nu-
clear development - with or without
authorization from the United States
Government.
The matter was intensively re-
fished by Summit Books. military men, an4 a story of present and viewed, at high levels. inside the Carter
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Administration, with little progress. As
yet, the Reagan Administration has not
addressed the issue. In early May, the
Administration did order the Libyan
Government to shut down its offices in
Washington, as part of the campaign
against international terrorism. But it
has not faced the broader problem -
the export of American weaponry and
expertise to terrorists.
Before the Federal prosecutors
brought their indictments in April 1980
in the Wilson-Terpil case, the file was
presented to Philip B. Heymann, then
Assistant Attorney General for the
Criminal Division. Heymann, who is re-
turning this summer to teach at Har-'
yard Law School, recalls: "I was
shocked by what I saw in the Wilson
matter. The notion that there is no con.
trol over an American intelligence offi
cial taking his know-how and selling it
to the highest bidder seems to ' be in-
sane. If terrorism Is to be taken as a,
major national problem," Heymann
says, "we'll have to start at home and
draft statutes that would bar the sale of
fancy American equipment and fancy
American expertise for terrorist pur-
poses. It won't be an. easy matter, be-
cause It's hard. to put-a lid on-the dis-
semination of information. But this
question is exactly what. Congress
ought to be holding hearings on.-
Federal authorities, in' accepting
Kevin Mulcahy's story as accurate, ac-
knowledge that its implications are
deeply disturbing: Qaddafi obviously
has utilized the materials and expertise
of Wilson and Terpil in his support of
such terrorist groups as the Palestine
Liberation Organization, the Red Bri-
gades of Italy, the Red Army of Japan,
the Baader-Meinhof gang in Germany'
and the Irish Republican Army. He is
suspected of having ordered the mur-
der of at least 10 political enemies in
Europe and the Middle East; two
months ago, the F.H.I. arrested Eu-
gene A. Tafoya of New Mexico, a for-
mer Green Beret, and accused him of
an attempted assassination of a Libyan
student at Colorado State University.
The Libyan is one of a growing number
outside the country who oppose Qadda-
fi's rule. When arrested, Tafoya, who
traveled to Libya three times last year,
had Ed Wilson's business card in his
possession with telephone and telex list-
ings in Tripoli, London and Washington
for one of Wilson's Swiss-based compa-
nies. Tafoya's links to Wilson are still
being investigated.
Colonel Qaddafi is relentlessly anti-
Israel, supports the most extreme fac-
tions in Syria and opposes the moderat-
ing influences of Jordan's King Hussein
and Egypt's Anwarel-Sadat as part of
his campaign of political expansion in
North Africa. QaddaWs ambitions
were strengthened early this year when
he successfully invaded Chad, seizing
an area believed to be rich in uranium
ore. The war also meant more profit for
Wilson, who has established his own
trading company in Tripoli, known as
Meprico, to supply Qaddafi's army.
Libya, relying on its estimated a25 bil-.
lion in annual oil revenues, is a major
purchaser of Soviet arms, and more
than 5,000 Warsaw Pact military advis-
ers are believed to be- on. duty with
Qaddafi's 60,000-man army.
A former
tions and computer-technology expert
in the C.I.A., Kevin Mulcahy was no in-
nocent when he came forward about the
way the export-import business had
worked. He had gone into business with
Wilson and Terpil at a high guaranteed
Income. Within three months, Mulcahy
realized that.-his his. partners were rou-
tinely selling restricted military and
CMmitniestiont _gear .He.himself of-
f'ied to sell such sophisticated equip-
ment as-second-generation computer
systems and coded communications
machinery.. Mulcahy did not hesitate in
his talks with the authorities to ac-
knowledge his own role in questionable
activities, which included the sale of
embargoed ammunition to South Af-
rica. In all of these dealings, he says, he
believed or wanted to believe that Wil-
son and Terpil were somehow part of a
'covert C.I.A. operation.
Today. Mulcahy is an angry and frus-
trated man. He believes his life is in
danger, a belief shared by Federal offi-
cials, and he is deeply disturbed by
what he regards as a monumental lack
of resolve, competence and communi-
cation within the Federal Government
in handling the case. It took nearly four
years to indict Wilson and Terpil in
Washington, on charges that include
Illegal export of explosives, tailing to
register as a foreign agent, and con-
spiracy and solicitation to commit mur-
der. Despite fugitive warrants, the
Government has been unable to appre-
hend them at a time when their travels'
In and about Europe, the Middle East,
Africa and the United States have been
observed by many people. Last winter,
more than six months after his indict-
ment, Wilson was seen by a business
friend in Blackie's House of Beef, a
Washington restaurant, with a group of
his former employees; it is not known
how he entered the country. Mulcahy,
meanwhile, has been forced to lead a
life of furtiveness. "I've had five years
of indecision, contradiction and waiting
for the day that this chapter of my life
ends," he says. "The Government
keeps telling me, 'We're on top of it;
we're on top of it.' " Yet Wilson and
Terpil remain at large, and many of
their operations, which clearly seem to
be working against the interests of
their own country and, indeed, world
peace, are believed to be continuing at
this moment.
