"While our slush
funds grew steadily, unusual overhead costs
diminished the profits. True, we were selling weapons to the
Iranians with a 50 percent to 400 percent mark-up on the ex-factory
price, but the actual cost of procuring and delivering
them was high, too. There was a huge network of arms brokers to
be paid, money to be handed over to those involved in "smokescreen"
deals, bribes to be paid to politicians and civil servants,
campaign "donations" to be made around the world, and other
expenses. The "donations" sometimes cost more than the
even made from the slush fund, albeit
indirectly, to U.S. politicians, including Democrats on the Iran-contra
panel. This may be one reason that the full story behind
the Iran-contra scandal never materialized. Even though Israel
leaked details about some of Oliver North's activities, the
Democrats, many of whom were well aware of what was going on,
kept quiet about the huge flood of arms that had been running to
Iran through Israel. Tel Aviv, not wanting its own arms deals with
Tehran to be exposed, had paid them off through various, often
convoluted, contributions to the American Israel Public Affairs
Committee (AIPAC). I don't know who at AIPAC knew the ultimate
source of these contributions, but it was clear someone did.
In Britain our
committee passed money in the same fashion to
the Jewish Reform Movement, confident that this money would
be channeled to the Conservative Party. Because of the friendship
with Britain, the Mossad European operations headquarters was
moved in 1982 from Paris to London and set up in a building on
A further example
of the very special friendship that Israel
established with Britain came when the Falklands war erupted.
Israel froze the sale of weapons to Argentina, despite existing
contracts for Kfir aircraft. As a result, the British government,
covertly but officially, reimbursed Israel for its losses on the
contracts. Of course it was known throughout the intelligence
community that Israel was also keeping British politicians happy
through the Jewish Reform Movement's Torah Fund. The friendship
soured, however, in 1988, when Margaret Thatcher supported
the sale of military equipment for unconventional warfare
to Iraq. It was particularly abhorrent for Israel that her son was
involved in it.
Aside from the
contributions being made in the United States
and Britain, payments were being made all around the world, and
those who received them kept their mouths shut -- even in faraway
Australia. Australia was often used by the Joint Committee
for "parking purposes," aircraft refurbishment, and stationing of
slush-fund monies. In 1982 I first visited Australia to hire an
accounting firm and open accounts in four major banks. Eventually
monies deposited in Australian banks reached the amount of approximately
$82 million U.S.
Starting in early
1986, 12 C-130 aircraft we had purchased from
Vietnam were shipped to Western Australia for repairs and refurbishment.
In 1987, while the Iran-contra hearings were going on
in the U.S. Congress, some of the arms going to Iran were temporarily
parked in Western Australia. Approximately 60 containers
of artillery shells from North Korea were parked in Fremantle
Port. Four thousand TOW missiles that went from the U.S. to
Guatemala were shipped to Western Australia and held for
approximately two months at a naval base on Stirling Island.
Silkworm missiles purchased from China for Iran were also
parked at Stirling Island for approximately two months.
In February 1987 a
"contribution" was made to the West Australian
Labor Party by our U.S. counterparts in the CIA. In gratitude
for the use of Australian soil for the transfer of arms to Iran,
Richard Babayan, a contract operative for the CIA, received a
check for $6 million U.S. from Earl Brian, who was acting on
behalf of Hadron, a CIA "cut-out." Babayan traveled to Perth and
stayed at the home of Yosef Goldberg, an Australian businessman
of Israeli origin who was well connected to Israeli intelligence
and to the local Labor Party headed by Brian Burke, then premier
of Western Australia. Babayan handed the check to Goldberg,
who in turn gave it to Alan Bond in his role as the guardian of the
John Curtin Foundation funds. This money was passed on by one
of Robert Maxwell's companies in Australia to be held by the
Pergamon Press Trust Fund in Moscow. Babayan later corroborated
the details of this operation in a sworn affidavit.
Despite the high
costs involved, profits were still made on the
sales to Iran. At various times the fund reached peaks of more
than $1 billion. At its height it stood at $1.8 billion, with money
constantly coming in and going out -- a huge turnover that would
have made a successful conventional enterprise very envious.
The Likud leaders running the government intended to use the
money for three main purposes.
