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COMMITTEE
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STAFF INVESTIGATION
RELATING TO THE NOMINATION OF
G. William Miller
TO BE CHAIRMAN OF THE BOARD OF GOVERNORS
OF THE FEDERAL RESERVE SYSTEM
PART
1
CONTAINING SUMMARY OF INVESTIGATION AND TEXT OF
PROCEEDINGS CONDUCTED AT TEXTRON MAIN PLANT, FORT
WORTH, TEXAS, FEBRUARY 2, 3, 4, AND 5, 1978 AND IN WASHINGTON, D.C., FEBRUARY 13, 14, 15, AND 17, 1978
PRINTED FOR THE USE
OF T H E
COMMITTEE ON B A N K I N G ,
AND URBAN
HOUSING
AFFAIRS
UNITED STATES
SENATE
FEBRUARY 27, 1978
U.S. GOVERNMENT PRINTING OFFICE
23-553 O
WASHINGTON
: 1978
COMMITTEE ON BANKING, HOUSING, AND URBAN AFFAIRS
WILLIAM PROXMIRE, Wisconsin, Chairman
JOHN SPARKMAN, Alabama
EDWARD W. BROOKE, Massachusetts
HARRISON A. WILLIAMS, JR., New Jersey
THOMAS J. McINTYRE, New Hampshire
ALAN CRANSTON, California
ADLAI E. STEVENSON, Illinois
ROBERT MORGAN, North Carolina
DONALD W. RIEGLE, JR., Michigan
PAUL S. SARBANES, Maryland
Staff Director
Minority Staff Director
B R U C E F . F R E E D , Professional Staff Member
C H A R L E S L . M A R I N A C C I O , Special Counsel
J O H N T . C O L L I N S , Special Counsel to the Minority
P . D O H E R T Y , Associate Director, Division of
Enforcement,
Securities and Exchange Commission
KENNETH
JEREMIAH
DAVID
JOHN TOWER, Texas
JAKE GARN, Utah
H. JOHN HEINZ III, Pennsylvania
RICHARD G. LUGAR, Indiana
HARRISON SCHMITT, New Mexico
S.
A.
MCLEAN,
BUCKLEY,
(II)
II*., N.J. JOHN TOWCN, TEX.
.H.
JAKE OARN, UTAH
ALAN CRANSTON, CALIF.
H. JOHN HCINZ III. PA.
ADLAt E. STEVENSON, ILL.
RICHARD O. LUOAR. INO.
ROBERT MORGAN, NX.
HARRISON Si
DONALD W. RIEGLE, JR.. MICH.
PAUL S. SARRANES, MD.
IC LEAN, STAFF D
JEREMIAH S. BUCKLEY. MINORITY STAFF DIRECTOR
MARY FRANCES DC LA PAVA. CHIEF CLERK
UlCmteb
Senate
COMMITTEE ON BANKING. HOUSING, AND URBAN AFFAIRS
WASHINGTON. D . C .
20510
February 21, 1978
MEMORANDUM
TO:
Members of the Senate Committee on Banking,
Housing and Urban Affairs
FROM:
Kenneth A . McLean\^Staff Director
RE:
Summary of Staff Investigation of $2.9 Million
Payment by Bell Helicopter
Attached is a summary of the staff's investigation of
the $2.9 million payment by Bell Helicopter to its sales
representative in Iran, Air Taxi. This investigation Was
directed by the Committee in the course of its nomination
hearings on Mr. G. William Miller to be a member of the
Board of Governors of the Federal Reserve System.
The summary is an attempt to outline the evidence
gathered by the staff in the investigation. It is not
intended to draw and should not be interpreted as drawing
any conclusions about the questions addressed during the
course of the investigation.
The exhibits referred to in this summary and in
the proceedings which follow are contained in Parts
2 and 3 of this publication.
SENATE COMMITTEE ON B A N K I N G , HOUSING AND URBAN AFFAIRS
Summary of Staff Investigation of the $2.9 Million
Payment by Bell Helicopter
TABLE OF CONTENTS
I.
INTRODUCTION
II.
BACKGROUND AND CHRONOLOGY
HI.
SUMMARY OF THE EVIDENCE ON M A J O R QUESTIONS
A.
Did General Khatami have an ownership
in Air Taxi?
B.
What role did General Khatami play in the sale
of Bell Helicopters to Iran?
C.
What knowledge did Bell Officials have of any
ownership interest by General Khatami in
Air Taxi?
D.
What role did M i l l e r p l a y in the sale of the
489 helicopters to Iran and the $2.9 million
payment to A i r Taxi ?
E.
Are the facts surrounding the $2.9 million
payment consistent w i t h the explanations
given by M r . M i l l e r at the Committee's hearing?
IV.
PARTICIPANTS
V.
GLOSSARY OF CODE WORDS
interest
SENATE C O M M I T T E E ON B A N K I N G , H O U S I N G A N D URBAN A F F A I R S
Summary of Staff I n v e s t i g a t i o n of the $2.9 Million
P a y m e n t by Bell H e l i c o p t e r
I.
INTRODUCTION
On January 24, the Senate Committee on B a n k i n g , Housing
and Urban Affairs held hearings on the n o m i n a t i o n of M r .
G . William M i l l e r to the Board of Governors of the Federal
Reserve S y s t e m .
During the course of these h e a r i n g s , members
of the Committee questioned M r . Miller about a payment of
'$2,950,000 w h i c h the Bell division of Textron agreed to
make to the Air Taxi Company of Iran in June of 1973 in
connection with the winding
up
of that company's
services
to Bell as its sales agent for m i l i t a r y sales to the Government of Iran.
During the same period of t i m e , Bell was
awarded a contract valued at approximately $500 million for
the sale of helicopters to the Government of Iran.
On the basis of a verbal report received from an agency
of the U . S . g o v e r n m e n t , the Chairman of the C o m m i t t e e ,
Senator William P r o x m i r e , asked M r . M i l l e r w h e t h e r he was
aware that the real owner of Air Taxi was the late General
M o h a m m e d K h a t a m i , then Commander-in-Chief of the
Iranian Air F o r c e .
Imperial
M r . M i l l e r replied that he had no
such knowledge and would not have approved the payment
had he known of such a r e l a t i o n s h i p .
Following these d i s c u s s i o n s , a m e m b e r of the C o m m i t t e e ,
Senator John H e i n z , asked for an investigation of this
payment by the Committee's s t a f f .
As Chairman of the
C o m m i t t e e , Senator Proxmire agreed to the
investigation.
2
- 2 -
The following report is a summary of the investigation
by the Committee's staff into the $2.9 million payment by
Bell.
The investigation has been conducted by Charles L.
Marinaccio and Bruce F. Freed of the Majority staff, John
Collins of the Minority staff, and David Doherty, Associate
Director of the Securities and Exchange Commission's
Enforcement Division who was temporarily assigned to the
Committee staff for the inquiry.
During the course of the investigation the staff took
depositions in Fort Worth, Texas, and Washington, D.C.
from Bell Helicopter and Textron officials, former Bell
Helicopter officials and from a former manufacturers
representative of Bell Helicopter in Iran and his lawyer.
Following are the individuals who testified before the
Committee staff:
James F. Atkins, President, Bell Helicopter Textron
Frank M . Sylvester, Vice President for International
Marketing, Bell Helicopter Textron
John E . Gallagher, J r . , director of operations, Bell
Helicopter International; formerly Bell Helicopter
sales official involved in Iranian helicopter sales
Charles R. Rudning, President, Bell Operations Corp.;
formerly vice president for program management,
Bell Helicopter Textron.
Edwin L. Farmer, Vice President for Finance, Bell
Helicopter Textron until' early 1978.
Thomas Soutter, Vice President and General Counsel, Textron.
George Galerstein, Chief Legal Counsel, Bell Helicopter
Textron.
13
-3-
Dwayne K. Jose, Vice President for Commercial Marketing,
Bell Helicopter Textron
E.J. Ducayet, President, Bell Helicopter Textron (I960 1972); Chairman (1972-1973); Member, Board of Directors,
Textron, 1973 - .
James A . Feliton, Area Export Manager for Europe, Africa
and the Middle East, Bell Helicopter Textron (19651967).
William H . French, former Bell Helicopter sales representative in Iran, 1964-1967, through his firm,
International Helicopter Consultants.
C. Robert Bell, Wichita, Kansas, lawyer who has represented
M r . French since the early 1960's.
The Committee staff also asked for affidavits from
members of Textron's Board of Directors and U.S. embassy and
military personnel in Iran between the mid-1960's and 1975
on their knowledge of General Khatami's interest in Air Taxi
and the $2.9 million payment by Bell Helicopter.
Furthermore, the Committee subpoenaed all documents
from Textron and its Bell Helicopter Division relating in any
way to Air Taxi, General Khatami and the $2.9 million payment
and has subpoenaed the records of the First National Bank
and Trust Company of Oklahoma City, Oklahoma, and Citibank
N.A. Paris, France, branch ^relating to A.H. Zanganeh, managing
director of Air T a x i , and Air Taxi.
The Committee sent letters to the U.S. government
intelligence agencies seeking confirmation of any link that
General Khatami had with Air Taxi between 1959 and 1973.
^Citibank cited French law is the basis for not complying
with the subpoena.
13
-4-
II.
BACKGROUND AND CHRONOLOGY
Bell's Foreign Representative System:
Bell Helicopter
relied on a network of manufacturers representatives to sell
its helicopters overs,eas.
The representatives, which num-
bered from 30 to 50 during the 1960's, were usually natives
of the countries in.which they operated.
In some instances,
they would also represent manufacturers of fixed wing aircraft.
Standard Agreements:
Foreign agents signed standard
manufacturers foreign representative agreements with Bell
that established commission fee schedules that would be paid on
sales they made.
(Ex. 60-62, 84J)
The agreements signed
by Air Taxi in 1959 and International Helicopter Consultants in 1965 included provisions prohibiting the payment
of commissions for sales arranged on a government-to-government basis.
(Ex. 60, 84J)
However, Bell later changed
its policy on commissions on government-to-government
sales, allowing them in its 1968 agreement with Air Taxi.
Agency Representatives In Iran:
1960 To Present
Air Taxi--1959-1963:
In 1959, Bell Helicopter hired
Air Taxi Company, a Tehran -- based air charter firm, as its
sales representative in Iran.
Air Taxi, which also re-
presented other aircraft companies such as Aerocommander,
was dropped by Bell in 1963.
In their testimony to
13
-5-
Committee staff, Bell officials couldn't recall why Air
Taxi was hired in 1959 or terminated in late 1963.
The
reason, they explained, was that helicopter sales in Iran
were negligible during those years.
According to the State Department, General Mohammed
Khatami, Commander-in-Chief of the Imperial Iranian Air
Force, was listed on public records in Iran as an owner
of Air Taxi between 1957 and 1965.
(February 16, 1978
letter from Douglas J. Bennet, Jr., Assistant Secretary
of State for Congressional Relations, to Kenneth A .
McLean, Senate Banking Committee Staff Director)
International Helicopter Consultants--1964-1967: Bell
Helicopter switched its sales franchise in Iran in early
1964 to International Helicopter Consultants, a firm that
had been Bell's sales agent in Kuwait since 1959 and was
representing Cessna Aircraft Company in Iran.
Mr. French said that within two years, he ran afoul
of General Khatami, whose influence over aviation matters
was growing, and the general had him expelled from Iran in
May 1966.
C. Robert Bell, a Wichita, Kansas lawyer re-
tained by M r . French in the early 1960's, said that he and
M r . French asked the State Department for advice in September 1966 on how to deal with the problem and were advised
to negotiate
"directly with General Khatami."
966-72 and Ex. 85, 86)
(Bell
10
-6Mr. Bell said he traveled to Iran in October 1966 and
met with Dr. Hasaan Safavi, a close associate of General
Khatami.
The two men agreed to create an Iranian company,
Skerkat Sahami Tayar Pars (also known as STP), which would
act as M r . French's representative in Iran, M r . Bell said.
STP's ownership was divided on a 51 percent-49 percent basis
between Dr. Safavi who acted as nominee for certain members
of the High Council of Civil Aviation, including General
Khatami, and Mr. French, M r . Bell said.
The lawyer said
that Dr. Safavi "identified himself as speaking for
General Khatami" during their discussions.
Mr. Bell said
General Khatami subsequently gave his blessings to the
arrangement.
(Bell 976-88)
Mr. Bell said he traveled to Bell Helicopter in Fort
Worth, Texas on November 2, 1966 to report on his trip to
Bell Helicopter officials.
Mr. Bell said he met with E. J.
Ducayet, Bell Helicopter's president, and told him of
M r . French's problems with General Khatami.
Mr. Ducayet
and Dwayne Jose, Bell Helicopter's Vice President for
Commercial Marketing, couldn't recall the meeting in their
testimony to Committee staff.
(Bell 993-1017; Jose 1198-
1214; Ducayet 1094-1104; Ex 88-90)
Mr. Bell and Mr. French corresponded with Bell Helicopter officials in 1967 providing additional details on the
business arrangement with STP.that Bell Helicopter would
13
-7-
be working through In Iran.
(Bell 1018-42; Ex. 82, 83,
91, 91A, 93, 95, 96, 97, 102)
Bell Helicopter dropped International Helicopter
Consultants as its Iranian agent in late 1967. (Ex. 102)
Air Taxi: 1968-
:
M r . Orpen and two other Bell
Helicopter officials traveled to Iran in late November
1967 to find a new sales agent.
name of Air Taxi.
They brought back the
Mr. Orpen, who left Bell Helicopter in
1969, said in a telephone interview with the Committee
staff that he heard from M r . French earlier in 1967 that
General Khatami had an ownership interest in Air Taxi.
He also said he knew before his trip to Iran that there
were "some ownership interests in Air Taxi that went up
to the Shah's family."
Describing what Bell wanted in a new Iranian representative, Mr. Orpen said, "We looked for someone who had
dealings with the royal family.
We were looking for poten-
tial contacts since the sales of our helicopters are
heavily dependent on high-level contacts."
Shortly after he
returned, Air Taxi was hired by Bell as its agent.
Asked about General Khatami's role, M r . Orpen said,
"Khatami would be important for sales of helicopters to
the Army because he had a finger in all aviation except for
the Navy.
We got that story from General Toufanian."
10
-8-
In early February 1968, Bell asked Air Taxi to become its Iranian agent "based on the favorable recommendations we have received."
(Ex. 7)
Air Taxi accepted Bell
1
offer at the end of the month.
Sale of the 489 Helicopters;
1968 - 1975
1968-1969:
Air Taxi officials met on many occasions
with Generals Toufanian and Khatami to nurture Iranian
interest in Bell Helicopter rather than A g u s t a , Bell's
Italian licensee, as the chief provider of helicopters
to the Iranian armed forces.
During this period, Agusta
was the main supplier of Bell helicopters to Iran.
December 1969:
The Shah attended a dinner party
at the home of General Khatami at which time A . H. Zangane
managing director of Air Taxi, showed a Bell Helicopter
film on Bell's Huey Cobra gunship.
M r . Zanganeh, accord-
ing to an Air Taxi internal memorandum, told the Shah
about the Cobra's "great possibilities" for Iranian forces
(Ex. 41)
June 15, 1970:
Air Taxi renewed its manufacturers
foreign representative agreement with Bell Helicopter.
9
-9It was this agreement that- was amended three times in
1972 and 1973.
1971-1972:
(Ex. 62)
Bell Helicopter, 'along with Air Taxi, under
took a major sales effort to get the Shah to purchase
large numbers of Cobras and transport helicopters for the
Iranian Army's new air cavalry unit.
Throughout that
period, Air Taxi received frequent advice from Generals
Khatami and Toufanian and H. Dehesh, General Toufanian's
assistant in the War Ministry, on the strategy and tactics
Bell Helicopter should pursue to get the helicopter
deal.
Early 1971:
Bell Helicopter begins the use of code
words in its telex traffic with Air Taxi.
April 1971:
Frank Sylvester, Bell's Vice President
for International Marketing, leads a Bell team to Iran
to formally propose the Huey Cobra for the Iranian military.
Mr. Sylvester met with M r . Dehesh and Generals
Toufanian and Khatami.
According to an Air Taxi internal
memorandum of April 24, 1971, "General Khatami gave very
important and useful guidance and advice (to
Mr. Sylvester)
for the future sales of a Huey Cobra." (Ex. 43)
10
-10-
March 1971:
Bell Helicopter was keeping U . S . military
officials in Iran advised of
its
sales efforts.
M r . Sylvester
wrote the following to General H . A . Twitchell, Chief of the
Armish MAAG in Iran, in a March 31, 1971 letter:
"It seems appropriate to mention in this letter that the
timing of Cobra procurement is now the pivotal planning factor.
"In April 1971 a final U.S. Military FY70 production run
of approximiately 200 Cobras will begin.
of any follow-on U.S. procurement.
We have no indication
Therefore, in order to take
advantage of the price of this production run, it is necessary
that customers place firm orders no later than 30 September 1971.
This is requisite to the procurement of long lead time components
to mesh with any extended production schedule."
April 28, 19 71:
(Ex. 14)
M r . Sylvester wrote in an aide
memoire
that Generals Toufanian and Khatami strongly favored Iranian
purchase of Cobras.
(Ex. 34)
August 22, 1971:
Air Taxi reported that the Iranian
government planned to buy 60 Cobras and 100 model 205s
(Hueys).
The 205s will be purchased most likely from Augusta.
October 20, 1971:
M r . Sylvester, Bell Helicopter, wrote to
Major General Ellis W . Williamson, Chief, M A A G , Iran/Armish, on
the purpose of his upcoming trip to Iran:
remains unchanged.
"Our basic objective
It is to steer both the (Iranian) government
and civil helicopter business into our Fort Worth and other
U . S . production facilities where, as you know, sustaining work
loads are increasingly needed...."
10
-11Late October 1971:
October 28, 1971:
Air Taxi internal memorandum of
"We (Air Taxi officials) verbally informed
M r . Horsley (a Bell sales official) that since very important
discussions are taking place and activities going on, to
discontinue
Agusta's efforts in Iran and replace them with
BHC (Bell Helicopter) in this market, it is absolutely inadvisable
to send reports in writing.
We stressed that all our communica-
tions from now on be either verbal, long distance telephone
calls or coded telex messages."
Late October 1971:
Mr. Atkins, Bell's executive vice
president, M r . Sylvester, and a Bell team traveled to Iran. This was
M r . Atkins' first visit to Iran.
January 1972:
Helicopter.
M r . Atkins takes over as President of Bell
E . J . Ducayet, M r . Atkins' predecessor; becomes
chairman of the company.
April 18, 1972:
Bell Helicopter
received a letter of
intent from General Toufanian of the Iranian government's plan
to purchase AH-1J Cobras and Model 214 transport helicopters.
The decision is contingent on a demonstration of the helicopters.
(Ex. 13)
Mid-May 1972:
M r . Sylvester and a Bell team
traveled to Iran to
prepare for demonstration of Bell Helicopters.
June 16, 197 2:
M r . Sylvester sent a copy of Amendment No. 1
to Bell-Air Taxi 1970 Agreement for M r . Zanganeh to approve.
(Ex. 38)
2 3 - 5 5 3 0 - 78
-2
12
- uAugust 16, 1972:
Zanganeh and Charles R. Rudning, a
Bell Vice President, signed Amendment No. 1 which was
effective as of April 1, 1972.
Amendment No. 1 provided
for a 2.5 percent commission to Air Taxi on the sales of
the Cobras and Model 214s to the Iranian government.
Mr. Atkins said in his testimony that the commission excluded spare parts and service provided for in the helicopter deal with the Iranian government.
(Ex. 63A)
Late August 1972: Bell Helicopter demonstrated its
Cobra and Model 214 helicopters for Iranian military.
Mr. Atkins accompanied Mr. Sylvester and the Bell team
to Iran.
Shortly after that demonstration, Mr. Atkins was
advised that Iran intended to buy about 500 helicopters
from Bell.
(Prior to the demonstration, Mr. Atkins
estimated that the potential sale was between 300 and 500
helicopters.)
September 20, 1972:
Air Taxi telex to Mr. Sylvester:
"According to No. 1, Trout and Skate, the door is still open
for Bell to secure training program and even logistic support
direct.
No. 1 referred to General Khatami.
October 14, 1972:
(Ex. 51)
Air Taxi signed Amendment No. 2
to its 1970 agreement with Bell Helicopter.
Amendment No. 2,which
superceded amendment No. 1 signed two months before, provided
for a one percent commission to Air Taxi on the helicopter sale
along with spare parts and service.
October 30, 1972:
(Ex. 64)
The Iranian government signed a letter
of offer from the U.S. government for the purchase of the
Cobras and Model 214s.
13
-13November 1, 197 2:
Letter of offer sent by the U.S.
Government to Iran for the sale of 489 helicopters to the
Iranian government (202 Cobras and 287 Model 214s) .
November 7, 197 2:
The Iranian government accepts the
letter of offer from the U.S. Government.
December 21, 1972:
The U.S. Army sends Bell Helicopter
a letter contract for the 489 helicopters.
January 2, 1973:
M r . Zanganeh was scheduled to arrive at
Bell Helicopter's Fort Worth headquarters to begin negotiating
his final settlement with Bell.
M r . Zanganeh brought Air
Taxi's file on its efforts on behalf of Bell Helicopter since
1968.
May 1973:
U.S. Army Aviation Systems Command, (AVSCOM),
which was handling the sale of the 489 helicopters to Iran, and
Bell Helicopter were negotiating the amount of the commission
payment to Air Taxi to be allowed under the Foreign Military
Sales program.
June 16, 1973:
AVSCOM concluded negotiations with Bell
Helicopter on the commission payment to Air Taxi and set
$1,000 per helicopter as a fair and reasonable payment.
June 26, 19 73:
The Shah issued an edict placing limits
on commission payments allowed on military sales to Iran.
June 28, 197 3:
Final agreement signed on the sale of
the helicopters to Iran.
June 29, 197 3:
Bell Helicopter and Air Taxi signed
Amendment No. 3 to the 1970 Agreement in which Bell Helicopter
14
-14said it would pay Air Taxi $2,950,000 in three installments
ending in 1975 in connection with its. representation of
Bell, including its efforts on behalf of the sale of the
helicopters. (Ex. 65)
15
-15III.
SUMMARY OF THE EVIDENCE ON MAJOR QUESTIONS
The following is a summary of the evidence gathered by
the staff on the major questions arrising during the course
of the investigation.
These questions deal with General
Khatami's ownership interest in Air Taxi; General Khatami's
role on the sale of Bell helicopters in Iran; the extent
to which Bell officials had knowledge of any ownership
interest in Air Taxi by General Khatami; the role played
by M r . Miller in the sale of the 489 helicopters and the
$2.9 million payment to Air Taxi; and whether the facts
surrounding the $2.9 million payment were as described
in M r . Miller's testimony before the Committee.
This summary is intended to make the Committee aware
of all of the relevant testimony and evidence gathered in
connection with these major questions.
The summary is
not intended to draw any conclusions with respect to
these questions.
10
-16A.
Did General Khatami Have an Ownership Interest in Air Taxi?
Testimony By William French and Attorney Bell
William French, Bell Helicopter's agent in Iran during the
period 1964 to 1968, testified that General Khatami was an
owner of Air Taxi from its inception. (French 830, 836, Ex. 81)
In 1966, according to French and his attorney, General Khatami
had French thrown out of Iran on trumped up charges for failing
to comply with Khatami's demand that French turn over an interest
in his Bell Helicopter franchise in Iran. (French 858, 859.
Bell 966).
The interest in the franchise was to be conveyed to
General Khatami either by French turning over 51 percent
owenrship in French's Company (International Helicopter Consultants) to General Khatami or by French becoming a subcontractor
of Air Taxi and another company controlled by Khatami and paying
Khatami's companies 10 percent of French's gross earnings. (Ex 84A)
French's partner prepared a letter which he filed with
General Pakravan, Minister of Courts and an Iranian Intelligence
Official in 1966 complaining of the situation and the creation
of a monopoly for Iranian business in General Khatami's companies
(Air Taxi and Heli Taxi). (Ex. 84A)
At this time, French's
partner had the public records searched to determine the ownership
of Air Taxi.
Records of registered companies in Iran showed that
Air Taxi was first registered in 1958 and that from 1958 until
June of 1965 General Khatami was listed as a shareholder of 40
shares of 200 shares issued with Shafik and Jahambani holding
40 shares each and 80 shares unlisted. (Ex. 81)
The search
further revealed that in 1965 a second registration by Air TAxi
13
-17-
showed Zanganeh holding 50 shares of 100 shares issued with
Shafik and EshOo holding the balance of 50 shares equally. (Ex. 81)
In 1966 French also filed a complaint to the State Department in
which he stated that General Khatami was still a major stockholder
in Air Taxi although in 1965 he and Jahambani had their names
removed as owners of Record. (Ex. 83A).
He charged Zanganeh with
being Khatami's puppet in this letter.
General Khatami's associate and respresentatives openly
discussed Khatami's ownership in Air Taxi.
Mr. French said he
talked with Shafik in 1959-1960 at which time Shafik told him
Khatami was a partner in Air Taxi.
French's attorney, Robert
Bell talked briefly with General Khatami in person in Iran at
which time Khatami told R. Bell that Dr. Safavi would speak for
Khatami in respect to establishment of a corporation which would
in effect be the parent corporation (STP) of French's companies
in Iran.
In October of 1966, D r . Safavi told R. Bell that
General Khatami controlled Air Taxi (Bell 981).
Dr. Safavi
further told R. Bell that STP (which was to be 51 percent owned
by Dr. Safavi as nominee for Khatami and others and 49 percent
owned by French) and Khatami's two other companies (Air Taxi
and Heli Taxi) would be the only companies allowed to sell
aircraft in Iran (Bell 1018, 1021).
General Rafet, another
Khatami representative in the take-over of the French BellHelicopter franchise, also told French that Khatami owned Air
Taxi (French 858).
18
-18-
Official Record Information Supplied by State Department
French's testimony respecting Khatami's ownership interest
in Air Taxi both before and after 1965 is corrpborated by
independent sources.
By letfer of 16 February 1978 the State
Department in response to the staff's request for information
stated that "General Mohammad Khatami was Chairman of Air Taxi
between 1957 and 1965, according to oral statement to the
(American) Embassy by Registration Office of Minister of Justice
(of Iran)."
French's testimony that Khatami retained a silent
interest in Air Taxi after 1965 is also corroborated-by
independent
sources in the form of affidavits supplied by State Department
officials in response to the staff's inquiry.
Affidavits from U.S. Military and Embassy Officials
1)
The Political and Military Affairs Officer in
Tehran (Mr. Rouse) during the period 1968-1972 stated: "In conversations with personal and professional contacts, mention was
made that General Khatami was a part-owner of Air Taxi.
I have
no personal knowledge of the accuracy of these reports.
I believe
it was widely assumed among prominent Iranians and U.S. businessmen
with defense interests, that General Khatami did have an ownership
interest in Air Taxi."
2)
The Deputy Chief of Mission in Tehran (Mr. Miklos) stated
that from time to time since 1960 he heard undocumented second
13
-19-
or third-hand stories that General Khatami had a financial
interest in Air Taxi, generally from people associated with
Iranian civil aviation affairs including U. S. government
officials; and that such stories circulated widely among
upper levels of Tehran business and social circles.
3)
The Counselor for Economic Affairs (Mr. Bewin) who
arrived in Tehran in 1974 heard from individuals in the Tehran
business community that General Khatami had a financial interest in
Air Taxi variously described as "silent partnership, minority
interest, and part ownership"; and that General Khatami's
interest in Air
Taxi was fairly common knowledge in U . S.
and Iranian aviation circles in the late 1960's or early
1970's.
4)
The Commercian Attache (Mr. Westley) heard that General
Khatami had a financial interest in Air Taxi soon after arriving in
Tehran in 1974 from an Iranian commercial assistant employee.
The Attache stated that General Khatami's "connection with
Air Taxi was not common knowledge but appeared to be taken
as an accepted fact by those in the aerospace business,
especially those interested in doing business with Air Taxi."
5)
The Deputy Director for Near Eastern and South
Asian Regional Affairs (Mr. Precht) stated that possibly
as early as 1974 and in 1975-1976, on several occasions
he heard "cocktail party" gossip that General Khatami had
a financial connection with Air Taxi which had been
terminated on an unspecified date.
The financial interest
10
-20-
was not common knowledge but was a "rumor that was only
rarely and rather discretely mentioned" by "resident
American businessmen."
6)
Ambassador Andrew Killgore stated that "while General
Khatami's financial interests may have been common knowledge
among certain categories of people, such as high-ranking
Iranian Air Force officers, it is doubtful that such information was common knowledge among the general public in
Tehran."
7)
Former General Hamilton A . Twitchell (Chief of the
Military Advisory Group in Iran) stated that "sometime during
my stay in Tehran from June 1968 until October 1971,
probably in 1969 or 1970, I heard informally that General
Khatami was associated in some manner with Air Taxi.
I
do not recall the circumstances under which I heard the
allegation, nor do I remember who told me."
10
-21TABLE SUMMARIZING RESPONSES TO COMMITTEE AFFIDAVITS
STATE
DEPT.
Knowledge of
Khatami's
ownership
interest
No Knowledge
of Khatami's
ownership
interest
No Reply
NOTE:
7
7
6
MILITARY
OFFICERS
AUDIT
AVSCOM
TEXTRON
3
0
0
4
10
10
8
3
5
Requests for information relating to knowledge of
whether General Khatami had an ownership interest
in Air Taxi were made to 63 individuals:
former
State Department officials, former U . S. military
officers who served in Iran during the period,
Army auditing personnel and Textron's accountants
and Members of the Board of Directors of Textron.
These individuals were requested to reply by
affidavit. The Committee received 41 replies as
of February 22 , 1978.
EVIDENCE FROM INTELLIGENCE
AGENCIES
General Khatami's ownership interest in Air Taxi during
the period 1960 to 1975, when he died in a glider accident, is
also corroborated by the following information in the files
of intelligence agencies of the U . S.:
10
-22-
1)
A CIA report dated 5 February 1960 states that Air
Taxi is being supported by prominent government personalities
such as Khatami, Shafik and Jahambani.
2)
A DOD intelligence report dated 1 March 1960 states
that Khatami, Jahambani and Eshoo own Air Taxi, which is a
distributor of Bell Helicopters in Iran.
3)
A DOD intelligence report dated 25 July 1960 states
that Air Taxi is owned by Khatami, Jahambani and Shafik.
4)
A CIA biography on Khatami dated 26 March 1968
states that "he owns Air Taxi, the only chartered air service
in Iran permitted to operate."
5)
A DOD intelligence report dated 14 March 1970 states
that Air Taxi is owned by a group of private individuals
with General Khatami controlling a majority of the stock
and Zanganeh the managing director.
6)
A DOD biography (March 1971) on Khatami refers to
the General as the owner of Air Taxi.
7)
A CIA document dated 25 January 19 78 which is sourced
to World Trade Directories and other public sources states
that Air Taxi was formed in 1959 by Zanganeh, Shafik and
Eshoo and that Zanganeh sold his stock in 1975.
However, other
sources mentioned in this document reported the 'humored"
Khatami
connection with Air Taxi and that shares in Air Taxi were owned by
various members of the Royal Family and possibly General
Khatami.
According to the CIA document, Zanganeh sold
his shares in 1975 to this same group.
23
-23-
Based upon the World Trade Report, the State Department
by letter dated 31 January 1978 informed this Committee that
its files contained contradictory information concerning the
ownership of Air Taxi by General Khatami since it also had
a DOD Intelligence Report of Marcy 1971 which referred to
Gene^il Khatami as the owner of Air Taxi.
This State
Department letter, however, preceded its more specific reply
of 16 February 1978 and the affidavits of its Tehran
Embassy employees.
Nevertheless, the World Trade Report
is consistent with the ownership of Air Taxi as set forth
in a document (Exhibit 57) supplied by Textron-Bell referred
to hereinafter in this memorandum.
Evidence from Bell Helicopter
The President of Bell Helicopter, Atkins, testified
that he spoke to Zanganeh directly in 1972 about the ownership of Air Taxi because it then appeared Bell Helicopter
would be making a substantial sale to Iran and making a
major payment to its agent Air Taxi. (Atkins 248).
Mr.
Atkins further stated that in coming to an agreement to pay
Air Taxi $2.9 million, Bell Helicopter asked Zanganeh to
furnish Bell Helicopter with authorization to accept
payment and complete the transaction by Air Taxi's Board of
Directors.
Helicopter.
Exhibit 57 is the document supplied to Bell
It states that such authority was given Zanganeh
by Air Taxi at a meeting of 100 percent of its shareholders:
24
-24-
Zanganeh, Shafik and Eshoo.
The information contained in
Exhibit 57 is the same as that set forth in a Dunn and
Bradstree report dated 4 October 1970 which was supplied
by Textron from its files showing Zanganeh, Shafik and
Eshoo to be 100 percent owners of Air Taxi.
of 27 January 1978 Textron stated that
By letter
"no indication of
any ownership interest of General Khatami has been discovered
and Bell Helicopter remains unaware of any such interest."
25
-24 A-
Following the preparation of this memorandum, First
National Bank and Trust Company of Oklahoma City supplied
information * relating to payments out of the accounts of
Zanganeh and Air Taxi for the period 1973-1975 for
transactions of over $100,000.
The documents and can-
celled checks supplied (and attached hereto) show that on
27 January 1973 Zanganeh wrote three checks out of his
account as follows:
M r . M . Khattami ($290,000); M r . N .
Djahambani ($131,000); and M r . A . Chafik
($131,000).
Khatami, Jahambani and Shafik were the three individuals
registered as stockholders of Air Taxi in its initial
registration in 1958.
(Ex. 81)
These payments by
Zanganeh were prior to the $2.9 million payment by Bell
Helicopter to Air Taxi.
Of the $2.95 million payment, $1.95 million was
1
deposited in Zanganeh s account at the Oklahoma Bank
(the other $1 million was deposited by Zanganeh in Citibank,
Paris).
Substantially all of the $1.95 million was
withdrawn shortly after being deposited and invested in
a note for $870,000 and a time deposit of $950,000.
Therefore, the ultimate distribution of the $1.95 million
is not presently known.
*Citibank has advised the Committee that French law
prohibits it from complying with the Committee's subpoena
requesting information from its Paris branch. Citibank also
advises that a petition filed with the French courts by the
Committee may be honored by the French courts with an order
for compliance.
26
-25B. What Role Did General Khatami Play in the
Sale of Bell Helicopters to Iran?
From the documents we have received and the testimony
we have heard, it is clear that General Khatami did have an
input into the Government of Iran's decision to purchase 489
helicopters from Bell Helicopter. Some Bell officials stated
that General Khatami's involvement related primarily to the
technical advice he rendered as the aviation expert in the
Iranian armed services. However, at least two Bell officials
indicated that Khatami's tacit approval would be required
before the sale could be concluded (Gallagher
Rudning
624-8
and
659-660).
Through his military office and his marriage to the
Shah's sister, General Khatami did have the opportunity to
influence matters affecting aviation in Iran. As the Commanderin-Chief of the Iranian Air Force, Khatami controlled all
types of Iranian military aviation. Moreover, since the
Iranian Army did not have any aviation experts when the
helicopter purchase was being considered prior to 1973,
Khatami, as a helicopter pilot and Iranian authority on
aviation, became the Iranian Government's expert advisor on
helicopters. However, testimony also indicates that the Shah
himself makes the final decisions on all major procurement
actions.
As viewed by Bell helicopter officials, the major
10
-27-
decision maker, other than the Shah, in the Iranian Government's
purchase of helicopters was General Toufnnian, Deputy Minister
of War for Armaments, and the head of the Military Industrial
Organization (MIO), the I rani an military procurement agency. In a
letter dated January 27, 1978 from Thomas Soutter, Textron's
General Counsel, to Ken McLean, transmitting Bell Helicopter
documents to the Committee Staff, Mr. Soutter indicated that
"Bell's primary and successful sales effort" was made to
General Toufanian (Ex.
Toufanian's
4). This statement indicating
importance was echoed by James Atkins, President
of Bell Helicopter, (Atkins
102,
145) and by other
Bell officials in testimony before the Committee staff.
General Toufanian was described as the person who compiled
all of the contract proposals and official recommendations
and took the final program recommendations to the Shah for
his approval (Gallagher
603). Thus, as head of military
procurement, Toufanian was the official link between the
Shah and a manufacturer such as Bell.
While Toufanian and MIO were described as the decision
points just below the Shah, the Bell Helicopter officials
did indicate that General Khatami played a significant,
although not the major, role in the helicopter sale. In. his
testimony, Mr. Atkins described Khatami as being an outstanding
Iranian Air Force officer and someone whose aviation judgment
was very well respected at all levels of the Iranian government
2 3 - 5 5 3 O - 78 - 3
13
-28-
(Atkins
192). Moreover, M r . Atkins indicated that as an
expert pilot, General Khatami would have an opinion as to the
capability of the Bell aircraft and that his views would
certainly be valued by those involved in the decision making
process (Atkins
231). When asked to characterize General
Khatami's role in the sale of the helicopters, Frank Sylvester,
Bell Helicopter Vice President* for International Sales, stated
that it would be "the most natural thing in the world when
the Shah decided to create an Army aviation unit ..., that
he would go to (General Khatami for) the best and most trusted
helicopter expertise and advice" (Sylvester
539).
When asked about Khatami's role in the helicopter sale,
John Gallagher, a Bell international sales agent, indicated
that General Khatami would have to give his "vote of approval"
before the sale was consummated. Mr. Gallagher also indicated
that he discussed Khatami's role with Messrs. Atkins and
Sylvester and that they agreed that Khatami's approval was
crucial to the success of Bell's sales effort
(Gallagher
624-628). Charles Rudning, presently President of Bell
Operations Corporation and formerly Vice President of Program
Management, testified that Khatami would have had a vote
or a recommendation on the prospective Iranian Army helicopter
program (Rudning
659-660).
Recognizing that General Khatami would have some
influence in the helicopter purchase decision, Bell Helicopter
29
-28-
officials personally briefed him on the various Bell proposals
submitted to the Iranian government during 1971-1972. Both
Atkins and Sylvester met with Khatami during trips to Iran,
Atkins recalling the purpose of his visit in November 1971
as a discussion of the advantages of Bell's product line
(Atkins
101). From these and additional contacts that Bell
officials and sales agents made with Khatami, it appears that
he was fully informed of the Bell sales proposals.
That General Khatami was actively interested and
involved in advising the Shah about Bell helicopters is
evident from two widely separated events. The first was the
December 1569 showing by Khatami of a Bell promotional film
about Bell Huey Cobra helicopters. The showing was in Khatami's
home, after a dinner party attended by Princess Fatemeh, the
Shah, the Iranian Prime Minister, and M r . Zanganeh, manager of
Air Taxi, Bell's Iranian agent. As recounted by M r . Zanganeh
in a memorandum to files, the Shah was very impressed with the
Huey Cobra capabilities and indicated that he would consider
using such aircraft in the Iranian Armed Forces (Ex.
41).
The second occurrence was General Khatami's flight in
the Bell Helicopter models proposed to be sold to Iran, at
the same time in August 1972 as the Shah flew such aircraft.
In describing Khatami's favorable attitude toward the helicopters,
Mr. Iranzad, Air Taxi's sales manager, stated in a memorandum
to files dated August 28, 1972 that Khatami strongly recommended
30
-29-
the purchase of these helicopters to the Shah (Ex.
50).
General Khatami's interest in having Bell Helicopter
products purchased by Iran during 1971-1972 is evident from
many of the documents submitted to the Committee by Bell
Helicopter. From the following documents, Khatami appears
to be influential in favoring Bell products and, in some
instances, advising Bell as to sales strategy.
a. In
an
internal
memorandum, dated April 10,
1971, written by Mr. Zanganeh of Air Taxi,
regarding the arrival in Iran of a Bell Helicopter
sales briefing team, M r . Zanganeh reports that
contrary to Bell's decision to make a maximum
public sales effort, >Generals Khatami and
Toufanian agreed with Zanganeh that the Bell
people should be very low key and only "adhere
to further guidance instructions which would be
given to them" (Ex.
33).
b. In Mr. Iranzad's memorandum to files of April
24, 1971, describing the visit of the Bell sales
team to Iran the previous week, he stated that
Khatami met with the group and "gave very
important and useful guidance and advice for
the future sales" of Bell Huey Cobras (Ex.
c. In
an
internal
43).
memorandum, dated April 28,
1971, Mr. Sylvester of Bell Helicopter stated
31
-30-
that Khatami had told the Shah that he is in
favor of the Huey Cobra for the Iranian Army
(Ex.
44).
d. In July 1971, General Howze, retired from the
U.S. Army and then employed by Bell, travelled
to Iran to promote the sale of Bell products.
Mr. Iranzad prepared a memorandum dated July 6,
1971 about General Howze's trip, indicating,
among other things, that Khatami gave General
Howze very useful guidance and advice which
would assist Bell Helicopter's future programs
in Iran. Iranzad also reported that Khatami stated
that he would definitely recommend the purchase
of Bell Helicopters for the Iranian armed
forces (Ex.
46).
During 1971, Bell was competing w i t h , among other
helicopter manufactuers, its own Italian licensee, Agusta.
While Agusta had sold and continued to be interested in
selling its transport helicopters to Iran, Mr. Atkins
and
other Bell officials have testified that Iranian military
leaders, while satisfied with Bell helicopters produced by
Augsta, had become dissatisfied with Agusta's spare parts
and service operation (Atkins
149). Iranian officials had
apparently expressed a preliminary interest in having Bell
Helicopter replace Agusta and, as such, the Iranians did not
13
-32-
want Bell Helicopter to be publicly discussing such preliminary interest. Thus, in the minds of Bell officials, references
in the documents to such matters as General Khatami's recommendation to maintain a low profile are merely indicative of
the fact that Iranian officials recognized the high quality
of Bell products and services, but that the Iranians intended .
to take their time in reaching a decision on any prospective
purchase.
Due to what has been described as poor communications
privacy and security by Bell Helicopter officials, cable
messages between Iran and the U.S. sent by Bell or its agent,
Air Taxi, were encoded during 1971-1972. Individuals, products,
and companies were given such names as "Trout", "Skate",
and "Grooper". One cable sent on September 20, 1972 by
Mr. Zanganeh of Air Taxi to Mr. Sylvester of Bell Helicopter,
indicated that "according to No. 1, Trout,and Skate, the door
is still open for Bell to secure training program and even
logistic support direct "
translated from Bell's
(Ex.
51). The code words, as
code list, indicate that General
Khatami was No. 1, Mr. Dehesh, from the Military Industrial
Organization, was Trout, and General Khosrodad, Chief of Army
Aviation was Skate. Thus, Mr. Zanganeh's message
to Bell
was that the support program that would be awarded in conjunction with the government to government helicopter purchase from
Bell might be awarded by Iran to Bell on a direct basis without
33
-32-
the U.S. government acting as an intermediary. When asked
about the significance of the reference in the cable to
Khatami as No. 1, Messrs. Sylvester and Atkins indicated that
they do not know why Khatami was referred to in such a manner
and that, in any event, the only No. 1 they have had knowledge
of in Iran has been the Shah (Atkins
208, Sylvester
471).
34
-33C.
What knowledge Did Bell Helicopter Officials Have Of
Any Ownership Interest Of General Khatami In Air Taxi?
The following is a summary of the testimony gathered
during the staff's investigation which bears directly upon
whether officials of Bell Helicopter had knowledge of
General Khatami's ownership interest in their Iranian sales
representative, Air Taxi.
The staff took testimony under oath from a number of
Bell officials including James F. Atkins, Frank M . Sylvester,
John E. Gallagher, Charles R. Rudning, and Edwin L. Farmer.
1
Each of these individuals testified in substance that
he did not know that General Khatami had an ownership interest in Air Taxi; he had no knowledge that Air Taxi ever made
any payments to Iranian Government officials; he had no
knowledge that any part of the $2.9 million paid Air Taxi
inured to the benefit of any Government official; he knew of
no payments to any Iranian Government official in connection
with this sale to Iran; and he had no knowledge of any fund
of Bell monies or other assets not recorded on Bell's books
and records.
1
T h e testimony of other Bell officials is set forth in
more detail, infra.
13
-35-
Each of these persons in turn testified in substance
that he did not discuss the above matters with Mr. Miller
and had no knowledge that M r . Miller was aware of any of
the above matters.
During the negotiations of the settlement payment,
Mr. Atkins said he was told by M r . Zanganeh that the owners
of Air Taxi were M r . Zanganeh, Chafik and Eshoo.
Zanganeh gave
no indication that Khatami had any kind of ownership interest in Air
Taxi. (Atkins 248) He further testified that in connection
with the final negotiation, Zanganeh was requested to furnish
a board resolution to Air Taxi indicating his authority to
agree to the settlement. (Atkins 248) Such a resolution was
furnished to Bell in and around May 1973.
This resolution
stated that the above three parties were 100 percent owners
of Air Taxi. (Atkins 257 , Exhibit 57).
Mr. Sylvester testified that he may have heard rumors of
ownership of Air Taxi by Khatami as follows (page 532):
"Were there rumors in Iran that you know of that Khatami had
an ownership interest in Air Taxi, have you ever heard such
rumors?"
(answer) "Well I think I probably did but I am just
at a complete loss to carry it any further than that.
know, I just, you know --."
You
Later on in his testimony at
page 550 he stated: "I don't remember, I don't remember hearing a rumor to the effect that Khatami had an involvement
in Air Taxi."
13
-36-
William H . French, Volume V I , Pages 806-945
A . Position
During the period of 1964 to 1968, Mr. French,
through his company, International Helicopter Consultants,
was the sales representative for Bell Helicopter in Iran
(French 814).
He was also a sales representative for
Cessna in Iran, and he represented Bell Helicopter in
Kuwait as well (French 846).
B.
Knowledge of Bell Officials
M r . French testified that during the period of 1964
through 1967 he discussed Khatami's ownership of Air Taxi
with Messrs. Orpen, Feliton, Jose, Pierrot, Harry Miller,
and, he believes, M r . Kling (French 896, 817, 822, 827, 828,
843) .
M r . French testified that it was general knowledge in
and around the 1960's that Khatami was an owner of Air
Taxi (French 842, 843).
He testified that Khatami would not
let him do business in Iran unless he gave 50 percent of
his franchises to Khatami (French 858, 861, 876, 877).
M r . French formed a new company called STP.
STP would be
51 percent owned in name by Dr. Safavi, which interest in
part would be held for General Khatami (French 880, 890, 892).
M r . French's other companies, including International Helicopter Consultants, would own the other 49 percent.
M r . French testified that on January 14, 1967, he wrote
a letter to Feliton in which he refers to the establishment
37
-36-
of STP and states that "now that we have General Khatami
as partner silently along with Dr. Safavi" it should open
many doors (Exhibit 82).
No one at Bell Helicopter,
including M r . Kling, raised any problem with respect to his
having Khatami as a silent partner in STP (French 902, 903,
942).
(His letter of January 14, referring to the STP
arrangement and General Khatami's silent partnership, was
distributed within Bell to Messrs. Kling, J o s e , Orpen,
Feliton, Spirtas, Baden, Shields and Pierrot (French 203,
Exhibit 82).)
That letter was acknowledged by M r . Kling's
letter of January 30 (French 902, Exhibit 83).
French had no discussions with M r . Miller concerning
Khatami's ownership of Air Taxi.
He has no information that
Bell representatives told M r . Miller about Air Taxi (French
919, 922).
Charles Robert Bell, J r . , Volume V I I , Pages 949-1083
A.
Position
M r . Bell is an attorney who represented M r . French during
the relevant period (Bell 952-955).
B.
Knowledge of Bell Officials
M r . Bell testified that he set up the arrangement with
Dr. Safavi in October of 196 6 whereby STP would be created.
Safavi would hold 51 percent for "certain members of the high
council of civil aviation" and M r . French's companies would
13
-38-
own the other 49 pcrcent (Bell 971-980).
Safavi said he
was speaking for General Khatami (Bell 981).
General
Khatami confirmed to M r . Bell that Safavi was speaking for
him (Bell 981, 985) .
M r . Bell testified that after his trip to Iran to set
up the above arrangement,
he went to Fort Worth and met
on November 2, 1966, with M r . Feliton and M r . Jose in Jose's
office (Bell 992-994).
At that meeting, M r . Bell testified
that he told them the entire story, including the fact that
Khatami owned and controlled Air Taxi, that Khatami had
demanded 50 percent of M r . French's business and when French
initially refused, he was thrown out of the country.
Mr.
Bell told Feliton and Jose that he had just returned from
negotiating a solution to M r . French's problem and he
explained the entire STP arrangement to them (Bell 9971008), including the fact that General Khatami would own a
substantial interest in STP.
At the end of that meeting,
Jose said, "I want you to repeat this to our president"
1000).
(Bell
M r . Jose and Bell then proceeded to M r . Ducayet's
office, then president of Bell Helicopter, where M r . Bell
testified he repeated the entire story for approximately 45
minutes (Bell 1000).
M r . Ducayet, at the end of the meeting,
thanked him for telling him that information (Bell 1009).
M r . Bell testified that no one at Bell indicated to him
it was contrary to Bell's policy to do business with government officials; in fact, they indicated the opposite -- "they
13
-39were concerned to be certain that they were going to be
doing business with General Khatami" (Bell 1009).
On
January 5, 1967, M r . Bell wrote a letter to M r . Feliton in
which he advised that STP had been formed and it was the only
company besides General Khatami's two companies that were
authorized to do certain kinds of business in Iran (Bell 1014,
1021, Exhibit 91).
M r . Orpen acknowledged the January 5
letter by a letter of January 17 and gave him temporary
authority to continue as Bell's representative (Bell 1025,
Exhibit 93).
M r . Bell testified that in June of 1967, he travelled
again to Iran and spoke with Dr. Safavi, who indicated that
General Khatami was displeased and wanted the Bell franchise
directly with STP rather than through French's
Helicopter Consultants (Bell 1032).
International
Upon his return from
Iran, M r . Bell reported on his trip both by telephone and
by a lengthy letter of July 7, 1967, to M r . Jose (Bell 1035,
Exhibit 9 6 )
1
1 None of the documentation supplied by Mr. French and M r .
Bell, including correspondence to Bell Helicopter indicating
a Khatami ownership interest in STP, as well as a connection
between Khatami and Air Taxi, was supplied to the Committee
staff by Textron in its first documentary submission in
response to the Committee subpoena. (Exhibits 8 2 , 83, 89, 90,
91, 93, 94, 96). When the documents from M r . French and
M r . Bell were brought to Textron's attention, Textron made
a further submission which included much of the above-referenced
correspondence. Textron explained that it had not concentrated its initial search prior to 1968 and had not
thought to look into the French, International Helicopter
Consultant file.
13
-40-
In this six page letter, Mr. Bell went over in detail the
past and current problems of M r . French and specifically
mentioned that General Khatami was one of the owners of STP
and that General Khatami had decided to handle transactions
of STP in "much the fashion he had set up for Air Taxi
and Helitaxi
M r . Bell testified that he has never met or corresponded
with M r . Miller and never heard M r . Miller's name mentioned
in his conversations with Bell personnel (Bell 1065, 1067).
Edwin J . Ducayet, Volume VIII, Pages 1086-1192
A.
Position
President of Bell Helicopter from 1962 through 1972.
Chairman of the Board during 1972.
board of directors since April 1973.
A member of Textron's
He reported directly
to M r . Miller (Ducayet 1090).
B.
Role
M r . Ducayet testified he did not participate in Air Taxi
negotiations.
M r . Atkins did and generally kept him
informed (Ducayet 1137).
H e , in turn, generally kept M r .
Miller informed (Ducayet 1138).
C.
His Knowledge
M r . Ducayet testified he has no recollection of ever
having met
Robert Bell (Ducayet 1092) .
"I have no
recollection of the gentleman or ever meeting him or not
13
-41meeting him.
He just means nothing to me"(Ducayet 1093).
He does not deny that Bell told him about Khatami and the
other matters as read to him from M r . Bell's testimony.
He testified he just does not recall one way or the other
(Ducayet 1151).
M r . Ducayet testified that M r . Jose reported directly to
him or through M r . Atkins (Ducayet 1093).
He met practically
daily with his marketing department (Ducayet 1155) .
He
believes that his people would have brought it to his
attention if a sales representative was owned in substantial
part by a government official in a country where that
representative would be doing business (Ducayet 1105).
He,
however, does not remember that happening (Ducayet 1105) .
If
a significant deviation from Bell Helicopter's policy was
brought to his attention, it was his practice to correct
it.
It was also his practice to report a serious breach
of policy to M r . Miller (Ducayet 1174, 1161).
M r . Ducayet testified he has no recollection of ever
hearing that General Khatami had an ownership interest in
Air Taxi (Ducayet 1097-1103, 1179, 1190).
If he had known
of Khatami's interest in STP, he would not have continued
Bell Helicopter's relationship with French and STP (Ducayet
1119, 1124).
He knows of no payments by Bell Helicopter
to government officials in connection with this sale (Ducayet
1164) .
He knows of no fund of corporate monies which are
not recorded on the company's books and records (Ducayet 1165).
13
-42-
M r . Ducayet testified he talked to Mr. Miller approximately
once a week (Ducayet 1163).
He does not recall ever
discussing Air Taxi or Khatami with M r . Miller or the $2.9 million
payment to Air Taxi (Ducayet 1135, 1138).
He recalls no
discussion of the $2.9 million payment with the board of
directors (Ducayet 1132) or with the audit committee
(Ducayet
1174) .
Dwayne K. Jose, Volume IX, Pages 1193-1290
A.
Position
Jose is vice-president of commercial marketing
1195).
B.
(Jose
He reported to M r . Ducayet (Jose 1197).
Role
He was in charge of international marketing for Bell
until 1969 at which time his responsibilities with respect
to Iran ceased (Jose 1227).
C.
His Knowledge
M r . Jose testified that he recalls having a meeting with
M r . Bell.
He does not recall the date nor who was present
(Jose 1198, 1200).
He recalls that M r . Bell said to him
then or later that Khatami was to have an interest in the new
company, STP.
He testified that "the whole story was so
preposterous that I didn't pay much attention to it" (Jose
1202-1206).
M r . Jose testified that M r . Bell was proposing
a "scheme that involved pay-offs to officials within the
13
-43government" (Jose 1209).
M r . Bell told him then or at a
later time that Khatami had an ownership interest in Air
Taxi (Jose 1210).
He was told on three occasions by M r . French
or M r . Bell that Khatami had an ownership interest in Air
Taxi.
Once was at the meeting he had with M r . Bell, once
was in a July, 1967 letter written to him by M r . Bell
reporting on his recent trip to Iran (Exhibit 96), and
finally M r . French so stated to him at the Paris air show in
1967 (Jose 1215).
He testified that he did not believe
what they said and determined that French was not the "kind
of person Bell Helicopter wanted to deal with" (Jose 1216).
M r . Jose testified he made the allegation of Khatami's
ownership of Air Taxi known to M r . Orpen, Kling and Pierrot
in connection with a trip they made to Iran for the purpose
of hiring a new manufacturer's representative (Jose 1220,
1222).
They reported back no conflict of interest.
He
does not know how they made this determination (Jose 1224,
1262) .
M r . Jose testified he does not recall one way or the
other whether his meeting with M r . Bell was followed by another
meeting between h i m , M r . Bell and M r . Ducayet (Jose 1213).
He has no recollection of ever discussing the ownership of
Air Taxi with M r . Ducayet (Jose 1214, 1225).
He testified
he does not recall if he discussed the Air Taxi-Khatami
2 3 - 5 5 3 O - 78 - 4
44
-43ownership with M r . Atkins (Jose 1226)
1
in the normal
course of his management responsibilities, he could have
mentioned such a matter to his superior, M r . Atkins, because
it was so unusual (Jose 1226) .
On December 11, 1967, a letter was sent to M r . French
terminating his representation of Bell in Iran but providing
for the continuance of his representation of Bell in Kuwait
(Jose, 1230, Exhibit 101).
He has no recollection of discussing the Iranian program
or discussing the Air Taxi matter with M r . Miller (Jose
1227).
M r . Jose said the company had informal procedures that were
subsequently published in late 1968, for investigating the
reputation of firms hired as Bell agents and whether any
government officials had ownership interests in them. (Jose
1236-1237). Bell officials differed in their testimony
over company policy on investigations into the background
and reputation of potential manufacturers representatives
when Air Taxi was rehired as Bell's agent in early 1968.
James F. Atkins, Bell's executive vice president at that
time, who became president in 1972, said, "There was no
specific method of retaining an agent." The company, he
said, investigated the ownership of a firm with which it
contracted only if it would owe Bell money. "And, of course,
in this case, Air Taxi was not ever going to owe Bell
money"(Atkins 27-31, 251).
13
-45;
James August l oliton*
Vol X Page 1307-1372
Position
M r . Feliton was employed by Bell from mid 1965 to
the end of January 1967 as an area export manager which
included Iran.
He reported to M r . Orpen.
(Feliton 1310,
1355)
Knowledge of Bell official
He testified he had a vague recollection of a meeting with M r . Bell, but does not recall who else attended.
(Feliton 1320, 1321), or whether a meeting took place
between M r . Bell and Ducayet (Feliton 1327), although it
would have been a normal procedure for a sales representative
or his representative to meet with management. (Feliton 1329)
He does recall that M r . French or M r . Bell proposed the
STP arrangement in which Khatami would have an ownership
interest.
(Feliton 1331)
He does not recall discussing
this matter with people at Bell.
(Feliton 1332, 1333)
Feliton testified that he has no recollection that Jose told
him the STP arrangement was preposterous, or any words to
that effect, or that Jose told him not to pursue the STP
proposal.
(Feliton 1334)
1
*Mr. Feliton s employment at Bell was terminated, but
n o t , according to his testimony,
for any of his activities
relating to the STP-Khatami relationship.
(Feliton 1314, 1316)
46
-45-
He is unaware that he violated any Bell policy in
connection with STP and he received no instructions from
Jose or Orpen not to pursue the proposal.
(Feliton 1335)
Feliton testified that he has no recollection that
the STP proposal received a negative reaction within Bell.
He has no recollection that Jose told him French should be
terminated and he believes he would have remembered it if
he had received such an instruction.
(Feliton 1359-1361)
He testified his incoming letters from French or M r . Bell,
as well as his outgoing letters to French or M r . Bell,
were copied to both M r . Jose and M r . Orpen.
(Feliton 1302,
1335)
He testified that he had never met M r . Miller.
47
-46D.
What role did Miller play in the sale of the 489
helicopters to Iran and the $2.9 million payment to Air
Taxi?
Miller became President of Textron in 1960 and became
Chairman of the Board in 1974.
sion of Textron.
Bell Helicopter is a divi-
Textron is the parent of thirty separate
divisions or companies.
Each division or company operates
autonomously with overall coordination for matters such as
financing handled at the Textron level.
In order to manage
this large enterprise, the thirty divisions and companies
are divided into five product areas with a group vice
president of Textron for each product area.
The group vice
president functions as a supervisor of the division and
companies falling within the product area.
Bell Helicopter falls within the Textron aerospace
group.
From 1960 to about 1974 Miller functioned in the
capacity of group vice president of Textron for aerospace.
Miller did not hold the title group vice president because
he was President of Textron during that period.
Miller
had a particular interest in aerospace and guided Bell
Helicopter (Atkins 26).
Ducayet was President of Bell
Helicopter to 1972 when Atkins became President.
supervised by Miller.
Both were
Both stated they brought matters to
Miller's attention on a regular basis in the form of recommended solutions they had worked out to problems that arose.
(Atkins 17 and Ducayet 1163).
13
-48Atkins did not have a direct relationship with the
Textron Board of Directors.
As supervisor of Bell Heli-
copter, Miller was responsible for handling Bell Helicopter
matters at the Board of Directors level.
Atkins wrote no
memos on conversation he had with Miller of other memos
to Miller about foreign sales except on matters which went
to the Board of Directors for resolution.
(Atkins 23).
Miller was informed of the possibilities of the
Iranian program before October 1972 because it was a large
program in the process of development.
(Atkins 40) Miller
was informed of the progress of the sale in 1972.
Ducayet
stated that "it was a big sale" so he discussed it with
Miller many times. (Ducayet 1135) Ducayet also said that
since the contract was so large the Board of Directors of
Textron was kept informed.
(Ducayet 1130)
Miller indicated some detailed knowledge of the sale
which was the single largest in dollar volume in Bell
Helicopter history ($500 million short term for the sale
of helicopters and $1 billion long term including coproduction -- Miller 121).
Miller stated that the sale
of the 489 helicopters required his personal attention in
"being knowledgable that it was being pursued."
(Miller 132).
On the other hand, Atkins stated that Miller was not kept
informed of Air Taxi's contacts in Iran on behalf of Bell
Helicopter.
At his confirmation hearing, Miller appeared
13
-49to have some detail knowledge of the Iran agency during the
1960-1972 period being familiar with Air Taxi as the agent
in 1959-1964.
Air Taxi's replacement, and subsequent re-
establishment in 1968 by Bell Helicopter.
Miller.also was
familiar with the terms of agency agreements relating to
commissions (Miller 46) but he did not negotiate the agency
agreement.
(Miller 46)
Miller testified that he did not know General Khatami
had an ownership interest in Air Taxi and the name did not
"ring a bell".
Miller assumed Zanganeh to be the owner or
part owner of Air Taxi (Miller 108).
Miller made no per-
sonal effort to find out the ownership of an agent with
whom Bell Helicopter had had a long relationship with no
significant activity (Miller 119).
Miller stated he had
no reason to believe Air Taxi had a relationship with a
member of the government (Miller 116) and he would have
been surprised to learn that General Khatami owned Air Taxi
(Miller 122).
Miller stated that he did not believe it to
be true that Khatami owned Air Taxi; if he had known it
he would not have permitted the agency relationship.
(Miller 431, 133)
Miller said as far as he knew if Khatami
had anything to do with Air Taxi it was undisclosed.
(Miller 142)
Miller stated that he was familiar with the negotiations leading to the $2.9 million payment by Bell Helicopter
to Air Taxi.
50
-49Atkins testified that it was his responsibility to
negotiate a payment to Air Taxi and that he was responsible
for the $2.9 million figure.
(Atkins 281)
Atkins said he
reported to Miller--discussed the final amount with Miller,
but Atkins said he "probably solely" made the decision on
the $2.9 million within guidelines set by Miller. (Atkins 289)
Atkins considered the handling of the compensation to Air
Taxi to be a "major problem" so he kept Miller informed.
Nevertheless, there were no memoranda written to Miller or
otherwise on the $2.9 million payment.
The only document
written was the amendment to the contract itself obligating
Bell Helicopter to pay Air Taxi $2.9 million.
(Atkins 415)
Atkins did not write a memo to the Textron Board of Directors nor did he appear personally before them on the $2.9
million payment.
Ducayet stated that the $2.9 million pay-
ment was not considered by the Textron Board of Directors
and he did not discuss the payment with Miller. (Ducayet
1132, 1135)
Ducayet stated that Atkins handled the $2.9 million
payment.
By letter dated 15 February 1978 Textron stated
that the Board of Directors was made generally aware of
the settlement with Air Taxi.
But the settlement was not
before the Board for action and it is not reflected in the
minutes.
Arthur Young, Textron's accountant, brought the
matter to the attention of the Audit Committee of the
Board in February 1977.
The matter was discussed and no
51
-50action taken.
Arthur
Young's report states:
"I was
satisfied that it had been brought to the Committee's
attention and that they would not be surprised if the
amount was disclosed in the future."
Miller testified that regular Textron procedures
found no circumstances to indicate that the payment to
Air Taxi went to influence government officials.
In 1975,
in the light of public revelations of foreign corporate
bribery, consideration of sales of securities to the
public and the SEC examinations of the 25 top defense
contractors-- including Textron--Textron "reduce (d) to
writing the results of its internal "investigation as to
whether or not there have been any illegal or improper
payments made by Textron to its overseas representatives."
(Ex. 66)
According to Ex. 66, Miller advised that he
knew of no such illegal or improper payments; agents fees
or commissions were not a significant factor in the business
of a Textron unit other then Bell Helicopter; Miller and
Ames (successor to Miller in 1974 as group vice president
of Textron for aerospace) indicated that the only significant commission paid by Bell Helicopter was the $2.9
million payment to Air Taxi.
Thus the internal inquiry
focused solely on the $2.9 million payment.
The inquiry was conducted by Textron's General Counsel.
It took the form of a meeting lasting a day or two at which
the General Counsel, M r . Ames, Atkins, Farmer and Rudning
52
-51-
were present for the discussion.
Following this meeting
the General Counsel drafted a memo which stated in part
that "no one could remember" why International Helicopter
Consultants (French's firm) was substituted for Air Taxi
in 1964 and that in 1968 Air Taxi was reappointed Bell
Helicopters reprsentative.
A conclusion stated in the memo is that "none of the
principals of Air Taxi are known or believed to be Iranian
Government officials."
Counsel did not discuss the matter
of the ownership of Air Taxi with any of the individuals
in Bell Helicopter who had been told that General Khatami
had an ownership interest in Air Taxi:
Feliton, and Jose.
Orpen, Kling,
Nor did he review the documents re-
lating to International Helicopter Consultants nor talk
to M r . French or M r . Bell.
The General Counsel did not
request Bell Helicopter to gather all documents from its
files relating to Air Taxi for his review.
Mr. Jose
testified that if he had been asked about the ownership
of Air Taxi he would have informed the inquirer that he
had been told on two or three occasions that General Khatami
owned Air Taxi.
(Jose 1254)
Following his investigation, the General Counsel reported back to Miller that he had traveled to Bell Helicopter;
that he had seen the documentation and heard the explanations;
and was satisfied that the $2.9 million payment to Air Taxi
13
-53-
did not fall in the questionable payment category (no part
of the funds went to an Iranian Government Official).
(Soutter 798-799)
13
-54E.
Are the facts surrounding the $2.9 million payment con-
sistent with the explanations given by M r . Miller at the Committee's
hearing?
During the Committee's nomination hearing, M r . Miller was asked
about the size of the $2.9 million payment, which to at least one
member of the Committee appeared to be an "exorbitant" amount.
The
relevant excerpts from M r . Miller's testimony on this issue are as
follows:
"The fee, Senator, was a large amount of m o n e y .
But as
you probably k n o w , once there is a contract with a dealer and
suddenly a big order comes along,there's
disavow the dealer's role.
no way contractually to
In most foreign countries if one tries
to terminate a dealer, the cost of doing so is quite expensive,
because foreign countries usually protect their nationals from
being cut off at a time when sales are developing....So we just
did the best we could.
I'm sure our officers tried as conscientiously
as they could to minimize the payment.... It was something we just
had to pay to settle a dealership, such as might be paid to
terminate a Chevrolet dealership or a Westinghouse dealership or
any other dealership.
(Hearings - p . 25.)
"I didn't arrive at that figure.
gated to officers of Bell Helicopter.
That was a matter dele-
I had faith that they did
55
-54-
their best to get the lowest figure they could under the circumstances.
The alternative would be litigation which could be
expensive and could have resulted in higher claims.
(Hearings -
p . 52.)
"I wouldn't consider the settlement of a contract of that
type in the face of the level of the market that was developing
as exorbitant.
(Hearings - p . 53.)
"....as I knew the circumstances, I knew and I now know
of no impropriety.
We had an agent of long standing; we had a
sales contract that turned out to involve originally $500 million, and later over $1 billion; we had an agent who had worked
on it and would have a claim to some compensation.
I believe
the Bell officials who worked on it did their best to minimize
the settlement payment, because it was a cost and the less we paid,
the better."
(Hearings - p . 55.)
A review of the contract between Bell and Air Taxi reveals
that at the time of the $2.9 million settlement on June 29, 1973,
Bell w a s , in fact, potentially liable for a greater amount.
Under the terms of amendment N o . 2 (exhibit 64) to the standard
manufacturer's foreign representative agreement (exhibit 6 2) then
in effect between Bell and Air Taxi, Bell was obligated to pay a
commission of 1% to Air Taxi on any sale of certain Bell helicopters including spare parts and related services and training
13
-56-
to the government of Iran through the Foreign Military Sales Program.
The final contract price on the 489 helicopters sold to
Iran was approximately $436.2 million, h e n c e , Bell's potential
liability to Air Taxi under amendment n o . 2 was $4,362 million.
In addition, Bell had a potential liability for a commission payment of at least $375,000 against a $15 million training contract executed directly with the government of Iran on February 21,19 73.
(This training contract eventually grew to $114 million on
July 1 , 19 74 when it was converted to an FMS contract.)
The
final settlement with Air Taxi in the amount of $2,950 million
thus represented a reduction of at least $1,787 million in potential commission payments on the part of Bell and possibly
more due to future sales.
This settlement became amendment n o . 3
(exhibit 65) to the basic contract.
The final agreement reached under amendment n o . 3 is consistent with M r . Miller's testimony.
The Company did, in fact,
have a binding contract and it successfully negotiated to minimize
its liability.
However, in order to gain a fuller understanding
of the situation, it is necessary to examine how Bell's liability
under the contract evolved.
Prior to the inception of the Iranian sale, Bell entered into
its standard representative agreement with Air Taxi in 1 9 6 8 .
This
agreement was updated on June 1 5 , 1970 and provided that Air Taxi
would be entitled to certain specified commissions on the sale of
specified Bell products in Iran.
The agreement further specified
that the commission would be subject to negotiation on all sales in
excess of five helicopters.
13
-57-
Amendment n o . 1 (exhibit 63-A) to the basic agreement was
signed on or about August 16, 1972 (exhibit 72) with an effective
date of April 1 .
This amendment described the potential sale
that was then developing and established a commission of 2-1/2%
payable to Air Taxi if the sale were concluded.
Amendment n o . 2
was signed the following October 14 and reduced the commission
rate to 1% in the event the sale were made through the U . S . government under the Foreign Military Sales Program.
A 2.5% commission
would continue on direct sales from Bell to Iran.
Amendment n o .
2 w a s , in turn, superseded by amendment n o . 3 on June 29, 19 73
which provided for the final settlement of $2.9 million.
The negotiations culminating in amendment n o . 1 were the
most crucial because they established an upper limit to Bell's
liability under the contract with Air Taxi.
At the same time, they
also entitled Air Taxi to receive a specific percentage
commission
on the forthcoming sale in Iran, whereas prior to the amendment
the commission was subject to negotiation. So while the percentage
commission agreed to in amendment n o . 1 established a ceiling on
the amount that Bell would be legally required to p a y , it also
established a floor on the amount that Air Taxi would be legally
entitled to collect.
Therefore, the reasonableness of the final
payment of $2.9 million agreed to on June 29, 1973 can only be
assessed against the reasonableness of amendment no.l which was
agreed to the preceding August.
13
-58-
Measured against the ultimate sale of 489 helicopters,
Bell would have been liable for a commission payment to Air Taxi
in the amount of $9.77 million under amendment n o . 1 (Tr. 308-10).
However, at the time amendment n o . 1 was agreed to, Bell officials
were still uncertain over the exact size of the program.
The
President of Bell, M r . Atkins, testified that during August of
19 72 the anticipated size of the sale ranged from a low of 300
to a high of 500 ships.
Thus the potential commission anticipated
by Bell at the time amendment n o . 1 was signed ranged from a low
of $6 million to a high of $10 million.
(Atkins: 370)
The staff attempted to find out from the Bell officials it
interviewed what Air Taxi did that from Bell's viewpoint warranted
a potential payment of $6 to $10 million dollars under amendment
no. 1.
This testimony is summarized as follows:
(1)
Compensation for cost of services.
There is no
evidence from Bell records to substantiate that the actual costs
incurred by Air Taxi in representing Bell from 1968 to 1973 anywhere approached the $2.9 million payment agreed to under amendment n o . 3 or the $6 to $10 million potential liability under amendno. 1.
The records of Air Taxi-Bell correspondence furnished to
the Committee and the testimony of Bell officials indicate that
Air Taxi's role over the period primarily involved setting up
meetings with Iranian officials, obtaining information about potential contract awards, and furnishing
secretarial,transportation
and related support services to visiting Bell officials. (Atkins :
84, 112,116; Rudnig: 673-74)
Moreover, M r . Atkins
13
- 5 9 -
testified that he assumed statements made by Air Taxi were
"over-exaggerations of their efforts to assist us in the sale."
(Atkins: 243)
Also, the Bell official principally in charge
of negotiating the three contract amendments testified that Air
Taxi was unable or unwilling to produce documentary evidence to
substantiate its expenses.
(Rudnig: 727)
The record also indicates that U . S . Army Procurement officials regarded the proposed commission payment as excessive.
On its original submission to the Army under the Foreign Military
Sales Contract, Bell officials had claimed a commission payment
of $5.0 million to Air Taxi.
After negotiations between Bell and
Army officials at the Aviation Systems Command, Bell agreed to
reduce the commission claimed under the contract to $1,000 per
ship for a total of $489,000.
At that time, the Armed Services
Procurement Regulations permitted the inclusion of dealer commissions on Foreign Military Sales Contracts provided they were
"reasonable".
Eventually, the $489,000 was removed from the
contract following the Shah's edict against commission payments
being included on FMS contracts with Iran.
The President of Bell,. M r . Atkins, testified that h e , Rudnig
and Sylvester felt that $500,000 was a reasonable estimate of
the amount Air Taxi might have spent in supporting B e l l .
323)
2 3 - 5 5 3 O - 78 - 5
(Atkins:
M r . Rudnig testified: "I'm really reaching n o w , but
13
- 6 0 -
I'd put him (Air Taxi) in the zone of one to two million dollars of probable costs that he could have incurred."
(Rudnig:
730)
(2)
Legal liability under the basic contract.
What-
ever the actual expenses of Air Taxi, Bell officials testified
they negotiated amendment n o . 1 partly in an effort to contain
their legal liability under the basic contract.
Mr
Rudnig: 65 3)
(Atkins: 312;
* Atkins also testified that
commissions were running much higher than two and. one-half percent in Iran at the time.
(Atkins: 300)
Thus, Bell
apparently concluded that Air Taxi might have been able to obtain a commission through litigation in excess of the $6 to $10
million liability agreed to under amendment n o . 1 .
In responding to the Committee's subpoena, Bell did not
produce any internal memos or opinions from outside counsel
analyzing Bell's legal exposure under the basic contract or
assessing the probability of an award in the $6 to $10 million
range in the event of litigation.
Moreover, M r . Atkins testified
that neither Bell's chief legal counsel nor Textron's general
counsel participated in the drafting of or negotiations on the
three amendments.
(Atkins: 285, 288)
M r . Atkins further
testified that he recalled discussing the amendments with these
officials.
However, subsequent testimony indicated the discussion
with Textron's general counsel occurred in 1975, well after the
three amendments had been agreed to.
(Atkins: 290)
61
-60-
A l s o , Bell's chief legal counsel testified that he had no
recollection of being consulted on the amendments although he
could not deny that he had not been consulted.
(Galerstein:
435)
Had Bell decided not to agree to amendment n o . 1 , thus
forcing Air Taxi to sue to claim its commission, Bell might have
been able to use a legal technicality in the basic contract to
help limit its liability.
The basic contract signed on June 1 5 , 1970
entitled Air Taxi to commissions only on certain listed products
specified on a Schedule A which was attached to the contract.
These
listed products did not include the two models eventually sold to
the government of Iran -- the Model 209 AH-1J and the Model 214.
Air Taxi was not expressly entitled to receive a commission on
these two models until amendment no. 1 was signed.
Bell's chief
legal counsel minimizes the legal effect of this omission, arguing
that the two models were essentially second generation versions
of models listed under the basic contract and therefore within
the scope of the basic contract.
Bell's only record of litigation concerning dealer termination rights involved its former representative in Turkey.
This
representative claimed a commission of $1.4 million or 5% on a
$28 million sale of 150 helicopters to the government of Turkey.
The suit was filed in the U . S . Federal Court, Southern District
62
-60of New York.
Bell reached an out of court settlement on
October 22, 1974 in the amount of $90,000 or less than one-third
of one percent of the sale price.
(31 Continuing incentive to perform.
Another reason
given by Bell officials to explain the agreements reached with
Air Taxi was that Bell wanted to give its representative a continuing incentive to perform.
Textron conducted its own internal
investigation of the final $2.9 million payment in 1975 and
in a memo prepared by Textron's general counsel, Tom Soutter,
it was reported that the reason for the amendments were partly
"to serve as a 'carrot' for improved performance by Air Taxi."
(Exhibit 6 6 )
1
Footnote
1.
The existence of this internal investigation seems to
contradict a statement by M r . Miller in response to Senator Proxmire's
request for copies of any internal investigation of overseas payments during the hearings.
M r . Miller replied that "there was not
a one-time investigation" although it is possible M r . Miller
thought the question referred solely to an investigation by Textron's
audit committee as opposed to its general counsel.
p . 76)
(Hearings,
A copy of M r . Soutter's memo was produced following the
Committee's subpoena but was not furnished voluntarily in response
to the staff's request for all documents bearing on the $2.9 million payment.
63
-62-
The incentive or "carrot" function of Bell's agreement was confirmed by Mr.Atkins, who testified that "I think we
wanted the representative to feel that he was going to receive a
fair commission for his services to encourage him to give us as
much assistance as he could in obtaining the final contract.
I think we're talking amendment 1 h e r e .
(Atkins:312)
1
Amendment n o . 1 was finally signed on August 16 , 19 72 at
a time when Bell already had many of its officials in Iran for a
demonstration of the two models it eventually sold to the government of Iran.
M r . Atkins had elsewhere testified that Air Taxi
was primarily engaged in a logistics or support type o.f role and
had been helpful in introducing Bell to the right officials, but
that all of the subsequent selling efforts were undertaken by
Bell officials.
(Atkins: 34, 112. 116)
Given this description
of Air Taxi's role by Bell's president, the record is not clear
Footnote
1.
This incentive or"carrot"
function was also intended
to apply to amendment n o . 3 which resulted in the final payment
of $2.9 million to Air Taxi.
Amendment n o . 3 provided that this
amount would be reduced by $3,000 for each helicopter less than
the 489 helicopters expected to be sold to Iran.
M r . Atkins
agreed that at that time, Bell Helicopter felt that Air Taxi continued to have an incentive to continue to see to it that all of
the ships would be sold and delivered to the government of Iran.
(Atkins: p . 305)
This continuing financial incentive on the part
64
-63as to why Bell felt it was necessary to provide Air Taxi with
substantial financial incentives to continue its support assistance, especially since a final decision from the Shah was only
two weeks away.
The need to provide Air Taxi with a substantial financial incentive to continue its services also seems to be in
contradiction with advice received from General Toufanian in
late 1971 and early 1972 that Bell should begin to phase out its
agent and deal directly with General Toufanian's
department.
(Sylvester:503-4)
(4) Allowability of commission payment in contract.
Another fact that might explain Bell's willingness to expose itself to a potential commission payment of as much as $10 million
under amendment n o . 1 was the belief of Bell officials at the time
that the commission payment could be included as a cost in the
Footnote continued
of Air Taxi to see that the sale was not reduced does not
strictly
conform to the characterization of the $2.9 million
payment given by M r . Miller during the Committee's hearings when
he described the payment as follows:
way this particular contract.
"It settled in a universal
It settled past services and
current services, and it discontinued services for the future.
65
-64-
contract for the sale of helicopters to Iran.
397)
(Atkins:
As long as it was possible to pass the cost on to the
customer, Bell had no direct financial incentive to minimize its
liability to Air Taxi for commission payments.
At the same time, Bell officials received signals throughout 19 72 from General Toufanian that he was upset about large
commission fees.
M r . Sylvester, Bell's Vice President for Inter-
national Marketing, testified on this point as follows:
"....General Toufanian made that position known repeatedly, and in the 1970's--late 1970's--well let's say the 1972
time frame, it was a regular item on his agenda for discussion
when you came into his office, you k n o w .
obsession with h i m .
He was ....kind of an
And he took great pride
in being able to say
that he had procured for his government large quantities of defense
equipment without any agent's fees.
subject."
(Sylvester:
f 5)
He was very vocal on the
510)
Value to Bell.
A final explanation of Bell's willing-
ness to enter into amendment n o . 1 was given by M r . Sylvester,,
who was asked whether he regarded the potential commission of
between $6 to $10 million under amendment no. 1 as a fair and
equitable compensation for the services rendered by Air Taxi.
M r . Sylvester replied that he did and continued with the following
observation:
66
-65-
"
services.
I couldn't put a value on his (Air Taxi)
All I know is that we made the sale.
you that we wouldn't have made it without h i m .
you that we did make it because of h i m .
in my view
I can't tell
I can't tell
B u t , in our view
and I was the one that kicked this thing off,
we would have been at a very serious disadvantage without h i m .
Now, one more time, how do you put a finite value on something
like that?
It was worth that to us to make the sale. Certainly,
that was a pretty modest thing."
(Sylvester: 5 77-78)
67
-60PARTICIPANTS
G. WILLIAM MILLER
President, Textron 1960-1974; dc facto
group Vice President of Aerospace (and
Bell Helicopter) 1960-1974; Chairman of
Board of Directors, Textron, 1974-
EDWIN J . DUGAYET
President, Bell Helicopter-Textron, 19601972; Chairman 1972-1973; M e m b e r , Textron
Board of Directors 1973*
JAMES F. ATKINS
Executive Vice President, Bell HelicopterTextron, 1960-1972; President, Bell
Helicopter-Textron, 1972-
ROBERT AMES
Textron Group Vice President for
Aerospace, 1974-
C . ROBERT BELL
Wichita, Kansas, lawyer for William
French
WILLIAM FRENCH
Bell Helicopter's sales representative
Iran, 1964-1967, through his firm
International Helicopter Consultants
JAMES FELITON
Bell Helicopter's sales official 19651967; responsible for Iran
E.J. FARMER
Bell Helicopter-Textron Vice President
for Finance, until early 1978.
DWAYNE JOSE
Bell Helicopter-Textron Vice President
for Commercial Marketing
JOHN E. GALLAGHER
Bell sales official involved in Iran
FRANK M . SYLVESTER
Bell Helicopter-Textron Vice President
for International Marketing since late
1969.
J . H . (BUD) ORPEN
Bell Helicopter-Textron International
Marketing Manager until Nov. 1969
GEORGE KLING
Bell Helicopter-Textron Sales Manager
for International sales, 1965-1968.
RICHARD PIERROT
Bell Helicopter-Textron official located
in Washington, D. C. with State Dept.
connections.
A . H . ZANGANEH
Managing Director, Air Taxi
68
-70-
KHALIL IRANZAD
Sales Manager, Air Taxi
AIR TAXI
Tehran based air charter firm which was
Bell's sales representative in Iran from
1959-63 and from 1968 on.
DR. HASSAN SAFAVI
Legal adviser, High Council of Civil
Aviation? Close associate of General
Khatami. Nominee for Khatami and others
as owner of STP.
STP (SHERKAT SAHAMI
TAYAR PARS)
Persian corporation formed in 1966 to
act as the representative of International
Helicopter Consultants in Iran
GENERAL KHATAMI
Commander in Chief, Imperial Iranian Air
Force; an owner of Air Taxi and STP; close
to Shah whom he flew from Iran at time
of Mossadegh uprising in 1953.
PRINCESS FATEMAH
General Khatami's wife,
sister
PRINCE SHAHRIAR CHAFIK
Son of A . Chafik; nephew of the Shah;
an Iranian Naval commander.
AHMED CHAFIK
An owner of record of Air Taxi along
with M r . Zanganeh in 1973; married at
one time to Princess Ashraf, Shah's
sister.
FREDERICK ESHOO
An owner of record of Air Taxi along with
M r . Zanganeh in 1973
THOMAS SOUTTER
Textron Vice President and General Counsel;
GEORGE GALERSTEIN
Bell Helicopter-Textron Chief Legal
Counsel
GENERAL RAFAAT
Close associate of General Khatami in
Imperial Iranian Air Force
GENERAL H . TOUFANIAN
Vice Minister of W a r , Chief of Military
Procurement
ENG. TOUFANIAN
Chief, Iranian Helicopter Industries;
brother of General Toufanian
4
Shah's younger
69
-60-
M R . H . DEHESH
Deputy Minister of War for Armament;
Assistant to General Toufanian
GENERAL HAMILTON HOWZE
Bell Helicopter consultant; involved
in early 1960s in formulation of U . S.
Army air mobile doctrine
GEN. MINBASHIAN
Commander in Chief; Imperial Iranian
Army
M A J . GEN. TWITCHELL
Commanding General, MAAG in Iran
GENERAL KHOSRODAD
Commander in Chief, Imperial Iranian
Army Aviation
MEHRABAD AIRPORT
Tehran's main airport
CHARLES R . RUDNING
Bell Helicopter-Textron Vice President
for program management; involved
in negotiations in 1972-73 on
commission payment to Air Taxi
COL. JAHAMBANI
Listed as an owner of record of Air
Taxi from 1958 to 1965; an associate
of General Khatami.
70
-70GLOSSARY OF CODE WORDS
(Used in Bell Helicopter cables involving
sales program in Iran)
No. 1
General Khatami
Turtles
206 Jet Ranger
Sail, Lizards
205 Huey
Sandfly
Army
Dragonfly
Navy
Bluefly
Air Force
I FN
Imperial Flight Hanger
RLS
Red Lion and Sun Society
Girls, Fish, Reptiles
Helicopters
Grooper, Grace
Augusta
Jane, Pike
Shah
Shark
AH-1G (Hueycobra-single engine version)
Swordy
AH-1J (Hueycobra-twin engine version)
Sea, School
Iran
Trout, Alice
Dehesh
Betty, Bass
Bell Helicpoter
J o e , Snapper
Air Taxi
Babs, Coddler
General Twitchell
FIN
Iran Helicpoter Industries
Dotty
Model 212
Skate
General Khosrodad
M a r t h a , COD
MAAG
71
-70-
US Shad
U. S. Army
Suzy, Salmon
General Toufanian
Shad, NEL
Army
Bones
Spares
GFE
Government furnished equipment
Fishtail
Armed Helicopter
EJD
E . J. Ducayet, Bell Helicopter Pres.
KIS
Sikorsky Helicopter
King Snake
Bell Helicopter's King Cobra Helicopter
Karen
Imperial Iranian Air Force
Blackhawk
A Sikorsky prototype attack helicopter
Kay
General Minbashian
JFA
James F. Atkins
CRR
Charles R . Rudning
HHH
General Howze, Bell Helicopter
Consultant
M r . H.
Christopher Horsely, Bell Helicopter
Sales Representative
Sail
Bell's Huey Model 205
72
.XI
it \ cf»ov.re«»
*'
1 I 1
I
A•.H* /ANOAULM
..I AVt-NUJ MAkLtHAL FkANLMtT U'L^^KLY
AIM
lt>»
MAIL
f-WANCt.
J
c s g
• 01 I !7J
L .1,1
L"
•si '••' P \ ]
-JVI
i. i
I O S- *> D jQ.LUt H JDf. H • I .s
I
V 10 »3 L7 +1*7
.
