Ashraf, the strong-willed twin sister of the Iran’s long-time ruler, had
gone from wielding immense behind-the-scenes clout in the ancient nation
of Persia to living in exile – albeit a luxurious one. With hostile
Islamic fundamentalists running her homeland, Ashraf also was troubled
by the plight of her ailing brother, the ousted Shah of Iran, who had
fled into exile, first to Egypt and then Morocco.
Now, she was turning
for help to the man who ran one of the leading U.S. banks, one which had
made a fortune serving as the Shah’s banker for a quarter century and
handling billions of dollars in Iran’s assets. Ashraf’s message was
straightforward. She wanted Rockefeller to intercede with Jimmy Carter
and ask the President to relent on his decision against granting the
Shah refuge in the United States.
A distressed Ashraf
said her brother had been given a one-week deadline to leave his current
place of refuge, Morocco. “My brother has nowhere to go,” Ashraf
pleaded, “and no one else to turn to.” [David Rockefeller, Memoirs]
Carter had been
resisting appeals to let the Shah enter the United States, fearing that
admitting him would endanger the personnel at the U.S. Embassy in
Teheran and other U.S. interests. In mid-February 1979, Iranian radicals
had overrun the embassy and briefly held the staff hostage before the
Iranian government intervened to secure release of the Americans.
Carter feared a
repeat of the crisis. Already the United States was deeply unpopular
with the Islamic revolution because of the CIA’s history of meddling in
Iranian affairs. The U.S. spy agency had helped organize the overthrow
of an elected nationalist government in 1953 and the restoration of the
Shah and the Pahlavi family to the Peacock Throne. In the quarter
century that followed, the Shah kept his opponents at bay through the
coercive powers of his secret police, known as the SAVAK.
As the Islamic
Revolution gained strength in January 1979, however, the Shah’s security
forces could no longer keep order. The Shah – suffering from terminal
cancer – scooped up a small pile of Iranian soil, boarded his jet, sat
down at the controls and flew the plane out of
Iran to Egypt.
A few days later,
Ayatollah Ruhollah Khomeini, an ascetic religious leader who had been
forced into exile by the Shah, returned to a tumultuous welcome from
crowds estimated at a million strong, shouting “Death to the Shah.” The
new Iranian government began demanding that the Shah be returned to
stand trial for human rights crimes and that he surrender his fortune,
salted away in overseas accounts.
The new Iranian
government also wanted Chase Manhattan to return Iranian assets, which
Rockefeller put at more than $1 billion in 1978, although some
estimates ran much higher. The withdrawal might have created a liquidity
crisis for the bank which already was coping with financial troubles.
appeal put Rockefeller in what he described, with understatement, as “an
awkward position,” according to his autobiography Memoirs.
“There was nothing
in my previous relationship with the Shah that made me feel a strong
obligation to him,” wrote the scion of the Rockefeller oil and banking
fortune who had long prided himself in straddling the worlds of high
finance and public policy. “He had never been a friend to whom I owed a
personal debt, and neither was his relationship with the bank one that
would justify my taking personal risks on his behalf. Indeed, there
might be severe repercussions for Chase if the Iranian authorities
determined that I was being too helpful to the Shah and his family.”
Later on March 23,
after leaving Ashraf’s residence, Rockefeller attended a dinner with
Happy Rockefeller, the widow of his brother Nelson who had died two
months earlier. Also at the dinner was former Secretary of State Henry
Kissinger, a long-time associate of the Rockefeller family.
Shah’s plight, Happy Rockefeller described her late husband’s close
friendship with the Shah, which had included a weekend stay with the
Shah and his wife in Teheran in 1977. Happy said that when Nelson
learned that the Shah would be forced to leave Iran, Nelson offered to
pick out a new home for the Shah in the United States.
conversation also turned to what the participants saw as the dangerous
precedent that President Carter was setting by turning his back on a
prominent U.S. ally. What message of American timidity was being sent to
other pro-U.S. leaders in the Middle East?
