2 North Associates Shipped Arms While It Was Illegal

Two associates of former National Security Council aide Oliver L. North shipped 358 tons of Communist-Bloc assault rifles and other arms to a Pentagon warehouse in the United States last fall, sources here said Thursday.

The weapons apparently were to be transshipped to Nicaragua’s contras .

And in an unusual twist, one of the two ships involved in carrying the arms to Defense Department munitions depots in North Carolina slowed its journey and even dropped anchor at sea for a lengthy period. Thus, although the arms had been purchased while a congressional ban on U.S. aid to the contras was in effect, it did not reach American shores until after it had expired.

The Pentagon did not respond Thursday to requests to explain what happened to the arms. It is not known whether the weapons, which left Europe ostensibly bound for Guatemala in late September, ever reached the contras.

It is considered standard practice, however, to equip anti-Communist insurgents such as the contras with Soviet-style weapons, in part so that the guerrillas can use captured ammunition and other material. Indeed, the Defense Department is known to be a large supplier of Soviet AK-47 rifles and other secretly acquired East Bloc weapons to the CIA, which sends them to insurgents around the world.

Details of the North Carolina arms shipment were provided Thursday by Copenhagen businessman Tom Parlow, an executive of Queen Shipping, who played a central role in the deal.

In two lengthy interviews, Parlow told The Times about that venture and a series of other cloak-and-dagger operations by the Panamanian freighter Erria--missions that included a plan to swap guns for as many as five Soviet tanks as well as a mysterious trip to meet seven U.S. Marines off the coast of Lebanon.

As described by Parlow and other sources, the North Carolina operation vividly illustrates how North and his two associates--Iranian-born California businessman Albert A. Hakim and retired Air Force Maj. Gen. Richard V. Secord--used a multimillion-dollar maze of dummy companies, Swiss bank accounts and ocean ships to carry out secret missions of their choosing.

In addition, it raises new questions about the finances of North’s operations: whether the Pentagon paid for the arms, whom it paid and whether it knew it was dealing with North, Secord and Hakim at a time when the Iran-contras link allegedly was still a deep secret.

Finally, the deal offers the clearest suggestion to date--though not proof--that money skimmed from the Iran weapons deals was used for other operations on behalf of the contras, as North has said.

Ship Offered to CIA

All the missions were undertaken at the behest of North, according to U.S. sources, who said that the Marine lieutenant colonel was in complete charge of the Erria and once offered it to the CIA for use in secret operations off the coast of Libya.

But Parlow said the day-to-day operations of the vessel were directed by Hakim and Secord. Hakim was the financial mastermind of the Iran arms sales, while Secord arranged the logistics of the sales and joined in negotiations with Iranian officials over the freeing of U.S. hostages in Lebanon.

Parlow said his company served as a front for the two men, financing the Erria’s operations and relaying orders to the crew. But Hakim had actual legal control of the ship and the North Carolina arms deal, Parlow said, while Secord often acted as adviser and second-guesser on the secret projects.

Parlow Admits He Lied

Parlow admitted that he had lied during interviews last month in which he maintained that he owned the Erria and used it only for legitimate business.

“I never owned the ship,” he said Thursday. “Hakim directed the ship. He would telephone me and tell me where he wanted it sent.”

Further details of the operations may come out in a legal and financial wrangle between Hakim and Parlow that erupted this week in Denmark. On Thursday, Parlow won a Danish court order seizing the Erria, claiming that Hakim still owes Queen Shipping more than $200,000 for expenses incurred while financing the ship’s eight months of derring-do under North, Secord and Hakim.

Hakim may be unable to repay the debts, Parlow said, because Swiss bank accounts used to purchase the Erria and repay Queen Shipping for operational expenses may be the same ones that were frozen at the request of the Justice Department, which is probing the Iran-contras affair.

Filed Suit in Denmark

Parlow filed suit in Denmark Thursday against Compagnie de Services Fiduciaires, a Geneva firm that had given Hakim legal power to control the Erria’s finances and operations. CSF has organized or controlled a vast array of other shell companies involved in the Iran-contras scheme on both sides of the Atlantic.

Among the firms with legal ties to CSF is Dolmy Business Inc., a Panamanian shell company that is the legal owner of the Erria. According to a two-page document in Copenhagen, CSF made Hakim its agent for the purchase of the Erria--then named the Veralil--and gave him complete fiscal and operational control of the ship.

Hakim and Willard Zucker, the attorney for CSF, bought the ship last April 28 after two days of negotiations with its Danish captain and former owner, Arne Herup. The $312,500 purchase price was forwarded to Herup from an account in Credit Suisse bank in Geneva, according to Parlow.

Clandestine Ventures

Within days, the ship was registered under the Panamanian flag and dispatched to Cyprus on an abortive mission to ransom U.S. hostages out of Lebanon for $1 million. That was the first of a series of clandestine ventures, most of which were reported in news accounts last month.

After apparently uneventful stops in Italy, Portugal and Denmark, the Erria sailed to Szczecin, Poland, on the East German border, where Parlow said the ship picked up a cargo of 158 tons of Communist-Bloc AK-47 rifles, grenades and ammunition on July 10. The purchaser, Parlow said, was Energy Resources International, a Panamanian firm.

