TED KOPPEL: [voice-over] February 1991. A U.S. Stealth fighter-bomber takes off from Saudi Arabia for a bombing run over Baghdad, to destroy a bomb factory built with American technology.
PRESIDENT GEORGE BUSH (SR.): We're dealing with Hitler revisited, and that must not stand.
KOPPEL: [voice-over] Tonight, an examination of how the Reagan and Bush administrations privatized foreign policy, circumvented the will of Congress and permitted the illegal transfer of arms and technology to Iraq.
ANNOUNCER: This is ABC News Nightline Investigation. Reporting from Washington, Ted Koppel.
KOPPEL: For months now, we've been producing and broadcasting a series of reports setting forth how Iraq, during much of the 1980's and into the '90s, was able acquire sophisticated U.S. technology, intelligence material, ingredients for chemical weapons, indeed, entire weapon-producing plants, with the knowledge, acquiescence and sometimes even the assistance of the U.S. Government. Sometimes, I should add, in violation of U.S. law. With one notable exception, we continue to stand by everything we have reported to you, but that exception has to do with a man who is facing confirmation hearings that begin next Monday. Robert Gates is the man nominated to become the next director of Central Intelligence, and simple fairness requires that we address again and in a prominent fashion, at the beginning of this broadcast, a charge that we made against Mr. Gates back in July, namely, that he was deeply involved as deputy director of the CIA in a major covert operation that funneled weapons and technology to Iraq.
The day after that broadcast, we reported that the Senate source who had told us about the covert CIA operation had called to tell me that he was mistaken, that no such operation had been authorized.
We left standing, however, the allegation that Mr. Gates had personally met with the Chilean arms dealer, Carlos Cardoen, who was one of the biggest shippers of arms to Iraq in the world, and that Gates was intimately involved in the transfer of arms and technology to Iraq. As we told you at the time, the White House denied the charge; they denied it categorically: "Mr. Gates never met with Carlos Cardoen."
To this day our sources - and there are three of them - insist that the allegations are true. What we have learned, though, in the reporting we've done over the past two months, has failed to produce specific additional information directly implicating Robert Gates. With a man's career in the balance, that needs to be said.
There are still significant questions about what Mr. Gates knew or should have known about U.S. arms and technology going to Iraq, and specifically about the activities of Carlos Cardoen. More about that a little later.
When we broadcast our last report, the White House issued the following denial: "The whole story is unfounded. There were never any sales, covert or overt, to Iraq or Iran through a third country."
In this broadcast, we will tell you what we know about the transfer of arms to Iraq, but first you need to know the climate that was generated here in Washington towards Iraq during the early 1980s.
Howard Teischer is a Middle East specialist who served on President Reagan's National Security Council at the White House.
HOWARD TEISCHER, former Reagan NSC Official: There was no way that any casual observer who took any interest in Iraqi matters and the Arab-Israel situation, the Middle East situation, could but conclude that Iraq was an enemy of the United States.
KOPPEL: [voice-over] Caspar Weinberger was Ronald Reagan's secretary of defense. I told him a few days ago that we had learned of the shipment of U.S. artillery in the early 1980s from Jordan to Iraq, and that the U.S. was aware of the transfer.
CASPAR WEINBERGER, former Secretary of Defense: The idea of any re-transfer from Jordan out was strictly forbidden, completely forbidden and, had it happened, we would have had every possible sanction we could use to prevent it occurring again.
Mr. TEISCHER: In the Defense Department and the State Department I began to hear unconfirmed reports that transfers had taken place. Jordan denied it formally and vigorously, and the U.S. didn't press the case. This is a good example of a way that communications can be established and approvals can be given with winks and nods, without documentation and with plausible deniability.
KOPPEL: [voice-over] We had also learned, I told Mr. Weinberger, of the transfer of U.S. satellite intelligence to Iraq as early as 1982.
SEC. WEINBERGER: Well, they're quite wrong about that. There's no assistance given to Iraq and no intelligence that I know of given to Iraq, nothing that I recall in the way of any kind of affirmative support, technology, weapons or anything of that kind given to Iraq.
KOPPEL: That, of course, is Mr. Weinberger's recollection in the current climate of 1991, when the notion of assisting Iraq with weapons and military intelligence is far less palatable than it was, say, in 1987, when Secretary Weinberger testified before the House Committee on Foreign Affairs.