The dinner led to a
public campaign by Rockefeller – along with Kissinger and former Chase
Manhattan Bank Chairman John McCloy – to find a suitable home in exile
for the Shah. Country after country had closed their doors to the Shah
as he began a humiliating odyssey as what Kissinger would call a
modern-day “Flying Dutchman,” wandering in search of a safe harbor.
his aide, Joseph Reed, “to help [the Shah] in any way he could,”
including serving as the Shah’s liaison to the U.S. government. McCloy,
one of the so-called Wise Men of the post-World War II era, was
representing Chase Manhattan as an attorney with Milbank, Tweed, Hadley
and McCloy. One of his duties was to devise a financial strategy for
staving off Iran’s withdrawal of assets from the bank.
pressed the Shah’s case personally with Carter when the opportunity
presented itself. On April 9, 1979, at the end of an Oval Office meeting
on another topic, Rockefeller handed Carter a one-page memo describing
the views of many foreign leaders disturbed by recent U.S. foreign
policy actions, including Carter’s treatment of the Shah.
“With virtually no
exceptions, the heads of state and other government leaders I saw
expressed concern about United States foreign policy which they
perceived to be vacillating and lacking in an understandable global
approach,” Rockefeller’s memo read. “They have questions about the
dependability of the United States as a friend.” An irritated Carter
abruptly ended the meeting.
Despite the mounting
pressure from influential quarters, Carter continued to rebuff appeals
to let the Shah into the United States. So the Shah’s influential
friends began looking for alternative locations, asking other nations to
shelter the ex-Iranian ruler.
arrangements were made for the Shah to fly to the Bahamas and – when the
Bahamian government turned out to be more interested in money than
humanitarianism – to Mexico.
“With the Shah
safely settled in Mexico, I had hopes that the need for my direct
involvement on his behalf had ended,” Rockefeller wrote in Memoirs.
“Henry [Kissinger] continued to publicly criticize the Carter
administration for its overall management of the Iranian crisis and
other aspects of its foreign policy, and Jack McCloy bombarded [Carter’s
Secretary of State] Cyrus Vance with letters demanding the Shah’s
admission to the United States.”
When the Shah’s
medical condition took a turn for the worse in October, Carter relented
and agreed to let the Shah fly to New York for emergency treatment.
Celebrating Carter’s reversal, Rockefeller’s aide Joseph Reed wrote in a
memo, “our ‘mission impossible’ is completed. … My applause is like
When the Shah
arrived in New York on October 23, 1979, Reed checked the Shah into New
York Hospital under a pseudonym, “David Newsome,” a play on the name of
Carter’s undersecretary of state for political affairs, David Newsom.
The arrival of the
Shah in New York led to renewed demands from Iran’s new government that
the Shah be returned to stand trial.
In Teheran, students
and other radicals gathered at the university, called by their leaders
to what was described as an important meeting, according to one of the
participants whom I interviewed years later.
gathered in a classroom which had three blackboards turned toward the
wall. A speaker told the students that they were about to undertake a
mission supported by Ayatollah Khomeini, Iran’s spiritual leader and the
de facto head of the government.
“They said it would
be dangerous and that anyone who didn’t want to take part could leave
now,” the Iranian told me. “But no one left. Then, they turned around
the blackboards. There were three buildings drawn on the blackboards.
They were the buildings of the U.S. embassy.”
The Iranian said the
target of the raid was not the embassy personnel, but rather the
embassy’s intelligence documents.
“We had believed
that the U.S. government had been manipulating affairs inside Iran and
we wanted to prove it,” he said. “We thought if we could get into the
embassy, we could get the documents that would prove this. We hadn’t
thought about the hostages. We all went to the embassy. We had wire
cutters to cut through the fence. We started climbing over the fences.
We had expected more resistance. When we got inside, we saw the
Americans running and we chased them.”
Marine guards set
off tear gas in a futile attempt to control the mob, but held their fire
to avoid bloodshed. Other embassy personnel hastily shredded classified
documents, although there wasn’t time to destroy many of the secret
papers. The militant students found themselves in control not only of
the embassy and hundreds of sensitive U.S. cables, but dozens of
American hostages as well.
crisis had begun, a hinge that would swing open unexpected doors for
both American and Iranian history.
denied that his campaign to gain the Shah’s admittance to the United
States had provoked the crisis, arguing that he was simply filling a
vacuum created when the Carter administration balked at doing the right
insistence of journalists and revisionist historians, there was never a
‘Rockefeller-Kissinger behind-the-scenes campaign’ that placed
‘relentless pressure’ on the Carter administration to have the Shah
admitted to the United States regardless of the consequences,”
Rockefeller wrote in Memoirs. “In fact, it would be more accurate
to say that for many months we were the unwilling surrogates for a
government that had failed to accept its full responsibilities.”
But within the
Iranian hostage crisis, there would be hidden compartments within hidden
compartments, as influential groups around the world acted in what they
perceived to be their personal or their national interests.
