Israelis Say Walsh Must Withdraw 2 Subpoenas

Independent counsel Lawrence E. Walsh must withdraw subpoenas of two key Israelis who had roles in the Iran- contra affair if he is to win cooperation of the Israeli government in his investigation, a senior official said here Friday.

“It’s either/or: either you have proceedings in court or voluntary (cooperation),” said the Israeli official, who spoke on condition of anonymity.

Walsh’s investigators want to interview David Kimche, former director-general of the Israeli Foreign Ministry; Al Schwimmer, a Brooklyn-born Israeli arms dealer; Amiram Nir, counterterrorism adviser to the Israeli prime minister, and Yaacov Nimrodi, another Israeli arms dealer.

Israel so far has refused to allow the four, all of whom played roles in the sale of U.S. arms to Iran, to be questioned by Walsh’s agents, contending it is up to Israel “to decide how we give information as a government,” the senior official said.

The apparent deadlock has stymied prosecutors’ efforts to obtain evidence of what took place in the arms sale, along with the diversion of funds to Nicaragua’s rebels, from participants Walsh is not seeking to prosecute.

Members of Walsh’s staff are expected to seek indictments against U.S. principals in the matter without the evidence but they want it to make their cases stronger.

Served in New York

The official did not suggest what cooperation Israel might be willing to offer beyond the written chronologies of the Iran transactions they gave to the House and Senate committees that investigated the scandal.

Subpoenas were issued for Kimche and Schwimmer after discussions in May between two of Walsh’s lawyers and Israeli officials led to no agreement, despite assurances by the Americans that they had no reason to believe the men had violated any U.S. law and had no intention of seeking charges against them.

Kimche was served with the subpoena while he was on a business trip to New York, and Schwimmer, who holds dual Israeli-U.S. citizenship, was served in Israel. Nir and Nimrodi can be served only if they come to the United States.

The Israeli government went to court to block the subpoenas, and Kimche was allowed to return home pending a ruling. It is understood that Chief U.S. District Judge Aubrey E. Robinson Jr. has refused to invalidate the subpoenas but has not decided whether Kimche and Schwimmer can refuse, under international law, to answer questions about their official duties.

“We stand on a principle here--the way to conduct international relations,” the Israeli official said. “You want the other government to come to you as a government, and not just grab someone from the street because he happened to be involved.”

What would the United States think if a foreign government subpoenaed an ex-U.S. official and tried to force him to testify on foreign soil about secret American dealings? the Israeli official asked.

“As a sovereign nation, you don’t make us go into a court of law, especially on a joint government-government operation in which we worked with the highest level of the Administration,” the official said.

Israel reached a separate agreement with the congressional investigators. In return for the committees’ agreeing not to call any of its citizens as witnesses, Israel supplied a financial chronology of its involvement in the arms sales and the first half of a historical chronology, covering the year 1985, according to the government official.

Walsh Wrote Letter

The historical chronology, a classified document consisting of about 70 pages, was given to the committees in the last week of July. The Israeli official said he hopes the second half will be completed in about a month.

When the agreement was announced in February, Walsh wrote Cabinet Secretary Ely Rubinstein to explain why his office needs live witnesses rather than a government chronology for any criminal prosecutions.

The witnesses could, for example, give their versions of conversations with former National Security Council aide Oliver L. North and retired Air Force Maj. Gen. Richard V. Secord about the arms deliveries to Iran and anything said about diverting proceeds to bolster the Nicaraguan rebels, Walsh’s representatives maintain. North and Secord, who conferred with Israeli representatives numerous times about arrangements for the sales, are prime targets of Walsh’s criminal inquiry.

The senior Israeli official blamed Walsh for the standoff, contending that the independent counsel “didn’t give the negotiations a full chance to end.” He did not elaborate but the official hinted that the stance Israel took during the ill-fated May discussions may not have been its final position.

But the official gave no indication of what kind of “cooperation” the Israelis had in mind, saying only that any concessions would have to wait withdrawal of the subpoenas.

Walsh’s office declined comment but his staff is understood to believe that the Israelis would refuse to allow any of their citizens to testify in court against American officials with whom they participated in the joint U.S.-Israeli arms sale initiative.

In seeking access to the Israeli witnesses, Walsh’s office is understood to have said it would not be necessary for them to testify before the grand jury in Washington. Instead, an FBI agent could sit in on the interviews and then give “hearsay” testimony of their statements to the grand jury.

Such testimony is admissible in a grand jury proceeding, but not at a criminal trial, leaving open the possibility that the Israelis might be asked to testify later in court.

Dan Fisher reported from Jerusalem and Ronald J. Ostrow from Washington.