North Apparently Sent Arms by Ship to Iran but Deal Failed : Bid to Swap Guns for Soviet Tank Told

Apparently directed by White House aide Oliver L. North, a small Danish cargo ship last October secretly attempted to deliver U.S.-made machine guns to Iran--seeking to swap the arms not for American hostages but for a captured Soviet T-72 tank long coveted by U.S. intelligence agencies, sources say.

The blue and white freighter, the Erria, took on its cargo of weapons at the Israeli port of Haifa, sailed through the Suez Canal and down the Red Sea to the mouth of the Persian Gulf. There, it waited at sea for several weeks, hoping for a signal to land at the Iranian port of Bandar Abbas, where the exchange was to take place.

Ultimately, this mission--like other Reagan Administration clandestine attempts to strike deals with the regime of the Ayatollah Ruhollah Khomeini--ended in failure. Arrangements for picking up the tank, considered a valuable intelligence prize, somehow fell through and the machine guns were quietly returned to Israel.

But the Erria’s voyage to the Straits of Hormuz--and a series of other missions it apparently undertook in the last two years--reflects the way North and his cadre of associates in and out of government initiated covert activities not only to further the Iran- contras deal but other ends as well.

Indeed, the odyssey of the rust-spattered freighter--as told by crewmen and port records in Europe and Central America--sheds light on how North and others apparently created and ran their own cloak-and-dagger apparatus to supplement the established institutions of the U.S. intelligence community.

And it raises new questions: Where did the network of covert wheeler-dealers find money to buy and operate a small freighter, on whose authority did she sail and who ultimately was responsible for devising her missions around the world?

The 163-foot ship, nominally managed by a Copenhagen shipping agent with long-standing ties to an ex-CIA official deeply involved in the Iran-contras affair, was based in Denmark but was registered under the flag of Panama and passed into the hands of a Panamanian company linked to the same Swiss financial firm apparently used for North’s Iran arms deals.

Traveled to 4 Continents

And, although much about the Erria remains unknown, over the last two years it has charted a course that has taken it to four continents, apparently going wherever the special interests of Oliver North directed:

--It once carried 500 tons of weapons, apparently intended for the contras, from a harbor in Poland to a transshipment point in France.

--On another trip, this time to Honduras, the Erria turned over Soviet-made rifles and Portuguese ammunition directly to agents of the Nicaraguan insurgents.

--Another time, she stood off the coast of Cyprus to pick up a courier bearing $1 million in cash from Texas millionaire H. Ross Perot, funds that were supposed to be used as ransom for American hostages North expected to be set free by their captors in Lebanon.

In her last known mission, the Erria reportedly was sent to Iran to pick up the Soviet T-72 tank. Documents obtained by The Times from arms merchants show that U.S. agents have been negotiating with Iran since at least March, 1986, to obtain a T-72 captured in Iran’s war with Iraq. The Pentagon wants to examine the tank, one of the most advanced made by the Soviets, because it has a new type of armor alloy and laser targeting systems, according to court documents.

Ship Limps Home

The attempt to trade U.S.-made machine guns for the tank was yet another undeclared deal with Iran. In this case, however, it fell through about the same time--early November--that the U.S. arms sales to Iran became public. At the end of November, the Erria limped back home--about the same time that North was fired by President Reagan.

Formally speaking, the Erria is owned by a Panamanian shell company called Dolmy Business Inc., which bought it last April. The Times reported last week that Dolmy, like several other dummy firms tied to the Iran-contras scandal, has business ties with a Swiss firm called CSF, which helped set up bank accounts used in the Iran arms sales.

Many of the accounts and companies were controlled by retired Air Force Maj. Gen. Richard V. Secord and his business partner, Iranian-born Californian Albert A. Hakim, according to congressional investigators and Administration officials. Secord and Hakim coordinated their operations with North, a Marine lieutenant colonel who handled both terrorism and contra issues from his office at the National Security Council.

Claims Ownership

A Copenhagen shipping agent with a lengthy history of weapons transport claimed Tuesday that he is the major figure behind Dolmy and said that he is the true owner of the Erria.

The agent, Thomas Parlo of S.A. Shipping of Copenhagen, acknowledged also that he is “a longtime personal friend” of Thomas Clines, an ex-CIA officer and North associate who has been named as a figure in both the Iran arms deals and the contra aid network. American sources have alleged that Clines obtained a ship for North’s use in the operation.

Parlo confirmed some details of the Erria’s travels but flatly denied any connection between the ship and the arms-for-hostages dealings, the Nicaraguan contra forces, Clines and North.