Rockefeller was just
one of many powerful people who felt that Jimmy Carter deserved to lose
his job. With the hostage crisis started, a countdown of 365 days began
toward the 1980 elections. Though he may have been only dimly aware of
his predicament, Carter faced a remarkable coalition of enemies both
inside and outside the United States.
In the Persian Gulf,
the Saudi royal family and other Arab oil sheiks blamed Carter for
forsaking the Shah and feared their own playboy life styles might be
next on the list for the Islamic fundamentalists. The Israeli government
saw Carter as too cozy with the Palestinians and too eager to cut a
peace deal that would force Israel to surrender land won in the 1967
anti-communists believed Carter was too soft on the
Soviet Union and was risking the
security of Europe. Dictators in the Third World – from the Philippines and South
Korea to Argentina and El Salvador – were bristling at Carter’s human
Inside the United
States, the Carter administration had made enemies at the CIA by purging
many of the Old Boys who saw themselves as protectors of America’s
deepest national interests. Many CIA veterans, including some still
within the government, were disgruntled. And, of course, the Republicans
were determined to win back the White House, which many felt had been
unjustly taken from their control after Richard Nixon’s landslide
victory in 1972.
struggle between Carter, trying desperately to free the hostages before
the 1980 election, and those who stood to benefit by thwarting him
became known popularly as the “October Surprise” controversy.
referred to the possibility that Carter might have ensured his
reelection by arranging the hostage return the month before the
presidential election as an October Surprise, although the term came
ultimately to refer to clandestine efforts to stop Carter from pulling
off his October Surprise.
CIA Old Boys
When the hostage
crisis wasn’t resolved in the first few weeks and months, the attention
of many disgruntled CIA Old Boys also turned toward the American
humiliation in Iran, which they found doubly hard to take since it had
been the site of the agency’s first major victory, the restoration of
the Shah to the Peacock Throne.
A number of veterans
from that operation of 1953 were still alive in 1980. Archibald
Roosevelt was one of the Old Boys from the Iranian operation. He had
moved on to become an adviser to David Rockefeller at Chase Manhattan
Another was Miles
Copeland, who had served the CIA as an intermediary to Arab leaders,
including Egyptian President Gamal Abdul Nasser. In his autobiography,
The Game Player, Copeland claimed that he and his CIA chums
prepared their own Iranian hostage rescue plan in March 1980.
When I interviewed
Copeland in 1990 at his thatched-roofed cottage outside Oxford in the
English countryside, he said he had been a strong supporter of George
H.W. Bush in 1980. He even had founded an informal support group called
“Spooks for Bush.”
Sitting among photos
of his children who included the drummer for the rock group, The Police,
and the manager for the rock star, Sting, Copeland explained that he and
his CIA colleagues considered Carter a dangerous idealist.
“Let me say first
that we liked President Carter,” Copeland told me “He read, unlike
President Reagan later, he read everything. He knew what he was about.
He understood the situation throughout the Middle East, even these
tenuous, difficult problems such as Arabs and Israel.
“But the way we saw
Washington at that time was that the struggle was really not between the
Left and the Right, the liberals and the conservatives, as between the
Utopians and the realists, the pragmatists. Carter was a Utopian. He
believed, honestly, that you must do the right thing and take your
chance on the consequences. He told me that. He literally believed
Southern accent spit out the words with a mixture of amazement and
disgust. To Copeland and his CIA friends, Carter deserved respect for a
first-rate intellect but contempt for his idealism.
“Most of the things
that were done [by the United States] about Iran had been on a basis of
stark realism, with possibly the exception of letting the Shah down,”
Copeland said. “There are plenty of forces in the country we could have
marshaled. … We could have sabotaged [the revolution, but] we had to
establish what the Quakers call ‘the spirit of the meeting’ in the
country, where everybody was thinking just one way. The Iranians were
really like sheep, as they are now.”
Altar of Ideals
But Carter, troubled
by the Shah’s human rights record, delayed taking decisive action and
missed the moment of opportunity, Copeland said. Infuriating the CIA’s
Old Boys, Carter had sacrificed an ally on the altar of idealism.
believed in all the principles that we talk about in the West,” Copeland
said, shaking his mane of white hair. “As smart as Carter is, he did
believe in Mom, apple pie and the corner drug store. And those things
that are good in America are good everywhere else.”
Veterans of the CIA
and Republicans from the Nixon-Ford administrations judged that Carter
simply didn’t measure up to the demands of a harsh world.