Kevin Mulcahy, now 38, grew up vin-
tage Americana in suburban Washing-
ton: altar boy, Eagle Scout, varsity
basketball, class vice president. He
was a son of Donald V. Mulcahy, a 28-
year-career senior official of the C.I.A.,
four of whose six children were also
employed by the agency. Kevin, the
oldest child, began working full-time
for the C.I.A. in 1963, after serving as
an airborne radio operator in the Navy.
He became a communications and
computer expert and worked on highly
classified programs that he will not
talk about today. In.1968, he resigned
from the agency to take a position in the
electronics industry. There followed a
succession of increasingly responsible
jobs in the computer industry, a serious
drinking problem that drove him into
Alcoholics Anonymous, and a painful
divorce.
By the fall of 1974, Mulcahy had come
to grips with his alcoholism and, having
left the computer industry, began
working in Virginia as a counselor in a
drug- and alcohol-treatment center. By
1975, he was trying to set up a P -. Aes of
halfway houses and was ac: ambling for
Federal grants. lvlulcahy rented a
house by chance from a Barbara Wil-
son-Edwin P. Wilson's wife. Mulcahy
became friendly with her and eventu-
ally was invited to dinner at the Wil-
sons' newly purchased, luxurious 1,500.
acre farm in Upperville, Va. Ed Wilson,
now 52, was well known inside the
C.I.A. as a skilled and trustworthy
operative. Wilson, who began his ex-
port-import business in the early 1970's
while working as a consultant for a top-
secret Navy intelligence unit, had
played a role in the Bay of Pigs and
other undercover operations in his long
C.i.A. career as a contract agent. MW-
cahy was Impressed.
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Over dinner, Wilson made it clear
that he knew pretty much all there was
to know about Kevin Mulcahy, about.
his former employment with the C.I.A.
and his current work with teen-agers. A
few months later, Wilson made an offer
Mulcahy would not refuse: If Mulcahy
would join his arms-sales business in
Washington and remain for one year,
he could then have as a bonus a nine
bedroom farmhouse Wilson also owned.
and use it as a halfway house for trou-
bled youths- Mulcahy's guaranteed
$50,000 annual income would be supple-
mented by commissions and expenses.
"I had no suspicions at all about the
job," Mulcahy recalls, and he began
working hard. "I was putting in 18
hours a day at first, dealing with 10,000
suppliers and inquiries about canned
food. parachutes -any kind of equip-
ment, from machine guns to aircraft -
There- was no reason for suspicion in
those weeks." Most of the business was
aboveboard and involved the sale of
highly technical equipment. Mulcahy
was responsible for arranging export 11r
ceases, international letters of credit
and shipping, and also for determining
which manufacturers' - equipment,.
would meet .the specifications of the-
order-
Mulcahy obviously passed muster. In
the early spring of 1978, Wilson walked
him to another office a few blocks
away, in downtown Washington, and in-
traduced him to Frank Terpil. now 41-
Terpil had served about seven years as-
a communications technician for the
C.I.A. but was forced to resign. In 1971
after a series of embarrassing private
escapades, including an attempt to
smuggle contraband liquor into India.
Unlike Wilson, who mingled easily and
effortlessly with senior C.I.A. officials,
corporate -executives -and important
members of Congress, the Brooklyn-
born Terpil was a street upcratut who
had been arrested twice for illegal traf-
ficking in arms. Mulcahy knew nothing
about Terpil except that he had worked
overseas for the C.I.A.
The three men agreed to set up a new
company, to be known as Inter-Tech-
nology Inc., for the specific purpose of
selling high-speed communications ;
gear and computers to foreign coun-
tries. The equipment was legally pur-
chased from American companies.
Each man was to be a one-third partner'
of Inter-Technology, which, it turns
out, was one of scores of Wilson-Terpil
companies scattered in corporate
records throughout the United States
and Europe.
If Mulcahy had any doubts about his
new job, he suppressed them by believ-
ing - or wanting to believe - that Ed
Wilson was still linked to the C.I.A. "Ed
would parade'his contacts in the C.I.A.
with the people he was doing business:;
with to impress them that he was stilt
C.I.A.," Mulcahy says. "He would sug-
gest he was still under deep cover."