FOREIGN AFFAIRS COMMITTEE MEMBER: Mr. Secretary, following up the chairman's question, could you tell us about Iraq, what help did we give Iraq?
SEC. WEINBERGER: Iraq?
FOREIGN AFFAIRS COMMITTEE MEMBER: That's right.
SEC. WEINBERGER: Well, we've given very substantial help to -
FOREIGN AFFAIRS COMMITTEE MEMBER: Also intelligence -
SEC. WEINBERGER: -to Iraq, yes sir. Yes. We should go into that more in closed hearings, but we have, and we have also, I think, tried to be of assistance in a number of other ways. [*See J4JP Note #1 below]
Mr. TEISCHER: Secretary Weinberger, Secretary Haig first and then Secretary Schultz, MacFarlane, Clark, Poindexter, all had different views on what to do, how to do it, when to do it. And the President, for better or for worse, was unwilling to assert discipline over his cabinet officers in these matters.
KOPPEL: [voice-over] Richard Perle was an assistant secretary of defense under Secretary Weinberger.
RICHARD PERLE, former Assistant Secretary of Defense: When you lack clear guidelines, everybody becomes a policymaker on his own, and people sense things differently, they read them differently, they act differently, and then you get a breakdown of cohesive policy. [*See J4JP Note #2 below]
KOPPEL: [voice-over] William von Raab was U.S. commissioner of Customs.
WILLIAM von RAAB, former U.S. Customs Commissioner: Customs was extremely concerned on my watch, which ended in 1989, with weapons going to Iran. I would say that, except as a routine matter, weapons going to Iraq were off our screen entirely.
KOPPEL: When you say "off your screen," you mean you didn't care?
Mr. von RAAB: There were no special operations or special efforts underway to prevent arms from going [from] the United States to Iraq.
KOPPEL: [voice-over] In 1982, the United States gave the world a clear signal that relations with Iraq were improving. It dropped Iraq from its list of states that support terrorism and, around the world, a variety of interested parties watched, listened and drew their own conclusions. Lebanese arms dealer Serki Saghanalian who claims to have worked with and sometimes in behalf of the CIA for many years, began selling Austrian artillery to Saddam Hussein's Republican Guard.
SERKI SAGHANALIAN, Arms Dealer: It's a long history, my friend. The 155mm. gun that went from Austria, you think the U.S. didn't know about it? I informed them. I told them what was happening. They said, "Sure, go ahead and help them as much as you can."
KOPPEL: It wasn't just a tilt toward Iraq, it was an opening of the floodgates. At times, U.S. laws were violated. There was an official atmosphere that ranged from indifference to tolerance and sometimes even outright cooperation. It was a perfect environment for a man like Chilean arms dealer Carlos Cardoen. That story in a moment.
KOPPEL: Think about it for a moment. What was the biggest single scandal of the Reagan administration in which the will of Congress was circumvented by the use of private arms dealers selling weapons in the Middle East? Iran/Contra, right. It's a scandal that resonates to this day, that caused Robert Gates to withdraw his first nomination as CIA director and that still casts a shadow on his confirmation hearings that are due to begin on Monday.
But it is becoming increasingly clear that the issue of aid to Iraq will be another major focus of his hearings. The sheer quantity of technology, weapons and money that were transferred to Iraq over roughly the same period dwarfs anything that went to Iran. Remember, official U.S. policy was that no help should go to either side. In reality, the Reagan administration was split, some senior officials supporting Iran, others Iraq. And to those who wanted to see Iraq helped, the man you are about to meet was in a perfect position to be of assistance.
CARLOS CARDOEN, Chilean Arms Dealer: Of course, we couldn't be less than proud because we found that we were able to things that we didn't even dream that we were able to do.
KOPPEL: [voice-over] This is Chilean arms dealer Carlos Cardoen, back in 1984, not long after he began a lucrative new business, the sale of cluster bombs to Iraq. Much has been made of the fact that cluster bombs are particularly nasty and deadly anti-personnel devices, designed to inflict maximum damage on heavy troop concentrations. Cardoen's cluster bombs depended on the transfer of a key weapons technology that was developed in the United States.
Steve Bryen is a former Pentagon official.