“There were many of
us – myself along with Henry Kissinger, David Rockefeller, Archie
Roosevelt in the CIA at the time – we believed very strongly that we
were showing a kind of weakness, which people in Iran and elsewhere in
the world hold in great contempt,” Copeland said. “The fact that we’re
being pushed around, and being afraid of the Ayatollah Khomeini, so we
were going to let a friend down, which was horrifying to us. That’s the
sort of thing that was frightening to our friends in Saudi Arabia, in
Egypt and other places.”
But Carter also bent
to the moral suasions of the Shah’s friends, who argued on humanitarian
grounds that the ailing Shah deserved admission to the United States for
medical treatment. “Carter, I say, was not a stupid man,” Copeland said.
Carter had even a greater flaw: “He was a principled man.”
So, Carter decided
that the moral act was to allow the Shah to enter the United States for
treatment, leading to the result Carter had feared: the seizure of the
crisis dragged on, the Carter administration cranked up the pressure on
the Iranians. Along with diplomatic initiatives, Iran’s assets were
frozen, a move that ironically helped David Rockefeller’s Chase
Manhattan Bank by preventing the Iranians from cleaning out their funds
from the bank’s vaults.
Memoirs, Rockefeller wrote that the Iranian “government did reduce
the balances they maintained with us during the second half of 1979, but
in reality they had simply returned to their historic level of about
$500 million,” Rockefeller wrote. “Carter’s ‘freeze’ of official Iranian
assets protected our position, but no one at Chase played a role in
convincing the administration to institute it.”
In the weeks that
followed the embassy seizure, Copeland said he and his friends turned
their attention to figuring a way out of the mess.
“There was very
little sympathy for the hostages,” Copeland said. “We all have served
abroad, served in embassies like that. We got additional pay for danger.
I think, for Syria, I got fifty percent extra in salary. So it’s a
chance you take. When you join the army, you take a chance of getting in
a war and getting shot. If you’re in the diplomatic service, you take a
chance on having some horror like this descend on you.
“But on the other
hand, we did think that there were things we could do to get them out,
other than simply letting the Iranians, the students, and the Iranian
administration know that they were beating us,” Copeland said. “We let
them know what an advantage they had. That we could have gotten them out
is something that all of us old professionals of the covert action
school, we said from the beginning, ‘Why don’t they let us do it?’”
According to The
Game Player, Copeland met his old friend, ex-CIA
counter-intelligence chief James Angleton, for lunch. The famed spy
hunter “brought to lunch a Mossad chap who confided that his service had
identified at least half of the ‘students,’ even to the extent of having
their home addresses in Teheran,” Copeland wrote. “He gave me a rundown
on what sort of kids they were. Most of them, he said, were just that,
government was another deeply interested player in the Iran crisis. For
decades, Israel had cultivated covert ties with the Shah’s regime as
part of a Periphery Strategy of forming alliances with non-Arab states
in the region to prevent Israel’s Arab enemies from focusing all their might against
Though losing an
ally when the Shah fell and offended by the anti-Israeli rhetoric from
the Khomeini regime, Israel had gone about quietly rebuilding relations
with the Iranian government. One of the young Israeli intelligence
agents assigned to this task was an Iranian-born Jew named Ari Ben-Menashe,
who had immigrated to Israel as a teen-ager and was valuable because he
spoke fluent Farsi and still had friends in Iran, some of whom were
rising within the new revolutionary bureaucracy.
In his own 1992
memoirs, Profits of War, Ben-Menashe said the view of Israel’s
Likud leaders, including Prime Minister Menachem Begin, was one of
contempt for Jimmy Carter in the late 1970s.
Carter for the peace agreement forced upon him at
Camp David,” Ben-Menashe wrote.
“As Begin saw it, the agreement took away Sinai from Israel, did not
create a comprehensive peace, and left the Palestinian issue hanging on
After the Shah fell,
Begin grew even more dissatisfied with Carter’s handling of the crisis
and alarmed over the growing likelihood of an Iraqi attack on Iran’s
oil-rich Khuzistan province. Israel saw Iraq’s Saddam Hussein as a far
greater threat to Israel than Iran’s Khomeini. Ben-Menashe wrote that
Begin, recognizing the realpolitik needs of Israel, authorized
shipments to Iran of small arms and some spare parts, via South Africa,
as early as September 1979.
