Israel Denies Role in or Knowledge of Transfer of Funds from U.s.-iran Arms Deal to Swiss Bank Accou
Menu JTA Search

Israel Denies Role in or Knowledge of Transfer of Funds from U.s.-iran Arms Deal to Swiss Bank Accou

Download PDF for this date

Israel flatly denied Sunday that it had any role in or knowledge of the transfer of funds from the U.S.-Iran arms deal to a Swiss bank account maintained for the Nicaraguan rebels known as Contras.

The statement was in response to allegations in a Senate committee report that funds for the transaction were placed in an “Israeli account” in Switzerland from which it was transferred to another Swiss bank account controlled by retired U.S. Gen. Richard Secord who handled aid to the Contras at a time when Congress banned such aid.

Premier Yitzhak Shamir and Foreign Minister Shimon Peres received over the weekend copies of the report of the Senate Select Committee on Intelligence which was released in Washington last Thursday.

Shamir’s spokesman, Avi Pazner, said in a prepared statement Sunday that the monies from the Iran arms deal were paid “by the Iranian representative directly into the account specified by the Americans and no sum of money transferred by the Iranians remained in Israel’s hands or went through Israel or its representatives.”


Defense Minister Yitzhak Rabin, in an Army Radio interview Sunday, categorically denied that Israel had sent weapons to the Contras. But the newspaper Maariv quoted senior security sources Sunday as saying that after intense lobbying by Lt. Col. Oliver North, a National Security Council (NSC) side subsequently dismissed, Israel agreed in October 1986 to send a shipment of several hundred Soviet-made rifles to the Contras.

According to Maariv, the shipment was recalled before it reached its destination because the Iran arms deal had been exposed.

Maariv on Friday published what it said was the number of the account at the Credit Suisse bank in Geneva where the U.S. deposited funds from the Iran arms sales for diversion to the Contras.

Maariv claimed that the account, No. IS 386430, was registered under the name “Lake Resources” and served for transferring money to suppliers of various services, including the Israel Defense Ministry. The account was administered by Secord and North, Maariv reported.


The immediate reaction here to the report by the Senate Select Committee was that it was lacking in important details because several key American witnesses had refused to testify.

The Knesset’s Foreign Affairs and Security Committee is expected to take up the matter later this week. Committee chairman Abba Eban said over the weekend that the committee would have to investigate all aspects of the Iran arms deal to determine exactly what Israel’s role was in the affair.

Israel has maintained from the outset that it acted solely as an intermediary at the specific request of the Reagan Administration to help secure the release of Americans held hostage by pro-Iranian elements in Lebanon.

According to Defense Ministry sources, members of the U.S. National Security Council asked Rabin several times that Israel sell arms to the Contras but Rabin absolutely refused. The Maariv report Sunday quoted senior officials as saying that “Oliver North drove us crazy with requests to supply weapons to the Contras.”


The first American request was directed to Rabin when he visited Washington in May 1986 by Col. North, then a member of the NSC. Others were present at the meeting and minutes were taken, Maariv reported. Rabin is reported to have turned down the request a second time when he was in Washington in September 1986. At that time, North made a specific request to transfer captured Soviet weapons to the Contras. Minutes were also taken at that meeting.

Rabin replied that he would not transfer weapons to the Contras but would be willing to consider the transfer to the U.S. of captured Soviet weapons to do with them what they pleased, Maariv reported.

The report went on to say that North claimed the Congressional ban was about to be lifted–which it was in October 1986. He agreed that the transfer to the Contras would be done through him and not directly by Israel.

He noted that Israel was known to possess many Soviet rifles and asked that they be given to him to be sent to the Contras. Rabin asked for payment for the weapons but North pleaded he had no funds.

Sources in Israel stress that North’s reply would not have been accepted if Israel knew at the time that North was transferring funds from the Iranian arms purchases to finance equipment to the Contras. But Israel did not have this knowledge and Rabin and others at the meeting, among them the Prime Minister’s adviser on counter-terrorism, Amiram Nir, accepted North’s statement. For two weeks North called Nir almost daily to have him urge Rabin to transfer the rifles.

Rabin finally agreed and the rifles were loaded aboard a ship at Eilat. Israel did not accept payment. The ship sailed for a destination determined by North but was recalled to Eilat before reaching its destination, according to the report published in Maariv Sunday.


The Maariv report on the Swiss bank account Friday said it played a central role in the first and second phases of the Iran arms affair, beginning in 1985. In the first phase, payments were made via Saudi businessman Adnan Khashoggi, Iranian mediator Manucher Ghorbanifar, and Israeli arms dealer Yaacov Nimrodi.

About $1 million were deposited in the account, apparently for 504 TOW anti-tank missiles transferred from Israel to Iran. The Maariv report said it was unclear why this money was received by the Americans. Senior sources here said this and other aspects of the deal’s financing remain “unexplained blank spaces.”

The matter resurfaced after Washington and Jerusalem decided at the end of December 1985 to halt the deal. But Israel took the initiative to revive it, at the insistence of Nir. He proposed to the Americans that they attempt to exchange Shiite prisoners held by the Israel-backed South Lebanon Army (SLA) for American hostages.


Following up on this proposal, discussions were conducted in Washington by the then National Security Adviser, Adm. John Poindexter, who prepared a memorandum for the resumption of contacts with Iran for President Reagan. Reagan approved it on January 17, 1986. The memorandum concerned the direct supply of American weapons to Iran with Israel serving only as a point of transshipment and as so-called “special envoys.”

Nir’s trip with American emissaries to Iran in May 1986 was approved in advance by Shamir, Peres and Rabin after consultations with security officials, Maariv said.

The paper said the TOW missile deal totalled about $6.9 million of which $6.7 million was transferred to the Defense Ministry which later paid $3 million to the U.S. and at least $500,000 to Ghorbanifar. An additional $600,000 was paid to “moderate” elements in Iran and $1 million was transferred to the U.S. Swiss bank account.

The report of the Senate Select Committee said that according to testimony and documents it received, Israel had a strong interest in promoting contacts with Iran and reportedly permitted arms transfers to that country as a means of furthering its interests.

A series of intelligence studies in 1984 and 1985 cited in the committee’s report indicated Israel shipped non-U.S. arms to Iran as early as 1982 and Israeli middlemen were used to arrange private deals. According to the report, Poindexter’s testimony confirmed the intelligence studies.

The report cited Secretary of State George Shultz’s objections. He is quoted as having warned the then National Security Adviser, Robert McFarlane, that Israel’s agenda regarding Iran “is not the same as ours” and that an intelligence relationship with Israel on Iran “could seriously skew our own perception and analysis of the Iranian scene.”

Founding Funders

The digitization of the JTA Archive would not have been possible without the generous support of the following donors:
  • The Gottesman Fund
  • Righteous Persons Foundation
  • Charles H. Revson Foundation
  • Elisa Spungen Bildner and Robert Bildner, in honor of Norma Spungen
  • George S. Blumenthal
  • Grace and Scott Offen Charitable Fund