STEVE BRYEN, former Pentagon Official: If he didn't get it from the U.S. he may not have been able to build the cluster bombs properly, so the answer to your question, how important were these transfers, they were probably very important. They may have been critical.
KOPPEL: [voice-over] Remember, Cardoen is from Chile. During the 1980s, the transfer of any kind of weapons technology from the United States to Chile was illegal.
The CIA's position on Cardoen is definitive. The agency told Nightline, "The CIA has never had a relationship of any type with Carlos Cardoen."
Somehow, though, Cardoen arranged for the transfer of cluster bomb technology to Chile, and set up his own factory to build them. As Nightline reported earlier, that technology came from ISC, International Signal and Control, of Lancaster, Pennsylvania. In October of 1984, ISC and Cardoen signed an agreement, in effect carving up the world's cluster bomb market. Cardoen would sell to all those countries with which ISC was prevented, under U.S. law, from doing business.
Could all this have gone on without the knowledge of the U.S. government? Senior Israeli officials have told Nightline that in the 1980s they were informed directly by the U.S. government that Carlos Cardoen was producing cluster bombs, using U.S. technology, and that these were being shipped to Iraq. Furthermore, several ISC executives claim a longstanding relationship with U.S. intelligence.
By 1988, Cardoen was not only selling cluster bombs to the Iraqis, he built them their own cluster bomb factory, like this one in Baghdad. He also provided the Iraqis with thousands of fuses to arm chemical weapons that were used in the Iran-Iraq war. And, according to foreign intelligence reports, Iraq was working on cluster bombs to dispense chemical and biological weapons with Cardoen's help.
By the time Iraq invaded Kuwait, Cardoen was also finishing a plant to produce sophisticated fuses for artillery shells and fuel-air explosives. Some of that advanced technology also came from the United States.
Mr. BRYEN: [voice-over] Earlier in the decade, during the bloody Iran-Iraq war, Cardoen provided tens of thousands of low-tech bombs, again employing U.S. technology. Cardoen had purchased in the United States key equipment from two munitions factories, which he shipped to Chile. He did that at a time when the U.S. arms embargo against Chile was in effect.
This picture shows Cardoen inspecting one of the plants which produced artillery shells. Retired Air Force Lieutenant Colonel Carlos Ricardson worked for Cardoen in the early '80s. He remembers what happened with that plant.
LT. COL. CARLOS RICARDSON, USAF (Ret.): He had a great deal of trouble with U.S. Customs. U.S. Customs stopped the shipment and held it up for, I guess, perhaps maybe even a year before it finally got broken loose and was shipped to Chile.
KOPPEL: [voice-over] The plant was designated as "scrap metal," and shipped from New Orleans. Another plant capable of producing aerial bombs came from Los Angeles.
INTERVIEWER: You saw the plant in L.A., you saw the plant in Chile. Would you consider that plant a scrap metal?
Lt. Col. RICARDSON: It's not hardly a scrap metal plant. He was very selective on the pieces of equipment that he took out of that plant, and mainly the presses, which are essential to making the casings. [*See J4JP Note #3 below]
KOPPEL: [voice-over] The reference is to bomb casings, Carlos Cardoen ultimately became one of Iraq's biggest sources of munitions during the '80s.
[On camera] With Robert Gates about to begin his confirmation hearings on Monday, the CIA in particular has taken great pains to emphasize that neither Gates personally nor the agency as a whole has had any type of relationship with Carlos Cardoen. The agency even faxed us a letter that Cardoen wrote last July to the U.S. ambassador in Chile. In that letter, Cardoen denies that he was a conduit for the agency and denies ever meeting Robert Gates.
[Voice-over] Indeed, Cardoen, who is currently facing several grand jury investigations, complains bitterly in his letter that he is being unjustly persecuted by the U.S. Government. He claims he has kept them thoroughly informed of all his commercial activities through the U.S. Embassy in Santiago.
Which brings us to James Theberge, who was, in the mid-1980s, U.S. ambassador to Chile. Shortly after leaving his post in 1985, Ambassador Theberge went to work for Carlos Cardoen, heading up one of his offices, Swissco Management Group, here in Washington.
LT. COL. RICARDSON: Ambassador Theberge's functions for Cardoen was probably one of opening doors, setting up marketing programs for Cardoen, and kind of the same thing that I did, except obviously at a little higher level.
