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Irangate's newest twist: the forty million dollar rip-off and other stories


Paul Cutter is talking to Metro again, telling stories of multi-million dollar rip-offs, international intrigue, epidemic corruption among senior military officers, and murder. Last week, in several phone conversations from his current residence, the Federal Correctional Institution at Safford, Arizona, Cutter, formerly a San Jose-based journalist and intelligence operative who is now serving a five-year prison term for conspiring to sell TOW missiles to Iran, repeated and elaborated on his claims that billions of dollars in arms were being sold to Iran in 1984.


Cutter also praised the work of the New York Times, which last week corroborated much of what Cutter told Metro in early December about a multi-billion dollar arms-dealing network based in Paris and directed by Col. Mark Broman. Even Cutter is surprised by the thoroughness of the Times investigation by reporters Stewart Diamond and Ralph Blumenthal. "I don't know how they got this," he says. "They absolutely got everything. They found the banking documentation. The point, is everything checks out."


Cutter claims to have detailed knowledge of the theft of $40 million that was deposited by Iran in a bank in London as partial payment of 80 M-48 tanks in 1983.


According to Cutter, a Houston-based firm called All Source Air Division signed a contract with Iranian procurement officers in Geneva in early 1983 to provide up to 700 M-48 tanks to Iran for approximately $900,000 each. All Source Air Division , which is no longer in business, was headed by a retired Air Force general named Swenson.


Metro has been unable to confirm the existence of this firm or learn anything of the whereabouts of General Swenson or his current activities. Others involved in this deal were Gen. Richard Sekord, who has been implicated in the Iran-Contra arms scandal on many levels, including the diversion of funds to the contras; retired CIA agent John Mowinckel; and several French and Swiss arms dealers.


The tanks were to be refitted in Israel. In order to take possession of the tanks, which were located on US bases in Europe, the purchasers needed "end use certificates" (EUCs) that would conceal the actual destination of the equipment (since sales to Iran were illegal). So the Iranians gave Mowinckel $100,000 to get an EUC, which he procured from a general in Paraguay for $5000. Apparently, with the EUC problem resolved, Sekord, Swenson, and the French arms dealer met in New York in September and concluded the deal. The Iranians put $75 million down for 80 tanks, but $40 million of that money disappeared.

Cutter was asked in January 1984 to try to find out what had happened to the money. "It was very embarrassing to the Americans," he says. "It was thrown to me to do something about trying to run down the generals and to recover the moneys. So I attempt that, but it was nowhere to be found." The EUCs, Cutter says, were fakes, and the whole deal was apparently a set-up. Though Cutter does not say it was the generals who took the money, he doesn't know who it could have been. He does say that an Iranian who was supposed to have handled the money in London was killed about two years later.


Another source, who spoke on the condition that he not be identified, agreed that a tank deal fell through in later 1983 because the money deposited by the Iranian government was stolen. But his version of the story differed in several ways. According to this source, the tanks were to be loaded from Haifa onto a Greek freighter. Two Iranians faked delivery of the money a bank in Montevideo, Uruguay, and took off with up to $70 million in cash.


In any case, after this fiasco, the Iranians came up with additional cash, and Israel ended up shipping 80 M-48s to Iran. (Cutter's commission was $175,000 per tank.)


At least 200 additional tanks were diverted from a stockpile of 400 that were to have been returned to the United States from Korea. Cutter says he even sent a telex in which he warned against going through with the original deal, and says he would have backed away himself except that the ODC was involved. Cutter also reveals additional information about Kenneth Timmerman, a free lance journalist who worked for Cutter's defense industry magazines in Paris, and who supplied information to the New York Times during their investigation last month. "Timmerman forgot to tell them (the New York Times) that he went in January '84 to Egypt on an F-4 project. He was up to his clavicles in arms. Eventually he and Broman had a falling out." Cutter says that Iran had received 14 F-4s in October or November '84, and had 40 in its fleet by February 1985.


Reporters for Cable News Network and the New York Times remain skeptical of Cutter's allegations, but they have been unable to disprove any of the information Cutter has provided. When reached by Metro, the two Times reporters acknowledged that they were continuing to work on the story actively, and hinted that they were attempting to confirm information provided by Cutter. Neither would comment on the specific nature of their current investigations. But Cutter's credibility remains a key issue. Because Cutter was convicted of conspiring to sell arms in an incident with no clear connection to the European arms peddling ring, it's unclear what the impact of the wider exposure will be on Cutter's appeal of his conviction, or on his request for a new trial. Cutter's credibility certainly is enhanced by the latest revelations of the Times, as well as the many other reports of government sanctioned arms dealing that have come to light in recent months, but the fact that Cutter was involved with military officers in an arms transaction in Europe doesn't necessarily prove his claim that the operation for which he was stung in Florida was a government operation.