.Sf? EXAMINfc THIO STATKMfcNT HiOMrTLY, KCfOMT AN* Olff ERKNCC TO THE AUDITING fjfcf-AKTHEN
trr mt>7
' b62
2 7<i,3fc/.C>7
•: 290,000.00
13I.OOO.UO
121.000,00
I"-
10
73
•THUSr'COM^.^NY" 'rr. \
fe
-
%
*
:
t
, A,fl7JL\GiNEH.>f » ^
Si..''DO £ 3 0 0 0 0 3 0 ,
1
75
GS823
cw
1
-2
3
4
5
UNITED STATES SENATE
6
STAFF OF
7
8
COMMITTEE ON BANKING, HOUSING AND URBAN AFFAIRS
9
10
STAFF INVESTIGATION RELATING TO
11
12
THE NOMINATION OF
13
G. WILLIAM MILLER
14
15
16
VOLUME I
17
18
19
20
KEE, MEYER, STURGESS & ASSOCIATES
Registered Professional Reporters
1102 O i l & Gas Building
Fort W o r t h , Texas 76102
21
22
23
24
Charles L Kee
Room 410
Federal Courthouse
Fort Worth, Texas
Vincent G. Meyer
Gaylord Sturgess
Larry Shetter
Donna McMullen
Kathy Sanders
Bar! Wells
25
Telephone: 817 336-3042
23-553 O - 7 8 - 6
76
2
INDEX
1
2
PROCEEDINGS
4
3
INTRODUCTORY MATTERS
4
4
POSITION, BACKGROUND AND ORGANIZATIONAL STRUCTURE
11
JAMES F. ATKINS
5
6
7
g
Examination
Examination
Examination
Examination
10
- Marinaccio
- Doherty
- Freed
- Collins
SALE OF HELICOPTERS
Examination -
16
AFTERNOON SESSION, THURSDAY, FEBRUARY 2 ,
JAMES F. ATKINS
18
19
20
Examination
Examination
Examinat ion
Examination
Marinaccio
75
1978
95
- Marinaccio
- Freed
- Collins
- Marinaccio
PARTICIPATION OF GENERAL KHATAMI AND OWNERSHIP OF
AIR TAXI
21
Examina tion - Marinaccio
Examination - Freed
Examina t i o n - C o l l i n s
22
23
24
25
EVENING RECESS
48
61
71
75
15
17
26
31
38
43
48
Examination - Marinaccio
Examination - Freed
Examination - Doherty
13
11
22
24
25
26
REHIRING OF AIR TAXI
12
14
•- Marinaccio
•- Freed
•- C o l l i n s
•- Marinaccio
COMPANY POLICY RE HIRING OF AGENTS
9
11
Examination
Examination
Examination
Examination
95
144
153
162
165
165
213
217
223
77
2-A
1
EXHIBIT INDEX
2
NUMBER
3
1
4
2
Subpoena
5
3
Letter,
1/25/78
6
4
Letter,
1/27/78
7
5
Standards of
8
6
Letter,
11/28/67
53
9
7
Letter,
2/16/68
53
10
8
Cable,
2/27/68
62
11
9
Cable,
2/28/68
62
IDENTIFIED
Letter,
2/1/78
6
8
12
10
Memo,
3/1/68
13
11
Memo,
4/11/68
14
12
Cable,
15
10
10
conduct
35
62
62
4/30/68
62
13
Letter,
16
14
Letter,
17
15
Cable,
6/2/71
88
18
16
Cable,
8/24/71
95
19
17
Cable,
8/27/71
95
4/18/72
75
3/31/71
88
20
18
Memo,
10/28/71
95
21
19
Memo,
9/21/71
95
22
20
Cable,
3/2/68
23
21
Letter,
24
22
Memo,
23
Cable,
25
108
12/10/72
108
9/23/71
10/14/71
108
; >
108
78
1
EXHIBIT INDEX
2
NUMBER
3
24
Cable,
4
25
Progress Report,
(Continued)
IDENTIFIED
9/24/71
108
8/31/71
108
5
26
Memo,
8/22/71
108
6
27
Memo,
8/13/71
108
7
28
Letter,
8
29
Memo,
4/6/71
108
11/2/69
108
108
9
30
Memo,
11/10/68
10
31
Memo,
3/1/68
11
32
Cable,
12
33
Memo,
4/10/71
145
13
34
Memo,
4/28/71
145
14
35
Memo,
7/23/71
145
15
36
Cable,
8/10/71
145
16
4/12/72
159
9/21/71
37
Cable,
17
38
Letter,
18
39
Memo,
6/16/72
4/11/68
108
108
160
169
19
40
Letter,
20
41
Memo,
12/27/69
169
21
42
Memo,
4/10/71
169
22
43
Memo,
4/24/71
169
23
169
12/29/69
169
44
Memo,
4/28/71
24
45
Memo,
5/29/71
169
25
46
Memo,
7/6/71
169
79
1 I
EXHIBIT INDEX
(Continued)
2
NUMBER
3
47
Memo, 3 / 1 9 / 7 2
169
4
48
Memo, 8 / 2 5 / 7 2
169
5
49
Memo, 8 / 2 6 / 7 2
169
6
50
Memo, 8 / 2 8 / 7 2
169
7
51
Cable ,
169
8
52
Memo, 4 / 1 8 / 7 2
169
169
IDENTIFIED
9/20/72
9
53
Memo, 5 / 1 2 / 7 2
10
54
Cable ,
2/7/72
214
11
55
Memo, 1 0 / 2 / 7 1
214
12
13
14
15
16
17 I
18
INFORMATION TO BE FURNISHED
Page 5 7 ,
19
20
21
22
23
24
25
l i n e 22 - I n d i v i d u a l Mr. Orpen worked
for.
80
1
UNITED STATES SENATE
2
STAFF OF
3
COMMITTEE ON BANKING, HOUSING AND URBAN AFFAIRS
4
STAFF INVESTIGATION RELATING TO
5
THE NOMINATION OF
6
G. WILLIAM MILLER
9 : 2 0 o ' c l o c k a.m.
Thursday, February 2 , 1978
Textron Main Plant
P. 0 , Box 482
Highway 183
Fort Worth, Texas 76101
10
11
12
APPEARANCES
FOR STAFF OF COMMITTEE ON BANKING, HOUSING
AND URBAN AFFAIRS:
Charles L. Marinaccio
Bruce F. Freed
John T. C o l l i n s
David P. Doherty
FOR TEXTRON:
Thomas D. S o u t t e r
George G a l e r s t e i n
22
23
24
25
81
4
PROCEEDINGS
1
2
3
MR. MARINACCIO:
4
nominated G. William M i l l e r
5
Governors of
i t ' s envisioned
7
Board of
that he w i l l
the Board of
And I
believe
be the Chairman of
the
The nomination of G. William M i l l e r
pending b e f o r e the United S t a t e s
10
a d v i s e and c o n s e n t ,
11
Constitution.
12
is
Senate pursuant to
responsibilities,
and with
its
the
The Committee on Banking, Housing and Urban
A f f a i r s of
the United S t a t e s Senate has j u r i s d i c t i o n
14
that nomination,
15
on the nomination of G. W i l l i a m
16
Miller.
G. W i l l i a m M i l l e r appeared b e f o r e
17
at a hearing,
Committee determined
and during the course of
to conduct a s t a f f
19
into
20
$2.9 million
21
approximately $500 m i l l i o n
22
government of
23
1974 and
the circumstances
surrounding
to A i r Taxi r e l a t i n g
the Committe
that hearing
the
inquiry
the payment of
to the s a l e
in h e l i c o p t e r s
to
of
the
Iran during the period approximately
1973,
1975.
24
This proceeding i s held pursuant
d i r e c t i o n of
over
and pursuant t h e r e t o commenced a hearing
18
25
has
Governors.
8
13
to be a member of
the Federal Reserve System.
6
9
The President
to the
the Senate Banking Committee and i s a part
of
82
5
1
th<£ hearing of
2
a member of
the nomination of G. William M i l l e r
the Federal Reserve Board.
3
This
is a f a c t - f i n d i n g
inquiry.
4
i n f e r e n c e should be drawn by v i r t u e of
5
proceeding i s being h e l d ,
i n f e r e n c e be drawn by v i r t u e of
7
q u e s t i o n w i l l be asked of
8
the w i t n e s s
9
say the w i t n e s s e s ,
And since
13
subject
the f a c t
the w i t n e s s .
plural,
witnesses
of
that any
w i l l be appearing here
the w i t n e s s e s w i l l be under
the laws r e l a t i n g
statements
16
w i t n e s s e s would be e n t i t l e d
17
And I note f o r the record
that two Textron counsels
18
here at
today, and I w i l l
19
them l a t e r
20
21
22
23
24
these proceedings
At t h i s
the record a l e t t e r
Banking Committee,
letter
in proceedings by the
the
to be represented by c o u n s e l .
are
identify
record.
time I would l i k e
to introduce
from the Chairman of
the
Senator William Proxmire,
to M e s s r s . Marinaccio,
25
be
to perjury and f a l s e
United S t a t e s Senate under oath and, of c o u r s e ,
that are a p p l i c a b l e
oath.
they w i l l
15
the
that
I should
14
for
this
We recognize
the w i t n e s s e s w i l l be under o a t h ,
to a l l
that
from Textron.
Nonetheless,
12
the f a c t
i s appearing here v o l u n t a r i l y .
voluntarily,
11
No negative
nor should any negative
6
10
to be
Senate
addressed
Freed, C o l l i n s and Doherty.
states:
"Gentlemen:
As Chairman of
into
the Senate
The
83
6
*
1
on Banking,
Committee
Housing and Urban A f f a i r s ,
2
having j u r i s d i c t i o n over
3
William M i l l e r
the nomination of
4
Governors of
5
hereby a u t h o r i z e you to administer
to be a member of
the Federal Reserve System,
take testimony under oath from v a r i o u s
7
o f f i c i a l s pertaining
8
the
Textron
to the s u b j e c t matter
I would l i k e
to have that put i n t o
the
record and marked as Exhibit Number 1 .
(The l e t t e r r e f e r r e d to
was marked " E x h i b i t No.
for i d e n t i f i c a t i o n . )
11
12
It
13
is possible
during the course of
that the information
these proceedings could be used
enforcement proceedings by the r e l e v a n t a g e n c i e s
16
United S t a t e s Executive
17
of
19
conducting
the S t a f f
20
the
representatives
of the Senate Banking Committee who are
t h i s inquiry
today.
I'm
Special
Counsel to the Senate Banking Committee.
This
S t a f f Member-of
24
25
the
My name i s Charles L. Marinaccio.
22
23
of
in
Department.
I would l i k e to introduce
18
1"
elicited
15
21
of
inquiry."
9
14
I
oaths and
6
10
G.
the Board of
This
the Minority of
i s Bruce F. Freed.
He's a P r o f e s s i o n a l
the Senate Banking Committee.
i s John T. C o l l i n s .
He's
the Counsel
the Senate Banking Committee.
to
84
7
4
1
And t h i s gentleman is David Doherty,
2
D i r e c t o r of
the D i v i s i o n of Enforcement at
3
and Exchange Commission.
to the Senate Banking Committee a t
5
6
will
7
elicited
Securities
Mr. Doherty has been
4
Chairman of
the
detailed
the request
the Senate Banking Committee.
of
is
these proceedings which
8
the Committee considers and determines
9
That i s
to be
confidential.
to say that Mr. Doherty would be f r e e to make
10
such information a v a i l a b l e
11
Committee determined
All
12
this
the
Mr. Doherty
not r e v e a l any information to the SEC that
during the course of
Associate
of
that
to the SEC, unless
the
the i n f o r m a t i o n was c o n f i d e n t i a l
the m a t e r i a l s
gathered during the cours a
13
of
14
Senate Banking Committee, and the Senate Banking Committee
15
would then have the opportunity to make the
16
of whether
the information is c o n f i d e n t i a l
If
17
18
i n v e s t i g a t i o n w i l l be made a v a i l a b l e
I may, I would l i k e
Textron to i d e n t i f y
19
20
MR. SOUTTER:
Irm
f o r the B e l l H e l i c o p t e r D i v i s i o n of
MR. MARINACCIO:
24
staff
25
conducting t h i s
members of
or n o t .
for
record.
Thomas D.
This i s George G a l e r s t e i n ,
23
f o r the
to the
determination
to ask counsel
Vice P r e s i d e n t and General Counsel of
21
22
themselves
first
Soutter,
Textron.
Chief Legal Counsel
Textron.
Now, there are four
the Senate Banking Committee here
investigation.
And they may a l l
have
85
8
1
q u e s t i o n s of
It
2
3
Che witness from time to
time.
i s customary procedure in proceedings by
Congressional committees
to have each of
4
the inquiry have the opportunity
5
We want to be completely f a i r
6
any time the witness or his counsel f e e l s
7
r o t a t i o n of questioning
8
counsel should r a i s e
9
endeavor
10
the members of
to q u e s t i o n the w i t n e s s .
to the w i t n e s s .
And i f
that
at
the
i s a burden upon the w i t n e s s ,
that f o r
the r e c o r d ,
to arrange our c o o r d i n a t i o n
and we w i l l
so that
it will
not
be a burden on the w i t n e s s .
11
Before I administer
the oath to Mr. A t k i n s ,
12
I would l i k e
13
E x h i b i t Number 2 , which is a copy of
14
which the Committee on Banking, Housing and Urban A f f a i r s
to,
for
the r e c o r d ,
introduce
the
this
document,
subpoena
15
served upon Mr. Thomas D. S o u t t e r ,
16
yesterday,
17
summary the examination which he conducted or had conducte i
18
on behalf
and ask Mr. Soutter
of Textron and i t s
counsel f o r
to s t a t e f o r
19
William M i l l e r ,
whether or not a l l
21
Committee in compliance with the subpoena.
22
could you s t a t e
24
25
t i o n of
in
to comply with the subpoena and ask him
documents have been given to
that f o r
Mr.
the
Soutter,
the record?
MR. SOUTTER:
Galerstein,
the record
Board of D i r e c t o r s and G.
20
23
Textron,
Bell Helicopter's
I requested of
counsel,
that an
George
investiga-
the records and documents of B e l l H e l i c o p t e r and
86
1
itsf a f f i l i a t e d companies should be conducted
2
to the Senate Commit tee 1 s - ^ S e n a t e s t a f f
3
January-*-*
4
MR. MARINACCIO:
5
MR. SOUTTER:
6
MR. GALERSTEIN:
7
MR. SOUTTER:
in response
l e t t e r , I think, of
31st?
No,
the—
The 2 5 t h .
No,
the l e t t e r
8
which i s not s u b s t a n t i a l l y d i f f e r e n t from the
9
that was served on me y e s t e r d a y .
10
I p a r t i c i p a t e d with Mr. G a l e r s t e i n
11
that s e a r c h ,
12
f a c t he has made a search of
13
14
Textron,
15
documents r e l e v a n t
16
subpoena.
18
I have d i r e c t e d
just
believe
f o r the r e c o r d ,
22
from Kenneth McQueen,
23
Banking Committee
the l e t t e r
of
you r e f e r r e d
the s t a f f
I may, Mr.
of
currently
subpoena.
to the l e t t e r ,
Staff Director
for
l e t t e r and to the
i s dated January 2 5 ,
to you,
and r e c o r d s .
to the
If
of
in
those f i l e s be searched
MR. MARINACCIO:
21
that
to both the i n i t i a l
20
25
those f i l e s
documents which are r e l e v a n t
19
24
in part
a t the corporate o f f i c e
To the b e s t of my knowledge,
has a l l
subpoena
and Mr. G a l e r s t e i n has advised me that
In a d d i t i o n ,
17
first,
Soutter,
I
1 9 7 8 , and
it's
the Senate
requesting—*
MR. SOUTTER:
That i s c o r r e c t .
r e p l y to him of January 2 7 t h , we supplied v i r t u a l l y
In my
all
87
10
1
o f ? t h e documents at
2
was made by hand d e l i v e r y
3
that time.
this
Additional
morning.
MR. MARINACCIO:
4
record,
5
Committee
submission
And I w i l l ,
for
mark the l e t t e r of January 25th from the
to Mr. Soutter as Exhibit Number 3 and mark
6
for
7
Soutter
8
27th,
9
s t a t e my understanding
the record as Exhibit Number 4 the l e t t e r
to Mr. McQueen dated January 2 8 t h ,
1978,
excuse me-r-^mark those f o r
from Mr.
1978-—\January
the r e c o r d ,
from what Mr. Soutter has
that
11
letter
12
which he submitted
13
complete compliance with the subpoena issued by the
the documents that he submitted pursuant
of January 2 5 ,
1978,
t h i s morning,
to m y s e l f ,
Senate Banking Committee and served upon Mr.
15
yes t e r d a y .
MR. SOUTTER:
knowledge,
that's
20
To the b e s t of my
MR. GALERSTEIN:
21
that l e t t e r E x h i b i t
January 25 was E x h i b i t
January 27 i s E x h i b i t
Excuse me.
Did you mak e
3?
MR. MARINACCIO:
23
25
Soutter
(The l e t t e r s r e f e r r e d to were
marked " E x h i b i t 3 " and
"Exhibit 4 " for i d e n t i f i cation.)
19
24
represent a
correct.
18
22
the
together with the documents
14
16
to
and
said
10
17
the
Yes,
the l e t t e r
3 , and Mr. S o u t t e r ' s
4.
letter
of
of
88
11
1
2
MR. GALERSTEIN:
Okay.
MR. MARINACCIO:
Mr. A t k i n s ,
3
time,
4
so I can administer
5
this
the oath to you.
Do you solemnly swear that during
6
proceedings you w i l l
7
the t r u t h ,
tell
these
the whole truth and :nothing but
so help you, God?
8
MR. ATKINS:
9
10
at
I wish you would r i s e and r a i s e your r i g h t hand
I do.
MR. MARINACCIO:
Please'be.sea ted.
Thank you.
11
12
JAMES F. ATKINS,
13
having been f i r s t
14
whole truth and nothing but the t r u t h ,
15
follows,
18
19
Q
as
Mr. A t k i n s , would you p l e a s e s t a t e your
full
name and your t i t l e here a t Textron?
A
Textron,
a D i v i s i o n of Textron,
22
Q
And would you s t a t e
23
d e s c r i p t i o n of
the
BY MR. MARINACCIO
21
25
testified
EXAMINATION
20
24
the t r u t h ,
to-wit:
16
17
duly sworn to t e l l
James F. A t k i n s ,
this
Bell
Helicopter
Inc.
f o r the record a b r i e f
the r e s p o n s i b i l i t i e s
and how long you have held
A
President,
of
that
position
position?
I ' v e been President s i n c e January 1 ,
'72,
and
89
12
1
I have the r e s p o n s i b i l i t y
f o r the management of
2
H e l i c o p t e r Textron and our a s s o c i a t e d
3
Helicopter
Bell
companies,
I n t e r n a t i o n a l and B e l l Operations
Bell
Corporation.
4
Q
How long have you been employed by Textron?
5
A
Well,
6
was with B e l l at
Q
7
Textron purchased B e l l
What p o s i t i o n s
did you occupy with B e l l
during
9
President a t B e l l H e l i c o p t e r ?
11
the 1 9 6 0 ' s and up to 1972 when you became
A
in 1960,
Yes.
Basically,
A brief
description.
when Textron purchased
I became the Executive Vice President of
12
B e l l H e l i c o p t e r Company, a D i v i s i o n of B e l l
13
which was ii s e p a r a t e l y owned c o r p o r a t i o n ,
14
per cent owned by Textron.
15
Q
And you-~^
16
A
And I held
17
Q
When you became President?
A
Right.
19
Q
And as P r e s i d e n t ,
of the B e l l
20
officer
21
A
Yes,
22
Q
Now, i s
Bell
the
Aerospace,
a hundred
that p o s i t i o n up to January of
18
23
and I
the time i t was purchased.
8
10
in 1 9 6 0 ,
are you the c h i e f
executive
Division?
I am.
it correct
that as President of
Bell
H e l i c o p t e r . , you would have personal knowledge and be
24
f a m i l i a r with and have had r e s p o n s i b i l i t y
25
of approximately $500 m i l l i o n
'72.
f o r the
in h e l i c o p t e r s
to
sale
the
90
13
1
government of
2
3
A
Yes,
Q
And that you would have r e s p o n s i b i l i t y
it
is.
4
matters r e l a t i n g
5
with that s a l e and such s a l e s by B e l l
A
6
7
9
for
to the payments to agents in connection
Yes.
Helicopter?
I have t o t a l r e s p o n s i b i l i t y
for
the
company.
Q
8
And s p e c i f i c a l l y you had
you have r e s p o n s i b i l i t y
responsibility-^did
in that connection f o r the
$2.9
10
m i l l i o n payment that was made to Air Taxi in connection
11
with the s a l e of
12
Iran?
those h e l i c o p t e r s
to the Government of
13
A
Yes,
14
Q
And would you have had r e s p o n s i b i l i t y ,
I did.
15
in that connection f o r the h i r i n g of agents that
16
H e l i c o p t e r may be d e a l i n g with on a worldwide
A
17
'
Iran?
Well,
Bell established a dealer
18
to represent
19
probably during the f i f t i e s .
20
responsibility
21
comes under my o v e r a l l r e s p o n s i b i l i t y
22
of
24
me f o r the
25
Bell
basis?
organization
i t around the world back in the,
I assume
And I had no p a r t i c u l a r
f o r the d i r e c t h i r i n g of a g e n t s ,
but
it
f o r the operation
the company.
Q
23
also,
A
Can you d e s c r i b e
record?
Okay.
that d e a l e r
structure
for
91
14
Q
1
2
A
3
4
Who was a member of
it,
i s i t a part
of
Textron?
No.
Each Textron D i v i s i o n i s autonomous,
each Textron D i v i s i o n has i t s
Bell,
5
as part of
own s a l e s
its
sales
programs.
programs,
6
established,
7
r e p r e s e n t a t i v e s , around the world,
8
has been developed over a period of perhaps 25 y e a r s .
9
I think we c a l l e d
these r e p r e s e n t a t i v e s
them manufacturing
and that
world and carry on s a l e s a c t i v i t i e s
11
company.
12
parts f a c i l i t i e s ,
13
Q
in behalf
to support our product
And I take i t
15
o r g a n i z a t i o n with a formal s t r u c t u r e ,
16
your various agents
17
an o r g a n i z a t i o n ?
in parts
of
They are
individual-—^
19
Q
They are
individual—^
A
23
24
25
Q
2 3 - 5 5 3 O - 78 - 7
that
in other words
or
independent?
partnerships
as i t may b e .
Mr. A t k i n s ,
you f u n c t i o n as a c h i e f
relation
saying
I n d i v i d u a l or
——independent corporations
or entrepreneurs,
spare
the world d o n ' t meet as
A
22
the
our
they are not an
18
MR. SOUTTER:
can you d e s c r i b e g e n e r a l l y how
executive
to the Textron parent
And
line.
from what y o u ' r e
they do so as i n d i v i d u a l a g e n t s ,
21
of
them have maintenance f a c i l i t i e s ,
14
20
organization
cover the major p o r t i o n of
10
Many of
and
o f f i c e r of B e l l
in Providence,
in
can you
92
=
1
15
d e s c r i b e what the parent is, f o r the r e c o r d , what
2
f u n c t i o n s are and how you i n t e r f a c e with that
3
on a d a i l y and monthly and y e a r l y
4
A
Uh huh.
5
Q
In a management
A
Yeah, yeah.
6
the c o r p o r a t e e n t i t y
8
independent companies.
sense?
Well,
Textron,
Textron i t s e l f
i n t o f i v e major product a r e a s .
of
the Aerospace group.
11
p r e s i d e n t s f o r each of
12
f a l l under the purview of
13
Aerospace.
Textron,
these major a r e a s .
of c o u r s e ,
its divisions.
furnishes c a p i t a l
the s u p e r v i s i o n of
17
which i t a s s i g n s
18
of c o u r s e ,
19
records and, of c o u r s e , are a c t i v e
20
forth,
23
24
25
And we would
the group v i c e p r e s i d e n t
16
22
i s broken down
We happen to be a part
each of
I t has b a s i c
the operations of
the
those
Now, who
to
for
divisions
Textron,
the f inane ial-~*c or p o r a t e
financial
in l e g a l a r e a s ,
so
corporation.
We as a d i v i s i o n operate under that
Q
for
responsibility
to i t s v a r i o u s p r e s i d e n t s .
maintains a l l
to p r o t e c t
is
thirty
Textron has group v i c e
15
21
of c o u r s e ,
that owns and manages some
10
14
structure
basis?
Well--*
7
9
its
is
structure.
the group v i c e p r e s i d e n t
for
Aerospace?
A
At
this
Q
At t h i s
time?
time, and i f
you w i l l
for
the
record,
<93
16
1
name each group v i c e p r e s i d e n t f o r Aerospace,
2
to
3
A
I believe
that when I —
4
took over as P r e s i d e n t ,
5
supervisor
of
6
the B e l l H e l i c o p t e r
7
but about
8
President of Aerospace,
9
Mr. Ames a t
I know that when I
Mr. M i l l e r acted as
At some point
10
going back
1968.
the
Division.
in time, which I ' m
guessing,
1974, Robert S. Ames took over as Group Vice
Q
this
and we in turn r e p o r t up through
time.
Do you know whether Mr. G. W i l l i a m
11
functioned
12
President of B e l l
in that c a p a c i t y p r i o r
Miller
to 1972 when you became
Helicopter?
13
A
Y e s , he d i d .
14
Q
Do you know how f a r back he would have
15
16
functioned
in that c a p a c i t y ?
Would he have functioned
that c a p a c i t y back as f a r as 1 9 6 7 ,
17
A
Yes,
18
Q
Further back, maybe 1964 or-***
A
I think he--* I think he served from 1960
19
20
through the
21
22
23
Q
I b e l i e v e he d i d .
'73-'74
time frame.
And Mr. M i l l e r
the c a p a c i t y as the c h i e f
in that c a p a c i t y and you in
executive o f f i c e r at
would you have contact with Mr. M i l l e r as your
24
25
in
!68?
A
Yes.
Q
--on a daily,
weekly b a s i s ,
on an
Bell,
supervisor—
intensive
94
17
1
basis,
on major p r o j e c t s
A
2
that B e l l
is
undertaking?
Not probably on a d a i l y or maybe not even on
3
a weekly b a s i s „
Textron assigned c o n s i d e r a b l e autonomy
4
to t h e i r d i v i s i o n s .
And I would report
5
bring to h i s a t t e n t i o n anything that
6
worthy of h i s a t t e n t i o n .
7
semi-weekly
to M i l l e r and
I thought was
But I would say a weekly or
basis.
8
Q
9
A
Semi-monthly
10
Q
—r>that in that c a p a c i t y he was your
A
Yes,
Q
And what was your r e l a t i o n s h i p with
11
And i t
is clear
that—»
basis.
super-
visor?
12
13
sir.
14
Board of D i r e c t o r s of Textron,
15
ship with the Board of D i r e c t o r s
16
President of B e l l
17
A
18
Board.
or what i s your
the
relation-
of Textron as
the
Helicopter?
I would have no d i r e c t r e l a t i o n s h i p with
I,
of c o u r s e , would know the members of
19
and would see them a t v a r i o u s Textron f u n c t i o n s .
20
have no d i r e c t r e l a t i o n s h i p with the Board.
21
division,
22
Q
the Board
But I
I'm a
not a c o r p o r a t i o n .
To your knowledge on matters
that would
23
need the Board of D i r e c t o r s '
24
B e l l H e l i c o p t e r , would that be the f u n c t i o n of—-would
25
that have been the f u n c t i o n of Mr. G. W i l l i a m M i l l e r
the
a t t e n t i o n having
to do with
as
95
18
1
yotrr supervisor
to deal with the Board of D i r e c t o r s
2
Textron on matters
3
Helicopter?
of business dealing with
4
A
That's
5
Q
Mr. A t k i n s ,
of
Bell
correct.
if
I may, as I said a t
the
6
outset,
7
I'm going to ask Mr. Freed in a moment to ask you some
8
q u e s t i o n s about the general area of
9
and how you r e l a t e
each of us are going to have some q u e s t i o n s ,
organization,structure
to your superiors and so on.
10
b e f o r e I do t h a t ,
11
witness,
12
you as a w i t n e s s ,
13
than one person questioning
14
o u t l i n e of areas
I think in f a i r n e s s
I should point out
because of
to you as
But
the
that in order to be f a i r
to
t h i s procedure and more
the w i t n e s s , we have an
that we want to cover with you.
And
15
our intent
16
p a r t i c i p a n t s making an i n q u i r y .
17
an area and move on to the next a r e a ,
18
the p a r t i c i p a n t s would have the f u r t h e r opportunity
19
i n t o that
is
and
to cover each area with each of
the
And then w e ' l l
finish
and then each of
to get
area.
20
A
Fine.
21
Q
Some of
these areas may o v e r l a p , but we hope
22
to keep the overlap to a minimum so that anybody coming
23
along and reading
24
of
25
it.
tell
the record would see the
development
And I ' d be very happy to in a shorthand way
you what the areas are that w e ' r e going to c o v e r .
96
19
1
2
A
Fine.
Q
The f i r s t area that we've j u s t gotten
3
i s your p o s i t i o n and background and the
4
structure.
We would intend next to go i n t o the area of
5
6
the company p o l i c y with r e s p e c t
the matter of
area of
the s a l e of
11
Iran,
12
Taxi in that
to go i n t o
that we would intend
the h e l i c o p t e r s
to cover
the
to the government of
i n c l u d i n g such things as the p a r t i c i p a t i o n of
13
Air
sale.
We would then intend to cover the area of
14
the p a r t i c i p a t i o n of General K h a t a m i — t h a t ' s
15
I believe—^and the matter of
16
17
agents.
the r e h i r i n g of A i r Taxi i n 1 9 6 8 .
Following
9
10
to the h i r i n g of
Following t h a t , we would intend
7
8
into
organizational
Following
the f a c t s r e l a t i n g
18
the ownership of A i r
that we would expect
to the payment of
And f o l l o w i n g that
19
wrap-up q u e s t i o n s a t
20
areas
21
22
23
24
25
the end.
million.
there may be some general
But those are the major
Fine.
(Short
Taxi.
to develop
the $ 2 . 9
that we would want to cover with you.
A
K-h-a-t-a-m-i »
break.)
97
30
1
(Short
2
break.)
MR. MARINACCIO:
For the r e c o r d , may
3
I s t a t e that we r ve j u s t had a short break to accommodate
4
the Court Reporter
5
paper
6
break,
in making a short
in h i s machine.
it.occurred
7
matter concerning
t o the subpoena t h a t
9
record.
10
And a t
11
And that during that
to Mr.
8
change of
the
short
Soutter t h a t he had one more
the submission of documents
pursuant
I thought should be s t a t e d
this point,
for
I ' l l ask Mr. Soutter
the
to
make a statement f o r the r e c o r d .
12
MR. SOUTTER:
Arthur Young,
Textron's
13
accountants,
14
Banking Committee had a l s o made a submission
15
connection with t h i s
16
I
at the request of the S t a f f
Senate
in
proceeding.
consider the m a t e r i a l s
17
submitted to the S t a f f
18
mitted a l s o on behalf
19
of the
to,
that Arthur Young
in e f f e c t ,
have been sub-
of Textron under the
MR. MARINACCIO: T h a t ' s
subpoena.
fine.
Mr.
Soutteji
20
may I ask you one c l a r i f y i n g question on t h a t :
21
Arthur Young documents which have been tendered to the
22
Committee,
23
i f Arthur Young had not submitted them, would they have
24
25
are they in your f i l e s a l s o ?
turned up in your f i l e s
saying
that—
to be submitted,
Are the
In other words,
or are you
98
1
MR. SOUTTER:
in our f i l e s ,
In the main,
those
docu-
2
ments were not
3
to the time that the subpoena was issued to me on the
but they had a r r i v e d
4
first
5
and saying that you may a l s o consider
6
been resubmitted
of February, and I am j u s t
7
to the
simply turning around
MR. MARINACCIO:
So they would have been
documents in your p o s s e s s i o n r e l a t i n g
9
that
to t h i s matter at
time?
10
MR. SOUTTER:
Only as of
their
to us from Arthur Young, with some very minor
12
13
those now to have
Staff.
8
11
MR. MARINACCIO:
Mr.
submissioJi
exceptions,
Thank you very much,
Soutter.
14
And a f u r t h e r q u a l i f y i n g matter on the
15
poena
16
ask Mr. C o l l i n s
17
Mr. Soutter a t t h i s
i s one that Mr. C o l l i n s wishes to r a i s e ,
18
to d i s c u s s
that matter d i r e c t l y
with
point.
MR. COLLINS:
The submission of
docu-
ments pursuant t o the subpoena, as we understand
20
includes those documents that
21
the issuance of
22
have submitted
you submitted p r i o r
the subpoena, as w e l l as those
MR. SOUTTER: ' C o r r e c t .
24
MR. COLLINS:
it,
to
that
today.
23
prior also
sub-
so I w i l l
19
25
prior
And the ones
submitted
include m a t e r i a l s that you submitted
you
99
30
i
I n f o r m a l l y to the S t a f f
2
with r e s p e c t t o Mr. M i l l e r ' s
p r i o r t o the hearing
nomination?
3
MR. SOUTTER:
That would be
4
MR. COLLINS:
I believe
5
mitted
some copies of
the
MR. SOUTTER:
7
MR. COLLINS: A l l r i g h t .
8
MR. MARINACCIO:
to turn the q u e s t i o n i n g
correct.
that you sub-
contracts?
6
9
conducted
That would be
correct.
That's
Mr. A t k i n s ,
fine.
I'm going
over to Mr. Freed in a moment,
10
but I might j u s t
11
v a r i a t i o n from time to time from the o u t l i n e which
12
I ' v e mentioned to you a moment ago that w i l l depend on
13
the nature and primacy of
14
so
of c o u r s e ,
there may be
the q u e s t i o n s and so on and
forth.
15
16
say t h a t ,
We w i l l now ask Mr. Freed to go i n t o
this
matter.
17
18
EXAMINATION
19
BY MR. FREED
20
Q
Mr. A t k i n s ,
I j u s t have j u s t a very few
21
questions.
22
of your communication with Textron
23
A
I j u s t want to c l a r i f y with you the method
Much of
the communication
Corporate
i s by t e l e p h o n e .
24
Some are in the form of an annual or a
25
business review where s e v e r a l of the Textron
headquarte
semiannual
officers
100
30
1
w i l l come t o our company and spend perhaps two days
2
h e r e . And, o t h e r s ,
of
course,
I may v i s i t
3
time to time. And,
of
course,
there w i l l be
4
w r i t t e n memorandums.
5
6
Q
tions,
Now,
Textron from
certain
in connection with the phone
conversa-
would you have w r i t t e n memoranda—
7
A
No,
sir.
8
Q
—as
9
A
No,
10
Q
In d i s c u s s i o n
to
those?
sir.
of
important matters with
11
Mr. M i l l e r
or with other top Textron o f f i c i a l s
12
ing overseas s a l e s or anything
13
would there be memoranda of phone
in r e l a t i o n
involv-
to a g e n t s ,
conversations?
14
A
No, s i r .
15
Q
Was most of the communication o r a l l y by
16
phone ?
17
A
Yes, w e l l — i s
18
Q
Yes.
19
A
Yes.
20
21
22
v e r s a t i o n s are
Q
it,"
I would say most of
did you say?
our business
con-
orally.
With no record of the substance of
the con-
versation?
23
A
24
corded
25
form of a r e s o l u t i o n .
"most of
No,
sir.
The only thing that would be r e -
i s anything t h a t would go to the Board f o r the
101
24
2-5
Q
1
2
When d e c i s i o n s
were reached, were they
out in memoranda or any other form or any other documents
A
3
Now, you are l i m i t i n g y o u r s e l f
4
Q
To the
5
A
—to
6
Q
Any other m a t t e r s , any matters
7
a
Well,
A
this—
various—
these
inquiries
on overseas
sales?
in g e n e r a l ,
there w i l l be exchange of
from time t o t i m e ,
10
as
Okay.
MR. MARINACCIO:
has some questions
correspondence
sure.
MR. FREED:
11
12
to
general p o l i c y .
8
9
spellec
in t h i s area
That's
all
I had.
I b e l i e v e Mr.
Collins
also.
13
14
15
EXAMINATION
BY MR. COLLINS
16
Q
Mr. A t k i n s , what was the chain of command
17
above Mr. M i l l e r
18
group v i c e p r e s i d e n t
19
dent of
20
A
during the time in which he acted as
over B e l l ?
the
presi-
Inc.?
From 1960, at the time of our a c q u i s i t i o n ,
21
Mr.
22
Mr. Thomps on was p r e s i d e n t
23
point
24
c o r p o r a t i o n ; Mr. L i t t l e
25
the m a j o r i t y of
Was he a l s o
the corporation of Textron,
L i t t l e was chairman of
in the 1 9 6 0 ' s ,
the c o r p o r a t i o n .
of
I believe
the c o r p o r a t i o n .
Mr. M i l l e r became p r e s i d e n t
retired.
the time,
So,
At some
of
the
I would say t h a t
he was a l s o president
of
the
?
102
25
2-6
1
<?brporat ion .
2
3
Q
And were t h e r e ,
other o f f i c e r s
of T e x t r o n ,
during t h i s
p o s s i b l y a v i c e chairman of
4
the board, executive v i c e p r e s i d e n t ,
5
group v i c e pres idents ?
6
7
A
who a l s o acted as
T h e r e — t h e r e may be some occasions where an
o f f i c e r ha s a l s o acted as a group v i c e
8
9
time, were there
Q
president.
And do you know i f Mr. M i l l e r acted as a
group v i c e p r e s i d e n t with r e s p e c t to any other
10
A
I do n o t —
11
Q
—during
12
A
He probably a l s o acted as group v i c e
13
t h i s time—during
that
d i v i s i o n s;—
time?
presi-
dent of B e l l Aerospace.
14
Q
A separate
15
A
Yes,
16
division?
sir.
MR. COLLINS:
All right.
That's
fine.
17
18
19
EXAMINATION
BY MR. MARINACCIO
20
Q
I have one f i n a l question
in t h i s area
21
background and o r g a n i z a t i o n a l s t r u c t u r e ,
22
have gone i n t o t h i s
23
like
24
25
and we may
s l i g h t l y b e f o r e , but I would
to as k the question
responsibility
just
directly:
To your knowledge, what was Mr.
specific
of
Miller's
during the period in which he
103
30
1
a group v i c e p r e s i d e n t
f o r Aerospace with
2
t o not only B e l l ,
3
Aerospace business Textron was
4
5
6
but other components of
in that p r e c i s e
A
I don't
whatever
in?
Would you e x p l a i n Mr. M i l l e r ' s
bit
respect
role a
little
position?
believe
t h a t Mr. M i l l e r ever held a
7
group v i c e p r e s i d e n t t i t l e .
8
the f a c t that Aerospace was l a r g e and he had a p a r t i c u l a
9
interest
I believe
t h a t because of
in Aerospace that he served to guide
Bell
10
H e l i c o p t e r and B e l l Aerospace. And, most of that tim^,
11
b e l i e v e he held the t i t l e
12
13
Q
see.
president.
Mr. A t k i n s , we are about to move on
to yout p o l i c y on agents h e r e .
14
15
I
of
.
Is there any statement that
make with r e s p e c t
I
you would l i k e
to the matters we have j u s t
to
covered
16
that you would f e e l would c l a r i f y the record or anything
17
that occurs t o you that would be in any way with r e s p e c t
18
to those p a r t i c u l a r matters h e l p f u l to the
19
inquiry?
A
I don't believe
20
Q
Mr. A t k i n s , w e ' l l now cover the p o l i c y on
21
agents.
22
so.
Does B e l l H e l i c o p t e r
23
they have during the period
24
any p o l i c y w r i t t e n ,
25
h i r i n g of agents overseas
or Textron have,
1968 t o the present
formal or i n f o r m a l ,
f o r the s a l e
relating
of
or did
date,
to the
helicopters?
104
30
1
*
2
informal,
3
it
4
p o l i c y on the h i r i n g
5
And i f
%
formal or
can you s t a t e f o r the record what i t
operates;
A
there i s such a p o l i c y ,
how i t
Well,
functions?
of
This
is;
is j u s t your general]
agents.
I know
that
there
is no w r i t t e n
6
cedure covering the r e t e n t i o n of r e p r e s e n t a t i v e s
7
a g e n t s , whatever you wish t o c a l l
8
9
Basically,
who can represent
how
we are
proor
them.
looking f o r r e l i a b l e
people
our company around the world and can
10
add t o our t o t a l s a l e s growth and support of our product
11
in the
12
field.
Q
Can you describe the p r o c e s s by which B e l l
13
Helicopter
14
take i t
15
ba s is ?
goes about the business
from what you've
said t h a t
16
A
That's
17
Q
Yes. A l l r i g h t .
and, s p e c i f i c a l l y ,
19
to what i n q u i r i e s
20
concerning the r e p u t a t i o n
that
22
in the 5 0 ' s ,
23
s a l e s overseas were very
individual
of the
process,
yourself
or Textron makes
agents?
you have to look back to the f a c t
and perhaps midway through the 6 0 ' s ,
that
our
small.
The r e s p o n s i b i l i t y
sentatives
please direct
Bell Helicopter
A
25
on an
Can you d e s c r i b e the
within t h a t ,
21
24
it's
I
right.
18
Well,
of h i r i n g a g e n t s ?
for selecting
repre-
in various p a r t s o f the world f e l l under the
105
30
1
j u r i s d i c t i o n of
2
our I n t e r n a t i o n a l S a l e s
I would say that there was no
Department.
specific
3
method of r e t a i n i n g an a g e n t . We would quite o f t e n
4
at r e p r e s e n t a t i v e s who represented
5
aviation
6
they tended to be candidates
companies
7
some of
the
l i k e Beech or Cessna or P i p e r .
Normally,
for representing
I believe
that the
Bell.
would be a matter that was discussed within the
9
n a t i o n a l Sales Department, and they would make a
Inter-
10
s e l e c t i o n and they would a s s i g n t h i s p a r t i c u l a r
11
s e n t a t i v e based upon our standard Representative
12
ment,
13
Department
sign and become a part o f .
15
procedure that was
16
Q
to
And that was, g e n e r a l l y ,
the
followed.
Is there any procedure f o r any w r i t t e n
r e p o r t , what the r e p u t a t i o n
18
under c o n s i d e r a t i o n as a p r o s p e c t i v e
A
Agree-
prepared by our Legal
17
19
repre-
that, each r e p r e s e n t a t i v e was required
14
And
representatives
8
our l e g a l agreement,
look
general
Well,
of the agent
is
that's
agent?
I think i t somewhat depends upon the
20
country of the world you are t a l k i n g about and a — For
21
example, a r e p r e s e n t a t i v e
22
probably get d i f f e r e n t
23
tive
24
thing of that
25
in Germany or England would
c o n s i d e r a t i o n than a r e p r e s e n t a -
in some small i s l a n d out in the Caribbean or sometype.
And I know that
I have p a r t i c i p a t e d
in
106
30
1
s e l e c t i o n of some r e p r e s e n t a t i v e s .
2
a l o t more that I have not p a r t i c i p a t e d
3
Q
I know that
there's
in.
For example, when a company wishes t o
in another s t a t e ,
hire
4
a representative
the company might
5
get a Dunn and Bradstreet report on that company or
6
might have h i s business background or review of
7
r e p o r t s and so on.
8
9
My question
Bell Helicopter
is:
it
annual
Is there any procedure
in
f o r going through that kind of a
10
management e x e r c i s e with r e s p e c t
11
agents
to the h i r i n g
of
overseas?
12
A
13
not always.
I would say that we sometimes do i t ,
14
Q
15
you consider
To what extent
16
f o r e i g n government o f f i c i a l s with respect
17
chase and s a l e of
but
in the h i r i n g of a agent do
the a b i l i t y of the agent
to
influence
to the pur-
goods?
18
A
Well—
19
Q
"Influence"
being defined as very broadly
20
knowledgeable about the government,
21
r e l a t i o n s h i p s with v a r i o u s government o f f i c i a l s and so
22
on?
23
A
Well,
certainly,
having
personal
we are looking f o r
capable,
q u a l i f i e d people who can s e l l our products abroad.
certainly,
f o r e i g n governments
And,
of the world have been
107
30
s^H>me of our main customers.
Q
What is
the o r g a n i z a t i o n a l
you which d e a l s with the h i r i n g of
What I'm asking
is:
A
over the h i r i n g of
Well,
foreign agents?
that
in the f i e l d
that
agents?
our o r g a n i z a t i o n a l
changed over the y e a r s ,
below
How do you maintain
management c o n t r o l over your people
negotiates
structure
structure
has
but our present s t r u c t u r e
I have a Senior Vice President
is
of Marketing and
Programs.
Q
And who would that be,
A
His name would be Horner.
sir?
And under him would be a Vice President
International
Q
S a l e s , who would be
And who,
Sylvester.
in the o r g a n i z a t i o n ,
a u t h o r i t y to approve the entering
of
would have the
into a contract
with
a f o r e g i n agent?
Would that be a matter that would have
come to you,
A
to
personally?
Let's
say that the Sales Department
understands the c o u n t r i e s
I would be i n t e r e s t e d
probably
in and
they would bring those to me a t the time that they were
ready to make t h e i r
Q
interested
2 3 - 5 5 3 O - 78 - I
selection.
Can you t e l l
in?
us what c o u n t r i e s
you are
Is Iran one of the c o u n t r i e s you are
108
30
i
interested
in?
2
A
I am today.
3
Q
Were you in 1972 and
4
A
I became i n t e r e s t e d
5
actually
in
Q
6
I wasn't
1968.
'3?
in the Iranian
situation
1971.
I am going to ask at t h i s point Mr.
7
to ask you some q u e s t i o n s .
8
about
9
more s p e c i f i c s
Doherty
I know he has some questions
the general p o l i c y of f o r e i g n payments and some
10
this point,
11
questions.
A
12
in
on t h i s area that I ' v e
I'd
covered.
So at
l i k e Mr. Doherty to ask you some
Sure.
13
EXAMINATION
14
15
BY MR. DOHERTY
Q
16
Mr. A t k i n s ,
you indicated
that perhaps
17
s t r u c t u r e had changed r e c e n t l y .
18
focus
19
the n e g o t a t i o n s
20
in Iran with r e s p e c t t o approximately 500
here in terms of
There i s a p a r t i c u l a r
the time periods
surrounding
f o r and consummation of a large
21
Could you describe
22
were o p e r a t i v e a t that time with r e s p e c t
23
procedures now with r e s p e c t
24
and c o n t r o l s
25
A
the
contract
helicopters.
to us the procedures
t o the
to the l e t t i n g
of
that
general
contracts
in that a r e a ?
We a r e — i n
thinking about t h e — L e t ' s pick a
109
32_
1
time frame. S h a l l we pick
2
Q
'72 or
Why d o n ' t we s t a r t
January 1 ,
'71
or—
with—
3
A
Se^,
4
Q
I think we ought t o s t a r t with
'72,
5
A
Okay.
In 1971,
Bell Helicopter
I became
president.
'71.
I was Executive Vice
Presi-
6
dent of
7
separate marketing departments, a U. S. Government Mar
8
keting Department, a Commercial Marketing
9
and an I n t e r n a t i o n a l Marketing
10
11
Company, and we had three
Department,
Department.
S y l v e s t e r was the I n t e r n a t i o n a l man.
worked f o r me as Executive Vice
12
Q
What was the s t r u c t u r e below him?
13
A
Well,
basically,
at
He
President.
that p o i n t ,
I
believe
14
that there would be salesmen covering areas of
the world
15
and they would be,
t o him
16
at
that
17
18
Q
'74,
19
20
21
I think,
reporting d i r e c t l y
point.
And during the period of time from ' 7 1 througlh
was there any s u b s t a n t i a l
A
basic
I believe
s a l e s r o l e was A t k i n s ,
Q
change in that
that there was n o t ,
Sylvester,
22
procedure t h a t was o p e r a t i v e a t that
t o who had a u t h o r i t y
A
25
limitations
the
and t h a t way.
Now, did B e l l or Textron have a p a r t i c u l a r
23
24
structure?
because
Well,
time with
to n e g o t i a t e agent
Textron
respect
contracts?
did not put any
specific
on u s , and I'm sure I had t o t a l
responsibility
110
30
1
€ o r the n e g o t i a t i o n s
2
Q
of
the
contracts.
When you say " t o t a l
3
ultimate r e s p o n s i b i l i t y ,
4
approved by you?
responsibility"
you mean
the contract would have to be
5
A
Yes,
6
Q
Were there ever occasions during t h i s
7
that's
right.
of time when a c o n t r a c t would be approved by the Board?
8
A
I know of no approvals by the
9
Q
Were there ever occasions during t h i s
Board.
10
of
11
someone above you or where you would secure
12
concurrence above you?
period
time where such a contract would be approved by
13
A
I believe
not of great
15
the only one that I d i s c u s s e d with Textron
16
would be the Iranian
17
Q
importance t o the c o r p o r a t i o n , and probably
officials
situation.
During the period of time we are
r i g h t n o w — l e t me r e s t a t e
19
someone's
that most of the c o n t r a c t s were
14
18
period
discussing
that:
Does Textron have any d i f f e r e n t
procedure
20
that
is a p p l i c a b l e
21
this
time,
other than what you've described t o me?
A
Well,
22
23
24
25
to a l e t t i n g
of agent c o n t r a c t s
B i l l M i l l e r as the Chairman of
at
Textron
issued a memorandum on Standards of Conduct back in
the
' 7 6 time frame. And that memorandum r e q u i r e s
certifications
from i n d i v i d u a l s
involved
in s a l e s
work
115
30
1
'to make c e r t a i n s t i p u l a t i o n s
2
MR. SOUTTER:
3
and we a l l
do t h a t .
Plus the p r o v i s i o n s
to
be put into the Agreement.
4
THE WITNESS:
5
Bill
6
that a l l
Yes.
issued a memorandum suggesting
In a d d i t i o n to
that—or
f o r e i g n agreements have c e r t a i n
requiring
specified
7
language with regard to the conduct of our a g e n t s ,
8
themselves.
9
been put i n t o our agreements and is now e f f e c t i v e ,
10
believe,
And t h o s e — t h a t
in a l l
11
MR. SOUTTER:
Mr. Atkins was r e f e r r i n g
13
of August 1 6 ,
14
been d e l i v e r e d to the
15
language requirement has
our agreements
12
to
That l a s t document
1976, a copy of which has
previously
Staff.
MR. DOHERTY:
Yes, we have
17
would be a p p r o p r i a t e to mark that document f o r
18
record a t t h i s
23
24
25
l a r g e r documents.
it
here
I think
it
the
time.
Do you have another copy or s h a l l we p u l l
out—
21
22
that
i s a memorandum from Textron
as part of a group of
20
I
overseas.
16
19
that
MR. SOUTTER:
We can provide you with
MR. DOHERTY:
Fine.
a copy.
L e t ' s have
that
document marked as Exhibit
No. 5 as an August 1 6 ,
two-page document e n t i t l e d
"Standards
of Conduct
1976
Policy
112
30
1
2
a*s to R e p r e s e n t a t i v e s ,
Agents,
Consultants,
Dealers or
Distributors."
3
(The document r e f e r r e d to was
marked " E x h i b i t No. 5 " f o r
ident i f i c a t i o n . )
4
MR. DOHERTY:
5
6
E x h i b i t No. 5 the August
7
sets
8
for
9
of
16,
We j u s t had marked as
1976 P o l i c y Statement whic^i
f o r t h in w r i t i n g a p o l i c y w h i c h — w e l l ,
itself.
I'll
the r e c o r d ;
just
It
paraphrase
it
seems to i n d i c a t e
f o r t h the p o l i c y t h a t a l l
speaks
clarity
that B e l l
setting
11
should be acquired through merit of the product;
12
no improper or i l l e g a l payment should be made to
13
government o f f i c i a l s or those a f f i l i a t e d
14
secure those
A
16
Yes,
MR. SOUTTER:
18
while you said
19
correct,
it's
May I i n t e r j e c t
that
is
It also sets
Thank you.
f o r t h the requirement
22
all
23
v i s i o n that the agent represents
24
its
25
payments as
future agent
efforts
to
s t a t e m e n t , Mr. Atkinji?
a p p l i c a b l e t o B e l l and that
MR. DOHERTY:
Q
in order
i s a Textron companywide memorandum.
20
21
that
i t would b e .
17
it
contracts
contracts.
Would that be a c o r r e c t
15
its
is
10
of
it
f o r the
contracts,
to secure
well.
that
in
that there w i l l be a prothat
the c o n t r a c t
i t w i l l not use
through
improper
113
36
1
Mr. A t k i n s ,
was p r i o r to t h i s
time a p o l i c y
2
in e f f e c t at B e l l or a t Textron with r e s p e c t t o
3
matters?
4
A
Was there a p o l i c y ?
5
Q
Ye s ,
A
I think i t w a s — I think i t was our
6
7
8
that we never desired
Q
any of
11
12
s ir .
Was t h i s
your
A
I am sure that that kind of guidance has
Q
of your subordinates?
o r a l l y or,
16
that,
17
21
22
23
24
25
And,
specifically,
prior,
A
Textron.
Did you ever communicate that p o l i c y t o any
15
20
transactions
superiors?
14
19
in
p o l i c y ever communicated t o you by
aiways been guidance out of
13
18
to p a r t i c i p a t e
policy
where i l l e g a l payments would be made.
9
10
these
again,
Well,
if
It's
16,
1976?
always been my p o l i c y
in that kind of
that
business
communicated that on many occasions
team.
We do want to
s e l l our product
on i t s m e r i t s .
We are quite
s u c c e s s f u l in the w o r l d .
And, b a s i c a l l y ,
our p o s i t i o n
in the world helps
our p r o d u c t s .
And I think the f a c t that our
has been unquestioned
f o r our
success.
or
what can you t e l l us about
we had no d e s i r e t o p a r t i c i p a t e
to our t o t a l s a l e s
in w r i t i n g ,
to t h i s memo of October
it's—
And I'm sure I ' v e
s o , was i t
in these areas
us
sell
integrity
i s one of
the
reaso is
114
37
1
2
Q
conveyed to B e l l ' s
3
4
A
very
13
14
15
16
17
20
21
22
23
24
Well,
quite
often—
Q
— g e n e r a l l y , what was s a i d and who were the
meetings?
On an annual or a semi—or on an every two
year b a s i s ,
we have i n t e r n a t i o n a l
sales
meetings. And
q u i t e o f t e n we have talked to the question of
commissionj
and we have always encouraged our r e p r e s e n t a t i v e s
represent
are
independent and are separate
actions
to
us in the r i g h t way, because even though they
companies,
their
r e f l e c t on u s . And so we do have great
interest
in do ing tha t„
Q
And i t ' s
your testimony
then that
generally
a t these meetings which would be attended by you said
sales
reps or would that
include your f o r e i g n
commission
agents ?
A
here a t
I t would b e — An I n t e r n a t i o n a l
Sales Meeting
B e l l would be a meeting of our r e p r e s e n t a t i v e s
from around the world,
plus our s a l e s team that are
25
to me g e n e r a l l y
A
A
18
19
conventions on these
And could you describe
p a r t i c i p a n t s at those
10
12
I ' v e made speeches at
Q
8
11
agents?
what they were and—
7
9
sales
whether that p o l i c y was
subjects.
5
6
Do you know, s i r ,
d i r e c t l y employed by B e l l „
115
38
1
2
Q
And by " r e p r e s e n t a t i v e s , "
agents or commission a g e n t s ;
you include
i s that
correct?
3
A
We only have manufacturing
4
Q
But i t ' s
representatives.
your testimony t h a t a t t h e s e meetings
5
you would convey to them the message that
6
represent B e l l
7
you i n d i c a t e d are s e t f o r t h in your
A
That's
9
Q
—16,
10
they should
in a manner c o n s i s t e n t with the
8
sales
policies
October- 1 -
right.
1976 w r i t t e n p o l i c y s t a t e m e n t ;
is
that
correct ?
11
A
That's
12
right.
MR. MARINACCIO:
13
l i k e t o ask some q u e s t i o n
14
did.
15
Mr. Freed would now
in the same area Mr.
THE WITNESS:
Doherty
Sure.
16
17
18
EXAMINATION
BY MR. FREED
19
Q
Mr. A t k i n s ,
I j u s t want to check with you:
20
You had said that
21
with Textron o f f i c i a l s would be the Iranian
22
23
24
the only c o n t r a c t you had d i s c u s s e d
situation.
I j u s t wanted to check on the s e r i e s
of
t r a c t s you discussed and what the time frame was,
in g e n e r a l terms,
25
the time frame of
those
conjust
discussions.
And, a g a i n , what were the c o n t r a c t s
t h a t you
116
39
1
d i s c u s s e d with them?
2
A
On the Iranian
3
Q
Yes.
4
A
Yes.
situation?
You made that
statement.
5
Q
I want the time frame and
6
A
Yes,
7
the—
I would say that I had d i s c u s s i o n s
in
the 1 9 7 2 - 1 9 73 time frame about the Iranian program,
8
cause I recognized the importance of
9
gram, and because I recognized
the Iranian
that the
pro-
representative
10
s i t u a t i o n could be d i f f i c u l t on such a large
11
program.
12
be-
proposed
I should a l s o probably c o r r e c t m y s e l f .
I
13
think a t v a r i o u s t i m e s ,
14
Turkey c o n t r a c t where we had terminated a -representative
15
and we became involved
16
termina t i o n .
17
I think we a l s o talked about a
in a l a w s u i t because of
And i t was e v e n t u a l l y ,
the lawsuit was
18
e v e n t u a l l y handled by the Textron Legal
19
and they assigned a t t o r n e y s
20
or
21
we talked
22
that particular case.
Q
that you talked about?
c o n v e r s a t i o n s with Mr.
to handle the
settlement
So t h a t ' s another one
Now, what, s p e c i f i c a l l y ,
24
A
Department,
that
about.
23
25
that
Well,
were the
contracts
T h i s , a g a i n , are these
your
Miller?
here we were t a l k i n g about a
large
117
32_
1
program.
And we probably didn t know the s i z e
program u n t i l October of
4
gram, and i t was in the process
5
And I'm sure that a l l through that time frame, when we wire
6
involved
7
about the p o s s i b i l i t i e s
8
I am t a l k i n g about the c o n t r a c t ,
9
ceived .
Q
This i s
11
A
Bell
13
14
16
17
of
20
22
23
t h a t we had talked
of t h i s program.
itself,
And,
here,
that we r e -
contract?
received.
Q
From whom?
A
It
ended up to be a U. S. Government
Q
For the
A
Yes,
con-
helicopters?
Q
For the s a l e of h e l i c o p t e r s
sir.
A
That's
Q
And so t o r e c a p i t u l a t e ,
discussions
this
in
to the Government
correct.
you had the
' 7 2 - ' 73 time frame with Mr. M i l l e r
on
contract?
A
On the t o t a l s a l e s
24
spare p a r t s ,
25
we were involved
development.
Iran?
19
21
the
pro-
tract.
15
18
of
in the marketing e f f o r t ,
10
12
but i t was a l a r g e
the
3
2
'72,
of
training,
program f o r the
logistics,
helicopters
the whole package thai
in d i s c u s s i o n s with the Government
Iran and with the United S t a t e s
Government.
of
118
41
1
*
2
about
3
begin the d i s c u s s i o n s ?
4
more frequent?
5
Q
Could you be more s p e c i f i c when you t a l k
'72-'73
A
time frame; about when in '72 did you
Or did the discussions become
W e l l , my f i r s t
6
t r i p to Iran was in late
That was followed by—and, at the same
7
I'm not the " s a l e s program."
8
working this program.
9
B e l l who were involved in the marketing programs.
10
f i r s t discussions,
11
'71.
time—
We have a whole team
So there were many people from
really,
was in l a t e
Then in the spring of
But mj
'71.
' 7 2 , we had further
12
discussions.
13
to bring our products to Iran to demonstrate
14
performance in c e r t a i n d i f f i c u l t , hot and high areas
15
of Iran.
That was in the spring of
17
basically
in the month of August and aarly September
18
of
16
And out of these di«custiott« we agreed
their
' 72r.
So the demonstrations were carried out
'72.
19
At that p o i n t ,
the Iranian Government made
20
the decision to purchase; at the same time made the
21
decision that the sale would be an FMS s a l e .
22
Q
A question you r a i s e d :
No^ thes«
discussions
23
that we're talking about, are these d i s c u s s i o n s
24
Mr. M i l l e r ?
25
A
with
Were you reporting a l l of t h i s to Mr. M i l l c r?
Well,
I'm sure I ' v e talked to Mr.
Miller,
119
42
1
Ibut I'm sure I ' v e
2
talked to other o f f i c i a l s
too.
3
Q
In providence?
4
A
Yes,
5
Q
But how much of the d i s c u s s i o n s
6
Mr.
A
8
sir.
Mr. M i l l e r had knowledge of the t o t a l
that we w e r e — t h a t we were
9
Q
program
formulating.
And who were the other o f f i c i a l s
you spoke
with in Providence?
11
A
12
Well,
I'm sure that we probably had d i s -
cussions with the Legal Department.
13
the F i n a n c i a l
in some d i s c u s s i o n s
15
a big
16
the Legal
18
19
20
21
22
23
regarding
involved
the t r a n s a c t i o n .
Would you be t a l k i n g
to the General
I t was
Counsel,
Department?
A
Sure.
Q
The Vice p r e s i d e n t
A
Sure.
f o r Finance?
Q
I t would be with the top Textron
A
Yes.
Q
And do you know whether they would then have
Yes,
A
officials?
i t would be.
subsequent conversations with Mr. M i l l e r
25
that
transaction.
Q
17
I f e e l sure
Department was probably a l s o
14
24
were with
Miller?
7
10
in Textron,
I have no knowledge.
also?
120
43
1
MR. FREED: Thank you.
2
3
MR. MARINACCIO:
Mr, C o l l i n s has some
questions.
4
THE WITNESS:
Sure.
5
6
7
8
9
EXAMINATION
BY MR. COLLINS
Q
L e t ' s go back to the g e n e r a l area
of
agency
relat ionships.
10
A
Right.
11
Q
We are t a l k i n g here about m a n u f a c t u r e r ' s
12
representa t i v e s - —
13
A
Right.
14
Q
—-in t h i s
15
discussion.
You a l s o had other types of
arrangements
16
whereby people would manufacture and s e l l
17
or B e l l H e l i c o p t e r products and s e r v i c e s
18
countries;
19
20
is
that
A
Yes.
Q
—to
25
foreign
explain your
distribution
network—
22
24
in
Helicopte: ' S
correct?
Would you j u s t
21
23
Bell
include manufacturer's a g e n t s ,
but a l s o
what other arrangements did you have?
A
sentatives,
I would say t h a t the manufacturing
repre-
together with our own i n t e r n a t i o n a l
sales
121
44
1
force, represented
2
effort
99 a n d
1 / 2 p e r c e n t of o u r
3
I would
say f r o m time to t i m e , there
4
have been a special consultant
5
never resulting
6
concerned.
of s o m e k i n d
Q
But would
8
A
Oh,
Q
For that a r e a , you would
10
you have
is t h a t
A
Yes.
Q
And
13
A
Y e s , s i r . It would
14
fore ign s a l e s .
r e c o r d <on
other, like a
they would
gain
be f o r e i g n
Yes,
18
Q
Now, how significant would
22
23
Bell Helicopter
your manufacturer s representatives
we
have had probably
that
1
be
compared
business?
W e l l , the r o y a l t i e s — w e l l , over the
co-production
25
would
sir.
1
been Agusta
our
would?
to
24
in
our—
Q
A
from
We w o u l d e a r n r o y a l t i e s w h i c h w e
A
21
income
sales?
17
20
licensee?
not be included
16
19
were
correct?
12
15
retained,
yes.
sales by licensee;
11
might
in a n y m a g n i t u d e a s f a r a s s a l e s
7
9
sales
oversea s.
s e v e n or e i g h t
licensees,
p r o g r a m s . • The two major
of I t a l y a n d M i t s u i of
Q
Licensees
A
To produce
to
programs
years,
and/or
have
Japan.
produce?
B e l l p r o d u c t s a n d s e l l in
certain
122
45
1
^specified m a r k e t p l a c e s .
2
w e ' v e had
3
the w o r l d :
4
5
A n d , in a d d i t i o n
c o - p r o d u c t ion p l a n s
in v a r i o u s
Germany, England,
Q
Now, with respect
to the
r e p r e s e n t a t i v e s , w o u l d t h e y be g i v e n or
9
an exclusive agency
10
A
11
agency
12
contract
contract,
Q
No.
of a n
it t o be a n
territories and non-exclusive
them an exclusive arrangement
Now, would
facturer's representative
A
20
rather
21
capabilities
to p r o d u c e
22
establish an
independent
23
market
Okay.
A
in
"licensee,"
in the
decided
certain
first off, would
full
be a
facility
would
force of their own
licensed
"manu-
" c o - p r o d u c t ion"'
our p r o d u c t , and w h o
sales
sometimes
territories.
licensee" and
co-production
a major government
that
for the r e c o r d a
corporation which would have
their product
A
in o t h e r
you define
19
large
exclusive
In t h e c a s e of a l i c e n s e e , w e
would
Q
know,
territory?
to l i c e n s e e s , w o u l d
16
give
ordinary
You
arrangement?
15
those
yes.
And with respect
A
is it
territory?
in a s p e c i f i c
I think we considered
be the same type
14
25
on
manufacturer's
p o l i c y to give them a n e x c l u s i v e
24
of
programs.
7
18
countries
earn royalties
8
17
that,
Australia.
A n d , y e s , we would
6
13
to
to
territory.
program would
result
to m a k e a p r o c u r e m e n t
when
of a
123
46
1
€
s u b st a n t ia 1 q u a n t i t y
of a i r c r a f t and
2
that we join with an aerospace
3
nation
4
labor
in a c o - p r o d u c t i o n
Manufacturer's
6
separate
7
independently
of B e l l a n d
bility
9
be to m a r k e t a n d p r o d u c t
for their
specified
11
Q
And
support
Bell have a
to s e l l in a t e r r i t o r y a s p e c i f i c
14
t h e r i g h t to t r y to
or a m a n u f a c t u r e r ' s
Could
Q
O k a y , if y o u h a v e a
17
A
Right.
18
Q
—who
you give me that
has
the p r o d u c t
20
A
Right.
21
Q
A
23
25
2 3 - 5 5 3 O - 78 - 9
c o u n t r ; To
be a
their
act
responsi-
function
would
in a
specific
licensee also has
the r i g h t
is
authority
that
an
would also
have
again?
licensee—
to m a n u f a c t u r e
a
product-
defined.
type
of h e l i c o p t e r , p e r h a p s .
the authority
A
Yes.
Q
— i n
A
(The w i t n e s s n o d d e d
a
product
the
sell?
A
24
took no
representative
16
the
own
would
licensee with
agent
22
retain
area.
Would
I assume
in t h e i r
our price
13
19
in o r d e r to
for w h o m we
commitments.
required
their
individua1 who would
12
15
of
representatives
company or a separate
8
10
effort
in t h e i r o w n c o u n t r y , c o n t e n t
5
probably
company
to s e l l t h a t
Ther
product
territory?
his head
up a n d
down.)
9
124
100
*
2
*
Q .
manufacturer's
3
4
What would
A
representative
in t h a t s a m e
licensee, then we would not
®
facturer's
^
the m a n u f a c t u r e r ' s
representative
Q
be w i t h
So that would
contract
the
territory?
W e l l , if w e g r a n t e d a n e x c l u s i v e
s e l l to a
a
Bell's relationship
right
grant a
to
manu-
in t h e s a m e
country.
b e p a r t of y o u r c o n t r a c t
with
representative?
A
That's right,
Q
That
sir.
y o u c a n n o t s e l l t h e s e p r o d u c t s . We
have
licensee?
A
Right.
Q
Fine.
In c h o o s i n g a m a n u f a c t u r e r ' s
sentative
in a s p e c i f i c
mentioned
that you would
familiar with
Would
A
of
you
someone who
may have handled
be an a g e n t
try to
engage
or m a y h a v e b e e n
an
competitor?
We
representative
probably would not
who represented
select a
another
manufacturer'
helicopter
manufacturer.
Q
was
other
aircraft.
it h a p p e n t h a t y o u w o u l d
an agent who may also
for a
or c o u n t r y ,
t r y to g e t
aviation, who
accounts, manufacturers
agent
territory
repre-
So—
A
He might
Q
—might
be.
be an a g e n t
for a
fixed
wing
125
48
1
manufa cturer ?
2
3
4
A
Yes,
sir.
Q
So it w o u l d
go w i t h a n a g e n t
5
A
10
11
12
13
14
15
move
on to t h e n e x t a r e a w h i c h
of A i r T a x i or t h e r e h i r i n g
like to give
you the
make any statement
any statement
Committee
last
20
21
22
23
24
that comes
to these m a t t e r s
the
T a x i in 1 9 6 8 ,
hiring
I'd
to
clarification,
the
to y o u r m i n d
in
that w e ' v e
just
I think your
any
cover* d
questioning
It c o v e r s t h e a r e a s r e a l
MR. MARINACCIO:
Q
to be
we
area?
well.
I w i l l say for
the
you."
Now, with respect
Air Taxi as an a g e n t
t o the r e h i r i n g
in 1 9 6 8 :
T a x i that ran from roughly
A
Yes,
sir.
Q
Is t h a t
correct?
1959
of
I t is t r u e , is it
that there was a previous agreement
25
is g o i n g
for the r e c o r d , for
complete.
record, "Thank
you.
M r . Atkins, before
of A i r
THE W I T N E S S :
is q u i t e
Thank
t h a t y o u f e e l m i g h t be h e l p f u l t o
way with respect
under the
fine.
s a m e o p p o r t u n i t y , if y o u w i s h ,
or a n y t h i n g
18
19
competitors?
M R . MARINACCIO:
16
17
of y o u r
M R . COLLINS: That's
7
9
for one
don't
Right.
6
8
be c o m p a n y p o l i c y t h e n , y o u
between
until
1964?
the
not,
Bell and
Ai:
126
49
1
A
2
Q
Yes,
sir.
Then
there was a p e r i o d , I b e l i e v e ,
3
about
4
with Air Taxi;
5
T
A
6
7
1964 u n t i l a b o u t
Q
again
1968 w h e n you had no
is t h a t n o t
hat's
And
correct?
correct.
then Bell Helicopter
in 1 9 6 8 a s a n a g e n t ;
8
A
Yes,
9
Q
Could
10
the a g r e e m e n t
11
Bell and Air
12
including
picked Air Taxi
is t h a t n o t
y o u e x p l a i n for the C o m m i t t e e ' s
during
Taxi?
the k i n d
the p e r i o d
1959
that were
a g r e e m e n t , the v o l u m e
a n d , f i n a l l y , for the r e c o r d , d i s c u s s
15
under which
16
p r o p e r w o r d , in
Okay.
was
signed
20
representatives.
I have reviewed
s i g n e d w i t h A i r T a x i in 1 9 5 9 .
on our s t a n d a r d
between
it,
under
that
commissions,
circumstances
if t h a t ' s a
remember
23
really, my knowledge
24
the a g r e e m e n t s
the agreement
is b a s e d
upon
'59 or
in
strictly
which we have made available
I understand
that we paid
was
manufacturer's
of m y r e c o l l e c t i o n , I
k n o w i n g a b o u t A i r T a x i in
that
That agreement
legal f o r m for
A s to the best
22
the
terminated,
benefit »
1964?
19
25
made
for B e l l , the s a l e s
the a g r e e m e n t w a s
18
21
to 1 9 6 4
T e l l us a l i t t l e b i t a b o u t
of s a l e s
13
A
up
correct?
sir.
14
17
from
relationship
don't
'68. A n d ,
reading
to
you.
them a small
amount
127
50
1
of c o m m i s s i o n , s o m e t h i n g
2
t e n or t w e l v e
3
aviation
5
much more
is v e r y
And
7
was very
there was
we
1968
14
believe
18
19
22
23
I approved
to
sell
on
why
in a g r e e m e n t s , a n d
why
the
testified
1968.
1968 a g r e e m e n t ?
I be-
that you approved
I don't
think
the a g r e e m e n t
I said
in 1 9 6 8 .
of t h a t a g r e e m e n t , f i n a l l y ,
that.
that
I don't
I negotiated
in 1 9 7 2 or
A
Yes,
Q
May
I a s k y o u , w h o , to y o u r k n o w l e d g e ,
the
circumstances
relating
T a x i in
in
information
1972?
of the contract
25
days.
Q
know about
24
lapse
you approve
No, sir.
the s e t t l e m e n t
17
was
agreement?
A
16
21
Did
lieve y o u p r e v i o u s l y
13
it c e r t a i n l y
so t h e r e p r e s e n t a t i v e ' s a b i l i t y
that four-year
Q
12
commercial
And
in t h o s e e a r l y
signed with Air Taxi again
11
20
back
that
in I r a n .
I really don't have any
9
this
limited.
8
15
to r e c o g n i z e
limited
limited
6
in
period.
You have
4
10
year
less than $20,000
sir.
relating
in 1 9 6 4 , a n d a l l the
to t h e e n t e r i n g
to t h e
would
terminatior
circumstances
into the a g r e e m e n t w i t h
Air
1968?
A
f r o m the
'•
It's a difficult
standpoint:
question
for m e to
I do not believe
that
answer
Mr.
128
51
1
^Sylvester w a s employed
2
prior to his
3
International
4
any
time.
b y u s in 1 9 6 8 . So
And
it w a s
Q
Would you know his
A
It p r o b a b l y w a s —
p r o b a b l y a m a n b y the n a m e
8
Q
Who
9
A
Ed
is M r .
Q
12
during
13
pres ident?
14
I would
of
t h i n k that
Orpen.
as
president
D-u-c-a-y-e-t.
And he was president
the p e r i o d
of B e l l
Helicopter
1 9 5 9 u p to 1 9 7 2 , w h e n y o u
became
A
1960 to
1972.
Q
1960 to
1972?
16
A
Yes.
17
Q
S o , as president at Bell H e l i c o p t e r
18
that p e r i o d , would
19
the final responsibility
20
ing
25
he a p p e a r
during
to be the p e r s o n who
had
for t h e t e r m i n a t i o n and
enter-
into these a g r e e m e n t s w i t h Air T a x i a t those
times?
21
24
it w a s
Ducayet.
15
23
us
name?
Ducayet was my predecessor
of B e l l H e l i c o p t e r .
11
22
of
for
longer.
5
10
someone
probably a manager
Sales who probably does not work
6
7
it w a s
A
I r e a l l y f e e l that
the v o l u m e
national business at that.time was
kind
of m a t t e r s w o u l d
even have a separate
times
but down
be h a n d l e d
of our
inter-
so s m a l l , t h a t
down
in t h e —
We
International Department at
in o u r S a l e s
Department.
these
didn't
that
129
100
1
'
Q
W e l l , have you since
2
heard
3
in d i s c u s s i o n s w i t h a n y b o d y
4
5
6
stances
information within
of t h e t e r m i n a t i o n
T a x i in 1 9 6 4 ?
state
7
®
9
10
LI
from
And
for the
the T e x t r o n
record whatever
I have not
Q
You have not
you have
(The w i t n e s s n o d d e d
No,
Q
—with
14
A
No , s i r .
15
Q
Do you know, have
Taxi's
A
head.)
of the
to
the
agreement—
sir.
A i r T a x i in
1968?
you any knowledge,
with a n y o n e , and
reputation was
in
if s o , s t a t e ,
from
what
1968?
I have no discussions
on t h a t
Q
And
of a n y t h i n g
you haven't heard
21
particular
22
A
No,
Q
Do y o u k n o w w h e t h e r
23
25
please
particular
matter.
20
24
his
of t h e r e - e n t e r i n g
Air
Air
heard?
Have you heard anything relating
any discussions
you
circum-
heard?
A
17
the
heard.
Q
16
yoi.
Corporation
of t h e a g r e e m e n t w i t h
A
19
l e a r n or h a v e
in T e x t r o n , a b o u t
13
18
to
if y o u h a v e h e a r d , w o u l d
A
circumstances
12
come
that
matter?
sir.
or n o t
Textron
and please, whenever
I say "Textron,"
ever made an
into the o w n e r s h i p
on
inquiry
or
I include
Bell—
Bell—
or r e p u t a t i o n
of
130
100
*
Air Taxi back
2
with
3
4
they entered
into
agreement
them?
A
I have no knowledge
t h a t t h e y did
Q
If I m a y , M r . A t k i n s , I ' d
in
1968,
no«
5
6
9
in 1 9 6 8 , w h e n
the r e c o r d E x h i b i t s
I
letter
from M r . Zanganeh
Export
Sales Manager
November
Exhibit
of A i r T a x i to M r .
And
Exhibit No. 7 would
M r . O r p e n to M r . Z a n g a n e h , d a t e d
Q
I'd
like
16
to t h e
17
it a n d a s k y o u a q u e s t i o n a b o u t
subpoena, and read
18
The document
19
"Dear Jose:
20
with
21
Taxi represent
22
copter
dated
16,
from
1968.
t o , if I m a y , s h o w y o u t h i s
N o . 7, w h i c h document was received
25
be a l e t t e r
February
15
24
Orpen,
again
(The two l e t t e r s r e f e r r e d to were
m a r k e d " E x h i b i t N o . 6" a n d " E x h i b i t
N o . 7" f o r i d e n t i f i c a t i o n . )
13
23
N o . 6 is a
of Bell H e l i c o p t e r ,
12
14
7.
for
2 8 , 19 6 7 .
1 0
11
N o . 6 and
like to m a r k
from
states
recommendations
I would
in p a r t
to M r .
like
that
in I r a n , b a s e d
we h a v e
review
it.
to
Zanganeh:
discuss
t h e f i r m of
B e l l f o r t h e s a l e of
products
pursuant
i t a n d a s k y o u to
We would
y o u the p o s s i b i l i t y
document
from Textron
its
on t h e
Air
heli-
favorable
received."
like you to p l e a s e
take a
look at
t h a t d o c u m e n t a n d a s k y o u if y o u h a v e a n y k n o w l e d g e
as
131
100
1
to w h o M r . O r p e n m a y b e r e f e r r i n g
2
recommendations, "the favorable
3
4
b e l i e v e , that he's referring
f i r m of A i r T a x i a n d M r .
5
®
7
A
to c o n c e r n i n g
recommendations,"
to w i t h r e s p e c t
that his name
that he's
is " J o s e . "
to
I
the
Zanganeh?
I have no knowledge with regard
recommendations
the
to
speaking
of.
I'm
I didn't
know
that.
M R . SOUTTER:
Have
THE W I T N E S S :
No,
the
amazed
you ever seen
that
be f o r e ?
11
BY M R .
MARINACCIO
Q
functioning
14
During
as
that period
of t i m e , y o u
the Vice P r e s i d e n t of B e l l
A
M R . SOUTTER:
What
is the d a t e of
M R . MARINACCIO:
1968
19
A
Yes.
Executive vice
president.
20
Q
Yes.
Executive vice
president?
21
A
Right.
22
25
the
letter?
1 8
24
Helicopter
Yes.
16
23
were
Company?
15
17
sir.
Q
which
I'd
l i k e to d i s c u s s w i t h y o u E x h i b i t
is a n e x h i b i t
w h i c h he states
in p a r t , a n d , a g a i n 3
pertinent portion and
No. 6
from M r . Z a n g a n e h to M r . O r p e n ,
I'll read
the
I ' l l show you the d o c u m e n t
and
in
132
55
1
then I ' l l a s k y o u a q u e s t i o n for the
2
A
Sure.
3
Q
In w h i c h h e
4
the
subject
6
appointed
10
would
11
and
13
the
15
20
21
22
23
24
feel that
be a good
idea
engineer
in the e v e n t
in I r a n ,
to e m p l o y a
on y o u r
special problems
it
qualified
recommendation
our I r a n i a n
involved
sales
I ' l l a s k y o u to
staff
in t h e
of
helicopter
services."
look at that d o c u m e n t
the question that I w o u l d have
to y o u
is:
If
and
it reflects
no special knowledge about
t h a t if A i r T a x i w a s
they would need
copter
A
to m a n a g e
one,
that A i r T a x i had
the
Bell Helicopter
products,
taken
on a s a n a g e n t ,
why
technical assistance
that agency
from Bell
Heli-
contract.
U h h u h . Well,, A i r T a x i h a d a f i x e d
base
25
and
that
to y o u t o b e a n a c c u r a t e
if it d o e s n o t — i f
one
on
statement would appear
and
be-
I am
f r o m your organization., for a p e r i o d
sales and after
16
19
to t h e d i s c u s s i o n a p p a r e n t l y
t o t w o y e a r s to a d v i s e
14
— "
as your r e p r e s e n t a t i v e
helicopter
12
to
Zanganeh:
"—and
9
18
of o u r d i s c u s s i o n
Referring
tween Orpen and
8
17
states:
" I h a v e g i v e n a g r e a t d e a l of t h o u g h t
5
7
record.
operation at Mehrabad Airport
during
this
time.
133
56
1
*
2
at
3
product would need
4
it's n o t u n u s u a l for u s to f u r n i s h t e c h n i c a l
5
t o m a n y of o u r m a n u f a c t u r e r ' s
6
the
I believe
that t i m e . And
they, certainly,
We
have
8
We h a v e
9
we detail just
Department
11
representing
12
Q
engineers
engineers
in o u r S a l e s
our
o u t of o u r b a s i c
ment officials
of
I have no
16
Q
— i n c l u d i n g , but not
personnel, individuals
18
with
the S h a h of Iran
A
properly
time
to
that
govern-
military
government
direct
individuals
of
chosen, other
in t h e
than M r . —
and
I would
Air
it.
knowledge at that
reputation and background
friendly
officials?
of t h e s t a t u s
of
or
I a s k you once a g a i n , p l e a s e ,
us t o a n y
that might have
were
or o t h e r
I have no knowledge
Could
could point
limited
t h a t m i g h t be r e l a t e d
I have no knowledge
Q
Taxi's
in
knowledge.
17
25
rep
Iran—
A
T a x i in 1 9 6 8 .
sometimes
relationship with any
15
24
around
Engineering
Do y o u h a v e a n y k n o w l e d g e at that
Air Taxi had any special
23
assistance
product.
13
22
our
And
Departments.
the w o r l d . A n d
to a s s i s t a m a n u f a c t u r e r ' s
14
21
to s e l l
from us.
representatives
service people across
10
20
in o r d e r
technical assistance
world.
7
19
Aero-Commander
that they represented
if
you
organization
t i m e of A i r
s o on a n d w h y
pronounce
it
they
134
100
*
"Ducayet" because
^
realize
3
*
you pronounce
A
the
t h e r e ' s a "t" at
total operation
He and
say that
of t h e
served as
basically was very
of t h e
end, but
I
"Ducayet."
W e l l , M r . Ducayet
company, and
would
it
the
the p r e s i d e n t
involved
in
company.
I worked v e r y closely as a team.
I would
be m o r e
l i k e l y to h a v e
knowledge
on a s i t u a t i o n
like
International
worked
I
International situation
than h e w o u l d h a v e , b e c a u s e he w a s my boss a n d ,
the
of
the
for
thing worked
this
actually
for me; the sales
effort
me.
And
I really believe
that M r . Orpen
probably our Export M a n a g e r at that
we had a very
time. And,
s m a l l d e p a r t m e n t , f o u r or f i v e
was
probably,
people,
maybe,
Q
So M r . O r p e n w a s w o r k i n g
A
N o , I t h i n k he d i d n ' t w o r k for m e .
there was somebody
in b e t w e e n
for you a t that
tim4?
I think
me.
Q
And
do you r e c a l l who that
A
I don't, but I certainly
Q
We would
individual
would
be?
appreciate
i t , if y o u
A
Sure.
Q
B u t , is it n o t c o r r e c t
stating
in y o u r t e s t i m o n y , t h a t
can find
out.
would.
then from what y o u art
this would h a v e b e e n
an
135
58
1
v
£t rea t h a t f e l l w i t h i n
your responsibility at that
2
A
Sure,
3
Q
So t h a t y o u r
A
I had
4
yes.
testimony
to a s s i g n
is—
responsibility
5
I
6
corporation was
involved
in.
7
we
involved
in V i e t n a m a n d
w o u l d be
ears
9
a
Q
was
That's
Q
—it
company,
17
19
20
21
22
23
24
25
there
it w a s n ' t t h a t
It w a s a s m a l l
Q
is a d i f f e r e n c e
the p e r i o d
time,
up t o
reason
you didn't
important
to
if y o u k n o w w h e t h e r
of 1 9 5 9 t o 1 9 7 4 a n d
the
of
on d i r e c t
government
is to s a y t h a t :
a
prohibition
to
the
commissions
to A i r T a x i a s a r e p r e s e n t a t i v e
That
sales
from
Is
1959 to 1964 a g r e e m e n t , there
in t h a t a g r e e m e n t
not
contract
i n t o w i t h A i r T a x i in 1 9 6 8 w i t h r e s p e c t
of t h e p a y m e n t
or
Taxi
or t h e r e q u i r e m e n t
the
you?
the
in t h e c o n t r a c t w i t h A i r
to g o v e r n m e n t ?
ask
it up to
entered
that under
there
knowledgeable—
ability
correct
my
matter.
N o w , may I ask you
during
that
right.
arises either because
Because
A
the
appointing
management
s o m e b o d y down below or they d i d n ' t report
15
18
I was
function
that
time.
for your t e s t i m o n y t h a t y o u a r e n o t
A
16
in I r a n a t t h a t
So that for w h a t e v e r
13
14
For example, at
I wasn't worrying about
out
12
for a
in t h e b i g p o l i c y m a t t e r s
in V i e t n a m a n d
repre sentative
10
11
involved
were heavily
8
time?
on c o m m i s s i o n
it
was
payments
136
59
1
to A i r T a x i f o r a n y s a l e s
2
government
3
in 1 9 6 8 w i t h A i r T a x i a n d
that a r o s e
basis; and that
on a g o v e r n m e n t
the a g r e e m e n t e n t e r e d
Bell provided
t h a t on
to
into
sales
4
of i t e m s , i n c l u d i n g h e l i c o p t e r s , m a d e on a g o v e r n m e n t
5
government
b a s i s , the commission
6
negotiated
or s u b j e c t
7
A
to
to A i r
I believe what
you a r e
speaking
normal evolution
tive agreement w h i c h we used across
was
11
form that we signed with Air
the most recent a d d i t i o n
Q
I recognize
question about
14
or n o t
15
that between
on c o m m i s s i o n s
to g o v e r n m e n t
sales; and
17
was no more
negotiation?
lutionary p r o c e s s , but
20
characterize
21
there was a substantive
23
24
25
A
And
precise
1959
to
in t h e
whether
'64, there
1968 a g r e e m e n t ,
it w a s a m a t t e r
is it n o t a f a c t
there
subject
to
evo-
that what
the " n o r m a l e v o l u t i o n a r y
ment, but I believe
was
government
A l b e i t , it w a s p a r t o f t h e n o r m a l
I would have
it
agreement
to A i r T a x i f o r
prohibition, but
18
of t h a t
I'm a s k i n g a
the period
19
the w o r l d .
of t h e c o n t r a c t , a n d
a prohibition
as
the
Taxi.
that.
the terms
16
22
is
in t h e b a s i c m a n u f a c t u r e r s - r e p r e s e n t a -
10
13
of
1
9
12
to
be
negotiation?
8
just
Taxi would
you
process,"
change?
to r e a d
that's
the print
of t h e
agree-
correct.
M R . M A R I N A C C I O : At this p o i n t , w i t h
re-
s p e c t to t h e h i r i n g of A i r T a x i in t h e s e m a t t e r s , I w o u l a
like to t u r n the q u e s t i o n i n g over to M r . F r e e d .
THE WITNESS:
Fine.
137
100
(Brief
break.)
EXAMINATION
BY M R .
MARINACCIO
Q
over
Mr. Atkins, before
to M r «
I turn
F r e e d , I h a v e one c l a r i f y i n g
There have been times when I referred
agents
and others h a v e , too.
say manufacturer's
the
terms
the
questioning
question.
to a g e n t s
and
I think we all meant
r e p r e s e n t a t i v e , but we've been
sales
to
using
interchangeably.
Have you understood
talked about agents
to a l s o
the q u e s t i o n s w h e n
r e f e r to
we've
manufacturer's
r e p r e s e n t a t ives ?
A
Yes,
Q
We'll
sir.
representatives,
t r y to k e e p r e f e r r i n g
f r o m M r . F r e e d , the
Mr. Atkins before
s o r t of s t a t e d
1968
provided
the standard
also
last series
in t e r m s of
And
the
of q u e s t i o n s
to the e v o l u t i o n
basically
I think
to
of
it
the 1 9 5 9 a g r e e m e n t a n d
the
agreement.
For
we've
B e f o r e w e g o o n to
the b r e a k related
the a g r e e m e n t w i t h A i r T a x i .
was
manufacturer's
but—?
M R . SOUTTER:
questions
to
the
the r e c o r d , I'd j u s t
like
to s t a t e
the S t a f f w i t h a c o p y o f t h e
f o r m of a g r e e m e n t a s
standard
it e x i s t e d
f o r m of a g r e e m e n t
in 1 9 7 0 .
'59
that
agreement,
in 1 9 6 8 , a n d
I don't
138
90_
believe M r . Atkins
reviewed
these
these p r o c e e d i n g s , but I submit
those
is
stated within
in p r e p a r a t i o n
that
the c o n f i n e s
MR. MARINACCIO:
c o m m e n t , and
think
I was only—^the
with respect
change
the a g r e e m e n t s
only point
in t h e a b i l i t y
to g e t a c o m m i s s i o n
And
I wanted
this
to k n o w
of
of
those agreements.
they were done
I just point out—for
stage
to b e a
representative
sales.
go a h e a d w i t h M r .
the
correct?
There were changes
I'm not prepared
in 1 9 6 8 or
the c h a n g e
at
to t h a t to p u t i n t o
in
to s a y
the 1970
in f o r m
MR. MARINACCIO:
we'll
themselves.
this
if M r . A t k i n s , or h i s c o u n s e l
is m y u n d e r s t a n d i n g
now whether
do s p e a k f o r
that
i s , there a p p e a r s
contrary
of
agreement.
I appreciate
the m a n u f a c t u r e r ' s
M R . SOUTTER:
course
of e a c h
on g o v e r n m e n t - t o - g o v e r n m e n t
s t a g e , had a n y t h i n g
r e c o r d , or
the e v o l u t i o n
I was m a k i n g at
to the a g r e e m e n t s
for
the
right
amendment.
there.
I see.
With
that,
Freed.
EXAMINATION
BY M R .
FREED
Q
I have several documents here which I want
to h a v e m a r k e d
put
the n u m b e r s
as e x h i b i t s .
I t h i n k as w e go a l o n g
on them b e c a u s e
there are quite a
We c a n do one e x h i b i t 8 , 9 , 1 0 , 1 1 , 1 2 , 1 3 ,
14.