Panamanian records show that Energy Resources was purchased in 1978 by Stanford Technology Corp. of Vienna, Va., a firm controlled by Hakim and closely linked to CSF. According to Portuguese records, Energy Resources in 1984 and 1985 bought nearly $2 million in Portuguese arms, most of which authorities there say went by ship or plane to Central America.

By July 19, the Erria had steamed into the arms-trading port of Setubal, Portugal, where the Portuguese export firm of Defex had a 200-ton shipment of munitions waiting. The load of arms--6,916 boxes--appears to have included ammunition for AK-47 rifles and perhaps for other weapons, as well as some 14 tons of Portuguese-manufactured land mines.

With its 358-ton shipment complete, records show, the Erria left Setubal claiming to be bound for Yemen. It returned to the harbor twice, claiming engine trouble. The first time it declared that it was bound for Puerto Barrios, Guatemala. The second time it set sail for Cherbourg.

Portuguese officials told The Times that they suspected the crew was faking the problems in a stalling maneuver and might even have sabotaged the ship in a delaying tactic. “It could be possible, yes,” Parlow said Thursday. “I won’t deny that.”

Ban on Military Aid

During that same period, Congress was debating whether to let a ban on U.S. military aid to the contras expire on Oct. 1, and it ultimately voted $100 million in aid for the fiscal year beginning on that day.

The Erria, finally arriving at the gritty English Channel town of Cherbourg, unloaded the entire cargo at the port’s munitions docks on Sept. 13.

A day earlier, acting under Hakim’s orders, Parlow had chartered a second ship, the Danish-flag freighter Iceland Saga, from the Netherlands port of Flushing Roads. The Iceland Saga sailed to Cherbourg immediately, loaded the Erria’s entire cargo into its hold and set sail on Sept. 20, ostensibly for Puerto Barrios.

Why the arms were switched to a new ship is not completely clear. One possible explanation is that the switch may have been designed to further separate Hakim, North and their network of companies from the arms shipment.

The Iceland Saga did not go to Puerto Barrios either. Eighteen days after leaving Cherbourg, on Oct. 8, it sailed up the North Carolina’s Cape Fear River to the U.S. Army’s Sunny Point munitions depot, where Parlow said it unloaded the cargo directly into a Pentagon warehouse.

90.3 Tons of Munitions

U.S. Customs officials and port records in the town of Wilmington, N.C., show only that the Iceland Saga unloaded 90.3 tons of munitions in the Wilmington port for delivery to the Defense Department. Customs officials have not responded to requests to examine records on the delivery.

Parlow said the Iceland Saga unloaded 90 tons of “hunting ammunition” in Wilmington. The rest of the munitions were apparently dropped off at nearby Sunny Point.

Parlow said he was not sure why the Iceland Saga did not go to its stated destination of Guatemala. Perhaps, he said, “they didn’t want the Russians to know where it was going.”

As the Iceland Saga was in the mid-Atlantic, the 18-month congressional ban on direct U.S. military aid to the contras expired on Oct. 1. At that point, it became legal for the Pentagon to accept the Iceland Saga’s arms on behalf of the contras, although legal questions may yet arise over whether their purchase before the ban ended was in compliance with the law.

Private Business

After the Wilmington stop, the Iceland Saga returned to private business and out of the arms deal. The Erria, meanwhile, continued on its covert missions in the Mediterranean.

On Oct. 5, Hakim ordered it to Cyprus for the second time in six months. The mission, previously described by sources as a wait for a release of U.S. hostages, now appears to have been a similar and equally abortive mission: Parlow said he was told later that the ship was to pick up “seven Marine Corps people” off Lebanon.

After Cyprus, the Erria sailed to Israel where, as previously reported, it picked up a load of arms for its final adventure: a planned swap of weapons with Iran for a captured Soviet tank.

That swap, too, was aborted. Parlow said that Hakim had hopes of picking up as many as five Soviet T-72 tanks from the Iranians for delivery to a U.S. Navy base in Diego Garcia, a tiny island in the southern Indian Ocean.

Hakim was undeterred, Parlow said, by the fact that the Erria had only a $20,000 container of rebuilt AK-47 rifles and ammunition to offer the Iranians in trade. An astounded Secord ordered the ship’s captain to open the container and photograph the weapons, apparently to prove that Hakim had not stowed something aboard that the Iranians valued more.

Swap Abandoned

The swap was abandoned after a month’s wait off the Iranian port of Bandar Abbas, and the Erria set sail for Denmark.

By that time, maritime sources say, the Erria had run up expenses of more than $500,000 and perhaps as much as $800,000. By the time the vessel docked in Korsor last Jan. 12, Hakim apparently lacked the funds to reimburse Parlow’s firm for the last $200,000 of expenses.

The scandal over the Iranian arms sales having erupted in the United States, Parlow sent letters to the four-man crew laying them off “due to the present market situation,” documents in the possession of the Danish Seamen’s Union show. He then placed the ship up for sale.

William C. Rempel reported from Copenhagen and Algiers; Michael Wines from Cherbourg, France, and Washington. Also contributing were staff writers Richard E. Meyer from Setubal, Portugal; Stanley Meisler and Alice Sedar from Paris, and Maura Dolan from Washington.