Hakim Contempt Citation Reversed

In a blow to Iran-Contra prosecutors, a federal appeals court reversed a contempt citation Friday that would have sent Iranian-American financier Albert A. Hakim to jail for refusing to turn over the records of eight foreign companies that were used to funnel U.S. weapons to Iran.

A three-judge panel, including President Reagan’s Supreme Court nominee Douglas H. Ginsburg, ruled that independent counsel Lawrence E. Walsh can obtain the records only if he can show that the district court that issued the contempt citation has jurisdiction over the individual companies or that an order to Hakim would not violate the Iranian-born businessman’s right to avoid self-incrimination.

It was the first legal setback for Walsh’s investigation of secret U.S. arms sales to Iran and the diversion of some of the profits to Nicaraguan rebels.

Swiss Furnished Records

However, the documents may be less crucial to the probe now than they were when Walsh first sought them last April because the Swiss government turned over a number of bank records earlier this week. The bank records are thought to contain much of the information Walsh had hoped to obtain from Hakim.

In a statement issued by his office, Walsh said: “The opinion of the court is being studied and a prompt decision will be made as to the appropriate way in which to proceed.”

U.S. District Judge Aubrey E. Robinson Jr. last July 30 ordered Hakim to produce the records or go to jail. Hakim refused to comply, but the jail sentence was stayed pending appeal.

Robinson held that Hakim, as an American citizen, was required to comply with Walsh’s subpoena for the records even though the companies were not registered in the United States. Moreover, Robinson ruled that Hakim could not invoke the Fifth Amendment because the privilege against self-incrimination does not extend to corporate records.

Overruled on Both Points

The Circuit Court of Appeals overruled Robinson on both points. It agreed that Hakim could not invoke the Fifth Amendment concerning the content of the documents, but it said he could claim the privilege if he could show that the mere act of producing the records might be incriminating.

The appellate court decision would seem to leave Walsh with three choices: appeal the decision to the U.S. Supreme Court, return to Robinson’s court and attempt to meet the higher standard imposed by the appeals court or abandon the effort to obtain the documents because they duplicate the Swiss bank records.

The district court case against Hakim, a business partner of retired Air Force Maj. Gen. Richard V. Secord, has been sealed. The key facts in the case came out when the appeal was argued in open court last September. However, a spokesman for Walsh said the parties to the proceeding were barred by a court order from providing any details that were not made public at the September hearing.

Dummy Corporations

None of the companies have been identified. Last June, Hakim, testifying under a grant of limited immunity from prosecution, told the congressional Iran-Contra committees that he created a number of dummy corporations in Switzerland, Bermuda and the Cayman Islands to handle various projects for Lt. Col. Oliver L. North, then a member of the National Security Council staff.

Hakim, North, Secord and former National Security Adviser John M. Poindexter have been publicly identified as targets of Walsh’s investigation. In addition, Alan D. Fiers, chief of the CIA’s Central America task force, has been informed that he is a “subject,” although not now a target, of the inquiry.