After the U.S.
hostages were taken in November 1979, the Israelis came to agree with
Copeland’s hard-headed skepticism about Carter’s approach to the hostage
issue, Ben- Menashe wrote. Even though Copeland was generally regarded
as a CIA “Arabist” who had opposed Israeli interests in the past, he was
admired for his analytical skills, Ben-Menashe wrote.
“A meeting between
Miles Copeland and Israeli intelligence officers was held at a
Georgetown house in Washington, D.C.,” Ben-Menashe wrote. “The
Israelis were happy to deal with any initiative but Carter’s. David
Kimche, chief of Tevel, the foreign relations unit of Mossad, was the
senior Israeli at the meeting. … The Israelis and the Copeland group
came up with a two-pronged plan to use quiet diplomacy with the Iranians
and to draw up a scheme for military action against Iran that would not
jeopardize the lives of the hostages.”
In late February
1980, Seyeed Mehdi Kashani, an Iranian emissary, arrived in Israel to
discuss Iran’s growing desperation for aircraft spare parts, Ben-Menashe
wrote. Kashani, whom Ben-Menashe had known from their school days in
Teheran, also revealed that the Copeland initiative was making inroads
inside Iran and that approaches from some Republican emissaries had
already been received, Ben-Menashe wrote.
“Kashani said that
the secret ex-CIA-Miles-Copeland group was aware that any deal cut with
the Iranians would have to include the Israelis because they would have
to be used as a third party to sell military equipment to Iran,”
according to Ben-Menashe. In March, the following month, the Israelis
made their first direct military shipment to Iran, 300 tires for Iran’s
F-4 fighter jets, Ben-Menashe wrote.
In the 1990
interview at his house in the English countryside, Copeland told me that
he and other CIA old-timers developed their own hostage-rescue plan.
Copeland said the plan – which included cultivating political allies
within Iran and using disinformation tactics to augment a military
assault – was hammered out on March 22, 1980, in a meeting at his
Copeland said he was
aided by Steven Meade, the ex-chief of the CIA’s Escape and Evasion
Unit; Kermit Roosevelt, who had overseen the 1953 coup in Iran; and
Archibald Roosevelt, the adviser to David Rockefeller.
idea was to have some Iranians dressed in Iranian military uniform and
police uniform go to the embassy, address the students and say, ‘Hey,
you’re doing a marvelous job here. But now we’ll relieve you of it,
because we understand that there’s going to be a military force flown in
from outside. And they’re going to hit you, and we’re going to scatter
these [hostages] around town. Thanks very much.”
would then move the hostages to the edge of Teheran where they would be
loaded onto American helicopters to be flown out of the country.
chagrin, his plan fell on deaf ears in the Carter administration, which
was developing its own rescue plan that would rely more on U.S. military
force with only modest help from Iranian assets in Teheran. So, Copeland
said he distributed his plan outside the administration, to leading
Republicans, giving sharper focus to their contempt for Carter’s bungled
plan went only to people in the government and was top secret and all
that,” Copeland said. “But as so often happens in government, one wants
support, and when it was not being handled by the Carter administration
as though it was top secret, it was handled as though it was nothing. …
Yes, I sent copies to everybody who I thought would be a good ally. …
“Now I’m not at
liberty to say what reaction, if any, ex-President Nixon took, but he
certainly had a copy of this. We sent one to Henry Kissinger, and I had,
at the time, a secretary who had just worked for Henry Kissinger, and
Peter Rodman, who was still working for him and was a close personal
friend of mine, and so we had these informal relationships where the
little closed circle of people who were, a, looking forward to a
Republican President within a short while and, b, who were absolutely
trustworthy and who understood all these inner workings of the
international game board.”
1980, Carter’s patience was wearing thin, both with the Iranians and
some U.S. allies. After discovering that the Israelis had made a secret
shipment of 300 tires to Iran, Carter complained to Prime Minister
had been a rather tense discussion between President Carter and Prime
Minister Begin in the spring of 1980 in which the President made clear
that the Israelis had to stop that, and that we knew that they were
doing it, and that we would not allow it to continue, at least not allow
it to continue privately and without the knowledge of the American
people,” Carter’s press secretary Jody Powell told me. “And it stopped”
– at least temporarily.
Questioned by congressional investigators a dozen years later, Carter
said he felt that by April 1980, “Israel cast their lot with Reagan,”
according to notes I found among the unpublished documents in the files
of a House Task Force, which had examined the October Surprise
controversy. Carter traced the Israeli opposition to his reelection to a
“lingering concern [among] Jewish leaders that I was too friendly with
National Security Adviser Zbigniew Brzezinski also recognized the
Israeli hostility. In an interview, Brzezinski told me that the Carter
White House was well aware that the Begin government had “an obvious
preference for a Reagan victory.”
