Evidence Seen Linking Secord to Arms Profit

Joseph Coors, the Colorado brewer who donated $65,000 to buy a single-engine plane for the Nicaraguan resistance, was shocked to learn this week that the aircraft now belongs not to the contras but to retired Air Force Maj. Gen. Richard V. Secord, a middleman in the Iran-contra affair.

“I didn’t give this money to Gen. Secord,” Coors told the congressional Iran-contra investigating committees. “I gave it to the freedom fighters of Nicaragua.”

Coors’ outrage is shared by many others--congressmen, as well as private contributors to the contras--who have seen mounting evidence that Secord profited personally as he sold arms to the contras for more than a year with White House support.

Defends His Motivation

Secord testified that his motive was to serve his country and the cause of freedom in Nicaragua. Whether he was a profiteer or a patriot will be a central question when the congressional hearings resume Wednesday with testimony from his business partner, Albert A. Hakim, who still controls at least $8 million left from the sale of arms to Iran as well as to the contras.

“I think there is growing evidence that Secord had a profit motive,” said Sen. George J. Mitchell (D-Me.), a member of the Senate investigating committee. “Certainly, it’s clear there was a substantial profit--even Secord has testified to that.”

Not only has Secord consistently refused to give U.S. investigators permission to look into the records of his numerous Swiss bank accounts, but several witnesses also have complained to the committees that he deceived them about his financial interests and took steps to drive lower-price competitors out of the business of supplying weapons to the Nicaraguan rebels.

Adolfo Calero, a contra leader, testified that it was “a revelation” to him that Secord had been charging a 20% markup on weapons shipments sold to the resistance in 1985. He said he had been led to believe that Secord was not making a profit.

Retired Army Maj. Gen. John K. Singlaub, who sold arms to the contras for less than Secord charged, said he was angry to learn that Secord was hoarding millions of dollars in contributions to the rebels in a Swiss bank account at a time when Singlaub was “working very hard” to secure much smaller donations.

“I’ll ask you a question which you may not wish to answer,” Sen. Warren B. Rudman (R-N.H.) said to Singlaub on Thursday. “Do you think Gen. Secord and his associates treated the contras as someone they really wanted to help, or somebody they wished to profit by?”

‘Prefer Not to Answer’

“You’re right. I would prefer not to answer that,” Singlaub replied.

“You’ve answered it,” Rudman said.

From the time that Congress cut off direct U.S. military aid to the contras in 1984 until sometime in mid-1985, Calero directly controlled all of more than $33 million in funds that were raised on his behalf with the help of White House aide Oliver L. North. The money, most of it donated by King Fahd of Saudi Arabia, was held in Calero’s bank in the Cayman Islands.

But in mid-1985, Secord, 55, a part-time arms dealer who once aspired to run covert operations for the CIA, began to establish a permanent, independent military supply network for the contras at North’s request. From that time until the operation was exposed in late 1986, all private and third-country donations to the contras went into Swiss bank accounts controlled by Secord and Hakim.

It is still not entirely clear why North decided to divert the contra money to Secord, although several witnesses have testified that the switch was made out of a concern for corruption and mismanagement within the ranks of the Nicaraguan resistance. Congressional investigators theorize that Secord also saw an opportunity to profit, as well as a chance to create a “shadow CIA “ that he could run as he pleased.

$2 Million From Taiwan

The money that Secord received in the name of the contra cause included $1.6 million from a private fund-raising group in the United States and $2 million donated by Taiwan.

With the income from these contra contributors as well as an estimated $3.5 million in profits from the U.S. arms sales to Iran, Secord’s operation delivered arms to the contras and also amassed an estimated $4 million in assets that included a Danish ship, an airstrip in Costa Rica and four airplanes--one of them the single-engine Maule that Coors calls “my plane.”

Contributors such as Coors were clearly misled to believe that they were giving directly to the contras, and there is no evidence that Secord always spent the donations as the donors wished. William O’Boyle, an oil investor from New York City, kicked in $130,000 for two Maules, which apparently never were purchased.

