Iran: Arms For the Ayatullah

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Edmund Muskie, who was then Secretary of State, complained to Israel about the arms sales, but the government of Prime Minister Menachem Begin responded that it had sold Iran only $300,000 worth of spare tires for F-4 fighter planes. It promised, in any event, to stop all future military sales. Yet, according to U.S. intelligence sources, Israel was also selling tank parts and ammunition to Iran. In 1981, after the release of the U.S. hostages, Israel resumed its military sales to Iran without Washington's approval.

According to documents seen by TIME, Israel handled most of its sales through Faroukh Azzizi, an Iranian arms merchant who lives in Athens. The papers show that Azzizi purchased U.S.-made Tow missiles from Israel in November 1982. The shipment went to Amsterdam before reaching Tehran. Says a senior Western diplomat in Brussels: "Israeli and American claims that Israel made only a single, isolated sale are pretty disingenuous." The Israeli government firmly denies any wrong doing. Said Defense Ministry Spokesman Nachman Shai last week: "We have not violated any agreement between the U.S. and us that forbids selling American-made weapons or Israeli-made weapons under U.S. license to Iran."

Another major supplier of munitions to Iran is South Korea. Computer printouts from the U.S. Office of Munitions Control show that in a recent twelve-month period Korean Air Lines and two government-controlled South Korean companies made 60 separate purchases of Hawk missiles and related parts. On the basis of their intelligence sources, U.S. Customs officials contend that these missiles were destined for Iran. Defectors from the Iranian air force confirm that South Korea has provided these parts as well as spares for the Iranian F-4s. One of them told TIME, in addition, that Agusta, an Italian company operating under agreements with the State Department and Fort Worth-based Bell Helicopter Textron Inc., supplied Iran with Chinook choppers in violation of U.S. licensing rules. Says a Pentagon official: "A lot of countries are buying far more supplies than their air forces could ever use. But we have no way of monitoring resales."

Private arms dealers like Hashemi and De Mello account for much of the sales to Iran. At Iran's insistence, Hashemi set up various business entities to try to conceal his U.S. connections: his R.R.C. Co. in Stamford with its rug-shop front; a subsidiary in London; a separate company, Zoomer Fly Ltd., also in London. Hashemi's brother Cyrus, who was president of the now-defunct First Gulf Bank & Trust, helped finance the Zoomer Fly operation.