Often on Friday nights, Wilson made it:
a point to go drinking at bars in subur-x
ban- Virginia known to be after-hours;:
hangouts for C.I.A. officials-on duty at
the agency's headquarters in McLean.:'
Mulcahy, the new partner, began going:
along. "I thought he was agency," Mul-
cahy says of Wilson. "I had noquestion
in my mind.'.
A few days after the new partnerships
was formed, Mulcahy discovered sales.
orders showing that Wilson and Terpil.
were- in the process of selling machine?
.guns and silencers to an arms dealer in
Zambia. He was bothered by thesale oft
the silencers for heknew they had only;
one purpose - killing without drawing
attention to the killer- Her telephoned
the F.B.I.. and later showed. copies of.
-.the sales orders to agents in the Bureau
of Alcohol. Tobacco and-Firearms
Firearms
.(B.A.T.F.); one of whose. functions It is
to monitor illegal-arms deals and re-i
port on impending saies.-He also asked
about his new partners: The authorities
said that the sale to Zambia was legai
and that they had nor derogatory hilor-;
mation about Wilma andTerpll-intheir
files. "I said to myseif.'Christ,. this has
got to be an agency Opera"- Mut-
cahy recalls.. "These guys-are buying.:'
and selling silencers, and the- F B.I. ,
and BAT.F. give them the O.K. So )'m--
feeling pretty good: I'd gone to the:Fed-
eral authorities, shown them docu`
meats and they said Wilson and Terpil-
Wilson's. contacts seemed inexhaus
ible. Ed Wilson was friendly; as Mul-:
cahy. and Federal investigators- were
later to learn, with many seniorlegisla,
tars, 'Including Senators Strom: Thur
mood of South Carolina and the. late'
John L. McClellan of Arkansas and
Representative Silvio O. Conte of Mas
sachusetts.: He could telephone a coo-
tact i,:. the Internal Revenue Service;
and within 15 minutes have intimate
financial details on a potential custom
er. He was able, with a telephone call to
Washington's -police-headquarters, to..
obtain registration information on a,
local automobile license plate. But
sometime In late May of 1978, Wilson
went a step further: He telephoned
Theodore G. Shackley, a, prominent.
C.I.A. official who was than serving as
the assistant to the deputy director for
clandestine operations - one of - the
most powerful posts in We a
gency
. , be was led to believe that
d Qaddafi
Shackley was renowned for his tough-
d
h
C.I.A. was deeply involved in Its still
controversial- Phoenix. assassination-
Program:- He- later served in Chile,.
when the. C.I.A. was- assigned the task
of interfering with the Government of
Salvador Allende Gossens. .
Wilson.arranged'a meeting at Shack-
ley's home.. a few- nights later after
work, bringing along Mulcahy and an
American, Harry Rastatter, one of Ter-
pil's business, associates who had just
-returned from a business trip to Egypt,
Turkey- and Iran~:..;. Rastatter_ had ob-
tained- some- Information. from Savak, '
the Iranian ? internak- police;- and was-
willing to pass It along.: to the C.I.A.:
.Shockley was introduced by Wilson to'
'Mulcahy. and recalled knowing his fa-:
they, : who, earned: the National Intelli-
gence Medal,. the agency's highest re-:
;ward.. before retirement. There was-
tally about- military and intelligence
.needs in.Iran, Turkey and Libya. Wil-
son told Shackley that he and Terpii
were planning to travel to Tripoli and
meet with Qaddaf3- "By now I'm con-
vinced that thewhole thing is an agency
front." Mulcahy recalls. "I thought Ed
was In bed with the C.I.A." Some Fed-
.,Mal officials say they are still investi-
gating Shackley's . personal and fman-
?dal Involvement with Wilson. Shackley
has. acknowledged to Federal authorl-
~,tiesthat the meeting described by Mul-
caby as- well, as other meetings with
-.Wilson. did take place, but Shackley in-
?slsted that at no time did Wllson'receive
any authority- or- sanction from the
C.LA. for his work in Libya. He said his
;contacts with Wilson were solely for the-
;purpose' of obtaining any stray bits or,
Intelligence Wilson might have picked
up,.Wilson and Shockley had worked to-: -
gether in 1960 on the Bay of Pigs opera-
tion Sbackley, . in an interview, con:
firmed Mulcahy's account of the meet
ing and said that he, like Mulcahy, was.
unaware then of Wilson's plans for sup. porting- Qaddafi's terrorist program.
Shackley said his purpose in talking to
.