Not only were the contra donations diverted to Secord, but Calero also was required to pay in advance for all weapons provided to his troops through Secord’s airlift. Calero paid $11.8 million to Secord and $5.3 million to Singlaub, his two major weapons suppliers.

Singlaub Had Better Deal

Singlaub gave him a better deal. For AK-47 assault rifles, for example, Secord charged the rebels $250 each for a shipment received in May, 1985, while Singlaub was able to deliver them that July for $135 each.

“I learned from Adolfo Calero that he had been required by the marketplace or whatever to pay almost twice as much, in some cases more than twice as much, as what we were able to get these weapons for,” Singlaub testified.

Calero agreed. “Gen. Singlaub’s price offer was outstanding,” he said. “That is the rifle our forces are fighting with now to this day.”

It was at about the time that Singlaub’s bargain-priced rifles were delivered to the contras that Calero lost financial control of the contras and Secord instead began collecting the donations.

Secord testified he told Calero that Singlaub would not be able to deliver what he promised, but testimony indicates that it was Secord who had the delivery problems. Calero complained that Secord’s operation was “lousy.”

One of Secord’s 1985 shipments was delayed so long that Calero jokingly called it “the slow boat from China.” Singlaub said that he was once asked by North or Secord--he cannot remember which--”if it would be possible to divert our ship to make a stop in another country to pick up some (of Secord’s) arms that were hung up there.”

Response Lukewarm

When Singlaub pointed out to North the large disparity between his prices and Secord’s, he said he got only a lukewarm response.

“In fact,” Rudman said to Singlaub, “nothing happened. You didn’t get any orders after that at all. . . . In fact, you were just cut out of the deal.”

Mitchell noted that Secord and Singlaub had a completely different approach to the same task. “The difference is that Singlaub set out to buy weapons at the lowest price and Secord erected a rather substantial infrastructure,” he said.

Whether or not Secord profited from the contra supply network, there is no question that his associates earned handsome salaries. Documents obtained by the committee show that Richard B. Gadd, who ran the Central American operation for Secord, enjoyed a profit margin of at least 58%.

There is also considerable evidence of a profit motive in Secord’s dealing with Iran. Secord, acting as the middleman in the U.S. arms sales to Iran during 1986, charged Iran an average of 130% more than he paid the U.S. government for the arms.

Nunn Offers Theories

During the first week of the hearings, Sen. Sam Nunn (D-Ga.), a committee member, noted that there were at least four theories about why the U.S. government sold arms to Iran:

--To open a dialogue with Iran.

--To win release of American hostages in Lebanon.

--To raise funds for the contras.

--To generate profits for Secord and other middlemen.

“Of those theories,” Nunn asked Secord, “which one would you subscribe to?”

“One and two,” Secord replied.

“It seems to me the pricing was more compatible with three and four,” Nunn said.

Secord, indignant over the profiteering charge, contended that the Iran-contra dealings hurt him financially because they absorbed so much of his time that he lost other lucrative clients.

Insisting that he was motivated entirely by U.S. strategic interests and a concern for the Nicaraguan people, he said that he forswore all personal profits from arms sales to the contras after taking a modest 20% markup on two initial weapons shipments in early 1985.

As for the Iranian arms deals, Secord said that all profits were viewed as necessary operating capital for what he called his “enterprise”--the umbrella organization that included the contra supply network, the mechanism for shipping arms to Iran and whatever other missions North devised for him.

Even though there is still $8 million left in the “enterprise,” Secord said, the money does not represent a profit because there are many unpaid bills. Committee investigators estimated these bills at no more than $500,000.

Sought to Aid Casey Fund

After three days of questioning about the money, Secord volunteered during his final day on the witness stand to donate it to a fund that had been set up for the contras in memory of the late CIA Director William J. Casey. But his offer only served to further enrage committee members, who believe that the money belongs to the U.S. Treasury.