Encircled by growing legions of enemies, the Carter administration put
the finishing touches on its own hostage-rescue operation in April. Code
named “Eagle Claw,” the assault involved a force of U.S. helicopters
that would swoop down on Teheran, coordinate with some agents on the
ground and extract the hostages.
Carter ordered the
operation to proceed on April 24, but mechanical problems forced the
helicopters to turn back. At a staging area called Desert One, one of
the helicopters collided with a refueling plane, causing an explosion
that killed eight American crewmen.
Their charred bodies
were then displayed by the Iranian government, adding to the fury and
humiliation of the United States. After the
Desert One fiasco, the Iranians dispersed the hostages to a variety of
locations, effectively shutting the door on another rescue attempt, at
least one that would have any chance of returning the hostages as a
By summer 1980,
Copeland told me, the Republicans in his circle considered a second
hostage-rescue attempt not only unfeasible, but unnecessary. They were
talking confidently about the hostages being freed after a Republican
victory in November, the old CIA man said.
“There was no
discussion of a Kissinger or Nixon plan to rescue these people, because
Nixon, like everybody else, knew that all we had to do was wait until
the election came, and they were going to get out,” Copeland said. “That
was sort of an open secret among people in the intelligence community,
that that would happen. … The intelligence community certainly had some
understanding with somebody in Iran in authority, in a way that they
would hardly confide in me.”
Copeland said his
CIA friends had been told by contacts in Iran that the mullahs would do
nothing to help Carter or his reelection.
“At that time, we
had word back, because you always have informed relations with the
devil,” Copeland said. “But we had word that, ‘Don’t worry.’ As long as
Carter wouldn’t get credit for getting these people out, as soon as
Reagan came in, the Iranians would be happy enough to wash their hands
of this and move into a new era of Iranian-American relations, whatever
that turned out to be.”
In the interview,
Copeland declined to give more details, beyond his assurance that “the
CIA within the CIA,” his term for the true protectors of U.S. national
security, had an understanding with the Iranians about the hostages.
(Copeland died on January 14, 1991, before I could interview him again.)
Much of the
controversy over the October Surprise mystery has centered on several
alleged secret meetings in Europe between senior Republicans – including
then-Reagan campaign chief William Casey and Reagan’s running mate
George H.W. Bush – and Iranian officials, including senior cleric Mehdi
A variety of
witnesses, including Iranian officials and international intelligence
operatives, have described these contacts, which have been denied by
Bush and other top Republicans. Though official U.S. investigations have
generally sided with the Republicans, a substantial body of evidence –
much of it which was kept hidden from the American people – actually
supports the October Surprise allegations. [For details, see Robert
Secrecy & Privilege.]
Evidence from Reagan-Bush campaign files also points to undisclosed
contacts between the Rockefeller group and Casey during Carter’s hostage
According to a campaign
visitor log for
September 11, 1980,
David Rockefeller and several of his aides who were dealing with the
Iranian issue signed in to see Casey at his campaign headquarters in
With Rockefeller were Joseph Reed, whom Rockefeller had assigned to
coordinate U.S. policy toward the Shah, and Archibald Roosevelt, the
former CIA officer who was monitoring events in the Persian Gulf for
Chase Manhattan and who had collaborated with Miles Copeland on the Iran
hostage-rescue plan. The fourth member of the party was Owen Frisbie,
Rockefeller’s chief lobbyist in
In the early 1990s, all the surviving the participants –
Rockefeller, Reed and Frisbie – declined to be interviewed about the
Casey meeting. Rockefeller made no mention of the meeting in Memoirs.
Henry Kissinger, another Rockefeller associate, also was in
discreet contact with campaign director Casey during this period,
according to Casey’s personal chauffeur whom I interviewed. The
chauffeur, who asked not to be identified by name, said he was sent
twice to Kissinger’s
Georgetown home to pick up the former Secretary of State and bring him
to Arlington, Virginia, for
private meetings with Casey, meetings that were not recorded on the
official visitor logs.
On September 16,
1980, five days after the Rockefeller visit to Casey’s office,
acting foreign minister Sadegh Ghotbzadeh publicly cited Republican
interference on the hostages.
“Reagan, supported by Kissinger and others, has no intention of
resolving the problem,” Ghotbzadeh said. “They will do everything in
their power to block it.”
