Warned Casey 3 Times on Iran Funds, Furmark Says : Businessman Claims He Got Middlemen Together

Roy M. Furmark, the New York businessman who testified last week before the Senate Intelligence Committee, said Tuesday that he met CIA Director William J. Casey three times in October and November to warn him of financial irregularities in the secret U.S. arms sales to Iran.

In an interview with The Times, Furmark said that he told Casey on their third meeting, on Nov. 24, that up to $15 million may have been diverted to the Nicaraguan contras from the arms sales.

Furmark said he told Casey at their first meeting, on Oct. 7, that $15 million had been deposited in a Swiss bank account of Lake Resources Inc., a front company later discovered to have been controlled by Lt. Col. Oliver L. North of the National Security Council staff.

Furmark said he was the one who first brought together the two key middlemen in the arms deal by introducing Saudi Arabian arms dealer Adnan Khashoggi to Manucher Ghorbanifar, an Iranian businessman, at a Persian rug auction in Hamburg, Germany, in June, 1985. The two men have acknowledged arranging four arms sales to Iran.

“In my last meeting, (with Casey) I told him that Ghorbanifar thinks some of the money may have gone to the contras,” Furmark said. He said he told Casey: “It looks like $15 million is missing.”

That meeting, according to Furmark’s account, occurred only the day before President Reagan and U.S. Atty. Gen. Edwin Meese III appeared at a White House press conference, at which Meese disclosed that $10 million to $30 million had apparently been diverted to the contras from the secret U.S. arms sales to Iran.

Furmark, a 55-year-old New York-based energy consultant, thus played a larger role than previously recognized in both the early and late stages of the controversial U.S. operation to sell arms to Ayatollah Ruhollah Khomeini’s regime.

New Light on Arms Deals

His account sheds new light on four of the arms transfers, valued at $30 million, and how much Casey and other officials might have known of the operation.

Casey, who remains hospitalized after suffering two mild cerebral seizures Monday, has publicly acknowledged talking with Furmark only once, on Oct. 7, about the arms deal.

But Furmark said he briefed Casey alone three times--at the CIA office near the White House on Oct. 7, on a government plane to New York together with Casey’s wife, Sophia, on Oct. 16, and at CIA headquarters in Langley, Va., on Nov. 24. He said he also met Casey’s staff investigators twice after Nov. 16 in Washington and once in New York over dinner at the Christ Cella Restaurant, an expensive mid-Manhattan steak house.

Casey testified in a closed session of the House Foreign Affairs Committee last Wednesday. He later told reporters that Furmark’s October account provided only a “whiff” that money had been diverted to the contras, and prompted him to “start asking some questions.”

Furmark, who said he is a consultant to Khashoggi, said the Saudi Arabian financier had asked him in late September to speak to Casey because Furmark had known Casey for more than a decade.

When asked about his knowledge of the arms deals, Furmark said, “I knew what was going on in a general sense” from previous conversations with Khashoggi. But he said Khashoggi didn’t brief him fully until a meeting in New York in late September.

“He told me he was trying to help the U.S. government,” Furmark said. “I think it was to open up channels of communication.”

Arms Deal Financing

Furmark said he told Casey that Khashoggi had arranged the financing of two arms shipments from Israel to Iran in August and September of 1985 for $1 million and $4 million. He said Khashoggi had then arranged a third shipment in February, 1986, for $10 million.

He said it was a fourth transaction, involving $15 million in May, 1986, that led to problems. Furmark said two Canadian investors, Walter E. Miller and Donald Fraser, had provided $10 million in “bridge financing” to Khashoggi for the deal. The Canadians have had extensive business dealings with Khashoggi in Vancouver, Salt Lake City and the Cayman Islands.

Furmark said unidentified “European and Middle East sources” had provided the money for the $4-million transaction, the $10-million transaction and $5 million of the $15-million transaction.

“Mr. Khashoggi knows the true source of the money used here, and I think only he knows,” Furmark said.

Furmark said he once shook hands in a Paris hotel lobby with Miller, a hotel owner and real estate developer. He said he never met Fraser.

Investors Left With Debt

Furmark said that two “partial shipments” of arms were delivered in July and August, 1986, but the Iranians paid only $8 million of the $15-million deal. Adding $3 million for handling and shipping, that left Khashoggi, the Canadians and the other investors $10 million in debt, Furmark said.

“Around the end of September, what happened was the Americans had decided to deal directly with Iran and not use Mr. Khashoggi and Mr. Ghorbanifar anymore,” Furmark said. “Which was fine . . . . But there was only one hitch. The May 15 transaction was not completed.”