Wilson and Rastatter was to collect in-
formation from non-CIA sources. "I
talked to them solely not to be a captive
of the system;" he said. "Wilson was a
guy who knew about a lot of things. He
was a good contact."
After the Shackley meeting, Mulcahy-
was brought into the Libyan operation.
Muammar el-Qaddafi had placed a pur-
chaseorder with Wilson and Terpil for
hundreds of thousands of timers capa-
ands of t
ble of detonating explosives at some'
specifically delayed time. Wilson and
Terpil did not ten MWcahy, however,
the real purpose of the devices; instead.
ee
e
em to clear mines from har-
ness and effici n t
eats as a station chief in I bors and battlefields safely Laos and in South Vietnam during the 1 them up. The minks, so blowing
as
2SC
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told, had been left from the 1973 Arab-
Israeli war. The timers were to bw
demonstrated to Qaddafi's-senior mill-
tary and intelligence aides that June In..
Libya, and Wilson and Terpil had to,
find an immediate manufactuer. They'
decided to exploit a long-time C.I.A..;
contractor, the Americana Electronic
Laboratories of Colmar, Pa., and Falls'
Church, Va.. which had routinely been:
providing the agency with some of its-.
most highly classi fied electronics and.
communications gear.
American Electraric-was a logical,
starting place. In May W18,.Wilson had
visited the company's plant in Falb
Church iman effort tarpersuade its oW
cers to-retain his-firm to represent its
products around-- the- world. Wilson:
brought Mulcahy' and -Terpil to- the
meeting. as well as an active C.I.A. em-
ployee, Patry E:.-Loomis,- an agent as
signed to-the-Far East who was operates
ing under cover for an aircraft: compa-
ny. One of Loomis's-. functions was to
serve asaaiaisonofficer.betWeen C.I.A.
headquarters and its overseas stations;,.
he was responsible for establishing per-
sonal relationships. with senior military
and Government officials in. the Far,.
East. Loomis addedcredibilityr to-WII_
son's pitch. "Terpf was there to im-
press them with his contacts in the Mill.
the Easrt''v Mukak- recrlla,- '`Wilson
was there for Europe and Loomis Lon:
the Far East I was there because Its
was told to them that I was ez C1.A.
and would remain on-site-and accessi.
ble while the others traveled." . .
Loomis, who had been illegally moon-
lighting for Wilson for some time, was
one of dozens of former Government`.
employees who had been recruited by'
Wilson and Terpil. Government investi-
gators have-learned that-Wilson's tech-
nique; as. utilized- in, his approach to.
American Electronic, was. to seek out
intelligence and military officials with
close relationships- with both vital sup-
pliers and foreign governments, These
men would be retained to sell goods.'
ranging from canned foods to weapons,.
to those foreign countries. Income for
his salesmen, as well as for Wilson, was
extremely high, in part _because the
sales were often contingent on under-.
the-table kickbacks to Wilson's com-'
pany and to foreign officials.
No agreement was reached between
Wilson and senior officials of American
Electronic at their meeting, but Wilson
and his associates were able to leave
the impression that their work was not
only highly profitable but also had been
officially sanctioned by the Govern-
ment. In June, when the 10 prototype
timers were needed, another series of
meetings was set up in a Virginia bar
involving three of Wilson's employees,
along with William Weisenburger, then--
an- active4uty C.I.A. official, and- two L.
employeesofAniericanElectranic, one,
of: whom-was another CJ.A: off'haal, ?,
them.: working _ under.. cover. Weisen
burger and the American Electronic
men agreed to work privately over the.
weekend to produce 10 prototype timing-.
devices at the inflated. cost of $1,500W,
each (10 times the actual cost). Federal'
authorities later concluded that these:
men knew that there had been-no of l--
idal.C.I.A.. authorization. for: the job,.
and that senior officials of American
.Electronic-had not known: of the moon
lighting. It was a project that in: the,
months ahead struck Mulcahy as wildlye
i=onic:. He-knew that many of the com-
pans::senior officials,, were4' Jewish
and, he- now says, "You can bet they
ywas beginningto get- a taste'
of, life as: an- international tsalesman.~t
surd li was good. _ Is, June,- he> flew toff;
England to.set up an exhibitio}atase,
caurity show at Brighton. ;T'heroomer
were first class, so was the',food-'and"
there seemed to be a constantseries-ofd
parties, and party girls. One of Mu1ca..
show-was a Syrian company. Abdallahi
Engineering; which was- intereste&-iri~
-purchasing high-speed = communica__3
tions, equipment - gear so- sensitive,.4
Mulcahy thought, that the State_ "De .
partment would never permit its