KOPPEL: These days, as we've told you, the CIA is so eager to distance itself from Carlos Cardoen that it has issued a categorical denial that a relationship of any type existed between Cardoen and the agency. Such things are difficult to prove, but consider this.
[Voice-over] Ambassador Theberge went to work for Cardoen around October of 1985. A colleague, indeed the man who ultimately succeeded Theberge at Swissco, has consulted his records and tells us that the ambassador worked for Cardoen until February of 1987. Theberge died in January of 1988, but his widow tells us that before he died he took on another job. For a year to a year and a half, she told us, Ambassador Theberge worked for the CIA.
In other words, he worked for Cardoen until February of '87, and died 11 months later, in January of '88. But Mrs. Theberge recalls her husband serving on the CIA's senior review panel. She initially told us that her husband worked on the panel for the last 12 to 18 months of his life. Today she said she couldn't recall precisely how long Ambassador Theberge worked for the agency.
At the very least, Theberge went directly from his job with Cardoen to a job with the agency. But there is reason to believe that he actually worked for both, for a few months at least, at the same time.
Incidentally, the function of the senior review panel is to advise one man - the director of Central Intelligence - and for at least part of the period in question there was an acting director of the CIA, Robert Gates.
We'll attempt to pull some of these threads together when we come back.
KOPPEL: When all is said and done, why should you or your representatives in Congress care? Eventually, after all, President Bush spoke and acted against Saddam Hussein more forcefully than anyone could have expected.
PRES. GEORGE BUSH (SR.): [October 23, 1990] We're dealing with Hitler revisited, a totalitarianism and a brutality that is naked and unprecedented in modern times.
GARY MILHOLLIN, Director, Wisconsin Project: The more we have Saddam, the more dangerous he got, and ultimately we had to go to war to destroy what we sold him.
KOPPEL: But it's not a question of holding the Bush or Reagan administrations to account for having made mistakes in regard to their policies toward Iraq. The issue is how those policies were implemented.
As we've reported over the past few months, the Atlanta branch of an Italian bank, BNL, was able to funnel billions, some of it in U.S. credits, to Iraq's military procurement network. The U.S. government knew and turned a blind eye.
Sophisticated military technology was illegally transferred from a major U.S. company in Lancaster, Pennsylvania to South Africa and Chile and, from there, on to Iraq. The Iraqi-born designer of a chemical weapons plant in Libya set up shop in Florida, producing and then shipping to Iraq chemical weapon components. The CIA, the FBI and other federal agencies were made aware of the operation and did nothing to prevent it.
During the 1980s and into the '90s, senior officials of both the Reagan and Bush administrations encouraged the privatization of foreign policy, certainly towards Iran and Iraq. The policy may have had merit, but they weren't willing or, in some instances, weren't successful in fighting it out on Capital Hill. So they found other ways. They made a mockery of the export control system, they found ways of encouraging foreign governments to do what our laws prohibited. They either knew or, if not, were guilty of the grossest incompetence, that U.S. companies were collaborating with foreign arms merchants in the illegal transfer of American technology that helped Saddam Hussein build his formidable arsenal.
This week, the CIA again told Nightline that our allegations over the past few months regarding covert operations to supply Iraq with U.S. arms and weapons technology were simply untrue. The CIA's inspector general, says a statement from the agency, "...has found no factual support whatsoever for such an operation or for the involvement of Mr. Gates."
At least one member of the Senate Intelligence Committee, Bill Bradley of New Jersey, feels that there may be reason to doubt both those claims, and he'll raise the issues at the Gates confirmation hearings next week.
The CIA also told us that its inspector general has found no evidence of any off-the-books, illegal activities. But the CIA concedes that off-the-books activities are not documented, precisely so that deniability can be preserved.
One thing is undeniable--
[voice-over] - this gunsight video of a Stealth fighter-bomber from the 37th Tactical Fighter Wing last February attacking a bomb factory on the outskirts of Baghdad: U.S. technology in the air destroying U.S. technology on the ground. The factory was built by Carlos Cardoen.
KOPPEL: That's our report for tonight. I'm Ted Koppel in Washington. For all of us here at ABC News, good night.
Copyright © 1991 American Broadcasting Companies Inc.