He said Khashoggi was under “great pressure from his investors” to get their money back. “They were going to take Khashoggi to court and include the American government if Khashoggi couldn’t pay. That’s why I was asked to speak to Casey.”

A lawsuit could have disclosed U.S. involvement in the secret arms sales and jeopardized chances of winning release of American hostages from Lebanese terrorist groups with links to Iran.

Furmark repeatedly insisted that he had not participated in the arms deals and was not involved in the financing or shipment of arms to Iran.

“I have no idea what was shipped, when it was shipped or how it was shipped,” he said. His own involvement in arms sales, he said, was “zero, no arms at all, zero, zero, zero.”

“Just because I know Mr. Khashoggi doesn’t mean I’m an arms merchant,” Furmark said, angrily criticizing recent press coverage of his role. He added, “My misfortune is I happen to be involved with people who may have done things.”

Furmark said he told Casey at their first meeting across from the White House that Khashoggi and his investors “were told” to deposit $15 million in advance on May 15, 1986, into a Lake Resources Inc. bank account in Switzerland.

“(Casey) said, ‘Lake Resources is not one of our accounts, and I don’t know whose it is,” Furmark recalled. “He said it’s not a name he knows, so he’d look into it. He said maybe it’s an Israeli operation, maybe it’s across the street (at the White House). That’s when he tried to call John Poindexter, but he wasn’t there.”

Vice Adm. John M. Poindexter was President Reagan’s national security adviser at the time. His resignation was announced at the White House press conference on Nov. 25.

North Controlled Account

Poindexter’s aide, North, controlled Lake Resources’ account at Credit Suisse Bank in Geneva. The company was registered in Panama in May, 1985, by North’s operatives, retired Air Force Maj. Gen. Richard V. Secord and his California business partner, Albert A. Hakim.

The company was dissolved immediately after disclosure of the U.S. covert arms shipments to Iran, and the Justice Department has asked Swiss authorities to monitor the Lake Resources account. North was dismissed from his National Security Council post after the diversion of the Iran arms funds was disclosed.

Furmark said he has had repeated unsuccessful business dealings with Iranian companies or officials in the last decade, but has not visited the country in about 15 years. It was one of those business deals that set the stage for the U.S. arms sales to Iran.

In June, 1985, Furmark said, he was in Hamburg for three days at a rug auction with business partners in a joint venture called the World Trade Group. According to court records in New York, World Trade Group was formed in April, 1985, as a holding company that would have three operating subsidiaries: “one to distribute agricultural equipment to Iran, another to engage in trading petroleum from the National Iranian Oil Co. and the third to supply arms to Iran.”

Furmark said he owned 10% of World Trade, and Khashoggi joined for $500,000 as a partner. He said he and Khashoggi both quit the company in July, 1985, because they didn’t trust another partner, Cyrus Hashemi, a London-based Iranian arms dealer who died last July.

Furmark repeatedly denied that World Trade or any of its subsidiaries was involved in arms sales to Iran. “They didn’t do one dollar of business,” Furmark said.

Negotiating Oil Deal

Furmark said he first met Ghorbanifar in January, 1985, when they were negotiating a contract to provide 50,000 barrels a day of Iranian crude oil for a European oil company.

In June he introduced Khashoggi to Ghorbanifar.

“That’s when they got to talk about the politics of the Middle East,” Furmark said in the 45-minute interview at his Manhattan office. “And they had lots and lots of meetings. And then Mr. Khashoggi put together a report that he sent to the governments of Israel, Egypt, Jordan, Saudi Arabia and to Mr. McFarlane to present his views of the chance for peace and dialogue.” Robert C. McFarlane was Poindexter’s predecessor as President Reagan’s national security adviser before leaving in December, 1985.

Khashoggi and Ghorbanifar have acknowledged in an interview with “ABC News” that they acted as middlemen in the first four arms shipments. Ghorbanifar said he deposited payments from the Iranians in the Swiss bank account controlled by Lake Resources Inc. after meeting with North and Secord.

Furmark, a tall, heavy-set man with thick dark hair and a goatee, testified for nearly four hours in a closed session last Thursday before the Senate Intelligence Committee. He said he will testify this Thursday before a House committee.

Born in Brooklyn

Furmark was born in Brooklyn on Sept. 28, 1931, and has lived in Brooklyn all his life, according to an affidavit filed in U.S. District Court in Manhattan in 1977. At the time, he estimated his net worth at about $205,000.

An accounting major at Pace College, Furmark worked with several accounting firms until 1964, when he started a private practice. In 1966, he joined John M. Shaheen, a New York businessman and former intelligence operative who had worked with Casey in World War II. Shaheen later introduced him to Casey, he said.

“The rest is history,” Furmark added with a laugh.

Staff writer William C. Rempel contributed to this story.