“I do not know North . . . . I’m not in any business deals with Tom Clines,” he said. “I can guarantee to you 100% that this ship has never been involved in any hostage activities.”

Reliable sources in the United States and Europe dispute those denials, however. They say that the Erria was the centerpiece of a North-managed operation, dubbed Project Democracy or Democracy Inc., that was deeply involved in both the hostage dealings and other free-lance ventures.

Most persons with knowledge of the Erria’s secret travels refused outright to discuss them. One apparently panicked worker on the Erria during the last eight months fended off queries about the trips by saying, “I’m not telling you about it. They will kill me.”

A reporter who tracked the freighter to an ice-locked harbor in Korsor, about 75 miles west of Copenhagen, was politely rebuffed by two Norwegians who claimed to be newly hired crewmen.

The Danish man who sold the freighter to Dolmy Business was tight-lipped. “It’s a long, long story, but I don’t want to talk to you about it,” said Arne Herup, who Parlo said continued to serve as the Erria’s captain after the ship’s sale.

Vessel for Sale

The Erria’s local agent in Korsor, J. Poulson, said that Parlo was seeking a buyer for the ship. Parlo confirmed that but said the vessel might sail again soon “if we find cargo.”

Despite the silence, however, records and interviews with a number of sources who asked for anonymity permit a detailed recounting of most of the Erria’s recent journeys under Dolmy’s ownership.

Left unanswered is the question of how the journeys were financed. Much of the eight months that the Erria was at sea under Dolmy’s ownership was spent at anchor, awaiting orders, or under power with an empty hold.

Danish records show that Dolmy paid 2.5 million kroner, or $312,500, for the 13-year-old vessel. Under prevailing rates, its crew salaries would have totaled more than $10,000 a month. The freighter, which delivered but one load of cargo after April, nevertheless appeared under no pressure to earn its keep, and Parlo offered no explanation of how it was paid for.

The Erria--the name is Latin for the Danish island of Aero--has been carrying weapons since at least 1984 and probably well before that. Portuguese records confirm earlier reports that the Erria arrived in Setubal in May, 1985. At the time of the 1985 visit, the ship was owned by Herup and sailed under a Danish flag.

Was Under Charter

But the freighter was under charter to S.A. Shipping, which had dispatched it two weeks earlier to a dock on the outskirts of Gdansk, Poland. There, according to sources and 1985 news accounts, the ship picked up a load of reconditioned Soviet AK-47 rifles and Eastern-bloc machine guns.

With its hold half full, the Erria steamed into Setubal harbor and tied up on May 8, 1985, to Dock 3, the berth normally used by ships that load bullets, grenades and explosives from Portuguese munitions factories. The factories are among the few in the West that make 7.62-millimeter ammunition, widely used by the contras because they can be fired in AK-47 rifles.

Private industry records, made available to The Times in Portugal, show that the Erria took on 14,714 boxes of munitions weighing 461 tons during the Setubal stop.

On May 11, the Erria, its belly full, edged out of Dock 3. The captain told the harbor pilot that he was bound for Puerto Barrios, the main Caribbean port in Guatemala. In fact, the Erria appeared three weeks later not in Puerto Barrios but in the Honduran town of Puerto Cortes, 60 miles away, and contra leaders said that they collected the cargo.

For whatever reason, the Erria pulled another switch again in 1986. By that time, S.A. Shipping no longer merely chartered the freighter but, Parlo claimed, owned it outright under the guise of a Panama firm.

In an interview, Parlo maintained repeatedly that he used Dolmy Business to purchase the Erria to escape tough Danish rules governing ship crews, salaries and operations. In all cases, he said, the freighter was used solely “for normal business practice.”

U.S. and European sources dispute that. One knowledgeable American official called the Erria purchase “strictly an Ollie (North) operation,” and one European with knowledge of the deal said that Parlo talked of buying a ship “for some Americans.”

Coincidence Claimed

Parlo called it coincidence that he chose CSF, the Swiss company with ties to North’s operation, to assist Dolmy and said that he is a long-term associate of Clines, who became an arms dealer after leaving the CIA in 1978.

“I know him. I’ve known Tom Clines for many years,” Parlo said. He said that their friendship did not extend to business dealings.

Another happenstance, Parlo said, was the Erria’s appearance in the port of Larnaca, Cyprus, last May 28, a month after Dolmy Business bought the ship and the same day that North and other U.S. negotiators arrived in Tehran for secret talks with Iranians.

Despite those denials, one source who was in Cyprus at the time placed Clines there as well, apparently to oversee a hoped-for release of Americans held captive in nearby Lebanon. And a second source alleged that a man fitting Clines’ description boarded the ship, which had been outfitted with three or four cots in expectation that a swap of $1 million in cash for the hostages would be made aboard the ship within days.