I'll
few.
139
100
(The i n s t r u m e n t s r e f e r r e d
were m a r k e d "Exhibit 8"
through " E x h i b i t 12" for
identification.)
1
2
to
3
Q
4
5
Taxi
6
deals were
M r . A t k i n s , did B e l l H e l i c o p t e r
in 1 9 6 8 b e c a u s e
in the o f f i n g
7
A
Not
8
Q
I want
9
it k n e w
to m y
Mr. Zanganeh.
11
it's
12
M r . Zanganeh
13
says
helicopter
Iran?
y o u a c o p y of a c a b l e .
Exhibit 8.
That's
It's a cable
Z-a-n-g-a-n-e-h-—of
thanks h i m for
he accepts
representative
15
he
the offer
the l e t t e r
to b e c o m e
from
Air
T a x i , and
And
of F e b r u a r y
the
This
in
manufacturer's
f o r A i r T a x i , for B e l l H e l i c o p t e r .
"Offer accepted
17
information
18
Departing Tehran
19
cable
20
but have
necessitating
And
for E u r o p e .
Then Exhibit Number
Orpen at Bell
22
to A i r
here
24
desirable
2 3 - 5 5 3 0 - 78 - 10
Request
9 is a c a b l e
it
from Europe
many
you
meeting."
from
Mr.
says:
"Zanganeh, advise possibility
23
25
T a x i , and
important
discussion.
s u g g e s t i o n re p o s s i b l e
your
for v i s i t w h i c h would
coming
be
standpoints."
D i d Mr.~*-xlo y o u k n o w w h e t h e r
it
16th,
says:
16
large
to B e l l H e l i c o p e r , A t t e n t i o n M r . O r p e n .
14
21
some
Air
knowledge.
to r e a d
cable w i l l be marked
10
in
that
rehire
Mr.
Zanganeh
140
100
did come
Co B e l l H e l i c o p C e r
Chen
Co
d i s c u s s-"*to h a v e
Chese d i s c u s s i o n s , and do you know
he w a s
Co w h e n h e
and
referring
Whac date was
Q
T h e s e were c a b l e s on F e b r u a r y 2 7 c h ,
Chen Che second
27ch.
again?
cable was on—^Che
on F e b r u a r y
I have no
Q
LeC me jusC mark
1st, which
Chere
is F e b r u a r y
which he
talks
of A g u s t a
telephone
of the c o n f i d e n t i a l
was agreed
Company
Bell's
of
of
heli-
to M r . O r p e n
either
through
by
Because
the r e p o r t s ,
that c o m m u n i c a t i o n with Bell
be m a d e
Emanuel
rumors
in F o r t W o r t h .
nature
representative
to F o r t
Brothers
the m e e t i n g of P r i n c e
in I r a n , w a s r e p o r t e d
dated
10—-it's
about:
the s a l e o f a l a r g e n u m b e r
long d i s t a n c e
The
Taxi internal memo
the h i g h e s t a u t h o r i t y a s w e l l a s
copters
27.
Chese.
is a n A i r
to T e h e r a n a n d a l s o
regarding
is
informacion.
"The continuous visits
with
firsC one
I am calling Exhibit Number
from M r . Zanganeh—-in
1968,
28th.
A
Then
March
Chis,
The Air Taxi cable
Orpen cable was
whac
said-—*
A
February
in F o r C W o r c h
Helicopter
telephone
in T e h e r a n
it
or b y m y
or
to
visit
Worth."
Were you aware
of
these rumors?
Didn't
Orpen
141
100
report
to y o u o n t h e p o s s i b i l i t y
M R . SOUTTER:
that
of
Can we have
the d a t e
of
again?
M R . FREED:
That was
M R . SOUTTER:
M R . FREED:
What
I recollect
In f a c t , I e n c o u r a g e d
BY M R .
on M a r c h
year?
Okay.
that Agusta made a sale
that
1st.
1968.
M R . SOUTTER:
A
in
Iran.
sale.
FREED
Q
busy
these?
How
large was
the s a l e a n d w h a t w a s
A
I guess
Q
T o t h e b e s t of y o u r
A
Fifty
Q
Now——
A
The history
in t h a t
not desirous
speculate but
it was-^-
recollection?
ships.
of t h a t w a s
time frame w o r k i n g
support the United
Q
I—* I shouldn't
it?
States A r m y .
of s t a r t i n g a n o t h e r
Now, I want
to q u o t e
that B e l l w a s
the b e s t
it c o u l d
very
to
And I felt
that we
program
Iran.
in
from a cable which
were
I
will—"s»an A i r T a x i i n t e r n a l m e m o w h i c h w e w i l l m a r k
as
Exhibit
the
11.
This
m e m o r e a d s as
is a g a i n f r o m M r . Z a n g a n e h .
And
follows:
"During repeated
meetings with
K h a t a m i , K - h - a - t - a - m - i , and a General
General
Toufanian,
142
100
spelled
T - o - u - f - a - n - i - a - n , as w e l l
interested
authorities
contract, we
did
our
to c o n c l u d e
Helicopter
Company
and
A
that
some
the
we
efforts
sale
should
Q
between Air
A
to
the
or
about
that
point
internal
into—
that
memo.
department
I personally
made
didn't
not a c o m m i t m e n t
push
that
the p o s s i b i l i t y
that
of
point?
the g r e a t
program
that
no.
the meetings,
relationship
time
I hadn't
those names
What
were y o u a w a r e
or any
A
Oh, I recollect
some
a possible
and
of
contact
Khatami?
even been
to I r a n .
I
meant.
did M r . Orpen report
there was
that
this
about
sales
though, at
Q
that
about
Generals T o u f a n i a n
even know what
Bell at
Bell moving
our
not recognize
of a n y
Bell
point.
Iran,
T a x i and
At
that
it w a s
future,
What
the m e e t i n g s
that
the
Agusta."
information
you recognize
I did
in
than
What was
time, and
I felt
at
Did
might be
fact
this
sales
A
didn't
at
make
no
I do know
because
Q
increased
is:
situation with
N o , I have
But
other
Agusta
the c o n t r a c t w i t h
you have any knowledge
about
as
the
to p u r s u a d e
rather
The question
memo
best
Government
working-*^ Do
concerning
to
you?
discussions
about
Iranian program,
the
that
they
143
100
wasted
help not only
training h e l p .
would
have
And
to f i n d
in h e l i c o p t e r s b u t
I recollect
financing
time under
the s a l e .
And
undertake at
those c i r c u m s t a n c e s , c o n s i d e r i n g
things
Q
that we were
Was Bell
that
we
to m e
it
that
all
the
doing.
then possibly moving
over your better judgment at
A
I cut
Q
Who was
A
Probably
Q
Were you aware
that
pushing
into
Iran
point?
it o f f , I d i d n ' t p e r m i t
the
wanted
some discussions
for
was not a p r o g r a m that Bell should
other
they
it
to
happen.
it?
sales
department.
then at that p o i n t of
Mr.
C h a f i k , that's M r . A „ C h a f i k , C - h - a - f - i - k , who was a
partner
Prince
in A i r T a x i , a n d
Shahrirar, that's
commander
of an
nephew
the
of
A
that
Imperial
the f a c t
S-h-a-h-r-i-r-a-r, Chafik
Iranian
was
Naval base and also
a
Shah?
I don't know
t h a t I k n e w of M r . C h a f i k
So a t
that p o i n t y o u k n e w
t h e o w n e r s of A i r T a x i w e r e , w h a t
son,
at
point.
Q
with
that M r . C h a f i k ' s
the S h a h
little about
who
their r e l a t i o n s h i p s
were
or—
A
I really-^*
Q
—*or with
A
I really had had
the I r a n i a n
military?
so little
involvement
with
144
100
1
Iran at that point
2
Q
Then
that my k n o w l e d g e was v e r y
let me a s k y o u a b o u t
3
this c a b l e a s E x h i b i t 1 2 .
4
at Bell
5
And
to A i r T a x i , a n d
it r e a d s a s
6
It's a c a b l e
sell our p r o p o s a l
8
made
9
April
statement
12
against
your better
13
A
Because
that you wanted
this c a b l e
to s t o p
I just
can't
I made a d e c i s i o n that we would
tell y o u .
I can't
Q
Who
17
A
He w a s a sales
is M r .
your
were
it c a m e
not do the
to m e
and
program.
Kling?
rep at
M R . FREED:
that
Kling
MR. GALERSTEIN:
time.
is s p e l l e d
What's
K-l-i-n-g.
t h e d a t e of
the
cable?
21
M R . FREED:
22
MR. GALERSTEIN:
That's April 30,
'68.
Okay.
BY M R . FREED
24
t h i s , these
tell you where
16
25
square with
t o o k a p o s it i o n — d a tes , I
15
23
be
airmailed
judgment?
14
20
can
agreement
must
25."
N o w , how would
19
1968.
sale and y o u
STOP Financing
Representation
11
18
mark
from M r . Kling
it's dated A p r i l 3 0 t h ,
"Zanganeh, we want UH1H
10
We'll
follows:
7
STOP
this.
limited.
Q
sales
Let me ask you this:
staff working
independently?
Was
the
international
How much
freedom
did
145
100
thefy
have?
A
They would
Q
But
That's
Q
And were
to g e t
off
A
you aware
to s e l l
All
A
selves
in
to m e
to g e t
this
to g e t
our r e p r e s e n t a t i v e .
the
the t r a n s a c t i o n , o u r
not pursue
the
And
Let me ask you
time.
then:
not commit
And we
I s it
that b e c a u s e
of V i e t n a m , a t
to V i e t n a m , t h a t
to g e t
to g e t
Iran or
That's
second?
not
our-
didn't.
reasonable,
it w a s n o t
into any other
'68, you
large
to
advisable
contracts?
correct.
M R . SOUTTER:
for a
the
least your commitment
produce helicopters
A
at
sale, we would
the f i n a n c i n g , w e w o u l d
to t h a t p r o g r a m a t t h a t
into
They
international
s t a t u s o f the s a l e .
t h e n , t h a t y o u a t t h a t p o i n t , in 1 9 6 8 , o r e a r l y
felt
sale
the d a t e w a s , I d o n ' t know-r-I t o o k
that w e would
Q
Iran and
cables,
Iran.
As I remember
some p o i n t — w h a t
attempt
into
these
least
right.
reported
position
then of their at
Agusta?
the r i g h t
people
you?
to b e s t r o n g e f f o r t s , f r o m
W e l l , Agusta was
Q
to
freedom.
right.
t h a t s a l e , to m o v e
to h e a d
had
they were reporting
A
what appeared
have considerable
C a n w e go off
the
record
146
100
MR. MARINACCIO:
1
2
I would
prefer
M R . SOUTTER:
4
whispering
5
table.
to M r . F r e e d
6
All right.
I find
Do you hear
8
MR. GALERSTEIN:
Oh,
9
M R . SOUTTER:
know whether
the w i t n e s s
11
your passing
on q u e s t i o n s
12
suggestion, what
14
is b e i n g d i s t r a c t e d
to M r .
that you're
to the
don't
through
a
to m e
is
I am l i s t e n i n g
to
witness.
MR. SOUTTER:
16
MR. MARINACCIO:
Yes.
the
witness.
18
M R . SOUTTER:
can
listen
to y o u a n d
20
the
I don't believe M r .
witness
22
communicating
23
And
that
said.
And
h e r e a f t e r , instead of
something
to M r . F r e e d w a s
the
orally
him written
notes
in h i s e a r , I w i l l d o s o , s o
it w i l l n o t b e a u d i b l e .
whispering
I heard w h a t
to M r . F r e e d , I w i l l w r i t e
if I w h i s p e r
Freed
witness.
MR. MARINACCIO:
21
I
If I m a y m a k e
is e v e n m o r e d i s c o n c e r t i n g
not listening
And
Freed.
15
25
me
yes.
Absolutely.
M R . GALERSTEIN:
13
24
the
whispering?
10
19
your
d i s c o n c e r t i n g a t t h i s end of
MR. MARINACCIO:
17
stay
o n the r e c o r d .
3
7
to
I didn't realize
audible.
that
my
147
100
M R . SOUTTER:
1
2
Thank
MR. MARINACCIO:
3
a s k y o u for
4
ear been disturbing
you.
M r . A t k i n s , may
the r e c o r d , has m y w h i s p e r i n g
5
to y o u
in a n y
THE WITNESS:
No.
The only
I felt was
that
7
what
s a y i n g w h i l e y o u two guys w e r e
8
That's
it w a s k i n d
MR. MARINACCIO:
10
your bringing
11
again, I wish you'd bring
12
BY M R .
Q
Fine.
16
had
17
conferring
to p u t
noted
A
the r e c o r d .
to g i v e y o u
that matter
in a l o w v o i c e a t
disconcerting
21
these
have any
if it
happens
again.
exhibits.
I might
say for
counsel had
the other
to y o u ,
We hope
the
end
I
been
of t h e
table.
it w a s
not
counsel.
MR. MARINACCIO:
25
And
appreciate
Touch!.
M R . SOUTTER:
24
I
to r e s t , t h a t o n o c c a s i o n
that M r . A t k i n s ' astute
19
23
understand
talking.
it to o u r a t t e n t i o n
MR. MARINACCIO:
record,
22
that up for
I'm going
15
18
to
that
FREED
14
20
of d i f f i c u l t
thing
all.
9
13
I
Freed's
way?
6
I was
in M r .
M r . C o l l i n s , do
you
questions?
M R . COLLINS:
No.
MR. MARINACCIO:
MR. DOHERTY:
Mr. Doherty?
I have just one
question.
148
100
EXAMINATION
BY M R .
DOHERTY
Q
earlier
M r . A t k i n s , it w a s m y u n d e r s t a n d i n g
testimony
applicable
that at
l e a s t as of 1 9 7 1 ,
procedure at Bell was
the l e t t i n g
or
the g r a n t i n g
I would
Basically,
the
them at that
No,
Q
—'policy?
A
No,
Q
Could you define
some
A
you would
f o r us
across-the-board—*
not
the b r e a k d o w n
fall under
I
approve?
the ones
that I was
the m o s t d e v e l o p e d .
at
that
The
that
Middle
time.
you defining
s i z e or p o t e n t i a l
And
terms
an
the E u r o p e a n c o n t r a c t s , b e c a u s e
Is it t h e n — a r e
in
to t h e u n i m p o r t a n t w h i c h
say, b a s i c a l l y
the market was
Yes.
not an
i d e a of w h a t w o u l d
East had not been developed
terms of
at
sir.
in w e r e
Q
looked
sir.
I would
interested
was where
So t h a t w a s
c a t e g o r y as o p p o s e d
gather
rep's
correct?
time.
A
A
with
contracts.
c o n t r a c t s as we
I see.
important
in
s o m e of t h e
Q
of—^give us
would
important
in c o n n e c t i o n
t h a t , is t h a t
approve
your
the
of a m a n u f a c t u r e r ' s
contract, you would approve
A
that
of
s i z e of
the
important
then
market?
a l s o m y a r e a of k n o w l e d g e
at
that
149
100
time and
because
my a r e a of k n o w l e d g e
I had some knowledge
Q
And
procedures
now
a t the
the r e l e v a n t
c o n t r a c t s w h i c h y o u did
level would
Q
A n d w a s , in y o u r
of
Q
Is
and
I think
A
that would
delegated
later
the V i c e P r e s i d e n t
in a c c o r d a n c e
would
those
deal with
in t h i s p e r i o d
And
by
him.
I
flow
of
to
time—
talking a b o u t —
compensation
it w a s
I
to
his
that a n y c o m p e n s a t i o n
w i t h our standard
And
compensation,
I wrote an official memorandum
be e s t a b l i s h e d
procedur
same
potentially
for s e t t i n g
of F i n a n c e .
ing his r e s p o n s i b i l i t y ,
not
the
of
them?
do
than w h a t w e ' r e
the r e s p o n s i b i l i t y
responsibility.
approve?
to t h e c o n t r a c t s ?
that could
W e l l , at some point
it w a s
the
was.
to a m e n d m e n t s
t h e a m o u n t of c o m p e n s a t i o n
agent.
it
to
what
o p i n i o n , the letting
there any d i f f e r e n t — o r
say a m e n d m e n t s
'68
effort.
time as y o u d e s c r i b e d
Yes, I believe
the
the e x p o r t
to
to A i r T a x i c o n s i s t e n t w i t h
A
procedures apply
the
time p e r i o d , w i t h respect
The manager
at that
of
the s t a r t ,
the a u t h o r i t y be d e l e g a t e d
the 1 9 6 8 c o n t r a c t
would
t i m e of
time,
people.
not yourself a p p r o v e , at
A
applicable
that
the E u r o p e a n
on the c o n t r a c t s , a g a i n , terms
applicable
through
of people at
of
agreement
establish-
which
on the
was
form,
150
100
Q
1
N o w , I'm not
sure whether we have
2
memorandum
3
on w h e n
4
A
Yes.
5
Q
I t h i n k it w o u l d b e h e l p f u l
6
to t h e e x t e n t
that policy was
that could be supplied
A
7
to
So i t ' s
Yes,
sir.
10
Q
-^ac
least
11
A
Yes,
sir.
Q
Until
it w a s
to t h e
that
or t h e a p p l i c a b l e p r o c e d u r e
14
amendments
15
talking, as we were
17
standard
18
to a s p e c i f i c
time w e ' v e b e e n
the
deal with changes
May
earlier, about
f o r m , or a r e y o u
discussing?
appropriate
in
to a n y
compensation?
I interject, are
the e v o l u t i o n
talking a specific
of
MR. DOHERTY:
That's
MR. SOUTTER:
I mean, that's
MR. DOHERTY:
Y e s , I'm discussing
what happens
the
amendment
19
22
you
contract?
20
21
if
offhand.
followed with respect
M R . SOUTTER:
16
to t h e r e c o r d
'75, '76,
time, what was
13
that would
date
us.
subsequent—=>
Q
A
the
set.
guess
9
12
it w o u l d h e l p us p l a c e
I would
8
that
correct.
both.
once a c o n t r a c t has b e e n g r a n t e d , and
now
then——
23
M R . SOUTTER:
For R e p r e s e n t a t i v e
"X"?
24
MR. DOHERTY:
That's right.
then
25
as
time comes w h e r e
there's an amendment
And
to t h a t
contract
151
100
1
wi£h respect
to c o m p e n s a t i o n
or
some other
2
a s p e c t of t h a t c o n t r a c t , w h a t p r o c e d u r e s
significant
in t h e 1 9 6 8
3
the m e m o y o u ' v e d e s c r i b e d
to u s w e r e a p p l i c a b l e
4
respect
amendments?
5
A
to t h o s e k i n d s
W e l l , I would
6
agreement
7
called
8
more
9
t h i n g , that p r o b a b l y
say
that was not
or
would
12
people.
somebody
it w a s a
not be a decision just made by
13
And
in the
important
sold
negotiation
in t h e F i n a n c e
in the C o n t r a c t s D e p a r t m e n t w o u l d
Department
participate.
the
ones
to a n
specificall
in the a g r e e m e n t , f o r e x a m p l e , if t h e y
than five ships and therefore
11
with
t h a t in a n a m e n d m e n t
to s p e c i f y c o m p e n s a t i o n
for
10
14
of
to—
It
international
I probably
was
involved.
15
Q
Thank
16
you.
M r . A t k i n s , we are a b o u t
17
matter
18
you'll have
19
statement
of
the s a l e o f
to m o v e o n to
the h e l i c o p t e r s .
the o p p o r t u n i t y
or a n y o t h e r
to m a k e a n y
statement
y o u feel might be h e l p f u l w i t h r e s p e c t
21
we've
22
T a x i in 1 9 6 8 a n d so
24
25
just been discussing, namely
A
the
previously,
clarifying
you w i s h to m a k e
20
23
As
to t h e
that
matters
the h i r i n g of
Air
on.
Thank y o u , but
I think
it's b e e n w e l l
covered
152
100
EXAMINATION
1
2
BY M R .
3
MARINACCIO
Q
Now, Mr. Atkins,
there did c o m e a t i m e , did
4
t h e r e n o t , in A p r i l
5
from Lieutenant
General Toufanian which
6
as a letter of
intent—
of 1 9 7 2 , w h e n y o u r e c e i v e d
7
A
Yes,
8
Q
-^setting
9
10
the
of h e l i c o p t e r s
A
any number
17
would
Okay.
Do you
Well, I don't
of h e l i c o p t e r s .
procure, provided
18
intend
I will
think
It m e r e l y
Company,
to
introduce
indeed,
MR. MARINACCIO:
like
to m a r k
this as E x h i b i t N u m b e r
MR. FREED:
21
MR. MARINACCIO:
22
the l e t t e r
specified
the ships met c e r t a i n
20
right
Okay.
specified
that
they
performance.
If I m a y , I woulji
14.
13.
13.
( T h e l e t t e r r e f e r r e d to w a s
m a r k e d " E x h i b i t 1 3 " for
identificat ion.)
23
24
the B e l l
a
now.
16
25
to p u r c h a s e
from
M R . MARINACCIO:
15
19
intent
record?
13
14
forth his
M R . SOUTTER:
that for
describe
correct?
11
12
I would
letter
sir.
substantial number
is t h a t n o t
a
Q
this
isn't
And
I s h o w y o u the d o c u m e n t
the d o c u m e n t
and a s k you
that y o u r e c e i v e d , the one
if
I'm
153
100
1
referring
to, and
I'll read
2
and a s k you some q u e s t i o n s
the d o c u m e n t
about
A
I worked
4
Q
S o i t is t h e d o c u m e n t
5
A
Yes,
6
7
record
to o b t a i n
that
document.
that you
received?
sir.
M R . GALERSTEIN:
What's
the
MR. MARINACCIO:
The date
date,
please ?
8
9
the
it.
3
very hard
into
document
is A p r i l 1 8 , 1 9 7 2 , a n d
it's
10
General Toufanian, Deputy Minister
11
the G o v e r n m e n t
of
Iran
from
"Dear M r . A t k i n s :
13
Further
of W a r for A r m a m e n t
to o u r c o n v e r s a t i o n s
14
visit
15
of
16
of I r a n
17
for
the I m p e r i a l
18
2.
This
19
performance
20
specifications
21
arrangements.
to F o r t W o r t h
the f i r m i n t e n t
to a c q u i r e
I am pleased
of
per
3.
airtransports-t-<sic ., h i s e t r o r ) r — t h e s e
25
helicopters
satisfactory
applicable
coproduction
23
24
two C - 1 3 0 a i r c r a f t s
to
helicopters
to I r a n a n d r e t u r n ; y o u s h a l l , h o w e v e r , b e a r
c o s t of the
evaluation.
you
Forces.
22
We shall provide
my
Government
is c o n t i n g e n t u p o n
satisfactory
reads:
during
the A H - l J and 214
of s u b j e c t a i r c r a f t s
and
it
to i n f o r m
the I m p e r i a l
Iranian Ground
decision
the
Lieutenant
to M r . A t k i n s , a n d
12
of
the
of
154
100
r
Very
1
2
truly, Lieutenant
M r . A t k i n s , 1*11 ask you
4
thought
5
Iranian Government would
6
number
7
approximate amount
8
to b e
9
that this
l e t t e r of
of h e l i c o p t e r s
A
11
me
12
curement
that
to p r o c e e d w i t h
in o u r d e m o n s t r a t i o n s
15
that
procure
thought maybe
Q
at
you
the
substantial
the
that Bell w a s
going
of
intent
to m e w a s
that
about
if w e w e r e
in the c o u n t r y
that
no
It d i d m e a n
successful
they
would
aircraft.
19
A
20
hundred would
21
200 a i r c r a f t
What was
that p o i n t ,
to
pro-
I d i d n ' t , as far as q u a n t i t y , I guess
17
time
if s o , s t a t e
the c o n t r a c t .
of o u r a i r c r a f t , a n d
subsequently
25
a
the Iranian G o v e r n m e n t w a s serious
14
24
from B e l l , and
that you thought
13
23
indicated
be p u r c h a s i n g
W e l l , the letter
authority
22
intent
if a t t h a t
supplying?
10
18
H.
Toufanian."
3
16
General
t o t a l , at
that
the d o l l a r v a l u e o f
I
point.
the 2 0 0
aircraft
approximately?
Five hundred-was
five hundred m i l l i o n ,
two
be-—.
Two hundred
A
Yes.
Q
Also roughly
A
Yes,
Q
I see.
million?
they w e r e a m i l l i o n
dollars
each?
sir.
But
the l e t t e r
of
intent did
indicate
155
78
4/19
1
that: I r a n h a d m a d e a n
2
supplier ?
i n i t i a l s e l e c t i o n of B e l l a s
3
A
Y e s , that's
4
Q
N o w , for
5
enter
6
s a l e of a n u m b e r
7
i n t e n t , and
8
when were
9
10
12
the h e l i c o p t e r s
September
14
202
or
A H - I J ' S
15
O c t o b e r , 1972
letter contract
probably
18
was confirmed
19
in J u n e of
from
November
into,
of
A
the
Government
for
of
approximate
a letter
in
of
approximately
the p r o c u r e m e n t
of
the
214's.
followed
the U „ S . G o v e r n m e n t
'72.
of
delivered?
of I r a n s i g n e d
And
then
the
up by a
to B e l l
in
letter
contract
definitive
contract
'73.
M R . SOUTTER:
21
23
entered
into a fully executed
20
22
the c o n t r a c t
T h a t l e t t e r of o f f e r w a s
17
the
letter
d e l i v e r e d , over what period
States
and 287 Model
for
to t h i s
there and w h a t were
f r o m the U n i t e d
of I r a n
pursuant
the h e l i c o p t e r s
The Government
13
16
of
subsequently
the G o v e r n m e n t
if s o , w h e n w a s
A
offer
the r e c o r d , d i d B e l l
of h e l i c o p t e r s
time, how many were
11
correct.
into a c o n t r a c t w i t h
dollar amounts
the
Between?
B e t w e e n , of c o u r s e , the U , S . G o v e r n m e n t
and
Bell.
BY M R .
24
MARINACCIO
Q
And
how many helicopters
25
1973 provide
2 3 - 5 5 3 O - 78 - 11
for?
did
the a g r e e m e n t
in
156
100
A
489.
Q
489?
A
Pardon m e .
Q
Please
A
There were
May
I correct?
do.
two s e p a r a t e — ^ t w o
c o n t r a c t s , one for 2 0 2 , one for
Q
you've
Just
in o r d e r
been speaking
FMS c o n t r a c t , and
A
Helicopter.
if s o , c o u l d
y o u tell us for
to
the
Systems
Command
in S t . L o u i s
and
record
to s e l l
to t h e I r a n i a n s , a n d
with
Is it f a i r
to s a y , f r o m y o u r
d e l i v e r e d , and
Government
of
sometime
over
an aviation p r o g r a m . And
18th,
i n t e n t , that you
going
up
The
they were
to
that
1972
thought
to b e
t h e c o u r s e of t h e n e x t
increased
is c o r r e c t .
testimony,
of A p r i l
200 helicopters were
this a m o u n t w a s
That
the time
a letter
that a p p r o x i m a t e l y
had
agreed
Bell.
in y o u r m i n d , a t or a b o u t
when you received
to p u r c h a s e a n d h a d
then the U . S .
the
Bell
In o t h e r w o r d s , the U . S . G o v e r n m e n t
in t u r n c o n t r a c t e d
the
is?
an Iranian request
A
the
States, are you referring
accepted
that
the r e c o r d , w h e n
W e l l , the c o n t r a c t w i t h B e l l w a s b e t w e e n
Army Aviation
Q
287.
to c l a r i f y
of a n a r r a n g e m e n t w i t h
G o v e r n m e n t of the United
what an FMS contract
separate
year
489?
Iranians were
in t h e
forming
preliminary
157
80
4/21
1
stages
2
next
of
their
thinking
in A p r i l of
3
they determined
4
going
5
A n d , o f c o u r s e , the U . S . G o v e r n m e n t w a s a c t i n g
6
advisers
f o u r or f i v e m o n t h s
the n u m b e r
to h a v e , a n d
to the
Q
7
' 72e
they made
Now, can you
selections.
tell us w h a t role or
was with respect
to o b t a i n i n g y o u r
10
intent
11
G o v e r n m e n t , and
then subsequently
12
200 helicopters
to 4 8 9 ?
13
Air Taxi efforts
14
were
15
understanding
16
A
their
initial
from General T o u f a n i a n on behalf
as
How
for
of
the
far b a c k do
go, what were
they, how
part
performance
letter
the
of w h a t
they
of
Iranian
increase
important
is
your
were?
W e l l , A i r T a x i , in m y m i n d , p e r f o r m e d
sales representative
function
18
in a c o u n t r y .
19
Iran,,
They represented
20
in t h e
Iranian
t h a t is n o r m a l l y
We had no p e o p l e
that w e r e
the
furnished
stationed
our product with various
in
people
Government.
When
the s a l e b e g a n
to d e v e l o p , o u r
22
would
23
Iranian p e o p l e , and our people w o u l d
24
e f f o r t and b e c o m e
move
from
the' Z a n g a n e h -
they and d e s c r i b e w i t h s p e c i f i c i t y , w h a t
21
were
country.
M r . Zanganeh and A i r T a x i p l a y e d , w h a t
the
thinking,
they
their equipment
9
25
in
their
of o p e r a t i n g u n i t s
8
17
And
they c o n s o l i d a t e d
in a n d
they w o u l d
the leaders
They supported
us
introduce
people
our people
take over
in t h e s a l e s
the
to
the
sales
effort.
in v a r i o u s w a y s .
And,
for
158
100
I
exalnple, I used
2
when we were
told
3
They carried
me down
4
locations
5
their airplanes
that we w e r e
to f l y d o w n
going
to E s f a h a n a n d
in E s f a h a n w h e r e w e w o u l d
So t h e y f u r n i s h e d
period
7
we were bringing
to the c o u n t r y a n d
8
we were bringing
to the
they furnished
9
10
I would
l e t t e r of
11
12
13
Q
16
20
21
22
23
24
25
or a n y o t h e r
Q
—of
A
I certainly knew
A
the
it.
made by Air
of Air
Taxi
of
that
Iran?
they knew
s o m e of
the
officials.
the
that
they were making
S h a h of I r a n a n d
I don't
contact
people—^-important
t h e S h a h of
think they-— I don't know
ever had a n y c o n t a c t w i t h
Q
not obtain
officials
that had d i r e c t c o n t a c t w i t h
t h e S h a h of I r a n ,
How about with people who had
to t h e S h a h of
equipment
that—
Were you aware
A
people
officials—
the G o v e r n m e n t
on this sale w i t h
people
t h e y did
of a n y c o n t a c t s
I knew
Q
demonstration
the
the
say w e obtained
A
high government
18
19
that
with various high government
15
for
the
operate.
the
for
Esfahan.
country.
you aware
T a x i or M r . Z a n g a n e h
14
17
say
Esfahan
to
probably
a lot of s u p p o r t
intent, I would
Were
took me
the—during
6
to
to t r a i n a t
Iran?
that
they
no.
direct
access
Iran?
Well, I assume
that
they had h i g h
level
159
100
corftacts
in t h e g o v e r n m e n t a n d
contacts with
Q
the
And
and I believe
Shah,
you referred
M r . Miller at that
had
yes.
at or a b o u t
were you discussing
they knew people who
this
time w h e n
to it a s a n
the d e v e l o p m e n t
time, who was
of
this
contract—
important
contract-
the c o n t r a c t
f u n c t i o n i n g as
with
your
supervisor?
A
I'm sure
that we were making
Q
Did
you
A
The
program.
Q
Did
level contacts
that
I was reporting
in f o r m u l a t i n g
to h i m o n t h e
the
progres
contract.
ever-—*
you ever discuss w i t h M r . M i l l e r
the
that Air Taxi and M r . Zanganeh had
they were m a k i n g on behalf of
high
in
the s a l e s
effort
I don't
consider
Iran,
in
Iran?
A
Generals
Well, you know, I guess
in the A r m y
to b e r e a l h i g h
in m y c o n t a c t s , I t a l k
Army all
the t i m e .
And
to G e n e r a l s
think I would
i n the U n i t e d
I think that's a normal
to b e m a d e by a n y c o m p a n y
don't
level people.
report
selling
States
contact
its p r o d u c t .
that as something
To
And
that
was
that
was
outstand ing.
Q
Would you report
taking place by Air T a x i and
were
discussing
this
it a s
something
its o f f i c i a l s ,
sale w i t h v a r i o u s
that
Generals?
they
I
me,
160
100
v
I
A
I don't know
2
don't consider
3
contacts,
I was
Q
4
that I w o u l d , b e c a u s e
that u n u s u a l .
Did
talking
to
I just
I was reporting my
own
people.
you ever discuss Air
5
Miller
6
its o f f i c i a l s m i g h t h a v e w i t h
in t h e c o n t e x t of c o n t a c t s
Taxi with
Mr.
that A i r T a x i or any
the S h a h of I r a n
7
A
No,
8
Q
How would you characterize Air Taxi's
sir.
efforts relating
9
10
Would
11
to t h i s m a j o r c o n t r a c t ,
I would
had p e o p l e
say
they k n e w .
13
the p r o g r a m was
that sold
15
desired
16
the B e l l p r o d u c t s w e r e
17
And
18
my own efforts
the B e l l p r o d u c t s .
19
from
the B e l l p r o d u c t s .
The
doing
perhaps
the U . S . G o v e r n m e n t
some
that made
1
it w a s n t A i r T a x i t h a t m a d e
21
contributed
22
at
23
p r o d u c t , the p e o p l e , t h e u s e o f
24
parts
25
the t h i n g s
of
to i t , t h e y
the r i g h t
time.
o f the w o r l d ,
that made
But
introduced
it w a s
that
sold
contacts
they knew
of
the
what
world.
to t h i n k , s o m e
the a d v i c e
the s a l e
the sale
they
happen.
it, they brought
the p r o d u c t
happen.
of
receive
happen.
the total B e l l
the U . S . A d v i s o r y
the sale
they
Government
in o t h e r p a r t s
the Bell p r o d u c t s a n d , I like
and
thing
It w a s n o t
Iranian
to f o r m a n a v i a t i o n p r o g r a m , a n d
it w a s
To me
will?
that A i r T a x i , c e r t a i n l y
H o w e v e r , the r e a l
14
20
if y o u
sales
you—»
A
12
of
or—"
in
They
us
thing,
the
other
Service, those
were
161
100
"
Q
Would
Mr. Zanganeh*s
having played
granting
it be fair
efforts
to c h a r a c t e r i z e A i r T a x i
in t h i s w i t h r e s p e c t
a leadership
to t h e s a l e
role with respect
of t h e c o n t r a c t , v i s - a - v i s ,
Bell Helicopter
and
to
the
themselves
and
as
Company?
A
N o , s ir .
Q
Would
it b e f a i r
to c h a r a c t e r i z e
efforts as being substantial and
significant?
A
It w a s c e r t a i n l y
supportive.
Q
Would
to c h a r a c t e r i z e
it b e f a i r
their
it
as
c r u c ial?
A
N o , s ir .
Q
Do you
without Air
A
contacts
of
the
at
think you would have made
the
sale
Taxi?
It d e p e n d s
upon whether we made
the
initial
the p r o p e r
time, and recognized
the
potential
program.
Q
Can you describe
by Air Taxi at
A
a t the r i g h t
Q
the p r o p e r
I believe
time
made
refer?
the p r o g r a m
to u s
attention.
Can you describe
the
that w e r e
to w h i c h y o u
that they b r o u g h t
t i m e , to o u r
to y o u r a t t e n t i o n a n d
the c o n t a c t s
the p r o g r a m
that
time they brought
it
they
to
brought
your
attention?
A
W e l l , i n m y mind;, A i r T a x i w a s w o r k i n g
with
162
100
out* s a l e s d e p a r t m e n t
In 1971
the h i g h
Air
showed
Our
convinced
of
there was a Paris Air
level people
Show and
p a r t of
in t h e t i m e f r a m e o f 1 9 7 0 a n d
me
from Iran visited
considerable
that I needed
to g o
us at
interest
international marketing
Show.
Many
the
in o u r
department
latter
trip w a s a v e r y
that
the Iranians w e r e
significant
operating
because
trip
the
of t h e i r h o t
conditions.
fact
t h a t B e l l h a d a-—*in d e v e l o p m e n t , h a d a S u p e r
For
the f i r s t
t h e y betjame v e r y
example, a Huey would
a hot day w i t h
of
twelve.
it w o u l d
not p e r f o r m .
to the S t a t e s a n d
to t h e S t a t e s a n d
b o t h our H u e y and
the T u g , a n d
But b e c a u s e of
t h e m to t h i n k a b o u t
They
talked
the
Huey,
For
That
It h a d
the hot
led
to t h e i r
at our
to u s a b o u t
the 2 1 4 .
And
a
and
that
Bell
decisions
look at w h a t we h a d .
looked
on
I saw t h a t , and
the Super H u e y
our Super Huey—at
it b e c a m e
to
take off from M e h r a b a d A i r p o r t
was developing back home.
came
them
and
in t h i s S u p e r H u e y .
t h r e e or f o u r p e o p l e a b o a r d .
ten or
high situation,
I encouraged
time, I introduced
interested
because
Agusta
high
to c o m e
Paris
products.
to I r a n in the
That
ships and were h a v i n g problems
capacity
of
1971.
the f a c t
and
1971.
And
they
facilities.
the c a p a b i l i t y
the
of
time we c a l l e d
they
talked
to u s
it
163
100
abcJut
the C o b r a s , a n d s h o u l d
the U . S . A r m y w a s b u y i n g ?
that
between Air T a x i and
And
the c o u n t r y and
these
Who
Cobra
discussions
that we b r i n g
them out
weren't
Government,
these
Government
two p r o t o t y p e s
in t h e d e s e r t a n d
do a f o r m a l
to
take
test
them
and
them.
in t h e G o v e r n m e n t
A
General
Q
Suggested
A
Yes,
Q
W h e n , c a n y o u f i x the
A
A p r i l of
'72.
Q
A p r i l of
1972?
intent
to m e
of I r a n s u g g e s t e d
that
Toufanian.
that
to
you?
sir.
Yes, sir.
And
date?
t h a t ' s w h y he w r o t e
I will buy
letter
prove
it w i l l
do
them,
W h e n you say
contact yourself with
including
the
the w a y h e d i d , to i n d i c a t e , o k a y , y o u
that your a i r c r a f t w i l l do w h a t you say
Q
And
the
that
you?
A
and
the I r a n i a n
take
e v a l u a t i o n p l a n for
of
they buy
the I r a n i a n G o v e r n m e n t , t h e y
in the h i g h a n d h o t p l a c e s a n d
Q
the s a m e C o b r a
o u t of t h o s e d i s c u s s i o n s , t h e
of I r a n s u g g e s t e d
to
Or s h o u l d
the U . S . M a r i n e s w e r e b u y i n g ?
were between Bell and
out
they buy
Generals——
that you stated
officials
of
you had
the I r a n i a n
direct
Government,
164
A
Uh
huh.
Q
_ ^ y o u had p e r s o n a l c o n t a c t w i t h
General
Toufanian?
A
Yes.
Q
Mr.
A
Yes,
Q
General
A
I'd met him
Q
Could
describe
Dehesh?
sir.
Khatami?
once.
y o u , for
the t i m e a n d
the r e c o r d
the place w h e r e
at
this p o i n t ,
you met
just
General
Khatami?
A
and
I h a d a n a p p o i n t m e n t w i t h h i m in h i s
it w a s , I w o u l d
Q
And
to G e n e r a l
it was
tell us
the p u r p o s e
'72.
of y o u r
visit
W e l l , General K h a t a m i , that's how you
pronounce
his
name, General
Q
And how
A
K-h-a-t-a-m-i.
Air Force.
And
do y o u s p e l l
it?
-r^was t h e C h i e f
he was a v e r y
w a s n a t u r a l a s p a r t of o u r
respected
of t h e
person
sales program
discussion.
of o u r h e l i c o p t e r s .
And
that we
A n d we did
that
Iranian
Country.
into a v i a t i o n .
talk with General K h a t a m i and explain
advantages
really
Khatami—
the I r a n i a n A r m y w a s m o v i n g
stop and
the s u m m e r of
Khatami?
A
And
just
guess
office
so
it
would
to h i m
in
the
that
165
100
( E x h i b i t s N o s . 14 and
w e r e m a r k e d for
identification.)
Q
Number
M r . A t k i n s , I've marked
for
the r e c o r d
14, a letter from M r . Frank Sylvester who
believe
is o n y o u r s t a f f and r e p o r t s
General H . A . Twitchell concerning
to I r a n .
And
the p e r t i n e n t p a r t
your attention
is a s
15
Exhibit
I
to y o u , to M a j o r
the s a l e of
helicopters
t h a t I w a n t "to b r i n g
to
follows:
"In A p r i l 1971 a final U . S . M i l i t a r y
F Y 70 p r o d u c t i o n r u n of a p p r o x i m a t e l y
200
will begin.
any
W e h a v e no i n d i c a t i o n of
follow-on U.S. procurement.
to t a k e a d v a n t a g e
r u n , it is n e c e s s a r y
orders not later
is r e q u i s i t e
I'd
t h a n 30 S e p t e m b e r
1971.
of l o n g
to m e s h w i t h a n y
This
lead
extended
l i k e to s h o w y o u this d o c u m e n t a n d
have
it.
MR. GALERSTEIN:
What's
the d a t e
that?
firm
schedule.?
you have a look at
M R . FREED:
A
order
production
that c u s t o m e r s place
to the p r o c u r e m e n t
time c o m p o n e n t s
production
T h e r e f o r e , in
of the p r i c e of this
Cobras
March 31,
'71.
March 31,
1971.
of
166
100
4/30
1
BY M R .
MARINACCIO
2
Q
3
with you that
Okay,
The matter
I would
this document raises
4
production
5
production, and
6
that during
7
you
And
discuss
and
the n e e d
you had mentioned
the V i e t n a m W a r a n d , p a r t i c u l a r l y
the
for
previously
in
1968,
were—^
8
A
Uh
9
Q
— - p r o d u c ing-*-=
10
A
Large
11
Q
-—large quantities
huh.
quantities.
12
presumably
your production
13
capacity.
And does
14
that your p r o d u c t i o n had b e g u n
15
Vietnam War and
16
that y o u w e r e
17
production
18
of y o u r g o o d
19
to
is t h e m a t t e r o f
line for Bell helicopters
so o n .
like
A
line was operating
this d o c u m e n t r e f l e c t
the
for
and
at
situation
to s c a l e o f f a f t e r
t h e r e w a s a t i m e a t or a b o u t
looking
for
of h e l i c o p t e r s
substantial
the B e l l h e l i c o p t e r
this
the
time
replacement
line and
Iran was
one
prospects?
Without
looking at p r o d u c t i o n
schedules,
I
20
can't remember
the e x a c t s i t u a t i o n , but c e r t a i n l y
as
21
Vietnam phased
out, certainly we were
other
22
possible
23
24
Q
customers
And would
a good p r o s p e c t
25
A
for o u r
it b e
looking
products.
fair
to say
f o r r e p l a c e m e n t in t h i s
I would
say at
for
the t i m e
that
that Iran
was
regard?
that
letter
was
167
90_
w r i t t e n , we saw a small program
in I r a n , n o t a
large
program.
And you'll notice
that letter only refers
to
Cobras.
Q
Can you discuss
significance
A
of that
sold Hueys
not g o i n g up a g a i n s t
And
statement
suggesting
I think at
thinking
those Hueys
the t i m e
A
Uh
Q
— i n
your answer
licensee
Right.
Q
And
I wanted
apparently works
were
to b r i n g
that you referred
I
to
think
to—»
to t h a t q u e s t i o n .
in I r a n a n d
in o r d e r
from
Uh
only.
ships.
so
for
you?
I'd
of
on.
to l e a d u s i n t o t h a t , I w o u l d
the d o c u m e n t m a r k e d
huh.
And
the m a t t e r
Exhibit Number
It's a c a b l e from K e n w o r t h y , who's an i n d i v i d u a l
A
We
huh.
A
to r e a d
were
that letter w e
15, which precisely
situation
that
helicopters
to d i s c u s s w i t h y o u f o r t h e r e c o r d
A g u s t a as your
like
that was
therefore we
that we wrote
N o w , the n e x t d o c u m e n t
the A g u s t a
the
in a s a l e s e f f o r t .
that they buy armed
your attention was Number
like
of
into I r a n , and
of a p r o g r a m of f i f t y or a h u n d r e d
Q
raises
tell us w h a t
is?
W e l l , the s i g n i f i c a n c e
A g u s t a had
were
that and
that
15.
168
100
Q
1
2
A t B e l l c r a f t , to I r a n , d a t e d 2 J u n e
1971,
s tating:
"By v i r t u e of o u r
licensing
agreement
4
with Agusta which provides Agusta
exclusive
5
sales rights
6
quote availability
7
H o w e v e r , this d o e s n o t p r e c l u d e
8
Government requesting U. S. Government
9
i n f o r m a t i o n on g o v e r n m e n t - t o - g o v e r n m e n t
3
10
as p r o v i d e d
11
Regards.
12
for 212
lead-in, I would
14
Agusta
15
agent
in l i c e n s e
STOP
Iranian
for
this
basis
agreement.
like to a s k y o u to b e g i n d i s c u s s i n g
situation.
in I r a n for
They w e r e , were
the sale of
A
That's
17
Q
And does
18
they n o t , y o u r
the
sales
helicopters?
correct.
that—
M R . SOUTTER:
Was
that j u s t a m o d e l ,
M r . Atkins?
20
MR. MARINACCIO:
you—because
22
23
of the U H ' I N
Kenworthy."
16
21
or d e l i v e r y
to
N o w , w i t h the u s e of t h i s d o c u m e n t a s a
13
19
in I r a n , w e a r e u n a b l e
I missed
Pardon m e , could
that, please?
M R . SOUTTER:
I don't know myself as
what Agusta sales rights w e r e , whether
it w a s by
to
model
24
25
A
A g u s t a had exclusive rights
to s e l l M o d e l
212'
169
100
I
at Iran, and
2
quote
t h e r e f o r e we did
them directly
not have
to the G o v e r n m e n t
If t h e U . S . G o v e r n m e n t
3
the r i g h t
of
to
Iran.
should
decide
to
4
a c c e p t a letter of o f f e r for an F M S sale f r o m
the
5
Government
could
of I r a n , t h e n t h e U . S . G o v e r n m e n t
6
deliver 212's
7
agreements
8
BY M R .
are
in I r a n .
That's
the w a y o u r
license
written.
MARINACCIO
9
Q
Well, I want
10
A
Yes,
11
Q
—matter
12
m a n y of
13
others
to d i s c u s s
with you at some length and
to g e t y o u r
lead-in question
15
like
16
to
17
helicopters
18
sell direct and bring
indicate
then I'm sure
to h a v e s o m e q u e s t i o n s
But my
14
Agusta—
sir.
the d o c u m e n t s , a n d
are going
this
testimony
that A g u s t a
to I r a n , a n d
on it:
had
in o r d e r
s a l e of h e l i c o p t e r s
A n d , f u r t h e r , if I m a y , t h a t
21
this
that t i m e — a n d
22
will fairly
23
Agusta
24
a s , and you may disagree with
25
o u t , there was a need
the B e l l d i s c u s s i o n s
and
on a
for w h a t
the
the
throughout
documents
to m o v e B e l l
I would
this, extreme
negotiations
to
government-to-
I think
in o r d e r
appear
to T e x a s , t h a t
government basis.
this-—that
I'd
to a l l o w B e l l
20
show
too.
certain
19
transation at
to b e m a d e
on this,
to s e l l
over
the
The documents
the p r o d u c t i o n
had
some of
is t h i s , a n d
the r i g h t
that
go
in a n d
characterize
secrecy
in o r d e r
about
that Agusta
170
90_
I
nor anyone else became aware
2
a substantially
3
A
Yes.
5
Q
And
7
the use of
to the
8
9
A
in
licensed
transports.
N o w , as
talking
off
pursuant
to s e l l
today.
I remember
the c u f f , I b e l i e v e
212.
T h e y had n o n - e x c l u s i v e
S o , the 212 w a s
on a n e x c l u s i v e
sale c o u l d
22
212
in
23
basis.
We
the b a s i s
the l i c e n s e
didn't
never
of
selling
And
agreement,
that the o n l y m o d e l
right
on
in I r a n w a s o n t h e
rights
to s e l l t h e
the o n l y
Model
Jet
rights.
territory
granted
t h e n , of c o u r s e , a n
FMS
be m a d e , but was n e ve r m a d e ; w e n e v e r
sold
a
Iran.
M R . GALERSTEIN:
12:00.
Cobras
It
to A g u s t a .
Ranger and H u e y s e r i e s , but not e x c l u s i v e
through
Okay?
they had an exclusive
25
that
gotten
there
in t h e r e o n
which
21
24
helicopter
So w e w e r e
C o b r a s , not
19
20
that.
to s e l l C o b r a s .
time, they don't have
the armed
14
18
on
which we've
A g u s t a had no rights
12
17
take
Iran.
to d e v e l o p
F i r s t of a l l , w e w e n t
'71.
have at that
16
to
subpoena.
11
15
in
then I'm going
these documents
10
13
large position
I'd a s k y o u to c o m m e n t
4
6
that Bell was about
Do you w i s h
It's a quarter
to b r e a k or c o n t i n u e
MR. MARINACCIO:
or
what?
Let's break
for
after
171
100
1
lunch now and w e ' l l c o m e b a c k
2
A
Okay.
A
4
5
minutes.
Agusta.
MR. MARINACCIO:
3
6
So w e ' r e a t
in 4 5
We are
Okay.
( W h e r e u p o n , the l u n c h e o n
t a k e n , to r e c o n v e n e
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
23-553 O - 78 - 12
indeed.
at
1:00 o'clock
p.m.)
recess
was
172
100
THURSDAY, FEBRUARY 2,
1
2
AFTERNOON
3
4
1978
SESSION
( W h e r e u p o n , the h e a r i n g w a s r e c o n v e n e d
1:00 o'clock p . m . , p u r s u a n t
to the
5
luncheon
at
recess.)
( E x h i b i t s N o s . 1 6 , 1 7 , 18
a n d 19 w e r e m a r k e d f o r
identification.)
6
7
8
9
10
JAMES F . ATKINS
resumed
the w i t n e s s
follows,
11
12
stand and
EXAMINATION
BY MR.
further
(Continued.)
M r . Atkins, before we
14
were discussing
15
show you a series of documents
16
on
the A g u s t a
t o o k the b r e a k , w e
situation.
and
And
I'd
get y o u r
I'd
like
18
Exhibit Number
19
documents
20
and communicated
21
16 s a y s
22
helicopter
to
comments
to s h o w y o u E x h i b i t N u m b e r
17 a n d E x h i b i t N u m b e r
that appear
to h a v e
18.
originated
to B e l l H e l i c o p t e r .
in p e r t i n e n t p a r t w i t h r e s p e c t
s a l e s , and
16,
These are
from Air
And
to
t h i s is d a t e d A u g u s t
M R . FREED:
23
Exhibit
all
Taxi
Number
prospective
24,
1971.
L e t me g e t — * * h a t n u m b e r
that?
like
them.
17
25
as
MARINACCIO
Q
13
24
testified
to-wit:
M R . MARINACCIO:
Number
16.
is
173
100
M R . FREED:
1
2
August 24,
1
71.
Let me get that
And a cable from whom?
M R . MARINACCIO:
3
4
to B e l l H e l i c o p t e r .
5
f r o m A i r T a x i to B e l l H e l i c o p t e r
6
7
10
17 is a c a b l e
d a t e d 27 A u g u s t
'71.
That's cable, August
M R . MARINACCIO:
And
27,
Exhibit Number
is a n A i r T a x i I n t e r n a l M e m o r a n d u m d a t e d O c t o b e r
18
28th.
1971.
Q
And Exhibit Number
12
the p r o s p e c t i v e h e l i c o p t e r
13
secrecy matter, quote:
16, speaking
maintaining
15
16
concealment.
A
I don't
18
Q
There appeared
in w h i c h c o d e s a r e
importance
Regards,
I n c i d e n t a l l y , who was
17
in t e r m s
s a l e s , talks a b o u t
"Once again must remind
14
of
Snapper."
Snapper?
know.
to b e m a n y , m a n y
documents
used.
A
I know, they w e r e u s i n g
21
Q
C o u l d y o u t e l l us the r e a s o n w h y t h e y
using
23
codes.
were
codes?
A
W e l l , b e c a u s e a t that t i m e in that
24
p a r t i c u l a r l y , nothing was privileged and
25
w e r e a p t to b e i n t e r c e p t e d .
of
the
20
22
Taxi
'71.
11
19
Cable from Air
And Exhibit Number
M R . FREED:
8
9
down.
And
I'm sure
country,
communications
that's
the
174
100
1
r e a s o n they
Q
2
3
did.
L e t t e r s w o u l d be i n t e r c e p t e d
telexes
intercepted ?
M R . SOUTTER:
4
5
or
Was
this a
competitive
situation?
6
A
W e l l , to m e , the t e l e p h o n e , the t e l e x , w a s
7
not protected at that
t i m e , a n d I t h i n k our p e o p l e
8
c o d e s b e c a u s e of t h a t
reason.
9
BY M R . MARINACCIO
10
11
Q
A g a i n , Exhibit Number
17 s a y s
"We strongly recommend
that
13
m a t t e r be treated w i t h m a x i m u m
14
otherwise
15
our mutual d i s a d v a n t a g e .
16
it w i l l r e s u l t
is A i r T a x i , i s n ' t i t , u n d e r the
A
I don't
19
Q
Document Number
20
this
caution,
Best regards.
indicates
that
Snapper
code?
during his stay
Teheran with
22
of M r . S y l v e s t e r , M r . M i t c h e l l a n d M r .
23
we verbally
Snapper."
18 s t a t e s in p e r t i n e n t
"On a few o c c a s i o n s
And
to
know.
21
25
delicate
in g r e a t c o n f l i c t
I t h i n k this d o c u m e n t
18
24
pertinent
part:
12
17
in
used
the B e l l H e l i c o p t e r ' s
team
in
consisting
Gallagher,
informed M r . Horsley—-"
I t h i n k t h o s e a r e a l l e m p l o y e e s of
"—'that since very
important
part:
Textron.
discussions
are
175
1
taking place and a c t i v i t i e s
2
discontinue
3
replace
Augusta's
going
efforts
in t h i s m a r k e t , it is a b s o l u t e l y
send reports
in w r i t i n g .
6
our communications
7
long d i s t a n c e
8
messages.
9
a c t i v i t i e s , we agreed
written
and
them with B H C , Bell Helicopter
5
11
to
in I r a n
4
10
on,
inadvisable
We stressed
that
f r o m n o w on b e e i t h e r
telephone
c a l l s or coded
Therefore, except
not
for
to s h o w y o u
these
documents,
M r , A t k i n s , and
r e l a t i o n s h i p b e t w e e n A g u s t a and Bell and w h y
14
this e x t r e m e
I would
like
to a s k y o u
to e x p l a i n
the
thought
situation-r—as
of s e l l i n g
I say, we
the a r m e d
17
We felt
18
was additional purchases
of H u e y s m a d e , t h a t
19
they should
Agusta.
that A g u s t a had
20
be made
t h e I r a n i a n s , to b u i l d
I r a n i a n s , to d e l i v e r
25
deliver
spare parts
a maintenance
aircraft
facility
on s c h e d u l e , a n d
on s c h e d u l e .
if
the A g u s t a p e r f o r m a n c e
areas.
in e f f e c t w e r e
And
they
in a l l
encouraging
there
to
for
us
train
the
to
The Government
was unhappy with
went
perhaps
N o w , Agusta had certain commitments
22
24
for
helicopters.
sold Hueys in I r a n , and
from
21
23
the
the need
secrecy?
W e l l , the A g u s t a
to I r a n w i t h
telex
reports."
Now, I wish
A
verbal,
any
13
16
to
all
routine
to s u b m i t
12
15
Company,
of
Iran
these
to
take
176
100
I
over
the
2
elements
3
do
certain
the I r a n i a n G o v e r n m e n t w e r e e n c o u r a g i n g
Q
Who would
those elements
Government have b e e n , would
6
7
of
in I r a n ,
A
Oh, we
the c e n t e r l i n e
9
helicopters,
10
and
this
in the
And
that w i t h
General
so, we were
going
saying,"Look, we're
is a d i f f e r e n t
The facility
Dehesh?
selling
situation
that A g u s t a
f a c i l i t y , b u t it w a s n o t p r o d u c t i v e .
thought we
should
13
was
Q
14
The
Bell should
take
that facility
there and
inspected
take over
the A g u s t a
A
And
Q
Who were
18
A
There was a joint company
19
owned by
20
had built
21
Agusta
22
their alternatives
23
24
25
the
There was a
the f a c i l i t y .
to p e r f o r m , a n d a t
And
But
thought
formed,
owned
the s a m e
time
partially
by A g u s t a ,
trying
to
t h e r e , and A g u s t a are v e r y c o m p e t i t i v e
that
get
they were
if A g u s t a
did
so it b e c a m e a v e r y c o m p e t i t i v e
So t h a t ' s r e a l l y
that
officials?
they were
to t u r n to u s
I
joint—
those government
Iranians, partially
it.
facility?
17
it.
They
facility.
officials
16
run
Mehrabad
over and run
the
Iranian Government
here."
had b u i l t at
was a nice
taken out
down
our
over
12
15
to
Iranian
it h a v e b e e n M r .
talked about
Toufanian and M r . D e h e s h .
8
11
us
that.
4
5
total helicopter business
not
weighing
perform
thing
out
people.
the c o m p e t i t i v e
s i d e of
it.
177
100
I think
they w e r e
talking about
e v e n t u a l l y w e did
take
them
Q
They were your
A
Uh
Q
—for
No.
turned
of
time—
it, and
the facilities
to
then
you
was
that
from
the
Agusta
operate.
the
Iranian
Government
instrumental—
Basically—
Q
—in
A
B a s i c a l l y , the m i l i t a r y
headed
having
you—
industrial
organizatior
by—
Q
A
Specifically?
—the
Vice Minister
Q
Would
that be General
A
Yes. — i s
such as
in c h a r g e
of War-7—
Toufanian?
of i n d u s t r i a l
this f a c i l i t y at M e h r a b a d .
level that we were
to u s
that were
A
at the
Actually what happened
And who were
officials
course,
licensee?
it o v e r
Q
licensee
certain aspects
Iranian Government bought
and
A n d , of
huh.
took over your own
A
in t h e r e .
over.
talking
Q
Was M r . Dehesh
A
Y e s , in s o m e o f
Q
In s o m e o f
A
He was at
And
facilities
it w a s
this
about.
involved
in t h o s e
discussions?
them.
them?
that
time an a s s i s t a n t
of s o m e
kind
178
100
I
to G e n e r a l
Touvanian.
Q
Was General
3
A
H e w a s not
4
Q
—involved?
5
A
Never
6
Q
And
2
A
7
Khatami—
involved.
involved.
that w a s
I met General Khatami
in 1 9 7 2 , I b e l i e v e y o u
I t h i n k it w a s .
'72 or
9
time, right.
10
Q
11
A
12
Q
— < w h a t c a m e o u t to b e the
13
A
—to
14
Q
—the
15
A
R i g h t , to f o r m u l a t e
Q
Did you have a long d i s c u s s i o n with
16
17
the s a l e s e f f o r t h a v i n g
that
to do w i t h — —
Trying—
A
formulate
the
s a l e of 4 8 9
I don't
sale—
program.
helicopters?
the
program.
think i t was very long.
spending m a y b e a half hour
20
21
it w a s
that s a l e s e f f o r t of
General
Khatami?
18
19
' 7 1 , b u t it w a s d u r i n g
During
stated?
I'm not sure w h e t h e r
8
once.
I remember
is m y r e c o l l e c t i o n
of
it.
Q
W h a t did he say to y o u a n d w h a t d i d y o u say
A
It's pretty hard
to
him?
22
23
years ago.
24
of
25
product
to say, f i v e o r s i x or
But,basically, I went
t a l k i n g a b o u t our p r o d u c t
line for
in t h e r e w i t h the
l i n e a n d h o w it w a s
the I r a n i a n G o v e r n m e n t
to
seven
purpose
the
purchase.
right
179
102
Q
I
2
N o w , w h y w o u l d y o u have gone to see
Khatami about
General
that?
3
A
Well, because-—
4
Q
Because
5
A
B e c a u s e I'm a good m a r k e t i n g m a n .
he—»
And w h e n
6
y o u go out to sell a p r o g r a m , y o u cover a l l y o u r
7
Y o u d o n ' t leave a n y o n e o u t .
8
the d e c i s i o n p o i n t was not G e n e r a l K h a t a m i .
9
d e c i s i o n p o i n t was in M I O , M i l i t a r y I n d u s t r i a l
10
And I h a d —
I knew
bases.
that
I knew
the
Organiza-
tion.
Q
11
W h a t p a r t did y o u think that G e n e r a l K h a t a m i
12
m i g h t play in the s u b s e q u e n t sale of h e l i c o p t e r s
13
B e l l to M I O — t h r o u g h M I O to the G o v e r n m e n t of Iran?
A
14
from
The G o v e r n m e n t of Iran is a v e r y s m a l l
thing.
15
A n d e v e r y o n e p l a y s in these t h i n g s , s e e .
16
g r e a t big o p e r a t i o n w h e r e you have t h o u s a n d s of G e n e r a l s
17
like w e have in W a s h i n g t o n .
18
And
operation.
person.
Q
And G e n e r a l K h a t a m i was the C h i e f of the A i r
A
Yes, s ir.
Q
And he would h a v e had an i m p o r t a n t i n p u t , at
Force ?
21
22
23
It's a v e r y s m a l l
the Chief of the A i r F o r c e is a v e r y i m p o r t a n t
19
20
It's not a
least in your m i n d , in any d e c i s i o n on the sale
24
A
W e l l , the
25
Q
—on
of—'
helicopters—
the sale of h e l i c o p t e r s f r o m B e l l to Iran
180
100
A
T h e h e l i c o p t e r s w e r e g o i n g on the
ground
f o r c e s , and w h a t his influence would be on the ground
f o r c e s , I had no i d e a .
qualified
wanted
B u t they m i g h t
l o o k a t h i m as a
e x p e r t in the a v i a t i o n b u s i n e s s , a n d as s u c h , I
to t e l l h i m a b o u t the v a l u e of the B e l l
Q
S i n c e h e w a s a G e n e r a l of the A i r F o r c e
h a d no s p e c i f i c r e s p o n s i b i l i t y
for
the a c q u i s i t i o n
h e l i c o p t e r s by the I r a n i a n A r m y , w h a t w a s
in y o u r
w h y did y o u t h i n k t h a t w h a t y o u told G e n e r a l
would have an important
copters
W e l l , I assumed
heli-
t h a t the t o p s o f the
So in f a i r n e s s
the h e l i c o p t e r s
t h e n , you felt that
A
from
would
about
helicopter.
K h a t a m i w o u l d p o s s i b l y have some
to a c q u i r e
forces
in the o p i n i o n s of G e n e r a l K h a t a m i
the v a l u e of a p a r t i c u l a r m a k e
Q
military
t a l k e d a m o n g t h e m s e l v e s , and
I w o u l d a s s u m e t h a t the c h i e f of the g r o u n d
be interested
input
General
into the
decision
Bell?
I didn't think he would have necessarily
But I've learned e n o u g h
can't afford
And
to h a v e
in t h i s w o r l d
that
this little p o c k e t over here
sometimes when you overlook a pocket
in a m a r k e t i n g p r o g r a m , t h a t p o c k e t t a k e s a
p o s i t i o n b e c a u s e y o u did not a d v i s e
mind,
Khatami
i n f l u e n c e o n the s a l e of
services had discussions and
you.
and
of
to the I r a n i a n A r m y ?
A
input.
products.
an
you
opposing
like
that
negative
t h e m of the m e r i t s
of
181
100
1
yoiar p r o g r a m .
2
and I went
3
thing
so I w a n t e d
to see h i m o n c e .
I t h i n k it w a s
D i d y o u t h i n k in y o u r m i n d
5
as you described
6
of s o m e
nature?
7
A
No,
8
Q
Of w h a t e v e r
9
A
Just an aviation
10
to c o v e r a l l the b a s e s
i t , had a n i n t e r e s t
in this
interest.
w a s a g o o d a v i a t o r , and as s u c h h e w a s
Q
We want
A
Sure.
13
Q
B u t I w a n t to c o n t i n u e
14
A
Yeah.
Q
the n e e d
—this
General
to get b a c k to G e n e r a l K h a t a m i
l i n e on the A g u s t a
for s e c r e c y a n d
transaction
and
concealment.
is a n i n t e r n a l m e m o r a n d u m f r o m M r . Z a n g a n e h
which we got from Bell Helicopter.
He
19, which
to h i s
files
says—
MR. GALERSTEIN:
Pardon m e .
What's
the
M R . MARINACCIO:
Excuse m e .
September
date?
22
23
later.
with—.
19
20
Khatami
interested.
18
21
transaction
I show y o u document E x h i b i t Number
17
pocket,
nature?
12
16
that that
sir.
11
15
the p r o p e r
to d o .
Q
4
And
21,
1971.
24
M R . FREED:
25
M R . GALERSTEIN:
Is this a n o t h e r
Number
19.
document?
182
100
M R . FREED:
1
2
Air Taxi Internal
Q
4
and
And
then I'll
6
Let me get
this document
let y o u look at
"As p r e v i o u s l y
September
says
it f o r y o u r
8
Toufanian asked
me
9
Bell Helicopter
Corporation
a representative
11
powers
12
informed
13
willingness
to s e n d a
or
on November
of
to d e f i n i t e l y
Government
and a b i l i t y
of B e l l
of
Helicopter
to c o - p r o d u c e
same m e e t i n g , M r . Dehesh re-emphasized
16
importance
17
support
18
know very well
19
effort both
20
In t h i s r e s p e c t w e a r e c o n f i d e n t
21
position
22
Fort
24
H u e y and H u e y C o b r a s .
At
Company
the
the
avoiding
to A g u s t a u n d e r a n y c o n d i t i o n .
We
is m a k i n g h i s
in I r a n a n d b a c k
full
the
15
of B e l l H e l i c o p t e r
send
officially
14
that Agusta
private
requesting
t e a m to T e h e r a n w i t h
the I r a n i a n
part,
General
telex
1, 1 9 7 1 , and
1971.
review:
scheduled at a very
m e e t i n g , M r . D e h e s h on b e h a l f
10
21,
in p e r t i n e n t
7
23
that.
Memo.
MR. MARINACCIO:
3
5
Okay.
in F o r t
about
in I r a n , b u t w o n d e r a b o u t
last
Worth.
their
it b a c k
in
Worth?"
Are you familiar with what M r . Zanganeh
talking about
25
A
in t h i s
I think
document?
so.
is
183
112
1
Q
Could
2
A
Uh
3
Q
And with particular
you give us your comments
4
interest M r . Dehesh would
5
Bell Helicopter
6
i m p l i c i t l y b e c a u s e he p r o b a b l y
7
documents, maintaining
8
9
A
to a v o i d
Okay.
have
reference
said
it in
armed
14
talking about
licensee.
And
15
We do not w a n t
that's
in s e c r e c y a s
Now, Agusta was
16
stay with
17
program was
18
19
You have purchased
I think
Q
need
developing,
far as A g u s t a
W e l l , I think you're
Q
And did you behave
22
A
W e l l , I think you're using
from
that
they're
concerned.
us
to
the
agree with
to m a i n t a i n s e c r e c y a n d c o n c e a l m e n t
A
25
is
sell
also.
Did you and Bell Helicopter
you're overdoing
to
that
they r e c o g n i z e d
21
24
in
to e n c o u r a g e
20
23
before,
transports
to i n t e r f e r e
that p o s i t i o n b e c a u s e
think
referring
to I r a n
the d i s c u s s i o n
trying
I
of
other
they're
11
our
the a g e n t
is t h a t , a s I told y o u
Bell Fort Worth was saying, we have gone
program.
what
secrecy?
10
13
that?
supporting A g u s t a , and
Well, I think what
helicopters.
to
in a d v i s i n g
c o n c e a l m e n t and
to in t h e A g u s t a m a t t e r
12
on
huh.
from
Agusta?
using—
in t h a t
way?
the w o r d
secrecy—
the w o r d " s e c r e c y a n d " c o n c e a l m e n t
Q
I ' m jus t u s i n g
A
Yes.
the
the
document—
184
107
1
Q
I'm using
2
A
You don't normally
3
marketing' p r o g r a m out
4
you just don't do
5
practice.
Q
that, as a m a t t e r
That's
Q
And
o n e of
to b e
structured
business
transaction
from government
if it w a s s t r u c t u r e d
through
Oh,
Q
—the
15
A
N o w , you" r e — y o u ' r e —
16
Q
—have
17
explain
18
A
No.
19
Q
What
20
A
You're making mistakes
21
Q
All right.
your
the
to
from
entered
government
agent—
no.
agent, Agusta
would—
to d e r i v e a c o m m i s s i o n .
Would
you
that?
it
is?
I think
in a d o c u m e n t , so I'd
A
of g o o d
that any
A
24
competitors,
the d o c u m e n t s , I b e l i e v e ,
indicated
14
read
your
l i c e n s e e a s w e l l as
13
23
lay
right.
o n e of y o u r p e o p l e
22
document.
competitor?
A
into had
in t h e
go o u t a n d
in f r o n t of y o u r
But Agusta was your
potential
because
Che w o r d s
in w h a t
like your comments
W e l l , I think I commented
had an exclusive
right
you're
to s e l l
saying.
I am summarizing what
before
on
that
the M o d e l 2 1 2 , and
I
that.
Agusta
Bell
25
[could
not
sell
the M o d e l 2 1 2 d i r e c t l y
to the G o v e r n m e n t
of
185
108
i
Iran.
But I believe
2
3
subject
4
could
to a n e x c l u s i v e a r r a n g e m e n t , a n d
sell
Q
5
6
series
those d i r e c t l y
Okay.
7
Zanganeh's
in b e i n g a b l e
9
of t h e h e l i c o p t e r s
the s u c c e s s
to g o
11
ask you some questions
does go b a c k
about
Mr.
Helicopter
for
the
of I r a n .
documents,
And
I'd
like
Would
you mark
to
these
(Exhibits N o s . 20 t h r o u g h
w e r e m a r k e d for
i d e n t if i c a t i o n . )
16
Q
M r . A t k i n s , I'd like
18
20 w h i c h
19
Helicopter
is a c o m m u n i c a t i o n
dated March 2 ,
to r e f e r
from M r . Zanganeh
to
M r . Zanganeh
"Am arranging meeting with vitally
project.
visit Texas.
Bell
says:
contact here within
24
Numbe
1968.
21
23
32
to E x h i b i t
20
this
please.
15
25
sale
them.
MR. MARINACCIO:
22
a
Sure.
13
17
Bell
through
to 1 9 6 8 a n d
not
Iran.
of B e l l
the c o n t r a c t
f r o m the G o v e r n m e n t
series
14
and
to get~»-*deriving
10
A
like
of
to d i s c u s s A i r T a x i ' s a n d
performance
of documents
therefore
to the G o v e r n m e n t
If I m a y , I'd
of d o c u m e n t s
8
12
that all other models w e r e
Subsequent
15 d a y s a f f e c t i n g
this m e e t i n g w i l l
Regards, Zanganeh Air
important
your
sales
schedule
Taxi."
Would you know who M r . Zanganeh
is
referring
186
108
1
t o "In t h i s
document?
2
A
N o , I h a v e no
3
Q
Do you have any ^recollection
4
visiting
5
would be characterized
6
important contact"
idea0
Texas, presumably
7
A
I would
8
Q
Who
9
communication
10
of a n y
y o u r p l a n t , in 1 9 6 8 , w h o
by M r . Zanganeh as a
involving
have
the s a l e s
no idea w h o
of
that
in B e l l H e l i c o p t e r w o u l d
from M r . Zanganeh at
that
is.
have
The Export Department, probably,
Q
Which was under
12
A
Yes.
13
Q
——supervision
your
and
r e p o r t a n y of
16
A
No, I didn't
17
Q
Did
18
A
W e l l , my testimony
19
people visited
20
idea who
21
22
23
24
Q
Number
say
you?
is t h a t
And
in 1 9 6 8 a l o t
I personally
have, n o
to d o c u m e n t
Exhibit
o f A i r T a x i to M r .
1 0 , 1 9 7 2 , in w h i c h he s a y s
in
Gallagher,
pertinent
part:
25
of
to.
l i k e to r e f e r
21 from an official
dated December
t h i s to
is r e f e r r i n g
I'd
not
that.
the B e l l P l a n t .
Okay.
that O r p e n did
you?
not report
that telex
Orpen.
jurisdiction.
testimony was
to
a
your—=»
15
this
gotten
time?
A
And
"vitally
helicopters?
11
14
person
"Mr. Zanganeh will be carrying
with
him
187
112
i
A i r T a x i ' s f i l e r e g a r d i n g our e f f o r t s
2
d u r i n g the p a s t y e a r s .
3
this f i l e y o u w i l l a p p r e c i a t e
4
c o o p e r a t i o n devoted and contributed
5
which resulted
6
While going
in the r e c e n t
for
Bell
through
the v a l u a b l e
large
b y us
order."
D o y o u r e c a l l if M r . Z a n g a n e h v i s i t e d
Bell
7
H e l i c o p t e r , T e x a s , a t a time s u b s e q u e n t
8
1 9 7 2 , a t a t i m e in w h i c h h e c a r r i e d a f i l e w i t h
9
c o n t a i n i n g d o c u m e n t a r y e v i d e n c e of his c o n t r i b u t i o n
10
the e f f o r t s
11
A
to the B e l l H e l i c o p t e r
I think
to D e c e m b e r
s a l e s in
him
file
12
you're reading from.
13
to d o c u m e n t
their case b e c a u s e w e felt that we would
14
to d o c u m e n t
the c o m m i s s i o n s
15
of the F M S c a s e
16
17
Q
it w a s our r e q u e s t
that w e m i g h t s u b m i t as
So y o u w e r e a w a r e
A
to A i r
Taxi
have
part
to t h e U . S . G o v e r n m e n t .
coming here with that f i l e .
18
in
Iran?
t h a t ' s p r o b a b l y p a r t of t h e
And
10,
that M r . Z a n g a n e h
Did
was
you-—•
W e l l , I c a n ' t s a y that I w a s a w a r e
that
he
19
was coming here w i t h that f i l e , but I know that he asked
20
h i m to p r e p a r e s u c h a f i l e , a n d I k n o w h e w a s
21
several
22
Q
times.
O n o n e of t h o s e v i s i t s a t or a b o u t
23
did y o u h a v e o c c a s i o n to s i t d o w n a n d
24
Z a n g a n e h a b o u t t h i s s p e c i f i c m a t t e r of e f f o r t s
25
m a d e to g e t
23-553 O - 78 - 13
here
the—
talk with
that
time,
Mr.
that he
had
188
in
i
A
Oh, I'm
2
Q
—get
3
A
I'm sure I talked
4
Q
Here
5
sure—
the B e l l H e l i c o p t e r
contracts?
to h i m a b o u t t h a t , y e s .
in T e x a s ?
A
Probably,
6
Q
On his
7
A
Yes.
8
Q
And how many occasions would you have
9
10
13
visit?
to h i m w h e n h e w a s h e r e , w o u l d
with
y o u have had a
A
talked
O h , X m a y have talked
to M r . Z a n g a n e h
Q
in
conference
How many discussions
Zanganeh
15
a n d his c o n t r i b u t i o n
16
large order" with the Government
that p a r t i c u l a r l y
t o — w e l l , I may
did y o u h a v e w i t h
focused
on his
of
"recent
Iran?
A
O h , I'd say f o u r or
18
Q
F o u r or
19
A
Yes.
20
Q
A n d c o u l d y o u t e l l us the s u b s t a n c e
21
conversations?
24
25
five.
five?
of
A
Well,
Q
W h a t w a s M r . Z a n g a n e h s a y i n g to y o u a s
those
I —
w h a t his c o n t r i b u t i o n
A
Mr.
participation
in the o b t a i n i n g of the
17
23
have
Texas—'
14
22
talked
him?
11
12
yes.
was?
W e l l , he considered
himself
to be
our
to
189
112
1
manufacturer's
2
Che b e g i n n i n g
rep
3
that he had a s s i s t e d
4
noching
5
compensaCed
else; and
7
noching
8
Iranian GovernmenC
10
11
13
e l s e , " did y o u
Co " l o g i s t i c
include
wich
No, I don't.
LogisCic
y o u need
Co c o n d u c e a p r o g r a m
to I r a n
16
helpful
in g e t t i n g
the e q u i p m e n t
17
helpful
in seeing
18
Many
services
Am
of
that
t h a t h e was-—*at
21
w i t h yo,u a f i l e a b o u t h i s
22
A
No, no, wait a
Q
—to
a
to t h e r i g h t
for
you correctly
important
brought
very
place.
us.
then
to b e
discussing
contributions—
minute.
very—'
M R . SOUTTER:
Okay.
We
He was
this m e e t i n g w h e r e h e w a s
23
chac
through customs, very
type he p e r f o r m e d
saying
means
supporC
in c h a c c o u n t r y .
it w a s d e l i v e r e d
20
Q
Shah
Co m e
to d e m o n s t r a t e .
I understanding
24
support
cyping, various
a l o t of e q u i p m e n t
Q
Che
Khatami?
14
well
if
in c h a c c o n t a c t s
15
25
if
officials—
chac, Cransporcacion,
19
Co b e
suppott
- n s u c h as Generals and perhaps
A
jusC
supporC
No.
General
12
ac
program|;
efforCs.
When you refer
Q
and
of a l a r g e h e l i c o p t e r
u s in m a n y w a y s , l o g i s c i c
for h i s
Q
A
Chat h e h a d b e e n our rep
c h a c , of c o u r s e , he e x p e c C e d
6
9
in I r a n ;
of d e v e l o p m e n C
That's
Please clarify
it.
not w h a t he
said.
190
112
i
*
A
I said
that we a s k e d
for a file
2
his c l a i m of a c o m m i s s i o n on the s a l e .
3
personally
4
with him about
5
Iran.
6
discuss
Q
d i d he m e n t i o n
7
the s p e c i f i c
8
h i s c a s e w i t h y o u , s o to
9
A
contributions
make
speak?
B e l l as a p o s s i b l e c o n t e n d e r
12
that he had
13
I knew all
14
have
t h a t h e had b e e n
supported
these
Did he
s o , if h e d i s c u s s e d
17
your
stating for
for
A
19
of c o u r s e , h e
20
to a s s i s t u s in o u r
in
the p r o g r a m .
from firsthand
in
developing
I knew
program.
k n o w l e d g e , he
didn'
them.
t e l l y o u or d i d n ' t h e
tell you and
that with y o u , I would
the record w h a t he
18
Well, M r . Zanganeh
told
is a g o o d
if
appreciate
you?
salesman,
and,
talked a b o u t w h a t his o r g a n i z a t i o n had
done
program.
Q
And w h a t did h e
A
We 1 1 —
Q
What kinds of
tell y o u , what did he
talk
about?
23
24
instrumental
u s in o u r d e m o n s t r a t i o n
things
to t e l l m e a b o u t
16
25
in
that he had m a d e , did he
11
22
efforts
W e l l , of c o u r s e , I h a d s e e n his o p e r a t i o n
I knew
21
for his
talk
you,
Iran.
Q
I didn't
to y o u , d i s c u s s w i t h
10
15
support
that, f i l e w i t h h i m , b u t I d i d
the p r o p e r c o m p e n s a t i o n
And
to
his
contribution?
things did
he p o i n t
to a s
being
191
112
A
1
W e l l , b a s i c a l l y , he talked a b o u t
2
t h a t h e had b e e n
3
i n s t i g a t e d , that he had helped
4
he h a d s u p p o r t e d
5
representative
6
physical services
7
told us
8
Q
9
in I r a n a t the t i m e
us
the
the p r o g r a m
us d e v e l o p
the s a l e ,
throughout as you expect a
to d o , t h a t h e h a d p e r f o r m e d
for u s .
These were
Now, you seem
to be~*»this
fact
was
the
sales
all
things
these
that
now you've
focused
A
Yes.
11
Q
Would
12
contribution—
you regard
A
No.
Q
—sort
15
A
No.
16
Q
Yes.
17
A
You don't recognize
of
logistical
B u t it is a b i g
18
into a new country w h e r e
19
typewriter
20
recognize
services.
important
thing.
the p r o b l e m s
it's v e r y d i f f i c u l t
You
of
going
to g e t a
don't
things.
21
Q
22
A
Okay,
Q
— — I ' m j u s t a s k i n g you w h a t he told y o u
25
these
time
things?
to g e t a n a u t o m o b i l e .
those
second
that as h i s m o s t
14
or
is the
on l o g i s t i c a l , p h y s i c a l
13
24
he
about.
10
23
that
W e l l , I'm not r e c o g n i z i n g
or n o t
recognizing-
okay.
at
conversations?
A
I'm giving y o u as clear an understanding
as
192
112
1
I e & n g i v e y o u of
2
Q
those
conversations.
Did he ever m e n t i o n
to y o u d u r i n g
3
of t h e s e c o n v e r s a t i o n s
that he had been
4
in d e v e l o p i n g c o n t a c t s
for Bell H e l i c o p t e r
5
with high government
6
persons w h o had a direct access
7
A
8
that he knew
9
he knew
10
11
12
13
A
knew
15
ac t i o n s .
16
17
he m e n t i o n e d
18
19
Did
he m e n t i o n
A
company was
What
that
associates
that
to t h o s e ,
to y o u i n h i s
if
question.
A
Sure.
Q
Did
in
With Government
23
a s to
He
their
whether
s«id
t h a t his
Iran.
officials?
you—
M R . SOUTTER:
just a little bit
or n o t .
not?
say t h a t h e p r o b a b l y
influential
22
conversa-
in c o u n t r y a n d I h a d o b s e r v e d
to y o u or
I would
Q
us
and
Iran?
to h i s
is y o u r b e s t r e c o l l e c t i o n
20
25
us
I c a n ' t tell y o u w h e t h e r h e did
21
24
to the S h a h of
introduced
that
That was my
that I had been
Q
Corporations
question.
tions with you?
14
instrumental
in I r a n , a n d m e m b e r s of h i s G o v e r n m e n t
in I r a n , c e r t a i n l y h e
Q
course
officials, including Generals
C e r t a i n l y , he introduced
that's your
the
Can we put
this
in
like
the
more?
MR. MARINACCIO:
I would
context
193
116
1
witness
Co a n s w e r
2
3
these
questions.
M R . SOUTTER:
BY M R .
MARINACCIO
Q
4
Fine.
Did you ever
tell him
5
h i m , that he had b e e n h e l p f u l and
6
gaining
7
Iranian Government
the c o n t r a c t b y v i r t u e
8
A
9
respond
10
Q
11
jus t — S u r e .
12
A
Okay.
13
Q
Make a
14
A
Okay.
15
that y o u a g r e e d
instrumental
with
in
of c o n t a c t s w i t h
high
officials?
I would
say-—* I w o u l d
like
to s o r t o f —
Can
Oh, please do, please do.
representative
I just—
I would
statement.
To me, a company
that r e t a i n s
in a n y f o r e i g n c o u n t r y e x p e c t s
a
sales
that
sales
16
representative
to u s e h i s b e s t e f f o r t s
17
products.
sales representatives
18
d u n g e o n and not h a v e friends and not k n o w p e o p l e and
19
of a n y v a l u e
20
And
to
to s e l l
cannot
So, certainly
part
in a
be
22
in the c o u n t r y , d i d
in m y m i n d , A i r T a x i p l a y e d
in the s a l e s p r o g r a m , d i d k n o w p e o p l e
23
your
live
you.
21
i n t r o d u c e u s to t h o s e
of
made by B e l l based
25
Bell based
on its p r o d u c t s , and
upon probably
a
influence
people.
But the r e a l sale w a s m a d e b y B e l l and
24
I
freely?
it w a s m a d e
the r e c o m m e n d a t i o n
it w a s
by
of the U .
S.
194
,
Government
through
that
the f a c t
that was
it wiasn't
That had not a damned
Khatami
thing
to d o
it.
Q
to
And
that M r . Zanganeh knew G e n e r a l
that we made a s a l e .
with
m
,
t h e w a y to g o .
Did M r . Zanganeh ever m e n t i o n General
Khatami
you?
A
Yes.
Q
And
on w h a t occasions and
in w h a t c o n t e x t
did
h e m e n t i o n G e n e r a l K h a t a m i to y o u ?
A
He mentioned
he k n e w .
He a r r a n g e d
And at one
G e n e r a l K h a t a m i as a friend
f o r m e to g o to s e e G e n e r a l
time I saw G e n e r a l K h a t a m i , he m a d e
arrangements
for m e
to s e e G e n e r a l
He recognized
not t h e — n o t
recognized
that G e n e r a l K h a t a m i
I guess
Air
Force.
in 1 9 7 7 o r s o , w e s o l d 4 0 o r 5 0 s h i p s
That's
Q
about
the b a s i s of
With respect
in
to
that
to t h e s e c o n v e r s a t i o n s
and
i n p u t of Z a n g a n e h a n d A i r T a x i a n d G e n e r a l K h a t a m i
of
this
the
it.
you've just d i s c u s s e d , had y o u ever discussed
particular aspects
the
program.
I t h i n k G e n e r a l K h a t a m i had died b y
time.
was
program.
that sometime later
there might be an Air Force helicopter
And
Khatami.
the
Khatami.
the d e c i s i o n p o i n t o n t h e
We also
program
fully
who
the
as
those
transaction with G. William
195
112
i
Milfler ?
2
A
I would
3
Q
What
4
you did
5
A
I would
6
Q
You would
7
A
Yes,
8
Q
If I m a y , I'd
9
into
or
think
is y o u r b e s t r e c o l l e c t i o n
as
11
Miller?
12
A
say I did
to w h e t h e r
like
What
I would
say
14
the particular
Q
16
ever discussed
A
19
20
What
is y o u r b e s t
recollection
M r . Zanganeh
Whether he was
to
Mr.
that
our
familiar
n a m e Z a n g a n e h or n o t , I d o n ' t
is y o u r b e s t r e c o l l e c t i o n a s
General Khatami with G. William
I would
Q
know.
to i f
you
Miller?
say I did not discuss G e n e r a l
Khatami
O n the o c c a s i o n
of y o u r v i s i t
to I r a n
in
1972 w h e n you met G e n e r a l K h a t a m i , did y o u , b e f o r e
left on that
22
going
23
down
Miller.
21
24
that question
that M r . Miller knew
representative was Air Taxi.
with Mr.
to b r e a k
you ever mentioned
15
not?
sir.
with
17
whether
not.
s a y y o u did
13
18
of
not?
two further p a r t s :
10
not.
trip, discuss
your
leaving
to I r a n w i t h M r . G . W i l l i a m
I told
you
the c o u n t r y
and
Miller?
A
O h , I'm certain
him I was going
to
Q
D i d y o u p r o v i d e h i m w i t h a n i t i n e r a r y of
Iran.
25
the
196
116
i
people
2
that you would
A
M R . SOUTTER:
trip
to g o s e e G e n e r a l
Was
the p u r p o s e
THE WITNESS:
Pardon?
6
M R . SOUTTER:
Was
trip
to g o s e e G e n e r a l
8
9
Q
What was
11
A
Which
Q
The
A
Well, probably
trip
General Khatami who was
15
and
to h e l p f o r m u l a t e
And would
17
G . William M i l l e r , at
18
travel
to I r a n f o r
A
20
over
21
specifics
22
with.
24
25
the
you have
that
have
to
Khatami,
see
of
MIO,
developing.
your
superior,
that you were
going
to
purpose?
informed
superior
him
that I was
I wouldn't
going
get
to d e a l w i t h or d o
You wouldn't discuss
to a f o r e i g n c o u n t r y
that was
informed
time
of w h o I w a s g o i n g
business with your
about?
the C h i e f of P r o c u r e m e n t
the p r o g r a m
that
I would
trip?
the p u r p o s e w a s
to I r a n o n a s a l e s p r o g r a m .
Q
the
in 1 9 7 2 w h e n y o u s a w G e n e r a l
14
Q
of
trip are you talking
13
23
the p u r p o s e of
No.
the purpose
12
19
your
MARINACCIO
10
16
of
Khatami?
THE WITNESS:
BY M R .
Iran?
Khatami?
5
7
in
No, s ir.
3
4
be v i s i t i n g w h e n y o u w e r e
into
business
in t h e n o r m a l c o u r s e
in a l a r g e c o r p o r a t i o n a
in w h i c h y o u h a d , I t h i n k
it
of
trip
would
197
112
i
be^air
to s a y , h a d h o p e s
2
helicopters
3
w i t h your superior
4
some
to s e l l a l a r g e a m o u n t
to; y o u w o u l d n ' t d i s c u s s
N o t in t h a t k i n d
6
Q
And
7
what
8
accomplish
you were
that goes
going
and w h a t we h o p e d
11
individuals
12
d i d n ' t kiaow w h e n
13
detail.
to w h o y o u w e r e g o i n g
to d o a n d w h a t y o u h o p e d
and
to
15
probably not
talk about
to s e e , a n d
I went who we were going
I would
with somebody
the
program
to
see.
probably have a principal
like T o u f a n i a n .