The first was to
finance activities of Yitzhak Shamir's faction
of the Likud Party. Between 1984 and 1989 no less than $160
million was funneled to Shamir's faction, handled by the deputy
minister in the Prime Minister's Office, Ehud Ulmart, who was
very close to the prime minister. Other funds were contributed to
the whole Likud Party, especially to its 1984 and 1988 election
campaigns. That amount totaled about $90 million.
Second, the slush
fund helped finance the intelligence community's
"black" operations around the world. These included funding
Israeli-controlled "Palestinian terrorists" who would commit
crimes in the name of the Palestinian revolution but were actually
pulling them off, usually unwittingly, as part of the Israeli
A key player in
some of these operations was the former Jordanian Army Col. Mohammed Radi Abdullah, the man who was
with Pearson and Davies when I made our approach to Davies.
Today in his early 50s, Radi was decorated by King Hussein of
Jordan for his bravery in the 1967 Middle East war. However, his
family fell out with the king because they were not willing to
participate in the mass slaughter of Palestinians by the Jordanian
Army in 1970. The family emigrated to London. The colonel
married a woman related to Saddam Hussein and went about
setting up a number of companies, including shipping offices in
Cyprus and Sicily.
Radi became known
as a businessman who championed Arab
and Palestinian causes in Europe. But he missed his homeland
and the days when he was lauded as a hero. He fell to the ways of
the West, started drinking heavily and spent a fortune on gambling
In the mid-1970s,
to recoup his losses, Radi went to work for
Pearson, who was supplying intelligence information to Israel.
With Radi's unwitting help, Pearson began to acquire intelligence
about Palestinian organizations in Europe. The way he did it was
by selling arms to those organizations. An arms dealer named
John Knight, who ran a company called Dynavest Limited, located
at 8 Waterloo Place, London SWI, and another dealer who
operated out of Sidem International Limited, Appleby House, 40
St. James Place, St. James Street, London SWI, acquired arms
from Yugoslavia. They would sell them to Radi, who would in
turn sell them to the Palestinian terrorist, Abu Nidal, and other
Palestinian groups. Radi was unaware of Pearson's Israeli connection,
as were the others involved.
While it may seem
curious that Pearson, a man working with Mossad, was encouraging a Jordanian to sell weapons to Israel's
enemies, it was actually all part of a very cunning plot. In doing
business with these groups, Radi learned what they were going to
use their weapons for and unsuspectingly passed the information
on to Pearson. Pearson, in turn, passed on to Mossad the intelligence
about the movements of the groups and the number of
weapons they had.
Based on Radi's
unwitting tips, over a two-month period 14 or 15 Palestinians were wiped out. Word went out among the
Palestinian groups that Radi was working for Israeli intelligence
and, fearing for his life, he took a trip to Baghdad and presented
his case to Abu Nidal himself. Abu Nidal believed his story that
he had been used -- which he had -- and put the word out that Radi was "clean." The blame was placed on Yasser Arafat's
group -- Palestinian factions at that time were warring among
Radi went back to
his drinking and womanizing, and the
money he made selling arms for Pearson all drained away. At that
very vulnerable point, in 1978, Pearson stepped in again and
offered Radi a £200,000 loan. This time, Pearson made it quite
clear to him that the money was coming from an Israeli source.
The desperate Radi accepted the loan and was recruited to work
for an antiterrorist group in Israel run by Rafi Eitan.
methods were rather unconventional, one could
say heinous, but it had operated successfully for years. An example
is the case of the "Palestinian" attack on the cruise ship
Achille Lauro in 1985. That was, in fact, an Israeli "black" propaganda
operation to show what a deadly, cutthroat bunch the
worked like this: Eitan passed instructions to
Radi that it was time for the Palestinians to make an attack and
do something cruel, though no specifics were laid out. Radi
passed orders on to Abu'l Abbas, who, to follow such orders, was
receiving millions from Israeli intelligence officers posing as
Sicilian dons. Abbas then gathered a team to attack the cruise
ship. The team was told to make it bad, to show the world what
lay in store for other unsuspecting citizens if Palestinian demands
were not met. As the world knows, the group picked on an
elderly American Jewish man in a wheelchair, killed him, and
threw his body overboard. They made their point. But for Israel it
was the best kind of anti-Palestinian propaganda.
