Court Sides With Hakim on Papers : Walsh Must Prove Jurisdiction for Foreign Firms’ Records

A federal appeals court, dealing special prosecutor Lawrence E. Walsh his first setback in court, today upheld arms dealer Albert A. Hakim’s right not to turn over the records of eight companies linked to the Iran-Contra scandal pending lower court review.

A three-judge panel of the U.S. Circuit Court of Appeals for the District of Columbia held that U.S. District Judge Aubrey Robinson, who ordered Hakim to produce the documents or go to jail, erred in deciding that Walsh only needed to show that his investigation had jurisdiction over Hakim in ordering him, as custodian of the records, to produce them.

In oral arguments in September, Hakim lawyer Richard Janis revealed that Hakim was a target of Walsh’s sweeping investigation of the scandal and asserted Hakim’s Fifth Amendment right against self-incrimination in refusing to comply with a grand jury subpoena.

Janis contended that although Hakim is an American citizen, Walsh had no jurisdiction over some of the foreign companies in question. None was identified.

“The independent counsel must show that the district court has personal jurisdiction over each of the companies whose records it seeks in order to obtain an order directing the witness to comply with the subpoena,” said Circuit Judge Harry Edwards, writing for the court.

“Because the independent counsel has not yet made the requisite showing, we reverse the district court’s order and remand for further consideration of the court’s jurisdiction over the eight companies.”

Hakim, who handled the scandal’s labyrinth of financial dealings, mostly through Swiss accounts, had secretly challenged Walsh’s subpoena in refusing to turn over financial records of foreign companies.

The court order, included in the opinion, said the documents requested were corporate in nature, including telephone logs, minutes of meetings, financial records and inter-office memoranda.

The court also held that Hakim “may properly invoke his Fifth Amendment privilege in refusing to produce the subpoenaed documents if he can show that the testimonial implications of his production of the documents . . . might tend to incriminate him.”

The matter now returns to Robinson’s court, where Hakim must make that showing, and Walsh must show that any incriminating evidence that might be linked to Hakim’s production of the papers is already known. Walsh also could give Hakim immunity from prosecution in return for his delivering the documents in question.

Hakim previously launched several unsuccessful challenges to Walsh’s attempts in Switzerland to obtain secret bank records linked to the affair. Walsh took custody of those records on Tuesday.