In the weeks before Election 1980, FBI wiretaps picked up other
evidence that connected Rockefeller associates with two of the key
suspects in the October Surprise mystery, Iranian banker Cyrus Hashemi
and longtime Casey business associate John Shaheen.
According to the FBI wiretaps hidden in Hashemi’s
New York offices in September
1980, Hashemi and Shaheen were involved in the intrigue surrounding the
Iran hostage crisis while simultaneously promoting murky financial
Hashemi was supposedly acting as an intermediary for President
Carter for secret approaches to Iranian officials about getting the
hostages released. But Hashemi also appears to have been playing a
double game, serving as a backchannel for the Reagan-Bush campaign,
through Shaheen, who had known Casey since their World War II days
together in the Office of Strategic Services, the CIA’s forerunner.
The FBI wiretaps revealed that Hashemi and Shaheen also were trying
to establish a bank with Philippine interests in either the
Caribbean or in Hong Kong. In
mid-October 1980, Hashemi deposited “a large sum of money” in a
Philippine bank and planned to meet with Philippine representatives in
Europe, an FBI intercept discovered.
The negotiations led Shaheen to an agreement with Herminio Disini,
an in-law of Philippine First Lady Imelda Marcos, to establish the Hong
Kong Deposit and Guaranty Company. Disini also was a top moneyman for
Philippine President Ferdinand Marcos.
The $20 million used as starting capital for the bank came through
Jean A. Patry, David Rockefeller’s lawyer in
Geneva, Switzerland. But the
original source of the money, according to two Shaheen associates I
interviewed, was Princess Ashraf, the Shah’s twin sister.
November 4, 1980, one year to the day after the Iranian militants seized
the U.S. Embassy in Teheran, Ronald Reagan routed Jimmy Carter in the
U.S. presidential elections. In the weeks after the election, the
hostage negotiations continued.
Reagan’s Inauguration neared, Republicans talked tough, making clear
that Ronald Reagan wouldn’t stand for the humiliation that the nation
endured for 444 days under Carter. The Reagan-Bush team intimated that
Reagan would deal harshly with Iran if it didn’t surrender the hostages.
making the rounds of
Washington went: “What’s three feet deep and glows in the dark?
Teheran ten minutes after Ronald Reagan becomes President.”
Inauguration Day, January 20, 1981, just as Reagan was beginning his inaugural address, word
came from Iran that the
hostages were freed. The American people were overjoyed. The coincidence
in timing between the hostage release and Reagan’s taking office
immediately boosted the new President’s image as a tough guy who
wouldn’t let the United States be pushed around.
reality, however, appears to have been different, with U.S. weapons soon
flowing secretly to Iran through Israel and participants in the October
Surprise mystery seeming to get in line for payoffs.
The bank deal that Cyrus Hashemi and John Shaheen had discussed for
months took final shape two days after Reagan’s Inauguration. On
January 22, 1981, Shaheen
opened the Hong Kong Deposit and Guaranty Bank with $20 million that had
been funneled to him through Jean Patry, the Rockefeller-connected
lawyer in Geneva who was fronting for Princess Ashraf.
Why, I asked one of Shaheen’s associates, would Ashraf have
invested $20 million in a bank with these dubious characters? “It was
funny money,” the associate answered. He believed it was money that the
Islamic revolutionary government was claiming as its own.
A second Shaheen associate said Shaheen was particularly secretive
when asked about his relationship with the deposed princess. “When it
comes to Ashraf, I’m a cemetery,” Shaheen once said.
From 1981 to 1984, Hong Kong Deposit and Guaranty pulled in
hundreds of millions of petrodollars. The bank also attracted
high-flying Arabs to its board of directors.
Two directors were Ghanim Al-Mazrouie, an
Abu Dhabi official who
controlled 10 percent of the corrupt Bank of Credit and Commerce
International, and Hassan Yassin, a cousin of Saudi financier Adnan
Khashoggi and an adviser to BCCI principal Kamal Adham, the former chief
of Saudi intelligence.
Though Cyrus Hashemi's name was not formally listed on the roster of the
Hong Kong bank, he did receive cash from BCCI, al-Mazrouie’s bank. An
FBI wiretap of Hashemi's office in early February 1981 picked up an
advisory that “money from BCCI [is] to come in tomorrow from London on
Concorde.” (In 1984, the Hong Kong Deposit and Guaranty collapsed and an
estimated $100 million disappeared.)
Early in the Reagan-Bush administration, Joseph Reed, the aide to
David Rockefeller, was appointed and confirmed as the new
U.S. ambassador to Morocco.