Other
into
probably
appointment
than that I would
know.
N o w w h e n I g o to c o u n t r y , I d o n ' t
p e r s o n , I see a b u n c h
Q
to s e e
to a c c o m p l i s h , b u t I w o u l d n ' t g e t
or w h o w e were going
14
16
of
W e l l , I probably would
10
of
see
one
people.
And you stated
19
it's your best r e c o l l e c t i o n
20
meeting with M r .
previously, I think,
that
that Z a n g a n e h a r r a n g e d
the
Khatami?
21
A
Yes.
22
Q
I think
for
the p u r p o s e
23
the r e c o r d , K h a t a m i , K h a t o m i
24
several different pronunciations
25
we're all
in
and—
A
18
trip
detail?
A
17
of a
in t h e n o r m a l c o u r s e o f b u s i n e s s
5
9
that kind
of
of c l a r i f i c a t i o n
(phonetic), and
of the
same
there
of
are
individual,
talking about General K-h-a-t-a-m-i,
the
198
112
1
G e n e r a l of
2
spelled
3
A
4
in thoese d o c u m e n t s
If I m a y , I'd
A
Uh
8
Q
—an
September
23,
10
l i k e to r e a d
internal memorandum
to s e e
12
Helicopter
13
agreed
14
on November
1, 1971.
15
immediately
relayed
16
Dehesh.
17
Helicopter
to s e n d
This
by M r . Zanganeh
the
telex
19
B.
To
the u s e f u l
treat all
to t h e m f u l l y
to
was
Mr.
Bell
to
Agusta.
information
confidential.
to the d e s i r e o f B e l l , A i r
22
still recommends
23
one
that p r i o r r e c o n n a i s s a n c e
is a d v i s a b l e b e f o r e N o v e m b e r
Does
Teheran
following:
support
Contrary
to
information
M o r e o v e r , in the s a m e
agrees
directions
BHC
its r e p r e s e n t a t i v e s
To avoid any
relayed
dated
Bell
C o m p a n y , and in a telex
A.
21
the
by
18
this d o c u m e n t
indicate
a s u b s t a n t i a l a m o u n t of d i s c r e t i o n
Exhibit
from Air Taxi
that
m a d e by A i r T a x i w e r e a c c e p t e d
25
from
1971.
11
24
you
huh.
"We are pleased
20
Taxi.
22-^
7
9
from Air
it's
it.
Q
Number
that come
the w a y
Y e s , K h a t a m i , t h o u g h , is t h e w a y
pronounce
5
6
the A i r F o r c e , a t l e a s t t h a t ' s
1,
Taxi
by
no
1971."
that A i r T a x i
in b o t h
its a c t i o n s
had
and
199
112
i
with respect
to r e c o m m e n d a t i o n s
2
Bell Helicopter
3
Helicopter
t h a t it w a s m a k i n g
C o m p a n y a n d , i n d e e d , that
Company heeded
the
t h e a d v i c e of A i r
Bell
Taxi?
4
A
5
Q
Can you c o m m e n t on that s i t u a t i o n as
6
A
L e t me put
Well—
7
Q
—-as
A
L e t m e p u t it in c o n t e x t f o r
9
Q
Sure.
10
A
In J u n e — o r M a y or J u n e
11
Paris Air
12
Iran visited
13
expressed
it's surfaced by
Show.
Representatives
the P a r i s A i r
an interest
From
14
15
relaying
16
come
17
was my first
trip
the p u r p o s e w a s
19
helicopters
20
in a p r o g r a m , w h a t
21
that s a y s .
Q
beginning
24
sale
25
of
Show a n d
in o u r
of
document?
you.
'71, there w a s
the G o v e r n m e n t
of
and
products.
that some
top m a n a g e m e n t
is
of
And
to I r a n in t h a t N o v e m b e r o f
to d i s c u s s
a
of
the B e l l C h a l e t
to d i s c u s s a p o s s i b l e p r o g r a m .
18
23
this
those discussions, what Air Taxi
is a r e q u e s t
to I r a n
it's—
it—»
8
22
to
Bell
that
'71.
the t o t a l r e q u i r e m e n t s
the G o v e r n m e n t o f I r a n a n d w h a t
they wanted
to d o .
That's
And
of
they
saw
what
And—
Is i t f a i r
to c h a r a c t e r i z e
of the p r o g r a m
that r e s u l t e d
it a s
in the
the kind
of
ultimate
of—9
A
W e l l , I think we had had r e p r e s e n t a t i v e s
in
200
112
1
country many
2
indicates
3
be
in c o u n t r y u n t i l
4
in
November.
5
Q
times b e f o r e , and probably what
there
is
I'd
that they
like
to r e a d
23 w h i c h r a i s e s a n o t h e r
7
Horsley
8
Textron.
scheduled
12
co-production.
13
business
14
what exactly
15
and
16
next week even
17
preliminaries.
18
so l e t ' s not
19
offhand?
A
This
through basic
now.
referred
24
that c o m p a r e d
to l o s e
Sea/Suzy/Trout
the
in
desire,
to a r r i v e e n d
to a s s i s t
you know who
in
of
the
to
chance."
Sea, Suzy and Trout
are,
same—
I don't remember who
of
the c o d e .
to the i n v i t a t i o n
It
to v i s i t M I O .
to-—'
This
full
This may be our one big change -
leave anything
Yes.
meetings
We are preparing
I will plan
if j u s t
It w a s j u s t s o m e
Q
of
Brussels.
l a c k of k n o w l e d g e
it is t h a t
is t h e
Yes.
22
to k n o w w i t h w h o m
We cannot afford
in t h a t r e g a r d
23
25
need
to t a k e p l a c e .
Would
21
from
says:
"Further
11
20
Number
Horsley was an employee
o u t of
not
arrived
It's a d o c u m e n t
I b e l i e v e he w a s o p e r a t i n g
He
should
to y o u f r o m D o c u m e n t
question.
to M r . Z a n g a n e h .
10
that
that B e l l
the. top m a n a g e m e n t p e o p l e
6
9
thought
is O c t o b e r
14th,
1971.
those
were
probably
What
date
is
201
112
*
A
Yes.
2
Q
This
3
A
Yes.
4
Q
Could you discuss
5
A
Yes.
6
Q
N o w , I don't know how
1
7
relates
8
a n d so
document raises
Yes.
10
Q
Because
that fits
I t h i n k the r e c o r d
on that co-production
A
Okay.
in
and
Agusta
like
would
to c o - p r o d u c e p a r t of
14
they w e r e going
15
yet at
that p o i n t
there.
16
saw the s i t u a t i o n
in t h e
to p r o c u r e .
17
Q
Meaning
18
A
Yes.
Iran
the h e l i c o p t e r s .
20
of k n o w l e d g e of
21
very
22
concentrate on training
23
building a logistics
24
tion.
25
enter
limited
And
to b e
that
clear
they
these helicopters
But after
I got
to
that
country
to c o u n t r y
and
country—
country?
I felt
that they not
facilities, and
co-produce
that they had a basic
the p r o d u c t , t h e y h a d
I made
felt
I had n o t b e e n
I recommended
19
And
needs
situation.
W e l l , the Iranians
13
co-production?
to t h e s u p p l y of h e l i c o p t e r s , in w i t h
A
12
the
co-production.
on.
9
11
the
I felt
lack
no f a c i l i t i e s ,
that
they needed
their a v i a t i o n p e o p l e
c a p a b i l i t y and not go into
program.
to
and
co-produc-
this very clear and really refused
into a c o - p r o d u c t i o n
or
to
202
112
And as
1
2
show
3
build
time w e n t on a n d we had
the p e o p l e o u r f a c i l i t i e s a n d w h a t
the c h a n c e
it t o o k
h e l i c o p t e r s , they b a s i c a l l y agreed w i t h us
4
s a i d , "Okay, let's get
5
get
6
point we w i l l
7
Q
8
whether
9
agreement, whether
the
logistics
talk about
I see.
or not
the
t h e n in t h e f u t u r e a t
D o y o u have a r e c o l l e c t i o n as
if y o u e n t e r e d
into a
or n o t y o u r m a n u f a c t u r e r ' s
11
c o m m i s s ion?
I believe
it w a s r e f e r r e d
of
excluded.
I
those a m e n d m e n t s
14
IHI was m e n t i o n e d , IHI, Iranian H e l i c o p t e r
15
was mentioned
16
Q
17
Exhibit Number
specifically
as being an exclusion
I'd like
M R . FREED:
MR. MARINACCIO:
commission.
from
24.
20
24 r e f e r s
21
slightest unwise move upsetting
22
so
to t h e s e c r e c y
I've
issue a g a i n
skipped
24
talking about
the w h o l e
because
the
thing, and
on.
23
from the
25.
19
25
think
Industries,
to r e a d a p e r t i n e n t p a r t
18
24
representati
to a n y
to in o n e
13
and was
to
co-production
in I r a n * A i r T a x i , w o u l d h a v e b e e n e n t i t l e d
A
let's
some
co-production."
10
12
and
t r a i n i n g d o n e first and
d o n e , and
to
to
M R . FREED:
in t h e
Are you going
to l e a v e
24
record?
M R . MARINACCIO:
Yes.
Because
I
think
203
112
it s h e d s
1
l i g h t o n s o m e of the
M R . GALERSTEIN:
2
3
documents.
d a t e it is so w e c a n m a r k
Just
tell us w h a t
it.
4
M R . MARINACCIO:
September 24,
5
MR. FREED:
is
6
M R . MARINACCIO:
7
the c o d e d
8
Brussels.
M R . FREED:
10
Helicopter.
11
BY M R . M A R I N A C C I O
Q
13
that?
It's a d o c u m e n t
n a m e S n a p p e r a g a i n , to B e l l
9
12
What
1971.
from
Helicopter,
Snapper cable
to B e l l
Document Number 25, August 3 1 , 1971,
from
A i r T a x i , C u s t o m e r ' s W e e k l y P r o g r e s s Report-?*-* I t h i n k
14
that would
15
pertinent
have gone
to B e l l H e l i c o p t e r s — s a y s
in
part:
"The a u t h o r i t i e s have b e e n emphasizing
16
17
i m p o r t a n c e o f k e e p i n g a l l of the
18
under cover and keep
19
o t h e r w i s e the w h o l e f u t u r e p o s s i b i l i t y w i l l
20
seriously jeopardized
21
to y o u r a t t e n t i o n
22
Please m a k e s u r e to a v o i d a n y u n n e c e s s a r y
23
or m o v e w i t h o u t c o n s u l t i n g us
24
25
Does
information
confidential,
as we r e p e a t e d l y
the g r a v i t y of the
be
brought
situation.
attempt
first."
t h a t i n d i c a t e , in a l l c a n d o r , t h a t
t h o u g h t , t h a t is to s a y , A i r T a x i , as c o m m u n i c a t e d
23-553 O - 78 - 14
them v e r y
the
they
to B e l l
204
12 7
1
that they were p l a y i n g a m o r e
2
role than l o g i s t i c a l support and
3
A'
I think
4
Q
I m e a n , they seem
5
6
7
A
Q
to b e g i v i n g y o u
the a d v i c e w a s
to the A g u s t a
nature?
The next document
pretty
taken, was
it
taken.
is D o c u m e n t N u m b e r
26,
dated A u g u s t 2 2 n d , 1971, another Air T a x i internal
M R . FREED:
11
MR. MARINACCIO:
another
internal Air
"Upon
13
What date
is
August 22,
from Bell Helicopter
investigation
1971,
Bell.
Company
14
and
thorough
I confidentially
15
out
t h a t t h e G o v e r n m e n t of I r a n h a s d e c i d e d
16
procure Huey and Huey Cobra
helicopters.
17
the time b e i n g
of
18
totals
19
H u e y 2 0 5 , a t o t a l of
the q u a n t i t y
these
160 s h i p s , M o d e l A H - 1 G , M o d e l
160
memo.
that?
Taxi memo made available by
inquiry
found
to
For
helicopters
AH-lJ,
ships."
20
Does
to the t y p e s o f —
Do
21
types of s h i p s , h e l i c o p t e r s
referred
refer
22
to the t y p e s o f h e l i c o p t e r s
that were
23
in f a c t
24
A
25
approved
this r e f e r
to t h e G o v e r n m e n t
of
The
to h e r e ,
subsequently
the
sold
Iran?
T h e A H - l G , the A H - l J .
form.
not?
I
situation.
10
12
discretionar
of that
l o t of the a d v i c e w a s n ' t
think that applies
8
9
No.
things
that—
strong a d v i c e h e r e , and
A
significant and
The J w a s sold
H u e y * it w a s g r o w n
into a much
in a n
more
205
128
1
powerful helicopter.
2
was
3
deve lopment
developed
And
it w a s
specifically
of the
s o l d as a B e l l 214
for I r a n a n d
Q
N o w , did—**>
5
A
S o the p r o g r a m g r e w f r o m
t h e 1 6 0 , to the
Q
To
8
A
Yes.
9
Q
That was
10
A
Yes.
11
Q
And
12
A
Yes.
13
Q
N o w , did Air T a x i ever
14
anybody
the
from whom
16
official—excuse
17
it j u s t
18
Government
Uh
Q
Did
25
they did
m e , it d o e s n ' t
n a m e of
found
to
individual
the
say G o v e r n m e n t
they ever c o m m u n i c a t e
to a n y of
confidential
to y o u or
out
Government
official,
that
the
huh.
T h e y did
Q
the n a m e of t h e
of t h i s c o n f i d e n t i a l
A
24
indicate
Iran—"
A
22
that.
they "confidentially
19
23
there,
question.
they c o n f i d e n t i a l l y — t h e
20
source
really my
I thank you for
15
21
that p o i n t
489?
in B e l l H e l i c o p e r
of
the
489.
7
says
for
program.
4
6
Iran paid
which
Would
not
to y o u
their
information?
to m e .
the s a l e s
it b e f a i r
information that
I don't know
people
or
whether
not.
to c o n c l u d e
that
they had at that
the
time
was
206
112
i
pointing
2
l a r g e s a l e of h e l i c o p t e r s
3
a
4
right direction, isn't
5
situation at
6
A
in t h e r i g h t d i r e c t i o n w i t h r e s p e c t
lot m o r e
than 1 6 0 , but at least
the
wrong
8
"co-production."
10
that a fair a s s e s s m e n t
say
they said
That never
I don't
think
A
Okay„
12
Q
But I could
document,
A
I'll read
15
Q
Yes.
16
18
19
that
some
S e e , it's i n t e r e s t i n g .
they were
going
to p r o c u r e
130
said
they
you review
that
meant
130 h e l i c o p t e r s ,
that
they
because
would,
not buy b o t h
models.
helicopters.
Q
I
A
N o w , we were at
see.
the g u n s h i p s .
The
that
time only
contending
Huey was
something
that we
should be placed with A g u s t a .
were
This really
really means
So it r e a l l y m e a n s
for
that
pause.)
b u y A H - l G ' s or A H - l J ' s , they would
25
They
Would
21
24
things
in t h i s p a r t i c u l a r w i r e
20
23
that
it.
they w o u l d n ' t b u y — — t h i s
22
of
the
happened.
be w r o n g .
(Short
A
in
please?
14
17
to b e
"co-production."
11
13
the
out
it w a s g o i n g
in t h a t w i r e , if y o u n o t i c e .
Q
did
to
It turned
time?
Y e s , but
7
9
to I r a n ?
So w e w e r e
really
felt
chasing
207
116
1
30 % u n
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
ships at
Q
I
that
point.
see.
(Brief
break.)
208
13 L
1
BY M R .
2
MARINACCIO
Q
I'd
like to read
3
E x h i b i t N o . 27 w h i c h
4
19 7 1 , t h e
5
and M r ,
communication
A
What date
7
Q
August
8
A
Okay.
Q
He
10
11
dated August
from M r . Sylvester
is t h a t
13th,
says
to a d o c u m e n t — w e l l ,
one
12
Managing
Director
I'll read the w h o l e
that he has
15
to G e n e r a l T o u f a n i a n
16
procurement
17
The
s e e n a c o p y of t h e
give Agusta
19
not
20
assume
confirms
Shah's
to commence
a RFP
first.
Directive
immediate
of 3 0 A H - 1 G or J ' s , p l u s
same document also directs
18
60
this applies
then Toufanian
activities
to
If t h e i r r e s p o n s e
to t h e c o m p l e t e
is d i r e c t e d
205's.
Toufanian
immediate, positive and acceptable
to the U . S . a n d
24
thing.
Zanganeh,
for A i r T a x i , h e
14
23
he's
paragraph:
"By telex today from A . H .
22
Atkins
now?
in t h e p e r t i n e n t p a r t a n d
It's just
21
to M r .
1976.
referring
13
of
13,
Ducayet.
6
9
you a pertinent part
is a d o c u m e n t
is
I
package)
to p r o c e e d
to u n d e r t a k e
(and
personally
procurement
here."
Would
you have any knowledge as
to w h o
would
25
have
directed
Toufanian
to p r o c e e d
personally
to
the
209
112
i
U.
S.?
2
I realize
that
3
to a s k of S y l v e s t e r , but
4
mentioned
5
be a f a i r l y
6
A
7
knowing
8
no
this document
I would
I thought
t h a t he m a y
to y o u , b e c a u s e
reaction would
I would
be
from
was
discussed
f e e l t h a t p r o b a b l y the g e n e r a l
the program with His M a j e s t y , and His
had
given him certain
12
his
i n s t r u c t i o n s , or o t h e r s , I h a v e n o w a y of
13
But I would
14
documents.
15
Q
Shah
say that
instructions.
they do not
You would
say that
Whether
communicate
there was
A
That's
18
Q
—and
19
A
Yes,
20
Q
Could
Majesty
those
were
knowing.
through
probably
no
right.
that
it w a s a n o r a l
communication?
sir.
you speculate with me a little
21
If y o u d i d n ' t
22
think Zanganeh would have been referring
23
had
directive—
17
A
think
I have no
24
s e e , this gets
25
Bell.
to
in t h e c o u n t r y , t h a t t h e r e
11
16
have
it s e e m s
one.
offhand—my
the situation
question
document.
9
10
important
this m a y be a b e t t e r
Now—
that there was
one, what
idea w h a t h e w a s
into the b u s i n e s s
do
bit?
you
to?
referring
to, but
of w h e t h e r A g u s t a
or
210
112
1
Q
Y e s , it
2
A
Yes.
3
Q
And
4
A
Now, notice
5
6
Q
whole
7
it's a t e r r i b l y c o m p l e x
— a
thread
thing and
A
8
that
It
an RFP
10
Q
Yes.
11
A
So w h a t t h i s
12
have a chance
to b i d
the
60
Yes.
A
He didn't have
is t h a t
17
they were going
18
place else for the
19
20
21
22
23
24
25
Q
a
to c o m e
I see.
communication
going
is t h a t A g u s t a
would
the r i g h t
to bid C o b r a s
So w h a t t h i s
becaus
indicates
1
to b u y 3 0 C o b r a s , 60 2 0 5 s
to us f o r t h e C o b r a s a n d
and
go
some
205's.
I'd
like
to r e f e r
to D o c u m e n t
No.
f r o m A i r T a x i to B e l l H e l i c o p t e r ,
Worth,,again, from M r c
in p e r t i n e n t
to
205's.
license with Cobras.
they were
this
clarify.
directs Toufanian
is s a y i n g
Q
he had no
to r u n t h r o u g h o u t
I'm trying to
first."
14
16
it's—
says:
13
15
seems
document also
give Agusta
thing, and
that—
that's what
See this?
"The same
9
does.
Sylvester.
This document
Fort
says
part:
"With reference
M a r c h 3 0 , 1971, we
to y o u r r e c e n t
immediately
telex
contacted
Toufanian and M r . Dehesh and briefed
them
28,
dated
General
211
112
1
regarding
2
As we
your
telexed
forthcoming visit
y o u on A p r i l
to
Teheran.
1, 1971, they
were
3
of the
o p i n i o n t h a t the H u e y C o b r a
4
should
be m a d e solely to t h e m .
They
believe
5
t h a t , contrary to your d e c i s i o n , the
minimum
6
exposure
is m o s t a d v i s a b l e . A s to t h e
7
locations and
8
necessary arrangements
9
presentation
This
invitations, we assure
timing,
you
w i l l be m a d e b y
document would
indicate
that
Toufanian, M r . Dehesh and Air Taxi are making
11
stantial
A
I don't
13
Q
Go a h e a d , w i l l
A
vester
16
the
17
wanted
18
the
see w h y y o u s a y A i r
to b r i e f a p o s s i b l e
same 30 C o b r a s w e ' v e
to c o m e
to I r a n a n d
been talking
said b a c k , " W e l l , the b r i e f i n g
M I O , " and
that was
should
be m a d e
that seems
24
"Minimum exposure
25
a recurring
to c r o p
thing.
on
he
MIO
to us
at
appropriate.
Of c o u r s e , Air T a x i does use
23
Syl-
about.
that Air T a x i contacted M I O and
20
that
s a l e of C o b r a s . A n d t h o s e art
21
Q
saying
T a x i as our sales r e p r e s e n t a t i v e
fact that he was going
And
Taxi.
you?
Y e s , w e l l , I read this as
telexed Air
19
22
sub-
decisions?
12
15
the
General
10
14
that
us."
up in m a n y of t h e s e
is m o s t a d v i s a b l e . "
And
it s a y s , " A s
this
language
documents.
I mean,
to t h e
that's
timing,
212
1
"locations a n d
2
n e c e s s a r y a r r a n g e m e n t s w i l l be m a d e b y
3
i n v i t a t i o n s , we assure y o u that
That would
4
that
5
decisions
6
us."
s o r t of i n d i c a t e , on its
A i r T a x i is t a k i n g u p o n
A
i t s e l f to m a k e
that they expect B e l l H e l i c o p t e r
W e l l , I t h i n k what, t h e y a r e
substantia
Sylvester
your p r e s e n t a t i o n s and we w i l l e s t a b l i s h an
9
t i m e , a n d a n a p p r o p r i a t e p l a c e at M I O for
to c o m e a n d
Q
I'd
12
dated November
13
memorandum, and
14
make
appropriate
those
like to m o v e on t o E x h i b i t N o .
2, 1969, another Air Taxi
in p e r t i n e n t
"During
internal
the i n a u g u r a t i o n
ceremony,
His Imperial Majesty stopped by Air
16
s t a n d a n d a s k e d a few q u e s t i o n s r e g a r d i n g
17
various models
18
Z a n g a n e h p e r s o n a l l y gave a l l the
19
explanations
20
of B e l l H e l i c o p t e r s .
to H i s
29,
part:
15
Taxi's
the
Mr.
necessary
Imperial Majesty."
We may have discussed
t h i s a s p e c t of
it
21
b e f o r e w h e n w e t a l k e d a b o u t y o u r k n o w l e d g e of M r .
22
Zanganeh's having discussed various matters with
23
Shah?
25
to
discussions.
11
24
on?
saying there
8
is t h a t y o u s h o u l d a g r e e
face,
to r e l y
7
10
the
A
I imagine
that was that public a f f a i r
had over there; that Air T a x i was r e p r e s e n t e d
the
they
there,
213
112
1
and His M a j e s t y , because
2
stopped and asked
3
Q
how much
5
or p e o p l e
6
Iran?
influence
that were
A
I don't
in c l o s e
9
Imperial
12
Document
N o . 30 goes back again
And
it
that the Iranian Government
"General Toufanian
formed
me that
between
75 to 100
disclosed
that
of p a y m e n t
should
also recommended
22
to send an a u t h o r i z e d
Teheran
His
November
with
Jet
to
buy.
General
19th.
We
He
Helicopter
representative
for the n e c e s s a r y
terms
would
the b u s i n e s s .
us t o a s k B e l l
in-
somewhere
Bell's prices and
of g e t t i n g
definitely not later
November
The
be
be m o r e a t t r a c t i v e , t h e y
21
25
intended
confidentially
'copters.
have a chance
24
to
of M o d e l
the q u a n t i t y w o u l d
20
23
with
aays:
15
19
influence
of
1 0 t h , 1 9 6 8 w h e r e A i r T a x i is d i s c u s s i n g a m e e t i n g
Rangers
18
the S h a h
t o o k me to see
G e n e r a l Toufanian about the quantity
14
17
He never
to
Majesty
Majesty.
Q
13
16
helicopters
Imperial
touch with
think he had a n y
His Imperial Majesty.
11
in
questions.
Z a n g a n e h h a d on H i s
8
10
interest
W h a t was your understanding with respect
4
7
some
of his
to
negotiations
t h a n the m o r n i n g
immediately
sent a
of
cable
214
112
1
to Bell H e l i c o p t e r
2
3
in t h i s c o n n e c t i o n .
N o w , I think you testified
at
that time you were not
4
A
That's
5
Q
—arrangement
6
down any business
7
A
suggested
9
basis
10
interested
Q
with—
in 1 9 6 8 w i t h I r a n
specifically
Sam at that
turn
about
14
r e p r e s e n t a t i v e , a g a i n , in I r a n , t h a t
15
come possessed
16
might be substantial
19
20
licensee
is f a i r , t h o u g h , t h a t I t h i n k
document does
18
it d o w n .
A
We k n e w
We
on
indicate
that shortly after
that Air Taxi became
of i n f o r m a t i o n w h i c h
sales to
your
this
or a t
or
manufacturer's
they began
indicated
to be-
that
there
Iran?
W e l l , we recognized
that Agusta m a d e a
sale.
tha t .
Q
I'm going
Document No. 31 concerns Agusta again
to leave
and
that.
21
M R . FREED: What
22
M R . GALERSTEIN:
You are putting
23
M R . MARINACCIO:
I'm putting
24
M R . FREED:
25
M R . MARINACCIO:
the
doing
point.
13
17
turn
or—
12
the time
big—
D i d y o u , in f a c t ,
t o t h e m t h a t t h e y g o to o u r
It
that
in t h e
that we were very busy with what we were
for Uncle
11
previously
correct.
We didn't
8
that
11
What
is
is
that?
it
it
in.
that?
It* s a n A i r
Taxi
in?
215
112
i
document, 1 March,
2
1968.
M R . FREED:
3
BY M R .
4
Q
MARINACCIO
And
the
last document
5
you before
6
a document, Exhibit
I ask M r . Freed
7
Helicopter
8
here
9
are had.
This
10
difficult
to
in T e x a s
I believe
is
Bell
to H u n t a n d H o r s l e y , a n d v a r i o u s
discussii
is
in c o d e a g a i n a n d
it's
awfully
read.
M R . F R E E D : Did you ever t h i n k
could break
with
somebody
the
nobody
code?
M R . GALERSTEIN: That's w h y they put
in
it
code.
M R . FREED: What's
16
M R . MARINACCIO:
17
the date on
September
that?
21,
1971.
W e l l , it's just a short d o c u m e n t and
18
i n d i c a t e a g a i n , j u s t to r e a d
19
that
it i s , a n d
20
some
of t h e s e
the f o u r or f i v e
indicate how difficult
I'll
sentences
it is t o
deciphe:
documents:
"With
reference
to your t e l e x
22
September
23
recommended
24
a r r i v e h e r e on or a b o u t N o v e m b e r
25
thorization
it's a
internal document
15
21
to d i s c u s s
from
13
14
I want
to a s k h i s q u e s t i o n s
No. 3 2 —
document, an
11
12
Okay.
dated
1 6 t h , had meetings w i t h Alice
that Betty's
to e x p r e s s
representative
Betty's
who
should
1st w i t h
desire
and
au-
216
112
1
readiness
2
Sharks/Swordies
3
that Bass
4
and support Grooper
5
should
6
s e a , for one r e a s o n
7
s h o u l d be s e r i o u s l y d e t e r m i n e d
8
Snapper."
9
to m a n u f a c t u r e
in school,,
Also
assistance
on t h i s p r o g r a m .
sentence, though, because
And I'm not
so s u r e w h o
and
I think Joe
Snapper
But, a n y w a y , this
is a d o c u m e n t
in 1 9 7 1 w a s t h i n k i n g
15
contributions
for t h e i r e f f o r t s and
16
generate what
later
17
t h a t t h e y o u g h t to g e t
18
m e a n , if t h a t ' s a f a i r c h a r a c t e r i z a t i o n
to b e r e c o g n i z e d
22
23
24
25
this d o c u m e n t at
A
tion
of
that
indicates
Helicopter
Taxi's
beginning
o u t to be a l a r g e
to
sale,
substantial compensation,
to
or
not.
'71, it's
t h a t A i r T a x i is d o i n g a
I
beginning
substantial
work?
W e l l , I can't read a n y t h i n g a b o u t
in t h a t .
Q
last
Taxi.
Bell
f a i r l y h i g h l y of A i r
But I think going back
amount
the
is.
14
21
compensated.
is A i r
that whoever
turned
efforts
to a s k you a b o u t
13
originated
in
or a n o t h e r , J o e ' s
11
20
However,
Bass permit Grace Manufacturing
10
19
30
advised
should absolutely avoid
I really wanted
12
98 sails and
I don't know how
W e l l , it s a y s — n o ,
r
"joe s
efforts
you are doing
the w o r d — i t
should
be
compensait.
says:
seriously
217
112
1
'
determined
and
compensated."
2
A
I don't know who Joe
3
Q
W e l l , I t h i n k a t the b o t t o m of the
4
Joe
is i n d i c a t e d
5
6
t o be A i r
his
A
that
9
result
Okay.
I think
The one t h i n g
the c o d e s
of a couple
that were
of y o u n g
10
wasn't much
11
s e n t b a c k on a t e l e x m a c h i n e
12
think
13
up a m o n g
security
that that's
the
in I r a n a n d
was
MR. MARINACCIO:
15
M R . FREED:
two minute
17
exhibits.
THE WITNESS:
19
M R . FREED:
say
really
felt
is
the
that
there
felt that whatever
we
becoming public and
of
I
thing
communication.
Mr.
Freed?
Yes. Could we take
to n u m b e r
just a
the
Sure.
So w e c a n j u s t g e t t h e m
in
quickly.
21
(Short
22
l i k e to
used were
break because I just want
18
25
through
r e a s o n that t h e y set that
themselves as a method
16
I would
salesmen who
14
24
to g o
questions.
8
23
document,
Taxi.
I am g o i n g to a s k M r . Freed
7
20
is.
recess.)
M R . MARINACCIO:
w a n t to m a k e a
A
devoting
Yes.
M r . A t k i n s , did
you
comment?
O k a y , it's m y opinion
too much attention
that
to the e f f o r t s
counsel
of A i r
is
Taxi.
218
112
1
I believe
that
the s a l e w a s
2
the merits
3
tions that were performed
4
of t h e p r o d u c t s
By t h e
of I r a n m a d e a n
6
a n d M o d e l 214 p r o v i d e d
7
as stipulated
9
intent agreement
by
equipment was
11
people
of
'72.
by representatives
of o t h e r
the a i r c r a f t
14
very difficult
in I r a n .
15
prove
16
hot altitudes of
such as the engine
locations
the p e r f o r m a n c e
demonstration
19
attended
by several hundred
20
probably
late O c t o b e r
24
25
manuarmament
in s i x o r
seven
The purpose was
in t h e h i g h
culminated
in a m o u n t a i n o u s a r e a
in a
outside
or early September
came
of
to
and
M a j e s t y m a d e the decision
major
Teheran,
This
was
'72.
out
flew both machines. And
ing d a y , G e n e r a l T o u f a n i a n
of
military people.
that time, His Majesty
Airport and
instructed
the
50
Iran.
These demonstrations
Mehrabad
and
of the m a c h i n e s
18
23
people
to
associate
to I r a n . A B e l l c r e w o f
facturers
22
1J
performance
Iran sent two C 130's
people then demonstrated
At
the AH
The a i r c r a f t , plus
13
21
Iran.
Government
to p u r c h a s e
12
17
in
the a i r c r a f t m e t the
transported
supported
demonstra-
1972
'72, the
on
Bell.
in J u l y of
10
based
on the
in A u g u s t of
The Government
Fort Worth
and based
letter of A p r i l
5
8
consummated
to
the
the
follow-
t o o k m e to the p a l a c e a n d
to p u r c h a s e
General Toufanian
the m a c h i n e s
to request an FMS case
His
and
fron
219
112
1
ttfie U . S . G o v e r n m e n t .
2
Q
Were you p r e s e n t , M r . A t k i n s , at
discussions
3
b e t w e e n the S h a h of I r a n a n d G e n e r a l T o u f a n i a n t h a t
4
to t h a t d i r e c t i v e
5
A
that the Shah issued that
There was no directive
issued f o r m a l l y .
6
was
7
Toufanian
8
r e q u e s t a l e t t e r o f o f f e r f r o m the U n i t e d
9
m e n t for that
10
11
in t h e p a l a c e a n d H i s M a j e s t y
Q
in m y p r e s e n c e
instructed
I
General
to p r o c u r e b o t h m a c h i n e s a n d
States
to
Govern-
procurement.
W h a t w a s the a p p r o x i m a t e d a t e of the
meeting
w i t h the S h a h t h a t y o u h a d ?
12
A
L a t e A u g u s t or e a r l y
September.
13
Q
1972?
14
A
Yes,
15
Q
Do y o u r e c a l l h o w long y o u m e t w i t h
16
led
day?
sir.
T o u f a n i a n a n d the S h a h of I r a n t h a t
17
18
General
date?
A
About a half
hour.
Q
C o u l d y o u , for the r e c o r d , g i v e us t h e
gist
19
of t h a t c o n v e r s a t i o n ; w h a t y o u s a i d ; w h a t G e n e r a l Tou-
20
f a n i a n s a i d a n d w h a t the S h a h
21
A
said?
Well, His Majesty expressed
22
in t h e h e l i c o p t e r
program.
He
his great
indicated
t h a t he
interes
desired
23
to e s t a b l i s h a h e l i c o p t e r f o r c e , n o t o n l y f o r
24
h i s c o u n t r y , b u t a l s o f o r c o m m e r c i a l , l e t ' s s a y , or
25
medical
23-553 O - 78 - 15
purposes.
defense
of
220
143
6/13
j
He
foresaw
2
difficulty
3
help and he foresaw
4
people
5
places across his
to clinics
6
the m a c h i n e s .
p i l o t , a n d he was v e r y
9
of the
We
the performance
impressed w i t h the
talked about
would
conduct his
12
about
the
of
helicopter
performance
Q
training
Did
the n a m e
Q
Bell
that
was
discussion.
"Agusta"
come up during
the
conversation?
I don't believe
so.
Was there any mention
in t h a t
that
program for h i m and
s u m t o t a l of t h e
c o u r s e of t h a t
A
the possibility
m a d e of G e n e r a l
Khatemi
conversation?
18
A
There was no mention
19
Q
Who had arranged
20
G e n e r a l T o u f a n i a n and the
21
would
22
strategic
H e , o f c o u r s e , is a v e r y g o o d
11
15
injured
aircraft.
10
16
medical
country.
His Majesty talked about
13
having
transport
t h a t m i g h t be s e t u p a t
7
17
t h a t he w a s
that you could
8
14
the fact
p r o v i d i n g his people w i t h the proper
be m e e t i n g w i t h
A
of G e n e r a l
to h a v e
Shah?
Who
Khatemi.
the m e e t i n g
informed
with
you that
Well, 1 was meeting with General
Toufanian
23
on a c o n t i n u i n g
24
t h i s d a y I wa s t o l d b y G e n e r a l T o u f a n i a n
that we were
25
go to the
to d i s c u s s
palace
basis
y 3U
them?
in f o r m u l a t i n g
this p r o g r a m . And
and His M a j e s t y wanted
to
the
221
112
1
program.
M R . COLLINS:
Who was
4
THE WITNESS:
Just the three
5
M R . MARINACCIO:
2
3
6
present at
the
meeting?
relinquish
the
I would
of
like
floor to M r . Freed at this
us.
to
time.
7
EXAMINATION
8
9
BY M R .
10
Q
FREED
I just have v e r y few q u e s t i o n s .
11
just
12
off so y o u can get t h e m
13
It's Exhibit
14
introduce
m e m o of A p r i l
M r . Sylvester
of J u l y 2 3 ,
down;
N o . 3 3 , an A i r T a x i
N o . 34
is a n ' & i d e
internal
memoire"
is a n A i r T a x i i n t e r n a l
N o . 36
20
21
August
22
them
1971.
B e l l to M r . I r a n z a d ;
10,
me
by
1971.
memorandum
1971.
And
19
exhibits and I'll just read
on t h e I r a n i a n C o b r a s , A p r i l 2 8 t h ,
N o . 35
17
18
10,
Exhibit
15
16
five
Let
is a c a b l e
that's
from Gallagher
spelled
of
I - r - a - n - z - a - d , on
1971.
What
I j u s t .wanted
to d o , the
23
j u s t t r y to e l a b o r a t e
24
advice that General Toufanian and his a s s o c i a t e ,
Mr.
25
Dehesh, were providing
sales
a little more
questions—is
on the type
to B e l l in d e v e l o p i n g
the
of
222
112
i
"strategy a n d
2
t o I r a n , j u s t s o w e c a n g e t on t h e r e c o r d
3
they were and how
4
s ituation.
the t a c t i c s
closely
5
followed
involved
in t h e
how
they were
sales
close
in
7
Q
they
What was
your understanding
of the r o l e s
A
Of G e n e r a l
10
Q
Of T o u f a n i a n and a l s o of M r . D e h e s h .
Toufanian?
11
D e h e s h , I t h i n k , is a k e y f i g u r e a s y o u r e a d
12
a l l of the
A
Well—
14
Q
T h e i r r o l e s , s a y , in
the
'71 a n d
A
Y e s , w e l l , the military
then
in
industrial
tion w h i c h G e n e r a l Toufanian heads was
18
agency
19
other defense
20
b y the G o v e r n m e n t
for
the h e l i c o p t e r
force equipment
of
They were
the
'72,
organiza-
procurement
equipment and most
that was being
of
the
procured
Iran.
instructed, I'm s u r e , to
22
a program, a helicopter
23
a t us a s a p o s s i b l e m a j o r p a r t i c i p a n t
24
And
25
our p r o d u c t s , to discuss
through
prelude?
17
21
Mr.
documents.
13
16
that
played?
9
15
the
(The m e m o s r e f e r r e d to w e r e markc
"Exhibit N o . 33" through "Exhibit
N o . 36" for identification.)
6
8
to be
program, and
they were
in t h i s
s o t h e y w e r e m e e t i n g w i t h us t o
our possible
establish
looking
program.
discuss
deliveries.
They
223
112
6/16
x
2
v^ere t a l k i n g
talking
co-production at that p o i n t .
training and
logistics.
3
they thought was a major
4
on a helicopter
5
in t h e s e d i s c u s s i o n
6
Q
program.
for t h e i r
of f o r m u l a t i n g
this
T h a t w o u l d be f o r m u l a t i n g
7
8
they wanted
9
A
10
Q
11
that's
program.
the p r o g r a m ,
t y p e of
would
helicopters
buy?
L e t me a s k y o u t h i s n o w :
the A i r T a x
"Upon
internal memo.
14
of t h e B e l l t e a m c o n s i s t i n g
15
three
16
sa id :
individuals,
"Contrary
the
telex
of S y l v e s t e r "
m a x i m u m exposure and w i d e p u b l i c i t y ,
19
General Khatemi and
both
20
a s M r . D e h e s h , a g r e e d w i t h me that B e l l
21
play a very
22
further
23
given to
24
A
What date was
25
Q
That's
General T o u f a n i a n , as
well
should
coordinate and
g u i d a n c e / i n s t r u c t ions w h i c h w o u l d
them."
that?
on A p r i l 1 0 ,
and
Horsley,
to make a
18
low key and only
1971.
33,
says:
arrival
including M r .
to B e l l ' s d e c i s i o n
No.
Zanganeh
receipt of Bell Helicopter's
dated March 30, 1971 regarding
other
In E x h i b i t
Mr.
13
involved
Right.
12
17
what
country
they w e r e d e e p l y
be the g o v e r n m e n t p o l i c y a b o u t w h a t
to
were
They were making
decision
And
They
be
adhere
224
112
1
2
'
And
Sylvester's
3
then
in E x h i b i t N o . 3 4 , t h i s
" A i d e M e m o i r e " of A p r i l 2 8 t h . It
"General Toufanian and Dehesh
leave H o r s l e y
us to
5
e n d i n g A p r i l 30 and have now requested
6
day extension
T a x i on J u l y 2 3 ,
9
Bell Chalet at
10
'71.
the
This
the P a r i s A i r
Government
12
desire
13
Huey Cobras
seven-
acceded."
Dehesh assured
16
Air T a x i and added
17
guidance
Show.
It
And
then
19
N o . 36, the cable
20
1 0 t h , it s a y s — i t ' s
is
and
Mr.
of
and
unprecedented."
in t h e f i n a l e x h i b i t , t h a t w o u l d
to Iranzad
a code telex and
it
21
"We a n x i o u s l y a w a i t
22
desire at the earliest possible
23
a request
further
24
p o s a l to a s s e m b l e / m a n u f a c t u r e " H u e y
from school"(which
are referred
the
the
management
capability
that their assistance
from Gallagher
to in t h e
the
said:
in p a r t i c u l a r ,
your programm
Air
in
to p r o c u r e H u e y
Bell Helicopter's
the q u a l i f i c a t i o n a n d
towards
of
is a b o u t a d i s c u s s i o n
for I r a n . . . .
about
week
internal memorandum
to B e l l ' s m a n a g e m e n t
15
a
of I r a n , M r . D e h e s h e x p r e s s e d
14
2 5
the
"On behalf of G e n e r a l T o u f a n i a n and
11
18
through
to t h i s , to w h i c h I
Then you have
8
in T e h e r a n
says:
requested
4
7
is M r .
on
August
says:
details
and
opportunity
is I r a n ) " f o r a
pro-
205's, which
telegram as "sails"
that
be
225
112
1
"We a g r e e and w i l l c o m p l y w i t h T r o u t ' s "
2
Trout
3
that Bass remain
4
"Bass"
in t h i s c a s e
5
Dehesh
7
the sales
is p l a y i n g a v e r y
strategy, you
8
9
Was this
the
sale, putting
A
12
procurement
13
that time
14
General
the
17
he worked
18
ideas
21
Bell
involved
Bell
on
government
in h e l p i n g
B e l l in t h e b e s t p o s s i b l e
in t h e G o v e r n m e n t
Bell
arrange
position?
large
of I r a n .
At
and
formulator
I saw that on m a n y of the p r o g r a m s
the program
He was
the m a n t h a t h a d
should
be.
there's no doubt
that e a r l y
in t h e g a m e
that the
Iranians
that they wanted
to
thai
the
had
buy
machines.
There's no doubt
that they were
a t t h a t p o i n t w i t h the A g u s t a
the p e r f o r m a n c e
in a d v i s i n g
Mr.
know.
on o v e r t h e r e .
And
decided
that
like to t h i n k that D e h e s h w a s a
And
of w h a t
20
25
these
two main officials were M r . Dehesh
I'd
19
in."
Toufanian.
of p r o g r a m s .
24
from reading
the case and w h y w o u l d a
department
16
23
until called
Bell.
W e l l , see, they don't have a very
15
22
is
close role
o f f i c i a l b e so i n t i m a t e l y
11
"recommendation
in b a c k g r o u n d
in t h i s c a s e
N o w , it a p p e a r s
6
10
is D e h e s h ' s
and
performance and
f r o m the U n i t e d
And—but
other
dissatisfied
States'
they
wante<
company.
t h a n t h a t , I d o n ' t k n o w w h a t t<
226
150
1\
say.
2
1
Q
But D e h e s h s
3
is m o r e
4
advisor.
role appears
than a formulator.
to b e —
Dehesh appears
Dehesh
t o be
an
5
A
He's an advisor
6
Q
But he's an a d v i s o r , a l s o , to
7
A
Oh,
8
Q
I m e a n , that's what
it a p p e a r s .
Oh, no.
in h i s r o l e o f , " W e ' d
9
to
Toufanian.
no.
A
11
to c o - p r o d u c e . "
12
you ought
13
Q
And
But this
This
15
Cobras and
is g o i n g
16
Well, only
B e l l s a y s , " N o , we don't
to c o - p r o d u c e
14
A
is g o i n g b e y o n d
into the a c q u i s i t i o n
then
But
for t h e s e kind
of
is
giving
I mean
only that kind
of
18
there, all through
205's
from
that stuff
the
least
the
22
volved
23
on t h e s t r a t e g y a n d
24
dislodge
internal memoranda
in d e v e l o p i n g
it a p p e a r s
and
they
they buy
have
those
Agusta.
from reading
through
cables, that Dehesh was
the s t r a t e g y and
tactics
conversation.
that
is w h e t h e r
B e l l or t h e y b u y them from
But at
21
A
records.
205's.
19
Q
think
of h e l i c o p t e r s ,
F o r e x a m p l e , o n e of t h e b a s i c q u e s t i o n s
20
lik
reasons."
corporate
17
He
a dvice?
10
25
Bell?
on h o w
then a d v i s i n g
Bell would
come
inyou
in a n i
Agusta.
N o , I don't
think that's
true.
I think he
wa 3 —
227
112
1
^ — I think h e —
He was
2
that would w o r k w e l l for his country and he was
3
to a d v i s e T o u f a n i a n
4
And
5
it i n c l u d e d
6
7
t r y i n g to f o r m u l a t e a
on h o w
s e e , you k n o w , this
logistics;
that program
thing included
it i n c l u d e d
t h e y c a m e up w i t h t h e t h o u g h t
that some
be t h e f a t h e r o f t h i s w h o l e p r o g r a m .
t o t u r n to s e v e r a l d i f f e r e n t p e o p l e
®
They didn't
the
different people.
telephone and
and
could have
1 5
16
They'd
send me a telex and
come
want
several
s a y , "Come
to
country
companies
such as
Northrup?
Q
T h a t w a s talked a b o u t a t the end
logistics and
Q
That was mentioned
20
A
Yeah.
21
Q
Sikorsky was mentioned
22
A
Well,
Q
—you
should
to get a
A
Yeah.
25
company
responsibility.
be a b l e
in a t c e r t a i n p o i n t s
A
24
thing. And
They did not
for
several other
19
23
go.
me."
But there were
possibly providing
18
rather
trying
training;
one
c a p a b i l i t y of r u n n i n g
fix my p r o b l e m for
Q
should
the
the whole
®
have
program
that
Northrup?
in
'72 a s
support.
in t h e
and
cable.
then—
see—
have Dehesh
in t h o s e
cases
providing
advice.
A
S i k o r s k y was the o n l y h e l i c o p t e r
manufactured;
228
152
1
rhaybe A e r o s p a t i e l e , b u t , S i K o r s k y w a s n e v e r a
2
because
3
in I r a n . A n d
4
big helicopters
they didn't have
the r i g h t e q u i p m e n t
that had been p r o v e n
problem,
for the
in V i e t n a m .
They
like the F 61 w h i c h t h e I r a n i a n
5
m e n t , t h e y b o u g h t a f e w of t h e m f o r t h e p u r p o s e
6
Navy, but
7
this had a l r e a d y been p r o v e n by the U . S . A r m y .
8
9
10
Q
f o r t h e A r m y m i s s i o n , it w a s n ' t
But
Dehesh had a p e r s o n a l
to it t h a t B e l l w a s b r o u g h t
p r o v i d e r , w a s he
11
A
in a s
the m a i n
say that
if h e h a d a n y
i n t e r e s t , it w a s f r o m t h e s t a n d p o i n t
13
f a l l e n on t h e i r
14
gram.
16
Q
face and
Dehesh was
for B e l l to come
17
A
But the big
They didn't want another
20
States
23
24
25
Q
they needed help
in t h a t
had
pro-
on H o w to arrange
failure, and, therefore,
for a c o m p e t e n t
to c o n d u c t
the
company
from the
failure
they
United
program.
But M r . Dehesh was providing
advice?
A
Pardon?
Q
But M r . Dehesh was providing advice
to
either directly
t o B e l l , p e r s o n n e l or t h r o u g h M r .
ganeh?
the
Is t h a t
seeing
personal
thing w a s , they had had a
were
22
And
'copter
that Agusta
in t h e r e a d v i s i n g
19
21
in
the
in?
18
looking
of
not?
I would
12
15
Govern-
proper.
interest
use
had
case?
Bell,
Zan-
1
229
153
1
A
No, I don't think
2
Q
You don't
3
when Bell should
4
of
its
5
6
7
8
9
10
11
12
13
See, I have no
idea
That may be somebody's words
of w h e r e
doing
these
things
in
terms
I didn't
interested
same
time, they were
from.
not
on m a n y ,
feel they w e r e —
t r y i n g to p r o t e c t
are
But I met
I felt
many
that
in a r e a l g o o d p r o g r a m . B u t , a t
in e v e r y p o s s i b l e
their
they
the
government
way.
M R . MARINACCIO:
has some questions
16
it m a y
f o r y o u on t h e p r o g r a m . "
were
comes
to s a y , " L o o k , w e
with M r . Dehesh and General Toufanian
o c c a s i o n s and
that
in a c a b l e o r
I t m a y b e p a r t of a p r o g r a m
14
15
lay low, m i n i m u m v i s i b i l i t y
advice
reconnoitering?
A
be.
so.
t h i n k so a f t e r y o u got the
on this
M r . Collins
I
believe
subject.
THE W I T N E S S :
Okay.
17
18
19
EXAMINATION
BY M R .
20
21
22
23
24
COLLINS
Q
t o go b a c k
A couple more
to t h a t m e e t i n g
in t h e s u m m e r o f
that
on t h i s
I just
that you had with M r ,
'72 w h e n y o u d i s c u s s e d
you felt he was
I just wanted
subject.
d u e or a t
least
the
the
want
Zanganeh
commission
compensation.
to a s k w h e t h e r h e , a t a n y t i m e
during
the
25
c o n v e r s a t i o n w i t h h i m , w h e t h e r he e v e r m e n t i o n e d
tha t: h e
230
112
1
iriade a p a y m e n t
2
G o v e r n m e n t , or w h e t h e r
3
in t h e
4
either direct or
5
6
Iranian
9
them?
t h a t he h a d v i s i t e d
Q
14
Amendment
Was that October
15
20
of
A
BY M R .
A p r i l of
our
negotiated—
is
I believe Amendment
1 to
April.
'72.
'72.
COLLINS
22
A
Yes.
23
Q
Signed
A
A p r i l of
with
April.
Q
25
in t o u c h
in—what's
M R . S O U T T E R : A p r i l of
A
per-
'72?
Taxi agreement
21
24
that
1 to the c o n t r a c t was
M R . SOUTTER:
18
19
Bell Helicopter
N o w , you recognize
timing a t —
17
Government
them and he had
Okay.
A
the A i r
Taxi,
Yes.
13
16
officials
in A i r
not.
s e r v i c e s of p u t t i n g
A
Iranian
indirect?
So his o n l y d i s c u s s i o n a b o u t
formed
1
interest
Q
8
12
a n y of the
Government had an
N o , he did
officials was
11
they—or
in the
A
7
10
to a n y of t h e o f f i c i a l s
it w a s
t that time, was
signed?
in A p r i l ?
'72, y e s .
And
the p u r p o s e
to e s t a b l i s h a c e i l i n g
on
of
that,
payments
231
155
1
that might be
due.
2
Q
This
3
A
A p r i l of
is in A p r i l ?
4
Q
' 72?
5
A
That was
6
7
two
and a half per
happened
Q
9
meeting with
11
before—
cent.
in A p r i l of
8
10
'72.
And
And
the r e l a t i o n s h i p
them
in
Q
Okay, well, fall,
I don't remember
14
Q
Yes.
A
But
15
whole
17
20
21
22
23
24
your
December as a
month
whatever?
exactly.
I met with them several times
on
the
subject.
Q
Oh, I see.
resally d i s c u s s e d
never
like that
to t h e
But during your m e e t i n g s ,
making any payments
A
W e d i d n ' t e x p e c t to m a k e a n y
Q
Y e s . But he m a y have
A
No, s ir.
Q
—that
he had
p a r t ies or a n y t h i n g
A
No,
or
you
anything
officials?
25
that and
there.
A
19
between
W e l l , I think we picked
A
That
December?
13
18
so t h a t w a s —
said,
'72.
12
16
W e l l , y o u k n o w , it
sir.
like
some expenses
that?
payments.
mentioned—
o r he p a i d
third
232
156
1
Q
Did A i r
Taxi receive compensation
2
s e r v ice s thfey p e r f o r m e d
3
Bell Helicopter
in t h e s u m m e r
4
said August and
September?
5
6
7
9
10
11
14
15
have
17
18
19
20
21
22
23
24
1 don't believe
Q
So t h e i r
only
A
That's right.
Q
No advance
A
No,
Q
1 believe
for t r a n s p o r t
13
16
A
of
'72 a n d
by
1 guess
you
so.
of t h e
then during
that
commission?
payments?
sir.
you said
that Agusta had a
license
helicopters?
A
Yes,
Q
And was
A
On the 212 w h i c h
exclusive
sir.
that
on t h e
exclusive?
is o n e m o d e l .
Q
I just wanted
A
Yes.
Q
—put
not
to
t h i s i n t o the r e c o r d .
from M r . Gallagher
It did
205.
to M r . Sylvester
It's a
cable
dated A p r i l
12th,
1972. And I believe at that
time M r . Gallagher was
Teheran and he's discussing
the p o s s i b i l i t y
of
p r o g r a m . G e n e r a l T o u f a n i a n , of c o u r s e ,
the letter
of
intent
following
or d u r i n g
that
And
M r . Gallagher
indicated
to M r .
Sylvester:
in
the
helicopter
25
the
the d e m o n s t r a t i o n s
compensation
period was the possibility
8
12
during
for
same
signed
week.
233
157
1
"Dehesh
2
p o r t i o n of p r o g r a m .
3
clouded
4
until after
5
by Agusta
And
Messrs. Gallagher
in a d d i t i o n ^ t o
8
chance
getting
of g e t t i n g t h e t r a n s p o r t
Uh
Q
Is t h a t y o u r
12
A
Yes, I —
13
Q
That
14
transport ?
15
A
clear
felt
that
whether
Bell
would,
portion
some
in A p r i l
of
huh.
Q
I understand what
they were
"it's
confirms
that
transport
portion
21
we are not
going
but we may be
trying
getting
A
to g e t
to g e t
is t h a t
One
the
the
saying.
the
transport
inference
I
think
transport—that
B e l l has the a t t a c k p o r t i o n .
is c l o u d e d
to g e t
it.
interested
in
b y Agusta',' m e a n i n g
"We," being Bell
the t r a n s p o r t
See, we had
The
that
Helicoptei
it.
Was Bell still interested
25
situation'
they are
still trying
clouded."
from that
20
23
of t h a t
sir.
But
y o u can make
"Dehesh
understanding
That Agusta was
portion, yes,
17
24
still
CM
R^.
A
22
likely
is
the a t t a c k p o r t i o n , h a v e
11
19
attack
visit."
and Sylvester
10
18
least
portion
and w i l l not
Corrado
7
16
Bell at
Transport
f r o m t h a t , i t ' s n o t c l e a r to m e
6
9
confirms
at this
time
in
portion?
offered
to d e m o n s t r a t e
the
214,
234
15 8
1
2
riot t h e
In m y m i n d , if t h e y h a d b o u g h t 2 0 5 ' s ,
would have gone
®
205.
Q
But
Gallagher and
A
to A g u s t a .
They didn't buy
that w a s the
understanding
it
those.
of
Messrs.
Sylvester?
I think that
they w e r e
t r a n s p o r t s , if t h e y w e r e
saying
205's were going
that
the
to g o
to
Agusta.
Q
O k a y . A n d a t the end w i t h r e s p e c t
involvement
by Air
s a y i n g , and
I'm
Taxi, M r . Gallagher
standing and has
last
Taxi has been
contributed
it w o u l d
out-
significantly
the
A
in g a i n i n g
appear
f r o m t h i s , or a t
s e n t e n c e , that M r . G a l l a g h e r
A i r T a x i did p l a y a
gaining
of A i r
program."
So
that
the
by
quoting:
"Performance
to
to
finishes
large role
least
believed
in t h e c o n t r a c t
frok
that
and
contract?
In p r o v i d i n g
sales services, not
the c o n t r a c t , the
Q
I should
A
You've
b a c k up
Q
Right, right.
"Presentation
scheduled
for
product.
then.
got to s e l l the
t h e n u m b e r of h e l i c o p t e r s
necessarily
It's
product.
talking about
in the p r o g r a m .
of p r o g r a m
Toufanian,
It g o e s
to H . I . M .
this a f t e r n o o n and
Thursday
is
on:
235
159
1
morning
2
d o u t m o s t to s h o o t d o w n in c o u n t r y d e m o a s
3
is n o t n e c e s s a r y a n d r e s u l t
4
i m p l e m e n ta t i o n . "
5
for a p p r o v a l .
D e h e s h s t a t e s he
in d e l a y of
D e h e s h w a s t r y i n g to s h o o t d o w n a
6
tion.
7
September.
8
a demonstration would have
9
I assume
A
10
t h a t ' s the d e m o n s t r a t i o n
I don't know what his
will
demonstra-
in A u g u s t -
interest
in n o t
l o s t six m o n t h s
on the
They
demonstration.
M R . MARINACCIO: Are you putting
in the
having
been.
H e w a n t e d t o g e t the p r o g r a m r o l l i n g .
11
12
it
program
that
record?
13
M R . COLLINS:
14
Yes,
it's
37.
(The c a b l e r e f e r r e d to w a s
m a r k e d " E x h i b i t N o . 3 7 " for
identification.)
15
16
THE WITNESS:
17
M R . MARINACCIO: Please
18
THE W I T N E S S :
Could
I make a
correction'
do.
In the d i s c u s s i o n
with
19
G e n e r a l T o u f a n i a n a n d the S h a h at the p a l a c e , M r .
20
Sylvester was also present.
21
22
M R . MARINACCIO:
clarifying
the r e c o r d on t h a t
23
24
25
23-553 O - 78 - 16
I forgot
THE WITNESS:
BY M R .
A
that,
Appreciate
sorry.
your
point.
Yes.
COLLINS
T h e only other thing I'd
like to a s k a t
this
236
112
1
time :
2
earlier
3
helicopters
4
A
(The w i t n e s s n o d d e d h i s h e a d
Q
In J u n e , did you have that
5
6
s e e , in A p r i l of
in the
A
of—or
I don't
become any more
how many
firm by that
Q
10
A
No,
11
Q
S o , I'd
time.
l i k e to p u t t h i s
be
M R . FREED: What
BY
Q
20
16th, 1972.
21
25
that?
letter
from M r .
Sylvest
M R . COLLINS
19
24
is
A
(The letter r e f e r r e d to w a s
marked " E x h i b i t N o . 38" for
identif icat ion.)
17
23
record
Company.
16
22
into the
38.
M R . COLLINS:
18
had
sir.
This would
Air Taxi
down.)
impression,
knew?
14
to
up and
same
helicopters?
13
15
hundred
t h i n k , you k n o w , the p r o g r a m
No one here
a lso.
of
stated
offing?
9
12
'72, I think you
that you felt there were a couple
just a couple
7
8
Let's
(Reading)
He's
Attention
sending an amendment
Representative Agreement between
This
of M r . Z a n g a n e h ,
is A m e n d m e n t
No. 1.
And
w h i c h is A m e n d m e n t N o . 1 , it
to t h e
Foreign
Bell and Air
on page
Taxi.
1 of t h e
amendment
says:
"The program anticipated
consists
June
of:
237
112
1
1
"100 2 0 6 A s ;
2
200 214's and
3
and
4
That was
Q
Give?
6
A
To give A i r
things
8
9
12
13
14
15
Taxi coverage
they had
of t h e
18
19
22
23
24
25
They would
select
But y o u w o u l d be s e n d i n g a
A
T h a t w o u l d a p p l y to w h a t e v e r
Q
So t h e s e a r e j u s t r o u n d
just
figures
they were
from
going
those.
commission?
they
figures
purchased.
that
they—
A
These are
A
They must have had
some
A
If t h e y b o u g h t t h e
205' s, they weren't
that—
idea—
going
214's.
Q
Yes, because
A
See.
Q
W e l l , he's
l e t t e r he r e f e r s
21
possible
taught.
Q
to b u y the
17
and
services
coverage.
N o w , it w a s n e v e r m e a n t t h a t
11
20
to give them
t o b u y a l l of t h o s e .
10
16
200 2 0 9 s ;
spare parts and
training."
A
various
50 205A's;
related
5
7
1
one was a transport
talking
or—
t h e r e a l s o a b o u t , in
to c o n v e r s a t i o n s
that they had
the c o m p e n s a t i o n
agreement?
A
Yeah.
Q
About
A
Yeah.
Q
A b o u t , I p r e s u m e , the proposed
A
But there was never a n y p o s s i b i l i t y
the
earlier
amendment?
of
Bell
238
162 .
1
selling
these machines as a total
program.
2
Q
And why
3
A
B e c a u s e , f i r s t of a l l , if t h e y b o u g h t
4
transports , they probably wouldn't
5
6
The
The
8
I don't
9
document
and a
that
half per
these
t y p e s of
A
c o m e to
came out w i t h
200
to
Bell.
there,
that q u a n t i t y , you k n o w , another
30 and I d o n ' t
that says
know why that
number
is t h a t w e w o u l d p a y
c e n t of w h a t e v e r w a s
two
sold.
Ultimately, this wasn't what was
sold,
aircraft?
N o , n o . We
is w h a t
transports.
way.
Okay.
Q
15
16
it w a s
214
that w e r e going
They wouldn't
2 0 9 ' s , how we
But what
13
14
says
b u y 205A
something
by A g u s t a .
know, because
was written
11
12
206A's were
be m a n u f a c t u r e d
7
10
not?
we ultimately
sold 287 t r a n s p o r t s and
202 H
1J's
sold.
17
18
19
EXAMINE TION
BY M R .
20
21
22
23
Q
I have two wrap-up
questions
W h e n y o u sa y y o u s o l d t w o h u n d r e d
ports
and two h u n d r e d and
of t h o s e w e r e a l s o u n d e r
24
25
MARINACCIO
A
was
At
to
something
section:
trans-
so.mething H I J ' s , w h i c h
license
that point, neither
under license
and
on this
Agusta.
to A g u s t a , t h e
the
ones
t r a n s p o r ^s
2 1 4 or t h e A H
1J
239
163
1
Q
W h i c h one had b e e n under
license
2
A
Neither
ever been
3
license
to
of t h o s e
two had
Q
Never had been under
5
A
214 w a s
had a
never
7
Q
8
of t h e
9
A
10
license
But
on a n y of o u r a r m e d
they had a
The
To the
A
12
Q
And would
13
competitive
14
A
15
yoo
with
Q
I
A
So
you have
the
considered
214 or w a s
e x a m p l e , the
205 p r o b a b l y h a d
t h e 214 had 3 , 0 0 0
it w a s a w h o l e n e w d y n a m i c
new transmission
20
A
Yes,
21
Q
I'd just
system, a
transport
helicopters'
sir.
like
to a s k y o u t w o m o r e
questions
Agusta.
A
Yes,
Q
To get the r e c o r d
licensee
15,
horsepower.
system.
Q
25
be
see.
They are both basically
24
the 2 0 5 t o
it?
19
about
version
205?
N o . For
17
23
helicopters.
to a n e a r l i e r
sir.
horsepower and
16
22
1J, Agusta
205.
Yes,
whole
license
AH
transport?
Q
18
under
license?
really a new a i r c r a f t .
11
16,
Agusta?
Agusta.
4
6
to
sir.
in v a r i o u s
parts
clear:
Has Agusta
of t h e w o r l d
been
for a n u m b e r
you::
of
240
112
1
years?
2
A
Y e s , it
3
Q
And what
4
performed
5
has.
in t h e s e v a r i o u s p a r t s
A
Well, Agusta
6
quality helicopter.
7
quality.
8
9
10
11
12
13
Q
has always
two statements
Let
a
very
in
is b e c a u s e
I
you
did
couldn't
me—
Q
W e l l , let m e g o o n .
so y o u ' l l be a b l e
to f o c u s
Y o u said
once
on
Let me t e l l y o u m y
sell 205's, they would have
face
t i m e y o u s a i d , " W e l l , if t h e y w e r e g o i n g
17
A
Ye s .
18
Q
So w o u l d
situation
quest
this.
that they f e l l on their
another
gotten
from
y o u k i n d of c o m m e n t
to
Agusta."
on t h a t
whole
there?
20
A
21
birds.
22
been very poor
23
supported
delivered
there that
A
15
25
world?
They have done very well
16
24
of t h e
has
mesh.
14
19
of h o w A g u s t a
The reason w h y I a s k this
s a y , you made
quite
is y o u r o p i n i o n
Well, Agusta
They are
has always
usually
late
And
we have taken
to s c h e d u l e .
on p r o d u c t s u p p o r t .
the product p r o p e r l y
in p a r t s
over
the
delivered
have
not
field.
license
spare parts
They
They have
in t h e
of t h e i r
quality
territory,
support, because
of
an
241
165
1
that.
For e x a m p l e , we have a depo
2
3
that services
4
world.
5
problems
And we put
7
done w e l l selling
8
in p r o d u c t
the
is p a r t i c i p a t i o n
11
A i r T a x i , I w o u l d a s k y o u if y o u w a n t
12
statement
13
that we have
A
y o u for
of G e n e r a l
which
K h a t a m i in t h e o w n e r s h i p
for the
to m a k e
sale of the
helicopters
covered?
No.
I think we've
done
that.
M R . FREED: Should we take another
16
MR.
MARINACCIO;
Let's
break?
t a k e a f i v e minute
recess.
18
19
of
any
15
17
has
that
g o o n to t h e n e x t a r e a
10
14
the
world.
M A R I N A C C I O :; h a n k
clarification. Before we
the
support.
T
o n the r e c o r d
of
is a g r e a t s a l e s m a n a n d h e
throughout
MR.
9
T7
had
Now, Corrado
now
throughout
t h a t t h e r e ss t r i c t l y b e c a u s e
that Agusta
6
in A m s t e r d a m
the t o t a l Agusta t e r r i t o r y
(Brief
BY M R .
20
21
22
M r . Atkins, I would now
Q
attention
Helicopter
24
matter
to the m a t t e r
of
K h a t a m i in t h e g r a n t i n g of
23
25
recess.)
MARINACCIO
for
the
s a l e of
of t h e o w n e r s h i p
of
D o y o u k n o w or
l i k e to
direct
the p a r t i c i p a t i o n
the c o n t r a c t
to
of
General
Bell
489 helicopters, and
the A i r T a x i
your
the
company.
have you ever heard
from
any
242
166
1
2
source whatsoever
i n t e r e s t of w h a t s o e v e r
^
*
that G e n e r a l Khatami
A
ownership
5
nature
I ha v e n e v e r h e a r d
in A i r
in A i r
had an
ownership
Taxi?
that G e n e r a l had
any
Taxi.
Q
General
Khatami?
A
Khatami*
Q
Khatami,
M R . GALERSTEIN: That's why he
didn't
Q
'
say
i t . H e d i d n ' t w a n t to c o r r e c t
1 0
MR. MARINACCIO:
1 1
THE W I T N E S S :
1 2
Yeah,
MR. MARINACCIO:
THE W I T N E S S :
BY M R .
Do you know
source whatsoever
K-h-a-t-a-m-i?
okay.
Khatami,
Khatami.
or h a v e y o u e v e r h e a r d
that Air
g i f t or g a v e a n y e m o l u m e n t
A
I
Q
—to
with either
from
Taxi made any payment
to a n y g o v e r n m e n t
any
or
official—
haven't.
the
the G o v e r n m e n t
s a l e of
2.9 m i l l i o n d o l l a r
A
again.
MARINACCIO
Q
to A i r
you
Spelled
of Iran
in
489 helicopters
payment made
connection
or f r o m
from Bell
the
Helicopter
Taxi?
I have no knowledge
Air Taxi has made any payment
or n e v e r
have heard
to a n y g o v e r n m e n t
o f f i c i a l as a r e s u l t of the p u r c h a s e
of t h e
489
of
that
Iran
243
167
1
"helicopters
or the p a y m e n t
2
of t h e t w o m i l l i o n
M R . GALERSTEIN:
nine.
It n e e d n ' t be
3
I ' m s u r e , b u t t h a t ' s a p a r t f r o m the a l l e g a t i o n
4
Senator Proxmire
5
allega tion.
6
to that e f f e c t .
the
8
that
9
Chairman
question
I don't
that w a y , and even would
made.
11
has an ownership
I think the a l l e g a t i o n
The
13
government
has an ownership
t o the U n i t e d
of t h a t o w n e r s h i p
16
million
dollar
17
General
Khatami.
A
mation
20
Q
21
22
23
24
25
from an a g e n c y
flowed
certainly
the
And by
virtue
of the
through
counter
Khatami
2.9
to
to a n y
infor-
hold.
w i t h G e n e r a l K h a t a m i on one
A
Yes,
Q
I believe
A
of
i n t e r e s t , of c o u r s e , p a r t
N o w , you have stated
conversation
the
was
Khatami
is t h a t G e n e r a l
in A i r T a x i .
payment may have
Well, that's
that I
recorc
that a payment
is t h a t G e n e r a l
States
interest
15
19
c l a r i f y the
interest.
information
14
that
clarify
think there's been any allegation by
10
18
Yes. I would
of the B a n k i n g C o m m i t t e e
12
by
I m e a n , p r i o r to
M R . MARINACCIO:
7
stated,
that you
occasion?
sir.
you stated
that you had w i t h
Yes,
previously
sir.
the substance
him?
of
the
met
244
168
1
At
Q
that t i m e , and
2
you had never mentioned
3
the
5
6
name,
7
to
A
That
Q
Did G . W i l l i a m M i l l e r
is
stated
to the b e s t of y o u r
n a m e of G e n e r a l K h a t a m i t o G . W i l l i a m
4
knowledge
Miller?
correct.
ever mention
A
when
that was news
mentioned
12
in a n
I think
I might
Miller
at that
15
in a n
accident?
Why would
you have mentioned
to G .
A
W e l l , it
was—
Q
What was
the conversation a t that
18
A
I don't remember what
particularly.
23
24
25
Iran had
Q
that
And
just that a major defense
been killed
in a n
Did you m e n t i o n
was,
official
accident.
to G , W i l l i a m M i l l e r
at
Khatami?
A
I don't think
Q
Was there any discussion with G .
at that time
killed
time?
the conversation
time that y o u had m e t G e n e r a l
Miller
Villiam
time t h a t G e n e r a l K h a t a m i had b e e n
17
21
killed
accident.
Q
from
been—
have
to h i m that G e n e r a l K h a t a m i h a d been
14
16
it
I think that m i g h t have
in t h e p a p e r a n d
13
22
Khatami",
O h , I think we might have talked about
General Khatami died.
11
20
the
to the b e s t of y o u r k n o w l e d g e , " G e n e r a l
10
19
that
you?
8
9
that you have
so.
or a n y o t h e r t i m e
that
William
General
245
169
1
Khatami may have played or had some participation of
2
whatsoever nature in the letting of a contract for
3
489 helicopters from the Government of Iran to Bell
4
Helicopter
®
A
Company?
There was no such conversation, and I
6
don't think General Khatami had anything to do with
7
the 489 ships coming from Bell.
8
® I
10
For the record, I would like to go into the
Q
documentation that has been made available to the
I
Committee from
11
Bell—
A
Sure.
Q
—pursuant
to the
subpoena which I think
bears on the question of the extent to which, if any,
**
General Khatami had participation in the said
helicopter
sa le.
I'd like to mark for the record a series of
17
documents.
18
(The documents referred to were
marked "Exhibit No. 39" through
Exhibit No. 53" for identificatii
19
20
21
Q
of General Khatami in the letting of the contract to
22
23
24
25
M r . Atkins, with respect to the participation
Bell Helicopters, I have a series of documents
that
were made available by Bell, Textron, pursuant to the
subpoena
that speak to that issue and I'd like to show
you the documents and get your testimony on each of thesi
246
170
1
"documents.
2
The first document is Exhibit No. 39, a
3
Zanganeh, Air Taxi internal memo, dated April 11, 1968,
4
which states in pertinent part:
5
"During repeated meetings with General
6
Khatami and General
7
interested authorities concerning the Agusta
Toufanian as well as other
8
contract, we did our best to persuade the
9
Government to conclude the contract with Bell
10
Helicopter rather than Agusta."
11
I show you this document and ask you if
12
it doesn't
13
sentative in Iran, M r . Zanganeh, was meeting with Generc 1
14
Khatami and General Toufanian to have the business go
15
to Bell, rather than Agusta?
16
A
indicate that your m a n u f a c t u r e r s
repre-
I believe that this memorandum was dealing
17
with the procurement of M o d e l 206's. And what it shows
18
is that our sales representative was unsuccessful in
19
obtaining the business for Bell.
20
21
22
23
24
25
Q
Could you point to where
in the document
this indicates that it's dealing with 206's for the
benefit of the record?
A
It doesn't say that in the document, but
I'm fairly sure that there was a procurement
being
made at that time of 206's, and that it did go to Agust*
•
247
212
1
2
I think that's what he was referring
Q
3
to.
I see.
I direct your attention next to Exhibit No.
*
40, which is a communication again from Zanganeh and
5
Air Taxi to Mr. Taylor.
Who is M r . Taylor, by the way?
^
A
He's a sales rep.
Q
And he works under
A
Yes.
Q
—organizational
A
Yes, yes.
Q
Dated December 29th, 1969, I believe.
it's the 24th.
written,
your—
structure?
No,
The 29 has been stricken and it's re-
It's December 24th.
The document says in
pertinent part:
"On my return to Teheran, M r . Iranzad"
who also works for Air Taxi "handed me the
Huey Cobra film, brochures and proposals.
I
will arrange an immediate presentation of same
to His Majesty and the authorities
concerned.
In the event that your proposals are found to
be interesting, we will do our best at this end
to give you all assistance possible. You are
well aware that unless you can provide
financing
of this deal through the U. S. Government
248
172
'Tranch' or, alternatively, arrange better and
1
2
lower term credit facilities than Agusta,
3
the deal will finally be diverted to them."
"Since the
4
interested party will be
5
leaving the country within two weeks for a
6
period of one month, I should make arrangements
7
before his departure.
8
I regret that I will not be able to attend
9
Bell Sales Conference from January 7th to 9th.
10
circumstances,
th e
I will cable you my arrival if otherwise."
I show you this document and I particularly
11
12
Under these
ask you to look at that paragraph that refers to the
13
"interested party" and ask you whether or not you have
14
any knowledge, direct or indirect, or have ever heard
15
that the interested party referred
16
is General Khatami?
17
A
to in that document
Well, as I read the memorandum, I think he's
18
referring to His Majesty as the "interested
19
And, of course, His Majesty normally went skiing in the
20
month of February, and that seemed to tie in pretty
21
closely to that.
22
23
Q
Have you ever discussed this particular
document with M r . Taylor?
24
A
No, I haven't.
25
Q
You haven't?
party."
249
212
*
A
Just off the record for a moment.
^
Q
Oh, sure,
^
(Off the record
discussion.)
Q
Why don't you say that for the record?
A
All right. Further, I believe that the
possibility that Air Taxi could have the opportunity to
present the Huey Cobra film to His Majesty was very unlikely.
Q
Q
11
12
13
14
15
16
17
18
19
M r . Atkins made that statement off the record
and I asked him to make it on the record.
M r . Atkins, I show you Exhibit No. 41, which
is an internal document of Air Taxi, M r . Zanganeh, once
again. And it says in pertinent part:
"In a dinner party given at the residence
of General Khatami, His Imperial Majesty, the
Queen, Princess Fatemeh and the Prime Minister
saw the film.
His Imperial Majesty displayed
a great interest in the film and raised
20
21
to His Majesty.
22
impressed with the Huey Cobra capabilities and
23
pointed out the great possibility of utilizing
24
this helicopter
25
immediately communicated
I gave the necessary
several
questions.
explanations
His Imperial Majesty was most
in the Iranian Forces.
Imperial Majesty's
I
the result of His
interest and comments to
250
174
1
Bell representatives."
2
I show you this document and ask you if it
3
doesn't indicate His Imperial Majesty, the Shah, was,
4
in fact, shown the film and in the presence of General
5
Khatami, a film related to Bell Helicopters?
6
7
8
9
10
11
12
13
14
A
I have no knowledge of this piece of paper,
Q
You had no previous knowledge that the
and—
Shah had seen this film in the presence of General
Khatami?
A
No, I have none.
Q
I show you Exhibit No. 42,, which is an
Air Taxi internal memorandum, dated April 10, 1971,
which states
15
16
17
18
19
20
21
22
23
in pertinent part:
"Upon receipt of Bell Helicopter's
telex
No. 231, dated March 30, 1971, regarding the
arrival of the Bell's team consisting of the
following, Sylvester, Striker, Kulik, Horsley.
I immediately approached General Khatami,
C-in-C" (must mean Commander-in-Chief)
"IIAF,"
Imperial Iranian Air Force, "and also General
Toufanian of the MIO, and personally related
the purpose
of the visit of Bell's team to
24
Iran."
25
"Contrary to Bell's decision to make a
251
175
1
maximum exposure and wide publicity, both
2
General Khatami and General Toufanian, as well
3
as M r . Dehesh, agreed with me that Bell should
4
play a very low key and only coordinate and
5
adhere to further guidance/instruct ions which
6
would be given to them."
7
I ask you to review this document and ask you
8
if it doesn't indicate that General Khatami, as well as
9
General Toufanian and Mr. Dehesh, were interested
10
in
the Bell sales program in Iran?
11
A
Well, reading this memorandum, I believe
12
that this was a Bell sales team that we were sending in
13
to work on the sale of the armed helicopter
in Iran.
14
Looking back on it, you'd have to feel that
15
our sales representative was directing us in the wrong
16
direction, because General Khatami, of course, in his
17
position as Chief of the Air Force, really had no
18
direct connection with the helicopter
19
20
21
22
23
24
purchase.
His advice might be sought by the ground
forces as to whether or not that was the proper equipment.
Certainly, General Khatami did not or was not
going to be the user of the aircraft that were being
procured.
Q
But this document indicates that General
25
Khatami was giving advice concerning the procurement?
252
176
1
A
No, I think this would have been a briefing
2
that was going to be made, and he was going to take a
3
briefing.
I think that's what that indicates.
4
Bell team was going to give a briefing.
5
specialists on there and that's why I know.
6
a specialist
7
Q
The
And I see some
Kulik is
in armament.
Once again, I'll ask you to comment on this:
8
The document does say General Khatami and
9
Toufanian, as well as M r . Dehesh agreed with me that
General
10
Bell should play a very low key and only coordinate
11
and adhere to further guidance and instructions which
12
would be given to them.
13
It indicates that General Khatami, at least
14
in Mr. Zanganeh's mind, who was your manufacturer's
15
representative
16
Khatami is issuing instructions and that Bell should
17
listen to the
18
19
20
21
22
23
24
A
in Iran, is of the mind that General
instructions.
I think it's more likely that that means
that MIO said the briefing should be made to us and
not to other people.
Q
I show you document, Exhibit No. 43, dated
April 24th, 1971.
It's another
internal memorandum
from M r . Iranzad who is an official of Air Taxi. And
he says here in pertinent part:
25
"Meeting in Air Taxi Company at 9:00
253
177
1
A.M. on April 17, 1971.
2
concerning the implementation of Bell Heli-
3
copter Company's program, fact finding about
4
Agusta's activities and presentation of the
5
Huey Cobra Helicopter to the Commanders of
6
the Iranian Armed Forces ensued."
Lengthy discussions
7
A
Ensued?
8
Q
Ensued, "followed," I think he means.
9
A
Okay.
10
Q
April 18, a meeting with General Toufanian
11
. and Mr. Dehesh.
12
"At this meeting, the Huey Cobra was
13
presented to the General who was
14
impressed and indicated that it is the
15
of the Iranian Government to evaluate
16
helicopter and most probably purchase Huey
17
Cobra helicopters
18
20
programs.
21
noon."
24
25
this
"At both the above meetings, lengthy
discussions were held concerning
23
intention
in the future."
19
22
considerably
The team returned
The team apparently
future
to Air Taxi about
included
Sylvester,
Striker, Kulik and Horsley.
"After a quick lunch, M r . Zanganeh piloted
an Aero Commander aircraft and flew the team
254
178
1
from Mehrabad Airport to Doshan Tappeh Air
2
Base to meet General Khatami, Commander
3
Chief of the Imperial Iranian Air Force and
4
other high ranking
5
in
officers."
"After preliminary introductions of the
6
Bell Helicopter team regarding their program
7
in Iran, discussions took place in a friendly
8
atmosphere for about an hour and a half.
9
General Khatami gave very important and .
10
11
12
useful guidance and advice for the future sales
of a Huey Cobra.
team were very
13
The Bell Helicopter
Company
impressed."
"At the end of the meeting, they returned
14
with the same aircraft to Air Taxi's premises
15
at Mehrabad
16
17
18
19
20
21
22
23
24
Airport."
I ask you to review this document and ask yot
to comment on General Khatami's interest in providing
guidance and advice to the Bell Helicopter
team,
including its manufacturer's representative, in making
sales of helicopters to Iran?
A
Well, I would think that General Khatami's
remarks would probably be in the area of configurations
and armament. And, of course, he had possession at that
time of F4's and F5 1 s in his Air Force.
And he, most
25
likely, would be talking about
configurations,
255
179
1
armament, avionics, things that would make the machine
2
a better machine for use in Iran.
3
knowledge I have of this.
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
Q
That's the only
And Sylvester, Striker, Kulik and Horsley,
do they work in your
organization?
A
Yes, sir.
Q
Did you receive a report from these in-
dividuals when they came back from this meeting?
Do
you have any recollection of it?
A
I think Sylvester talked to me about their
trip in general.
Q
Do you
recall—
A
And felt optimistic that we might sell 20 or
30 Cobras in Iran.
Q
regard
Wouldn't M r , Sylvester's optimism in that
be consistent with General Khatami's
guidance
and advice for future sales of those instruments, ships,;
helicopters?
A
Counsel, you know, I've been in this business
a long time.
My sales teams often come back and
me how many ships we're going to sell tomorrow,
tell
Until
such time as we receive a contract with a signature on
it, I don't really put much faith in this optimism. It
24
has to be the real thing.
25
Q
But wouldn't you agree that the optimism ovej
256
180
1
a long period of time, in this case finally came to
2
fruition?
3
dollars' worth of items to Iran.
4
A
You did end up selling a half a billion
Again, we were talking to the wrong person
5
who wasn't going to buy aircraft from us.
6
them from MacDonald or somebody else, but he wouldn't b<
7
buying them from Bell.
8
9
10
11
12
Q
He might buy
Did your team ever indicate to you that
General Khatami had expressed an interest in aiding in
the sale of Bell Helicopters to the Government of Iran?
A
No, no, it did not.
Q
M r . Atkins, I show you Exhibit No. 44, a
13
letter, a memorandum from Mr. Sylvester to apparently
14
Mr. Horsley in which they state in pertinent part:
15
"General Khatemi, Commander-in-Chief
16
the Iranian Air Force, has also reported
17
the Shah as being in favor of Cobra for the
18
Air Cav Mission."
19
20
21
22
23
24
25
of
to
And a copy of this document is noted as
having gone to you in 19 71.
Does this document
indicate to you that you
were then given knowledge by M r . Sylvester
that
General Khatami had been making recommendations
in
favor of the purchase of Bell Helicopters directly to
the Shah as far back as April 28th, 1971?
257
212
1
A
Now, this memorandum is a Horsley
conversa-
2
tion with Sylvester, and these remarks are Horsley's
3
remarks, not Sylvester's remarks.
4
Q
I appreciate the clarification of the
5
document.
6
the bottom of the page 2, by Mr.
The document does appear to be signed at
Sylvester,
7
A
He's reporting a telephone
8
Q
All right.
M R . FREED: Excuse me. Is this No. 44?
9
10
M R . MARINACCIO:
11
12
M R . FREED:
Sylvester to
M R . FREED: Thank you.
It's Aide Memoire dated
April 28th, '71.
18
W
Memo.
Horsley.
M R . SOUTTER:
20
Could you just tell me what
M R . GALERSTEIN:
15
17
Yes.
that is?
13
14
conversation.
THE WITNESS:
Well, the first sentence
here, it says:
"General Toufanian, Commanding General of
21
the Iranian Military Industrial Organization,
22
who reports in that capacity directly to the
Shah and is responsible for all military procurement, and General Minbashian, Commander-inChief of the Iranian Ground Forces, have met
258
182
1
with the Shah and have come out strongly in
2
favor of the Cobra."
3
Now, how Horsley would know that, I don't
4
know.
5
memorandum by General Khatami.
Then there is a similar remark, later in the
6
M R . GALERSTEIN:
Let me make a correctic n
7
right now if I may:
8
to Horsley.
9
an Aide Memoire by Sylvester recording a telephone
I said that was a memo, Sylvester
It is not a memo, Sylvester to Horsley. It's
10
conversation with Horsley.
11
Horsley.
12
It is not directed
THE WITNESS:
And, to me, this is a
13
salesman reporting more than he knows as
14
BY M R . MARINACCIO
15
16
Q
to
facts.
Now this document, M r . Atkins, shows that
you got a "cc"?
17
A
Uh huh.
18
Q
You got a copy of this document in 1971?
19
A
Uh huh.
Q
Did you call either Mr. Sylvester
20
in or M r .
21
Horsley who were then in your organization and admonish
22
them for reporting more than what they knew as facts?
23
24
25
A
I am sure I didn't.
They report
their
feelings on situations, and I am sure that if that
triumvirate of generals had recommended
the Cobra way
259
183
1
"back then, they probably would have bought them at that
2
time.
3
Ground Forces, and the aircraft were actually for him.
4
Because General Minbashian was Chief of the
Q
On the point of General Khatami, however,
5
does this document indicate that as far back as 1971,
6
you were apprised by your staff of General Khatami's
7
recommendation to the Shah in favor of the sale of
8
Bell Helicopters to Iran?
9
A
Yes, but my staff had no way of knowing that
10
General Khatami had recommended them to the Shah.
11
I would have to consider the document accordingly.
12
13
Q
So, in effect, your testimony is that the
document is to a degree puffed?
14
A
That's right.
15
Q
But you made no effort to admonish your
16
staff at that time to take care and not to puff too
17
much, in your words, in your words?
18
to be fair to you, in your
19
20
And
A
people.
I mean, I'm trying
testimony.
Well, salesmen, in general, are optimistic
And salesmen will make statements
regarding
21
their sales potential.
22
droppers. And to one degree, I don't want to discourage
23
their efforts across the world.
24
25
And many salesmen are name-
And, certainly, I
wouldn't think it a bit unusual for Bell, as part of
of their normal sales program, to be talking to General
260
184
1
Toufanian over here as Director of Procurement, M I O ,
2
of talking to General Minbashian over here, who is
3
Chief of the Defense Forces, who are going to use the
4
product. And then talking to a General Khatami, who
5
is an air expert in that country, to get his support
6
for a program.
7
unusual.
8
9
Q
I wouldn't think that would be a bit
It's part of a good sales program.
My question is:
Whether these series of
documents don't b e g i n to show that General Khatami
10
for the alleged
11
with respect to the procurement of helicopters
12
ginning to show an inordinate amount of interest in
13
the sale of Bell Helicopters to Iran?
14
15
lack of direct responsibility he had
I would
A
is be-
like to you comment on that.
I think General Khatami, again, was an
16
aviation expert.
There weren't many aviation experts
17
in that country.
And I would think that he would have
18
an input to make to the final sale. But, he is not
19
20
21
22
23
24
the procuring officer and he is not the user of the
a ircra ft.
Q
Well, since he had an input to make to the
final sale and the final sale was pretty important to
Bell Helicopter, you should have been, as president of
the company, cognizant of his input and interest, and
25
I think you were, as we
stated.
261
212
1
'
2
You went to see him.
A
I went to see him.
Q
Yes, and you stated that, previously, sure.
A
Yes.
And if I really thought he was con-
trolling, I would have been knocking on that door more
than one time 0
^
Q
But isn't it also logical from a management
8
point of view of a large corporation on a sale of this
9
importance to the company, with your knowledge of
10
11
12
Khatami, that you would have mentioned
the package of the whole to your superior, G, William
Miller?
13
14
15
16
17
18
19
20
A
We were selling 30 Cobras.
And let's say
they were a million dollar apiece. That was
million dollars.
thirty
That sale was not that important to
us, 30 million dollar sale. And, sure, we kept Bill
Miller appraised
Europe.
that we had a sales program going on in
But at this point in time, we had no idea of
the total possibilities or the potential of that program
We were still selling 30 Cobras by that point.