In 1986, Radi was
involved in another slush-fund black operation -- the well-documented
attempt to blow up an El Al plane. Or at least what was publicly
perceived to be an attempt. In fact, it was a cold, calculated plan
conceived by Rafi Eitan to discredit the Syrians. At a secret meeting in
Paris, Eitan told Radi that he wanted to implicate the Syrian Embassy in
London in terrorism and have all the Syrian diplomats thrown out of
England. Radi had a 35-year-old cousin, Nezar Hindawi, living in London,
who had two things going for him -- he was friendly with the Syrian Air
Force intelligence attache in London, and he had a problem with an Irish
girlfriend who told him she was pregnant.
Radi went to his
cousin and offered him $50,000. At the same time he told Hindawi that he
wanted him to do some work on behalf of Palestine that would also rid
him of his troublesome girlfriend.
"This money I'm
offering you," Radi told Hindawi, "is from our Syrian brothers on behalf
of the Palestinians. We want to blow up a Zionist plane. All you have to
do is make sure the girl gets onto an El Al plane with explosives in her
Radi arranged for
his cousin to meet the Syrian intelligence officer, and Hindawi later
came away with the clear impression that what he was doing was for the
Arab cause. In accordance with his briefing, Hindawi told his
32-year-old girlfriend, Ann-Marie Murphy, a chambermaid at the Hilton
Hotel on Park Lane, that he loved her and wanted to marry her. He was
eager to introduce her, his future bride, to his old Palestinian parents
who lived in an Arab village in Israel. He told her to go and visit them
and receive their blessing. Then, when she arrived back in England, they
would get married. Overjoyed, she agreed to go, not realizing that the
address he gave her in Israel was bogus.
As far as Hindawi
knew, the woman was going to be sacrificed. All he had to do was tell
her that he wanted her to take a bag of gifts to his parents. But
because he didn't want to risk her being stopped for having too much
carry-on luggage, he would arrange for a "friend" who worked at the
airport to pass her the bag when she entered the El Al departure lounge.
She would pass through the regular Heathrow security checks and then be
given the package containing the bomb.
Hindawi had been
told that a Palestinian cleaner would pass the deadly package to
Ann-Marie. In mid-April 1986, he kissed her goodbye and watched her walk
through passport control to what he expected would be her death, along
with that of all the other 400-plus passengers on board the El Al jumbo
In the El Al
departure lounge, an Israeli security man dressed in casual clothes --
the "Palestinian cleaner" -- passed the girl the parcel. She took it.
But within seconds she was asked to submit to a search. The security
people, who were in on Rafi Eitan's plan, could not afford any
accidents. When the bag was opened, plastic explosives were found in a
rushed off to be interrogated by British security. Sobbing, she told the
story of the rat of a boyfriend. Police arrested Hindawi at the London
Visitors Hotel, between Notting Hill and Earl's Court, after his brother
convinced him to give himself up. He spilled the beans and told them
that a Syrian intelligence officer had asked him to carry out the task.
But Radi was not implicated. He was under MI-5 protection. As a result,
Margaret Thatcher closed down the Syrian Embassy in London. Rafi Eitan
had had his way, Hindawi was jailed for 45 years, and Ann-Marie went
home to Ireland where she gave birth to a daughter.
The third and last
main purpose for the slush-fund money was to
finance the housing projects in the West Bank and Gaza Strip for Jewish settlers who had been taking over Palestinian land there.
Since many members of the U.S. Congress saw these housing
projects as a provocation that would impede peace in the Middle
East, a lot of U.S. aid to Israel prohibited the use of the money for
building in the West Bank. As part of the coalition, the Labor
Party, keen to participate in a peace conference, was also against a
government project for West Bank housing.
The answer, as far
as Likud was concerned, was to draw on the
slush fund. Tens of millions of dollars were used in the West Bank
and the Gaza Strip to help build the foundations for new Jewish
settlements and to buy the land from the Arabs. Although much
land was simply confiscated and more taken through condemnation
for government purposes, many Arabs, forbidden by the PLO
to sell land to the Jews in the West Bank, nevertheless did so at
inflated prices, even though they were putting their lives at risk
should they be caught.
What they did was
sell to various foreign Jewish front companies
that were actually financed by the joint Committee. Many
West Bank Arabs became wealthy selling their land, taking the
money and emigrating to other countries. As far as Likud was
concerned, it was money well spent, because it was encouraging
the Arabs to emigrate, while leaving land for the Jews to move
onto. Their houses would also be subsidized by the slush fund."
"Profits of War -- Inside
the Secret U.S.-Israeli Arms Network," by Ari Ben-Menashe