Shadowy N.Y. Businessman : Furmark Had Roles in Big Bankruptcy, Iran Ventures

Times Staff Writers

Roy M. Furmark, the shadowy New York businessman who testified before a closed Senate Intelligence Committee hearing for nearly four hours Thursday about his knowledge of U.S. arms sales to Iran, was a key figure in the largest bankruptcy in Canadian history.

Furmark also joined with Saudi billionaire Adnan Khashoggi in a separate venture in 1985 to supply arms, military equipment and foodstuffs to Iran. The venture did not succeed.

Federal court records in New York show that Furmark was vice chairman of the board of directors, executive vice president and treasurer of the ill-fated Newfoundland Refining Co. in Come By Chance, Canada, which left more than $600 million in debts when it failed in 1976.

The collapse spawned a tangled web of lawsuits in which Furmark and his co-defendants were ultimately judged liable for more than $50 million. The judgment was settled out of court in 1982, according to lawyers in the case.

Furmark testified after CIA Director William J. Casey told the House Foreign Affairs Committee on Wednesday that Furmark, a former client and apparent friend, had telephoned him on Oct. 7 about the possible diversion of funds from sales to Iran of U.S. arms.

Casey said Furmark had told him that unidentified Canadian businessmen were threatening to sue to recover $10 million they said they were owed for providing money for the Iran arms deal. Casey said such a lawsuit could have disclosed U.S. involvement in the deal and jeopardized chances of obtaining release of Americans held hostage in Lebanon by pro-Iranian extremists.

Runs From Reporters

Furmark, a tall, heavy-set man in his 50s with a salt-and-pepper goatee, literally ran from reporters after his appearance on Capitol Hill. That was in keeping with a man who has not put his or his company's name on the door to the Furmark Corp. offices in mid-Manhattan. The offices were closed Thursday.

"He's a cemetery," one business associate said. "He doesn't tell me anything about what he does."

The associate, who answered phone calls to Furmark Thursday but refused to identify himself, said he and Furmark had been in "the oil business" together since 1978. He said Furmark is in the "oil and gas business" and "has oil wells all over."

Court records show Furmark was also a ranking officer in several other companies owned by John M. Shaheen, a flamboyant New York financier and oilman who died in November, 1985. Shaheen had worked with Casey in the World War II Office of Strategic Services.

Sued Over Loans

The Clarkson Co. Ltd. of Toronto, trustees in bankruptcy for the Come By Chance refinery, sued Shaheen, Furmark and three other individuals and three companies to recover more than $51 million apparently lent to Shaheen and six of his companies by the refinery. Furmark was an officer and director in each of the six companies, according to court records.

The refinery, built by Shaheen in cooperation with Newfoundland's provincial government to turn out 100,000 barrels a day, closed after two years of operation. It was Canada's largest bankruptcy.

According to a decision by the U.S. 2nd Circuit Court of Appeals dated Sept. 5, 1981, Furmark and Shaheen signed a promissory note and letter of agreement dated Oct. 27, 1975, when the refinery was already insolvent. The documents postponed for 10 years payment of more than $45 million in debts to the refinery from 29 Shaheen affiliate companies, as well as Shaheen, Furmark and the other defendants.

The court affirmed a lower court ruling against the Shaheen group, finding in part that the promissory note and letter "were a fraudulent conveyance . . . with intent to hinder, delay and defraud creditors."

Signed Promissory Note

One lawyer in the lengthy litigation recalled Furmark's role clearly. "He was the one who signed the promissory note that is the heart of these shenanigans," said the attorney, who asked not to be identified.

Furmark's attorney in the case, Donald B. Daparma, could not be reached late Thursday.

In the 1985 Iran venture, Furmark held a minority interest in Bayway, a Panamanian corporation formed in 1985 as a joint venture controlled by Khashoggi and the late Cyrus Hashemi, sources told the Times.

Hashemi, an Iranian arms dealer who died last summer, had been a federal informant in a major U.S. Customs Service undercover "sting" operation in New York that led to the indictment last April of 18 individuals and companies on charges of conspiring to sell more than $2 billion in arms to Iran.

Among those arrested were two Khashoggi associates, including Samuel Evans, a London-based American attorney for both Bayway and Khashoggi.

Partner Sold Holdings

Months earlier, Khashoggi's Bayway interest had been bought out by Hashemi for $500,000, the amount Khashoggi had invested. Hashemi, in turn, reportedly sold Khashoggi's shares to an American businessman in Europe.

It was not clear whether Furmark remained active in the venture after Khashoggi's withdrawal. But, prior to collapse of the original partnership, Khashoggi and Hashemi had met with Iranian officials at the Iran Embassy in Bonn, West Germany, to negotiate sales of the arms and other goods.

In a separate case, Furmark was involved in negotiations to purchase another financially troubled oil refinery. He told a New York Times reporter in 1980 that he was adviser on energy investments to Roger E. Tamraz, a Lebanese financier who headed a group of Arab investors interested in taking over the Commonwealth Oil Refining Co. of Puerto Rico, which had filed for Chapter 11 reorganization proceedings under the Federal Bankruptcy Act.

Bob Drogin reported from New York and William C. Rempel from Los Angeles.

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