21
22
this as a part of
Q
'72(and
But I think by this point, and certainly by
'73, the potential was fairly great?
23
A
But, you know, there are so many programs
24
around the world that you start out o n —
You have a
25
batting average of something„ And, to me, I have
262
186
1
responsibility around
2
bility to keep my payroll up, keep feeding my people.
3
And I don't run to my superior everytime we're taking of f
4
on a 30 million dollar sales program.
5
6
7
this company.
I have a responsi-
I sold that many helicopters
this week.
Q
in California
So, you know, it isn't that big a deal.
What, with respect to the sale you made this
8
week, maybe a lesson, maybe we can learn a lesson on
9
how your organization
10
11
12
operates.
Did you talk to the people in Providence
about that sale?
A
13
No, no.
They don't even know about it yet.
I have to recognize the fact that at the
14
amount of sales to support this organization, I have
15
to sell something sixty or seventy million dollars a
16
month. And, you know, I don't run off and say, "We
17
made a great big sale" when we sell 15 or 20 or 30
18
million dollars worth of helicopters.
It's not that big
19
Q
Nevertheless, the sale of 489
20
A
Was very
Q
— w a s a very important venture?
A
It w a s —
21
22
23
24
helicopters—
important.
It was i m p o r t a n t — It was more
important than 489 helicopters.
Q
How so?
A
From the standpoint of the future.
25
489
263
1
helicopters wasn't so important.
2
million dollars.
3
continuing
It was the fact that we had a
program.
4
Q
In Iran?
5
A
Yes.
6
Q
And
7
®
That was the important
thing.
I think it's fair to say, though, that
the germs of that continuing program began a long time
ago, maybe even as far as the early
9
That was only 500
1970's?
A
Could be.
Q
You began to put that program together a long
time ago?
A'
Yes, but the potential of it, none of us could
Q
And that's really why I keep asking the
see.
question:
Since the potential of the program was so
large and since it w a s — g r o p i n g
outlines of it were dim-
ly perceived a long time ago, whether or not you wouldn'i
have sat down with your superior, G. William Miller,
and had a long chat with him about it and informed
him
of who the players were; who this guy was; who that
guy was; this general; that g e n e r a l — j u s t
in a business
sense, I mean, you know.
A
Well, I think I said I kept him advised
the program we were selling.
of
And I would guess that
the input I would have made wouldn't have been very
264
188
1
"serious until after I had been in Iran in November of
2
'71. And , at that point, I think I saw some of the
3
potential.
4
programs began, was at that point.
And that was really when our real sales
5
Q
6
A
Sure.
Q
An internal memorandum of Air Taxi again.
7
I'd like to continue with Exhibit No. 45.
8
Sill on the point of General Khatami's
9
in the sale 0
participation
10
This document says in pertinent
11
"In the absence of Mr. Zanganeh, who is
part:
12
in Europe, General Khatami, Commander-in-Chief,
13
IIAF, instructed me to inquire from Bell
14
Helicopter Company the price and delivery time
15
of two helicopters, Model UH-1N, for Search/
16
Rescue operations.
17
the fact that he has received proposals
He indicated that despite
from
18
other manufacturers, he personally prefers to
19
have the U. S.-made Bell Helicopter
20
fleet."
21
22
23
24
25
in his
This is General Khatami talking, according
to Air Taxi.
"HeJ' General Khatami, "indicated
that
until the time when the requirements of all the
other Armed Forces are known and the total
265
189
1
Order is placed through FMS to Bell Helicopter
2
Company, this matter be left in abeyance,
3
and the result was phoned to Fort Worth and
4
verbally conveyed to BHC's representative
5
from Teheran."
6
I think this document, again, follows the
7
discussion that we 1 ve just been having about the
8
inception of sales back in 1971.
9
And I ask you if it doesn't indicate that
10
General Khatami is now beginning to show an
11
amount of interest in the sale of Bell Helicopters.
12
13
M R . SOUTTER:
Counsel, I'd like to
say I think "inordinate" is a loaded
phrase.
14
M R . MARINACCIO: All right.
15
M R . SOUTTER:
16
conclusions and
17
with a slant on it.
You know, draw your own
say what you want, but I find that
18
THE WITNESS:
19
M R . MARINACCIO:
20
21
22
23
inordinate
loade 1
Yeah.
I will withdraw
the
question and rephra se it.
M R . SOUTTER:
Just, you k n o w — Mr.
Atkins may want to—
M R . MARINACCIO:
I think my point is
24
that since Khatami appatently has no responsibility
25
for the purchase of these helicopters for the Air Force
266
190
1
that he's even beginning to talk about FMS which is a
2
government-to-government sale, and seems to be p r e —
3
you k n o w — p r e s a g i n g
4
5
A
the sale of 489 helicopters?
You notice it said there that Khatami wanted
to procure two UH-lN's for Search and Rescue purposes.
6
Now, that is probably his mission.
And he
7
had a fleet of Command Huskies that was performing
8
mission.
9
particular two-ship
I didn't—
that
I don't think I ever heard of this
inquiry for UH-lN's, but I don't
10
believe that he ever bought those UH-lN's, and, certain-
11
ly, not from us.
12
13
Q
Could I ask you to look at the last few
sentences of the document and comment on that?
14
It seems to be talking about a different
15
transaction there, and one to be structured
16
ment- to-government through an FMS sale?
17
from govern-
A
Yea h.
18
Q
Which is the way the
19
A
Yeah.
Q
— c o n t r a c t with Bell Helicopter and Iran was
20
21
structured.
22
23
24
final—
He seems to be talking about two separate
items in that.
A
Well, what
I—
Q
One, the two helicopters and one, a very
25
267
212
1
2
large sale to be done through FMS?
A
No.
I think what he's said there:
Maybe
3
the two-ship sale would be held until an FMS program
4
was entered into. Because Bell could not sell the
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
23-553 O - 78 - 18
UH-IN's direct to the Government of Iran. It was a
licensed territory to Agusta.
I think that's what he said.
(Short break.)
268
212
(Brief break.)
BY MR. MARRINACCIO
Q
Mr. Atkins, on the previous question, I know
I used
the term "inordinate" in my question.
intend
to indicate that I have concluded
I did not
that.
I was
asking a question of whether or not a document~~-if that
couldn't be inferred from the document.
Now, if your testimony is that you disagree
with that characterization, please so state for the
record.
A
And we're here to get your
testimony.
Well, I'd just like to maybe make a little
general statement maybe oh General Khatami.
As I said before, I met him only on one
occasion, that was in office, and we discussed
the
proposed helicopter program in Iran. .
He was recognized
standing Air Force officer.
in his country as an outI'm sure his aviation
judgment was something that was very well respected at
all levels of the Government.
I do not feel that General Khatami played any
part in the decision-making process as far as the
helicopter program was concerned.
I think he may have
been consulted as to the suitability of the product.
to the best of my knowledge, he had no ownership
in Air Taxi.
And
interest
He obviously, from his communiques, was a
269
in
friend of Mr. Zanganeh.
But I think that's the total
relationship.
MR. GALERSTEIN:- Mr. Marinaccio, may
I interject?
MR. MARINACCIO::
Please do interject.
MR. GALERSTEIN: Mr. Atkins has not
looked
through all of the documents that we have provided
to you and so he's not aware of what is ordinate or is
inordinate in view of the tremendous bulk of contacts
that we have provided
to you that were had between Air
Taxi and Bell and others.
And, just for the record, I'd like to say
that if one had to objectively decide whether it was
an inordinate amount of a large number, let us say, of
contacts with General Khatami, or a small number of
contacts in view of his position as Chief of the Air
Force, one must conclude that it is an inordinately
small amount of contacts, not an inordinately large
amount of contacts.
And I say that simply because you
have extracted these documents that we provided
to you
and willingly, and i n c i d e n t a l l y before subpoena, and
presented only those to Mr. Atkins and not shown him the
tremendous mass of communications which bore no reference
whatsoever to General Khatami but to all high ranking
Government officials in Iran,as one would expect in a
270
212
sale of this type.
BY MR. MARINACCIO
Q
record
I think it's important and relevant for the
to discuss with you all documents which
indicate
the quality of General Khatami's input into the sale of
the helicopter, regardless of the quantity of contacts.
I am endeavoring to discuss with you not the
sum total of every document where General Khatami's name
appears, but those documents which indicate that a
proper question should be asked concerning
his participation
the quality of
in the sale of those helicopters.
A
And
I have—»
Q
And whether it's one document or five
documents out of 42 documents, they call for questions to
be discussed and your
A
Yes.
responses.
And I have no objection to that.
But
on the other hand, you appreciate my limited knowledge of
General Khatami when I have met with the man one time.
And
it seems to me that if I were the chief officer of a
company who was contemplating a large sale, if I really
felt that he was the controlling factor in that sale, I
would have talked to him many more times than once, like I
did other officers.
Q
Well, I think in that context it's going to
become relevant after I'm finished with these documents to
271
212
ask you such questions as ) what did you do to inform
yourself of various persons who may or may not have had
an interest in Air Taxi,
and—
A
All righto
Q
—^various persons who may or may not have had
an interest and so on, to develop whether or not Bell
Helicopter apprised
itself in a management way of what
was going on with respect to its agent in a foreign land.
A
Well, let's wait till we get to that.
Q
Sure.
I show you document Exhibit Number 46,
another internal memorandum from Air Taxi, stating in
pertinent part, referring
to a meeting July 3rd, 1971:
"Prior to this meeting, Mr. Zanganeh
(who is a close friend of General Minbashian)
had briefed him regarding the future of Huey
Cobra helicopters
in Iran as well as the keen
interest shown by His Imperial Majesty and
General Khatami."
Later on in the document it says:
"Later on I heard from Mr.
Zanganeh—"
"I" meaning Iranzad, who is Mr. Zanganeh's deputy or
whatever.
"Later on I heard from Mr. Zanganeh
that General Khatami spent more time than
272
212
scheduled and gave General Howze very useful
1
2
guidance and advice which, undoubtedly, will be
3
most vital for the future programmes of Bell
4
Helicopter Company in Iran.
5
referred
6
and commented
7
equipped and fast helicopter with many
8
diversified capabilities, and definitely this
9
helicopter will be recommended by him to be
10
utilized
11
General Khatami
to his viewing of the Huey Cobra film
that it is certainly a well-
in the Armed Forces."
I ask you to review this document and state
12
whether or not this document doesn't indicate that
13
General Khatami had a recommendation responsibility
14
over the procurement of helicopters by all Armed Forces
15
in Iran?
16
A
Without reviewing the document, I have no
17
knowledge of General Khatami having any particular
18
responsibility or authority to r e c o m m e n d
19
purchase for the Army Aviation Program.
20
Now, after reviewing the d o c u m e n t —
21
MR. GALERSTEIN:
22
MR. FREED:
23
24
25
helicopters for
A
— I
What number is that?
46.
find that Mr. Iranzad, who evidently
was not present at any of these conversations—' I really
can't take this as very much fact.
He heard from Mr.
273
212
1
Zanganeh certain things.
2
conversations.
3
Retired General Howze, they were no doubt talking on
4
5
6
7
tactical matters.
And it seems to me quite
reasonable
to the Iranian missions.
Q
May I ask you if General Howze ever became
employed by Bell Helicopter
A
Yes.
in any capacity?
General Howze was employed by us for
11
several years.
12
assisted us in briefing on the tactical use of our
Q
in our planning area, and he
Over what period of time was General Howze
employed by the Bell Helicopter
16
A
17
18
19
20
He worked
machine in certain parts of the world.
14
15
It
doesn't seem unusual,
10
13
these
that Khatami would express to Howze his feelings on how
this ship could be adapted
8
9
But he was not present at
And for General Khatami to be talking to
this
Company?
Oh, about ten years.
Q
Could you give us the approximate dates?
A
I'd say-—* I'd say the 1960's, probably.
Q
Was he an employee of Bell Helicopter at
time—
21
22
A
I do not know.
Q
—when
A
I do not know.
this document was—=>
23
We used—*he was an
employee—
24
a full-time employee for a period of time, and then he
25
wanted
to go into retirement and he stayed on working for
274
198
1
us"as a consultant for a period of time.
2
consecutive period of time which was about ten years.
3
4
Q
But it was a
I don't think I could place my hand on the
document immediately, but I recall seeing a document
5
which indicated
6
way in the entering into of the contract with the
7
Government of Iran for the 489 helicopters.
8
that General Howze participated
A
No.
9
Q
Do you have any knowledge of that"?
10
A
No.
11
contrac tua1. discussions.
12
Q
13
14
15
But he did take a trip to Iran at one p o i n t — —
He
Q
—•—••to discuss the matter with various
took—*
Iranian
Well, we ran a demonstration which was based
upon his tactical
19
20
21
thinking.
Q
So he had a participation in the-^-
A
He wa s — •
Q
—in
A
His purpose was to show the Iranians how
the sale of the helicopters?
the helicopters could be used.
23
24
He—
A
A
18
22
in no way in the
officials?
16
17
He participated
in some
MR. SOUTTER:
demonstration
He was part of the
team?
25
THE WITNESS:
Yes.
275
199
8/08
MR. GALERSTEIN:
1
2
have provided you with a report by General Howze.
3
4
MR. MARINACCIO:
I was referring
5
6
9
MR. MARINACCIO:
16
17
MR. GALERSTEIN:
MR. MARINACCIO:
me, I'll be very
22
to—
I don't have it here.
If you'll hand
it to
glad—
MR. GALERSTEIN:
is because it does refer
^why it isni* there
to General Khatami.
And I
wondered why you don't include it in the list of
documents that you're now referring to?
MR. MARINACCIO:
If you'll give me the
document I'll be very glad to have the witness's
20
21
But if
But the reason I ask-*r»
18
19
report—
It's not one of the
you'll hand it to me, I'll be very glad
14
15
And in that
documents that I have marked for an exhibit.
12
13
the report that
Do you have that in front of you, may I ask?
10
11
That's
to.
MR. GALERSTEIN:
7
8
Mr. Marinaccio, we
MR. GALERSTEIN:
I don't h a v e —
testimony,
Well,
the reason that I bring it up is because General Howze
specifically, which as I'm sure you know, says that he
23
tried to get General Khatami to take him to the Shah
24
and that General Khatami wouldn't do it.
25
MR. COLLINS:
Do you have a date of that
276
212
1
report? ^
2
MR. GALERSTEIN:
No, I don't know the
3
date.
4
included within the general reference
But I think in all fairness it ought to be
to General Khatami.
5
MR. MARINACCIO:
Well, as I
6
MR. GALERSTEIN:
But it's your show
7
and I don't mean to—-*»
8
9
MR. MARINACCIO:
MR. GALERSTEIN:
14
15
16
There are many
that—
Well, excuse me for
interrup ting.
12
13
No.
documents that refer to General Khatami
10
11
say—
MR. MARINACCIO: — I
particular questioning of Mr. Atkins.
you raised
haven't pulled
However, since
the issue of that particular document, I
would appreciate it very much if you would put your hands
on that document, and I would be most happy to let M r .
17
Atkins review it forthwith and get his comments on it
18
for the record.
19
MR. GALERSTEIN:
20
document.
21
BY MR. MARINACCIO
22
23
24
for
Q
I will get the
I don't have it available at the moment.
I show you Exhibit Number 47, which is
another internal document from Air Taxi dated March 19,
1972, stating in pertinent part
that:
25
"The Iranian Calendar Year is about
to end.
277
212
i
I had several very important meetings with
2
General Khatami and General Toufanian upon their
3
return from abroad."
4
5
And
I'll just read
6
it discusses a number of things.
the whole
Well,
document.
"My intention is to bring myself up to
7
date regarding
8
these days.
9
tives in Teheran.
the overall situation existing
Agusta has no important representaI learned
that Victor
10
Emanuel and Corado Agusta had an audience with
11
His Imperial Majesty in St. Moritz and once
12
again they begged him for a further
13
Presently the circumstances are in favour of
14
Bell Helicopter Company.
15
General Toufanian and Mr. Dehesh I learned
16
they were very impressed and pleased with their
17
trip to the United
chance.
At a meeting with
States, particularly
that
with
18
their visit to Fort Worth.
19
said that now that the ground has been broken
20
in favour of Bell Helicopter Company, most
21
probably
the number of helicopters
22
will considerably
23
will also be determined
24
25
Moreover,
increase.
they
required
The required
models
shortly."
This is on March 19, 1972, and I'll ask you to
just review this document and comment on it because I
278
212
1
think i t — i t
shows, does it not, that in March of 1972
2
that the sale of the helicopters
3
point to where substantial sales are envisaged?
is progressing
to the
4
A
Uh huh .
5
Q
And of course that's consistant with the
6
7
8
9
10
letter of intent signed by General Toufanian the following
month?
A
Yes.
Q
Sure.
A
Of course, this was where we had
the
11
opportunity
12
and show them through our facility, show them the scope
13
14
15
16
17
18
19
20
21
22
23
to take General Toufanian and Mr. Dehesh
of what it took to manufacture helicopters and where
really we convinced
them that co-production was not
prudent at this time.
discussed
And
this was the trip where we
the possibility of a demonstration.
And
then, of course, that was later confirmed by General
Toufanian's letter of April of
Q
'72.
I show you Exhibit Number 48, another
internal
document from Air Taxi dated August 25, 1972, stating in
pertinent part:
"We reported
this valuable
complimentary
service of Bell Helicopter Company to General
24
Khatami, Commander
in Chief of the Iranian Air
25
Force, to be notified to His Imperial Majesty.
279
212
i
Later on we learned
2
was very pleased and expressed his appreciation."
3
4
A
I know all about
5
6
Q
that His Imperial Majesty
Oh, yeah, I know all about this.
Yes,
this.
May we have your comment on it for the
record, please?
7
A
I was in Teheran and Agusta manufactured
8
Bell Model 212's were serving the royal hanger.
9
Majesty was flying those ships every day.
His
And we found
10
that they were having great difficulty in the hanger.
11
They didn't have the required
12
a technical team into the hanger to make sure that those
spare parts.
And we sent
13
helicopters were in first-class shape.
14
spare parts from Fort Worth to help do that with.
15
This is what they're talking about.
16
fact, we improved
17
opera ting.
18
19
20
Q
And we got some
This was just a
the safety of the fleet that they were
I show you Document Number 49 dated August
26, 1972, another document from Air Taxi, an
internal
document, which says in pertinent part:
21
"His Majesty and General Khatami and all
22
the dignitaries attended
23
and were much
this
demonstration
impressed."
24
I wish you'd look at that document and give us
25
your comments on it.
280
212
1
A
This memorandum of August 26, '72 refers to
2
the major demonstration that Bell made of the AH-1J
3
and the 214 to the Iranian Military at Karaj Dam.
4
We probably had 200 military guests, we had
5
our demonstration teams out there.
6
not there, contrary to what this sounds like.
7
General Khatami was not there.
8
9
His Majesty was
And
So now, that's how these memorandums come in.
His Imperial Majesty and General Khatami and all the
10
dignitaries attending this demonstration were very
11
impressed," says the memorandum.
12
13
Neither His Majesty nor General Khatami
attended
that demonstration. I did.
They were not there.
14
Q
Uh huh.
15
A
There were probably 200 military people
there,
16
but General Khatami was not there and His Majesty was not
17
there.
18
19
That's the kind of paper work we're dealing with.
Q
Had you seen this
A
No.
document—
20
—previous
21
No, I haven't seen this,
22
—today?
23
24
25
to—
No.
Have you ever taken any steps in all the years
that Air Taxi was your manufacturer's representative, to
281
212
1
caution them against puffing?
2
3
A
No, sir.
But that is a very good
though, because I was on that site that day.
example,
And
if
4
His Majesty was there or if General Khatami was there, I
5
would have been very aware of it.
6
not
7
And I know they were
there.
Q
I show you a document Exhibit Number
50,
8
dated August 28, 1972, an internal Air Taxi document,
9
which states in pertinent
10
part:
"The following day General Khatami, at
11
his request, flew both helicopters and was
12
also most excited with the performance of these
13
aircraft.
14
15
After his flights he commented -
'I hope to change my entire existing
fleet to these new models. 1
16
The General's attitude was a great help
17
in the successful sale of these helicopters,
18
since we learned of his strong
19
to His Imperial Majesty."
20
21
22
23
recommendations
Can I ask you to comment on that?
A
Let's read
the whole memorandum.
Q
Please do.
A
"His Imperial Majesty expressed his desire
24
to personally fly these two helicopters.
At
25
1400 hours he arrived at the Imperial Flight
282
212
1
Hanger in his private 212 Bell helicopter.
2
flew both models around Teheran and over the
3
large Stadium where he made
4
and
He
several.landings
take-offs,"
5
That's the first paragraph in the memorandum.
6
This was the day that I previously mentioned
7
when His Majesty came out to Mehrabad and flew both the
8
AH-lJ Cobra and
9
the Model 214.
Now it says:
"The following day General
10
Khatami flew both helicopters and was also most
11
excited with the performance of these aircraft."
12
13
General Khatami did fly both aircraft.
The time frame in which he flew those aircraft I don't
14
think is expressed correctly in this memorandum,
15
think he flew both those aircraft before His Majesty
16
flew
them.
17
MR. SOUTTER:
18
memo would
19
last demonstration at Karaj?
22
23
24
The timing of that
suggest this occurred, as written, after
20
21
I
THE WITNESS:
the
Yes. .
BY MR. MARINACCIO
Q
Again, this is a memorandum written by your
manufacturer's representative
A
Right.
Q
And
in Iran?
Which doesn't report
facts.
25
I ask you the number of occasions in all
283
212
1
the years in which they've been your manufacturer's
2
representative in Iran in which you have cautioned
3
a management point of view to report only facts and
4
to not puff ?
5
A
6
Obviously we haven't succeeded in cautioning
them to limit their remarks to facts which they know.
7
Had you ever cautioned them,that you can
Q
8
recall?
9
A
10
them i
I can't recall we've cautioned
them.
I didn
have that much to do with them.
11
Who, incidentally, did deal with them on a
Q
12
daily bas is ?
13
A
Yes.
Q
But who would you say in your organization—
A
Mostly Frank
14
15
16
17
Q
Frank Sylvester?
Yes.
Q
And Jack Gallagher?
A
Uh huh.
Q
I show you a document marked Exhibit Number '
20
21
22
23
24
Sylvester..
A
18
19
I realize you had management control.
And Jack Gallagher.
another document that we received from Bell Textron.
I
1
believe it s a document from Mr. Zanganeh to Frank
Sylvester.
And it discusses the sale of the helicopters
And it says , in c o d e — t h i s
25
code.
23-553 O - 78 - 19
It says:
is another document that's in
284
212
8/17
"According to No. 1, Trout and
Skate,
the door is still open for Bell to secure
•program and even logistic support direct,
training
1
And down at the bottom of the page there is
a decoding notation.
Trout is Dehesh, Skate is
denominated as General Khosrodad, and No. 1 is General
Khatami.
I show you this document and ask you if you
have ever heard
No. 1 at any
A
1 in Iran.
that General Khatami was referred
to as
time?
To me, there's only one person that's Number
And when I refer to Number 1 in Iran, I
respectfully refer to His Majesty.
But I don't
think—
Q
But
apparently—
A
I don't think they were referring to His
Majes tyo
Q
Apparently
this document refers
to Number 1
as General Khatami.
A
They're over-estimating his position if they
Q
Have you ever heard reference to Number 1
are „
previous to today?
I mean, have
you—
A
To—
Q
To any individual who was coded
in any way in
any of these transactions with Iran, have you ever heard
285
212
i
the code, Number 1?
2
3
A
Maj es ty.
4
5
Q
A
Q
A
things like
12
13
14
15
16
17
18
21
in
Well, how many occasions then have you heard
to any
individual
University of Texas football team, a few
that.
No, sir.
1 know of no references to
General Khatami as Number 1.
very involved
And, incidentally, I was
in the sale of the training program and the
logistics program.
General Khatami,. I assure you, was
not involved at all in those discussions
in any way.
And I don't think he had any part in the decision of those
items.
19
20
I haven't heard codes, I don't play around
the denomination Number 1 with reference
10
11
the
that kind of stuff.
8
9
Well, how many occasions have you heard
code Number 1?
6
7
Whenever I heard Number 1, I thought of His
Q
I show you Document Number 52, £h Air Taxi
memorandum dated April 18, 1972, which states in pertinent
part, and I'll show you the document:
22
23
24
"Today is one of the most remarkable days
in the history of Air Taxi Company in that we
reaped
the harvest of several years of efforts."
25
And later down in the document it says:
286
212
1
"Immediately, after receipt of this letter
2
Mro Zanganeh approached
3
personally instructed General Azarbarzin,
4
DCS/Ops, Iranian Air Force, to arrange
General Khatami who
the
5
departure of two C-130 aircraft for this
6
purpose."
7
8
9
10
11
12
13
14
15
16
17
18
19
The purpose of the transmission of the two helicopters
Iran, I believe.
A
That's coming back or going over
Q
I think it's going over.
there?
But I'll show you
the document in a minute.
A
Okay.
Q
Because I think this document relates to
the General Toufanian document which indicates that in
the letter of intent you need to fly the helicopters
over in a C-130.
A
Uh huh.
Q
Finally, the document says
"General Khatami's orders
that:
explicitly
20
indicated
21
of C-130's in Iran for.this specific purpose, any
22
23
24
that in the event of the unavailability
other C-130 aircraft already assigned for another
mission would be diverted
to fly to Fort Worth
and accomplish this important mission."
25
I show you this document and ask you for
to
287
212
1
your comments.
2
A
My comments on it would be that General
3
Khatami was authorized by General Toufanian 1 s
4
intent to commit two of the Iranian Air Force C-130's
5
to Fort Worth to pick up the two prototype aircraft.
letter of
6
The aircraft actually came in here sometime
7
in the month of July and carried our equipment to Iran.
8
9
Just off the record for a moment, if I
could, I'll tell you a little funny thing about
this.
10
Q
I wish you'd
11
A
Well, the funny thing about it was, we had
12
great difficulty
13
aircraft back.
14
tell it on the record.
in getting two C-130's to get the
But General Khatami, as Chief of the Air Force
15
was merely instructed
16
to bring the helicopters over by Toufanian's
17
intent.
18
19
20
Q
to use two of his transport aircraft
letter of
I show you Document Exhibit Number 53, a
document from Mr. Zanganeh, internal document again, in
which he states in pertinent part:
21
22
23
24
25
"At my weekly meeting with General Khatami
I brought
Needless
this subject to his attention.
to say, the'heavy burden of this
demonstration will rest on the shoulders of
the Iranian Air Force such as the demonstration
288
212
1
sites, fuel, airports, ground support, live
2
firing sites, et cetera."
3
I'll ask you to review this document and
4
comment on it because I think it refers to the
5
demonstration in 1972 which you previously said was
6
fairly
7
8
9
10
important.
A
You know, there's one thing I might comment
about here, and this document brings it to mind.
And
that is that Air Taxi had many relationships with the
Iranian Air Force.
And, for example, the weekly meeting
11
here was probably not for the purpose of helicopter work.
12
But, for example, they furnished
13
Turboprops that the Air Force had.
14
15
16
And so I assume that there were
19
20
21
22
23
24
maintenance
contracts and so forth that ran between Air Taxi and the
Iranian Air Force.
17
18
the Aero Commander
So, we shouldn't consider that Mr. Zanganeh
only knew General Khatami in talking about helicopters,
he had other business with General Khatami.
Q
Had you been made aware at any point
Mr. K h a t a m i —
A
No.
Q
-r.for any purpose?
A
I never knew that until you read
25
that—
Were you ever aware that Mr. Zanganeh met weekly with
this
289
212
1
memorandum.
MR. MIRANACCIO:
2
3
questions I have at this point.
4
ask his questions.
A
5
I Chink Chat's all Che
I'll ask Mr. Freed
to
Okay.
6
7
8
EXAMINATION
BY MR. FREED
9
There are just two documents that I want to
Q
10
place in the record just to pursue just very, very
11
briefly the line of questioning Mr. Marinaccio has been
12
pursuing.
13
The first document is a telex from Mr.
14
Horsley to Mr. Zangahey and Mr. Iranzad dated
15
7, 1972.
16
February
In it he says:
"General K. I understand returns Teheran
17
this week.
18
especially
19
to St. Moritz enroute home be ascertained.
20
Please advise
21
22
23
soonest."
I assume, in this context, that he would be
referring to General Khatami, since he's the only
General K who has been coming up at this point.
24
25
Feel it very important his viewpoints
in relation to his recent visit
What would Horsley be interested
this?
in with
I assume the Shah was out skiing in St. Moritz at
290
212
this point.
(Exhibits 54 and 55 were
marked for identification.)
Q
Again, that's where Mr. Horsley is initiating
the contact with Khatami through
A
Uh huh.
Zanganeh.
I really have no knowledge of this,
and I can't speculate on what it means.
Q
Let me ask you one other question on that:
Did the Bell officials or any of the Bell officials
such as Mr. Horsley, Mr. Gallagher or others,
initiate,
go seek advice from General Khatami on their own or
work through Mr. Zanganeh in this case, or was it their
policy to maintain frequent and regular contact with him?
A
My opinion is that General Khatami was not
that available to him, and I don't think they sought
advice from him, no.
Q.
there—this
At this point in February of 1972, was
is about two months away from the letter of
intent, and certainly the Shah is going to play a major
role in making a decision.
that Mr. Horsley wanted
Would
it be a fair assumption
to get the latest reading of the
Shah's thinking, General Khatami would be the source of
that because of swinging through St. Moritz on the way
back?
A
I could only speculate and I really don't want
291
215
8/24
1
to do that.
2
3
4
Q
Let me ask you, there's one other document I
want to put in the record, it's an Air Taxi internal
memorandum dated October 2nd, 1971.
This deals with a
5
visit to Iran of Tony Bearden, that's spelled
6
who was Bell Helicopter's cameraman.
7
over in Iran to take some pictures.
8
ment ions:
9
11
that he's
And in that he
"Mr. Zanganeh also arranged
10
B-e-a-r-d-e-
It appears
Bearden to visit H.R.H. Princess
for Mr. Tony
Fatemeh—"
That's F-a-t-e-m-e-h.
12
" — ( S i s t e r of His Imperial Majesty and wife of
13
General Khatami, Commander
14
Air Force), to shoot very interesting
films
15
while H.R.H. Princess Fatemah piloted
the
16
helicopter."
17
18
Did you know that General Khatami's wife was
a sister of the Shah?
19
20
21
22
in Chief, Iranian
A
Yes, I did.
Q
Would a connection like that be of
importance
in terms of getting an entree to the Shah, given the way
things' work in Iran?
23
24
A
I wouldn't think so.
q
Of course, the Shah places great
25
on familial connections.
importance
292
212
1
A
Well, I have no knowledge of that.
And my
2
experience with those people at those levels are very
3
limited.
4
5
I don't feel qualified
Q
to talk about it.
You didn't feel that the fact that Khatami's
wife was the Princess of the Shah gave him any extra
6
influence or put him in a better position to provide
7
information for you for him to exert his influence or
8
help Bell at all given all the documents that we've
9
laid out?
10
A
I don't think that was his purpose.
11
Q
That was 55.
12
Did you know at the time t h a t — Did you
13
know in this period from '68 and 1972 that Khatami's
14
wife was
15
16
17
the sister of the Shah?
A
I became knowledgeable at some point in that
period. It certainly wouldn't have been before
Q
'71.
Certainly that could be a key factor when you
18
talked about the dinner party that General Khatami gave
19
for the Shah, I think that was in 1969, at which Mr.
20
Zanganeh showed the film on the Huey Cobra and then made
21
his presentation.
22
A
23
24
25
I wasn't there.
MR. FREED:
I have no idea.
That's the end of my
questioning.
MR. MARINACCIO:
Mr. Collins?
293
212
MR. COLLINS:
Just a few.
EXAMINATION
BY MR. COLLINS
Q
One thing, one preliminary question I would
like to ask:
All the documents we've been reviewing, I
think there are over six hundred pages, why did
all come in to Bell Helicopter, particularly
coming from Air Taxi?
they
those
There's a lot of internal memos
from Air Taxi. Were those sent in after they were written
or were they all given to you or others here at any one
period
of time, any one date?
A
Well, I believe
that—»
Q
You know, they could have formed
A
Yeah.
supporting—
Q
—documents.
A
I believe that w e were having discussions
with the GOI regarding our representative.
Q
What's
that?
MR. SOUTTER:
A
Government of Iran.
Government of I r a n — r e g a r d i n g our representa-
tive and his compensation.
And I remember that they were
interested
in what services he had rendered and what he
had done.
And I think that Bell said to the representative
"Gather together your files and show us what you have done
294
218
1
2
Q
So when was this?
This was after the contract
had been % consummated ?
3
A
I would guess that it was sometime in late
5
Q
When It was going to be an IFM?
6
A
Yes, sir.
Q
Then the Government of Iran wanted to know
4
'72.
7
8
what the commission was going to be?
9
10
A
Government of Iran about compensation.
11
12
13
Well, I had several discussions v/ith the
Q
The size?
A
I had several conversations.
to that, we'll talk about
14
Q
You mentioned
And when we get
those.
that General Khatami was not
15
involved in negotiations on the training or logistics
16
program.
17
think you mentioned
18
in that.
19
A
20
21
22
23
24
I
that you were active, very active,
Mr. Dehesh and General Toufanian.
Everything centers on the procurement
office,
and—
Q
Those two
A
And
individuals?
those two were the head of the procurement
office.
25
Who was the person that you ment i o n e d — a n d
Q
It's interesting to me in going
through
295
212
and read all of these pieces of paper, that General
Khatami is mentioned quite often with respect to the
helicopters and other matters.
Minbashian—
And this General
Minboshian?
A
Minbashian.
Q
— M i n b a s h i a n , whose forces would use the
equipxent, were mentioned very sparingly by Air Taxi, the
representative over
there.
A
Uh huh.
Q
I don't know, you know, if——that doesn't
say I'm concluding anything.
A
Yes.
Q
You know, just as an observation, it does
show, I think, in their minds, -in Air Taxi's minder-'that is
Iranzad and Zanganeh-—that if Toufanian, Dehesh and
Khatami, this other General, Minbashian, was involved
t h e discussions, but he wasn't a central figure, you
know, at least in their minds.
I just wondered, what
part did he take in a decision?
going
to use the e q u i p m e n t —
A
You mean Minbashian?
Q
Yes.
negotiations and
If his forces were
A
Did he play an active role in the
the playing stages
No, he didn't.
MR. FREED:
Why?
or—
in
296
220
1
A
Well, I would say that t h e — You see the
2
emphas is on General Khatami probably because of the fact
3
Chat Air Taxi had prior relationships on other programs
4
with Che Air Force.
5
Now, the ground forces were really just
6
coming inCo aviacion.
7
successor, General Relvasian, neither of them have really
8
played a big role in Army aviation.
9
10
11
12
13
14
15
16
17
18
19
20
21
22
delegated
Rather, they have
that to another gentleman who is Chief of Army
Aviation for
the—
Q
At that time?
A
Yes .
Q
During these negotiations t\ey had an
individual that they—-r*
A
Yes.
Q
Do you remember his name?
A
General Koshradad.
Q
Can you spell that?
A
Koshradad, K-o-s-h-r-a-d-a-d, or something
like that.
Q
Yes.
A
Yes.
Q
— t h e papers, also?
A
Yes .
Q
But again, not as frequently as these other
23
24
And, really, Minbashian or his
And
I think he is mentioned
in—
25
297
212
1
three, Toufanian, Dehesh and
Khatami.
The other thing I want to ask you:
2
With
3
respect to General Toufanian, Dehesh, Mr. Dehesh or
4
General Khatami, did you ever have any discussion with
5
them or with anyone else concerning any outside
6
that they might have, that is, a business or
7
interest?
8
other one was a civil servant in the Iranian Government.
9
I was wondering whether
interest
investment
They're all, well, the two were Generals, the
in your conversations with
10
Zanganeh, other people in Iran, or even here with your
11
own employees, whether it ever came up that these
12
people had any investments, any outside investments of
13
any significance?
14
that they might own a hundred shares of General Motors.
15
16
A
Yes.
Well, of course, as I've said before, I
met General Khatami once and I know nothing about-"
17
Q
Yes.
18
A
—his
19
And I'm not talking about the fact
or anything
20
background
or his business
connections
else.
General Toufanian I know well, but I have
21
never heard of any outside business connections on his
22
part.
23
24
25
Mr. Dehesh had some outside business
connections.
He had a textile mill of some kind in Iran.
I don't know any more about it than that, but I know at
298
222
1
one time le was attempting to buy some machinery
2
some company in the States and he mentioned
3
one
4
5
7
10
A
War
Well, I'll try to find the document, but in
one of the documents they ran down the titles and he
was described as Deputy Minister of War for Armaments.
A
I don't believe that he was ever Deputy
Minis ter of War.
13
14
15
16
17
title?
1 don't believe he had the Deputy Minister of
title •
Q
11
12
And he was, I believe, Deputy Minister of
War for Armaments, that was his
8
9
time.
Q
6
Q
Okay. Someone may have thought he was.
A
Yeah.
Q
It would certainly appear
A
That's reserved for the military, titles of
I think
that—
that
Q
Oh, I see, okay.
And as far as General
19
Khatami, you mentioned
20
anything, you never heard of any outside
21
too?
I recognize
25
the other two y o u n e v e r heard of „
interest of his,
you—
A
I mentioned
Q
Yeah.
A
I said I have n o —
23
24
he—
that type •
18
22
from
that to me at
that first.
I met General Khatami once.
I have no idea of any of his outside business
interests.
223
8/32
1
Q
Oh, o k a y .
And
the last thing
2
like to ask you:
3
Bell, or else I guess y o u can include A i r
Did
any of your
4
did any of
5
may have b e e n solicited
6
bribe
7
for
A
No,
T a x i in
the fact
by a foreign o f f i c i a l
this,
that
they
to pay a
payment?
sir.
8
MR. COLLINS:
9
MR. MARINACCIO:
10
just
subordinates here at
them ever r e p o r t or d i s c u s s
improper
I would
I think
that's
fine.
I think we ought
to
break.
11
A
12
Okay.
(Whereupon,
13
4:50 p.m.,
14
2,
15
16
17
18
19
20
21
22
23
24
25
23-553 O - 78 - 20
to reconvene
the e v e n i n g
recess was
taken at
at 9:00 a . m . , on F r i d a y ,
February
1978.)
(The
transcript
is continued
in V o l u m e
II.)
301
212
1
2
3
4
UNITED STATES SENATE
5
6
STAFF OF
7
8
COMMITTEE OH BANKING, HOUSING AND URBAN AFFAIRS
9
10
11
STAFF INVESTIGATION RELATING TO
12
THE NOMINATION OF
13
G . V'XLLLAl-i M I L L E R
14
15
16
VOLUME II
17
18
19
20
KEE, MEYER, STURGESS & ASSOCIATES
Registered Professional Reporters
1102 Oil & G a s Building
Fort W o r t h , T e x a s 76102
21
22
23
24
Charles L Kee
Room 410
Federal Courthouse
Fort Worth, Texas
Vincent G. Meyer
Gaylord Sturgeaa
Larry Shatter
Donna McMullen
Kathy i
Bari W<
25
Telephone: 817 336-3042
302
225
INDEX - VOLUME II
1
2
MORNING SESSION, FRIDAY, FEBRUARY 3, 1978
226
3
PARTICIPATION OF GENERAL KHATAMI AND OWNERSHIP
OF AIR TAXI (Continued.)
226
4
JAMES F. ATKINS
Examination
Examtnation
Examination
Examination
Examination
5
6
7
*
-
Marinaccio
Freed
Collins
Doherty
Collins
$2.9 MILLION PAYMENT TO AIR TAXI
278
8
Examination - Marinaccio
9
226
255
265
271
274
278
305
LUNCHEON RECESS
10
11
NUMBER
12
56
Letter, 5/9/73
245
13
57
Ownership resolution
257
14
58
Resume - A i r
262
15
59
Memo, 4/19/68
275
16
60
Agreement, 8/27/59
287
17
61
Agreement, 4/1/68
287
18
62
Agreement, 6/15/70
287
19
63
Amendment No. I, 6/15/70
287
20
63-A
Amendment No. 1, 4/1/72
293
64
Amendment No. 2, 10/14/72
301
65
Amendment No. 3, 6/29/73
302
21
22
23
24
25
EXHIBIT INDEX
Taxi
IDENTIFIED
303
226
1
FRIDAY, FEBRUARY 3, 1978
2
MORNING SESSION
3
(Whereupon, the proceedings were reconvened at
4
9:00 o'clock a.m., pursuant to the afternoon recess on
5
Thursday, February 2, 1978.)
6
7
M R . MARINACCIO:
Mr.
Atkins, may I remind you that you*re still under oath.
8
MR. ATKINS:
9
M R . MARINACCIO:
10
Good morning.
Yes, sir.
And, as yesterday,
all the testimony you give today will be under oath.
11
M R . ATKINS:
12
M R . MARINACCIO:
Yes, sir.
I would like to note
13
for the record
14
again today, Mr. Soutter and Mr. Galerstein, and
15
representing the Staff of the Senate Banking Committee
16
today are again the same persons that were here yesterday.
17
namely, Mr. Mftrinacclo, Mr. Freed, Mr. Collins and Mr.
18
Doherty.
that Mr. Atkins has his counsel with him
19
20
MR. JAMES F. ATKINS
21
resumed the witness stand and testified further as follows t
22
to-wit:
23
24
EXAMINATION
BY M R . MARINACCIO
25
Q
Mr. Atkins, yesterday we left of where we
304
227
1
were discussing the role of General Khatami, and we had
2
previously discussed
3
Zanganeh.
4
the role of Air Taxi and Mr.
And I'd like to continue with that.
The question that I have to open the proceed-
5
ing this morning Is:
6
Textron undertake to keep itself fully informed over the
7
period of years that the sale of 489 helicopters was
8
being discussed and negotiated, to keep Itself
9
as to what
What efforts did Bell Division of
Informed
Its manufactuer's representative was
10
specifically doing with respect to that sale in Iran,
11
including its efforts to contact various
12
Government officials, military officials, the Shah and
Iranian
13 . the manufacturer*s representative *s contact with General
14
Khatami?
15
Division, of course, would be familiar with those efforts.
16
A
You, as chief executive officer of Bell
Well, in selling a major program, it's Bell's
17
policy to sell at «11 levels of government, and to start
18
at the lowest level and work your way up.
19
Bell never attempted
to see the Shah of Iran
20
during these negotiations.
21
but we made no particular effort to see His Majesty.
22
Bell had a small sales team that visited
We finally were
invited
the
23
country on a fairly constant basis, perhaps during the
24
last year of the sale, and
25
in my mind the sales effort
was mainly conducted by this Bell team.
305
228
The representative was in a supporting role
1
2
to the Bell team.
We do n o t —
3
I think it's quite customary for
4
us and the way we do foreign business, that a sales
5
representative
6
assist
7
major sales effort Is made by the Bell marketing
8
I think that was true in this case.
9
Is a presence in country, and Is an
in developing a program.
Q
I would
But quite often the
people.
like to return to the question that
10
I specifically asked, namely, what efforts did Bell
11
Textron undertake to keep itself fully apprised of what
12
its manufacturer's representative/agent
13
with respect to contacting high government officials,
In Iran was doing
14
including military officials, the Shah and
15
Khatami?
16
A
General
I think I tried to answer that question by
17
saying that we were conducting the sales effort In that
18
last year, we were leading the sales effort.
19
the major contacts were made by our company and not by
20
our sales rep.
21
22
q
And, to me,
What period do you refer to as the last year
of the sale, for the clarification of the record on that?
23
A
On November
24
Q
There were some documents that we went over
25
'71 to November
'72.
yesterday and discussed with you that indicated
that
306
229
1
your manufacturer' s representative in Iran had contacts
2
with both General Khatami and, through Khatami, with the
3
Shah of Iran.
4
I ask the question again:
What steps, what
5
management controls, did Textron Bell place in motion
6
and what steps did you take, as chief executive
7
of Bell, to keep yourself fully informed as to what
8
Air Taxi was doing with respect to General Khatami and
9
the Shah of Iran and other high government
10
A
officer
officials?
Well, I don't think that any of the documents
11
yesterday showed that Air Taxi was in contact with the
12
Shah of Iran.
13
Q
14
15
So I think you're misstating the case.
May I ask you to answer my question with
respect to General Khatami?
A
I'm sure that Air Taxi had contacts with
16
General Khatami.
17
him on many programs, because they were in a supportive
18
role to the Iranian Air Force.
19
I'm sure that they had contacts with
As I told you yesterday, I had one contact
20
with General Khatami, and
21
knowledge on General Khatami.
22
23
24
25
Q
that's about the sum of my
And what steps did Textron Bell take over
this period of time to keep itself fully informed as to
what Air Taxi was doing with respect to General Khatami?
A
Well, I don't think it was our right to
307
230
1
attempt to control their actions in respect to their
2
relationship with the Iranian Air Force, and they had a
3
relationship with the Iranian Air Force.
And what they did for us In talking
4
5
helicopters, as I told you before, I don't t h i n k —
6
think that General Khatami would well be contacted
7
because of his expertise in aviation.
8
that he was a role player in the final decisions that
9
were made in the country.
q
10
11
I
But I don't think
Nevertheless, Air Taxi was your representative
in Iran, and the Air Taxi documents indicate a substantial
12
number of contacts directly with General Khatami over this
13
matter.
14
nodding his head, yes.
15
Let the record reflect
that the witness Is
And I ask you, what did Textron Bell do to
16
keep itself fully apprised during this period of time
17
as to what contacts were being made between Air Taxi and
18
General Khatami?
19
A
Well, I think the best thing we did was put
20
our own people in country, and basically, to me, Air Taxi
21
was not representing us at the highest levels of
22
government, we were doing our own
q
23
representation.
And was your staff Informed and did
they
24
inform you of the contacts made between Air Taxi and
25
General Khatami over this period of time?
308
231
1
A
2
Khatami, yes.
3
4
5
Q
I knew that Air Taxi had contacted
And I don't think that's a bit
General
unusual.
And what was your understanding as to the
reason Air Taxi had contacted General Khatami?
A
Because of the General's knowledge of aviation
6
and because of the fact that in any major sales program
7
you contact anyone who you feel may be in a position
8
to consider your program.
9
10
Q
And whet consideration of your program did
you think that General Khatami would
get?
11
A
I had no idea what he would
12
Q
What consideration would he give to the
13
14
get.
program?
A
I assume that he would give a technical
15
consideration to the program.
16
he was an expert aviator, and he would have an opinion
17
on the capability of the product.
18
Q
He was an expert
pilot.
Did you think during this period of time that
19
General Khatami's opinion aa to the technical capaballity
20
of the product would be a factor which would go into the
21
decision making of the Government of Iran with respect to
22
the purchase of the helicopters?
23
A
I have a great respect for all Four Star
24
Generals, and I felt certainly his opinions would be
25
va lued.
309
232
1
Q
And during this period of time, G. William
2
Miller was your superior and you were in contact with him
3
concerning this sale of helicopters to Iran, were you not?
4
A
Yes, sir.
5
Q
And on approximately how many occasions over
6
7
the period of years did you discuss the prospective sale
of the helicopters to Iran with G. William Miller?
8
9
10
11
14
15
18
19
20
21
Q
Yes.
A
I just offhand don't have any Idea, but I
Q
times?
times.
And during ail of these occasions In which
you discussed
the sale of the helicopters to Iran with
G . William Miller, on how many occasions did you discuss
General Khatami's
16
17
How many
would guess ten, twenty
12
13
A
role?
I don't think I did.
A
the focus point was MIO.
Because, In my mind,
And I think that If I discussed
the program, I w o u l d — First of ail, I wasn't
about individuals involved
in the program.
talking
I was
talking
about the program, as such, and the strategy of winning
the program.
And if I had discussions with Bill Miller,
22
I would
think they more likely concerned
the actions
that
23
were going on within the U.S. Government and within the
24
MIO Organization of the Iranian Government.
25
Q
I believe you said you didn't think you had
310
233
1
discussions with him, and so on.
What is your testimony, your best
2
3
recollection
as to whether you did or not?
4
5
A
My best recollection is that I did not.
Q
You did know at that time that General
6
Khatami wa s the brother-in-law of the Shah of Iran, did
7
you not?
A
8
9
Yes, sir.
And
Q
10
issued
11
helicopters?
12
13
14
it was ultimately the Shah of Iran that
the directive In your presence to purchase
A
Q
discussed
the
That's correct.
Was there ever an occasion in which you
the Shah's decision with G. William Miller?
15
A
Well, certainly.
16
Q
Did G. William Miller, to your knowledge,
17
know whether or not General Khatami was the brother-in-law
18
to the Shah of Iran?
19
A
I don't know that.
20
Q
And what was the occasion of your discussion
21
with G. William Miller of your meeting with the Shah of
22
Iran relative to the sale of the helicopters?
23
A
I'm sure that I reported
to Mr. Miller upon
24
my return from Iran that we had had a very
25
demonstration, and that His Majesty had flown the aircraft
successful
311
235
1
and chac he had made a favorable decision Co proceed with
2
the program and had Instructed General Toufanian to
3
to the U.S. Government and ask for a letter of order.
Q
4
go
Do you recall the date, the approximate dar.c,
5
the month and the year, in which you met with the
5
that occasion in which the Shah issued the directive?
7
8
9
A
It was either in August or September of
Q
And was it on that same trip to Iran that
A
No, sir.
11
Q
What was the approximate d a t e — Your
stated
testimony
that—
13
A
Yeah.
14
Q
— y o u met with General Khatami on one
15
occasion.
16
A
Yeah.
17
Q
When was that, sir?
18
A
I think it may have been in t h e — d u r i n g
19
'72.
you met with General Khatami?
10
12
Shah—on
November
20
Q
the
*71 trip.
Now, I believe, in response to one of my
21
questions earlier this morning, you Indicated
22
Taxi and Zanganeh had not had contacts with the Shah of
23
Iran?
24
25
A
that Air
Well, I have no way of knowing whether Mr.
Zanganeh had a contact directly with the Shah of Iran.
312
235
1
But X had no knowledge that he had the capability to have
2
that contact.
3
Q
I'd like to read to you from Document
Exhibit
4
Number 41, an Internal memorandum from Mr. Zanganeh
5
dated December 27, 1969, which states in pertinent
6
"On my return from Europe I received a
7
part:
Huey Cobra film and proposal which Mr. Taylor
8
left with Mr. Iranzad during my absence.
9
dinner party given at the residence of General
In a
10
Khatami, His Imperial Majesty, The Queen,
11
Princess Fatemeh and the Prime Minister
His Imperial Majesty displayed
saw the
12
film.
13
Interest in the film and raised several questions.
great
14
I gave the necessary explanations to His Imperial
15
Majesty.
16
Impressed with the Huey Cobra capabilities and
17
pointed out the great possibility of utilizing
18
this helicopter
His Imperial Majesty was most
In the Iranian Forces.
I
19
immediately communicated the result of His
20
Imperial Majesty's Interest and comments to
21
Bell's
22
representative."
i ask you whether or not that document
23
refreshes your recollection as to whether or not Air Taxi
24
had the G e n e r a l — a n d M r . Zanganeh in p a r t i c u l a r — h a d
25
the
ability to contact, be with on occasion, the Shaw of Iran
313
235
1
In circumstances where the sale of Bell helicopters
2
would be discussed?
3
A
The memorandum speaks for Itself.
But I
4
have no way of knowing If Mr. Zanganeh was actually present
5
during that meeting.
6
Q
The document does
7
A
The document speaks for Itself.
8
Q
Yes, sir.
9
A
But X have no way of knowing that Mr. Zanganeh
10
say—
was at that dinner.
11
Q
If I may, I'd like to continue with this
12
question for a moment.
The document does indicate that
13
Mr. Zanganeh was at the dinner party.
14
A
It speaks for Itself, It says that.
15
Q
The document says
16
A
Yes, sir.
17
Q
Now, wouldn't it have been important to you,
that?
18
as the chief executive officer of Textron Bell, to
19
apprise yourself of the capability of your manufacturer's
20
representative In Iran to be with and deal directly with
21
the Shah of Iran who, after all, Issued the directive for
22
the purchase of the helicopters at a subsequent
A
23
time?
Well, I don't understand where we're going,
24
I don't understand what you're getting at, really.
25
a sales representative could be in the presence of His
If
314
237
1
Majesty, certainly It would add to his capability as a
2
sales representative, certainly that would be.
3
that—part
4
5
But
of—
Q
Excuse me, please finish your answer.
A
But I had no method of knowing whether or not
6
he actually attended
7
memorandum that's In this file that says His Majesty and
8
General Khatami were at the demonstration at Karaj.
9
was there.
10
Q
this dinner.
I know they were not
It's like the other
I
there.
Did you not feel it important to keep yourself
11
apprised
12
a person like the Shah of Iran with respect to the sale
13
of helicopters?
14
A
fully of the capability of your agent to contact
Well, did I n o t — Repeat your question, please
15
16
M R . MARINACCIO:
Would you read
question back for us, please?
17
THE REPORTER
18
(Reading from his notes):
"Did you not feel it important to keep
19
yourself apprised
20
your agent to contact a person like the Shah
21
of Iran with respect to the sale of
22
helicopters?"
23
A
24
25
the
sales
fully of the capability of
I always consider it important to control our
programs.
Q
Specifically, you previously stated
that you
•
315
238
1
had no knowledge of the capability of your manufacturer'a
2
representative in Iran to have contact with the Shah of
3
Iran.
4
5
A
Uh huh.
Uh huh.
Q
Don't you think it would have been Important
6
for you to know the capability of your manufacturer's
7
representative to have those kinds of contacts and to be
8
able to meet with the Shah?
9
A
Well, you know, a meeting with the Shah of
10
Iran can be good or it can be bad.
11
Impression that the person makes*
12
It depends upon the
And I guess in talking with the Shah of Iran,
13
I would rather represent my company myself than have a
14
representative represent my company.
15
So, I don't know what his social contacts
16
were and I don't know whether he traveled in the group of
17
people who had access to the Shah or not.
18
your memorandum and he s a i d — a n d it says he was at this
19
dinner.
20
23
24
But I don't know what his relationship, if any,
was with the Shah of Iran.
21
22
I can read
o
Your testimony then is that you did not
contemporaneously keep yourself fully apprised of the
contacts of Air Taxi and Mr. Zanganeh with the Shah of
Iran?
25
23-553 O - 78 - 21
A
What do you mean by contemporaneously?
316
235
1
Q
Contemporaneously, at the time they were made.
2
A
No, no.
3
after
4
5
Q
A
Q
11
I would probably guess when It came
Q
Would
14
i
A
18
20
23
So at that time you would have been apprised
Probably one of our sales reps who read
Q
Who would that have been?
A
I have no Idea.
the
Q
And
the sales rep would have advised you at
that time that Mr. Zanganeh had met with the Shah of
Iran?
A
He would have said what his memorandum
Q
And would you have believed
24
25
I assume it would have been.
memorandum.
19
22
that have been shortly after December
by whom?
16
21
in.
27, 1969?
A
17
this
When did they first tell you about the
A
13
15
I'm sure that somebody told me about
memorandum?
10
12
Well, when did you first know when it
memorandum.
8
9
it happened.
happened?
6
7
I wouldn't have known of this until
said.
that Mr. Zanganeh
had been in the personal presence of the Shah of Iran or
317
240
1
would you have not believed
It?
2
A
I could believe that that were possible.
3
Q
Did you or did you not believe it at that
A
I don't know.
4
time?
5
6
7
MR. GALERSTEIN:
one purely to clarify:
8
9
This
Hay I Interject
document—
M R . MARINACCIO:
I'm eliciting
the
testimony of the witness.
10
MR. GALERSTEIN:
Yes, I understand.
11
M R . MARINACCIO:
I'm not taking your
12
testimony on any clarification point.
13
14
M R . GALERSTEIN:
testify.
I don't wish to
I'm trying to be of assistance.
15
M R . MARINACCIO:
To whom?
16
M R . GALERSTEIN:
To you.
17
wish not, it's perfectly okay.
18
19
But If you
MR. MARINACCIO:
If you want to confer
with your client, you may do so.
20
M R . GALERSTEIN:
No, I don't want
to
21
confer with him.
22
to you, but If you wish me not to speak, I will not apeak.
23
I am only trying to be of assistance
M R . MARINACCIO:
If at any time you
24
have any statement to make on behalf of your client,
25
you're free to make it for the record.
318
241
M R . GALERSTEIN:
1
2
was Crying Co do, M r . — n o t
3
co calk.
5
this.
Now, let's get off of
Let's go on.
MR. MARINACCIO:
6
7
co you, buc you cold me not
THE WITNESS:
4
MR. GALERSTEIN:
9
THE WITNESS:
11
Weil, you make your
statement for the record.
8
10
Well, Chat's what I
It's okay.
Let's go ahead.
BY MR. MARINACCIO
Q
Mr. Atkins, on approximately how many
12
occasions between early 1970 and 1973 were you apprised
13
by your sales people that Mr. Zanganeh and Air Taxi had
14
been In contact with the Shah of Iran?
15
16
A
I have no idea.
Q
Would
it have been more than one but less than
17
five, five to ten, ten to twenty, what's your best
18
recollection?
19
A
I don't w a n t —
20
Q
I do not wish to have your speculation for
21
22
I don't want to speculate.
the record, I wish to have your best
A
recollection.
My best recollection is that I really don't
23
feel that I was apprised of that probably more
24
certainly your five is high.
25
Q
than—
And who in your sales organization would have
319
242
1
apprised you of the circumstances of Zanganeh's contacts
2
with the Shah of Iran?
3
A
Well, I was deeply Involved
in the sales
4
program, and it might have been any of our sales people
5
who were working the program, basically Sylvester and
6
Gallagher
7
8
9
10
Q
and—
And in any of your discussions with G. William
Miller during this time, did you apprise G. William Miller
that your agent in Iran, Mr. Zanganeh, had been in the
company of and had met with the Shah of Iran?
11
A
I did
12
Q
And on occasion had discussed
13
Bell helicopters
14
A
not.
the sale of
in the Shah's company?
I did not.
And I probably did not because,
15
like you talked about yesterday, I feel many of these
16
memorandums from Air Taxi are puffed.
17
that word.
18
19
Q
I did use that word
you were indicating
I think you used
in my question because
that they were puffed.
20
A
That's right.
21
Q
I did not indicate that I had concluded
22
they w e r e puffed.
23
24
25
that
A
Well—
Q
I thought that I was trying to be fair In
giving you a characterisation that described what I
320
243
1
2
3
4
5
6
thought you were telling me in your
A
testimony.
Well* I thought I took an Important memorandum
and showed you it was puffed.
Q
But this document, Document Number 41,
wasn't puffed?
A
I have no knowledge of whether Mr. Zanganeh
7
was at that dinner or he wasn't at that dinner.
8
see Is what the memorandum says.
9
Q
All X
Well now, if on more than one occasion but
10
less than five occasions you were told by your sales
11
people that your agent in Iran had been in contact with
12
the Shah over the sale of Bell helicopters, don't you
13
think that would have been an important thing for you to
14
check out to see If it was true or untrue?
15
16
17
18
A
I don't know how I would check that out.
Q
Did you assume it was true or did you assume
it was untrue?
A
X assumed
that t h e — t h a t
the statements made
19
by Air Taxi were over-exaggerations of their efforts to
20
assist us in the sale.
21
22
23
24
25
Q
If X may, I'd like to ask you, for the record,
because I don't think this is in the record:
The sale
of 489 helicopters represented about $500 million in
business.
What percentage of Bell Helicopter's yearly
321
244
1
sales was made up by the sales of helicopters
2
during the periods when the 489 helicopters were being
to Iran
3
delivered?
4
A
Probably 30 per cent.
5
Q
Did you h a v e — b y "you" I mean Bell Helicopter
6
T e x t r o n — h a v e an office in Iran staffed by your own
7
people?
A
Not at that point, not back in the '71 time
10
Q
When did you establish a n office in Iran?
11
A
I believe we established an office in Iran
12
in '73.
8
9
frame.
We worked out of our hotels, really.
13
Q
In '73?
14
A
In *72 and la '71 we worked out of the hotels.
15
16
17
18
19
20
21
22
23
24
25
(Brief break.)
322
235
1
2
3Y M R . M A R I N A C C I O
Q
M r . A t k i n s , did you f e e l a t the time
In
3
1 9 7 0 , ' 7 1 , ' 7 2 , that M r . Z a n g a n e h m a y have been
4
or w h e n did y o u f i r s t b e g i n to f e e l t h a t M r . Z a n g a n e h
5
m a y have e x a g g e r a t e d his a b i l i t y to d e a l w i t h the h i g h
6
Government
pjfflng,
officials?
7
A
Well,
8
Q
A n d is that a fair c h a r a c t e r i z a t i o n of w h a t y^>u
9
10
11
12
13
really feel?
A
sentative.
16
19
in sales p r o m o t i o n
normally
accomplishments.
A n d I w a s d e a l i n g a t the k e y point w h e r e
d e a l i n g a t that
point.
A n d , t h e r e f o r e , I t h o u g h t he was an a s s i s t
to the sales p r o g r a m , and I d o n ' t t h i n k there's
wrong with
anything
that.
M R . MARINACCIO:
I'd like to mark for
the record E x h i b i t N o . 5 6 .
(The d o c u m e n t r e f e r r e d to was
m a r k e d " E x h i b i t N o . 56" for
identification.)
23
Q
Which
is a d o c u m e n t dated 9 M a y , 19 7 3 , from
25
the
d e c i s i o n s w e r e going to be m a d e ; and I know he w a s n ' t
22
24
repre-
At the same t i m e , I b e l i e v e the type of
20
21
mine.
In my m i n d , Air T a x i was a good s a l e s
overstate their
17
18
I w a n t your t e s t i m o n y , not
people that are engaged
14
15
In—
C . P . K u d n i n g , Vice P r e s i d e n t , P r o g r a m M a n a g e m e n t a t
323
235
1
B e l l H e l i c o p t e r to the D e p a r t m e n t of the A r m y , and
2
s t a t e s in p e r t i n e n t p a r t , and then I ' l l let you r e v i e w
3
the d o c u m e n t to get your
testimony:
"Air T a x i has b e e n a v e r y
4
responsive
5
and responsible foreign representative
6
us and has s i g n i f i c a n t l y
7
s u c c e s s f u l sales e f f o r t s for our U . S .
8
manufactured products
9
it
contributed
for
to the
in I r a n . "
I ' l l a s k y o u to r e v i e w this d o c u m e n t and
10
a s k y o u for your comments w i t h r e s p e c t to the
11
p o r t i o n that I have read into the
12
A
pertinent
record.
W e l l , M r . R u d n i n g was t r a n s m i t t i n g to the
13
U. S. Army Aviation Systems Command, U. S. Government
14
F o r m 1 1 9 , " C o n t r a c t o r ' s S t a t e m e n t of C o n t i n g e n t or
15
Other Fees."
16
H e w a s a l s o t r a n s m i t t i n g a copy of our
17
Manufacturer's Foreign Representative Agreement with
18
/intendments 1 and 2 t h e r e o f .
19
20
H e was a l s o a d v i s i n g the A v i a t i o n
Systems
C o m m a n d that w e were s t i l l in n e g o t i a t i o n to d e t e r m i n e
21
the f i n a l s e t t l e m e n t w h i c h we would make w i t h the
22
manufacturer's
23
24
representative.
And so as part of his l a n g u a g e , he m a d e
s t a t e m e n t that y o u e m p h a s i z e d :
25
"Air T a x i has b e e n a v e r y r e s p o n s i v e and
the
324
235
1
responsible foreign representative and has significantly
2
contributed to the s u c c e s s f u l sales
3
4
5
Q
8
Would you agree with t h a t , M r . Rudning's
chara cterization?
A
6
7
effort."
I think that they were v e r y
responsive.
The w o r d , "responsible," y e s , I guess I
would say that they were r e s p o n s i b l e
Q
people.
To your k n o w l e d g e , did a n y b o d y in Textron/Bel
9
indicate to the Department of the A r m y that was re-
10
V i e w i n g the commission matter to A i r T a x i , that A i r
11
12
T a x i may have on occasion
A
puffed?
I don't know that they d i d .
You c a n , when
13
y o u question M r . R u d n l n g , he handled most of the U .
14
S . Government discussions and he can comment on that
15
better than I c a n .
16
17
18
19
20
21
22
23
24
25
Q
What was the first time that you e v e r learned
or heard o f , from a n y o n e , w h o the owner or owners or
persons having any interest w h a t s o e v e r in the ownership
nature in Air Taxi?
A
I would say that the first time that I ever
gave much thought to that question was during the year
'72 w h e n I saw that or felt that we were going to
conclude a major s a l e .
Q
And could you tell us w h a t your thought
process was during that period in 1972?
325
235
i
A
Well—
2
Q .
I m e a n , w h a t did you
3
A
Yeah.
4
Q
And w h a t did y o u do?
5
A
W e l l , we were n e g o t i a t i n g for the s a l e .
6
think?
I
r e c o g n i z e d that we had a r e p r e s e n t a t i v e w h o w a s pro-
7
b a b l y g o i n g to r e c e i v e a m a j o r p a y m e n t .
8
w i t h M r . Z a n g a n e h the o w n e r s h i p of his
And I discussed
company.
9
Q
And this w a s in 1972?
10
A
I believe so.
11
Q
And did you d i s c u s s this w i t h !4r. Z a n g a n e h
1
72. I would t h i n k it w a s , y e s .
12
on one o c c a s i o n or more than one o c c a s i o n , a n d w h e r e
13
did this d i s c u s s i o n take place?
14
15
A
W e l l , I c a n ' t remember w h e t h e r
in Iran or it o c c u r r e d h e r e .
it o c c u r r e d
But, I discussed
with
16
him:
17
me a t that time t h a t M r . E s h o o , w h o had s i g n e d some of
18
these a g r e e m e n t s , I t h i n k , and M r . C h a f i x , w e r e h i s
19
p a r t n e r s in the c o m p a n y a n d that they o w n e d a h u n d r e d
20
per cent of the s t o c k of A i r
21
22
Q
24
Taxi.
Khatami?
A
N o , sir.
Q
Did M r . Z a n g a n e h e v e r indicate to y o u t h a t
G e n e r a l K h a t a m i had a n y kind of o w n e r s h i p
A n d he told
D u r i n g this d i s c u s s i o n , did y o u or M r .
Z a n g a n e h ever m e n t i o n the name of G e n e r a l
23
25
Who w e r e the owners of his c o m p a n y ?
interest,
326
235
1
w h a t s o e v e r , in A i r
2
3
Taxi?
A
No, sir.
^
Did M r . Z a n g a n e h e v e r i n d i c a t e to y o u or did
4
you e v e r know f r o m a n y source w h a t s o e v e r , or ever
5
that M r .
6
7
K h a t a m i had an o w n e r s h i p
interest in Air
Taxi
A
I did n o t .
Q
Who else did y o u d i s c u s s the m a t t e r of the
8
o w n e r s h i p of A i r T a x i w i t h other than M r . Z a n g a n e h ,
9
i n c l u d i n g a n y o f f i c i a l s of B e l l H e l i c o p t e r or a n y o n e
10
11
12
else?
A
I think R u d n i n g and I may have d i s c u s s e d
R u d n i n g was the c o n t r a c t u a l man in this
so I w a s w a t c h i n g the c o n t r a c t u a l s i d e of this
14
p r e t t y close a n d he w o r k e d w i t h me on
15
16
17
18
19
20
21
22
23
24
25
Q
it.
s i t u a t i o n , and
13
hear
situation
that.
A n d w o u l d R u d n i n g h a v e b e e n in the p o s i t i o n
to k n o w or have heard of the o w n e r s h i p of A i r T a x i ?
A
I d o n ' t know w h e t h e r he was involved
d i s c u s s i o n s or n o t a t hat
in the
point.
Q
R u d n i n g w o r k e d for you?
A
Ye s , 8 i r .
Q
Did h e , on o c c a s i o n , t r a v e l to Iran?
A
Oh, ye8, sir.
Q
And w h a t w a s his r e s p o n s i b i l i t y in t r a v e l i n g
to Iran?
A
For w h a t purpose w o u l d he g o there?
W e l l , R u d n i n g a t that t i m e , I b e l i e v e , w a s
327
250
1
2
Vice Presid' a t of P r o g r a m M a n a g e m e n t here a t B e l l . And
t h a t included n o t only the m a n a g e m e n t of the p r o g r a m s in
3
h o u s e , b u t a l s o the c o n t r a c t u a l r e l a t i o n s w i t h our
4
customers.
5
6
A n d he t r a v e l e d to Iran on the b a s i s
w e w e r e f o r m u l a t i n g this p r o g r a m .
7
8
that
He w a s a s s i s t i n g
in
the f o r m u l a t i o n of w h a t the p r o g r a m was a n d how it woulc
w o r k . And he was a l s o h a n d l i n g the c o n t r a c t u a l m a t t e r s
9
involved.
10
Q
11
Was it a part of his r e s p o n s i b i l i t y
in con-
t r a c t u a l m a t t e r s to keep h i m s e l f informed of the owner-
12
ship of the c o m p a n i e s
13
14
A
I wouldn't
Q
—he
that—
say—
w o u l d be s i g n i n g c o n t r a c t s w i t h ?
15
16
A
I w o u l d n ' t s a y that he d i d .
Q
On b e h a l f of the c o m p a n y ?
A
I d o n ' t think t h a t r e s p o n s i b i l i t y is s p e l l e d
17
18
out a n y p l a c e , n o .
19
Q
20
21
22
Do y o u place upon him the r e s p o n s i b i l i t y
for
a s c e r t a i n i n g the o w n e r s h i p of c o m p a n i e s w i t h w h o m he
signs
contracts?
A
No.
23
Q
Upon w h o m do y o u place that
A
W e l l , w e d o n ' t g o out a n d c h e c k the owner-
responsibility?
24
25
ship of every c o m p a n y w i t h w h o m we place a
contract.
328
235
1
2
Q
companies
w i t h w h o m y o u a r e p l a c i n g a c o n t r a c t and w h e n d o y o u not|?
3
A
W e l l , f i r s t of a l l , there's a m a t t e r of
4
w h e t h e r or n o t you h a v e a n y f i n a n c i a l — w h e t h e r
5
c o m p a n y is g o i n g to owe B e l l m o n e y , f i n a n c i a l r e s p o n s i -
6
bility.
7
c h e c k i n g out
8
9
11
12
Q
A
18
19
22
23
24
25
in the o w n e r s h i p of A i r T a x i
v e l l , I c e r t a i n l y just felt that I should
know w h o o w n e d A i r T a x i . A n d , f r a n k l y , I felt w h e n I
a s k e d the q u e s t i o n of M r . Z a n g a n e h , I guess £ a s k e d
It
on the b a s i s o f , " W e l l , y o u own a h u n d r e d per cent of
your c o m p a n y , " p r o b a b l y and he s a i d , " N o , I d o n ' t . I
h a v e t w o p a r t n e r s a n d they a r e t h e s e two
20
21
So then w h a t w a s the p u r p o s e o f , in y o u r
then a t t h a t t i m e , if they w e r e n o t g o i n g to owe y o u
14
17
in
ownership.
w o r d s , b e i n g interested
money?
16
T h a t ' s w h e n w e a r e b a s i c a l l y interested
n o t ever g o i n g to owe B e l l m o n e y .
13
15
that
A n d , of c o u r s e , in this c a s e , A i r T a x i was
10
W h e n do y o u c h e c k the o w n e r s h i p of
Q
Individuals."
A n d that w a s the first o c c a s i o n a t w h i c h
you
e v e r had i n t e r e s t in a s c e r t a i n i n g the o w n e r s h i p of A i r
Taxi?
A
Tha t's r i g h t .
Q
Did y o u ever d i s c u s s the m a t t e r of the
ownership
of Air T a x i w i t h the S t a t e D e p a r t m e n t or a n y e m p l o y e e
329
235
of the State
i
Department?
2
A
N o , I can't
3
Q
E i t h e r in the U . S . or Iran?
4
A
N o , I can't say I d i d .
Q
T o your k n o w l e d g e , did a n y of T e x t r o n / B e l l
5
say—
6
e m p l o y e e s have s u c h d i s c u s s i o n s w i t h S t a t e
7
employees?
Department
8
A
No, sir.
9
Q
Did you e v e r d i s c u s s the m a t t e r o f the owner-
10
ship of A i r T a x i w i t h a n y o f f i c i a l of the D e p a r t m e n t
11
the A r m y ?
of
12
A
N o , w e did n o t .
13
Q
Did you e v e r d i s c u s s — a n d w h e n I s a y " y o u , "
14
I m e a n y o u as a n i n d i v i d u a l or a n y b o d y in your
15
of w h o m y o u had k n o w l e d g e — e v e r
16
the o w n e r s h i p of A i r T a x i w i t h a n y I n t e l l i g e n c e
17
of the U . S . G o v e r n m e n t ?
18
19
20
22
Agency
A
N o , did n o t ,
Q
Did y o u e v e r d i s c u s s the sale of h e l i c o p t e r s
A
W e l l , I'm sure t h a t t h e —
Department?
I'm sure that we
talked w i t h the E m b a s s y in I r a n .
23
24
d i s c u s s the m a t t e r of
in Iran w i t h a n y o f f i c i a l of the State
21
company
Q
been?
25
And w h e n y o u s a y " w e , " w h o w o u l d t h a t h a v e
Would t h a t h a v e been y o u , d i r e c t l y ?
A
I am sure I d i d .
330
253
1
2
3
Q
And w h o did y o u d i s c u s s that w i t h ?
r e m e m b e r thfc n a m e of the
A
Do you
official?
I b e l i e v e m o s t of our c o n t a c t s w e r e w i t h the
4
C h i e f of the A r m i s h - M & a g , w h o was G e n e r a l W i l l i a m s o n .
5
A n d h e , in t u r n , of c o u r s e , w a s talking to t h e
6
Ambassador.
7
I don't think that I talked to t h e A m b a s s a d o r
8
a b o u t the p r o g r a m at that t i m e .
9
of A m b a s s a d o r s
in t h e r e .
And there w a s a c h a n g e
It w a s b e f o r e M r . H e l m s
came
10
in. A n d — s o , I don't b e l i e v e —
11
to G e n e r a l W i l l i a m s o n on s e v e r a l o c c e s i o n s , but I d o n ' t
12
b e l i e v e t h a t I e v e r talked to the E m b a s s y
13
Q
I b e l i e v e that I talked
Of c o u r s e , I a p p r e c i a t e your a n s w e r and
14
a c l a r i f y i n g a n s w e r . But to the s p e c i f i c
15
your b e s t r e c o l l e c t i o n
16
the State D e p a r t m e n t a b o u t this
17
18
19
20
21
22
23
24
25
A
people.
it's
questions,
is that y o u did not talk to
matter?
Y e a h , n o w , of c o u r s e , w e —
It's hard
s t r a i g h t e n this a l l o u t , b e c a u s e , of c o u r s e —
to
Let's
s e e , this sale w a s an FMS s a l e . A n d , t h e r e f o r e , it did
not go t h r o u g h the State D e p a r t m e n t .
N o w , I'm sure
that the DSAA people w o u l d h a v e their c l e a r a n c e
the State D e p a r t m e n t for the
from
sale.
S o , I don't really think we were
involved
w i t h the S t a t e D e p a r t m e n t on this s a l e . D S A A , D e f e n s e ,
Security, /ssistance.
331
250
1
Q
2
You m e n t i o n e d A m b a s s a d o r H e l m s . Did y o u
d i s c u s s the s a l e of the h e l i c o p t e r s w i t h him?
A
N o , b u t he w a s in the c o u n t r y d u r i n g
during t h e — d u r i n g
the—
the t i m e that B e l l m o v e d into country
for the t r a i n i n g and logistics p r o g r a m s .
And I talked
to the A m b a s s a d o r a t v a r i o u s times on v a r i o u s
problems
that w e had in c o u n t r y .
Q
W h e n did M r . H e l m s become A m b a s s a d o r , d o y o u
remember?
A
1 don't
remember.
Q
About
A
I think so, yeah.
Q
Did y o u ever h a v e a n y d i s c u s s i o n s w i t h a n y
1973?
m e m b e r of a n y U . S . I n t e l l i g e n c e
Agency?
A
No, sir.
Q
A b o u t the sale of the h e l i c o p t e r s
A
A r e y o u talking a b o u t the CIA or w h o are
in Iran?
you talking a b o u t ?
know
Q
Any intelligence
egency?
A
N o , I had n o d i e c u s s i o n . If I d i d , I d i d n ' t
It.
Q
T o your k n o w l e d g e , did a n y other B e l l offi-
cii Is have any d i s c u s s i o n s with
23-553 O - 78 - 22
any—
A
Not to m y k n o w l e d g e ,
Q
— i n t e l l i g e n c e a g e n c i e s a b o u t this sale?
332
255
2
3
4
A
N o t to m y
Q
I'd n o w like to a s k M r . Bruce Freed to a s k
y o u some
knowledge.
questions.
A
Sure.
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
EXAMINATION
BY M R . F R E E D
Q
reputation
M r . A t k i n s , w h a t was G e n e r a l
Khatami's
in Iran a t the time that sales w e r e
being
c o n s i d e r e d and then n e g o t i a t e d ?
A
Vie 1 1 , his r e p u t a t i o n , of c o u r s e , this is
h e a r a a y on m y p a r t , but h e w a s a h i g h l y
respected
C o m m a n d i n g G e n e r a l of the A i r F o r c e . And h e was h i g h l y
respected by the U . S . G o v e r n m e n t p e o p l e w h o d e a l t
country.
Q
And he w a s c o n s i d e r e d to be a most a b l e
W h a t w a s his r e p u t a t i o n
in
man.
in terms of the
r o l e h e w a s g o i n g to play in a n y a i r c r a f t
acquisitions
or sales in Iran?
A
^ e l l , to the best of my k n o w l e d g e , the w a y
the G o v e r n m e n t of Iran is set u p , the a c t u a l a c q u i s i t i o n
is done b y the M i l i t a r y I n d u s t r i a l O r g a n i z a t i o n . And
the r e q u i r e m e n t s a n d so f o r t h m a y be s t i p u l a t e d by a
23
s e r v i c e , b u t the a c t u a l p r o c u r e m e n t
Is done over h e r e
24
25
by t h e M i l i t a r y I n d u s t r i a l
Organization.
Y o u have to r e m e m b e r that the U . S . G o v e r n m e n
333
256
1
is v e r y i n f l u e n t i a l , e s p e c i a l l y
2
w h a t the G o v e r n m e n t of Iran was g o i n g to p r o c u r e , be-
3
cause they w e r e a d v i s i n g as to the best w e a p o n s
4
their use in I r a n .
5
in those d a y s , a b o u t
for
S o , I'm sure that the G e n e r a l flew a lot or
6
the a i r p l a n e s that he w a s g o i n g to b u y a n d w a s g o i n g
7
to come into his I n v e n t o r y and so f o r t h .
8
9
10
11
T h e a c t u a l p r o c u r e m e n t was a l w a y s over here
in the M i l i t a r y I n d u s t r i a l O r g a n i z a t i o n , as far as I
know.
Q
But G e n e r a l K h a t a m i w a s
Commander-in-Chief
12
of the A i r
Force?
13
A
Right.
Q
With g r e a t interest in a l l a v i a t i o n .
14
And
15
isn't it f a i r to a s s u m e that he w o u l d play a v e r y
16
c e n t r a l role in a c q u i s i t i o n s and
17
18
19
20
21
22
23
24
25
A
purchases?
V;e 1 1 —
Q
In c l e a r i n g ?
A
— w e l l , take a look at the U . S . A r m y and
c o n s i d e r the fact that y o u have C o m m a n d i n g
Generals
of the E u r o p e a n Command and y o u have C o m m a n d i n g
Generals
of C O N U S and you h a v e C o m m a n d i n g G e n e r a l s of RUCKER and
so f o r t h .
agency.
They are r e c o m m e n d i n g b o d i e s to a
That p r o c u r e m e n t a g e n c y r u n s the
and selects the s o u r c e .
procurement
competition
It isn't s e l e c t e d by the
334
257
1
generals
2
I r a n i a n G o v e r n m e n t operated
in the f i e l d .
3
Q
4
field.
5
A
Well—
6
And I would a s s u m e that the
in a s i m i l a r
manner.
Sut G e n e r a l K h a t a m i w a s n ' t a g e n e r a l in the
Q
He was C o m m a n d e r - i n - C h i e f
7
A
V e i l , t h a t ' s — y o u k n o w , a l l the Air Force
8
is in I r a n .
9
Q
10
11
12
13
14
15
16
17
18
19
20
T h e y a r e not out in the
General Khatami's
i n f l u e n c e , the fact that
they
could g o t h r o u g h ?
A
No.
I r e s p e c t e d G e n e r a l K h a t a m i a s a Four
Star G e n e r a l of the I r a n i a n F o r c e s . And I w a s —
I was
sure that h e was a v e r y p o w e r f u l man in c o u n t r y .
But
that's the extent of m y k n o w l e d g e .
Q
I w a n t to introduce E x h i b i t N o . 5 7 .
This is
a d o c u m e n t , a r e s o l u t i o n of the Board of D i r e c t o r s
of A i r T a x i i n d i c a t i n g o w n e r s h i p of the c o m p a n y .
It's
dated on M a y 2 1 , 1 9 7 3 .
(The d o c u m e n t r e f e r r e d to was
m a r k e d " E x h i b i t N o . 57" for
identification.)
Q
N o w , let Lie j u s t show this to y o u and let me
just h a v e it b a c k .
25
of
possibly
sales had to be cleared or a p p r o v e d b y h i m b e f o r e
22
24
field.
W e r e y o u a w a r e of r e p o r t s or a n y rumors
21
23
of the A i r F o r c e ?
A
Sure.
Okay.
335
255
*
2
Q
M r . A t k i n s , this instrument of o w n e r s h i p is
the first f o r m a l d o c u m e n t in T e x t r o n ' s s u b m i s s i o n
under
the subpoena of a n y i n d i c a t i o n of w h o the owners of
Air Taxi were.
A
Uh h u h .
Q
It c o m e s on May 2 1 , 1 9 7 3 .
A
W e l l , this d o c u m e n t r e s u l t e d a s — f r o m a
W h y , a t that
w h o l e series of n e g o t i a t i o n s , and rather
time?
painful
n e g o t i a t i o n s , in w h i c h w e were a t t e m p t i n g to r e a c h a
s e t t l e m e n t of our M a n u f a c t u r e r ' s R e p r e s e n t a t i v e A g r e e ment with Air
Taxi.
A n d w h e n we came to a f i n a l a g r e e m e n t w i t h
M r . Z a n g a n e h , we a s k e d that he f u r n i s h us a
of his Board of D i r e c t o r s
resolution
of his a u t h o r i t y to a c c e p t
the s e t t l e m e n t w h i c h we w e r e
offering.
I b e l i e v e a n d to the b e s t of m y
recollection,
the o w n e r s h i p t h i n g was s o m e t h i n g t h a t they a d d e d , a n d
we had n e v e r
requested.
W h a t we were
interested
in w a s :
Did M r .
Z a n g a n e h have a u t h o r i t y f r o m his Board to s e t t l e this
agreement?
A n d I b e l i e v e that the part of this
thing
here that s a y s , "We're the o w n e r s , " was s o m e t h i n g
just came out of their own l e g a l form of doing
Q
that
something
k h e n was the final a g r e e m e n t w i t h M r .
336
250
1
Zanganeh
^
reached?
A
June t h e — w e l l , to me it was r e a c h e d
some-
t i m e ; the t e n t a t i v e a g r e e m e n t was r e a c h e d some time
the m o n t h of H a y , I w o u l d s a y , '73.
And this w a s
the f i n a l c o n f i r m a t i o n w h i c h we f i n a l l y signed
of
1
In
in June
73•
Q
W h a t d o y o u m e a n , this was the final?
Are
you r e f e r r i n g to this o w n e r s h i p d o c u m e n t as the
final
confirmation?
A
W e l l , the A m e n d m e n t 3 to the M a n u f a c t u r e r ' s
Agreement.
Q
W h e n did the n e g o t i a t i o n s w i t h M r . Z a n g a n e h
begin?
A
W e l l , of c o u r s e , there was a w h o l e
series
of n e g o t i a t i o n s , s t a r t i n g w a y b a c k in A p r i l of ' 7 2 . And
this f i n a l n e g o t i a t i o n , I w o u l d g u e s s , w e n t over a
period of s e v e r a l m o n t h s .
Q
year
S o , in e f f e c t , the n e g o t i a t i o n s w e n t over a
period?
A
W e l l , we r e a c h e d an a g r e e m e n t
in A p r i l of
'72 a n d we changed that a g r e e m e n t in O c t o b e r of * 7 2 .
And then we g o t down to a n e g o t i a t i o n of a
s e t t l e m e n t on the t o t a l t r a n s a c t i o n .
that h a p p e n e d
Q
final
And I w o u l d
in the A p r i l - J u n e , 1973 t i m e
frame.
W a s this d o c u m e n t in a n y w a y r e l a t e d
to
guess
337
250
1
2
s u b m i s s i o n s that y o u w e r e g o i n g to be m a k i n g , that
y o u w e r e m a k i n g to the A r m y A v i a t i o n Systems
A
To m e , this d o c u m e n t was something
l e g a l l y w a n t e d to tie this t r a n s a c t i o n
Command?
that w e
up.
A n d I'm t a l k i n g a b o u t M r . Z a n g a n e h ' s
authorit
to make the f i n a l s e t t l e m e n t .
Q
W h y d i d n ' t the issue of A i r T a x i o w n e r s h i p
come up before 19 73?
A
I a m not s a y i n g that this was a m a t t e r of
ownership I was worried about here.
I was worried
a b o u t the m a t t e r of M r . Z a n g a n e h ' s a u t h o r i t y to
c o n s u m m a t e this t r a n s a c t i o n for his
Q
company.
I w a n t to just say for the r e c o r d , the
d o c u m e n t t h a t I refer to w a s the o w n e r s h i p
instrument
of A i r T a x i that was c e r t i f i e d by the U . S . E m b a s s y
o f f i c i a l on M a y 2 1 , 1 9 7 3 .
A
I d o n ' t t h i n k it w a s a s t a t e m e n t of ownership
It w a s a r e s o l u t i o n of the Board of D i r e c t o r s
certain things.
A n d the o w n e r s h i p j u s t f e l l out of it
w a s the w a y they signed
Q
it.
B e l l was n o t interested b e f o r e M a y of 19 73
in g e t t i n g a s t a t e m e n t of w h o the m a n a g i n g
w e r e , w h a t the lines of a u t h o r i t y w e r e a t
A
stating
No.
partners
the—
I p r e v i o u s l y t e s t i f i e d that I had
talked to M r . Z a n g a n e h a b o u t t h a t , and that he had
338
261
1
informed m e w h o the o w n e r s were of the c o m p a n y . And
2
a t this p o i n t , we were n o t interested
3
thinking
4
Did M r . Z a n g a n e h have a u t h o r i t y to a c t for his
5
in this i m p o r t a n t t r a n s a c t i o n ?
6
i n — We w e r e n o t
of the o w n e r s h i p . We w e r e t h i n k i n g
about:
company
A n d t h e r e f o r e we
" M r . Z a n g a n e h , y o u g e t y o u r a p p r o v a l of your Board
said:
of
7
D i r e c t o r s and s h o w us that y o u h a v e a u t h o r i t y to a c t
8
for the
9
Q
company."
W o u l d n ' t this h a v e b e e n i m p o r t a n t w h e n
you
10
s i g n e d the c o n t r a c t , r e s i g n e d the c o n t r a c t w i t h A i r
11
T a x i in 1968?
12
A
W e l l , it w a s n ' t c o n s i d e r e d
13
Q
W h y did y o u d o u b t , or B e l l H e l i c o p t e r
14
15
M r . Zanganeh's
A
important, n o .
authority?
I d o n ' t t h i n k there was a n y
particular
16
reason.
17
I t h i n k we m e r e l y w a n t e d to c o n f i r m that his
18
a c c e p t e d the s e t t l e m e n t that we m a d e .
19
20
21
22
23
24
25
doubt,
I d o n ' t t h i n k w e r e a l l y did d o u b t his a u t h o r i t j
w a n t t o come b a c k and n e g o t i a t e a n o t h e r
Board
And w e d i d n ' t
time.
Q
A n d that's w h y the M a y 2 1 , 1973
A
Yes, sir.
Q
—was
A
Yes, sir.
Q
Was this p r o v i d e d at B e l l ' s
A
Ye8, sir.
document—
provided?
request?
339
i
M R . FREED:
2
(Brief
3
4
7
M R . MARINACCIO:
12
13
14
15
by T e x t r o n a r e in the record b e f o r e the
18
19
20
21
22
tendered
Committee.
