Gordon Thomas - Gideon's Spies

Four branches had been created to operate under the ERD umbrella. The most important was SIM; it provided “special assistance” for the growing number of “liberation movements” in Iran, Iraq, and, to a lesser extent, Syria and Saudi Arabia. The second branch, RESH, handled relationships with friendly intelligence networks. Top of those was the South African Bureau of State Security. Mossad had a similar unit called TEVEL, which also had close links with the Republic’s intelligence community. The relationship between RESH and TEVEL was often tense because of the inevitable overlapping.

A third ERD department, Foreign Liaison, dealt with Israeli military attachés and other IDF personnel working overseas. The department also monitored the activities of foreign military attachés in Israel. That brought further conflict, this time with Shin Bet, who until then had the sole prerogative to report on such activities. The fourth arm of ERD was called Intelligence Twelve. Set up to liaise with Mossad, this unit had further soured relations with the men on the upper floor of their building on King Saul Boulevard. They felt overall that ERD would diminish their power.

Ben-Menashe had been attached to RESH, with a specific responsibility for the Iranian “account.” He arrived at a time when Israel was about to lose its most powerful ally in the region. For over a quarter of a century, the shah of Iran had worked diligently behind the scenes to persuade Israel’s Arab neighbors to end their hostility toward the Jewish state. He was still making limited headway, notably with King Hussein of Jordan, when the shah’s own Peacock Throne was swept away by Ayatollah Khomeini’s Islamic fundamentalist revolution in February 1979. Khomeini promptly handed over the Israeli embassy building in Tehran to the PLO. Equally swiftly, Israel turned to helping the Kurds wage guerrilla war against the new regime. At the same time, Israel continued to supply arms to Tehran for them to use against Iraq. The “kill both sides” policy that David Kimche and others in Mossad advocated was well and truly in force.

Ben-Menashe soon found himself involved in David Kimche’s grand design to trade hostages for arms with Iran. Both men traveled together to Washington, where Ben-Menashe claimed he prowled the wide corridors of the White House, met President Reagan, and was on first-name terms with his senior aides.

Charming, and with a devil-may-care attitude, Ben-Menashe was a popular figure at Israeli intelligence community parties, where senior politicians could swap stories with the spymasters to mutual benefit. Few could tell a tale better than Ben-Menashe. By the time Kimche was starting the hostages-for-arms deal, Ben-Menashe had been appointed Prime Minister Yitzhak Shamir’s “personal consultant” on intelligence, having told Shamir he knew where “all the bodies were buried.” Kimche decided it made Ben-Menashe the ideal choice to work with the one intelligence officer he admired above all others, Rafi Eitan. With the full approval of the prime minister, Ben-Menashe was released from all other duties to work with Eitan. The two men moved to New York in March 1981. Their purpose, Ben-Menashe would recall, was straightforward : “Our friends in Tehran were desperate to have sophisticated electronic equipment for their air force and air and ground defenses. Israel, of course, wanted to help them as much as possible in their war against Iraq.”

Traveling on British passports, always a favorite of Mossad, they set up a company in New York’s financial district. They quickly recruited a team of fifty brokers who scoured the U.S. electronics industry for suitable equipment. All sales were accompanied by end-user certificates that stated the equipment was to be used only in Israel. Ben-Menashe would recall: “We had packs of certificates which we would fill out and send to Tel Aviv to keep on file in case anyone ever bothered to check.”

The equipment was flown to Tel Aviv. There, without going through customs, it was transferred onto aircraft chartered from Guinness Peat in Ireland and flown to Tehran. Guinness Peat, a well-regarded aircharter company, was an obvious choice. The idea of using Irish pilots had also been Rafi Eitan’s. He had maintained what he called his “Irish connections. When it comes to a deal, the Irish understand the rules. The only one which matters is to pay on the day.”

As the volume of the New York operation increased, it became necessary to have a central holding company to process the billions of dollars involved in the purchasing and selling-on of arms. The name chosen for the company was ORA, “light” in Hebrew.

In March 1983, Ben-Menashe was told by Rafi Eitan to recruit Nicholas Davies into ORA. How the old spymaster had heard of Davies was almost certainly through Mossad; in turn the service would have been told about Davies by Bazoft, who had done freelance journalist work for the Mirror foreign editor. Later that month, Ben-Menashe and Davies met in the lobby of London’s Churchill Hotel. By the time they left, Ben-Menashe knew that Davies was “our man.” The next day they lunched at Davies’s home. Present was Davies’s wife, Janet. Ben-Menashe quickly formed the impression that the sophisticated, smooth-talking Davies was afraid of losing her. “That was good. It made him vulnerable.”

Davies’s role as a consultant to ORA was finally settled over a meeting at the Dan Acadia Hotel on the beachfront north of Tel Aviv. Ben-Menashe remembered: “We agreed he would be our London conduit for arms, our contact man for various Iranian and other deals. His home address would be used on ORA stationery and during the day his direct office phone number—822-3530—would be used by our Iranian contacts.”

In return, Davies would receive fees commensurate with his newfound role as a key player in the arms-for-Iran operation. In all, he would receive $1.5 million, deposited in bank accounts in Grand Cayman, Belgium, and Luxembourg. Part of the money went to settle his divorce. Janet received a single payment of $50,000. Davies cleared all his bank debts and bought a four-story house. It became ORA’s European headquarters, its phone number—231-0015—another contact for the arms dealers who now had become part of the journalist’s life. Through his position as foreign editor, Davies began to visit the United States, Europe, Iran, and Iraq.

Ben-Menashe noted approvingly that “on his travels he introduced himself as a representative of the ORA Group. He would set up a meeting, usually for a weekend, and he would fly to the city concerned, arrange for the number of weapons to be supplied and how payment was to be made.”

In 1987, Iran’s Ayatollah Ali Akbar Hashemi Rafsanjani received a cable from ORA concerning the sale to Iran of four thousand TOW missiles at a cost of $13,800 each. The cable concluded with the confirmation that “Nicholas Davies is a representative of ORA Limited, with the authority to sign contracts.”

It was a champagne time for Ari Ben-Menashe, Nicholas Davies, and the powerful figure who loomed ever larger in the background of unfolding events, Robert Maxwell. But none suspected for a moment the grim truth of the Hollywood cliché Davies liked to quote, “There’s no such thing as a free lunch.”

Matters had looked very different on that morning in late March 1985 when Ari Ben-Menashe had caught the early-morning British Airways flight from Tel Aviv to London. Eating his kosher airline breakfast, he reflected that life had never been so good. He was not only making “real money,” but had learned a great deal at the elbow of David Kimche as they trawled through the Byzantine world of selling arms to Iran. Along the way, he had also furthered his education in the continuous interplay between Israel’s politicians and its intelligence chiefs. For Ben-Menashe, “compared to my former colleagues, the average arms dealer was a choirboy.” He had identified the problem: the aftereffects of Israel’s Lebanon adventure, from which it had finally withdrawn, battered and demoralized. Anxious to regain prestige, the politicians gave the intelligence community an even freer hand in how it waged pitiless war against the PLO, whom they saw as the cause of all Israel’s problems. The result was a succession of scandals where suspected terrorists and even their families were brutalized and murdered in cold blood. Yitzhak Hofi, the former head of Mossad, had sat on a government commission, set up after intense public pressure, to investigate the brutality. It concluded that intelligence agents had consistently lied to the court about how they obtained confessions: the methods used had too often been gross. The committee had called for “proper procedures” to be followed.