Before leaving for his posting, he visited the CIA and its new director,
William Casey. As Reed arrived, CIA official Charles Cogan was getting
up and preparing to leave Casey’s office.
Knowing Reed, Cogan lingered at the door. In a “secret” deposition
to the House Task Force in 1992, Cogan said he had a “definite memory”
of a comment Reed made about disrupting Carter's “October Surprise” of a
pre-election release of the 52 American hostages in
But Cogan said he couldn’t recall the precise verb that Reed had
used. “Joseph Reed said, ‘we’ and then the verb [and then] something
about Carter's October Surprise,” Cogan testified. “The implication was
we did something about Carter's October Surprise, but I don't have the
One congressional investigator, who discussed the recollection with
Cogan in a less formal setting, concluded that the verb that Cogan chose
not to repeat was an expletive relating to sex – as in “we f--d Carter’s
During Cogan’s deposition, David Laufman, a Republican lawyer on the
House Task Force and a former CIA official, asked Cogan if he had since
“had occasion to ask him [Reed] about this” recollection?
Yes, Cogan replied, he recently had asked Reed about it, after Reed
moved to a protocol job at the United Nations. “I called him up,” Cogan
said. “He was at his farm in Connecticut, as I recall, and I just told
him that, look, this is what sticks in my mind and what I am going to
say [to Congress], and he didn't have any comment on it and continued on
to other matters.”
”He didn't offer any explanation to you of what he meant?” asked Laufman.
”No,” answered Cogan.
”Nor did he deny that he had said it?” asked another Task Force lawyer
Mark L. Shaffer.
”He didn't say anything,” Cogan responded. “We just continued on talking
about other things.”
And so did the Task Force lawyers at this remarkable deposition on
December 21, 1992. The
lawyers even failed to ask Cogan the obvious follow-up: What did Casey
say and how did Casey react when Reed allegedly told Reagan’s
ex-campaign chief that “we f--d Carter’s October Surprise.”
Cogan’s testimony and other incriminating documents in files left
behind by the Task Force, which finished its half-hearted investigation
of the October Surprise controversy in January 1993.
those files, I also discovered the notes of an FBI agent who tried to
interview Joseph Reed about his October Surprise knowledge. The FBI man,
Harry A. Penich, had scribbled down that “numerous telephone calls were
placed to him [Reed]. He failed to answer any of them. I conservatively
place the number over 10.”
Finally, Penich, armed with a subpoena, cornered Reed arriving home at
his 50-acre estate in
“He was surprised and absolutely livid at being served at home,” Penich
wrote. “His responses could best be characterized as lashing out.”
threatened to go over Penich's head. In hand-written “talking points”
that Penich apparently used to brief an unnamed superior, the FBI agent
wrote: “He [Reed] did it in such a way as to lead a reasonable person to
believe he had influence w/you. The man's remarks were both
inappropriate and improper.”
But the hard-ball tactics worked. When Reed finally consented to an
interview, Task Force lawyers just went through the motions.
took the interview notes and wrote that Reed “recalls no contact with
Casey in 1980,” though Reed added that “their paths crossed many times
because of Reed's position at Chase.” As for the 1981 CIA visit, Reed
added that as the newly appointed
to Morocco, he “would have stopped in to see Casey and pay respect.”
whether Reed made any remark about obstructing Carter's October
Surprise, Reed claimed he “does not specifically know what October
Surprise refers to,” Penich scribbled down.
[For a text of the Penich notes,
click here. To see a PDF file of the actual
The Task Force lawyers didn’t press hard. Most strikingly, the
lawyers failed to confront Reed with evidence that would have impeached
his contention that he had “no contact with Casey in 1980.” According to
the sign-in sheets at the Reagan-Bush campaign headquarters in
Arlington, Virginia, which
the Task Force had obtained, Reed saw Casey on September 11, 1980, less
than two months before the election.
When the official House Task Force report was issued on
January 13, 1993, the Task
Force largely cleared the Republicans of the longstanding October
Surprise charges, but that conclusion was based on tendentious
interpretations of the published evidence and the withholding of many
Among the evidence that was never shared with the American people
was the fascinating connection between the powerful friends of David
Rockefeller and the shadowy operatives who had maintained clandestine
contacts with the Iranian mullahs during the long hostage crisis.
[For the latest and fullest account of the October Surprise
mystery, see Parry’s
Secrecy & Privilege from which this story was excerpted.]