T h e reason w h y the p a r t i c u l a r d o c u m e n t s
are
being m a r k e d h e r e is so that the r e v i e w e r of the
p a r t i c u l a r t e s t i m o n y , as in the case of M r . A t k i n s ,
w i l l b e a b l e t o identify the p a r t i c u l a r d o c u m e n t s
w e ' r e t a l k i n g a b o u t in M r . A t k i n s ' t e s t i m o n y .
that
But a l l
of the d o c u m e n t s a r e in the r e c o r d .
16
17
M a y I p o i n t o u t a t this
time that a l l of the d o c u m e n t s that h a v e b e e n
10
11
Exhibit
(The resume r e f e r r e d to was
m a r k e d " E x h i b i t N o . 5 8 " for
identification.)
6
9
I want to introduce
record.
5
8
now.
recess.)
M H . FREED:
N o . 58 for the
O k a y , let's t a k e a b r e a k
M R . FREED:
and it a p p e a r s
c o m p a n y w i t h n o d a t e on
Q
This w i l l be E x h i b i t N o . 58
to be a r e s u m e of Air T a x i of the
it.
M r . A t k i n s , could y o u just c h a r a c t e r i z e
this
document also?
M a y I h a v e that so we can then d i s c u s s
when you are through reading
it
it?
23
M R . S O U T T E R : Do y o u w a n t M r . A t k i n s
24
characterise
it first?
25
M R . F R E E D : Y e s , if h e
can.
to
340
250
1
A
This a p p e a r s to be a s t a t e m e n t and
2
of the A i r T a x i C o m p a n y .
3
It n a m e s the n u m b e r of e m p l o y e e s .
4
5
8
Q
Could I have that b a c k ?
A
Yes.
Q
9
Thank
document,
A
I do n o t
know.
Q
D o y o u know w h e n it was p r e p a r e d , E x h i b i t
N o . 58?
14
15
16
A
No, I don't.
Q
D o y o u know why E x h i b i t N o . 58 was
A
Is this one of the d o c u m e n t s that w e provided)?
17
MR. S O U T T E R :
18
M R . FREED:
provided
20
22
It talks
the E x h i b i t N o . 58 on A i r Taxi?
12
21
A
ment
in the
prepared?
Yes.
This E x h i b i t N o . 58 w a s
submission.
I d o n ' t r e m e m b e r , r e a l l y , s e e i n g t h a t docu-
before.
Q
Do y o u know w h a t E x h i b i t N o . 5 8 , w h a t the
23
i n f o r m a t i o n on E x h i b i t N o . 58 is b a s e d
on?
24
A
No, I don't.
q
Do y o u know w h e t h e r E x h i b i t N o . 53 was
25
their
you.
M r . A t k i n s , w h o p r e p a r e d this
11
19
It talks a b o u t
a c t i v i t i e s a n d the c o m p a n i e s they r e p r e s e n t .
7
13
directors.
a b o u t b a n k s in w h i c h they do b u s i n e s s .
6
10
It names the
description
341
1
2
3
p r e p a r e d b e f o r e the C o m m i t t e e ' s r e q u e s t for
information,
for the d o c u m e n t s , or the E x h i b i t N o . 58 was
in r e s p o n s e t o the C o m m i t t e e ' s
A
Committee's
Q
prepared
request?
I a m sure it was n o t prepared a f t e r
the
request.
A n d w h y is t h e r e n o i n d i c a t i o n in E x h i b i t
No.
58 of o w n e r s h i p of A i r T a x i ?
A
I have n o i d e a , b e c a u s e I a s s u m e that's
merely
one of the d o c u m e n t s that's b e e n g a t h e r e d up a s b u s i n e s s
has gone a l o n g w i t h A i r T a x i . And I d o n ' t
r e m e m b e r s e e i n g that d o c u m e n t
Q
really
before.
1 ould E x h i b i t N o . 58 c h a r a c t e r i z e w h a t
H e l i c o p t e r knew a b o u t A i r T a x i u n t i l it r e c e i v e d
Bell
Exhibit
N o . 5 7 on it?
A
I w o u l d guess that that was n o t p r e p a r e d by
Bell.
Q
You would guess?
Y o u w o u l d a s s u m e then t h a t
E x h i b i t N o . 5 8 w a s p r e p a r e d by Air T a x i ?
A
Yes, I would.
N o w , that's my
opinion.
Q
A n d t h e r e w a s n o a t t e m p t by B e l l to c h e c k the
i n f o r m a t i o n p r o v i d e d by A i r T a x i in E x h i b i t N o . 58?
A
W e l l , a s I s a y , I b e l i e v e this is the f i r s t
time I h a v e seen i t .
I d i d n ' t r e v i e w a l l the
t h a t w e r e submitted to the
Q
exhibits
Committee.
N o w , in E x h i b i t N o . 5 8 , it lists Air T a x i as
342
265
1
the d i s t r i b u t o r in Iran for B e l l H e l i c o p t e r , Avco
2
c o m i n g , A e r o C o m m a n d e r , King R a d i o a n d S u n a i r Electronic s .
3
4
W h i c h w a s the l a r g e s t a c c o u n t in E x h i b i t
A
I Imagine A e r o
6
Q
A e r o C o m m a n d e r was the largest a c c o u n t ?
A
(The w i t n e s s n o d d e d his head up and
Q
A n d w h a t w o u l d be the second
7
8
9
10
11
13
14
15
16
17
18
19
20
largest?
I t h i n k B e l l w o u l d be t h e second
N o w , for the r e c o r d , w h a t Is A e r o
A
A e r o C o m m a n d e r is a — w a s at one time a
separate G e n e r a l A v i a t i o n C o m p a n y .
largest.
I believe
Commander?
it's
n o w b e e n p u r c h a s e d by R o c k w e l l . A n d A i r T a x i w a s
distributing Aero Commanders. Excuse m e — w a s
Aero
distributin g
Commanders.
Q
And Aero Commanders are w h a t , executive
aircraft?
A
considered
T h e y are a t u r b o p r o p a i r p l a n e .
It could b e
e x e c u t i v e a i r c r a f t or it could be
considered
military aircraft.
M R . FREED:
I have n o f u r t h e r
M R . MARINACCIO:
23
down.)
Q
22
25
Commander.
A
21
24
No.
58 of A i r T a x i ?
5
12
Ly-
questions.
M r . Collins?
EXAMINATION
BY M R . COLLINS
Q
M r . A t k i n s , y o u m e n t i o n e d that y o u d i d n ' t
343
250
1
r e a l l y h a v e an o c c a s i o n to inquire as to the
ownership
of a n a g e n t , u n l e s s the a g e n t was doing b u s i n e s s for yoii,
in such a m a n n e r that they w o u l d owe y o u m o n e y . And
that
in the case of A i r T a x i , they g e n e r a l l y d i d n ' t owe y o u
money?
A
Uh h u h , y e s .
Q
Y o u a l s o had c o m m e r c i a l c o n t r a c t w i t h Air
T a x i , that they a c t e d as y o u r M a n u f a c t u r e r ' s
Repre-
s e n t a t i v e , and I believe they s t i l l d o ; is t h a t c o r r e c t '
A
Yes, sir.
Q
W o u l d y o u h a v e i n v e s t i g a t e d or inquired as
to the o w n e r s h i p b e c a u s e of the c o m m e r c i a l
A
agreement?
W e l l , s e e , w e ship e v e r y t h i n g out of h e r e
n o r m a l l y on p r e p a y m e n t or on letters of c r e d i t .
t h e r e f o r e , we n e v e r h a v e a —
Nobody o v e r s e a s —
And,
Generally,
the people o v e r s e a s do n o t h a v e a n o p e n a c c o u n t w i t h u s .
N o w , m a y b e some of our m a j o r
distributors
in E u r o p e or some p l a c e like t h a t d o , b u t n o t
g e n e r a l l y the s m a l l a g e n c i e s of this
type.
Q
S o y o u r e q u i r e the m o n e y up f r o n t ?
A
Ye s , s i r .
Q
Or a t least part of it?
A
Y e s , s i r — m o s t of i t — a l l of
Q
S o , in a c o m m e r c i a l a r e a , y o u w o u l d n ' t
a s k e d A i r T a x i a b o u t their
ownership?
it.
have
344
250
1
2
3
A
That's
right.
Q
Y o u w o u l d have e s t a b l i s h e d
thct they had
s u f f i c i e n t c r e d i t h e r e so that they could
A
Their
purchases.
Q
—any
p u r c h a s e s they m a d e ?
A
That's
Q
W h a t does IHI stand for?
cover—
right.
I b e l i e v e there w a s
a n E n g i n e e r T o u f a n i a n as the head of that?
A
T h a t ' s Iranian H e l i c o p t e r
Industry.
Q
A n d is that in g o v e r n m e n t or a p r i v a t e con-
A
W e l l , that started out to be the p l a n t b u i l t
cern?
b y A g u s t a a n d j o i n t l y owned by M I O and A g u s t a .
T h a t n o w has b e e n p u r c h a s e d
the I r a n i a n
Q
100 per cent by
Government.
W h e n w a s it p u r c h a s e d by the I r a n i a n Govern-
m e n t , do you recall?
A
Probably
'73.
We a r e n o w o p e r a t i n g
that
factory.
Q
A n d s i n c e w h e n have you o p e r a t e d
A
Since
Q
That is, Bell Helicopter?
A
Yes.
it?
'73.
Q
Since
'73?
A
Yes.
It's a —
It's n o t a f a c t o r y .
It's a
345
1
d e p o type o p e r a t i o n or r e p a i r type
facility.
2
Q
It's n o t
3
A
No, sir.
4
Q
T h i s had n o t h i n g to do then w i t h c o - p r o d u c t ioji?
A
No, sir.
Q
R e p a i r of the h e l i c o p t e r s ?
A
Yes, sir.
Q
Bell Helicopters?
5
6
7
8
9
10
11
12
13
14
15
A
Yes, sir.
Q
E n g i n e e r T o u f a n i a n was the b r o t h e r of G e n e r a l
Toufanian?
A
That's
18
19
20
21
22
right.
Q
A n d Prince C h a f i k , I b e l i e v e h e was a C o m m a n d e r
in the Iranian I m p e r i a l N a v y , a n d he w a s , p e r s o n a l l y ,
the n e p h e w of the
16
17
production?
Shah.
A n d in that c a p a c i t y a s C o m m a n d e r of the
N a v a l & s e , I b e l i e v e t h a t h e , P r i n c e C h a f i k , was
interested
in a c q u i r i n g s p a r e parts for h i s
helicopters,
a i r c r a f t and a l s o c o n s i d e r e d p u r c h a s i n g some B e l l produces
f r o m A i r T a x i ; is t h a t c o r r e c t ?
A
I don't know
Q
In 1971?
that.
T h a t h e had d e a l i n g s w i t h A i r
Taxi
23
c o n c e r n i n g B e l l P r o d u c t s ; do you know
that?
24
A
I k n o w that he was concerned a b o u t the support
25
of the B e l l m a c h i n e s that they had
acquired from Agusta,
346
J. 69
*
2
3
4
5
—6
7
A n d he was looking for spare s u p p o r t .
w h e t h e r he w a s
Q
I d o n ' t know
looking to A i r T a x i for that or n o t .
A n d that his f a t h e r w a s one of the
partners,
one of the three p a r t n e r s o w n i n g Air T a x i ; is that
correct?
A
I'm n o t c e r t a i n of the r e l a t i o n s h i p
the C h a f i k and A i r T a x i and p r i n c e C h a f i k .
between
I'm n o t
Q
9
10
11
12
13
14
15
16
17
18
19
20
21
22
c e r t a i n of their
Q
relationship
W h e n y o u d i s c u s s e d the a g e n c y a g r e e m e n t
that
you had w i t h A i r T a x i w i t h your p e r s o n n e l d u r i n g 19 7 2 ,
did the r e l a t i o n s h i p s , e x c l u d i n g C h a f i k , we d o n ' t know
v?hether he w a s the s o n of the C h a f i k w h o was a n o w n e r
o f A i r T a x i — Did E n g i n e e r T o u f a n i a n , that
relationship
w a s it e v e r d i s c u s s e d or w a s the r e l a t i o n s h i p
K h a t a m i ' s w i f e as P r i n c e s s and s i s t e r of the
w a s that ever
A
betweeen
Shah,
discussed?
E n g i n e e r T o u f a n i a n was c o m p l e t e l y
divorced
f r o m a n y t h i n g to do w i t h the A i r T a x i s i t u a t i o n . He had
Q
But at the time in 1 9 7 2 , c o - p r o d u c t i o n w a s ar
i s s u e , a t least in the I r a n i a n s ' m i n d ?
A
W e l l , b a s i c a l l y , E n g i n e e r T o u f a n i a n had
23
f a c i l i t y c o g n i z a n c e , m o r e or less a t this d e p o I ' m
24
talking a b o u t .
25
and d i d s o m e of the f a c i l i t y w o r k a t the d e p o .
He was
in charge of t h a t .
there
He w a s the g u y that p l a n t e d the
And there was n o c o n n e c t i o n
trees
347
270
1
w i t h A i r T a x i In a n y w a y .
2
3
Q
Khatami's
4
5
6
7
8
9
10
W a s there a n y d i s c u s s i o n a b o u t G e n e r a l
w i f e , the
A
No.
Q
And h e r r e l a t i o n s h i p w i t h the
A
(The w i t n e s s shakes his h e a d . )
Q
I b e l i e v e she was a p i l o t a l s o ?
A
That's
Q
She flew some of the B e l l H e l i c o p t e r s ?
A
That's
11
12
15
18
right.
A
M R . COLLINS:
O k a y . That's fine.
THE W I T N E S S ;
T h e y have a r o y a l hangar
S i k o r s k y a n d so f o r t h .
Q
hank
And they fly t h e m q u i t e
Did a n y o n e d i s c u s s w i t h h e r , y o u r
of
often.
personnel,
did t h e y d i s c u s s w i t h her w h a t she t h o u g h t of the
product ?
19
20
21
right.
there w i t h the p r o d u c t s of B e l l , some p r o d u c t s
16
17
Shah?
you.
13
14
Princess?
A
I really don't know.
I never met
Q
X m e a n , she n e v e r p a r t i c i p a t e d
her.
in n e g o t i a -
tions a t a l l ?
22
A
Oh, no, no.
23
M R . MARINACCIO:
Is t h a t a l l ?
24
M R . COLLINS:
L e t me a s k o n e m o r e :
25
Q
23-553 O - 78 - 23
Did she h a v e a n y role in the
Iranian
348
250
1
2
G o v e r n m e n t , other than b e i n g the P r i n c e s s ?
A
N o t that I know
3
of.
M R . COLLINS:
4
O k a y , thank
M R . MARINACCIO:
you.
M r . Doherty?
5
6
7
8
EXAMINATION
BY M R . D O H E R T Y
Q
9
10
11
12
You were questioned earlier, M r . A t k i n s ,
w i t h r e s p e c t to y o u r ' s and c o m p a n y ' s — a n d w h e n I s a y
"company" I mean Bell and Textron Company's
of the o w n e r s h i p of A i r
13
14
15
16
17
18
19
20
21
22
I have j u s t a couple of q u e s t i o n s :
knowledge
Taxi.
I w o u l d like to b r o a d e n that a little
bit.
To your k n o w l e d g e , does a n y o n e a t B e l l h a v e a n y knowledj
w i t h r e s p e c t to w h e t h e r A i r T a x i h a s a n y o t h e r kind of
a relationship with Iranian Government officials?
And,
if s o , a c o n t r o l r e l a t i o n s h i p or a r e l a t i o n s h i p , a n
indirect o n e w h e r e A i r T a x i m a y do b u s i n e s s w i t h anothei
c o m p a n y w h i c h is somehow a f f i l i a t e d w i t h a
government official?
foreign
I'd just like to b r o a d e n
that—
A
Ye s , ye s .
Q
— a n d a s k y o u , g e n e r a l l y , w h e t h e r y o u , to
23
y o u r k n o w l e d g e , a n y o n e a t B e l l has a n y k n o w l e d g e w i t h
24
r e s p e c t to a n y kind of a r e l a t i o n s h i p of A i r T a x i w i t h
25
Iranian Government
officials?
349
1
A
I k n o w of n o r e l a t i o n s h i p w i t h
them.
Q
D o y o u know w h e t h e r a n y o n e at Bell m a d e a n y
i n q u i r y of A i r T a x i a s t o w h e t h e r it had a n y kind of a
relationship
like t h a t w i t h the Iranian
Government
officials?
A
No, I don't.
Q
A s i d e f r o m the s p e c i f i c o w n e r s h i p
question,
to your k n o w l e d g e , does a n y o n e a t B e l l h a v e a n y
knowledge
a s t o w h e t h e r a n y part of the 2.9 m i l l i o n d o l l a r
payment
m a d e by B e l l to A i r T a x i in a n y w a y inure-J to the
b e n e f i t o f , d i r e c t l y or i n d i r e c t l y , a n y I r a n i a n Government
official?
A
I have n o k n o w l e d g e of that a n d I d o n ' t t h i n k
any Bell people
Q
do.
Do you know w h e t h e r a n y o n e a t B e l l m a d e
a n y inquiry as to w h e t h e r a n y p o r t i o n of s u c h p a y m e n t
w o u l d or d i d , d i r e c t l y or i n d i r e c t l y , inure to the
b e n e f i t of a n y I r a n i a n G o v e r n m e n t
A
No, I don't.
officials?
I t h i n k those p e o p l e w o u l d thlni
it was i n s u l t i n g if we a s k e d that kind of a
Q
question.
T h e n I t h i n k the l o g i c a l c o n s e q u e n c e of that
is the a n s w e r to my n e x t q u e s t i o n :
Do y o u know w h e t h e r
a n y o n e a t B e l l d i r e c t e d or suggested to A i r T a x i t h a t
n o p o r t i o n of t h e funds paid to A i r T a x i s h o u l d be in
a n y w a y or should in a n y w a y inure to the b e n e f i t of a n y
350
235
1
Iranian Government
2
3
*
A
official?
I'm c e r t a i n t h a t , y o u k n o w , we made an
a g r e e m e n t w i t h A i r T a x i as a c o r p o r a t i o n . We w o u l d
e x p e c t t h e m to use the funds for their p u r p o s e s . And
we c e r t a i n l y w o u l d not e x p e c t a n y t h i n g to go b a c k to
any Iranian Government
Q
official.
B u t , a t that t i m e , n o d i r e c t i v e w a s made t o
A i r T a x i , n o r was a n y r e p r e s e n t a t i o n s e c u r e d from A i r
T a x i t h a t n o p o r t i o n of the p a y m e n t w o u l d
A
No, sir.
Q
—to
Is that
inure—
the b e n e f i t of a n y G o v e r n m e n t
official?
correct?
A
That's
correct.
Q
There
i s , h o w e v e r , a p r o v i s i o n , as I under-
stand it in the c u r r e n t m a n u f a c t u r e r ' s
representative's
a g r e e m e n t that w o u l d e f f e c t i v e l y s e c u r e that kind of a
c o m m i t m e n t from m a n u f a c t u r e r ' s r e p r e s e n t a t i v e s , is it
not?
A
That is
Q
A p a r t f r o m the p a r t i c u l a r d i s t r i b u t i o n
correct.
of
the 2.9 m i l l i o n d o l l a r p a y m e n t , do y o u know to your
k n o w l e d g e w h e t h e r a n y o n e a t B e l l had a n y k n o w l e d g e
with
r e s p e c t to w h e t h e r a n y p a y m e n t or a n y b e n e f i t of a n y
kind w a s passed a l o n g by A i r T a x i for the b e n e f i t
of
a n y Iranian G o v e r n m e n t o f f i c i a l in c o n n e c t i o n w i t h the
351
250
i
2
3
4
5
6
7
8
9
10
11
12
13
14
15
p r o c u r e m e n t of the c o n t r a c t u n d e r
A
discussion?
I h a v e n o k n o w l e d g e and I k n o w of n o B e l l
e m p l o y e e s that h a v e k n o w l e d g e .
Q
A n d to y o u r k n o w l e d g e , n o s p e c i f i c
inquiry
w a s m a d e on the part of any B e l l p e o p l e w i t h r e s p e c t
to that?
A
That's
correct.
Q
Did y o u p a r t i c i p a t e in a n y d i s c u s s i o n s or
did a n y i n f o r m a t i o n come to you in a n y f a s h i o n
that
A i r T a x i e i t h e r had d i s c u s s e d or c o n s i d e r e d a n y s u c h
improper-—engaging
in s e c u r i n g the
A
in a n y s u c h m e t h o d s
in o r d e r to assist:
contract?
T h e r e was n e v e r a n y i n d i c a t i o n t h a t A i r T a x i
was m a k i n g a n y improper p a y m e n t s
in c o n n e c t i o n w i t h the
contract.
16
M R . DOHERTY: Thank you, sir.
17
M R . COLLINS:
Please?
18
M R . MARINACCIO:
We'd like to go b a c k
19
20
to M r . C o l l i n s for he i n d i c a t e s h e has some
follow-up
questions.
21
THE WITNESS:
22
23
24
25
Okay.
EXAMINATION
BY M R . C O L L I N S
Q
Mr. Atkins,
w i t h r e s p e c t to my e a r l i e r
352
250
1
2
3
4
q u e s t i o n s on P r i n c e C h a f i k , I w a n t t o i n t r o d u c e as
E x h i b i t 59 an i n t e r n a l m e m o f r o m M r . Z a n g a n e h , dated
A p r i l 1 9 , 1 9 6 8 , in w h i c h he i n d i c a t e s that m e e t i n g s
w e r e held w i t h P r i n c e C h a f i k , i d e n t i f i e d as the n e p h e w
of His I m p e r i a l M a j e s t y a n d son of M r . C h a f i k , p a r t n e r
of A i r T a x i C o m p a n y , c o n c e r n i n g
logistical support by
A i r T a x i and the p o s s i b l e p u r c h a s e of six h e l i c o p t e r s .
I j u s t w a n t to introduce that into the record
s h o w i n g t h a t , a t least in M r . Z a n g a n e h ' s m i n d , P r i n c e
C h a f i k w a s a l s o — i n a d d i t i o n to b e i n g the n e p h e w of the
S h a h , w a s a l s o t h e son of M r . C h a f i k , a p a r t n e r
Air
in
Taxi.
(The m e m o r e f e r r e d to w a s
m a r k e d " E x h i b i t N o . 5 9 " for
identif i c a t i o n . )
A
W e l l , I w o u l d take it that this
is p r o b a b l y
Q
information
correct.
Y o u w o u l d doubt that M r . Z a n g a n e h w o u l d
know
whether—
A
I s a y , it w o u l d be
Q
It would be?
A
Yes, sir.
59.)
correct.
(The w i t n e s s
indicated E x h i b i t No
A n d the six h e l i c o p t e r s I d o n ' t t h i n k e v e r
came a b o u t .
Q
Y e s , b u t I just w a n t e d to know w i t h
respect
to o t h e r n e g o t i a t i o n s w h e t h e r P r i n c e C h a f i k ' s n a m e
ever
353
276
1
came up since
2
A
he—
Prince Chafik w a s — o p e r a t e s
for the
3
a n d down in the P e r s i a n G u l f a r e a , w a y d o w n a t
4
A b b a s . And his n a m e came up e a r l y in the
5
b e c a u s e he was u n h a p p y a b o u t the s u p p o r t of h i s
6
H e l i c o p t e r s down in the G u l f .
7
b u i l t h e l i c o p t e r s down there and he d i d n ' t have
8
parts for
9
11
Q
a s y o u k n o w , was the Navy?
13
Q
A n d he w o u l d n ' t p a r t i c i p a t e
A
Oh, no.
Q
In a n y d e a l s ?
17
A
No.
20
21
22
23
24
25
a —
or a d v i s e
the
Shah?
16
19
Chafik.
B u t that was his only G o v e r n m e n t d u t y , a s fat
H e w a s a — Y e a h , he w a s
18
spare
them.
A
15
Bell
H e had a few A g u s t a -
12
14
Bandar
discussions
A n d that's a b o u t a l l I know a b o u t
10
Navy,
the rank
Q
A
He w a s —
I t h i n k he m i g h t h a v e b e e n
of—
e l l , he w a s the P r i n c e ?
N o , he was a — b u t
I think h i s r a n k w a s some-
t h i n g like less than a C a p t a i n , I b e l i e v e .
Q
Was he one of m a n y p r i n c e s , do y o u know?
A
O h , I a m sure there are
Q
N e p h e w s o f the Shah?
A
I a m sure t h e r e a r e m a n y .
many.
354
1
M R . COLLINS: All right. Thank
2
M R . MARINACCIO:
you.
M r . A t k i n s , we a r e
3
now f i n i s h e d w i t h that a s p e c t of the o u t l i n e we d i s c u s s e d
4
at the o u t s e t a n d w e ' r e a b o u t to g e t into the m a t t e r of
5
the 2.9 m i l l i o n dollar
6
7
8
9
w e ' v e d i s c u s s e d , I'd n o w like to give y o u the
12
13
r e s p e c t to the t r a n s a c t i o n t h a t w e ' v e b e e n
had a r a t h e r lengthy d i s c u s s i o n on i t , if y o u ' d
c o m m e n t s on w h a t y o u a r e f e e l i n g is a b o u t
for two d a y s .
M R . MARINACCIO:
22
T h a t ' s f i n e . And if y o u
d o n ' t care to a n y m o r e —
THE W I T N E S S :
19
21
Zanganeh's
THE W I T N E S S : W e l l , I've c o m m e n t e d on that
18
20
like
r e l a t i o n s h i p to G e n e r a l K h a t a m i a n d the Shah?
16
17
discussing.
A n d , if y o u w o u l d , b e c a u s e I think we h a v e
14
15
opporf^nit
to a d d a n y t h i n g to the record that you would like w i t h
10
11
payment.
A s p r e v i o u s l y , w i t h a l l the o t h e r m a t t e r s
I t h i n k it's
M R . MARINACCIO:
okay.
— w e ' 1 1 lay it to r e s t ,
fine.
THE W I T N E S S :
I t h i n k it's
M R . MARINACCIO:
fine.
Do y o u h a v e a n y
other—
23
THE W I T N E S S :
N o , s i r , I'm h a p p y w i t h it
24
M R . MARINACCIO:
25
just state it for the
record.
if y o u d o , y o u can
355
278
1
THE W I T N E S S :
2
I'm happy w i t h
M R . MARINACCIO;
Thank
it.
you.
3
4
5
6
EXAMINATION
BY M R . M A R I N A C C I O
Q
V i t h r e s p e c t to the m a t t e r of the 2.y millioi L
7
d o l l a r p a y m e n t to A i r T a x i , I'd like to read for your
8
b e n e f i t , into the record h e r e and find out w h e t h e r
9
a g r e e or d i s a g r e e w i t h this s t a t e m e n t , this e x c h a n g e
10
b e t w e e n S e n a t o r Brooke a n d M r . M i l l e r a t the h e a r i n g
11
b e f o r e the Senate B a k i n g C o m m i t t e e on T u e s d a y , J a n u a r y
12
24, 1978.
13
d i s c u s s i n g the 2.9 m i l l i o n dollar
14
15
And S e n a t o r Brooke and M r . M i l l e r a r e
"Senator Brooke:
payment:
Who w a s the chief
n e g o t i a t o r for B e l l ? "
16
" M r . M i l l e r : The p r e s i d e n t of B e l l . "
17
"Senator Brooke:
18
"Mr. Miller:
19
" S e n a t o r Brooke:
20
21
22
23
24
25
you
"Mr. Miller:
Is he s t i l l p r e s i d e n t ? "
Yes, sir."
"Senator Brooke:
"Mr. Miller:
Who is t h a t ? "
James A t k i n s . "
He n e g o t i a t e d
"Senator Brooke:
Would t h e y h a v e b e e n
r e p o r t e d to you a s chief e x e c u t i v e
of the p a r e n t
these?"
Yes, sir."
corporation?"
officer
356
279
1
«'-£,{r. M i l l e r :
Yes."
2
Q
W o u l d you a g r e e
3
with—
A
Yes, I would.
4
Q
— M r . M i l l e r ' s t e s t i m o n y on that?
5
A
Y e s , I concur e x a c t l y w i t h w h a t he s a i d . That
6
7
8
was the e a s i e s t q u e s t i o n to a n s w e r .
Q
A n d , f u r t h e r , two pages l a t e r , -thr^ e x c h a n g e
is s t i l l g o i n g
9
on:
"Senator Brooke:
Do you know w i t h whom
10
y o u r p r e s i d e n t or the p r e s i d e n t of B e l l Heli-
11
copter negotiated
12
13
"Mr. Miller:
with
14
15
with?"
I b e l i e v e he n e g o t i a t e d
Mr.—"
The record s a i d " Y a n g a n e h " , b u t
"Zanganeh."
16
"Mr. Miller:
17
with M r . Zanganeh.
18
he w o u l d have n e g o t i a t e d w i t h .
19
20
21
22
23
24
25
it's
I b e l i e v e he
me w a s t h e y h a d r e p o r t e d
A
That's
negotiated
I d o n ' t k n o w of a n y o n e e l s e
His r e p o r t
to
s
to M r . Z a n g a n e h . '
correct.
Q
T h a t is c o r r e c t ?
A
(The w i t n e s s n o d d e d his head up and
Q
Is it your t e s t i m o n y that y o u n e g o t i a t e d
M r . Zanganeh?
A
I did.
down.)
with
357
0 Art
1
2
Q
F u r t h e r g o i n g on w i t h the t e s t i m o n y a t
the h e a r i n g ;
3
"Senator Brooke;
4
Was this a f o r m a l
r e p o r t to y o u as Chief E x e c u t i v e
5
"Mr. Miller:
6
Officer?"
This had b e e n t h r o u g h Khe
g r o u p v i c e p r e s i d e n t s ; d i s c u s s i o n s of this
over
7
t i m e , as they had tried to n e g o t i a t e a s b e s t
8
t h e y c o u l d , a n d a s k e d for c o u n s e l of u s .
9
I d o n ' t know that t h e r e was a f o r m a l
10
"Senator Brooke:
12
"Mr. Miller:
14
Q
referring
16
17
19
20
21
Yes."
Do y o u know w h i c h d o c u m e n t M r . M i l l e r is
to?
A
A m e n d m e n t 3 to the m a n u f a c t u r e r ' s
Q
A n d t h e r e is n o d o c u m e n t in m e m o r a n d u m
agreement.
form
of T e x t r o n a n a l y z i n g a n d g i v i n g a b a c k g r o u n d to the
h i s t o r y of the n e g o t i a t i o n s w i t h M r . Z a n g a n e h on t h e
2.9 m i l l i o n d o l l a r
23
25
reduced
f r o m y o u to M r . M i l l e r or to the Board of D i r e c t o r s
22
24
It would h a v e b e e n
to w r i t i n g , w o u l d it n o t ? "
13
18
report.
There was a final formal document."
11
15
And
payment?
A
N o , s i r , t h e r e is n o t .
Q
T o your k n o w l e d g e , was there a n y s u c h docu-
A
There w a s n o t .
ment?
The w h o l e t r a n s a c t i o n
is
358
281
1
c l e a r l y set forth in A m e n d m e n t
2
3
q
3.
N o w , y o u stated y o u w e r e r e s p o n s i b l e
negotiations?
4
A
Yes, sir.
5
Q
A n d y o u r e p o r t e d to M r . M i l l e r ?
6
7
lor the
Were there r e p o r t s m a d e to the
D i r e c t o r s of T e x t r o n , to y o u r
Board of
knowledge?
8
A
I have no
9
Q
H a v e y o u e v e r h e a r d w h e t h e r there w e r e or
10
there weren't?
11
12
d i r e c t k n o w l e d g e of t h a t .
A
I a m n o t p r e p a r e d to c o m m e n t on that a n d
I a m sure y o u can g e t that i n f o r m a t i o n some p l a c e e l s e .
13
Q
N o , b u t have y o u heard w h e t h e r or n o t the
14
B o a r d of d i r e c t o r s c o n s i d e r e d the 2.9 m i l l i o n
15
payment?
16
It, no.
17
18
19
A
22
23
24
25
dollar
If you h a v e n ' t h e a r d
I think I heard it w a s d i s c u s s e d by the
A u d i t C o m m i t t e e , a n d I t h i n k that's the e x t e n t of m y
knowledge.
20
21
If y o u h e a r d i t , y e s .
Q
A n d w h e r e did y o u h e a r that it had b e e n
d i s c u s s e d by the A u d i t C o m m i t t e e ? F r o m w h o m did y o u
hear
that?
A
I c a n ' t r e m e m b e r e x a c t l y w h e r e 1 heard
it,
but I t h i n k I a l s o read it in the t e s t i m o n y . I t h i n k I
r e a d M r . M i l l e r ' s t e s t i m o n y a n d I think it said
there
359
282
1
2
that it w a s talked a b o u t in the A u d i t
Q
Committee.
I take it f r o m w h a t your t e s t i m o n y has been
3
t h a t y o u did n o t a p p e a r a t a n y Board of
4
m e e t i n g of
5
A
I have
6
Q
—at
7
Directors'
Textron—
been.
w h i c h the 2.9 m i l l i o n d o l l a r
to A i r T a x i was d i s c u s s e d
payment
in a n y way?
8
A
T h a t ' s c o r r e c t , X did n o t .
9
Q
Did y o u e v e r a p p e a r b e f o r e the A u d i t
A
N o , s ir.
Q
—In
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
dollar
payment?
A
No, sir,
Q
N o w , w e ' v e d i s c u s s e d the word
"negotiations."
W h e n e v e r w e use the t e r m " n e g o t i a t i o n s , " can we a g r e e
that w e a r e t a l k i n g a b o u t the n e g o t i a t i o n s
for the
2.9 m i l l i o n d o l l a r f e e , a t this p o i n t , a n d n o t the
n e g o t i a t i o n s for the s a l e of the h e l i c o p t e r s ?
A
Ye s , s i r .
Q
N o w , over w h a t period of time did
those
n e g o t i a t i o n s take p l a c e ?
A
F r o m — l e t ' s set the. s c e n e f i r s t , r e m e m b e r i n g
t h a t we e n t e r e d into A m e n d m e n t 1 to the A g r e e m e n t
A p r i l of
r
72.
A n d t h e n we w e n t to A m e n d m e n t 2 in
25
r e g a r d to the 2.9 m i l l i o n
Committe e —
O c t o b e r of
'72.
in
360
283
1
Q
I w o u l d a s s u m e that t h e — w e l l , I f e e l that
2
t h e n e g o t i a t i o n s for the f i n a l A m e n d m e n t 3 w a s in the
3
p e r i o d of A p r i l t h r o u g h June of
4
Q
So w h e n
5
6
you—
M R . SOUTTER;
interrupt
M r . M a r i n a c c i o , may I
you?
7
M R . MARINACCIO:
8
M R . SOUTTER:
9
10
tified a s e x h i b i t s ?
don't
M R . MARINACCIO;
Q
21
A
Yes.
Q
Y o u a r e not r e f e r r i n g to a n y
discussions
that m i g h t h a v e taken place d u r i n g the period in w h i c h
agreed
23
25
you
A m e n d m e n t N o . 1 was a g r e e d to or A m e n d m e n t N o . 2 w a s
22
24
So w h e n y o u r e f e r to n e g o t i a t i o n s , a r e
r e f e r r i n g the period in 1973 only?
18
20
you.
BY M R . M A R I N A C C I O
17
19
I just
We intend to v e r y
M R . SOUTTER; Thank
15
16
Is a n y b o d y p l a n n i n g to?
iden-
shortly.
13
14
Surely.
Are those amendments
recall.
11
12
'73,
to?
A
That's
correct.
Q
W h o was involved
In the p r o c e s s by w h i c h
A m e n d m e n t N o . 1 and H o . 2 came to be a g r e e d upon?
you
involved?
Were
361
235
*
2
3
A
T o the b e s t of my r e c o l l e c t i o n , I w a s
a n d I w a s giving
A m e n d m e n t 1 and
4
I n s t r u c t i o n s for the n e g o t i a t i o n s
I c a n ' t r e m e m b e r b e i n g d i r e c t l y Involved
9
Q
And you negotiated
it with M r . Z a n g a n e h ?
A
That's
Q
Over the course of how m a n y
11
A
P r o b a b l y t h r e e or four m e e t i n g s .
13
14
15
16
17
18
19
20
21
22
23
24
25
negotiated
that a m e n d m e n t .
10
12
in
itself.
And in A m e n d m e n t 3 , I p e r s o n a l l y
8
for
2.
the n e g o t i a t i o n ,
7
involved
correct.
meetings?
Q
B o t h here and in Iran?
A
I b e l i e v e they w e r e a l l h e r e .
Q
A n d t o your k n o w l e d g e , w h o w o u l d
have
n e g o t i a t e d on b o t h 3 i d e s , B e l l ' s side a n d A i r T a x i ' s
s i d e , A m e n d m e n t H o . 1?
A
I b e l i e v e C h u c k R u d n i n g w a s our
n e g o t i a t o r on 1 .
principal
A n d M r . Z a n g a n e h on A i r T a x i ' s
side.
And I b e l i e v e that C h u c k a l s o n e g o t i a t e d N o . 2 .
Q
And M r . Zanganeh
for—
A
Yes.
Q
—Air
A
Yes.
Q
To your k n o w l e d g e , were there a n y a t t o r n e y s ,
Taxi?
e i t h e r for the c o m p a n y or for M r . Z a n g a n e h involved
in
362
285
1
2
3
4
5
a n y of those negotiations?
A
I don't believe there were a n y a t t o r n e y s .
Q
Your testimony is that you negotiated
A m e n d m e n t N o . 3 by yourself with M r . Zanganeh?
A
M r . R u d n i n g helped. M r . Sylvester was p r e s e n t .
6
7
8
9
10
11
12
13
14
15
16
17
18
B u t , b a s i c a l l y , M r . Rudning is a good cont r a e t u a l w r i t e r , a n d , b a s i c a l l y , he wrote the a m e n d m e n t
He w a s b a s i c a l l y responsible for the words in the
amendments.
I a m sure we d i d .
Q
—amendments ?
A
Ye s , I'm s ure we d id.
Q
And w h o would those discussions have been
w i t h , which
A
George,,
23
24
25
lawyers?
W e l l , I think we had discussions here w i t h
And I think w e a l s o talked with Textron
legal—
Q
George?
A
Galersteln.
Q
Galerstein?
A
I a m not sure w h e t h e r it was Tom Soutter or
21
22
those—
A
19
20
Did you have a n y discussions with your
Q
attorneys about
And w h o in Textron
legal?
John H e n d e r s o n .
Q
W h a t ' s your best recollection as to w h e t h e r
or not you had a n y conversations about A m e n d m e n t N o . 3
363
235
1
w i t h M r . Soutter or w i t h M r . H e n d e r s o n ?
2
3
4
A
I t h i n k w e did h a v e .
Q
With
A
W e l l , o n e of t h e m , and I'm not sure w h i c h
Q
W h a t is the r e l a t i o n s h i p b e t w e e n M r . Soutter
both?
one.
and M r . Henderson?
Legal
Is M r . S o u t t e r in c h a r g e of the
Department?
A
M r . H e n d e r s o n was in charge of the L e g a l
D e p a r t m e n t and he w a s s u c c e e d e d by M r . S o u t t e r .
And
e x a c t l y w h a t date that w a s , I'm not s u r e .
M R . S O U T T E R : W o u l d y o u like m e t o
clarify
that?
M R . MARINACCIO:
M R . SOUTTER:
Yes, please.
I've b e e n in c h a r g e of
the L e g a l D e p a r t m e n t s i n c e June of
M R . MARINACCIO:
Q
'71.
Thank y o u .
D o y o u h a v e a n y r e c o l l e c t i o n , M r . A t k i n s , of
e v e r h a v i n g d i s c u s s e d the m a t t e r of a p a y m e n t to A i r
T a x i w i t h M r . H e n d e r s o n p r i o r to
1971?
A
No, I don't.
Q
M r . A t k i n s , I'm going to m a r k for the
p u r p o s e of this e x a m i n a t i o n , E x h i b i t N o . 6 0 , w h i c h is
the B e l l a g r e e m e n t w i t h Air T a x i in 1959 that w a s outstanding, I believe, until 1964.
23-553 O - 78 - 24
364
250
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
E x h i b i t N o . 6 1 , w h i c h is a n a g r e e m e n t
B e l l and A i r T a x i , e n t e r e d
between
into in 1 9 6 8 .
1
E x h i b i t N o . 6 2 , w h i c h Is M a n u f a c t u r e r sR e p r e s e n t a t i v e A g r e e m e n t entered
into b e t w e e n B e l l and
A i r T a x i on June 1 5 t h , 1 9 7 0 .
E x h i b i t N o . 6 3 , w h i c h is A m e n d m e n t N o . 1 ,
Exhibit No. 63.
E x h i b i t N o . 6 4 , w h i c h is A m e n d m e n t N o . 2 to
the a g r e e m e n t .
A n d E x h i b i t N o . 6 5 , w h i c h is A m e n d m e n t
No.
3 to the a g r e e m e n t .
(The d o c u m e n t s r e f e r r e d to w e r e
marked "Exhibit-60" through "-65"
for i d e n t i f i c a t i o n . )
M R . MARINACCIO:
m i n u t e r e c e s s a t this p o i n t .
(Brief r e c e s s . )
We w i l l take a five
365
235
i
(Brief b r e a k . )
2
THE WITNESS:
3
on sbme p r i o r
Could I m a k e a c o r r e c t i o n
testimony?
4
M F . MARINACCIO:
5
THE WITNESS:
Please do.
D u r i n g the b r e a k I had a
6
d i s c u s s i o n w i t h M r . Soutter and M r . G a l e r s t e i n
7
their p o s s i b l e p a r t i c i p a t i o n in w r i t i n g the a g r e e m e n t .
8
9
about
M r . Soutter a d v i s e s me that he r e a l l y did not
p a r t i c i p a t e in w r i t i n g the a g r e e m e n t , and f i r s t r e v i e w e d
10
the a g r e e m e n t in 1 9 7 5 .
11
a t that time to r e v i e w the a g r e e m e n t and h e d i d .
12
he did not p a r t i c i p a t e
13
14
A n d he had a p a r t i c u l a r
in w r i t i n g
reason
But
the a g r e e m e n t .
S i m i l a r l y , M r . G a l e r s t e i n did n o t p a r t i c i p a t e
in w r i t i n g the a g r e e m e n t .
15
T h e a g r e e m e n t w a s b a s i c a l l y w r i t t e n by m y s e l f ,
16
as a c o n t r i b u t o r
17
c o n t r a c t s man on i t , and m a y b e somebody in h i s d e p a r t m e n t
18
a s s i s t e d him in w r i t i n g the a g r e e m e n t .
19
that c l e a r .
20
M R . MARINACCIO:
21
clarification.
22
BY M R . M A R I N A C C I O
23
24
25
to i t , R u d n i n g p r o b a b l y b e i n g
Q
the
I wanted
Appreciate
And J u s t so I u n d e r s t a n d your
to g e t
your
testimony:
W h a t is your b e s t r e c o l l e c t i o n as to, not o n l y w i t h
respect
to the w r i t i n g of the a g r e e m e n t , b u t the p a r t i c i p a t i o n
in
366
250
12/02
1
a n y m a n n e r and the d i s c u s s i o n s you m a y h a v e
2
A
Yes.
3
Q
—with
had—
our c o u n s e l here or c o u n s e l in
4
P r o v i d e n c e w i t h r e s p e c t to the n e g o t i a t i o n s of the
5
agreement?
A
6
W e l l , after talking to c o u n s e l , I f e e l that I
7
b a s i c a l l y had c o n v e r s a t i o n s w i t h M r . M i l l e r a b o u t
8
road a l o n g w h i c h I intended to proceed
9
in the
the
negotiations
I f e e l that I p r o b a b l y s o l e l y made
the
10
d e c i s i o n on the a m o u n t of m o n e y that w a s paid under
11
agreement.
12
the
I think that I had g u i d e l i n e s that I w a s
13
o p e r a t i n g u n d e r , and I made a s e t t l e m e n t w i t h i n
14
guidelines.
15
those
A n d then I'm sure that a f t e r it was a l l
over,
16
I had a d i s c u s s i o n w i t h M r . M i l l e r a b o u t the a g r e e m e n t
17
itself and that we had c o n s u m m a t e d for
18
Q
$2,950,000.
N o w , y o u p r e f a c e d your s t a t e m e n t b y
saying,
19
" A f t e r d i s c u s s i n g this m a t t e r w i t h my c o u n s e l , " and so
20
on—
21
A
Yeah.
22
Q
—which
23
A
Yeah.
24
25
is f i n e for the r e c o r d .
Q
But I'm a s k i n g for your b e s t
A
Uh h u h .
Well—
recollection—
367
250
Q
i
—as
to w h e t h e r or not you
discussed,
2
c o n t e m p o r a n e o u s l y , a t the time y o u w e r e
3
w h e t h e r y o u had a n y d i s c u s s i o n s w i t h either c o u n s e l a b o u t
4
the dollar
A
5
negotiating,
figure?
W e l l , I'm sure I had d i s c u s s i o n s w i t h M r .
6
Soutter at the time that he w a s e x a m i n i n g the a g r e e m e n t
7
in 1 9 7 5 , and that's p r o b a b l y w h a t I o r i g i n a l l y
8
9
Q
figure.
11
A
It w a s
W e l l , I w o u l d a g r e e that they had n o
p a r t i c i p a t i o n in those
13
14
E x c e p t my q u e s t i o n w a s m o r e p r e c i s e .
c o n t e m p o r a n e o u s w i t h the n e g o t i a t i o n s of the d o l l a r
10
12
remembered.
Q
discussions.
T h e y had no p a r t i c i p a t i o n in the d i s c u s s i o n s
with M r . Zanganeh?
15
A
Or w i t h — t h a t
16
Q
Did y o u
17
A
When I discussed with M r . M i l l e r , M r . Soutter
18
w a s not
19
Q
I—
When I d i s c u s s e d —
discuss—
present.
Did y o u d i s c u s s s e p a r a t e l y in a n y c o n v e r s a t i o n
20
w i t h a n y c o u n s e l of T e x t r o n or a n y other c o u n s e l , the
21
m a t t e r of the n e g o t i a t i o n s and the d o l l a r f i g u r e
22
a fee to A i r T a x i w h i l e n e g o t i a t i o n s w e r e g o i n g on?
23
24
25
A
No, sir.
Q
D u r i n g the period o f , I b e l i e v e y o u
denominated
It e a r l y 1973 u n t i l J u n e
1973?
setting
368
291
12/04
1
2
A
Right.
No, sir.
Q
I h a v e one more d o c u m e n t , M r . A t k i n s , that
3
I'd like to m a r k as E x h i b i t N u m b e r 6 3 - A , a d o c u m e n t
4
that w a s a l s o submitted b y T e x t r o n , and it's a l s o
5
d e n o m i n a t e d as A m e n d m e n t N u m b e r
6
(Exhibit N u m b e r 63-A
w a s m a r k e d for
identification.)
7
8
9
10
11
12
1.
Q
If I m a y , M r . A t k i n s , I'll j u s t c o m e over
here and stand near you so w e can b o t h h a v e a look at
these
documents.
A
Okay.
Q
A n d I'll j u s t a s k y o u to g o through them and
13
v e r i f y , for the p u r p o s e of your t e s t i m o n y , that these are
14
the d o c u m e n t s , if y o u ' l l j u s t d e s c r i b e E x h i b i t
15
60 and w h a t it is for the r e c o r d , then 6 1 and so on?
16
A
Okay.
Number
Exhibit Number 6 0 , a Manufacturer-
17
F o r e i g n S a l e s R e p r e s e n t a t i v e A g r e e m e n t dated 27 A u g u s t
18
1959 b e t w e e n B e l l H e l i c o p t e r C o r p o r a t i o n and A i r T a x i
19
C o m p a n y , e x e c u t e d for A i r T a x i b y M r . E s h o o , e x e c u t e d
20
B e l l H e l i c o p t e r C o r p o r a t i o n by M r . D u c a y e t .
21
22
23
24
25
for
T h e r e are s e v e r a l r i d e r s to this a g r e e m e n t
attached.
In e f f e c t , there are s e v e n r i d e r s
attached,
w h i c h g e n e r a l l y a f f e c t the terms and c o n d i t i o n s of the
basic agreement.
June 2 1 s t , 1 9 6 3 .
A n d the last r i d e r , N u m b e r 7 , is dated
369
292
12/05
Exhibit Number
1
61, Manufacturer's
Foreign
2
Representative Agreement between Bell Helicopter
3
and Air Taxi C o m p a n y , dated April 1st,
4
agreement
5
and
is e x e r c i s e d
for B e l l H e l i c o p t e r
6
'68.
for A i r T a x i by M r .
by E . L .
This
Zanganeh
Farmer.
Exhibit Number 62, Manufacturer's
Foreign
7
Representative Agreement between Bell Helicopter
8
and A i r
9
Air T a x i by M r . Z a n g a n e h and
10
Taxi C o m p a n y , dated June
Company
15th, 1970, executed
for B e l l H e l i c o p t e r b y
for
Mr.
Sylvester.
11
M R . SOUTTER:
With
the e x c e p t i o n
12
of the r i d e r s o n t h e f i r s t a g r e e m e n t , a r e
13
on the
standard
printed
14
the
16
BY M R .
17
same basic
these documents
19
the s i g n a t u r e s
20
signature
21
note
legal form that we use across
They
the
are
world.
going
through
t o v e r i f y , a s b e s t y o u c a n , if y o u
on these d o c u m e n t s ?
that y o u d o n ' t regard
If y o u
can,
see a
as a u t h e n t i c ,
please
it.
A
Fine.
23
Okay.
M R . SOUTTER:
f i r s t b l u s h , if I
agreements
Y e s , they a r e .
M a y I a l s o a s k y o u as y o u ' r e
18
25
some
MARINACCIO
Q
22
those
of
form?
THE WITNESS:
15
24
Company
Exhibit 63 and 6 3 - A , at
may—
MR. MARINACCIO:
Y e s , you
may.
370
335
1
2
3
MR. SOUTTER:
Manufacturer's
No.
1.
Foreign
They are
of
each
5
of
the
6
wording
7
can
8
b e f o r e , or may we
other.
of e a c h
tell us
if
will
11
wanted
be going
14
A
15
16
17
and
18
19
20
21
22
24
25
have
And
into
that
I wondered
of
Just
them at
put
a
those
this
them
the
if
counsel
differences
t o —
matter
look at
retyping
sure whether
substantive
time
Amendment
duplicates
to h a v e b e e n a
is i d e n t i c a l .
a
I think
little
that
later
documents
counsel
on.
and
I
get
just
your
point.
in a n d
then worry about
them?
MARINACCIO:
Q
Pardon
A
Well, you want
then we'll
me?
come back
Sure.
A
Manufacturer's
Taxi.
C. R. Rudning
This
and
Helicopter
by C . R . Rudning
No.
and
Foreign
was
Bell Helicopter
executed
for Bell
Companjr
by
Zanganeh.
63-A, Amendment
Taxi, executed
by Air
documents
Representative
Taxi by M r .
Number
these
them?
amendment
and Air
to d e s c r i b e
1, between
for A i r
Exhibit
me
to
Q
and Air
Bell
not
not
Agreement, Amendment
23
re
appear
to h a v e y o u
BY M R .
1
one am
I for
there are any
identification
13
Agreement
One would
MR. MARINACCIO:
10
to b e e a c h
And
9
12
Representative
in f a c t , h o w e v e r — t h e y
4
others.
—purport
Taxi by M r .
No.
on behalf
1,between
of
Zanganeh.
Bell
371
2 94
i
Amendment Number
2 is E x h i b i t 6 4 .
2
exhibit
3
Agreement between Bell Helicopter
4
It's executed
5
by A . H . Zanganeh.
6
14th,
is a n a m e n d m e n t
to F o r e i g n
Representative
Company and A i r
for Bell by C . R . R u d n i n g and
The
date of
this
agreement
A m e n d m e n t N u m b e r 3 to t h e
Foreign Representative Agreement between Bell
9
C o m p a n y and Air
and
dated
June 2 9 t h ,
Q
Thank
13
14
these agreements
16
18
A
Sure.
Q
—get
obligations
21
22
Helicopter
for B e l l b y C . R .
And
is
l i k e to g o t h r o u g h e a c h o n e
of
you.
and—
your
testimony with respect
in e a c h o n e of t h e s e
to
to
agreements.
In t h e E x h i b i t N u m b e r 6 0 , w h i c h
and
23
24
25
it
last r i d e r , r-i-d-e-r,,is
the
commissions
is
the
o r i g i n a l a g r e e m e n t b e t w e e n B e l l a n d A i r T a x i , of
1 9 6 9 , the
Rudning
this a g r e e m e n t
of t h e p a r t i e s w i t h r e s p e c t
that are contained
19
20
October
1973.
If I m a y , I'd
15
17
Taxi, executed
for Air T a x i by M r . Z a n g a n e h .
12
is
Taxi
Manufacturer's
8
11
Taxi.
for Air
'72.
7
10
This
dated
August,
27 A u g u s t
1959,
provides—
M R . SOUTTER:
Correct
MR. MARINACCIO:
M R . SOUTTER:
that
It s a y s
That
is
date?
"27 A u g u s t
the d a t e
of
1959
the
372
335
1
rider?
2
3
MR. MARINACCIO:
Rider Number
7 o n the d o c u m e n t .
M R . SOUTTER:
4
5
agreement
of
'59.
The rider
6
pointing
8
BY M R .
9
that o u t .
Q
and
that—
to a n
itself has a different
I appreciate
You're right, exactly
The Rider
the R i d e r
is A i r
became
s t a t e s as
"Sales
Which
effective
right.
12 J u n e
1963,
Representative—"
"—acknowledges
has no obligations w h a t s o e v e r
and agrees
that
Manufacturer
to p a y
commissions
15
to S a l e s R e p r e s e n t a t i v e o n a n y s a l e w h i c h
16
from:
19
20
21
22
23
24
25
your
Taxi.
14
18
date.
follows:
13
17
of
MARINACCIO
11
12
Would
is the d a t e
I think that's
MR. MARINACCIO:
7
10
That
(1)
through
An order
Che United
(2)
An
Government
pursuant
similar
So
order
placed by a foreign
States
Government,
government
or
placed b y the U n i t e d
for d e l i v e r y
to a f o r e i g n
results
States
government
to t h e F o r e i g n A s s i s t a n c e A c t o r
United
States Government
that under
on a sale f r o m g o v e r n m e n t
other
programs."
this a g r e e m e n t at
that
time,
to g o v e r n m e n t , a c o m m i s s i o n
Air Taxi would have been prohibited
by
this a g r e e m e n t ,
to
is
373
335
1
that not
correct?
2
A
I'd
like
3
Q
Sure.
A
I would
(Short
4
5
6
to r e a d
that
pause.)
agree with your
Thank you.
I now refer you
8
61, which was
9
a n d A i r T a x i in 1 9 6 8 , a n d
10
of
the a g r e e m e n t e n t e r e d
the p r o v i s i o n s
11
to E x h i b i t
into b e t w e e n
the a g r e e m e n t p r o v i d e s
"Bell w i l l pay fair c o m m i s s i o n s
negotiated
13
b y or b y d i r e c t i o n of
14
Government
w h e r e a listed
And
16
is n o p r o h i b i t i o n
17
government sales but
18
negotiated.
19
21
so o n .
It a p p e a r s
product
the U n i t e d
is
delivered
States
That's
Q
Is t h a t
A
That's
on
there
government-tobe
correct.
correct?
correct.
M r . Marinaccio, may
please ?
25
one
to b e
that such commission w i l l
M R . SOUTTER:
24
Bell
in
to m e t h a t in t h i s a g r e e m e n t
on commissions
A
22
Number
or—"
15
20
of
that:
12
23
interpretation
agreement.
Q
7
It.
MR. MARINACCIO:
MR. SOUTTER:
Yes,
Thank
sir.
you.
I,
374
297
12/10
MR. MARINACCIO:
1
2
Q
Thank
Exhibit Number 62, which
you.
is a n
agreement
3
between Bell and Air Taxi dated
4
15th, 1970, I believe
5
on government-to-government
sales
6
subject
it's c o n s i s t e n t w i t h
7
identical
t h a t the a b i l i t y
to n e g o t i a t i o n , a n d
to t h e 1 9 6 8
A
That
9
Q
Thank you.
10
of J a n u a r y
12
it m a y c o m e u p l a t e r , t h i s
is E x h i b i t
MR. MARINACCIO:
M R . SOUTTER:
17
Q
With respect
Amendment Number
19
and A m e n d m e n t
21
22
23
24
25
Thank
"—a
think
you.
I appreciate
1 to the a g r e e m e n t
Number
1 provides
your
63, which
commission
of J u n e 1 5 t h ,
1970,
that:
Representative—"
of 2 . 5 % of t h e v a l u e o f
from
the U . S .
the p u r c h a s e a n d d e l i v e r y of
resulting
is
in p e r t i n e n t p a r t
Taxi.
contract Bell receives
for
I
63.
to E x h i b i t N u m b e r
" B e l l w i l l p a y to t h e
Meaning Air
part—
out.
18
20
agreemen
Yes.
MR. MARINACCIO:
that
1 to t h e
in p e r t i n e n t
14
pointing
still
or
Counsel, because
13
16
to A i r T a x i Is
Amendment Number
M R . SOUTTER:
15
commissiys:
correct.
15th, 1970, provides
11
to p a y
June
agreement?
8
is
6 / 1 5 / 1 9 7 0 , that's
from a contract between
any
Government
helicopters
the
U.S.
375
335
i
G o v e r n m e n t and
2
And
3
the I m p e r i a l
I'll ask you
if A m e n d m e n t N u m b e r
final controlling
5
approximately
6
whether or
7
have been approximately
8
9
10
11
A
the c o m m i s s i o n u n d e r
of the v a l u e
As
that a commission
15
value
for s u b s e q u e n t d e l i v e r y
the
U.S.
to I r a n , it
provides
of t w o a n d a h a l f p e r c e n t o f
of the h e l i c o p t e r s w o u l d
Q
And
the
be p a i d , helicopters
24
25
in a n o r m a l
is A m e n d m e n t
Number
that we've
as
things
contract.
B the provision
have been controlling with respect
the h e l i c o p t e r s
23
cent
Imperial
included
22
million?
the
f r o m s p a r e p a r t s , t e c h n i c a l d a t a , or
two
would
In p a r a g r a p h A
that could be
would
Iran,
two and a h a l f per
distinguished
18
21
of
to a c o n t r a c t b e t w e e n B e l l a n d
14
20
t i m e s 2 . 5 % , or $ 1 2 . 5
of
to
Government.
Government
19
the
this a g r e e m e n t
of a n y c o n t r a c t b e t w e e n B e l l a n d
13
17
five
and
to t h e s a l e s
W e l l , this a g r e e m e n t p r o v i d e s
12
16
in e f f e c t , o r w a s
in s a l e s of h e l i c o p t e r s
that Bell w i l l pay a c o m m i s s i o n
Iranian
Government."
is n o t c o r r e c t ,
document with respect
500 m i l l i o n
not
if t h a t
1 had been
4
Iranian
that
to the sale
been discussing
for
the
of
last
days?
A
Yes,
sir.
Q
Would
A
Yes,
Q
And
Provision Number
B be
the
one?
sir.
if t h a t A m e n d m e n t N u m b e r
1 had
remained
376
335
1
controlling
2
h a v e b e e n 2.57 0 o f w h a t d o l l a r
3
approximate
4
commission
6
spare
dollar
figure
W e l l , it w o u l d b e
were
8
v a l u e of t h o s e
in t h a t c o n t r a c t .
9
Q
items
dollar v a l u e of
11
hundred m i l l i o n , less
12
twenty-five
13
14
A
16
17
18
prefer
to g e t
25
Would
the
Amendment
on it.
of
My
Number
less
items
the
the
that
dollar
should
of
the
it h a v e b e e n a
than a hundred
million, fifty
millioJi
million?
not speculate.
I would
figure.
M R . SOUTTER:
1 is d a t e d —
impression was
Mr. Atkins,
I thought
that
it w o u l d
this
there was a
have been
date
April
197—
21
24
items?
I probably
20
23
I don't know what
m i l l i o n , ten m i l l i o n , five
19
22
the $500 m i l l i o n
were.
those
15
an
approximate
C a n y o u g i v e me a n a p p r o x i m a t i o n
10
would
envisaged?
p a r t s , t e c h n i c a l d a t a , the s u p p o r t i n g
7
that
f i g u r e , c a n y o u g i v e us
so w e c a n g e t t h e
that that document
A
5
t h r o u g h o u t , the c o m m i s s i o n u n d e r
THE WITNESS:
Two.
M R . SOUTTER:
— 2 .
I believe you testified
scope
of the p r o g r a m
than what
states
in A p r i l o f
it d e v e l o p e d
to b e a t
t h a t the a m e n d m e n t
April 1, '72.
yesterday
that
'72 w a s c o n s i d e r a b l y
the e n d .
Paragraph
shall become effective
I just wondered
the
i f the m a t h e m a t i c s
less
E
on
then
get
377
335
1
to b e a s h i g h a f i g u r e a s h a s b e e n
2
THE WITNESS:
3
m a d e on the b a s i s
4
the c o n t r a c t .
suggested?
W e l l , the a m e n d m e n t
that we wanted
to l i m i t l i a b i l i t y
It w a s a k n o w n f a c t
that commisr.ions
5
Iran were running much higher
6
cent at
7
p u t a l i m i t on the m a x i m u m c o m m i s s i o n w e w o u l d
have
8
pay, and
into.
the t i m e .
that's why
9
d e t e r m i n e d , and
this a g r e e m e n t was entered
11
determined
12
the v a l u e o f
at that
And
the o t h e r
this amendment was
14
which would
15
that w a s the r e a s o n
16
BY M R .
thing
that we wanted
over a long number
for r e l a t i n g
I appreciate
minutes away from
19
it i f , f o r
20
could
21
helicopter
22
discussing?
to
been
to d o
with
items
of y e a r s , a n d
it o n l y
to
helicopters.
that c l a r i f i c a t i o n .
the luncheon b r e a k .
the r e c o r d , d u r i n g
give m e , for
sales minus
A
Yes.
Q
And
the
spare parts
I realize
We are
I would
of t h e
to do s o .
you
final
that you have
that y o u may w a n t to
ten
appreciate
luncheon break
the r e c o r d , the v a l u e
t h a t , and you h a v e e v e r y r i g h t
to
MARINACCIO
Q
24
per
been
t h e p r o g r a m h a d not
to t a k e o u t a l l t h e s u p p o r t i n g
continue
18
23
in
point.
13
17
on
it was desirable
N o w , t h e n u m b e r of a i r c r a f t h a d n o t
10
25
than two and a h a l l
And we felt that
was
been
qualify
But I wish
to
378
335
those
numbers
2
A
Yes,
3
Q
Refer
1
place
4
Amendment Number
5
attention
6
in the
record.
okay.
to E x h i b i t N u m b e r
2 to t h e a g r e e m e n t , a n d
to t h e p e r t i n e n t
"As p r o v i d e d
7
Bell will pay
8
commission
direct
of 1 p e r c e n t o f
l i s t e d p r o d u c t or s e r v i c e
any contract Bell receives
11
Government."
follows:
a
t h e p r i c e of
sold by Bell
from the
I ' l l a s k y o u to r e v i e w
your
hereof,
to the R e p r e s e n t a t i v e
10
And
is
part w h i c h reads as
in P a r a g r a p h D
9
12
64, which
any
under
U.S.
this d o c u m e n t
and
13
a s k y o u if i t d o e s n o t r e f l e c t
14
Number
15
d o w n f r o m 2 . 5 p e r c e n t of t h e s a l e o f h e l i c o p t e r s
to
16
1 p e r c e n t of t h e s a l e o f h e l i c o p t e r s ?
have
17
that discussion after
18
the g r o s s a m o u n t of
19
the c o m m i s s i o n w o u l d h a v e
20
that between
Amendment
1 and A m e n d m e n t N u m b e r 2 , the c o m m i s s i o n had
A
And we'll
the l u n c h e o n b r e a k w i t h r e s p e c t
the f i g u r e s a s
to w h a t
the v a l u e
W e l l , this a m e n d m e n t was
entered
into at
time
22
d e t e r m i n e d , a n d a l s o tta t it h a d b e e n d e t e r m i n e d
23
probably would be a n F M S
25
that the size of the p r o g r a m had b e e n f a i r l y
of
the
well
that
sale.
A n d w e w e n t b a c k to the r e p r e s e n t a t i v e
took the p o s i t i o n
to
been.
21
24
gone
t h a t , In l i g h t o f t h e s i z e of
the
and
it
379
335
1
p r o g r a m , that w e desired
to r e n e g o t i a t e
the
contract
2
and establish a commission which would
3
amount and w h i c h could be better supported
as a
4
and reasonable
rendered.
5
6
7
8
10
13
14
15
17
18
Which was
A
Right.
Q
And was
about
what
the s e r v i c e s
1 p e r c e n t i n the
Q
1 per cent of
This was
A
Spare
Q
—spare
A
Yes.
Q
20
21
N o w , over
the total p r o g r a m ,
p a r t s , et
the
program
including
service-
cetera?
luncheon break which we
total dollar value
the 5 0 0
of
the f i g u r e
that w o u l d be?
are
on
I assume
million?
T h a t w o u l d b e 1 per c e n t of 500
Q
W h i c h Is 5 m i l l i o n ?
A
Yes.
Q
Thank
million.
you.
F i n a l l y , b e f o r e w e b r e a k , I'd
your attention
spare
parts.
A
22
23
document?
1 p e r c e n t of the t o t a l
to t a k e , c a n y o u p l e a s e g i v e m e
be
fair
that still 1 per c e n t minus
No.
the
lessev
cetera?
A
that would
19
24
for
the sales , p r i c e of the h e l i c o p t e r ,
12
16
Q
parts, service, et
9
11
commission
be of a
to E x h i b i t N u m b e r
like
to
6 5 , w h i c h , and
direct
I'll
25
a s k y o u If t h i s
23-553 O - 78 - 25
is n o t
the o p e r a t i v e d o c u m e n t
under
380
335
which
the $2.9 m i l l i o n p a y m e n t w a s
A
It
Q
And
made?
is.
it p r o v i d e s
in p e r t i n e n t p a r t
that:
" A i r T a x i a g r e e s , in c o n s i d e r a t i o n
payments
specified
in p a r a g r a p h A , w h i c h
$ 2 . 9 m i l l i o n , to c o n t i n u e
and
support
Helicopter
to p r o v i d e
to B e l l H e l i c o p t e r
International
of contracts
to t h e
for supplies and
effective
through
performed.
for d e l i v e r y
of 4 8 9 h e l i c o p t e r s
A , that
C o m p a n y , is r e d u c e d
specified
to I r a n
for
in
is to s a y , the $ 2 . 9 m i l l i o n , w i l l
t h a n the 4 8 9 w h i c h is n o t d e l i v e r e d
Is that c o r r e c t and
be
less
to
is t h a t t h e
by
any
paragraph
reduced by $3,000 for each helicopter
Iran."
agreement
negotiated?
A
That'8
Q
A n d 8o the commission
correct.
M R . SOUTTER:
until
the p r e s e n t p r o g r a m , w h i c h
r e a s o n , the c o m p e n s a t i o n
c o p y for a
the
In the event
Bell Helicopter
which you
Bell
performance
services
all such contracts are completely
calls
total
C o m p a n y and
in I r a n , i n
executed prior
the
assistance
date h e r e o f , directly w i t h Iran and
U.S. Government
of
moment?
fee
to—
Can I just
look at
the
381
304
12/17
1
MR. MARINACCIO:
2
And
so the c o m m i s s i o n
3
f i n a l c o m m i s s i o n fee worked
4
p a y m e n t of $2.9 m i l l i o n
5
that was not
6
A
7
'
Q
Yes.
fee
to A i r T a x i ,
o u t , was on the basis of a
less $3,000 for a n y
helicopter
delivered?
W e l l , of c o u r s e , w e d i d n ' t c o n s i d e r
a commission
Q
All
9
A
We considered
10
between
11
under
12
agreement we settled all claims
13
any
14
Industrial
right.
two p a r t i e s .
this a s e t t l e m e n t
of a
A n d A i r T a x i had c e r t a i n
their m a n u f a c t u r e r ' s
a g r e e m e n t , and
that
s a l e w h i c h w e h a d m a d e or w o u l d
in
make
Q
to h a v e a n i n c e n t i v e as
17
representative
to s e e
18
copters were
19
A
Oh, yes,
sure.
Q
And
is b e c a u s e b y v i r t u e of
24
25
Is it n o t
sold
true that under
to it t h a t a l l o f
to t h e G o v e r n m e n t o f
that
to $ 1 . 5 m i l l i o n , a n d
the 4 8 9
$ 3 , 0 0 0 , up
to a
get an
t o t a l of $ 2 . 9 m i l l i o n
heli-
Iran?
the
the
for e v e r y ship
over z e r o , they would
Air
manufacturer's
if z e r o s h i p s a r e d e l i v e r e d , A i r T a x i w o u l d
delivered
Military
this a g r e e m e n t
l a n g u a g e o f t h e a g r e e m e n t , if y o u w o r k o u t
entitled
for
Organization.
Taxi continued
23
rights
this
to the
16
22
contract
they might have
15
21
this
fee.
8
20
the
specific
mathematics
have
that
been
was
additional
if a l l 4 8 9
h e l l c o p t e : :s
382
335
1
were
d e l i v e r e d , Is t h a t n o t
2
A
That's
3
Q
So that at that
correct.
4
that A i r T a x i continued
5
to s e e
6
delivered
7
time, Bell Helicopter
to h a v e a n i n c e n t i v e
to it t h a t a l l of the s h i p s w o u l d b e
to t h e G o v e r n m e n t o f
A
That's
8
9
correct?
continue
sold
correct.
Let's
I'd
l i k e to n o w
t a k e a b r e a k a n d b e b a c k in 4 5
10
THE WITNESS:
11
( W h e r e u p o n , the luncheon recess
t a k e n , to r e c o n v e n e a t 1 : 0 0 o ' c l o c k p . m . , o n
13
February
3,
15
Volume
17
18
19
20
21
22
23
24
25
III.)
was
Friday,
1978.)
(The t r a n s c r i p t
16
break
minutes.
Okay.
12
14
and
Iran?
MR. MARINACCIO:
for l u n c h .
to
felt
is c o n t i n u e d
in
383
335
UNITED
STATES
STAFF
COMMITTEE
SENATE
OF
ON B A N K I N G , HOUSING A N D U R B A N
STAFF INVESTIGATION
RELATING
THE NOMINATION
G. WILLIAM
VOLUME
AFFAIRS
TO
OF
MILLLR
III
KEE, MEYER, STURGESS & ASSOCIATES
Registered Professional Reporters
1102 Oil & Gas Building
Fort Worth, Texas 76102
Vincent G. Meyer
Geylord Sturgeee
Larry Shelter
Charles L. Kee
Room 410
Federal Courthouse
Fort Worth, Texas
Kathy Sam
Bar! Wells
Telephone: 817 336-3042
384
335
INDEX - VOLUME
1
2
3
AFTERNOON
$2.9 MILLION PAYMENT TO AIR TAXI
JAMES F. ATKINS
4
6
EVENING
3,
1978
308
(Continued.)
Examination
Examination
Examination
Examination
Examination
Examination
5
7
III
SESSION, FRIDAY, FEBRUARY
-
308
Marinaccio
Collins
Freed
Collins
Doherty
Marinaccio
308
328
357
374
376
411
428
RECESS
8
9
10
NUMBER
11
66
EXHIBITS
M e m o of T e x t r o n
to
IDENTIFIED
file
Re $2.9 million payment
12
310
67
Letter, 6/16/72
331
68
Amendment No. 1
333
69
Amendment No. 2
333
70
Cable, 7/26/72
343
71
Cable, 8/9/72
343
72
Cable, 8/16/72
343
73
Cable, 5/22/72
351
20
74
Arthur Young
21
75
Memo, 7/30/73
13
14
15
16
17
18
19
submission
on b i l l
367
369
22
INFORMATION TO BE
23
24
Page
25
FURNISHED
3 7 4 , line 20 - C o r r e c t v e r s i o n of A m e n d m e n t N o .
1.
385
308
FRIDAY, FEBRUARY
1
AFTERNOON
2
3,
1978
SESSION
( W h e r e u p o n , the p r o c e e d i n g s
3
1:00 o'clock p . m . , pursuant
4
to the
were resumed
luncheon
at
recess.)
JAMES F. ATKINS
5
6
resumed
7
to-wlt:
the w i t n e s s
stand and
8
testified
EXAMINATION
9
BY M R .
10
asked
12
ing
(Cont inued.)
M r . Atkins, before we
you
to, over
t o o k the b r e a k , I had
the b r e a k , c o m p i l e
to A m e n d m e n t s N u m b e r
1 , 2 and
some
3.
A
Yes, I do.
14
Q
Could
15
A
The original U.S. Government
16
In J u n e
of
'73; there w e r e
17
o n the C o b r a s a n d
18
of
those
Q
of
one on
2 . 5 p e r c e n t of $ 3 9 0
The
Issued
one
total
contracts
$390,762,000.
for a 2.5 per c e n t c o m m i s s i o n
A
In t h o s e
So, under Amendment Number
22
25
record?
contracts
the 2 1 4 s .
Included
23
24
into the
those?
$436,243,000.
The helicopters
had a v a l u e
them
relat-
two s e p a r a t e c o n t r a c t s ,
the second
two c o n t r a c t s w a s
19
21
you please read
figures
Do you have
13
20
follows
MARINACCIO
Q
11
further as
That's
1, which
provided
to A i r T a x i , it w o u l d
be
million?
correct.
MR. MARINACCIO:
Could we compute
that
386
309
1
figure
right
now?
2
MR. GALERSTEIN:
Do you want
3
M R . MARINACCIO:
Yes.
4
ME. GALERSTEIN:
8T7-679-0r5-0.
5
8,769,050.
That's
6
3-9-0-7-6-2.
7
A
two and a half
N o w , of c o u r s e , w h e n
8
negotiated
9
number of a i r c r a f t would
10
value
11
BY M R .
12
of
at
14
of t h e
15
that
Would
be procured
A
17
September
Q
or w h a t the
final
be.
the f e e w o u l d
be
approximation
in the f i n a l
sale
commission
We just d i d n ' t know how many h e l i c o p t e r s
And
of
that probably wasn't determined
So, at
thac
t i m e , y o u then had no
in y o u r
mind—>
A
That's
right.
21
Q
-—that would
22
A
Yes.
We w e r e
be
payable
exposure because we recognized
24
being paid
somewhere between
perhaps.
to A i r
specific
Taxi?
trying to put a l i m i t on
23
per c e n t ,
they
until
'72.
20
the
helicopters?
would b u y .
25
1 was
no idea w h a t
you have any reasonable
t i m e of w h a t
16
18
the A m e n d m e n t
' 7 2 , w e had
those contracts would
times
MARINACCIO
Q
13
19
in A p r i l of
per c e n t
it?
that dealers
five and
our
in I r a n
seven and a
were
half
387
310
Q
1
2
N o w , on A m e n d m e n t
1 per cent c o m m i s s i o n
to A i r
3
A
That would
4
Q
—and
5
A
So that w o u l d
6
Q
on
be$4 million
362.
362,$4.36 million.
7
course, under Amendment Number
was
And
3 the f i n a l
t h e n , of
commission
million?
9
A
Right.
10
Q
I'd
11
record, which
12
for T e x t r o n , a m e m o r a n d u m
13
of f e e s p a i d
like
to m a r k E x h i b i t N u m b e r
is a d o c u m e n t w h i c h w a s
to f o r e i g n
66 f o r
tendered by
to the f i l e , R e :
the
counsel
Commissions
representatives.
( E x h i b i t N u m b e r 66
was marked for
identification.)
14
15
MR. GALERSTEIN:
16
17
interrupt.
18
c e n t of 3 9 0 s o m e t h i n g
I t is $ 9 , 7 6 9 , 0 5 0
19
20
21
million.
the—•
8
$2.9
for
Taxi—
be on $436
based
$4 m i l l i o n
Number 2 , which provided
BY M R .
for
Excuse me.
Let
the two and a h a l f
per
million.
MR. MARINACCIO:
I t is 9
million?
MR. GALERSTEIN:
9 million
7-6-9-0-5-0.
MARINACCIO
22
Q
23
say was
24
confidential attorney work product document, an
25
inquiry related
me
I'm referring
tendered
to E x h i b i t N u m b e r r
by T e x t r o n and purports
to, a t l e a s t
66, which
to be a
in s u b s t a n t i a l
part,
I
privilege)
internal
this
388
311
1
particular
2
states
p a y m e n t of $2.9 m i l l i o n .
in p e r t i n e n t p a r t
"On June
3
4
I believe
5
6
that would
be
1975.
I—"
"I" m e a n i n g M r . S o u t e r , c o u n s e l
"—met
8
Rudning at Bell Helicopter
9
payment
And
then
13
for
Textron.
w i t h J i m A t k i n s , Ed F a r m e r a n d
Iran.
of c o m m i s s i o n s
The following
And
14
"In
of p a r a g r a p h s
1972, indications
of
As
17
agreement with Air Taxi was amended
18
times.
19
partly
20
commissions
21
for
22
23
The reason
to B e l l ' s
for
and partly
the a m e n d m e n t s
to
were
excessive
to s e r v e a s a
performance by Air
your understanding
25
of w h a t
'carrot'
Taxi."
the p a y m e n t s w e r e
A
What
is t h e d a t e h e ' s
Q
I ' l l a s k y o u to r e v i e w
the
three
I'll ask you whether or not that
24
direct
attention.
to b e d e v e l o p e d ,
to r e d u c e a n y e x p o s u r e
improved
summary.
potential
business
began
learned."
follows:
16
in I r a n c a m e
in
in
that I w i s h to
to is a s
15
this business
the
by Bell Helicopter
the one p a r a g r a p h
your particular attention
Chuck
to d i s c u s s
summarizes what we
there are a number
12
document
that:
7
11
the
18th—"
" — B o b Ames and
10
And
characterizes
for?
talking about
there?
the d o c u m e n t and
read
389
312
1
it.
It s a y s , " I n 1 9 7 2 , i n d i c a t i o n s
2
et c e t e r a .
3
it the
4
exposure
5
a
"The r e a s o n for
the a m e n d m e n t s — "
three a m e n d m e n t s , " — w e r e
partly
to e x c e s s i v e c o m m i s s i o n s a n d
' c a r r o t ' for
improved
Would
6
A
7
of p o t e n t i a l
you agree with
I would
8
limit our e x p o s u r e
9
particularly
comment
partly
by Air
commissions.
to f e e l t h a t h e w a s g o i n g
12
to e n c o u r a g e h i m
13
much assistance
in o b t a i n i n g
14
I think we're
And
them
to r e c e i v e a
fair
to g i v e u s
the f i n a l
as
contract
1 here.
2 we reduced
commissions
t h e n , of c o u r s e , in A m e n d m e n t
So I don't
as A m e n d m e n t
21
limitation
22
would
23
feeling
24
compensation
25
3 we
reduced
further.
19
20
repre-
further.
17
18
to
I'm
now.
the
sentative
16
trying
And
1
c o m m i s s i o n for his services
N o w , in A m e n d m e n t
as
that?
11
15
take
any
Taxi."
secondly, I think we wanted
talking Amendment
I
to s e r v e
that, yes, we were
on excessive
as he could
and
to r e d u c e
talking about Amendment Number
And
10
performance
business,'
1 had.
And
for his
1 was
the same
there
the c o m m i s s i o n
it w a s a l s o t h e r e
that he was going
So you
they had
Amendment
o n the a m o u n t of
receive.
Q
think
to r e c e i v e a
purposes
to s e t a
that
the
to g i v e h i m
reasonable
services.
think
that
this p a r a g r a p h
really
agent
some
390
335
particularly
author
of
the
A
But
this p a r t i c u l a r l y
though
it d o e s
A
Yes, I believe
Q
And
three
say
refers
it is t r u e
that under Amendment Number
probably
the h i g h e s t
1,
figure
amendments?
A
That's
Q
I'd a l s o
t h a t p o r t i o n of
correct.
like
to d i r e c t y o u r a t t e n t i o n
this same d o c u m e n t w h i c h
talks
to d i s c u s s
A
In t h i s t i m e
Q
Y e s , in
this $2.9 m i l l i o n
A
Yes.
Mr.
payment?
frame?
1975.
I believe you testified
contemporaneously
Jim
this.
the o n l y m e e t i n g y o u h a d w i t h M r . A m e s a n d
Soutter where you discussed
to
about,
1 8 t h , Bob A m e s and M r . Soutter m e e t i n g w i t h
A t k i n s , Ed F a r m e r a n d C h u c k R u d n i n g
that
to A m e n d m e n t
"amendments"?
it—
the 2 . 5 per c e n t f i g u r e w a s
on June
the
document.
1, even
of t h e
I know you w e r e not
Yeah.
Q
Number
talks a b o u t — a n d
with
the
this morning
negotiation—
Q
—of
A
Yeah.
the payment
that you did
Q
—discuss
A
W i t h M r . S o u t t e r , that's
the matter
not—>
with—
right.
that
Was
391
314
1
2
3
4
that
Q
—with
Mr.
A
That's
right.
Soutter.
Q
Y o u came b a c k and clarified
the record
point.
A
5
That's
right.
W e l l , in
6
preparing
the
'75 t i m e f r a m e h e r e w h e n
7
was
8
o f t h e r e c o r d s , I ' m n o t a w a r e of w h e t h e r
9
d i s c u s s i o n or w h e t h e r
this m e m o r a n d u m and d o i n g his
10
that time.
11
guess.
12
them everything
And during
that
time I'm sure w e
that was had at
14
15
remember
16
and what everybody else
t h a t the p a r t i e s
A
for
their
They just wanted
19
that Tom was d o i n g , and he needed
thing as
20
Q
21
A
I don't remember
22
Q
—during
23
A
No.
24
Q
Since your counsel
one
at
give
of
the
so
you
said
on?
a factual presentation
the Iranian commission
he was
to
talked a b o u t , what you
there said and
Do you recall
tried
that m e e t i n g , w h a t do
18
since
there was
examination.
Is y o u r r e c o l l e c t i o n
discussion
17
examination
here for a c o u p l e of d a y s , I
they needed
And what
Tom
there were several discussions
But they were
Q
13
25
on
of
it m i g h t a f f e c t s o m e
some
if t h e w o r d
work
background.
"carrot" was
used—
that.
the—
present at
is h e r e , M r . S o u t t e r , a n d
the m e e t i n g , I w o u l d
be happy
to
392
315
1
give him an opportunity
2
wishes
M R . SOUTTER:
4
characterization
5
I cannot recall anybody
6
a memorandum which
7
h e r e , I think you said
8
is
of " c a r r o t "
I think
is p r o b a b l y m y
saying
I did
that
that.
That
prepare after
it w a s o n J u n e
he
subject.
the
verbiage.
is a d r a f t
of
the m e e t i n g
down
1 8 , of 1 9 7 5 ;
that
correct.
That must have been, I believe, probably
9
impression
from the
my
time.
M r . A t k i n s has just now sort of refreshed
11
12
m e m o r y as
13
characterize his
f e e l i n g as p e r h a p s
14
oriented
the first a m e n d m e n t
15
But I don't
16
to the w h o l e m e e t i n g on t h a t , and I w o u l d
but I'll answer
towards
think
into
the q u e s t i o n i n g
I didn't quite understand
20
agree or not agree
21
f i r s t a m e n d m e n t , or w a s
it y o u r
22
really
talked a b o u t a l l
three
24
entire
factual situation
25
believe
that
your
more
to a l l
further
that
three.
to
add,
memorandum.
this p o i n t .
last s t a t e m e n t .
this p a r a g r a p h
M R . SOUTTER:
my
not
It's not my intent
e n the m e m o a t
19
23
than
I have anything else
MR. MARINACCIO:
get
that was
q u e s t i o n s , if y o u w i s h , o n
17
18
comment
t o m a k e f o r t h e r e c o r d , If a n y , o n t h i s
3
10
to m a k e w h a t e v e r
feeling
focused
Did
on
that the
to
But
you
the
meeting
amendments?
Well, we discussed
in the c o u r s e o f
that, and
the
I
it w a s a t l e a s t m o s t o f the d a y a n d m a y b e p a r t s
of
393
316
1
two d a y s , d o w n
here.
I am reminded
2
n o w , in the c o u r s e
of
these
3
d i s c u s s i o n s , that that type of p h r a s e o l o g y m a y w e l l
4
been more applicable
5
being described
6
it w o u l d
8
than as
have been applicable
I wrote
that
to a l l
three.
MR. MARINACCIO:
recollection
is p r e s e n t l y
President
for
Mr. Ames
MR. MARINACCIO:
Atkins
13
a d a y , day and a h a l f , two d a y s , on this
and F a r m e r and R u d n i n g m e t for
M R . SOUTTER:
14
is a G r o u p
Vice
and
the b e t t e r
part
of
subject?
Well, closer
to a
day
yes.
MR. MARINACCIO:
16
17
at
18
d o c u m e n t s , or w a s
the d i s c u s s i o n o f w h e t h e r
19
participants?
20
dum are
22
y o u c o r r e c t m e if I ' m w r o n g .
tabs w h i c h go out
23
documents were produced
24
which were reviewed
25
cover
Attached
to t h a t
to, I think, around
Substantially
i n t h e c o u r s e of o u r
that
any
this just an oral discussion among
21
memorandum.
And do you recall
or not y o u r e v i e w e d
M R . SOUTTER:
your
W h o is M r . A m e s ?
And yourself
12
but,
And
Textron.
11
15
memorandum
All right.
that M r . A m e s —
M R . SOUTTER:
9
10
to t h e f i r s t a m e n d m e n t a s i t w a s
to m e
7
have
the
memoran-
fourteen—
a l l of
those
meeting,
then and copies were a t t a c h e d
to
the
394
317
1
BY M R .
2
3
M r . A t k i n s , did y o u w a n t to add a n y t h i n g
what M r . Soutter has just
A
4
5
MARINACCIO
Q
said?
No, no, I don't
t h i n k I'd c a r e
to a d d
any-
thing.
M R . FREED:
6
7
to
internal
D i d y o u p u t in M r .
i n v e s t i g a t i o n as E x h i b i t N u m b e r
8
MR. GALERSTEIN:
Yes.
9
MR. MARINACCIO:
Y e s , it's
10
numbered
11
BY M R .
66.
M r . A t k i n s , I'd
56, which was
like
to r e f e r b a c k t o
13
Number
14
to t h e D e p a r t m e n t o f the A r m y c o n c e r n i n g h i s
the c o m m u n i c a t i o n
15
A
Uh
huh.
16
Q
Or
the p a y m e n t o f $ 2 . 9
17
In p a r a g r a p h 3 of
18
that
M R . SOUTTER:
I believe.
20
Number
21
the first
22
b e l i e v e , as you k n o w , transmitting
this p a r t i c u l a r
two a m e n d m e n t s .
document—
25
matter of a p a y m e n t
n o t h a v e said $ 2 . 9 m i l l i o n .
to A i r
Taxi.
only
is a n o t h e r
MR. MARINACCIO:
should
Rudning
million.
document
There
Exhibit
fee.
correction,
The $2.9 million didn't come until
3 , and
24
from M r .
Just a minor
19
23
been
MARINACCIO
Q
12
Soutter's
66?
the
That
third
Amendment
transmitted
letter, I
amendment.
is c o r r e c t .
It r e l a t e s
to
the
I
395
318
1
2
3
A
Uh
huh.
Q.
And
In p a r a g r a p h N u m b e r
page 2 , M r . Rudning
"We r e c o g n i z e
4
for
3 of t h i s l e t t e r ,
states in pertinent
that this matter
the p u r p o s e s of the
5
resolved
6
of t h e s u b j e c t c o n t r a c t s , t h e r e f o r e ,
should
the
7
forthcoming amendments
p r o p o s a l s w i l l c o n t a i n a c o m m i s s i o n of
9
per helicopter and a proposed
definitive
clause
$1000
limiting
the c o m m i s s i o n
to t h a t a m o u n t a n d
11
reduction
lesser sum per helicopter
12
do so n e g o t i a t e
13
And
to a
providing
subsequently with Air
I ' l l a s k y o u if t h a t d o e s n ' t
if w e
indicate
at
15
Army was
16
$ 1 0 0 0 p e r h e l i c o p t e r a n d w h i c h , if m y n u m b e r i n g
17
is c o r r e c t , o n t h e s a l e o f 4 8 9 h e l i c o p t e r s , w o u l d
18
$489,000?
19
20
that the p a y m e n t
A
mean
the r e p r e s e n t a t i o n
No.
for
Taxi."
14
this time
be
definltizlng
8
10
to o u r
on
part:
to t h e D e p a r t m e n t o f
that
the
to A i r T a x i w o u l d b e l i m i t e d
That c l a u s e — o r
mathematics
be
that paragraph does
not
that.