In fact, the Times article strongly implies that Col. Broman, who directed the Office of Defense Cooperation in France for the Defense Department, was operating for personal profit, and using his office in the US Embassy to give his operation a legitimate front. Broman, of course, has denied any wrongdoing. Whether or not he was actually operating with the approval of his superiors, and whether that approval came from policymakers in Washington is an open question in the Timespiece, and that was practically the first issue raised by CNN reporter Jeanne Moos when she was contacted by Metro.


The Times report does note that army investigators knew about Broman, and passed the information about his activities on to the National Security Agency, the CIA, and the Defense Intelligence Agency, but these government agencies did not pursue the investigation.


Even Cutter acknowledges that the line between official and private operations was hazy. "I believe we're talking about a cabal of these retirees who actually were not doing this so much for themselves and their own pocket," he says. Instead, he speculates that the arms sales to Iran were used to generate money to support anti-communist insurgencies in Eritrea, Angola, Afghanistan, and Nicaragua. "That thing is swallowing billions -- maybe two billion dollars a year, " he explains, "and that money has to come from somewhere. Probably a goodly portion comes from the sources of the CIA. The CIA can't afford it all, so I think you're talking about a cabal of retirees who are concerned about communism. I'm sure they're tied into the president and they're working some of it under their own momentum -- under the umbrella of the White House."


Given the Reagan Administration's standard operating procedures, it is no longer possible to know when individuals were acting officially and when they were acting for personal profit or out of ideological zeal. Paul Cutter claims, for example, that the entire sting operation that led to his arrest was a way of getting rid of him, because he knew too much about the ongoing arms trade between the US and Iran that was being managed by US military officers in Europe. He also insists that all of the operations directed by Mark Broman appeared to have clearance from "higher-ups", but that everyone involved was also skimming a portion of the profits. "We now know that a member of the Bush staff and another official on the NSC were his superiors," says Cutter, but he won't name those individuals until he has the opportunity to examine additional documents.


Cutter seems far more interested in attracting attention and telling his story than he does in going free. The fact is, he becomes eligible for parole on March 31, and even if he wins his release in the courts, it would only cut a few months off his sentence.

Just the same, he and San Jose attorney Chris Carroll are continuing their legal actions to overturn the verdict, win a new trial, and not coincidentally, collect millions of dollars in damages. Carroll angrily blames Judge G. Kendall Sharp, who presided at the trial in an Orlando, Florida courtroom in the fall of 1985, for Cutter's continued detention, and has filed a "petition of bias" to have Sharp remove himself from the case. All of that despite the fact that he isn't even officially representing Cutter anymore.

Instead, because Cutter is "indigent" (at least for the purposes of the court), he is being represented by a court appointed Florida lawyer named Leon Cheek. When interviewed by phone last week, Cheek said he had not spoken to Carroll, and had not seen the New York Times story. Cutter calls Cheek's work "criminal", and says that he had to file one petition himself because Cheek never even contacted him.


Cheek did say that he expects to present oral arguments in the 11th Circuit Court of Appeals within a month, in which he will claim that Cutter's conviction should be thrown out because the government presented false testimony about the sale of arms to Iran.


It may still turn out that Paul Cutter's story is just a fairy tale, but more and more, it looks like his story is substantially correct, with some allowances made for certain self-serving pronouncements. The Times, in particular, has been careful to confirm all of Cutter's claims through additional sources, including Timmerman, French arms dealer Claude Lang, and a variety of documents. Lang described in detail several meetings in Broman's embassy office where arms sales were discussed and Iran specifically mentioned. Whether or not Paul Cutter was working for a private arms network, or for his government, the basic, unsavory facts are now known:


US military officers, probably with at least the tacit approval of senior officials in the Reagan Administration, were selling arms to a nation with which they were virtually at war, skimming profits for personal enrichment, even stealing millions of dollars in cash payments, and killing or otherwise neutralizing threats to the operation. Quite possibly, they were using those moneys to fund right wing political mischief in Central America and elsewhere. In the meantime, the Iranians were using the arms to perpetuate their hopeless and devastating war against Iraq, at the cost of thousands of lives.


It's a hell of a way to run the world -- but it is beginning to look like that's exactly what they were hoping to do.


Reprinted from San Jose Metro, 1987


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