By one account, the Erria made repeated approaches to the Lebanese coast during that period, staying in constant radio contact with nearby Israeli navy ships. But the hostage swap was never pulled off, and maritime records indicate that the freighter left Cyprus June 5.

From Larnaca, the Erria steamed westward to Italy, then to Setubal, then Copenhagen. On July 10, it docked in the Polish port of Czczezin, where Parlo acknowledged that it picked up a shipment of AK-47 rifles.

Eight days after departing from Czczezin, the Erria returned to Setubal, where it loaded 6,916 boxes of munitions weighing 210 tons, according to records made available to The Times. The buyer is not known.

Nor is the ultimate destination. One set of port documents claims that the Erria listed its next port as Yemen. Questioned about that, S.A. Shipping’s Parlo said the Erria was never bound for Yemen “as far as I can remember.”

Guatemala a Destination

But documents drawn from the ship’s cargo manifest list another destination more familiar to Parlo: Puerto Barrios, Guatemala, where the Erria allegedly had been bound in 1985. As for that listing, Parlo said: “It is possible. But I can’t say offhand.”

The fully loaded Erria left Setubal on July 23. Days later, it claimed engine trouble and returned to anchor in the harbor, where it sat silently for two weeks. It docked briefly, then headed back out to sea Aug. 29, then returned Sept. 8, again pleading mechanical problems.

Port officials remain privately skeptical of those reports, noting that the Erria did not even approach a dock the final time it came to the harbor. “Maybe they needed time to sell their cargo,” one official said.

Indeed, the Erria again chugged out of Setubal harbor on Sept. 9 carrying the same weapons that it had loaded almost two months earlier. But this time, the destination was different; the ship told harbor pilots it was bound for Cherbourg, France.

Four days later, that is where it tied up. Longshoremen spent two days emptying the hold, moving crates of guns and bullets to pallets that would shortly vanish from the port.

“There was no purchaser in Cherbourg,” Parlo said. “The cargo was transshipped” out of the country.

Officials in Cherbourg, which specializes in the loading and unloading of weapons, refused to disclose the destination of the Erria’s cargo. Remi Marie-Jean Mauger, a maritime agent and Denmark’s honorary consul in Cherbourg, said he could not recall that the Erria had unloaded any cargo at the port, but a high government official said the ship was empty when it left Cherbourg.

From Cherbourg, the freighter sailed almost directly to Cyprus and anchored offshore--awaiting, Parlo claimed, a shipment of oranges. But another knowledgeable source contended that the ship was again anchored in a waiting game for hostages who never appeared.

It is now known that North and the White House were planning an arms sale to Iran at the time in the hope of freeing remaining American hostages. However, that shipment was not delivered until Oct. 27, and there has been no previous indication that Americans might have been close to freedom in early October.

For whatever reason, the Erria’s operators are believed to have turned their attention to a different prize--a captured Soviet tank.

Sailed to Haifa

On Oct. 8, the Erria pulled into the Israeli port of Haifa, where a source with reliable knowledge of the ship’s movements said that it took on a container loaded with machine guns believed to be of American origin. It anchored weeks later just south of the sultanate of Oman, a few miles across the Strait of Hormuz from Iran.

Parlo acknowledged that the ship had planned to deliver a cargo to the Iranian port of Bandar Abbas. He vehemently denied that the cargo, which he refused to identify, was of U.S. origin.

Another source said that the Erria had been instructed to pick up one or possibly two tanks at Bandar Abbas and ferry them to an island off the southern coast of Africa in the Indian Ocean. The United States maintains a naval base on the Indian Ocean island of Diego Garcia, but it could not be learned whether the tank was destined for that port.

The machine guns were never delivered and the tank was never picked up. Parlo said, without confirming the identity of the cargo, that the delivery was not made because the buyer refused to pay him for the Erria’s lengthy anchorage off Oman while awaiting permission to dock.

Some time in December, the freighter left the seas around Oman empty-handed, steamed up a narrow finger of the Red Sea and dropped off its container of machine guns at the southern Israeli port of Eilat. It waded through choppy seas toward home and finally reached Korsor on a frigid day in mid-January.

It sits there today, under guard and for sale.

Staff writers Doyle McManus and Don Shannon in Washington, Bill Rempel in Los Angeles, Marjorie Miller in Honduras and researcher Alice Sedar in Paris contributed to this story. Michael Wines reported from Korsor, Denmark, and Richard E. Meyer reported from Setubal, Portugal.