21
I had m a d e a d e c i s i o n
that we would
claim
22
$1000 per ship under our U . S . Government c o n t r a c t , and
23
the balance
24
25
profits.
of t h e f e e
And
that we paid would
I had made
be from
that d e c i s i o n going
k n o w i n g w h a t the e v e n t u a l outcome
23-553 O - 78 - 26
to
Bell's
in, without
of the n e g o t i a t i o n
would
396
319
1
be.
2
Q
W h e n did
3
you make that
4
A
5
tive c o m m i s s i o n
this
6
the G o v e r n m e n t of
the c o m m i s s i o n s
8
Bell but
Iran.
t h e y had
to o t h e r
And
did
in the
10
G O I , they r e c o g n i z e d
and
was being closely reviewed
12
payable
about
p a i d o n o t h e r orders,- n o t
to
that Air T a x i was our
a b o u t the f e e s
reasonable
be
Taxi.
fee?
15
something
16
a reasonable
like
17
And
t h e r e was3 a n e x p r e s s i o n
the e x p e n s e s
18
that
19
just arbitrarily
20
something
21
we
22
amount
25
upon
made a decision
the r e p r e s e n t a t i v e
And
so
that was
And
so w e
the U . S . G o v e r n m e n t a
feeling
claim
of $ 5 0 0 , 0 0 0 .
Because
might w e l l have
of m o n e y d u r i n g h i s r e p r e s e n t a t i o n
489 ships.
be
in I r a n w a s g r e a t , I
that we would
that w a s r e p r e s e n t a t i v e
that
maybe
by A i r T a x i would
this d i s c u s s i o n , and
the p o t e n t i a l of t h e p r o g r a m
23
24
incurred
that
is a
fee.
N o w , based
felt
the
representative
that might
A n d w e had d i s c u s s i o n s a b o u t , w e l l , w h a t
14
by
T h e y had b e c o m e c o n c e r n e d
c o u r s e of my d i s c u s s i o n s w i t h
concerned
to A i r
representa-
people.
11
they were
whole time f r a m e , the
situation
7
13
make that decision and w h y
decision?
During
9
you
a thousand
of
thousand dollars
per
that
Bell.
dollars
c l a i m e d in our c o n t r a c t
spent
times
proposal
ship.
And,
to
as
397
320
1
this says, w e agreed
that
2
less
than that, we'd
reduce
if w e
3
more
t h a n t h a t , it w o u l d
4
c la i m .
should
it.
negotiate
not be a matter of
5
N o w , later
6
w a s b e i n g p r o c e s s e d , the G o v e r n m e n t
in t h e p r o g r a m , a s
7
U.S. Government
8
provide
9
to
to r e v i s e
contract
the
contract
of Iran r e q u e s t e d
be p a y a b l e
on FMS
the
to
sales
Iran.
10
Q
When was
A
I'm not sure.
12
happened
13
Government
the d a t e
in 1 9 7 4 , b u t
that?
the n o t i f i c a t i o n
came sometime
14
of
T h e a c t u a l r e v i s i o n of A S P I R
in the J u n e
We w e r e advised
to t h e
'73 t i m e
of t h a t b y
U.S.
frame.
the U . S .
15
and w e withdrew our claim for a thousand
dollars
16
And
in o u r
17
that said, depending upon what was
18
the A S P I R
19
claim.
Based upon
20
claim.
S o , i n e f f e c t , the $ 2 . 9 m i l l i o n
21
has b e e n paid o u t of B e l l p r o f i t s and
22
charged
to a U . S . G o v e r n m e n t c o n t r a c t o r
23
of Iran
in a n y
24
Q
instead
respect
anything
the U . S . G o v e r n m e n t A S P I R ,
that no commissions would
11
25
anything
If w e n e g o t i a t e d
of that w e
inserted a clause
change, we would
have
the change
Government
per
ship.
contract
finally worked
out
t h e r i g h t to m a k e a
on
future
in A S P I R » w e n e v e r m a d e
that w a s
paid
none of it has
to t h e
a
been
Government
way.
Still referring
to a n y d i s c u s s i o n s
to t h i s d o c u m e n t , a n d
that you were
informed
with
of
398
321
2
b e t w e e n T e x t r o n and
2
Department
3
payment would be higher
4
the D e p a r t m e n t
of t h e A r m y e v e r
o f the A r m y , w a s
informed
that
the
the
actual
than $1000 per helicopter
to A i r
Taxi?
5
A
They were actually
furnished with Amendment
6
to the M a n u f a c t u r e r ' s R e p r e s e n t a t i v e A g r e e m e n t as p a r t
7
our compliance w i t h contingent
8
contract.
9
I think you have a letter on
10
Q
Yes, we
11
12
Government
of Iran a b o u t
A
Yes,
14
Q
—to
15
the
that.
to a d i s c u s s i o n w i t h
the
fees—
sir.
Air
When was
Taxi.
that d i s c u s s i o n or
16
c a n y o u p l a c e a d a t e o n it a n d
17
was
discussions,
t e l l us w h o
that
discussion
with?
18
under
of
do.
N o w , you refer
13
19
fee statements
3
A
in t h e
It w a s p r o b a b l y m a y b e o n e o r t w o
'72, early
with MIO, Military
'73 t i m e f r a m e , a n d
Industrial
it w o u l d h a v e
A n d did y o u p e r s o n a l l y a t t e n d
A
I did,
sir.
Q
—with
the
I did,
sir.
Q
And who was
been
Organization.
Q
A
discussions
this
meeting—
MIO?
present at that
meeting?
399
322
1
A
From
Bell?
2
Q
From
Bell.
3
A
I don't really know who was present with
4
I know
5
Rudning was
I was
there and
there;
I w o u l d n ' t be surprised
I'm not s u r e of
Mr.
that.
6
Q
And who was
7
A
General
8
Q
And w h a t did G e n e r a l T o u f a n i a n
there f r o m the G o v e r n m e n t
of
Iran?
Toufanian.
9
that meeting
10
A
Well,
11
Q
—about
13
A
W e l l , he had b e e n v e r y active
14
to e l i m i n a t e
fees and contracts w h i c h his
15
negotiates.
And he understood
16
these discussions
12
if
me.
say
to y o u
at
about—
he—
f e e s or p a y m e n t s
of a n y kind
to A i r
Taxi?
through
in
attempting
Government
the time frame
that Air T a x i w a s our
representative,
17
a n d he w a s i n t e r e s t e d
18
r e a s o n a b l e c o m m i s s i o n for
19
I respect his judgment very greatly, and he advised
that
they b e — t h e y
of
receive only a
their services r e n d e r e d .
And
me
20
that the G o v e r n m e n t of Iran did not intend
to
21
commissions.
t h a t , w e l l , if
22
y o u have a sales o f f i c e , w e l l , you have
23
24
And we
talked about
the f a c t
expenses.
So he s a i d , " W e l l , I ' l l pay the
expenses."
25
Q
Of A i r
Taxi?
pay
reasonable
400
323
A
1
Of your
And
2
so, I guess
3
find out w h a t were
4
standpoint
5
how much
6
their other
that
of
It w a s v e r y d i f f i c u l t
the r e a s o n a b l e
expenses
from
the
to B e l l a s
s o , I think Rudning and
against
Sylvester and
8
9
our p r o g r a m , and we'll claim
supporting
that a m o u n t as a
reasonable
fee and w e ' l l a b s o r b a n y t h i n g else o v e r and a b o v e
11
A n d w e so a d v i s e d
12
of c o u r s e , h a d d i s c u s s i o n s w i t h W a s h i n g t o n
13
d i d n ' t w a n t to p a y a n y f e e s
14
h a v e a p r o b l e m on the p r o g r a m a n d w i t h a half a
15
dollars
16
discussions
the G o v e r n m e n t
of I r a n .
to a g e n t s .
Involved, we just withdrew
and wrote
N o w , at
it o f f
And
then
saying
And
T o u f a n i a n , was he
w h a t y o u ' v e s a i d , that he indicated
21
that Air T a x i was entitled
22
contract
to a b s o r b b y
24
A
25
i n d i c a t i n g , Is It f a i r
contract
discussing
to i n f e r
that—he
Oh, yes.
of I r a n i n t h e
And General Toufanian
that we finally made a settlement with Air
General
from
recognized
to a r e a s o n a b l e p a y m e n t
that might be over and a b o v e w h a t he w a s
the G o v e r n m e n t
to
sales.
that t i m e , w h e n you w e r e
19
than
million
the m a t t e r of fees and p a y m e n t s , c o m m i s s i o n s , w i t h
20
they,
they
rather
that from our
to c o s t o f
that.
18
23
I
in
10
Q
and
business.
j u d g e d , w e l l , they may have spent $500,000
17
to
they were operating a total business
their expenses pertained
And
7
representative.
on
willing
contract?
recognizes
Taxi.
the
401
335
2
2
Q
Did y o u discuss w i t h General T o u f a n i a n
that time what would b e a fair gross payment
A
No, we
Q
—for
A
No.
6
Q
—what
7
A
N o , we did
Q
—what
3
4
5
8
9
might
No, we
11
Q
Did
12
you were
13
commission
services—•
not.
might be a fair ball park figure
its
to h i m w h a t b a l l p a r k
talking about with respect
A
N o , I do not believe
15
Q
Did
already entered
you
tell him at
17
payment
A
I m a y have told h i m
19
Q
What
20
y o u did
21
c o n v e r s a t i o n w a s g o i n g and
22
of 2 . 5 p e r
A
had gone
24
l per cent
25
my recollection
that time that y o u
1 that called
that, I'm not
is y o u r b e s t r e c o l l e c t i o n a s
not
in t e r m s o f h o w t h e f l o w o f
to A m e n d m e n t 2 .
your
for a
that.
sure.
to w h e t h e r
the
recollection?
that by
that time we
And w e probably
t h a t w e had A m e n d m e n t
on
had
cent?
I would guess
23
of a
so.
into A m e n d m e n t Number
18
or d i d
to the p a y m e n t
figure
Taxi?
14
16
for
services?
didn't.
you indicate
to A i r
Taxi—
be—
A i r T a x i to g e t f r o m y o u f o r
A
to A i r
didn't.
a l l o f its
10
at
2 on.
probably
talked about
That's
the b e s t
the
of
402
335
Q
fees and
And when General Toufanian was concerned
payments
from your
to a g e n t s
testimony
fees that would
i n I r a n , is it f a i r t o
to t h e G o v e r n m e n t
the c o n t r a c t a n d n o t n e c e s s a r i l y
paid
W e l l , he r e c o g n i z e d
responsibility
kind
And
that would
be
that w e had a
to A i r T a x i t h a t w e h a d
I'm certain he knew
in l e g a l
legal
t o f u l f i l l in
that we had
to m a k e
some
some
problems.
Q
Y o u say you're certain
A
Yes,
Q
A n d did he m e n t i o n
A
I mentioned
Q
You mentioned
A
Sure.
Q
Was
it,
that
that
that—did
you mention
that?
sure.
it?
the m e n t i o n i n g
toward a p r o g r a m where
to b e
that he recognized
sir.
it in t h e c o n t e x t
on
o f a s e t t l e m e n t w i t h A i r T a x i in o r d e r n o t t o b e
involved
fees
the fees
the
of I r a n
otherwise?
A
way.
infer
that his main concern was with
be c h a r g e d
about
o f it a n d
the d i s c u s s i o n
the G o v e r n m e n t o f I r a n w a s
headed
they wanted
or
no commissions
paid—
A
Yes.
Q
—to
A
Yes.
Q
W h e t h e r or not the c o s t s w e r e
agents?
going
to b e
of
403
335
1
absorbed
2
in C h e
A
W e l l , I don't think
3
came out.
4
now
5
6
7
8
9
10
11
1 2
13
contract?
than they w e r e
in—
G o v e r n m e n t did not w a n t
you consider
that he
the A S P I R and
to p a y c o m m i s s i o n s .
influenced
the A S P I R — t h e
ASPIR was written
fair and r e a s o n a b l e , except
that c h a n g e
Q
And when was
A
Yes.
Q
Now, under
19
the change
20
that it paid
21
A
Yes.
Q
It would
A
Y e s , as
22
23
24
25
and as
long as
are
paid
He
So y o u c a n see
t h a t c h a n g e , in 1 9 7 4 y o u
that c h a n g e , and o p e r a t i n g
he
still be
say?
under
to c o m e
of a
that
commission
sale?
proper?
l o n g a s it w a s p r o p e r l y e x p o s e d
in your c o n t i n g e n t fee
it's not a cost
about
today, operating under
to p a y t h e k i n d
to A i r T a x i u n d e r a n F M S
the U . S . G o v e r n m e n t
into
that.
it b e p r o p e r
new procedure, for Bell
changed
provided
that G e n e r a l T o u f a n i a n had c a u s e d
as y o u s a y , w o u l d
when
that went
of I r a n .
i n the U . S . A S P I R .
15
18
And
his
they will not be
to the G o v e r n m e n t
had s t r o n g f e e l i n g s a b o u t
16
that
that, you will p a y — c o m m i s s i o n s
on any FMS business
caused
different
the U . S . A S P 1 R and
first change
allowable under U . S . Government contracts,
they're
really
things are
His primary concern was
14
17
that that point
I think you look back and
to
statement,
that's chargeable
to
the
404
335
1
Government
Q
2
3
4
5
6
7
realizing
that
a m o u n t of
10
11
12
the
on
present
these rules are not a p p l i c a b l e ,
I know, when
it w a s e n t e r e d
the p a y m e n t
to the U . S .
of
into
the
at
that
gross
Government?
That's
Q
And
A
That's
Q
—is
A
Aviation
Systems
Command.
correct.
Aviation
Systems
Command.
that would
t l i a t
be so-called A y g c O M
—
right.
that the D e p a r t m e n t
A n d , t w o , that
14
of the A r m y ?
the c o s t n o t be a b s o r b e d
In
the
contract—
16
17
and
A
That's
Q
—but
correct.
be
loss
statement—
A
That's
20
Q
—or
21
A
That's
22
Q
—or
23
A
Pardon?
24
Q
However
25
explain
under
A
Q
13
19
two k e y f a c t o r s
the two key factors a r e , o n e , disclosure
9
18
way.
in s u c h p a y m e n t ^ o p e r a t i n g
least as far as
8
15
in a n y
S o , in o t h e r w o r d s , t h e
propriety
rules
of Iran
separately
expensed
on your
profit
right.
however——
right.
however
it, please
that a c c o u n t i n g w o r k s
that accounting works
do.
out.
out.
If y o u
can
405
328
1
A
2
In y o u r . f l i e s
3
Finance
4
expensed
5
F M S c o n t r a c t or
6
m e m o r a n d u m e x p l a i n s how he w a s c o n t r o l l i n g
7
8
Yes.
that
that 2-9-5-0
a n d n o t in a n y w a y c h a r g e d
At
memorandum
our Vice P r e s i d e n t
to w r i t e , to a s s u r e
Q
Mr.
I think you found a separate
that I caused
of
was
to t h e U . S .
to t h e G o v e r n m e n t o f I r a n .
Government
That
that
this p o i n t , M r . A t k i n s , I'd
like
to
have
Collins—
9
A
1 0
Sure.
Q
——continue
the
questioning
11
1 2
13
EXAMINATION
BY M R .
COLLINS
Q
M r . A t k i n s , I'd
asking about
be sold
Q
A
appeared
might
sold
you m e n t i o n e d — w e l l , just now
you
you weren't sure.
(Nods h e a d . )
In Iran was
that you felt
is, w h a t you thought might be
And
the f i g u r e of a c o u p l e hundred
A
by
'72.
Yesterday
mentioned
to j u s t s t a r t o f f
the n u m b e r o f h e l i c o p t e r s
to I r a n , t h a t
In A p r i l o f
like
to s e l l 3 0
yesterday you
mentioned
helicopters.
Well, when—our
first
objective
Cobras.
Yes.
After my meeting
possible
In N o v e m b e r
that we might
enlarge
of
' 7 1 , It
that sale
through
406
329
1
the sale
of
of
1
72 which
Q
4
5
214.
Of c o u r s e , then w e had our meetings
2
3
the
a couple
to the
of h u n d r e d
At
helicopters
that p o i n t , with
quite
7
they were
8
you didn't know how many, but
9
point w e might have
Q
10
12
Yes,
13
Q
—the
14
agreement, those
15
of
that
that they
the fact
I guess
thought 200 was
MIO.
it w o u l d
be
would—
that I felt
some
that
214s—no,
I think at
that
reasonable.
fine.
far as the d i s c u s s i o n s
A
about
the
commission-
sir.
amendments
to t h e J u n e
took place at what
15th,
1970
times prior
to A p r i l
'72?
16
A
Would
you phrase
17
Q
Yes.
W h e n did
that again,
concerning Amendment Number
19
agreement between Bell and Air
guess
20
A
I would
21
Q
And
22
A
I don't remember
you did
1 to t h e J u n e
the n e g o t i a t i o n
24
what was being negotiated
25
negotiated.
take
15th,
place
1970
Taxi?
in p r o b a b l y M a r c h , A p r i l of
not participate
23
please?
the d i s c u s s i o n s
18
idea
to b u y a C o b r a a n d
A l l right, that's
As
11
likely
in A p r i l
letter of intent from the
But did you have some
A
6
led
of A m e n d m e n t
in
them?
participating directly
1.
'72.
in
I certainly was aware
and agreed with what was
of
being
407
330
1
Q
Who was
doing
2
A
I believe Rudning was doing
3
Q
And
4
A
Zanganeh.
5
Q
During
6
Number
1, was
on behalf of Air
o f f i c i a l s , that
8
Government
is, Iranian Government
N o , of c o u r s e
10
Q
So that n e i t h e r
contacting
A
13
private
14
Q
15
a few
negotiation.
Amendment
government
officials
or
government
This
not.
Bell nor Air Taxi would
officials about
the
agreement?
is a p r i v a t e m a t t e r b e t w e e n t w o
separate
Okay.
I'd
like
to i n t r o d u c e
into
the
the p a s t
two
During
t h e c o u r s e of f o r
we have received
18
t h e m , f o u r c o p i e s of a n A m e n d m e n t N u m b e r
19
to b e d i f f e r e n t d o c u m e n t s .
20
and
21
like
22
c o u l d , t e l l u s w h i c h o n e is the c o r r e c t A m e n d m e n t
And
25
several documents
I'd
like
to i n t r o d u c e
of any difference
1, which
May we ask
appear
amendment
these, and
them as exhibits
weeks,
Among
of A m e n d m e n t N u m b e r
to have y o u , M r . A t k i n s , r e v i e w
M R . SOUTTER:
from Textron.
One is a p r o p o s e d
three are signed v e r s i o n s
knows
record
exhibits.
17
24
be
companies.
16
23
U.S.
officials?
A
12
the
Bell?
concerning
involvement by
9
11
for
Taxi?
the n e g o t i a t i o n s
there any
7
the n e g o t i a t i n g
if
1.
I'd
you
1.
now.
if the
in t h e l a n g u a g e s c o n t a i n e d
Staff
in
the
408
331
1
copies?
2
me as
This
is, I believe—it
M R . COLLINS: W e l l , I should
4
June
5
Company, attention Mr.
1 6 t h , 1972
6
letter
from M r . Sylvester
to A i r
"Enclosed a proposed Amendment
to the A g r e e m e n t
8
A i r Taxi and Bell
as a proposed
Exhibit
indicate,
dated
June
Number
15th, 1970
between
document.
67.
(The letter w a s marked
" E x h i b i t N o . 67" for
identification.)
12
13
M R . COLLINS:
14
that has a l r e a d y b e e n e n t e r e d , 6 3 - A , the v e r s i o n
15
Amendment
16
Rodning, witnessed
17
date
Number
MR. COLLINS.
20
24
25
The other
that.
prior
Taxi.
is
1,
one
of
typewritten
1972.
63-A.
"A".
let me
to t h e S t a f f o f t h e
to the h e a r i n g c o n d u c t e d
clarify
Committee
concerning Mr. Miller's
It w a s s u b m i t t e d w i t h c o p i e s of
Manufacturer's
Air
That
is
Zanganeh,
name, April
two v e r s i o n s — a n d
63-A was submitted
nomination.
by M r .
by M r . M i t c h e l l , and d a t e d ,
MR. GALERSTEIN:
19
23
The next document
1 t h a t is s i g n e d
in f r o n t of M r . Z a n g a n e h ' s
18
22
1
Helicopter,"
11
21
Taxi
Zanganeh:
7
9
to
counsel.
3
10
is c e r t a i n l y n e w s
the
Representative Agreement between Bell
and
409
332
The
1
2
one of w h i c h
other
two copies
is E x h i b i t 6 3 .
3
been signed at different
4
which
one m i g h t be
H o w e v e r , they appear
t i m e s , so I ' m u n a b l e
t h e m is s i g n e d
6
T e x t r o n as witnessed
7
Air Taxi by M r . Zanganeh, witnessed
8
I-r-a-n-z-a-d.
10
assistance
on these
12
63-A
14
wording of these
15
b e t w e e n 63 and
16
a r e on the o p p o s i t e
for
on b e h a l f
by M r .
of
Iranzad,
May I offer
p r o o f r e a d , a n d w e c a n find
two.
63-A was
The
We have had
no difference
only difference we
that the s i g n a t u r e s
some
of t h e o t h e r , a n d a d i f f e r e n t p a r t y h a s
18
witness.
19
M R . COLLINS:
20
MR. GALERSTEIN:
And
63 and
in
the
find
of the
s i d e , s o to s p e a k , o f t h e
17
signed
one
signatures
it a s
there's a date on
And
there's a date
one.
on
one.
22
M R . COLLINS:
23
MR. GALERSTEIN:
24
25
determine
Yes.
MR. GALERSTEIN:
13
21
have
two?
MR. COLLINS:
11
to
1,
to
by M r . R u d n i n g
by M r . M i t c h e l l , and
MR. GALERSTEIN:
9
Number
63.
E a c h of
5
of A m e n d m e n t
But
w e find
exactly
Typewritten
the s i g n a t u r e — t h e
the
same.
date.
Typewritten
date.
c o n t e n t on these
two
410
335
1
2
MR. COLLINS:
other
( E x h i b i t s Nos. 68 and
w e r e m a r k e d for
4
BY M R .
M r . A t k i n s , I'd j u s t
are differences
8
other
three
between
The
M R . COLLINS:
they are
these
three
that
were
they—
far as I c a n
determine
similar.
13
the number
MR. SOUTTER:
—identical?
MR. COLLINS:
Similar,
M R . SOUTTER:
Thank
MR. COLLINS:
The differences are
of m o d e l s , models
anticipated
proposed
As
ther<i
manner.
in s o m e m a n n e r a s to t e x t , a r e
11
that
agreement and
in s o m e
M R . SOUTTER:
signed
like to m e n t i o n
the p r o p o s e d
that w e r e signed
9
69
COLLINS
Q
7
12
these
identification.)
6
10
to m a r k
two.
3
5
We'll have
to b e s o l d
yes.
you.
of h e l i c o p t e r s
in the
that
in
are
program.
M R . SOUTTER:
That
MR. COLLINS:
And
is b e t w e e n
the
and—
agreement?
the
M R . SOUTTER:
Signed.
MR. COLLINS:
—signed
THE WITNESS:
Could
three
signed—
documents.
I see
the
proposed
411
334
MR. COLLINS:
1
2
t h a t the p r o p o s e d
3
BY M R . COLLINS
Q
4
is E x h i b i t
proposed version, I believe
6
by
the U . S .
7
w i l l just read
A
10
Bell w i l l pay
11
Q
the other
to t h e
three
Uh
15
Q
The other
approved
for my e d i f i c a t i o n .
18
what are
the o t h e r
19
you
in C l a u s e B , p a r a g r a p h
B.
Government
Representative."
That
the
clause
the U . S . G o v e r n m e n t "
is n o t
in
difference—
M R . GALERSTEIN:
17
You say
Excuse m e .
"the other
three
A
question
versions,"
three?
MR. COLLINS:
Okay.
Those are
63-A,
M R . SOUTTER:
Is n o t 6 3 a l s o a s a m e
69.
21
of either
68 or
23
24
there aren't
that "as
the
huh.
16
23-553 O - 78 - 27
record
versions.
A
25
In
to t h e a p p r o v a l o f t h e U . S .
to t h e a p p r o v a l o f
14
68 a n d
B.
the d o c u m e n t , if
T h a n k y o u , that's a l l .
"subject
22
it s t a t e s
the first phrase
"Subject
12
the
Government."
9
20
is C l a u s e
M r . A t k i n s , you have
13
for
67.
The other difference
5
8
I'll state
copy
69?
MR. COLLINS:
It I s .
M R . SOUTTER:
I just want
four signed
versions.
But—
to m a k e
sure
>
412
335
j
MR. COLLINS:
2
3
M R . SOUTTER:
three
signed
M R . COLLINS:
BY MR.
6
Q
The
8
operative date of
9
reading
three exhibits:
it
"This A m e n d m e n t
April
13
that
14
Is
signed
1,
6 9 , is
and
versions.
Paragraph
and
the
E, and
I'm
says:
shall become
effective
on
1972."
the p r o p o s e d v e r s i o n , E x h i b i t 6 7 , I b e l i e v e
it w i l l b e c o m e o p e r a t i v e a t t h e d a t e
it
it w a s
says
signed.
that c o r r e c t , M r . Atkins?
15
A
Yes,
16
Q
Y o u have
17
A
Yeah.
Q
Otey.
yes.
the d o c u m e n t
M R . COLLINS:
minutes
so y o u can
look through
W o u l d y o u w a n t to d o
right
three
6 3 - A , 68 and
the a m e n d m e n t .
from Exhibit 68,
10
And
And
other difference between Exhibit 67
the other
12
one proposed
COLLINS
7
11
There's
versions.
4
5
No.
that
there
Why don't we
t h e s e , if y o u
take
you?
five
wish.
or—
A
I don't really have much
Q
All right, fine, fine,
A
I can reply
now.
in f r o n t of
trouble with
this.
okay.
to the p r o p o s e d — t h i s
here
one
413
336
Subject
1
2
that would
3
an agreement
t o the a p p r o v a l o f t h e U . S .
have been a nice clause
of t h i s
type a t
5
recover whatever
6
A n d , of c o u r s e , he objected
money was
7
not w a n t his c o m p e n s a t i o n
8
approval.
9
it w a s w i t h B e l l .
paid
to o u r
Q
At
he o b j e c t e d
It w a s u n k n o w n a t that
14
Q
The
15
A
So—so,
the U . S .
that
I would
the
18
Q
That's
19
A
And
20
three others
s a y t h a t this
proposed
executed
correct.
set that a s i d e .
Then we
have
about.
W e l l , there
is a n o t h e r p a r t
T h e question comes up as
it w a s
A
W e l l , this one was
25
Q
Amendment
Number
1.
to
that.
to w h e n
negotiated.
24
clause.
t h a t it w o u l d
parties.
that would
to t a l k
signed, when
on
letter—•
contract between
was
Government,
time.
17
23
t h a t h e d Id
Government
to t h a t c l a u s e
agreement, Exhibit Number 67, was never an
Q
would
representative.
16
22
In
contract?
A
21
if w e
that time did you a n t i c i p a t e
g o F M S , t h a t i s , the
13
that
to a n y U . S .
His contract was not w i t h
And
to h a v e
to that on the b a s i s
subject
that basis and w e subsequently removed
11
12
for Bell
point.
We would have been assured
4
10
that
Government »
never—
the
agreement
414
337
5
A
This
one was never
Q
That's
A
Okay.
Q
There'8 a letter
M r . Sylvester
correct.
7
8
that enclosed
to M r . Z a n g a n e h m e n t i o n i n g
t h a t t h e y had o n the
6
signed.
IQ
meetings
subject.
A
Right.
Q
Do you know anything about those
A
from
previous
did M r . S y l v e s t e r c o n t a c t y o u c o n c e r n i n g
9
that
Well, I knew
meetings,
them?
that M r . Sylvester and
Mr.
H
Rudning were having meetings regarding an amendment
12
t h e M a n u f a c t u r e r ' s A g r e e m e n t , to e s t a b l i s h a b a s i s
future payment, yes, I knew
13
14
Q
Was
time
16
language
17
on the date
18
that were s i g n e d , stating
19
April
20
23
that the A m e n d m e n t Number
Q
it w a s s i g n e d
t
don't
25
A
have
rather
1 would
than the
be
to
is
effective
those dates make
any
anyone.
Because
the l e t t e r o f
to d o u n d e r
this—
intent from
sent on April
But that wasn't
the
effective
amendments
that the a m e n d m e n t
believe
Toufanian, I believe, was
24
that
1?
difference
22
reason why at
the p r o p o s e d a m e n d m e n t , a s E x h i b i t 6 7 , contained
A
21
that.
there any particular
15
to
for a
General
18th.
the b a s i s of w h a t w e
would
415
338
Q
1
2
commissions
an a g r e e m e n t as
W e had an a g r e e m e n t , y o u k n o w , w e had
Manufacturer's Agreement
that was
in
Q
That was
6
A
Y e s . B u t , I m e a n , to m e t h a t m a d e
to b e n e g o t i a t e d
7
r e a l l y , in the f i n a l o u t c o m e of
8
I assume, and maybe
10
that maybe
a period
the n e g o t i a t i o n s
of
Q
11
13
any knowledge
14
a n y t y p e of r o l e
I'm w r o n g , b u t
had gone on for
else w h o participated
No.
in n e g o t i a t i n g
the
And all through
the U . S . G o v e r n m e n t nor
17
way
18
relations with our m a n u f a c t u r e r ' s
indicated
I assume
of
this s i t u a t i o n ,
of our
N o , s ir .
21
Q
Do you have any
22
A
No, sir, I
23
Q
Any
that
signed?
neither
in a n y
representative.
Do you know when Amendment Number
Would M r . Sylvester
having
contractual
Q
1 was
signed1
knowledge?
don't.
s p e c u l a t i o n as
to w h e n
have mentioned
had
agreement?
A
25
either
the G o v e r n m e n t of I r a n w e r e
in the n e g o t i a t i o n s
24
that
Involved,
20
d i f f e r e n t !»
no
that kind
19
it w a s
it?
in t h e n e g o t i a t i o n s
of g o v e r n m e n t p e o p l e b e i n g
16
involved
as p a r t of
it.
And M r . Sylvester never
he or anyone
A
a
time.
12
15
the
existence.
5
9
to
beforehand?
A
3
4
To have established
it w a s
signed?
in the S p r i n g
of
'72
416
339
A
1
2
3
2—the
W e l l , let's go on t o —
other copies of
what do they
What about
the a m e n d m e n t
Q
A
Y o u h a v e p u t in c e r t a i n
6
Q
That's
correct.
7
A
Let me
see
the o t h e r
see
those
5
8
Q
Okay.
9
A
Let me
M R . SOUTTER:
a
(Short
BY M R .
M r . Atkins
determined
got 6 3 - A , 69
A
and
63
there?
I t h i n k one of
those
is
recess.)
just asked
No,
BY M R .
23
24
and
how
it c o u l d
Exhibit
be
67—
63—
M R . SOUTTER:
Do you have
that Exhibit 68 and 69 and
21
25
We've
COLLINS
Q
20
22
exhibits.
duplicate •
18
19
three
exhibits.
63.
16
17
three
M R . GALERSTEIN:
Here's
14
15
exhibits.
68.
12
13
there,
of—
M R . SOUTTER:
10
11
that you had
show?
The other copies
4
Amendment
No.
63.
COLLINS
Q
— 6 3 - A —
A
No.
6 3 , 68 and
s i g n e d in t h e s a m e
69 a p p e a r
manner.
to b e a l l
the
same
417
340
1
Q
That
is c o r r e c t , e x c e p t
2
they were
3
T h e signature's a p p e a r
4
at
the d o c u m e n t s .
The "2"
5
in 6 3 , goes a b o v e
the line
6
I did
7
either
8
not
signed at different
looked at
in
them w h e n I submitted
is e x a c t l y
the
MR. COLLINS:
12
MR. GALERSTEIN:
you're pointing
14
15
16
17
signed at different
25
the s u b s t a n c e
MR. COLLINS:
they w e r e
document.
69.
is
same.
right.
So the only
—is
That's
difference
signed
at
this q u e s t i o n
the
of
line.
correct.
That possibly
Or signed
MR. GALERSTEIN:
23
I had
they
times.
M R . SOUTTER:
22
24
But
They were
MR. COLLINS:
were
one,
times.
MR. GALERSTEIN:
21
that
to 6 3 .
signatures coming balow the line and above
19
20
them
out—
MR. GALERSTEIN:
18
line
the E x h i b i t 6 8 a n d
That's
MR. COLLINS:
different
the
68.
say w h e n I submitted
content
look
in Z a n g a n e h g o e s b e l o w
MR. GALERSTEIN:
exactly—the
that
to b e d i f f e r e n t , if y o u ' l l
11
13
the fact
6 8 o r 6 9 , w a s g o i n g to b e s i m i l a r
9
10
for
t i m e s , to ray u n d e r s t a n d i n g .
signed at different
in
Or s i g n e d
It could b e .
times, not
the
counterpart.
in
counterpar
But at
same
least
418
341
Q
1
2
M r . A t k i n s , Exhibit 63-A
t h a t h a s a d a t e , is d a t e d A p r i l
4
by M r . Zanganeh—or
5
And
6
Mr. Zanganeh proposing
7
16th,
yet
discrepancy
A
Let's
just a
Q
to
June
Was
to w h y
the a m e n d m e n t u n d e r
it b e e n
that
considera-
signed?
in
it h a d b e e n
signed
June.
s e e if w e c a n c l e a r u p
the
record
Yes.
A
18
another one
We now have an Exhibit 6 3 , a n o t h e r one
one 6 7 .
19
Elimiate
that 6 7 .
Another
one 68
exactly
Q
22
the
he'8 eliminated
A
is
same.
Now you have a
proposed—
M R . SOUTTER:
and
63-A,
and
69.
N o w , the text o f t h o s e four a m e n d m e n t s
21
signed
least.
bit.
another
25
in, at
from M r . Sylvester
I can't recollect whether
17
24
that
the a m e n d m e n t w a s s e n t o n
or was under consideration
16
23
is t h e r e ?
t i o n in J u n e o r h a d
15
20
letter
1 , 1 9 7 2 , as being
1,
1972.
13
14
the
typed
Do you have any knowledge as
11
12
someone
the J u n e — o r
8
10
of
these exhibits concerning amendments, Amendment Number
3
9
is t h e o n l y o n e
No.
6 7 is t h e
proposed
that.
I eliminated
that.
M R . SOUTTER:
6 3 , 6 8 , 63-A and 69
419
335
1
THE WITNESS:
Yes.
2
M R . SOUTTER:
—are
3
signed c o p i e s o£ A m e n d m e n t
Number
1.
4
MR. COLLINS:
That's
5
THE WITNESS:
And
6
text.
7
BY MR.
Q
Fine.
9
A
And
signature
you have picked
Q
And a date on
12
A
On 63-A
13
Q
The only one that's
14
A
That's
15
Q
Okay.
16
A
N o w , the proposed
there's a
same
out some d i f f e r e n c e
18
the
date.
dated.
amendment, Exhibit 67, was
and w a s n e v e r
signed
pending
the f o u r e x h i b i t s
in f r o n t of u s , I g u e s s
is, when were
they
that we
the one r e m a i n i n g
have
question
signed?
Q
That's
A
I h a v e no r e c o l l e c t i o n of t h a t ,
24
Q
To your
25
A
Maybe M r . Rudning can help you out on
between
parties.
So as far as
2 3
in a
right.
the one that was negotiated
2 2
the
63-A.
17
2 1
they're
which—
11
2 0
correct.
COLLINS
8
10
signed—purportedly
correct.
sir.
knowledge—
that.
420
343
Q
1
2
occur
But
4
say
5
occurred.
Looking
at M r . Sylvester's
It c o u l d n ' t h a v e o c c u r r e d
6
Q
7
is, Exhibits
8
of A p r i l
9
Do you know why
going on for
11
why
12
no difference
13
Q
they
in.
like
that
that negotiations
of time and
It's obvious
to i n t r o d u c e
were
that's
t h a t it h a s
three
additional
e x h i b i t s , a l l c a b l e s , the f i r s t o n e b e i n g a c a b l e
15
M r . M i t c h e l l of B e l l c r a f t
16
dated August
17
agreement.
to M r . S y l v e s t e r
18, 1972, concerning
the
in
signing
by M r . G a l l a g h e r
20
cable
21
26,
23
24
25
to h a v e a n a g r e e m e n t
from M r . Gallagher
signed;
to M r . S y l v e s t e r
from
Teheran,
of
T h e n e x t o n e , the e x h i b i t c o n c e r n s
19
made
agreement.
14
18
as
date?
in t h e o u t c o m e o f t h e
I'd
have
they were dated
that k i n d of a p e r i o d
put the d a t e
not
they were a l l d a t e d ,
I can only assume
10
letter, I would
in A p r i l , could
63, 63-A, 68, 69, why
1 , the e f f e c t i v e
A
22
not
in A p r i l ?
A
3
to y o u r k n o w l e d g e , the s i g n i n g d i d
an
efforts
it's a
dated
July
1972.
The
last exhibit, a cable
from M r .
Sylvester
to M r . M i t c h e l l , I n t e r n a t i o n a l M a r k e t i n g , A u g u s t
(Exhibits 7 0 , 71 and
w e r e m a r k e d for
identification.)
9,
72
1972.
421
344
M R . COLLINS:
1
2
r e c o r d , put
the e x h i b i t s
3
Number
4
Sylvester dated
70 w o u l d
To c l a r i f y for
in chronological
b e the c a b l e f r o m M r . G a l l a g h e r
July 26, 1972, Exhibit Number
5
be
6
A u g u s t 9, 1972, and Exhibit Number
the c a b l e f r o m M r . S y l v e s t e r
7
from M r . Mitchell
8
1972.
9
Q
10
they're
11
parts.
12
A
I don't
13
Q
Get your
someone broke
15
of these
just read
t h e m to y o u , t h e
see how you b r o k e our
impressions.
it f o r u s a n d w r o t e
The July 26th cable
who at
72 w i l l b e
Well,
the
time w a s
in I r a n , g o t
from M r .
20
it.
Strike
21
"Am using max e f f o r t .
22
agreement after consultation with
Quoting
code.
bottom
the c a b l e , it w a s
from A i r T a x i to M r . S y l v e s t e r , indicates
on August
them-.—
pertinent
Gallagher,
Gallagher was using max e f f o r t —
25
16th,
it d o w n o n t h e
19
24
cable
fortunately,
18
23
dated
the
documents.
16
17
read
Mr.
71 w o u l d
to M r . M i t c h e l l
M r . A t k i n s , if I c o u l d
Exhibit
to
to M r . S y l v e s t e r d a t e d A u g u s t
in c o d e — j u s t
14
the
order.
9th,
that
Mr.
that, I'll
Joe will
sent
quote
sign
Alice."
from the S y l v e s t e r c a b l e
to
Mitchell,
1972:
"MFRA A m e n d m e n t N o . 1 executed by
Joe
422
335
1
airmailed
2
today.
return airmail
3
E x e c u t i o n a t your end
is u r g e n t r e p e a t
urgent.
P l e a s e c o n f i r m r e c e i p t and a c c e p t a n c e
4
plan by return
5
The
this
telex."
last d o c u m e n t , cable from Mitchell
Sylvester dated August
16th,
"Agreements
received
today.
prepared
by you signed by
Rudning has signed
M r . A t k i n s , if y o u w o u l d
I would
like
And
I want
to, before
to a s k y o u to r e a d
these
t h e m to
deciphering
the c o d e o n t h i s p i e c e o f
in
the
' 7 2 , in
paper,
read:
"Am using max effort.
Air Taxi will
agreement after consultation with
(Short
A
Uh
Q
From
period
Dehesh."
pause.)
t h o s e c a b l e s , it w o u l d a p p e a r
that
1 was under
long
negotiation
of t i m e , s e v e r a l m o n t h s , a t
through
sign
huh.
Amendment Number
you,
the c o d e , b e c a u s e
to S y l v e s t e r , J u l y o f
would
of
copy."
look at
I give
Joe
on behalf
cable from Gallagher
it u s i n g
to
1972:
Bell and w i l l hand carry fully signed
documents.
and
the latter p a r t of
for a
least from June
August.
A
Uh
huh.
Q
It was s t i l l u n d e r
consideration.
16th
423
346
1
A
Uh
huh.
2
Q
A n d as p a r t of
t h a t , it w o u l d a p p e a r
3
Air Taxi was consulting with a person who was a
4
o f f i c i a l of I r a n , M r .
5
apprised
7
seen
that cable
For
A
the r e c o r d , state
Those cables
was signed
11
regarding
12
with Dehesh about
j
on A u g u s t
the Gallagher
the
During
indicate
16th,
'72.
cable and
that period
be sold discussed
16
first p a r t of A u g u s t , do y o u have
the n u m b e r
A
With who,
18
Q
With
19
A
Oh, l'm*8ure
20
Q
Had
23
24
25
A
to
it
of h e l i c o p t e r s
ever
that
'72 t h r o u g h
might
the
any—
Government.
that—
it b e e n e s t a b l i s h e d
that 200 or 250
heli-
provided?
M r . C o l l i n s , t h e n u m b e r of h e l i c o p t e r s
by T o u f a n i a n and His
probably after I saw them.
that determined
talking
now?
the I r a n i a n
purchased was decided
the r e f e r e n c e
by you from April
17
copters would be
agreement
knowledge
of t i m e , w a s
15
or w e r e
that that
situation.
discussed
22
ever
" y e s " or '.'no,"
I have no
14
21
ever
before?
10
13
is, whether you were
of t h i s m a t t e r o r w h e t h e r y o u e v e n h a v e
8
9
government
Dehesh.
The question
6
that
the n u m b e r
And
it w a s
Majesty
those
of h e l i c o p t e r s
to b e
two
people
tt*at w e r e
to b e
424
347
1
purchased.
2
numbers.
Nobody else was
Involved
The U.S. Government
3
what air mobile
5
those s t u d i e s , T o u f a n i a n made recommendations
6
acted
All
7
8
are handled
9
They
10
are
all at
11
12
at
they r e c o m m e n d e d .
these matters, y o u have
the h i g h e s t
l e v e l of
That's correct.
the i n f o r m a t i o n
A
Toufanian
14
Q
That's correct.
Gallagher
16
had c o n s u l t e d or w a n t e d
17
they would
21
And
are
But
to
provide
Toufanian.
from that cable
from
appear
Taxi
that Air
to the a g e n c y
it d i d n ' t a f f e c t
before
agreement.
the n u m b e r of
helicopters
procured.
Q
of t h e
No, but
it m i g h t h a v e a f f e c t e d
think
the
percentage
fee.
A
I don't
23
Q
And you have no
24
A
I have no k n o w l e d g e .
per cent was
Government.
to c o n s u l t w i t h D e h e s h
sign an amendment
22
25
that
understand,
But someone has
to S y l v e s t e r , it w o u l d
A
to b e
were
did.
15
19
to
the l i n e , they
to the S h a h o r to
13
20
upon
which
top.
Q
18
Based
on
Majesty.
not decisions made down
the
those
given them studies
4
on by H i s
forces
had
in d e c i d i n g
something
it
did.
knowledge?
The
that we agreed
two and a
half
among>ourselves
that
425
335
j
2
we would
s i z e of
3
4
5
6
1
Q
When did you determine
A
We determined
the maximum we could
Q
You were
August and
Yes,
Q
And were
the
13
for
Yes, sir.
say that
15
through August.
16
and various crews
17
demonstrating
18
Q
they were
in I r a n in t h e l a t t e r p a r t
the other Bell p e o p l e
W e l l , they w e r e
there probably
that were
of
there
through
The
there, I would
starting
in m i d
people coming
going around
the a i r c r a f t and
so
the
July
in a n d
out
country
forth.
time period was w h e n
the
demonstrations
occurring?
A
Yes.
21
Q
They were
22
A
I came
just before
q
I came
scheduling—
in a t t h e e n d
t h e e n d o f the
Would
in—
of the
demonstration—
demonstration.
there have been any reason why
Taxi would have consulted with M r . Dehesh about
was
go.
We had v a r i o u s
20
24
this
summer?
A
were
more
sir.
14
2 5
to A u g u s t
They asked
September?
A
23
in t h i s A p r i l
than two and a half and so f o r t h , and w e decided
11
19
that
that?
It w a s a n e g o t i a t i o n .
10
12
what
program.
time f r a m e .
g
9
e s t a b l i s h as a m a x i m u m f e e , not k n o w i n g
Air
the
426
335
agreement between you
5
6
7
need
A
Not
Q
—and
A
Not
Q
At
and—
that I k n o w
Air
of.
Taxi?
that I know
of.
that time there w o u l d n ' t have been
to e s t a b l i s h w i t h
the G o v e r n m e n t
compensation was being
of I r a n
what
considered?
8
A
Huh
9
Q
And your meetings with M r . Toufanian
1 0
U
uh.
compensation agreement I believe you stated was
N u m b e r 3 , is that
on
12
That's
13
Q
—before,
Amendment
correct.
to M r .
That occurred
Marinaccio?
when?
15
A
Well,
16
Q
Your discussions with M r .
Toufanian.
I —
I think I said
discussions
17
A
18
through
19
Q
About
20
A
About compensation.
late
'72 a n d e a r l y
to G e n e r a l T o u f a n i a n .
22
with all
23
prominent
24
25
q
document
there were
'73.
compensation?
21
And
that were
about
problem
it
in c o u n t r y .
Very
mind.
who would
like
This was a major
he w a s c o n c e r n e d
the U . S . c o n t r a c t o r s
in h i s
the
correct—
A
14
any
be
in c h a r g e
this was properly
of a s s u r i n g
that a
signed and d a t e d , that
is,
427
350
1
an amendment
to a n
agreement?
2
A
I'm sure Rudning was
3
Q
Because
4
amendments
5
earlier
6
and particularly
7
in c h a r g e
in t h e
t h a t a l l of t h e m w e r e
the A mendments
Uh huh.
2 and
M a n u f a c t u r e r ' s A g r e e m e n t , and
11
12
they were basing
13
major
programs
Q
14
And
and
on
attempt
this
I think there was
lots
not being
fair and r e a s o n a b l e ,
that on w h a t was b e i n g paid
in the
on
and
other
country.
Was M r . Miller apprised
of 1 9 7 2 o r e v e n
of n e g o t i a t i o n s
15
16
the c o m p e n s a t i o n a r r a n g e m e n t b e t w e e n Air T a x i and
A
I'm sure I kept M r . Miller advised
w e r e d o i n g in t h e m a t t e r o f h a n d l i n g
19
because I considered
21
Q
But
didn't recall when Amendment Number
A
No, I didn't,
Q
Okay.
24
the record a n o t h e r e x h i b i t .
Bell?
we
representative
problem.
1 was
you
signed?
sir.
MR. COLLINS:
23-553 O - 78 - 28
to
of w h a t
to t h e b e s t o f y o u r r e c o l l e c t i o n ,
23
25
the
it to b e a m a j o r
22
in
in the S u m m e r w i t h r e s p e c t
18
20
of
t h e r e w a s a f e e l i n g o n t h e p a r t of A i r
the Spring
17
dated,
3.
9
discussion.
and
record
I think this w a s our first
to w o r k o u t t h e p r o b l e m o f c o m p e n s a t i o n
T a x i that we were
that.
signed
8
10
of
the o t h e r a g r e e m e n t s
that M r . M a r i n a c c i o placed
indicate
A
I believe
72?
I'd
like
to i n t r o d u c e
into
428
335
MR. FREED:
73.
M R . COLLINS:
73.
A cable from
Y a t e s , B e l l c r a f t , to M r . G a l l a g h e r .
what
the m e s s a g e
is.
May 22nd,
And
I'm not
Mr.
sure
1972.
( E x h i b i t N o . 73
w a s m a r k e d for
identification.
MR. MARINACCIO:
Atkins, while
record.
that exhibit
is b e i n g m a r k e d
I didn't hear your full response
question.
Did
you indicate
informed because
it w a s a m a j o r
the
last
Yes.
Yes.
COLLINS
Q
M r . A t k i n s , this c a b l e is the o n l y o n e ,
the only d o c u m e n t
we have received
I'd j u s t
Miller
Taxi
for
to t h e
problem?
MR. MARINACCIO:
And
Mr.
that you kept M r . Miller
THE WITNESS:
BY M R .
Excuse me,
I have read
in t h e 6 0 0 o d d p a g e s
that concerns
the name
that
"Miller."
l i k e t o a s k y o u if y o u k n e w of a n y
that was employed
it's
by Bell Helicopter
other
or b y
Air
or—
A
We
Q
—or
have—
by anyone
with, with respect
else
that you were
to the I r a n i a n
dealing
contract?
A
We
have—
Q
A n d b e f o r e you r e s p o n d , I w i l l let y o u
certainly
429
352
1
read
2
the m e s s a g e
this.
It appears
3
t h a t p a r t o f i t e n d s w i t h the
I'd
4
A
5
to r e f e r
to s o m e a g r e e m e n t .
ends w i t h a w o r d , or the m i d d l e
like
to g e t y o u r
Oh, I know what
My
6
term
this
interpretation
of
impressions
is a l l
of
this m e s s a g e w o u l d
7
8
to I r a n , a n d
this was a question about a hold
9
statement
10
And Miller
11
And
owned by
the U . S .
12
W a s h i n g t o n , the N a v y g u y , a n d
13
"Ramsey," he's
14
not release copy
15
He had sent
it that M i l l e r
in o u r W a s h i n g t o n
to R a m s e y
requiring.
the F M S
office.
guy,
So M i l l e r
in B e l l ' s W a s h i n g t o n
Q
And
17
A
I think the hold harmless had
the
fact that Bell w a s
19
We had a lease from the U . S . G o v e r n m e n t
20
to I r a n , a n d
21
s t a t e m e n t , and
to d o w i t h
taking a U.S. Government AH-lJ
I think
for a hold
that's whatlt
had
to take
to d o
Q
Who was
23
A
I think the U . S . Government was
24
held harmless
25
N o w , that's me talking
if w e did
this
Iran.
ship
with.
harmless?
going
s o m e d a m a g e or s o m e t h i n g
from reading
to
the
harmless
22
g o i n g to be held
MAAG.
what?
18
they w e r e a s k i n g
will
office.
it o n to G e n e r a l W i l l i a m s o n w h o w a s
the hold harmless was
sale.
in
to our
16
harmless
is t h e g u y
they refer
be
Government
the U . S . G o v e r n m e n t w a s
is the N a v y g u y w h o w a s h a n d l i n g
interpret
that.
about.
taking an AH-lJ
I would
message
"garble."
that w e were
that probably
Then
of the
to b e
in
that s t a t e m e n t
Iran.
there.
430
353
1
Q
Sure.
2
A
The reference
3
of
the
to t h e a g r e e m e n t , t h e
agreement—
A
Is p r o b a b l y
5
Q
And
6
A
He's not an A d m i r a l .
7
Q
Oh, I see.
8
A
He's a civilian working
4
9
Of
Okay.
11
A
Those kind
Q
We
13
like
Just
do you have any
17
18
Department?
in t h e N a v y
FMS
I can handle
those
real
At
the
time
that this
of B e l l c r a f t , h e w a s
in
cable
Iran,
knowledge?
A
I believe
Q
Okay.
he was at
He was
this end
(Indicating).
In the U . S . , M r . G a l l a g h e r
was
at Mehrabad Airport?
20
back
22
civilian.
them.
to c l a r i f y :
16
25
N o , he's a
the N a v y
to a s k
was sent, was M r . Yates
24
Miller?
I like.
15
23
agreement.
easy.
14
21
harmless
Department.
Q
19
the h o l d
this A d m i r a l
10
12
complexity
had
A
Yes, yes.
in
our International
Q
You mentioned
He's one of our
Department.
earlier
that Bell
taken over most of the n e g o t i a t i n g
Iranian Government
helicopters
in o r d e r
you made
in
administrators
Halicopter
effort with
to g a i n t h e s a l e o f
1973.
the
the
431
354
If t h a t w e r e
1
the c a s e , w h y , In t h e S p r i n g
2
1972, would
3
considered
4
you were doing all
5
proper just
to h a v e g i v e n t h e m e n o u g h
to c o v e r
their
6
expenses, as I think you've mentioned
expenses
did
7
up in d i s c u s s i o n s w i t h
8
they would agree
9
Was
that
to a 2 . 5 p e r c e n t
or
to a 2 . 5 p e r c e n t c o m m i s s i o n ?
the w o r k , w h y w o u l d n ' t
it h a v e
the I r a n i a n G o v e r n m e n t a s
to u n d e r
If
the t e r m s o f t h e
been
come
to
Well, Mr.
C o l l i n s , if y o u w e r e
in
business
11
for yourself and you had held a Bell r e p r e s e n t a t i o n
12
Iran since
13
e f f o r t for a l l those f i f t e e n y e a r s , w o u l d
14
to a c c e p t r e i m b u r s e m e n t
15
reasonable
16
17
what
contract?
considered?
A
10
you have even agreed
to a g r e e
of
Q
1959 and you had conducted
some
in
marketing
you be
willing
of y o u r e x p e n s e s a s f a i r
and
compensation?
W e l l , the q u e s t i o n > i s
that w h a t y o u
considered
to b e f a i r ?
18
A
Yes,
19
Q
And
sir.
I should
state
20
a g e n t f r o m 1 9 5 9 to 1 9 6 4 , a n d
21
1968.
22
between
23
documents we received
So t h e q u e s t i o n
1968 and
24
$19,000
25
equipment.
1973?
in c o m m i s s i o n s
that A i r T a x i was
then was not b e t w e e n
is, what compensation was
And
I believe
indicated
s o m e of
the
1964
proper
the
that Air T a x i was
on certain spare parts and
paid
other
and
432
355
1
A
Uh
2
Q
So that you w e r e paying
3
huh.
them, so they w e r e being
some commissions
compensated.
4
A
Uh huh.
5
Q
It w a s n ' t
6
at all during
7
A
But—
8
in—and
9
b u s i n e s s , you look at
the B e e c h e s a n d
10
Pipers.
their representatives
11
l i k e 2 5 p e r c e n t of s a l e s p r i c e a s n o r m a l
that you hadn't compensated
this period
of
I particularly
time.
they pay
l o o k a t the g e n e r a l
13
products
individually and
14
much reason for
15
so f o r t h a n d
But w h e n you consider
was
17
contract and didn't even consider
18
p r o g r a m , I had
19
reasonable
Q
the
something
commission.
sell
the
therefore
that the $2.9
l i k e a h a l f o f o n e p e r c e n t of
there's
the
million
initial
the p o t e n t i a l of
this
to f e e l t h a t a 2 . 9 5 s e t t l e m e n t w a s a v e r y
thing.
Even
21
Helicopter
22
the d e m o n s t r a t i o n
though you have
really made
23
A
Yes,
24
Q
In
25
A
Yes,
aviation
it.
16
something
and
the C e s s n a s a n d
N o w , g r a n t e d , it i s n ' t — t h e y
12
20
them
M r . C o l l i n s , in t h e a v i a t i o n b u s i n e s s
And
to
the s a l e , that
o f the
sir.
effect—
sir.
indicated
helicopter?
that Bell
I s , it w a s
through
433
356
1
2
3
Q
—the
A
Yes, sir.
effort
to h e l p
p r o d u c t sold
I think a b u n c h of us put
the p r o d u c t
sell
4
Q
But
5
A
Was a contributing
6
Q
Enough
7
$2.9
9
10
but—
Taxi—
factor.
to c o m p e n s a t e
Mr. Collins, when
m y p r o f i t and pay
t h e m in t e r m s
Q
I take $2,950,000
During
or I w o u l d n ' t d o
the n e g o t i a t i o n s w i t h A i r T a x i
the a m e n d m e n t s , a m e n d m e n t — w e l l , right now
13
Amendment
14
apprised
Number
of
the
1, you indicated
A
Yes,
16
Q
Did
17
A
Ye s , s i r .
18
Q
And
19
A
Yeg,
20
Q
And
knowledge
22
A i r T a x i as
23
amendments
24
Government?
A
of
it's
looking
over
at
that you kept M r . Miller
negotaitions?
15
21
out
it.
12
25
of
it t o s o m e b o d y , y o u k n o w , I f e e l
fair and reasonable
11
itself,
the e f f o r t s of A i r
some
million?
A
8
Itself?
sir.
y o u d o the
same for A m e n d m e n t N u m b e r
2?
3?
sir.
during
this t i m e y o u never had
any
that M r . D e h e s h may have b e e n c o n s u l t i n g
to t h e
t e r m s of
the c o n t r a c t or
to t h e c o n t r a c t , or a n y o n e e l s e
N o , I d o n ' t see a n y r e a s o n w h y
with
the
in t h e
they
Iranian
should.
434
357
j
I'm sure M r . D e h e s h , like G e n e r a l T o u f a n i a n , had
2
same directive
3
commissions
4
5
Q
they desired
from all purchases
A
had
to m i n i m i z e
under FMS
But would he have held
of 1 9 7 2 , w o u l d M r . D e h e s h
5
7
that
have had
It in h i s m i n d , I k n o w
in t h e
t h a t in h i s
summer
mind?
Toufanian
that.
MR. COLLINS:
9
MR. MARINACCIO:
to a s k h i s q u e s t i o n s
eliminate
contracts.
I'm sure he would because General
8
10
that
or
the
All right.
I'd
Thank
you.
like for M r . Freed
now.
11
12
13
EXAMINATION
BY M R .
14
FREED
Q
M r . A t k i n s , the E x h i b i t N u m b e r
13
mentions
15
the c o - p r o d u c t i o n a r r a n g e m e n t s , t h a t i s , the l e t t e r
16
General Toufanian
17
was
in the l e t t e r of
18
1 9
20
2 1
2 2
2 3
2 4
25
to y o u o n A p r i l 1 8 t h , 1 9 7 2 .
W h e n did Bell and
talks about
that
intent.
the c o - p r o d u c t i o n a g r e e m e n t ?
A
And
from
I'm sorry.
the I r a n i a n G o v e r n m e n t
sign
•
I'm not with you as
to w h e r e
that
that.
Q
It's
A
O h , here
in p a r a g r a p h
Q
Number
A
Yes.
it
number—
is.
2.
The co-production agreement was
signed
435
358
1
in N o v e m b e r
Q.
2
3
were
1975.
the l e t t e r of i n t e n t
three and a half years
A
4
of
So, after
5
6
Those aircraft
7
co-product.
Q
8
9
you showed
t h e m the
That's
11
Q
T h e fact they d i d n ' t have
12
A
That's
Q
aircraft
A
15
16
and
the
capability?
right.
they should b u y
the
complete
here?
That's
Then
right.
in 1 9 7 4
17
to s u b m i t a p r o p o s a l
18
t h e m , the 2 1 5 a n d
19
them and a community and
20
to
right.
You thought
from
not
difficulties?
A
13
of
aircraft.
after you brought them over here
10
14
to c o - p r o d u c t i o n
the f i r s t p r o c u r e d
the G o v e r n m e n t of I r a n agreed
That's
there
negotiations?
W e l l , the l e t t e r p e r t a i n s
the first four h u n d r e d — o f
in 1 9 7 2 ,
the I r a n i a n G o v e r n m e n t a s k e d
to d e v e l o p
the 2 1 6 , and
two new a i r c r a f t
This request came
for
to b u i l d a f a c t o r y
to c o - p r o d u c e
to u s
in
us
for
Iran.
through
the
U.S.
21
G o v e r n m e n t , and w e p r e p a r e d
22
which a major FMS case was presented
to G e n e r a l
Toufanian
23
in W a s h i n g t o n b y a l l
of a l l
Services
24
and Four Star Generals
25
the I n f o r m a t i o n b a s e d
the S e c r e t a r i e s
and a l l the
The proposal was
the
upon
rest.
not acceptable
to
General
436
3671
2
3
T o u f a n i a n and
he refused
to-— W e l l , I don't know
or n o C , buC he never a c c e p C e d
Che leCCer
S u b s e q u e n C l y , he w e n t
competition
for s o m e b o d y
ouc on a
in C h e w o r l d w i d e
i n d u s C r y *:o
build a plane, build a communiCy, co-produce
7
helicopCers.
There were many proposals:
8
competition.
11
1975
13
14
Q
A
In
in
November
to a l e t t e r
of o f f e r .
1974.
MR. SOUTTER:
16
the c o - p r o d u c t i o n m e n t i o n e d
17
the w a y and
never
Is
it f a i r
to s a y
M R . SOUTTER:
The co-production
21
THE WITNESS:
Program.
22
M R . SOUTTER:
— p r o g r a m and
24
THE WITNESS:
Right.
25
(Brief
23
again from
right.
later
new—
'74
by
was?
That's
19
that
in 1 9 7 2 j u s t s i m p l y w e n t
THE WITNESS:
18
20
When
offer?
15
on b e c a m e a
chac
program.
N o w , you refer
that letter of
hundred
And we won
A n d o u c of chac w e n e g o t i a t e d
the c o - p r o d u c t i o n
four
Aerospaciele, Belco
A g u s C a , S i k o r s k y , a n d , of c o u r s e , B e l l .
10
12
of
worldwide
6
9
whecher
offer.
4
5
he r e f u s e d
on?
break.)
started
was
437
367i
BY M R .
2
Q
FREED
We w e r e
3
duction agreement
4
m e n t for the
5
of
Bell and
7
duction agreement
A
8
in h i s
Govern-
for A i r
letter of A p r i l
Taxi
of a r r a n g i n g a
in l a y i n g t h e g r o u n d w o r k
The events
Iran to understand
13
copters
in
co-pro-
'71-'72?
that
'72 m e n t i o n e d
should
that followed
General
co-pro-
15
N o w , their next thinking
started
17
400 additional
18
Air
in
21
procurement
of heli-
basis.
was made
in l a t e
'72.
on c o - p r o d u c t ion
'74 a n d w a s a n e n t i r e l y n e w p r o g r a m
for
aircraft.
Taxi-or
of a n y k i n d w i t h
20
the G o v e r n m e n t
that the first p r o c u r e m e n t
So this
16
led
n o t b e on a c o - p r o d u c e d
14
M
r . Zanganeh had no
the co-production
Q
Did
A
Yes, sir.
program
you begin negotiations
connection
then.
afresh?
This was an entirely new
trans-
action.
23
24
co-pro-
duction.
11
22
Iranian
W e l l , let's go back and remember
Toufanian
the
helicopters.
in t h e d e v e l o p m e n t
12
19
the
M r . A t k i n s , did M r . Z a n g a n e h
play any role
10
between
production
6
9
d i s c u s s i n g w h e n we broke
Q
So A i r
Taxi and M r . Zanganeh would
played—
25
A
No
part.
have
o
438
3671
Q
—no
2
A
(The w i t n e s s
3
Q
M r . Miller
4
T h e n were
would
7
8
9
be for the
A
12
17
Q
there
24
25
to w r a p
words
in
the
co-
Washington.
started.
This
'75.
And we
that
submitted
the t o t a l
time
them?
program.
in O c t o b e r
And M r . Miller
of
joined
negotiations.
came
in a t
the end a n d
was
got down to w r i t i n g
the
so f o r t h , M r . M i l l e r
was
up?
W h e n we a c t u a l l y
o f the a g r e e m e n t a n d
there.
Q
Did
B e l l or T e x t r o n r e t a i n
or m a n u f a c t u r e r ' s
21
23
the year
proposal covering
So M r . Miller
A
20
22
testimony
the n e g o t i a t i o n s
that p r o g r a m .
us in t h o s e f i n a l
18
19
through
1975 to complete
15
16
t h a t he n e g o t i a t e d
We went to Iran some
13
14
said
head.)
'75 a g r e e m e n t . W h e n d i d h e e n t e r
rather elaborate
10
11
that?
W e l l , there was a p r o p o s a l period
probably ran
a
in
shakes his
p r o d u c t i o n a g r e e m e n t a t his
5
6
r o l e , no part
A
N o , s ir .
Q
There were no Iranian
manufacturers
were
representative
involved
A
The
representatives
or h a v e a n
in I r a n
in c o - p r o d u c t i o n a g r e e m e n t
only representative
in I r a n w a s A i r T a x i a n d
then?
represented
or a g e n t s
that
agent
for
of
as
Bell
1975?
Bell has
their relationship
who
was
had
439
362
1
concluded
2
And we have
3
future
4
Q
5
sales
6
7
in
11
about
Bell actually
Government and
14
ment.
15
a n y kind
And
our
for
Include
anything
Govern-
for c o - p r o d u c t i o n
of
for the
sale
of 4 8 9
then
mention?
A
That's
Q
The
on A p r i l
U.
contract.
18,
right.
last m e n t i o n was
in t h e
l e t t e r of
intent
1972?
21
A
That's
22
Q
Exhibit No.
A
That's
Q
When then was
A
W e l l , the G o v e r n m e n t
agreement
c o n t r a c t was w i t h the U . S .
So t h e F M S a g r e e m e n t
dropped any
25
Iran
reached a g r e e m e n t w i t h the
there was no prevision
in t h a t f i r s t
Q
24
in
c o - p r o d u c t ion?
A
23
commercial
Iranian Government
of 4 8 9 h e l i c o p t e r s , d i d t h a t
13
20
Bell for
But c o m m e r c i a l a v i a t i o n
that Bell reached w i t h the
19
the
negotiated.
N o w , in t h e a g r e e m e n t , t h e f i n a l
the sale
18
million
limited.
Q
16
2.9
on a l l
Iran?
They do.
10
17
that we have
of t h e
of a n y kind
loes Air T a x i represent
is v e r y
12
payment
no r e p r e s e n t a t i v e s
programs
A
8
9
b a s i c a l l y w i t h the
correct.
13.
correct.
co-production
separated?
of I r a n <$esired
to
make
440
=
363
2
2
3
their
initial procurement and
possibility
that A p r i l
4
'72
the
the explanation
course of the
5
and
6
i n d u s t r y , the G o v e r n m e n t
7
were not prepared
8
b a s i s . And
9
year
11
of the c o m p l e x i t i e s
of t h e
of I r a n r e c o g n i z e d
to go forward
on a
the
perhaps.
To your best recollection, about w h e n , when
'72?
A
Well, certainly b y — c e r t a i n l y
Q
Now, when you visited
by
September
Iran then and
S h a h , h a d tlhe d e c i s i o n b e e n m a d e t h e n t o d r o p
16
duction?
17
A
Y e s , it
18
Q
And
'copters
just go with a straight
on an FMS
Y e s , it
21
Q
N o w , If t h e
purchase
of
Iranian Government had gone
c o - p r o d u c t ion r o u t e , w o u l d
23
of a n M N O f e e t o A i r
lated
co-pro-
had.
22
A
the
basis?
A
24
saw
had.
20
they
co-production
15
25
helicopte
that
'72.
14
19
in
negotiations,
that happened, say, midway through
you say m i d w a y
12
13
'72
Q
the
it w a s m e n t i o n e d
letter.
During
10
they discussed
of c o - p r o d u c t i o n . A n d
I believe
there have
been a
the
prohibition
Taxi?
that some
of the a g r e e m e n t s
that n o f e e s w o u l d be p a y a b l e
on p a r t s
stipu-
produced
441
3 64
i
in I r a n f o r a c o - p r o d u c t i o n p r o g r a m . B u t t h e
2
coming
3
to a
Q
based
6
A spare parts
on t h o s e
A
thing because
8
money.
9
Q
subject
it w o u l d h a v e
S o it w o u l d
i n t e r e s t n o t to h a v e a
A
perhaps,
12
Q
And
13
commission?
14
A
Perhaps.
15
Q
N o w , in t h e
commission
be c e r t a i n l y
co-production
that would
was eventually
17
a n y m o n e y or a n y t h i n g
18
or e v e n a p r o p o s e d
settled
No, sir.
to be- a
negotiated
been a large a m o u n t
in A i r
of
Taxi's
agreement?
yes.
16
A
or a
parts?
11
19
commission
V e i l , a g a i n , it w o u l d h a v e
7
10
S t a t e s w o u l d s t i l l be
fee.
4
5
f r o m the United
parts
have deprived
t h e m of a
2.9 m i l l i o n d o l l a r
on Air T a x i , did
relating
to a
c o - p r o d u c t ion
The
payment
that
include
co-production
agreement?
2.9 m i l l i o n was a
payment
20
m a d e to s e t t l e a c o n t r a c t r e l a t i o n s h i p
between Air
21
and
that Air
22
23
24
Bell. And this
would
settlement
receive no further
in the p a s t a n d
would
in the
25
obtain
Q
provided
payments
had r e n d e r e d
that
Taxi
Taxi
for a n y s e r v i c e s
on a n y b u s i n e s s
that
they
we
future.
I w a n t to talk for a m o m e n t , d i s c u s s
the
442
3671
2
status
of I r a n i a n
commission
3
Taxi have
5
even
been
if c h a r g e d
6
A
7
legal.
8
Q
his e d i c t or a t
Iranian
o f f t o B e l l on
T o the b e s t
This
commission
legal under
is e v e n a f t e r
least
issue of c o m m i s s i o n s and
the A S P I R
had
initiated
13
Q
No.
14
A
And
upon
there
commissions
So t h e c o m m i s s i o n s
17
A
Would have been
18
Q
The
in
l a w of t h e
land.
would
have
been
illegal?
illegal, though, under ASPIR —
21
Q
They would not have
22
A
L e t me g o b a c k a n d
in I r a n
been
permitted?
say that commission
The A S P I R g o v e r n i n g
of U . S . G o v e r n m e n t
or—
illegal.
t o d a y , the b e s t of my
legal payments.
provisions
Iran
been legal, but
W e l l , they wouldn't have been
ments on sales
in
legal.
commissions would have
been
done
A
whole
the change
20
25
issued
today.
Q
they would have
the
is m u c h b u s i n e s s
16
are very
the
be
relations.
But that doesn't change
24
loss?
General Toufanian
A
23
regulations
its p r o f i t a n d
12
19
payment to Air
law a n d
issued h i s — r a i s e d
11
based
the
of m y k n o w l e d g e , it w o u l d
10
15
concerning
payments.
Would a direct
4
9
law a n d r e g u l a t i o n s
pay-
knowledge,
the
contracts^ would
state
443
366
1
that commission
2
the c o n t r a c t .
3
illegal.
payments are unallowable
That asper does not make those
4
Q
Unallowable
5
A
That
if a
in t h e s e n s e — i n
contractor
6
c o m m i s s i o n s , he c a n n o t r e c o v e r
7
Government
8
Q
expends
I hich
M R . SOUTTER:
N o . 13 of E x h i b i t N o . 6 6 h a s w h a t
12
are quite welcome
13
BY M R .
provisions
and
to r e a d
Q
16
to the U . S . A r m y A v i a t i o n
17
deals with
N o w , I'm referring
9 t h , 1973
Tab
to be
in
the
you
whole.
to E x h i b i t N o . 56
Systems
to Air
Yea h .
Q
Paragraph N o . 4 states
between
consider
and
commission
therefore
be h a n d l e d
that
reproduced."
agreement
confidential
request that
In a c o n f i d e n t i a l
the enclosures
This
that:
Bell and Air T a x i to be
information. We
matter
the
Command.
Taxi?
A
"We
which
letter from M r . Rudning at
the p a y m e n t s
20
2 3 - 5 5 3 0 - 78 - 29
S.
FREED
w a s the M a y
25
I believe
from them
15
24
the U .
they s p e a k for t h e m s e l v e s , and
14
23
for
May I suggest that
asper
22
sense?
means—
11
21
payments
money
it u n d e r
10
19
what
under
contract.
9
18
costs
to t h i s
this
nature
letter not
be
Bell
444
3671
Why would
2
letter
3
A
to the A r m y , t h e
B e c a u s e we
4
private
5
to a n y o n e
6
7
A
No, sir.
Q
So
A
There was no
that
We h a v e —
Q
W e l l , I would
74 w h i c h
23
happen
concern.
business
informatiofi
competitors, very
competiti
like to introduce E x h i b i t
is t h e A r t h u r Y o u n g
Q
year
submission
N o w , in t h a t , t h e r e
on
No.
Bell.
Fort Worth
office
the p r o v i d e n c e
dollar
payment
in i t , it
of A r t h u r
for
fisca
Young's
Young.
involves a discussion
of commissions
o f the
to the I r a n i a n
2.9
is a v e r y c o n f i d e n t i a l
client because
the
Iranian
item
million
program.
states:
"This
the
of A r t h u r
to a M r . M . A . R i z z o , R - i - z - z - o , of
office
This
And
is a m e m o r a n d u m
1973 from a M r . C e c i l E . Smith
24
25
disclosed
them.
( T h e s u b m i s s i o n r e f e r r e d to w a s
marked "Exhibit N o . 74" for
identification.)
21
22
not be
are
competitors.
17
20
matters
you—
We have
16
19
that
knowledge?
15
18
should
to k n o w a b o u t
it w a s j u s t t o p r o t e c t
or your o p e r a t i o n s
13
14
like
if t h i s b e c a m e
9
12
In
Was there any concern a b o u t what might
in I r a n
11
think our b u s i n e s s
that would
Q
Included
request?
to our c o r p o r a t i o n and
8
10
t h a t s t a t e m e n t be
with
Government
445
36714/9
j
does not allow any commissions
2
sales to
3
4
There
know who put
5
that
13
A
whole
16
in h a n d w r i t i n g ,
if c h a r g e d
to t h e I r a n i a n
Probably
I don't
saying:
to t h e m .
It
hasn't
program."
the
of
because
of their
ignorance
of
the
matter.
Q
Would not
Bell have told A r t h u r Young
Iranian Government
Arthur Young coming
14
15
there.
natura?
11
12
on
But w h y would Arthur Young make a note
9
10
It's
Only
been charged
7
8
is a m a r g i n a l n o t e
it i n .
"No.
6
to be paid
them."
A
regulations
to r e v i e w t h e
Well, Arthur
accountants
beforehand,
Young—meet
information.
before
payment?
w i t h some of
to v e r i f y our r e c o r d s . And w h e r e
came f r o m , I have no
about
our
that
commeni:
They probably had
mad
17
available
to t h e m the l e t t e r w r i t t e n b y Farmer
which
18
instructed
o u r p e o p l e on h o w t o h a n d l e
the
payment.
19
Q
Now, also
in t h i s d o c u m e n t , t h e r e a r e
in
20
e a c h y e a r of t h e d i s c u s s i o n
of the p a y m e n t s
to
Iran,
21
22
there
is t h e n o t a t i o n
Bell does not want any
that these
payments are
information disclosed
confidential
on
this.
23
Why was
that?
24
25
A
I think we don't want any
on our books and records
of a n y k i n d .
information
I think we
disclosed
want
446
3671
to disclose
2
t h r o u g h our n o r m a l public
only what we are required
3
E x h i b i t N o . 75 w h i c h
5
the dealer
8
Q
in t h e I r a n i a n
A n d , a g a i n , this m e m o
D i d B e l l k e e p a l l of
Iranian commission
A
Probably.
13
Q
A g a i n , to protect
14
A
Certainly.
15
Q
agreement
17
is E x h i b i t N o . 6 4 .
18
commission
19
dollar
20
A
23
is m a r k e d a s
"Confi-
And
its d o c u m e n t s
on
the
the
information?
that
Bell had with A i r T a x i , I believe
What was
the m a x i m u m
that
potential
l i a b i l i t y j u s t p r i o r to the 2.9
million
agreement?
it w a s
I think we talked about that
something
Q
4.3
A
Yes,
24
25
program.
N o w , u n d e r A m e n d m e n t N o . 2 t o t h e 19 70
16
22
about
confidential?
12
21
introduce
dential."
10
11
like to
from M r . Farmer
( T h e m e m o r e f e r r e d to w a s
m a r k e d " E x h i b i t N o . 75" for
identification.)
6
7
9
I'd
is a m e m o
commissions
disclose
reporting.
M R . FREED:
4
to
like four m i l l i o n
million was based
figure
dollars.
on t h e o n e p e r
cent?
sir.
M R . GALERSTEIN: The precise
4,362,430.
before.
figure
is
447,
T70
1
BY M R .
2
Q
3
FREED
Now, Amendment
to o n e p e r
cent on foreign m i l i t a r y
4
How does this
5
testimony
6
two a n d a h a l f per
in
M R . FREED: Do we have
(Off the record
M R . SOUTTER:
M R . MARINACCIO:
14
M R . SOUTTER:
18
have
testimony
21
22
to a n
25
to read
Iranian
been marked.
and
And
the d o c u m e n t
searching
on this p o i n t , may
into the r e c o r d w h a t
on c h a r g i n g
that has
if y o u w i l l j u s t g i v e t h e p a g e
No. 66.
I
I
fees
By a l l m e a n s .
from a document
for t h e
13 o f E x h i b i t
sir?
or
contract?
I
already
number
record?
M R . SOUTTER:
Tab
that?
While you were
M R . MARINACCIO:
believe you are reading
testimon
Marinaccio?
Yes,
to be the a s p e r p r o v i s i o n s
commissions
23
24
Mr.
of M r . M i l l e r
your permission
believe
19
20
in h i s
discussion.)
13
for the
was
Washington.
12
17
testimony
M R . G A L E R S T E I N : Do y o u have the
11
16
that point
cent?
confirmation hearing
10
15
commission
sales.
of Bell at
This was M r . Miller's
9
the
square with M r . Miller's
that the e x p o s u r e
7
8
N o . 2 limits
It
"Foreign Military
I'm reading from what
says:
Sales
to
Ira#?."
is
448
367"One
1
be
2
of the f o l l o w i n g
included
in a l l c o n t r a c t s
3
ments
4
agent's
5
and payment
6
of Iran before
7
of t h e G o v e r n m e n t
fees/commission
(a)
provisions
for F M S
require-
of I r a n , u n l e s s
has been
thereof approved
contract
shall
the
identified
by the
Government
award:
For firm fixed
price
contracts,
or
8
fixed price contracts with escalation:
"The
9
contractor
price
10
does not
certifies
t h a t the c o n t r a c t
include any direct or
11
of a g e n t ' s
12
s a l e s agents involved
13
s a l e s to the G o v e r n m e n t
fees/commissions
indirect
for
(b)
15
"Notwithstanding any other
t y p e s of
16
of t h i s
17
cost of a g e n t ' s
18
sales agents
19
sales
20
considered as an allowable
21
this
22
contract, any direct
25
indirect
for
contractor
military
of I r a n s h a l l n o t
i t e m of c o s t
be
under
contract."
End quote; end m y
reading.
M R . MARINACCIO:
your
or
provisions
in t h e f o r e i g n
to t h e G o v e r n m e n t
23
24
contracts:
fees/commissions
involved
military
Iran."
14
A l l other
contractor
in t h e f o r e i g n
of
cost
clarifying
that for the
Thank you.
record.
Appreciate
449
366
1
BY M R .
2
Q
3
FREED
I want
to r e a d
f r o m the r e c o r d
of the c o n f i r m a t i o n h e a r i n g s
4
"Question:
of M r .
Senator
how much M r . Zanganeh asked
6
tated
7
"Mr. Miller:
the^y w e r e
9
commissions
which
half million dollars, something
on 5 0 0 m i l l i o n w o u l d
12
"Am I right?"
13
"Yes.
t h a t it w o u l d
Air Taxi would provide
17
tinued
18
people became
19
u n t i l they got the b e s t
Q
Could
22
23
24
25
like
the
p r o g r e s s e d , it b e c a m e m o r e a n d m o r e
16
that."
program
apparent
be a bigger program and
its s e r v i c e s .
to b e n e g o t i a t e d
more
at
of
be s e v e n a n d a
And I know that as
15
that
It
lower rates as
involved and
comment
A
Amendment
on
conour
renegotiated
deal."
S o , at that p o i n t , do y o u a g r e e or
you
and
contemplated
of t w o a n d a h a l f p e r c e n t
11
20
know
precipi-
The original agreements
signed modifications
10
21
Do y o u
for w h i c h
negotiations?"
8
14
transcr
Miller:
Brooke:
5
of the
disagree?
this?
Well, I think M r . Miller
1 which provided
is c o m m e n t i n g
that we had a
on
responsibility
to p a y two and a h a l f per cent o f c o n t r a c t p r i c e .
in a d d i t i o n
to t h a t , w e h a d
the
future
liability
And
of
450
373
14/14
1
additional monies
2
by settling
3
much
4
reasonable
5
s a m e t i m e , t o o k out a n y f u t u r e
6
against
7
Taxi.
9
would
for the services
us o n n e w
11
A
14
M r . Atkins
16
rather
17
to a s k
19
complex
party.
to N e w
legal
sued under Iranian
law?
Bell have
if it h a d
I
really,
him
questions.
it's f a i r . A n d
if y o u w a n t
legal
Let me just a s k M r . A t k i n s
this matter with
anybody?
N o , s ir .
M R . MARINACCIO:
has an a d d i t i o n a l
a t this
dispute
York?
Did y o u e v e r d i s c u s s
A
Air
Law.
legal q u e s t i o n s , you ought to a s k some
23
25
contract with
could.
M R . FREED:
this:
the
Taxi
is n o t a n a t t o r n e y a n d y o u a r e a s k i n g
20
24
they
I don't think
18
and
of A i r
M R . GALERSTEIN: Excuse me.
15
22
the
Now what rights would
the suit
fair
seems to p r o v i d e that a n y
I believe
Q
moved
claims
under New York State
Could Air Taxi have
12
21
thought was
out at a
business.
The contract
be h a n d l e d
settled
therefore,
rendered, and w h i c h , at
Let me a s k you a b o u t
10
13
out for $ 2 , 9 5 0 , 0 0 0 , we
lower f i g u r e , w h i c h we
Q
8
on a n y n e w b u s i n e s s . A n d ,
time to
question
you.
I believe M r .
that he would
Collins
like to
put
451
367THE
1
WITNESS:
Okay.
2
EXAMINATION
3
4
BY M R .
5
Q
COLLINS
M r . A t k i n s , I would
6
would
provide
7
correct Amendment
8
We d i s c u s s e d
9
And
10
if y o u
A
just
for the r e c o r d w h a t
1 to the June
these various versions
Could
have more
13
would.
14
Q
I don't
17
A
firsthand
knowledge
in?
of t h a t s i t u a t i o n
So, I will ask you and
know who w i l l have
I will ask him
I think you have
the d o c u m e n t ,
M R . MARINACCIO:
we would
21
Bell's personnel and
22
w h i c h h a s b e e n m a r k e d , is t h e d o c u m e n t
has reference
that your
would
than
I
document,
also.
but—
W e l l , I t h i n k , if I m a y
20
request
that
it.
for the p u r p o s e of the c l a r i f i c a t i o n
of t h e
record,
counsel make a search
t e l l us w h i c h o n e of t h e
of
exhibits,
that M r .
Collins
to.
24
M R . SOUTTER:
happily endeavor
amendment.
I think he
19
25
agreement.
But we w o u l d a l s o w a n t a copy of the
18
23
the
I s u g g e s t to you that y o u r e v i e w
m a t t e r w i t h R u d n i n g w h e n he comes
16
of the
you
could—
12
Itself.
you consider
1 5 t h , 19 70
11
15
l i k e t o a s k , If
M r . Marinaccio, we
to go o n , but the a g r e e m e n t s
will
which
were
452
3671
s i g n e d , leaving out the proposed
one, are
2
agreements
3
consequence
4
legal efficacy.
As you know, Amendment
5
became
in a n y s e n s e .
of o n e a n o t h e r a n d t o u s , it is of
at a l l , and
operative
they would
the terms
7
seded by Amendment N o . 3.
8
you request, but I, at the present
9
tell you and doubt
of A m e n d m e n t
10
No. 1, never
superseded
it r e a l l y m a k e s a n y
M R . COLLINS:
I think one
is t h a t y o u h a v e a f e w e x h i b i t s , a l l
named as Amendments N o . 1.
13
1 , 19 7 2 .
14
signed.
15
think we want to have
cables
It c l e a r a s
can't
Issue
here
pertaining—being
indicating
The amendment was signed
that
difference.
O n e o f t h e m is d a t e d
April
t h a t it w a s
in A u g u s t . S o , I
to
when—
M R . SOUTTER: W e l l , let's not have a
17
legal argument
18
o p e r a t i v e a g r e e m e n t s , a l l of w h i c h s a y
19
e f f e c t i v e as of A p r i l
on t h i s .
There
1, 1972.
Is a p r o v i s i o n
it w i l l
O n e , of t h e m ,
20
has an A p r i l date
21
April date.
22
tions to do a g r e e m e n t s as o f , to provide
23
dates w h i c h w i l l either be before
super-
time, certainly
12
25
by
We w i l l m a k e the e f f o r t
11
16
same
N o . 2 , w h i c h , in t u r n , w a s
that
T h e r e are
no
have had the
It w a s
6
24
verbatim
on i t .
in
be
actually,
The others do not have
It is n o t u n c u s t o m a r y
We w i l l do as we
in m a n y , m a n y
or
the
an
situa-
effective
retrospective.
w e r e a s k e d , to try and
identify for y o u what everybody
considered
to be
the
453
3671
f i r s t , b u t I can see n o
2
a n y of t h o s e
legal operative effect
M R . MARINACCIO:
3
4
of the r e c o r d .
5
as
6
operative
7
clear
8
a g r e e m e n t w a s , in f a c t , e n t e r e d
9
between
documents.
I think
it's
Just for
important
to w h i c h one of the a g r e e m e n t s
agreement.
Because
clarification
t o be
clear
is c o n s i d e r e d
the
I think we have to be
on the r e c o r d as to the p r e c i s e date t h a t
it w a s
entered
into as a date
into, and
subsequent
if a n d
o r if it w a s a d a t e b e f o r e A p r i l 1 , is a m a t t e r
11
o u g h t to be v e r y
12
And
13
is a m a t t e r
14
relevancy
15
entitled
16
operative
on t h e
I do n o t a g r e e
irrelevant
when
to A p r i l
10
clear
operativ
1,
that
record.
that t h e m a t t e r of
to t h e r e c o r d .
timing
It's a matter
to the r e c o r d , and I think the record
to b e c l e a r o n w h i c h o f t h e d o c u m e n t s
is a n
document.
17
At
18
ty to a s k the q u e s t i o n s
this p o i n t , I would
that he
like to a s k M r .
Doher
has.
19
20
EXAMINATION
21
BY M R .
22
Q
DOHERTY
23
personally
24
of
25
M r . A t k i n s , did you testify that you had
gone
to I r a n
1972?
A
of
is
Yes, I did.
in t h e
latter part of August
454
366
Q
1
2
Could
like at that
3
A
y o u t e l l us w h a t
time
in t e r m s
The—when
4
completed
5
final demonstration
6
of t h e I r a n i a n
7
8
It w a s
shortly
the program would
the numbers, numbers
12
cured.
13
week after
14
would
later
I would
Q
it w a s
mid
informed
that would
time within
that
be
told
pro-
the
the n u m b e r s .
B u t , mid-September, what were you
next
I
talking
numbers?
I think we w e r e , at that p o i n t , believed
t h a t the p r o g r a m w a s 4 0 0 , 5 0 0
So that's the
A
Yes.
21
Q
B a l l p a r k area
22
A
Yes.
Q
B u t a s of A u g u s t
was
program.
September.
Q
25
some
that, that they finalized
20
24
that the d e c i s i o n
of h e l i c o p t e r s
believe
in t e r m s o f
A
group
go f o r w a r d , I b e l i e v e I was n o t
say someplace
about
almost
for a large
the p o i n t I w a s
19
23
in c o u n t r y , w e h a d
to m a k e a t g a r a g e
I believe at
15
dollars?
military.
11
18
I arrived
looked
o u r m o n t h of d e m o n s t r a t i o n s , a n d w e h a d a
10
17
of n u m b e r s a n d
m a d e on the p r o g r a m to go f o r w a r d w i t h the
9
16
the p r o g r a m
you realize you were
ships.
480?
anyway?
in g o i n g o v e r t h e r e , d i d
speaking
was a big p r o g r a m , I g a t h e r .
in t e r m s
of, I mean,
this
Y o u knew the potential
was
455
367i
there at that
point?
2
A
(The w i t n e s s n o d d e d
3
Q
The record won't reflect a nod
4
head, sir. Would
5
it b e s a f e to s a y t h a t y o u k n e w
8
or m o r e
Q
Would
that
A
was
it w a s a b i g
of p o t e n t i a l l y
program.
it b e m o r e — d i d
you realize
it w a s
time?
I don't think I can be r e a l s p e c i f i c ,
think that X understood
three
Q
to f i v e h u n d r e d
So the
then would appear
A
hundre
sir.
but
the program
magnitude
o f the p r o g r a m
in A u g u s t
ships.
parameters
t o b e t h r e e to f i v e h u n d r e d
(The w i t n e s s n o d d e d
his
ship
area
head.)
18
Q
Is t h a t c o r r e c t ,
19
A
Yes,
20
Q
If N o . 1 , A m e n d m e n t N o . 1 , w a s n o t
sir?
sir.
21
u n t i l s o m e p a r t or s o m e
22
which would appear
23
indicating
24
August
25
per cent provided
you
t w o or t h r e e
time?
potentially more at that
I would
17
ships at
Yes,
14
16
in t e r m s
A
13
15
answer?
Would
Q
12
your
I realized
were dealing
11
of
Yes.
6
10
head.)
A
7
9
you
his
time
in m i d - A u g u s t
finalized
of t h a t
to be the case f r o m E x h i b i t N o .
that Z a n g a n e h h a s signed a s p a r t of
16, making
the calculations
for
it
year,
'72,
on
of two a n d a
half
in A m e n d m e n t N o . 1 , b a s e d
even
on
456
3671
300
s h i p s , I t h i n k w e ' d be t a l k i n g a b o u t a
2
of s o m e w h e r e
3
million dollars, just
in t h e v i c i n i t y
of—
That would
A
N o , I don't think
5
Q
Seven
6
that's
A
I think we c a l c u l a t e d —
the figures
on the p r o c u r e m e n t a t
8
a half per c e n t , wasn't
9
million
correct.
Didn't we
the rate
or e i g h t a n d a h a l f m i l l i o n
M R . GALERSTEIN:
BY M R .
12
Q
9.7 on
13
A
One the 500
14
Q
Y e s , s o on 3 0 0 , w e ' d
9.7.
DOHERTY
the—
ships.
probably be
in t e r m s of s i x o r s e v e n m i l l i o n , s o m e w h e r e
16
ballpark?
17
A
Yes.
18
Q
S o It w o u l d be c o r r e c t
22
23
24
25
a t the time A m e n d m e n t N o . 1 was
to b e s o m e t i m e
for t h e r e i n was
talking
in
to s a y t h e n
that
that
executed, which
in A u g u s t of 1 9 7 2 , a s o p p o s e d
of 1 9 7 2 , that the C o m m i s s i o n
vided
half
dollars?
15
21
calculate
of t w o a n d
it a b o u t s e v e n a n d a
11
20
nine
million?
7
19
be
ballpark?
4
10
commission
appears
to A p r i l
that was potentially
somewhere
between
pro-
approximately
s i x m i l l i o n , if i t ' s a 3 0 0 plane p r o g r a m a n d n i n e o r
m i l l i o n , if it w e n t up to
A
Yes,
sir.
500?
ten
457
366
Q
1
N o w , I believe you had testified
2
early as November
3
m u c h b e e n m a d e on t h e p a r t of S e l l p e o p l e
4
was a potentially very large
of
I r a n , a n d t h a t A i r T a x i w a s j u s t n o t up t o
that n e g o t i a t i o n ;
A
Veil, I don't
think we would
sentative handle a negotiation
9
country, no matter how
N o w , I am not throwing
11
A
Yes.
12
Q
I'm not suggesting
13
A
Yes.
14
Q
—Air
in a n y
stones
a t —
that-r-
p r o b l e m , per
se,
that Bell had m a d e a d e t e r m i n a t i o n
in a n d a b o u t
that
but
16
time that
17
as opposed
it w o u l d
take
the lead
on the
to A i r T a x i .
Is t h a t
right?
18
A
Yes, we'needed
19
Q
A n d , in f a c t , B e l l d i d t a k e
negotiations
at that
A
(The w i t n e s s n o d d e d
Q
A n d did take the
you were
over
the
involved.
lead
on
the
time?
22
letter of intent w a s
negotiations
to b e d e f i n i t e l y
21
repre-
T a x i had a particular
15
25
let a
capable.
Q
24
handling
of t h a t s i z e
10
23
in
correct?
8
20
there
program, "potential"
6
is t h a t
as
pretty
that
5
7
that
1971, a determination had
his
lead
head.)
in A p r i l o f
issued and a c t u a l l y
there and h a d , after
gather, a fairly positive
'72, the
through
August
the d e m o n s t r a t i o n ,
commitment
that ^ h e
program
I
458
3671
was going
to go t h r o u g h
2
A
That's
3
Q
—of
4
A
That's
5
Q
opinion
7
August
8
for their
9
million dollars
11
'72?
correct.
in y o u r n e g o t i a t i o n s
facts, was
efforts
Q
to a
on this
W e l l , c e r t a i n l y , we had a n a g r e e m e n t
that a m o u n t
N o w , up u n t i l A u g u s t of
didn't provide a set percentage
correct?
15
A
That's
16
Q
The
of
1 9 7 2 , the
commission;
original contract
of J u n e
that any commission
negotiable ?
19
A
That's
20
Q
So that u n t i l this a g r e e m e n t , and
24
25
agreement
is
1970
18
N o . 1 was entered
under
commissioi.
that
correct.
17
23
ten
program?
14
22
your
in
commission
of a n y w h e r e b e t w e e n s i x a n d
13
21
it
with A i r T a x i that
of 1 9 7 2 , t h e y w e r e e n t i t l e d
A
September—
correct.
which they could have received
12
or
N o w , in l i g h t of t h o s e
6
10
in A u g u s t
on this kind
of a
provided
sale would
correct.
into
in A u g u s t of
Amendment
1972, would
be c o r r e c t to say that no d e t e r m i n a t i o n had b e e n
as to w h a t the p r e c i s e a m o u n t of m o n e y w o u l d be
was
due to A i r T a x i u n d e r t h a t
A
That's
be
correct.
contract?
it
made
that
459
3671
Q
2
negotiating
3
N o . 1, that provided
4
T a x i of s i x t o t e n m i l l i o n
5
What
A
principle
fact guided
the provision
into this
you
in t e r m s
contract
for a p o t e n t i a l
c o m m i s s i o n s . A n d , as I mentioned
rates
8
f r o m 25 p e r c e n t o n o u r p r o d u c t s ; o n o u r J e t
9
they run about
s e r i e s , our s t a n d a r d
12
13
19
20
21
24
anywhere
Rangers,
On our
provides
Huey
for about
six
that time
that you were
helicopters?
A
That's
Q
S o it t r a n s l a t e s
A
That's
commissions
correct.
i n t o s i x to t e n
paid
c o r r e c t . But we
million
looked at the
in t h e f i e l d , p a i d b y B e l l .
q u i t e a b i t a b o u t t h e r a t e s of c o m m i s s i o n s
paid
Q
commission
Would
o n l y the r a t e by
sidered
25
2 3 - 5 5 3 O - 78 - 30
We
rates
of
knew
that were
beirig
in I r a n . W e t h o u g h t t w o a n d a h a l f p e r c e n t w a s a
reasonable
22
23
commission
dollars?
17
18
But y o u did know a t
talking a b o u t 3 0 0 to 500
15
16
agreement
of
cent.
Q
14
before,
industry were averaging
12 a n d a h a l f p e r c e n t .
per
Air
looking at rate
7
11
to
dollars?
V e i l , basically, we were
10
in A m e n d m e n t
commission
6
in t h e a v i a t i o n
of
A
on that
you agree that you could not
i t s e l f ; t h a t the rate had
in r e l a t i o n s h i p
Of
sale.
course.
t o t h e s i z e of
the
consider
to be
con-
contract?
460
383
Q
Were
there any other
factors
that
entered
1
into your
consideration?
2
A
No.
Q
S o , b a s i c a l l y , it w a s — a s
I t h i n k those w e r e t h e b a s i c
ones.
3
I understand
what
4
you said, a figure which you considered
to b e —
I don't
5
6
want
to p u t w o r d s
in y o u r m o u t h :
Did
you consider
this provision was a fair compensation
that
to A i r T a x i
for
7
8
9
Its
services?
A
Yes.
reasonable
We
considered
c o m p e n s a t i o n , and
it t o b e a f a i r
to be
and
less than w e
were
10
11
12
being paid
Q
on s i m i l a r c o n t r a c t s
The
standard
in
Iran.
c o n t r a c t , the
facturer's representative
standard
manu-
contract by Bell during
that
13
14
15
16
17
18
19
20
21
22
23
24
25
p e r i o d , as I u n d e r s t a n d
two separate
the direct
foreign
kind
it, contained
of s a l e s .
provisos
One would
generally
be
s a l e f r o m B e l l to a t h i r d p a r t y , b e it a
government
I understand
or otherwise. And
it, generally
commission written
Into
carried
that p r o v i s o , as
a set rate
the c o n t r a c t ;
Is t h a t
A
That's
correct.
Q
On
other h a n d , as I understand
standard
for
the
c o n t r a c t , the p r o v i s o t h a t d e a l t w i t h
s a l e s , the kind of t r a n s a c t i o n s w e ' r e
did not contain a specific
compensation;
is t h a t
right?
the
rate
set
Government
dealing with
set p e r c e n t a g e
correct?
of
of
here,
461
36714/25
i
A
Was
2
Q
So the c o n t r a c t
3
not
4
that
s u b j e c t to
c o n t a i n a c e r t a i n per
A
That's
6
Q
N o w , could
for that
is
y o u e x p l a i n to us w h a t
W e l l , our
9
Q
N o w , I'm
10
A
Yeah.
11
Q
—just
12
transaction, but
13
contracts
reason
base—
saying—
to c l a r i f y — n o t
just on this
in t e r m s o f w h y d i d
that way?
A
Why was
agreement provided
16
commission
17
on s m a l l q u a n t i t y
payable
a , let's
particula
Bell draft
that the s t a n d a r d
W e l l , our manufacturer's
18
the
was?
A
15
cent for c o m p e n s a t i o n ;
correct.
8
14
i t s e l f , w h e n w r i t t e n , did
correct?
5
7
negotiation.
its
form?
representative
say a standard
rate
to a l l o u r f o r e i g n a g e n t s
of
on—based
purchases.
If t h e p u r c h a s e s e x c e e d e d a c e r t a i n n u m b e r
19
a i r c r a f t , then
20
w o u l d be
21
the
commission
payable
to the
representat
negotiable.
W e had n o w a y of f o r e s e e i n g a l l the
different
22
c i r c u m s t a n c e s , a l l the d i f f e r e n t
23
types
24
have a l l over the w o r l d . A n d , t h e r e f o r e , we kept
25
open
of
of a r r a n g e m e n t s
types
and services
for negotiation b e t w e e n the
of
contracts,
of d e a l e r s
parties.
t h a t w e wojild
the
thiAg
462
366
1
Q
W e l l , I may have misunderstood
2
it w a s m y i m p r e s s i o n
3
between B e l l and a foreign c o u n t r y , your
4
reps agreement
5
negotiate
6
be
7
8
9
10
per
just said
it, your compensation
sale
manufacturer's
up f r o n t , "If
you
on a d i r e c t sale
will
so.
Q
Does
not?
A
No.
I think you are
a certain number
i n c o r r e c t , that we
of a i r c r a f t ; a n d
if
Q
14
I
were
does
contain
y o u e x p l a i n to us w h y the
the p r o v i s i o n s w i t h r e s p e c t to
if o v e r a c e r t a i n n u m b e r
17
18
19
20
21
22
A
example, the standard
run around
of a i r c r a f t
W e l l , if w e — i f
is
contract
negotiation
sold?
we use this
case as
commission would have
10 p e r c e n t w h e n y o u w e i g h t
aircraft and
sale.
see.
Could
15
have
more
s o l d , t h e n the c o m m i s s i o n s
o p e n to n e g o t i a t i o n s , w h e t h e r a n F M S o r a d i r e c t
13
Bu
cent?
I don't believe
than that number were
12
16
generally
if t h e r e w a s a d i r e c t
A
stipulated
11
that
something.
probably
together
the spare p a r t s . A n d , t h e r e f o r e ,
commission
for w h i c h we would have been
would have
been much higher
than we
an
the
the
committed
finally
negotiated.
23
Q
Is t h e r e a n y
relationship
generally
between
24
the c o m m i s s i o n
that was paid
on d i r e c t
sales as
compared
25
with
the commission
that was
p a i d o n F M S or
government-
463
367i
-to-government
A
2
3
sales?
Yes.
I would
say that there
is a
direct
relat ionship.
Q
4
5
one
6
of that
And how do those two relate? Are
larger
7
than the other?
Is t h e r e a n y
they
equal,
relationship
sort?
A
I would
say that the commission
on a
direct
8
sale—and
9
s t a n d a r d a r r a n g e m e n t — w o u l d • a lways be at least as
10
as
ships, where we have
the c o m m i s s i o n m i g h t be on a n F M S
11
12
l e t ' s u s e under, f i v e
Q
Would
sale.
you say that the commercial w i l l be
a t l e a s t as h i g h ?
Is t h a t w h a t y o u
said?
13
A
Yes.
14
Q
A s a g e n e r a l r u l e , is t h e
15
A
Somewhat higher than the FMS
16
Q
Thank
17
18
A
Yes,
I mean a
direct
Q
Is
sir.
it u n u s u a l a t a l l f o r t h e F M S , f o r
21
government-to-government
22
for a commission
23
commission
sale.
you.
And when I say "commercial,"
19
25
commercial—
sale.
20
24
a
high
A
percentage
that
in t e r m s
Is
of
s a l e , t o c o n t a i n or
is e q u a l t o t h e d i r e c t
the
provide
sale
percentages?
it u n u s u a l f o r a n F M S s a l e t o b e a r t h e
as a direct sale?
I would
not
say it w a s
sam|e
464
366
1
un us ua 1 .
2
3
Q
You mentioned
4
5
certain meetings with
General
Toufanian.
I believe
is t h a t
you indicated
you had
two
meetings
correct?
6
A
I think I said at
7
Q
C a n y o u r e c a l l or do y o u h a v e a r e c o r d
8
when these meetings
9
10
A
took
least
two
meetings.
place?
I have no r e c o r d . But I believe we
about agents and representatives
on s e v e r a l
11
C e r t a i n l y , t h e G o v e r n m e n t of Iran u n d e r s t o o d
12
Air Taxi was
13
ticipating
14
I would—the
our representative. They saw
in t h e
have
occurred
16
maybe
early
conversations
in t h e s e c o n d
'73,
cn
this
six months
of
And
would
'72, and
Did
A
Yes.
Q
D o y o u r e c a l l w h e t h e r one of the
they take place
20
that took place
21
discussed
22
in A u g u s t o f 19 72?
in w h i c h a g e n t s
in
Iran?
A
I don't
24
Q
Do y o u know w h e t h e r
to took place
think
meetings
or c o m m i s s i o n s
t o o k place a t the time of your
23
par-
too.
Q
refer
that
subject
18
25
occasions.
them
17
19
spoke
s u p p o r t of o u r d e m o n s t r a t i o n s .
major
15
of
were
trip to
Iran
so.
the d i s c u s s i o n s
that
o r a n y o f t h e m t o o k p l a c e prior
you
to
465
3671
that trip to
2
3
A
when
Iran?
It's d i f f i c u l t
those discussions
4
Q
dates are hard
6
y e a r s , but
8
9
10
11
14
15
l e t t e r of
20
23
piece
of
I don't
think
suggestions
issuance
meetings
of
the
me—in
April
to b u y . A n d
that
that
t h e y d i d n o t w a n t to
of
procure,
Q
Did
A
B e c a u s e , certainly, they could approve
of that
you?
d i d n ' t m e e t a c e r t a i n p o i n t or
t y p e . So that piece
firm commitment
Q
Is
to
it y o u r r e c o l l e c t i o n
took place after
mination
to
A
of p a p e r w e h a d w a s
that
something
not
buy.
cussions
were.
They really at
of p a p e r w e h a d w a s n o b e t t e r t h a n a p i e c e
the h e l i c o p t e r s
a
events?
of
of t h e s e
19—excuse
it d i d .
p a p e r , if t h e y h a d d e c i d e d
24
25
to the
point had not made a firm decision
21
22
it h e l p s ; w h e t h e r o n e
i n t e n t in A u g u s t
A
17
19
to other
of
1972?
16
18
can you set them r e l a t i v e
might have taken place prior
of
I realize
to r e c a l l , c e r t a i n l y a f t e r a p e r i o d
see w h e t h e r
12
13
t h e m in t e r m s o f —
In o t h e r w o r d s , let me t h r o w out a c o u p l e
and
exactly
occurred.
Can you pinpoint
5
7
for me to p i n p o i n t
then that these
Iran had made a
firm
dis-
deter-
buy?
I t h i n k that's w h e n the m a j o r
conversations
466
3 89
Q
1
2
ust
or
And
I believe
3
Yes.
4
Q
Of
5
A
Yes.
M R . DOHERTY:
7
else
8
meetings.
9
intends
Q
of
the
to d i s c u s s
I won't
Government
of the a g e n t , A i r
12
ments ?
13
A
Not
14
Q
Do
15
was
16
were
17
Government
but
25
of
them we
21
didn't
Q
that
to
Au^
the
someone
contents
of
those
that.
like to a s k
Iran was
you whether
provided
of
contract
the
with
copies
the various
amend-
knowledge.
substance
in t h e v a r i o u s
government
anyone
the
my
know whether
of t h e
that
of
what
amendments,
officials
of
the
Iran?
to t h e b e s t
had
made a
of my
go past
that
determination
any
officials
that
of
knowledge.
settlement
Was
if p o s s i b l e
to the
again
into
the best
to a n y
told
I
24
known
I think
Taxi contract and
in t h e
Not
20
23
provided
of
you
A
19
get
But, I would
11
18
that that was
1972?
6
22
testified
September?
A
10
you
with
the
I know
that
dealer,
point.
made
information
should
the G o v e r n m e n t
A
Would
you repeat
Q
Would
you read
your
to y o u r
of
not
Iran?
question?
it b a c k ,
please?
knowledge
be
provided
467
3671
THE R E P O R T E R
2
"Was a n y determination
(Reading
from his
m a d e to
your
3
knowledge
4
should n o t be provided
5
G o v e r n m e n t of
6
A
Determination by
Q
B y B e l l or b y a n y o n e e l s e , to y o u r
7
8
i n i t i a l l y , by
9
10
A
sentatives
12
held
13
18
19
was
21
22
23
24
25
of our a r r a n g e m e n t s
to o u r c u s t o m e r s .
in t h i s
the question
is:
there
this m a t t e r w i t h
Q
A l l r i g h t . B e a r i n g t h a t in m i n d ,
there any discussion among
Bell?
information.
Bell people,
third parties
that this
however,
between
information
provided?
I just think
it's our basic p o l i c y that
lay t h e m o p e n to e v e r y o n e .
and
or e m p l o y e e s
It w o u l d n ' t be
go o u t
And we would not
of o u r b u s i n e s s a r r a n g e m e n t s
representatives
customers.
thing
Was
There w a s no r e q u e s t for
the details
pro-
repre-
I think the same
d o n ' t take our business a r r a n g e m e n t s
with our
A
A
knowledge;
situation.
W e l l , I think
s h o u l d n o t be
the
say that we would not normally
Bell people and a n y
20
of
Bell?
any particular discussion about
16
information
officials
Iran?"
I would
Q
15
17
true
t o the
Bell.
vide the details
11
14
t h a t , if p o s s i b l e , t h a t
notes):
or a n y o n e
done.
with
we
and
provide
our
else with
our
468
3671
Q
Now, I understand.
2
A
Yes.
3
Q
4
A
5
—that
No—
—contrary
7
A
Yes.
8
Q
Or that there was
9
about
it.
any discussions
this?
12
13
A
Not that
Q
A very
provided
in r e s p o n s e
16
noted
17
were some, but very
18
few
to u s
to my
in r e s p o n s e
of m a t e r i a l s
issued
few m e m o r a n d a
internal memoranda within
cables
coming from
to
were
voluntarily—and
to T e x t r o n . A n d
I am sure
of m e e t i n g s
or
we
there
very
B e l l or b e t w e e n B e l l a n d
there were
some
in t e r m s
of
overseas.
Do you have any explanation
explain
whether
knowledge.
to—both
to the subpoena
its e m p l o y e e s , a l t h o u g h
for that or can
that to u s , M r . Atkins?
23
inappropriate
t h a t t h e r e w e r e v e r y f e w , if a n y —
21
25
I—not
large volume
15
24
done
of that sort were held w i t h respect
14
22
something
I am simply asking a t this point
11
20
to your u s u a l p o l i c y w a s
here.
10
19
suggesting—
something—
Q
6
I am not
M R . MARINACCIO:
question,
May
please?
THE WITNESS:
Yes.
I clarify
that
y
469
3671
2
M R . MARINACCIO:
us f r o m d u p l i c a t i n g
3
I think
this
the d o c u m e n t a t i o n
to the C o m m i t t e e
5
1 9 7 2 . A n d as I r e c a l l the
6
there were no documents, no
7
analysis
8
t o b e the n e g o t i a t i n g
9
until
would
12
same
you please
A
14
BY M R .
DOHERTY
15
Q
And
I think
17
few d o c u m e n t s
22
23
24
25
submission and
internal
the
of
documents,
documents, no
period which you have
denominated
p e r i o d , the f i r s t p a r t of
1973
up
in r e s p o n s e
take note
to h i s
question,
of m y c o m m e n t a l o n g
the
Well—
16
21
submitted
lines?
13
20
that was
rather a b r u p t l y a t the end
So, I think
11
19
the
save
June.
10
18
stops
it w i l l
later.
4
during
Because
if I c o u l d
that even prior
just
to
'72, there
in the w a y of
internal
A
I don't
Q
A g a i n , we are not
A
Yeah,
yeah.
Q
—and
I don't want
suggesting
there's
It w a s s o m e t h i n g
think
one
seemed
thing.
to be
very
memoranda.
it—
something
we know
interject
suggesting—
you to infer that we
i n a p p r o p r i a t e , b u t we
that we'd
like to ask
are
are-
you
about.
A
I think
that normal documents
that we
would
470
393
14/34
1
generate
2
would make
on a p r o g r a m
to our
I think
3
like
this are
it w o u l d
be v e r y a b n o r m a l
4
generate any documents with regard
5
with
6
defined
our r e p r e s e n t a t i v e , because
7
Q
8
could.
in a f o r m a l
to o u r
I believe
the
testimony
indicates
two or t h r e e m e e t i n g s w i t h G e n e r a l T o u f a n i a n .
12
testimony
13
ciates
14
with
15
place with respect
16
finally worked
discussions
20
23
24
25
of your a s s o c i a t e s
that you and
something
in t h e n a t u r e
to the
where
any memoranda
in t h e
meetings
that
took
were
that
documents
indicated
in on t h o s e , is
what
that
or p r a c t i c e
Bell that memos would not have been generated
those
asso-
meetings.
consistent w i t h the u n u s u a l procedure
at
The
hard negotiations
or m a t e r i a l s
focusing
you
Taxi.
took place at those
So, just
been
attended
of on-going
three amendments
out with Air
that
c e r t a i n of your
I don't believe we noted
provided
22
some
the A i r T a x i people
19
21
perhaps
indicates
18
to
in on a f e w s p e c i f i c s , if I
attended
17
us
they have already
11
had
for
relations
10
and
we
lege 1 d o c u m e n t .
Let me focus
9
the p r o p o s a l s
customers.
here
at
sieet i n g s ?
A
reached
I would
were
say
that w h a t e v e r
put forward
understandings
in t h e a g r e e m e n t s w e
would
we
471
3671
w r i t e . A n d , you k n o w , this a v i a t i o n business
2
moving
3
actions
4
forth to d e a l w i t h those
5
business.
And
each day.
And
I'm
And
involved
I have
on s o m e t h i n g
w h i c h , r e a l l y , is a p r e t t y
7
really entirely a matter
facts
9
it's
10
has
t h a t y o u can
11
12
to use m y m e m o r y a n d
like a n e g o t i a t i o n
things
of t h a t
Q
14
notes ?
15
A
Not
16
of o p i n i o n .
I don't
I see.
Is
it y o u r
A
Not
Do you know whether
23
24
25
it's—
memorandum
on
take
usually.
Q
22
There
p r a c t i c e , s i r , to
18
21
hard
type.
Your
those
thii
whether
of m o n e y .
think
prepare
Q
20
There's no
p u t d o w n to s u b s t a n t i a t e
17
19
like
1
We just w o u l d n ' t
13
so
s i m p l e n e g o t ia t ion," i t s
the r i g h t or the w r o n g a m o u n t
to be a j u d g m e n t .
fasttrans-
transactions.
6
8
is a
in m a n y , m a n y
own
notes?
usually.
you took notes at any
meetings?
A
I don't think
Q
Does Bell have a policy
t a k e n or t h a t m e m o r a n d a
A
We d o n ' t
Q
There's no
A
No
so,
not be
have a
policy.
no.
policy.
policy?
that notes not
prepared?
be
of
472
3671
Q
2
record
3
of what
4
company with
I think that
if A i r T a x i , i t s e l f , c o u l d be d e s c r i b e d
5
6
in t h e
Is
that
the r e c o r d
description
Uh huh.
operator
13
of
that would
of w h a t A i r T a x i
W e l l , Air T a x i
on M e h r a b a d
is a f i x e d
t i m e , 19 72 t i m e
owned
16
a i r c r a f t , b a s i c a l l y , for the G o v e r n m e n t
two major maintenance
21
offices, a substantial
frame,
they
They maintained
of
Thej
many
Iran.
secretaries,
operation.
record
discussion.)
M R . D O H E R T Y : Can we take a five
minute
recess ?
THE W I T N E S S :
23
25
base
on the f i e l d .
T h e y had p i l o t s , m e c h a n i c s ,
22
24
facilities
several Aero Commanders.
(Off t h e
us
Airport.
had
20
give
is?
14
19
indicate
you could
15
18
developed
substance.
I b e l i e v e at the
17
terms
substantial
has been
B u t , if y o u k n o w , p e r h a p s
A
in
all.
it's a c o m p a n y
a basic
it a
the
country?
There are some documents
11
12
Is it a m a i l d r o p ?
operations
on that point at
9
10
it i s .
I don't think
7
8
it w o u l d h e l p t o c l a r i f y
(Short
BY M R .
Q
Sure.
recess.)
DOHERTY
In y o u r n e g o t i a t i o n s
with respect
to
Amendmer
473
3671
N o . 1, what was Air Taxi's
position
2
A
3
higher
4
their exact offers.
A n d , as
5
that I participated
in t h a t .
6
and
7
Sylvester
Q
11
13
16
17
18
19
20
21
22
23
24
25
much
I can't
those
five
that
recall
think
Rudning
negotiations.
per
cent.
into twelve
to
twenty
potentially?
A
Yes.
Did M r . Ruaning
justification was
indicate
to y o u w h a t
for a r g u i n g
for
their
that kind
of a
fee?
14
15
I believe
conducted
Q
stated
per c e n t .
I told y o u , I don't
talking
Which translates
million dollars,
10
12
probably
they were
negotiations
that they wanted a
fee t h a n t w o a n d a h a l f
But 1 think
8
9
Well, I am certain
in t h o s e
A
their
I think
the j u s t i f i c a t i o n
long s t a n d i n g r e l a t i o n s h i p
that they had
period
of t i m e .
going rate
Q
ongoing
earned very
that
with
they used
Sell; the
little money over
And a l s o t h e y felt that
in I r a n on m a j o r
was
fact
that
whole
that was
the
contracts.
Did M r . R u d n i n g r e p o r t d i r e c t l y
t o y o u on a n
basis—
A
Y e s , he
Q
—around
did.
these
negotiations?
A
Y e s , he
Q
Vihat w e r e y o u r m a r c h i n g
did.
A
Well, w e — w e
needed
orders
to M r .
to e s t a b l i s h
the
Rudnind'
celling
474
3671
on t h e a m o u n t t h a t w e w o u l d
2
We h a d
3
tional responsibility
4
contracted
5
o r the G o v e r n m e n t
And
of
it be t h e
U. S.
so o u r p u r p o s e
one that we could
9
customer.
12
Is
the
A
justify
it y o u r v i e w
I thought that
upon
probably a reasonable
commission.
17
18
19
Q
22
23
24
25
that time was
be folded
s i z e of p r o g r a m s ,
Q
The second amendment was
f i n a l i z e d , I believ<
later.
What factors
between
intervened
in A u g u s t
of two and a h a l f
agreement
in w h i c h a one
A
that
contract?
was.
O c t o b e r of 1 9 7 2 , j u s t a f e w m o n t h s
that enabled
cent,
was
c o s t of t h e
Y e s , it
could
per
it y o u r a n t i c i p a t i o n
into the
A
20
21
At
our
commission?
two and a half
and, again, depending
that fee would
to
then that you felt you
14
16
the
and
in o u r f i n a l p r i c e
13
15
to pay
commission,
six to ten m i l l i o n d o l l a r
Yes.
we
Government
in life w a s
8
justify
addi-
Iran.
representative a fair and reasonable
11
the
this to w h o m e v e r
7
10
representative.
that w e had
to j u s t i f y
with, whether
6
h a v e to pay our
to recognize
per cent and
per cent fee w a s
Bell to scale
down the rate
W e l l , I think t h e —
o f t i m e , it w a s q u i t e
definite
I think
that
the
the
agreement
October
negotiated
of
commission?
in t h a t
period
the p r o g r a m w a s a
475
3671
2
"go"
program.
that
i t was probably going to go FMS.
3
4
5
6
7
10
11
12
representative
17
18
19
20
21
half
that we were going to have
per cent was a reasonable
And that we f e l t
difficulty
commission.
that he should take
into c o n s i d e r a t i o n and provide f o r a d i f f e r e n t
s i o n r a t e on an FMS s a l e than on a d i r e c t
we took the FMS s a l e t o t h i s
hard n e g o t i a t i o n and i t
Q
On the d i r e c t
that
commis-
sale.
And so
one per c e n t . And i t was a
took a l o t of
time.
sale,
who would the
justifica-
sale,
there probably wouldn't
t i o n have been made t o ?
A
On the d i r e c t
have had t o have been a j u s t i f i c a t i o n ,
We had a d i r e c t
customer.
because we had a -
o f f e r of a contract p r i c e with the
And, e v e n t u a l l y ,
they would be matching
with an o f f e r from the U. S. Government under a
of
offer,
so they could compare the two p r i c e s ,
choose as they would from those
22
23
leverage with the
in j u s t i f y i n g t o our government the f a c t t h a t two and a
15
16
definite
And f o r the purpose of n e g o t i a t i n g with our
13
14
i t was quite
r e p r e s e n t a t i v e we were using the
8
9
And I a l s o think
So,
that
letter
and
prices.
in our minds, on a f i x e d p r i c e
direct
c o n t r a c t with the Government of I r a n , we had no—we
24
did not have t o j u s t i f y .
I t was j u s t a c o n t r a c t
25
Over here,
23-553 O - 78 - 31
you had to
justify.
offer.
476
3671
Q
You testified
before
that the going
rate,
2
s o to s p e a k , o f c o m m i s s i o n s
in I r a n w a s m u c h h i g h e r
3
even
cent?
4
5
6
the t w o a n d a h a l f p e r
A
Uh
Q
Was
huh.
that
only with
respect
A
W e l l , I don't have access
8
ment r e c o r d s , but I think there were
9
sions paid
10
Q
on F M S
Uh
Q
hat was
two and a half per
it t h e n a b o u t t h i s
sion
15
the t w o and a h a l f per
16
two and a h a l f per
17
that you felt would
A
make
cent
cent translated
into
dollars?
the U . S . G o v e r n m e n t
20
some
leverage
21
we had not
signed a contract. And
always
the
commis-
in
somi
be m u c h
if it w a s a m o r e
leverage
from
if w e
the
could
t h a t , w e l l , If w e
the
easier
reasonable
And w e , at that p o i n t —
on our r e p r e s e n t a t i v e
commis-
justify
it s i m p l y
of commission.
25
to
Was
W e l l , I felt our j o b w o u l d
had
particular
it d i f f i c u l t
with
24
cent
level?
rate
23
substantial
Govern-
huh.
14
22
to the U . S .
sales.
Over and above
A
13
19
con-
instances?
12
18
to n o n - F M S
tracts ?
7
11
than
See, we
standpoint
not—
t r a n s a c t i o n w i t h y o u , then we don't have
accept
contract.
Q
By the " c o n t r a c t , " y o u m e a n —
We
can't reach a
reasonable
the
had
.>
to
477
367i
A
With a
customer.
2
Q
—with
the
3
A
customer?
Yes.
4
S o , I t h i n k he j u s t t o o k h i s
5
assume
6
d i r e c t . But
7
T a x i didn't have a l l the power
8
9
10
that he would
Q
Were
reaching
these
it w e n t
the
other
It was
Q
And
t w e e n the O c t o b e r
translates
dollars, between
16
in J u n e of
17
million dollars, I
into about
that and
of
Yes.
for one
O f c o u r s e , in I g u e s s
letter
for the 489
ment.
It w a s a n FMS
per cent
which
million
No. 3
to a b o u t
2.9
of
intent
it w a s
December
f r o m the U .
S.
q u a n t i t y of air-
c u s t o m e r , the
U. S.
Govern-
sale.
the same
become more a n d m o r e
in b e -
ships.
So n o w we had a d e f i n i t e
At
figure.
think?
craft and we had a d e f i n i t e
in a n y
the f i n a l A m e n d m e n t
23
25
for
transpired
'73 w h i c h f i n a l l y c a m e d o w n
22
24
Air
world.
four and a half or five
'72, we received a
21
gone
that
considerations
1972 a g r e e m e n t
14
of
in t h e
strictly a judgment
15
Government
it
that again shows
c a n y o u t e l l us w h a t
13
20
seen
I
meetings?
A
A
And
to have
one p e r c e n t f i g u r e d i s c u s s e d
12
19
FMS.
liked
there any other
11
18
have
chances, and
t i m e , the G o v e r n m e n t
interested
in t h e
of
Iran
commission
had
478
367-
1
s i t u a t i o n a c r o s s a l l the
2
3
and
4
offer a commission
told
them that we w o u l d
5
6
to o u r
be
including
in p a y i n g
I told
8
representative
9
in o u r
and
it w a s n ' t
and
representative.
it w a s a g o o d
something
11
nize their
I could
size amount
of
the
money,
c a r r y by m y s e l f .
that, w e l l , maybe we
cost as a cost under
cost and
it w a s p r e t t y d i f f i c u l t
And
15
that we would
our
And
could
recog-
contract.
16
and we would
so w e made
the
to
judgment
e s t a b l i s h $ 5 0 0 , 0 0 0 a s t h e a m o u n t of
charge
to o u r c o n t r a c t a t h o u s a n d
per s h i p , w h i c h I thought w a s v e r y generous
18
A n d , at the same
t i m e , w e recognized
19
to h a v e
20
p r o g r a m t h a t had
21
I wanted
22
the r e p r e s e n t a t i v e
23
to settle with
on our
that we were
such
o u t of o u r b u s i n e s s
So, we offered a settlement
military
dollars
future;
to then reach a n a g r e e m e n t w h i c h w o u l d
representative
pert
going
the
that
take
forever and a
to divorce
from any further participation
business.
cost
our r e p r e s e n t a t i v e , to m e e t
such potential and
thelx
do.
independent
17
weren't
And we did make an a t t e m p t to d e t e r m i n e
14
25
FMS
them we had a r e s p o n s i b i l i t y to
there was discussions
12
MIO
commissions.
10
24
with
T h e y , in t u r n , t o l d m e t h a t t h e y
interested
7
13
contractors.
A n d , as I s a y , I had d i s c u s s i o n s
in
the
the
daj
479
367-
Q
i
2
How did you convince
c u t , so to s p e a k , his
3
A
commission
or h i s
One
offered
to m o v e
6
instead
of b e i n g p a i d a t the
7
paid
8
money earlier
9
money.
the payment
up f r o n t .
time
the only thing
the r e p r e s e n t a t i v e .
is w o r t h
our contract, we
told
14
therefore, we needed
something
16
negotiated
the company
could afford
out on this kind
17
Q
Were any other
18
A
N o , s ir.
of a
Q
—to
20
A
The
21
Q
Did he at a n y time simply
that he would
and binding
contract?
A
Oh,
Q
For his
yes.
fee?
that
to p a y .
made
i n d u c e h i m to m a k e t h a t
not accept
that
unde
and,
was
And
we
basis.
concessions
full disclosure
that
lot.
the m o n e y ,
to r e a c h a n a g r e e m e n t
his
offered
the r e p r e s e n t a t i v e
could not recover
15
that
received
I don't know how much money
But we just
13
25
have
was
his
that we r e a l l y
in i n t e r e s t , b u t n o t a h e c k of a
12
24
words,
of d e l i v e r y , h e
than he otherwise would
That was
11
23
to d o , we
In other
on a s c h e d u l e . A n d , t h e r e f o r e , h e r e c e i v e d
10
22
negotiation.
basic thing that we offered
5
to
fee?
W e l l , it w a s a v e r y d i f f i c u l t
4
19
the representative
to
him—
cut?
is in t h a t
take
agreement.
the
less since h e h a d a
position
valid
480
366
1
A
O h , ye s .
2
Q
What
3
A
W e l l , you k n o w , we told him his recourse
4
5
6
7
8
9
10
11
12
13
to s u e u s . W e t r i e d
16
17
18
19
22
23
fair and
that we can afford
to p a y y o u .
to come f r o m our
we can't
recover
Q
There
it f r o m o u r
How
was
in A m e n d m e n t
that the
2.9 m i l l i o n
if t h a t w e r e
that provision
that w e had
No. 3, I
dollars
that was
the
case.
reached?
We
knew
that
termination
to t e r m i n a t e
the
item.
dollars.
to spend
We
that
We
money and
we
rapidly.
the
in its e n t i r e t y ;
substantial
million
full authority
money
of
not
in o u r p o s s e s s i o n a c o n t r a c t
or f i v e h u n d r e d
knew that we had
were spending
and
customers."
W e l l , that was purely a negotiated
was worth four
terminated
recognize
or a r e p a y m e n t w o u l d b e d u e t o B e l l
ultimately delievered,
recognized
and
funds entirely
$ 3 , 0 0 0 for e a c h of the 4 8 9 h e l i c o p t e r s
A
got to
was
trying
reasonable
You've
is a p r o v i s i o n
believe, that provides
w i l l be reduced
20
21
that's
thst this
is g o i n g
mind?
to s a y t o h i m , " L o o k , w e ' r e
to p a y y o u s o m e t h i n g
14
15
g o t hiia to c h a n g e h i s
contract
could never
that there would
claim
if t h e r e
be
be a
should
be a n
inte
contract.
24
And we just
felt that
it w a s a
long
term
25
program, and
that as a long term program,, w e ought
to
481
14/45
!
have
2
decided
3
course, they never
4
delivered.
5
some
protection,
to t e r m i n a t e
Q
if, indeed
o u t to the a g e n t
7
is t h a t
d i d . A l l the a i r c r a f t a r e
is m a d e
I understand
over the
it, the
l i f e of t h e
A
That's
Q
So that y o u w o u l d n o t , n o r m a l l y , be
10
with
the kind
11
that
provision?
of p r o b l e m y o u a r e
Tha t ' s r i g h t .
Q
Your testimony
front payout
15
a payout
16
tiated
17
accept a
that was
over the
lesser
19
Q
Or at
20
A
The fact
23
24
25
for h e r e , as
is t h a t
up-
opposed
of the c o n t r a c t , w a s a
commission;
That's
early
dealing with, with
one, and was a consideration
A
dealing
is, h o w e v e r , that the
provided
life
18
22
contract;
correct.
A
14
21
Q
was arrived
to the a g e n t
to
correct?
correct.
lesser
fee?
that we m a d e a d v a n c e d
payments
later
yes.
N o w , c a n you t e l l m e haw
the $ 3 , 0 0 0
figure
out
air.
at?
We
to
nego-
in t h e p r o g r a m r a t h e r t h a n m a k i n g p a y m e n t s
in t h e p r o g r a m ,
A
pay-
correct?
9
13
Iran
now
8
12
of
p a r t of t h e a i r c r a f t , a n d , of
N o w , n o r m a l l y , as
6
the G o v e r n m e n t
just grabbed a figure
of t h e
482
367-
1
Q
Because
2
would
3
believe.
translate
4
5
$3,000 figure?
A
The
figure was
kind
8
$500,000
9
at a thousand
of a b a s i s .
At that t i m e , we
per ship.
for
it o n
expected
from the U . S. Government
dollars
I
the
arbitrary?
W e l l , I think we r e a t i o n a l i z e i
7
sale
into about $6,000 a h e l i c o p t e r ,
But you have no other explanation
6
10
the fee on a 4 8 9 h e l i c o p t e r
under
to
the
this
recover
contract,
So t h a t r e d u c e d
our
exposure.
11
Then we
knew that probably
if t h e
Government
12
of I r a n tried
13
perhaps
14
m i l l i o n d o l l a r s , a n d we would
earn profit
15
hundred million
I think that was the
16
on w h i c h w e g e n e r a l l y
just reached an a m o u n t
17
that we would recover
if t h e c o n t r a c t w a s
18
Q
the
to t e r m i n a t e , s a y , w i t h i n the
termination
costs w o u l d be a
dollars.
And
Did B e l l make an e f f o r t
19
a government-to-government
20
to B e l l
21
22
23
A
least
25
sale?
hundred
on
that
of
basis
money
terminated.
t o cause t h i s to be
Was t h a t
time we would have
s o m e of o u r p e o p l e w o u l d h a v e
preferable
preferred—i
preferred
to g o
on
contract.
I , p e r s o n a l l y , never had
like
year,
situation?
W e l l , at the
a direct
24
in t h i s
first
the p r o t e c t i o n
that
leaning.
of t h e U . S . G o v e r n m e n t .
I
It w a s a
483
367i
major t r a n s a c t i o n .
2
visions
3
good when you have a long-term
of
4
a
I guess I recognized t h a t the
U. S. Government c o n t r a c t are
I like
to know my customer and I knew the
U. S. Government as a customer a l o t b e t t e r
6
the Government of
8
Q
pretty
transaction.
5
7
pro-
Iran.
I liked the
t t e n I did
protection.
Did there come a point where i t became
fairl
apparent t h a t i t would be an FMS s a l e ?
9
A
To me that point was reached the day that
10
Shah said t o me, "And i t w i l l be an FMS t r a n s a c t i o n . "
11
That was the day.
12
Q
And when was t h a t ?
13
A
That was in l a t e August or e a r l y
14
of
September
'72.
15
Q
Would you say that within a month p r i o r
to
16
that t i m e ,
17
though i t would be an FMS o r , was i t a t o s s of a coin
18
at
that
19
20
21
22
23
24
25
there was a leaning
toward i t
looked as
point?
A
Well,
the Government of
Iran are good
n e g o t i a t o r s . And they always play t h e i r hand a l l
way. And, t h e r e f o r e ,
understanding
that
the
t o me, we never r e a l l y had an
of which way they intended to g o ,
until
day.
Q
Was i t
A
Oh,
no.
t h e i r choice or did B e l l
have—
th^
484
1
Q
— a
2
A
No, no.
3
Q
—influence
4
A
No, no.
5
We w o u l d
choice.
6
Q
7
gather
8
up a g a i n s t
9
A
10
Huey's
good deal
It
of—
was—
over how
It w a s
have accepted
How does the
it w o u l d
a direct
s i z e of t h i s
o t h e r s a l e s by B e l l or
O h , I think we sold
at one time.
That's a pretty good
that
Q
f r o m s a l e s t o the U . S .
14
A
It's the next
15
Q
There are a few other areas
16
cover quickly, unless
17
wants
to g e t
18
into
Bell was able
size
contract
19
sure.
20
many, many
21
respect to q u e s t i o n a b l e
22
known
there's
Was one
A
I'd
something
like
that
size.
to
anyone
had an a n s w e r
to t h i s , I a m
IRS has
sent
corporations a questionnaire
as the S e r i e s
knowledge
in
Government?
biggest.
As I a m sure you k n o w , the
23
to handle
the
now.
W e may have
large
stack
2,200
B a s i c a l l y , it w a s a b i g c o n t r a c t , b u t
kind
11
payments
that has
come
out
not
to
with
to b e
Questionnaire.
s e n t to B e l l o r T e x t r o n , to
your
?
The
I
Textron?
Aside
contract.
the U . S . Army
of c o n t r a c t
25
Iran's
contract, which
13
24
done?
of
is in t h e v i c i n i t y o f 5 0 0 m i l l i o n d o l l a r s ,
11
12
be
the G o v e r n m e n t
identity
that you give
to I t , I
don't
485
367-
1
know.
2
3
But, yes, we
Q
or
A
Y e s , it
Q
And
7
BY M R .
DOHERTY
8
Q
In y o u r
of t h e s u b p o e n a
o p i n i o n , did
issued
to
fall within
BY M R .
the scope
Q
don't have
16
point—
17
knowledge, maintain any
18
other assets
24
25
it f a l l w i t h i n
the
scope
In m y o p i n i o n , it d i d
not
subpoena.
M r . A t k i n s , during
time
23
not.
Textron?
of t h e
15
22
response?
DOHERTY
14
21
N o , you have
M R . SOUTTER:
13
20
Bell
was.
M R . SOUTTER:
10
19
to by
h a v e w e r e c e i v e d a c o p y of t h a t
6
12
letter.
Was that questionnaire responded
5
11
that
Textron?
4
9
received
that we have
the r e l e v a n t
been discussing
to redefine
Were y o u or did
it.
here—
period
I guess
I think we know at
B e l l or T e x t r o n , to
funds
of c o r p o r a t e
of
we
this
your
monies
that were not recorded on the books
or
and
record s ?
A
No , s i r .
Q
Of the
A
No, sir.
have no knowledge
Q
Thank
corporation?
I can stipulate
o f the T e x t r o n
that
for B e l l .
I
situation.
you.
With respect
to the
internal policy
statement
486
367-
1
that was
2
do you know what
3
statement?
4
your
5
referred
to t h e o t h e r d a y of A u g u s t
the d i s t r i b u t i o n
How has
p e o p l e , if a t
A
Finance and asked
7
f r o m the p r i n c i p a l
8
these a r e a s . And
9
that he said he had
h i m to get r e p r e s e n t a t i v e
people who might be
I think h e ' s —
g u y that w a s out of the c o u n t r y .
siderable number
M R . SOUTTER: Could
back to your preceding
14
transactions?
M r . Atkins
15
and h e knew of
none.
am speaking
was speaking
for
22
23
24
25
of
go
off-book
I am just saying
for
Bell
that
I
h a v e said
I
none.
Thanks.
I shouldn't
Bell.
to l o o k l i k e y o u w e r e
Q
a b o u t the
M R . SOUTTER:
M R . SOUTTER:
BY M R .
con-
I interrupt and
Sure.
THE WITNESS:
some
for.
M R . DOHERTY:
M R . DOHERTY:
20
there's a
said h e was speaking
for Textron and I know
19
21
questions
'77
that was
of t h e m t h a t w e ' r e a s k i n g
13
in
I saw a r e p o r t on
And
of
statements
involved
them all but one, and
11
17
to
that over to the V i c e P r e s i d e n t
10
16
that
all?
6
18
h a s b e e n of
1976,
that policy been communicated
I turned
12
16,
Well, I didn't want
1
"Mr. Clean ' and we
it
weren't.
DOHERTY
I had asked
you a few broad
questions
before
487
367-
1
2
w i t h r e s p e c t to A i r T a x i ; j u s t t w o o r t h r e e
I'd
l i k e t o a s k t h e m of y o u n o w
questions
in a b r o a d e r
sense
3
w i t h respe-ct to n o t o n l y A i r T a x i , b u t B e l l , T e x t r o n
4
otherwise.
5
To your knowledge, s i r , has a n y payment
6
funds
7
to your k n o w l e d g e
8
Iranian Government
9
with
10
11
12
or a n y b e n e f i t b e e n m a d e by B e l l o r a n y o n e
the sale
A
to a n y o f t h e
d i r e c t l y or
your knowledge, considered
a n y o n e , to your
17
18
the
in
connection
A
by a n y o n e
I know of n o r e q u e s t
Q
D o y o u k n o w of a n y d i s c u s s i o n w i t h
to the p o s s i b i l i t y of m a k i n g
such a
N o , I do
I know M r . Marinaccio
b u t I'd
by
from
Do y o u know
or the e x i s t e n c e
any further
A
respect
payment?
not.
l i k e t o a s k y o u one
22
or d i s c u s s e d
for any payments
A
25
to
anyone.
Q
24
any
knowledge?
20
23
of a n y k i n d t o
or consideration,
19
21
here?
Government.
13
16
of
Was any such payment
14
15
else
officials
I k n o w of n o p a y m e n t s
Q
of
indirectly
that we have been d i s c u s s i n g
o f f i c i a l of the I r a n i a n
or
has 3 few m o r e
last q u e s t i o n , w h i c h
of any a d d i t i o n a l
of a n y o t h e r d o c u m e n t s
light on the subject m a t t e r
I do not think so.
questiotLi
is:
information
that would
of t h i s
I d o n o t I^now of
shed
inquiry
anything
488
367-
1
M R . DOHERTY:
Thank
2
THE W I T N E S S :
Okay.
3
you.
BY M R . M A R I N A C C I O
4
Q
5
mately
6
a n d w e ' v e g o t to c o n t i n u e
M r . A t k i n s , we've b e e n at this
for
sixteen and a half h o u r s , and we're a l l
this on S a t u r d a y and
7
S o , I've j u s t got a few m o r e q u e s t i o n s and
8
we
can wind
t h i s up w i t h
9
A
Okay,
Q
We a p p r e c i a t e
your
You indicated
previously
11
in y o u r
13
Miller viewed
14
a
16
No.
f o r m e to
17
18
Q
p r o b l e m , " or t h i s
I said I reviewed
I thought
in y o u r t e s t i m o n y
A
and
No.
I said
I considered
therefore I disclosed
22
A
My relationship with
problem
you
specifically
problem
see.
I have a major
bring
it a m a j o r
it t o M r . M i l l e r .
I
25
it a s a m a j o r
settle.
Q
24
was
for M i l l e r . "
21
23
testimony
William
said this was a major problem for M r . M i l l e r ?
19
20
this as a " m a j o r
A
hopefully
patience.
t h a t , in f a c t , I t h i n k y o u s a i d , t h a t G .
problem
Sunday.
fire.
12
"major
tired
you.
10
15
approxi-
Textron
is b a s e d
o n , if
problem, I don't hide that p r o b l e m .
it f o r w a r d .
A n d , to m e , t h e h a n d l i n g
representative was a major problem, and
of
I
the
that's why
I
489
3
1
2
64
brought
it to M r . M i l l e r ' s
Q
attention.
A n d as we d i s c u s s e d
yesterday
3
record, M r . Miller was
your
4
he would
to w h o m y o u w o u l d
5
prob lems ?
be t h e p e r s o n
immediate
6
A
That's
7
Q
N o w , w h y did y o u r e g a r d
8
9
million
dollar
A
payment as a major
Well, because
to m y d i v i s i o n , a n d I w a n t e d
successful
14
15
16
17
18
19
20
21
22
23
24
25
in h a n d l i n g
this
bring
and
major
particular
of m o n e y
to a s s u r e
is
important
that I was
the r e p r e s e n t a t i v e
in a
method
that he w o u l d be s a t i s f i e d , and h o p e f u l l y — m y h o p e
to r e c o v e r
Q
the m o n e y
in m y c o n t r a c t
Fas M r . Miller
you handled
2.9
problem?
that kind
11
13
the
right.
10
12
for
supervisor
was
pricing.
satisfied
with
the w a y
the 2.9 m i l l i o n d o l l a r p a y m e n t , to
that
your
knowledge ?
A
Y e s , I t h i n k he f e l t t h a t t h a t w a s
a p p r o p r i a t e w a y to h a n d l e
it w a s good
that we
the r e p r e s e n t a t i v e
Iran was
Q
gations
o u t our
He felt
relationship
that
with
as far as the m i l i t a r y b u s i n e s s
in
concerned.
Did
you make M r . M i l l e r aware of the
u n d e r c o n t r a c t of T e x t r o n / B e l l u n d e r
No. 1, Amendment
A
closed
the s e t t l e m e n t .
an
Yes, I
N o . 2 and Amendment
did.
No.
3?
obli-
Amendment
490
3671
Q
So that M r . M i l l e r was aware
2
Amendment
N o . 3, there was a provision
3
a
of m a x i m u m 2 . 9 m i l l i o n
4
reduced by 3,000
5
not
payment
per h e l i c o p t e r
that
in t h e r e
under 489 that was
delivered?
A
That's
7
Q
He was aware
of that
provision?
8
A
He was aware
of t h a t
provision.
9
correct.
Q
N o w , you have
10
h e r e of t h e
termination
11
and
12
dollar payment.
13
have you
that was
A
s p o k e n on s e v e r a l
of t h e
You've used
of t h e
the word
I think
I have,
perhaps
incorrectly,
the fact that we have deleted
the
17
rights
Government.
20
21
22
23
24
25
Iranian
still remains
to s e l l t o t h e I r a n i a n
So y o u were
of t e r m i n a t i o n
A
No.
for
representative's
using "termination"
On any sale
because
in e x i s t e n c e , e x c e p t
in the
of o n g o v e r n m e n t - t o - g o v e r n m e n t
of B e l l e q u i p m e n t
sense
sales?
to
the
military.
Q
I
A
D i r e c t or
Q
D i r e c t or i n d i r e c t .
wanted
Taxi,
million
not?
16
Q
2.9
"termination,"
the t o t a l c o n t r a c t
19
occasions
contract with Air
the p u r p o s e , a p u r p o s e
15
18
for
to A i r T a x i to be
6
14
under
see.
to finish
your
indirect.
answer?
Pardon m e , I think
you
491
367-
1
A
N o , go
ahead.
2
Q
Except
that that termination
3
4
5
6
7
8
9
of course, with respect
were
t h e s u b j e c t of t h e 2.9 m i l l i o n d o l l a r
to take
16
17
18
19
20
21
22
23
24
to k e e p p e r f o r m i n g
o r d e r to o b t a i n
not
apply,
that
payment.
of t h o s e
ships
of y e a r s , a n d A i r
on t h a t c o n t r a c t
t h e f u l l 2.9 m i l l i o n d o l l a r s ;
Taxi
in
is
that
correct?
A
That's
Q
You mentioned
correct.
previously
just go back to this major
in y o u r — i f
problem discussion
I may
for a
moment:
14
15
place over a period
was expected
11
13
to t h e 4 8 9 h e l i c o p t e r s
B e c a u s e , s t r i c t l y s p e a k i n g , the d e l i v e r y
had
10
12
did n o t
Since
you regarded
it w a s a m a j o r
it a s a m a j o r
of five h u n d r e d m i l l i o n
substantial
dollars
importance
that because
affirmative, I
to T e x t r o n — a n d
you would
your head
in
agree
the
think?
Run
Q
Wouldn't
to be w r i t t e n
sale
of B e l l , a n d I w o u l d
you are nodding
A
m e n t of s u c h a
since
since the
in h e l i c o p t e r s w a s a
p a r t of t h e b u s i n e s s
s a y of m a j o r
with
p r o b l e m to y o u ,
problem, and
o u t of v o i c e .
Yes, I agree.
it b e u s u a l , in t e r m s
of the
l a r g e p r o j e c t , for s o m e a c t i o n
to M r . M i l l e r a n d
manage-
memoranda
to go from M r . M i l l e r
25
t o the
2 3 - 5 5 3 O - 78 - 32
Board
of D i r e c t o r s
of T e x t r o n
in a<'matter
of
492
367-
1
this
importance?
2
A
V e i l , as
it t u r n e d
o u t , we r e a c h e d
a
3
reasonable
s e t t l e m e n t w i t h o u r r e p r e s e n t a t i v e arid w e
4
summarized
that
5
to his
6
It i t s e l f .
into a — i n t o
c o n t r a c t . And
to me that was
It s p o k e f o r
7
Q
But that was
8
A
That was
9
an agreement, an
itself.
the
contract?
the change
Q
No documents
'72 o n i n t o
'73 w h i c h d i s c u s s e d
12
ten million
dollars negotiated
13
and
finally down to 2.9?
14
15
18
19
what
22
23
24
25
A
No.
Q
—negotiating
position
Air Taxi was
the company
taking, how
better business
there
20
21
t o the
over a period
11
17
memorandum,
representative
agreement.
10
16
the
amendment
positions
should
dents.
And
settlement.
discussing
the—
parties,
t a k e , and what
kinds
of
position
it w a s w i t h i n m y a u t h o r i t y
that
to their
to m a k e
keep my superior
paper.
why
documents?
of t h e t y p e of o p e r a t i o n
b u n c h of
to
million
Could you explain
I w a s d o i n g , but I did n o t need
with a whole
of s i x
to 4 . 3
of t h e
considerable autonomy
And I would
late
the c o m p a n y could g e t a
d e a l in t h i s ?
Because
They assign
the p a y m e n t
on down
No documents
is a n a b s e n c e o f t h o s e
A
is.
of m o n t h s ,
Textron
presi-
that
advised
to d o c u m e n t
that
of w h a
493
36714/57
Q
1
2
3
of B e l l H e l i c o t p e r
6
A
in the d e t a i l s
I a m sure he was more
or n o t I h a d
the U . S .
of
this
signed
interested
the 5 0 0 m i l l i o n
dollar
W o u l d h e n o t be
interested
s h i p of A i r T a x i a n d a r e p r e s e n t a t i v e
A
9
in
contract
with
in w h o t h e
M r . M i l l e r has got 30 companies
to take
of a n d h e c a n ' t g e t i n t o t h a t k i n d o f d e t a i l .
11
his presidents.
12
for.
How
large
here
problems.
is t h e s a l e o f 5 0 0 m i l l i o n
in h e l i c o p t e r s
15
Is t h a t o n e of t h e
16
been
involved
i n , in t h e h i s t o r y of the c o m p a n y , in
17
last
10 or
15
years?
A
I assume
Q
W o u l d n ' t y o u t h i n k t h a t that w a s a m a t t e r
19
20
such
importance
21
the d e t a i l s
22
in that
23
24
25
A
details
largest
it
to t h e b u s i n e s s of
dollars
14
18
in r e l a t i o n
care
That's
T h a t ' s w h y h e ' s g o t 3 0 of us o u t
We h a v e t o t a k e c a r e of t h o s e
Q
owner-
of B e l l H e l i c o p t e r - —
10
13
whether
Government.
Q
7
8
interested
supervisor
d ivision?
4
5
W a s n ' t M r . M i l l e r as the m a n a g e m e n t
Textron?
sales that Textron has
ever
the
is.
that M r . M i l l e r would want
on his own of the
ope ation
to get
of B e l l
of
Into
Helicopter
circumstance?
W e l l , f o r e x a m p l e , he d i d n ' t g e t i n t o
of the 5 0 0 m i l l i o n
that's a lot m o r e
important
dollar
than
the
c o n t r a c t . A n d , to
the three* m i l l i o n
me,
dollar
494
3671
settlement
2
Q
3
while
4
were
that was made w i t h our
N o w , in y o u r
previous
ago, you mentioned
m a d e a t the
top
Wouldn't
5
In
representative.
testimony a
t h a t a l l of t h e
little
decisions
Iran.
the a b i l i t y
of y o u r
representative
6
in I r a n t o c o n t a c t t h e t o p o f f i c i a l s
in t h e
7
Government and
occasions with
8
Shah then loom as a very
A
9
be p r e s e n t
on v a r i o u s
important
W e l l , you know, I have
10
of a c o u n t r y as a p e r s o n
11
doing
12
imagine a social contact being
13
the b e s t t h i n g
Q
of g r e a t
to l o o k a t a
leader
integrity and
And
important
if t h e d e c i s i o n s
I
to
as
can't
him.
in I r a n
14
m a d e a t the top by j u s t a h a n d f u l of p e o p l e , y o u
15
not regard
16
there had direct access
17
18
19
A
it a s
important
that your
to these
I don't think business
the
contact?
for his c o u n t r y .
So that e v e n
Iranian
top
were
would
representative
people?
is s o l d
in t h a t
way,
myself.
Q
Wouldn't
you have recorded
20
course of business
21
had a r e p r e s e n t a t i v e
22
to the S h a h a n d
in t h e
t h e f a c t to M r . M i l l e r
in I r a n t h a t h a d
the Shah's
normal
that
direct
you
access
brother-in-law—
23
A
No.
24
Q
— n a m e l y , General
A
I t h i n k I w o u l d h a v e r e p o r t e d jto M r . M i l l e r
25
Khatami?
495
41 ft
1
t h a t I had s e e n the
2
accomplish.
Shah and what I had been a ble
I don't
3
information about
4
and passing
5
Q
that
think
I would
have
some representative
taken on
seeing
the
to
hearsay
Shah
along.
But a t the time you received
that
informatio^,
6
as we discussed
this m o r n i n g
in e a r l y
7
reason
the v e r a c i t y
that Z a n g a n e h had met
8
to d o u b t
t h e S h a h on
9
A
And
Q
December
11
A
And we had no program
that memorandum was dated
several years away
f r o m a p r o g r a m in I r a n , a n d
14
more
15
in a l l h i s c a r e e r w i t h
18
19
Q
contract
ten
20
21
22
23
24
25
than a hundred
government?
when?
in I r a n , a n d w e
worry about whether a representative
17
with
1969.
13
16
no
occasion?
10
12
1970, you had
thousand
dollars w o r t h of
us h a d a m e e t i n g w i t h
(The w i t n e s s
But he ended
shakes his
up h e l p i n g
I
that hadn't
were
should
done
business
this
head.)
y o u out on the
that Textron was able to d e v e l o p
in t h e
biggest
last
years?
A
W e l l , I just didn't
see
Q
N o w , could you please
it a s t h a t
important,
sir.
A p r i l 1 , 1972 was
was put
A
tell me why
so important; so important
t h e d a t e of
that
it
i n t o b o t h A m e n d m e n t N o . 1 a n d A m e n d m e n t N o . 2?
I am not aware
of a n y r e a s o n
it w a s
496
436
1
that
2
difference what date
Q
3
4
important, because
and
A
signed
appeared
7
signed after A p r i l
8
subsequent
f r o m the
Q
to 1 A p r i l
the second
correspondence
the
W h y were they made effective
And I believe
that
case that d o c u m e n t w o u l d
11
dated.
12
A
o n e of t h e m w a s
that
date
for a n y
Q
W e l l , w h y w a s the date
A
Sir, I don't
19
20
21
22
23
that
numerous
L e t me
t i m e s . And not only at this
has extended
questioning
himself
say for
the
time, but
previous
little
f a i r to t h i s w i t n e s s
s o m u c h t h r o u g h o u t a l l of
I want his
too
who
this
answered
fully.
M R . MARINACCIO:
recollection.
an
asked
to keep p o u n d i n g a w a y w h e n he has
the question
1,
back-
1972?
I think that really goes a
I don't think that's
24
25
1 April
the same q u e s t i o n has n o w been
in t h e d a y , a n d
far.
have been
know.
M R . GALERSTEIN:
record
even dated A p r i l
document.
15
16
date
done?
14
18
at a prior
W e l l , as M r . Soutter says, you select
effective
it
was
1, '72, yes.
1972, in w h i c h
17
1972?
one w a s , and
10
13
amendments
first one
9
Why was
no
signed.
o n e or b o t h of t h o s e
O h , I'm certain
6
It m a d e
those amendments were
Were either
negotiated
5
I think they a r e —
best
497
420
L4/61
!
2
3
reason
4
when
5
I mean October
M R . GALERSTEIN:
He h a s g i v e n
it to
M R . MARINACCIO:
F i n a l l y , for
the
for d a t i n g a d o c u m e n t as s i g n e d
that document was
of
signed
probably
M R . GALERSTEIN: Would
7
M R . SOUTTER:
10
11
12
M R . SOUTTER:
Amendment No. 1 was
clear.
paragraph
The date
Q
25
that
August.
October
very
it w a s s i g n e d .
The
1."
N o . 1 is a d i f f e r e n t
And what
is y o u r t e s t i m o n y
to A m e n d m e n t N o . 1 w h i c h
A
as
of A p r i l
22
24
indication
story.
BY M R . M A R I N A C C I O
20
23
sir?
A m e n d m e n t N o . 2 is
is on t h e b a c k w h e n
Amendment
18
21
back—
please?
it, says, "Signed,
"Effective April
16
19
or
says:
15
17
Yes,
There's no
d a t e , e f f e c t i v e as of A p r i l .
14
you read
signed anywhere after
A m e n d m e n t N o . 2 , right on
13
in A u g u s t ,
Correction
M R . MARINACCIO:
9
1972,
1972.
6
8
1 April
you.
Q
I know
1st,
is the " d i f f e r e n t
of n o r e a s o n
to d a t e the
date
respect
story"?
amendments
'72.
Did you ever have a discussion with
o r in y o u r m i n d , d i d y o u f e e l t h a t
had
then with
to b e m a d e e f f e c t i v e
those
anyone
amendments
for a n y r e a s o n p r i o r to
of G e n e r a l T o u f a n i a n ' s
letter of
i n t e n t to
the
purchase
498
436
14/62
the
helicopters?
2
A
3
substantial
4
me we didn't
5
Government
6
ment signed a
7
didn't f e e l that
effect on the w h o l e
that had
contract, because
h a v e a n y k i n d of a p r o c u r e m e n t
of I r a n u n t i l such time a s
l e t t e r of
intent with
from
Q
I think
us t o d i s c u s s a
it's e x t r e m e l y
Important
to us
him
12
to A i r
the p a y m e n t
of a c o m m i s s i o n
I believe
14
General Toufanian
15
1972
16
21
22
23
24
25
you
with
or t h e m a k i n g o f a p a y m e i t
Taxi.
13
20
of
for
little more fully those meetings
11
19
the
u s in D e c e m b e r
had w i t h G e n e r a l T o u f a n i a n , w h e r e y o u d i s c u s s e d
18
to
the U . S . Govern-
10
17
any
'72.
8
9
I certainly
y o u said
took place
those discussions
in t h e
with
August-September,
period?
A
early
I said also
in
Q
in t h e — l a t e r
in t h e y e a r
and
'73.
Later
in the year and
possibly
in the
first
p a r t o f 19 73?
A
Yes.
Q
Who else was
present at those meetings
General Toufanian besides
yourself and General
A
I don't remember anyone
Q
It w a s
A
I don't know
j u s t t h e t w o of
that.
being
you?
with
Toufanian)?
present.
499
436
1
Q
T o the best of your
2
A
I don't k n o w —
3
see the p r o c u r e m e n t
I —
recollection?
Sir, I go to Iran and
people many times when I'm
I can't tell you who sat
in
I
Iran.
4
And
5
A l l that I k n o w , he w a s the p r i n c i p a l on one s i d e a n d
6
w a s t h e p r i n c i p a l on t h e
other
7
anyone else was there
not.
or
in a n y o n e m e e t i n g w i t h
side.
8
Q
W h e r e did
9
these discussions
A
In his
10
Q
In G e n e r a l T o u f a n i a n ' s
11
A
Yes,
12
Q
And w h o
initiated
T o u f a n i a n a s k y o u to c o m e
to
And
18
20
21
Did
in b e c a u s e h e w a n t e d
We would be discussing m a n y , many
And what would
c u r e m e n t of h e l i c o p t e r s
A
to
Genera
talk
The
formation
subjects.
subjects.
those subjects
be,
for the G o v e r n m e n t
of
the
pro-
Iran?
of t h i s g r e a t b i g p r o g r a m .
just don't press a button and make a program
like
You
this
happen.
22
23
offices?
those meetings?
this w o u l d be just one of m a n y
Q
19
place?
you?
A
17
if
sir.
14
16
take
know
I
office.
13
15
I don't
me.
Q
the
24
25
Of which
the 4 8 9 h e l i c o p t e r s w e r e a p a r t
of
program?
A
Ye s , s i r .
Q
Did
Toufanian ever
say to y o u t h a t he
flatly
500
436
i
didn't want any commissions
2
with
3
allowable
paid
to a n y o n e
the s a l e o f t h e s e h e l i c o p t e r s , u n l e s s
cost under
the U . S . G o v e r n m e n t
4
A
No, sir.
5
Q
W e l l , w h a t d i d h e s a y on t h a t
A
General Toufanian was
6
7
the
8
to p r o c u r e , w h e t h e r
9
or w h e t h e r
12
He n e v e r said
lowest possible
it c a m e
10
11
in
p r i c e o n the
it c a m e
it w e r e
FMS
subject?
interested
product
about
the
commissions
it w a s a t u r n i n g
point
in I r a n
15
And
Air
Taxi was
17
23
24
25
he u n d e r s t o o d
from the b e g i n n i n g
Bell's representative
Air Taxi should
handle
Iran.
We talked
19
22
in
con-
relations
representatives
21
going
contract.
concerned
w i t h the U . S . G o v e r n m e n t as far as h o w y o u
20
obtaining
contract
14
18
in
he was
13
16
Regulation
ttet were being paid under U . S. Government FMS
tracts. And
in
several times about
d o w n into the
that
country.
the
only receive a reasonable
A s we came
fact
that
commission.
19 73 t i m e
frame,
he t o l d m e , o k a y , "We w a n t t o p a y n o c o m m i s s i o n s . "
I said, "General, we've
representative
he
has
said, "perhaps
sentative
I would
an
that.
from a direct
from an FMS
He was also
connection
got a p r o b l e m .
incurred
costs
I can r e c o g n i z e
of a c o m m i s s i o n
on o u r b e h a l f , "
the
payment."
t r y to e s t i m a t e a c o s t a n d
We've got
costs as
And
this
and
repre-
I said,
include a
And
fair
"Okay.
501
436
i
amount
2
n o w negotiating .'
in t h e U . S . G o v e r n m e n t
1
dollars
3
per
the time
5
the t i m e of t h e s i g n i n g
6
t r a c t , he a d v i s e d
7
want to pay a n y commissions
8
contract.
I was
9
10
ment and
11
ship from our
12
But
had no objections
as
it w a s n o t
16
Q
informed
The
H
e
con-
that he did
not
FMS
of t h a t b y t h e U . S . G o v e r n the
thousand
dollars
that General
per
Toufaniaji
t o your p a y i n g a c o m m i s s i o n , as
included
in t h e F M S
long
cost?
recognized—
cost under
recognizes
18
business and we a r e able
19
w e see
20
Q
the
FMS?
that we are an
individual
to c o n d u c t o u r own b u s i n e s s , as
fit.
My
question was whether
or not G e n e r a l
21
f a n i a n had no o b j e c t i o n , w h e t h e r he s a i d h e had
22
objection
to B e l l H e l i c o p t e r ' s
23
to A i r
24
A
I don't
25
Q
—even
and
on a n y U . S . G o v e r n m e n t
to w i t h d r a w
V e i l , he
A
17
of t h e U . S . G o v e r n m e n t
it's your testimony
14
A
are
thousand
proposal.
13
15
the
of t h i s c o n v e r s a t i o n
the U . S . Government
I agreed
Q
selected
ship.
Between
4
contract which we
That's where we
paying
the
think
the—
it w a s n o t
no
commission
Taxi—
though
Tou-
included
as
502
436
1
re i m b u r s a b l e ?
2
A
I don't think the G e n e r a l ever came out
3
said t h a t .
4
understood
5
sentative.
6
no longer worried about
7
Q
about
10
11
12
13
14
15
18
19
20
21
22
23
24
25
I m a d e a settlement w i t h the
And he was v e r y h a p p y
that
B e l l l i k e he
he
repre-
I did.
is s t i l l
And
he
worrying
companies.
Can
you explain that?
Why would
he not
worrj
Bell—
A
B e c a u s e he
recognized—
Q
—because
A
—because—because
of t h e p a y m e n t
to A i r
he recognized
Taxi?
that we
a settlement with a representative. A n d , as a
of t h a t
would
16
17
that
about other
8
9
B u t , on the other h a n d , I k n o w that
and
settlement, no further
be p a y b l e
Q
about
on
And what would be
You read
You are
government
Q
t o do
of h i s
kind
Bell.
worries
to?
is r e a d
the
papers.
t h e m as w e l l a s I d o .
Q
explain
the s o u r c e
that you refer
W e l l , all you have
indicating, of course, I think
we are talking about
A
of a n y
s a l e s to h i s g o v e r n m e n t f r o m
other companies
A
commissions
made
result
the a r e a s
of p a y m e n t s
to
that
foreign
officials?
N o , I'm
not.
Oh, I see.
Well, that's
why I asked you
i t . T h e n w h a t a r e y o u t a l k i n g abo^ut w h e n
you
to
503
436
1
say your settlement relieved
2
t o B e l l , b u t he
3
to other
still has those worries with
Because
5
cause
6
country and
7
in t h e p r i c e s
companies are
he—because
pay commissions
of t h e i r
Under the F M S
9
A
Since
That's what shut
still
on s a l e s a n d
it d o w n ,
in
'74, they
N o w , what I'm really saying
13
did b u s i n e s s
14
p r o b a b l y had a representative
And
did
that you change
changed
the
20
Saudi and
Q
t h e ASPIR'.
procurement
to
eliminate
FMS contracts. And
U . S. G o v e r n m e n t , "I
1
A n d the U . S .
then they added
so forth
he
demand
Government
to t h a t
other
countries
see that flows
24
policy that allows
25
they are not
like
exception.
As a businessman, what benefit would
23
to the
were
you
ASP-IR.
And
22
the w a y
the G e n e r a l m a d e a big e f f o r t
17
19
can't.
involved.
a l l that from U . S. Government
that by saying
them
is t h a t w e
was
And every major
16
18
include
really.
in a t i m e f r a m e w h e n r e p r e s e n t a t i v e s
15
in
program?
the law c h a n g e d
in I r a n .
getting—be-
representatives
12
21
respect
products.
Q
11
he's
still—have
8
10
respecl:
companies?
A
4
h i m of w o r r i e s w i t h
you
to t h e G o v e r n m e n t o f I r a n b y v i r t u e
commissions
in r e i m b u r s a b l e
to be paid as
costs?
Isn't
long
of a
as
ultimately
504
436
1
the c o m m i s s i o n
2
to be sold
3
A
4
Q
in t h e p r i c e o f t h e
to Iran e i t h e r
that?
If B e l l has to w r i t e the
against
its p r o f i t a n d
6
is g o i n g
to be
A
commission
loss s t a t e m e n t , then
less for a p a r t i c u l a r
Q
Right?
9
A
Right.
10
Q
So w o u l d n ' t
it n o r m a l l y ,
profit
in t h e c o u r s e
b u s i n e s s , charge a p r i c e for the sale
12
that would
13
its p r o f i t a n d
give
A
it a r e t u r n
loss
Well, no.
are done.
These
helicopters
these big
upon good
18
very
19
thinks
20
add a profit p e r c e n t a g e .
21
Is s o m e t h i n g
22
tiated very
cost data
on
contracts
big contracts are n e g o t i a t e d ,
tracting
that
722 a u d i t o r s and 4 3 3
massage.
And
carefully negotiated and
is a f a i r p r i c e — f a i r
23
its
it f e e l s a d e q u a t e
That's n o t how
17
officers
that
of
of
statement?
16
And
based
con-
those contracts
represent what
cost. And
are
everyone
to that
that profit
that's not very big and
they
percentage
is a l s o
nego-
carefully.
So y o u d o n ' t r e c o v e r a n y a d d e d
24
y o u pay out to a representative
25
contract
its
year?
11
15
or
Right.
8
14
article
way?
How do you figure
5
7
reflected
negotiation.
under
costs
that
that kind
of a
505
436
14/69
M R . MARINACCIO:
2
3
4
5
6
very patient and
very kindly
for your
And I w i l l ask
tioning
if y o u ' d
or
13
16
17
18
19
20
21
it a
THE
long
finished w i t h the
you fellows
courtesies
record—
WITNESS:
Y e s , I w o u l d , sure
WITNESS:
would.
Of a c l a r i f y i n g
I'd
like
have run your review and
that
you have extended
I think we have gone
deeply.
You have
a witness
lead a
to r e m e m b e r
to r e c a l l e v e n t s
life
that
nature
to s a y t h a t I thin(c
investigation,
been accurate.
Thank
me.
into this thing
that
in t h e w e e k .
what
the
very
it's v e r y d i f f i c u l t
of f i v e y e a r s a g o , w h e n
something
used my best
have
efforts
of t h e s i t u a t i o n a s
I
you.
M R . MARINACCIO:
Thank
you v e r y
much.
23
(Whereupon
the
evening recess was
taken,
reconvene at 9:00 a.m. Saturday, February 4 ,
1978.)
to
24
25
(The T r a n s c r i p t
is c o n t i n u e d
fo
you
So, I hope my dates
B u t , I've certainly
to g i v e y o u a s g o o d a p i c t u r e
could.
to
is so f a s t t h a t y o u a r e d o i n g
different everyday
t
ques
addi-
h a v e y o u , in a v e r y n i c e m a n n e r , a n d I a p p r e c i a t e
22
you
not?
14
15
been
And we thank
to make any statement, any
M R . MARINACCIO:
10
12
that we are
for the
THE
8
11
like
tional statement
witness.
testimony. We've been at
you now
7
9
cooperative
M r . A t k i n s , you've
in•> V o l u m e
IV.)
429
1
2
3
4
UNITED
5
STATES
SENATE
6
STAFF
OF
7
8
COMMITTEE
ON
BANKING,
HOUSING
AND
URBAN A F F A I R S
9
10
STAFF
11
INVESTIGATION
RELATING
TO
12
THE
NOMINATION
OF
13
G.
14
WILLIAM
MILLER
15
16
VOLUME
17
IV
18
19
20
KEE, MEYER, STURGESS & ASSOCIATES
Registered Professional Reporters
1 1 0 2 O i l & Gas B u i l d i n g
Fort W o r t h , Texas 7 6 1 0 2
21
22
23
24
Charles L. Kee
Room 410
Federal Courthouse
Fort Worth, Texas
Vincent G. Meyer
Gaylord Sturgess
Larry Shetter
Donna McMullen
Kathy Sanders
Bari Wells
25
Telephone: 817 336-3042
23-553 O - 78 - 33
.
508
436
INDEX - VOLUME
FEBRUARY
PRELIMINARY
IV
4 , 1978
MATTERS
FRANK M.
SYLVESTER
431
Examina tion
Examination
Examination
Examina tion
Examination
Examination
Examination
Examina tion
Examination
Examination
{, F E B R U A R Y
FRANK M.
EVENING
431
SYLVESTER
-
Marinaccio
Freed
Marinaccio
Freed
Marinaccio
Freed
Marinaccio
Freed
Collins
Marinaccio
4 , 1978
549
Examination
- Doherty
549
Examination
Examination
- Marinaccio
- Collins
582
585
Examination
- Marinaccio
622
644
RECESS
NUMBER
442
451
456
461
480
483
510
516
520
529
EXHIBITS
76
Memo,
77
R e s p o n s e to Q u e s t i o n s r e
"Standards of Conduct"
78
Letter,
IDENTIFIED
10/27/72
490
Textron's
565
611
5/4/72
INFORMATION TO BE
P a g e 4 2 9 , line 11 - T e x t r o n ' s
Commiss ions.
FURNISHED
reply
to I R S r e p a y m e n t
of
509
430a
INFORMATION
1
TO BE F U R N I S H E D
CONTINUED
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
page
6 4 1 , line 9 - F u r t h e r search for trip r e p o r t s by
Gallagher, Atkins, Sylvester,
Rudning and F a r m e r , "find out what
t h e y a r e , w h a t w a s in t h e m a n d
w h e t h e r or n o t t h e y s h o u l d be
p r o d u c e d p u r s u a n t t o the s u b p o e n a
510
436
SATURDAY, FEBRUARY 4,
i
2
MORNING
( W h e r e u p o n , the p r o c e e d i n g s
3
4
reconvened
5
1978, pursuant
6
3,
to the e v e n i n g r e c e s s
MR. MARINACCIO:
we commence
9
matters
the p r o c e e d i n g s
I would
13
relating
14
to p a y m e n t s
Could
document available
16
Committee
the r e c o r d
testimony
to a n I R S
of c o m m i s s i o n s
Before
two
with
to the C o m m i t t e e
to p r o v i d e
Monday
22
that
can have
23
or T u e s d a y .
to
Textron
to o v e r s e a s
agents.
to t h e
We've
it T e l e c o p i e d
on
of
that
Staff?
to the S e r v i c e ,
the
yes.
And when w i l l you
be
Staff?
M R . SOUTTER:
21
inquiry
Mr.
We will provide
MR. MARINACCIO:
able
of
c o u n s e l for T e x t r o n m a k e a c o p y
Staff with our reply
20
the
MR. SOUTTER:
18
25
morning.
this m o r n i n g , there are
Yesterday, during
A t k i n s , reference was made
24
Good
l i k e to d i s c u s s o n
12
19
February
counsel.
11
17
on F r i d a y ,
4,
1978.)
8
15
were
at 9:00 o'clock a . m . , on S a t u r d a y , F e b r u a r y
7
10
1978
SESSION
Certainly
got a T e l e c o p y
not
later
than
facility, we
Monday.
MR. MARINACCIO:
Appreciate
that
very
much.
The other matter
I'd
like
to d i s c u s s
with
511
436
1
counsel
is the m a t t e r
2
have one
of A m e n d m e n t
or m o r e c o p i e s , s i g n e d
Did
3
Number
c o p i e s , in the
counsel have an opportunity
4
to c h e c k on t h a t s i t u a t i o n a n d b e a b l e
5
o n e of t h o s e d o c u m e n t s w a s
6
Number
M R . SOUTTER:
last
evening
which
Amendment
I think M r . Gallagher,
8
excuse m e , M r . G a l e r s t e i n , should
9
MR. GALERSTEIN:
10
assistance
to t h e S t a f f
11
which we normally
12
think
13
that were raised
It
by
this kind
important
the Staff
point.
it w o u l d
be
the p r o c e d u r e s
of d o c u m e n t .
in v i e w of t h e
of
by
And
I
issues
yesterday.
MR. MARINACCIO:
haven't been
sworn yet.
17
into
these
18
questioning, I would ask you
19
the m o m e n t w h i l e M r . G a l e r s t e i n
20
about
his
to t h a t
I think
or
is—
15
s o m e of
speak
if I e x p l a i n e d
execute
it's p a r t i c u l a r l y
14
Mr. Sylvester,
But because we may be
issues with you later
on in
to s t e p o u t of
you
getting
the
the r o o m
is m a k i n g h i s
for
statement
u n d e r s tanding-r--'
21
MR. SYLVESTER:
22
MR. MARINACCIO:
23
procedures
24
question
is s u b s e q u e n t l y a s k e d
25
w e ' l l be
sure we're
record.
to i n f o r m u s
the o p e r a t i v e
we
1?
7
16
1, of w h i c h
relating
to A m e n d m e n t
Sure.
—-of
Number
the p r a c t i c e s
and
1 , so t h a t
any
of y o u on t h a t
getting your own reaction
if
subject,
of
it.
512
436
1
M R . SYLVESTER:
2
MR. MARINACCIO:
left
the
you.
MR. GALERSTEIN:
6
precisely
7
are
8
engage
9
Amendment
to A m e n d m e n t
the p r o c e d u r e s
Number
1.
I am not
speaking
What I am
speaking
t h a t w e , a s far as I k n o w ,
i n , in the e x e c u t i o n of d o c u m e n t s
Number
10
1 or A m e n d m e n t
We always
M o s t of
Sylvester,
room.)
5
11
Thank
( W h e r e u p o n , the w i t n e s s , M r .
3
4
Certainly.
the
times
12
have more
always
such
as
N u m b e r 2 3 or
anything.
than one c o p y
signed.
two c o p i e s , o f t e n
three
copies.
In g e n e r a l p r a c t i c e , w h a t w e d o is h a v e
13
customer
14
w h e r e u p o n we
15
e a c h of t h o s e
16
to t h e o t h e r
or
the o t h e r p a r t y s i g n t w o or t h r e e
17
then get
it a n d
19
it is n o t u n u s u a l
20
either
21
for w h a t e v e r
interim between
time that we send
for o t h e r
to h a v e
people
purpose
22
document,
t h e n send o n e
statement
then
24
operative
document?
the
it b a c k
secretaries
back
time that we
to the o t h e r
xeroxing
in the o r g a n i z a t i o n
it m a y b e
t h a t e a c h o n e of
signed
party,
copies
to l o o k a t
or
necessary.
MR. MARINACCIO:
23
the
the
times,
party.
18
25
the d o c u m e n t , sign
three d o c u m e n t s , and
In the
the
to
So w o u l d
it b e
these documents
MR. GALERSTEIN:
your
is
W e l l , that w o u l d
the
have
513
436
to b e m y c o n c l u s i o n
from what
is the o p e r a t i v e d o c u m e n t ,
I s e e , t h a t e a c h o n e of
yes..
MR. MARINACCIO:
the
l i g h t of y o u r
lection was
his people
with
statement
that M r . A t k i n s
entered
into
for
May
I ask you
the r e c o r d :
stated
yesterday
it t h a t y o u ' r e
i n f o r m us p r e c i s e l y
s i g n i n g of
these
in a p o s i t i o n
recol
and
conferring
And
so,
this m o r n i n g
on w i t h r e s p e c t
to
to
the
documents?
MR. GALERSTEIN:
W e l l , as y o u
r e c a l l , M r . M a r i n a c c i o , I did not say that
I was
will
informing
y o u of w h a t p r e c i s e l y w e n t o n w i t h r e s p e c t
to
documents.
to n o t i f y
I made
it a v e r y s p e c i a l p o i n t
that I w a s giving you
been
since
— ' l e t me speak
stated
t h a t it w a s h i s
have
time.
the m a t t e r u p , let
me-—
secretary,
Yesterday, Mr. Atkins
impression
that he had
said, M r . Soutter
consulted
or M r . H e n d e r s o n
me.
And
M r . Soutter
the
during
you
door.)
to t h a t p o i n t .
w i t h , I b e l i e v e he
with
the
I know, all
you bring
( K n o c k a t the
That's
these
the g e n e r a l p r o c e d u r e s w h i c h
f o l l o w e d , as far as
But
in
that he
this a g r e e m e n t w i t h o u t
of w h a t w e n t
this
My best
the l e g a l d i v i s i o n , i n c l u d i n g y o u r s e l f .
how was
them
the b r e a k a f t e r h i s
told h i m h e d i d n ' t r e c a l l a n y
testimony,
such
and
514
436
1
consulcation.
2
recall
3
that
4
that at
it.
And
I told h i m l i k e w i s e , t h a t I d i d
B u t , I said
this
When Mr. Atkins
t h a t b u t h e did
7
put on i t , that I would
not a d v i s e
8
returned, he advised
y o u of
what M r . Atkins was
matter with
not have any memory of
11
statement
saying was
to m a k e
for
the
have related w h a t
14
my
what
during
b l u r , if I m a y u s e
the p e r i o d
to n o t i f y
of 1 9 7 1 m y m e m o r y
And
I think
I
of
19
my wife was critically
ill and
o f f i c e , out more often
than
21
approximately
22
J u l y of t h a t
As a matter
a lawsuit
is a v e r y
in.
And
that
distinct
of t e r m s .
in and
for
Because
o u t of
she died
during
a service
the
in
year.
of f a c t , I h a d a-—-we h a d a t
f i l e d a g a i n s t u s for a d e f a u l t j u d g m e n t
later, because
received
I was
this, and,
the S t a f f
that c o n t r a d i c t i o n
20
Yes.
t h a t s t a t e m e n t w a s , to t h e b e s t
it's w o r t h , I d o w a n t
18
25
a
record.
Last night I thought about
17
24
the
the b r e a k and he had
ability.
15
23
of
that he had d i s c u s s e d
MR. GALERSTEIN:
13
of
that
it.
My recollection
the two c o u n s e l over
12
you
the- q u a l i f i c a t i o n
MR. MARINACCIO:
10
of
point.
6
16
deny
I was consulted, I just don't have any memory
5
9
to M r . A t k i n s , I w o u l d n ' t
not
that
t i m e the r e c o r d s
of a l a w s u i t a n d
failed
show
a
Bell
year
that
to g i v e
it
I
to
I
515
436
i
the i n s u r a n c e
2
you
that
company.,
M y o n l y point—'--and
qualification.
the b e s t e v i d e n c e
documents and w h e n
9
the
l i g h t of
the
as
to t h e p r e c i s e
testimony
and even from what
people
12
to say, M r . A t k i n s , u n d o u b t e d l y ;
13
M r . Sylvester; and m a y b e
14
yes t e r d a y .
that w e r e
15
y o u s e e m to b e
involved
only point
17
it is n o t u n u s u a l
documents
signed
to h a v e
followed
from M r .
themselves:
Atkins
that
and
is
maybe
outlined
Well, certainly
the
is
that
of
concurrently.
some
You're
indicating
Thank
you.
questions.
J u s t o n e or t w o , M r .
to u s t h e u s u a l
in the c o n s u m m a t i n g — - d e v e l o p i n g
and
procedures
consummating
contract.
25
in
the
to y o u a t y o u r r e q u e s t
MR. DOHERTY:
Galerstein.
so o n ,
t w o or t h r e e c o p i e s
M r . Doherty has
21
that
those
into and
M r . Rudning;
MR. MARINACCIO:
20
your
s o m e o t h e r s , as M r . A t k i n s
that I'm making
19
a
time.
under-
saying now,are
directly
MR. GALERSTEIN:
16
d a t e s of
that we heard
11
24
I can
I did a p p r e c i a t e
they w e r e entered
10
23
of
tell
M y p o i n t of f u r t h e r c l a r i f i c a t i o n w a s
8
22
Sure.
to
that.
7
18
t h a t up j u s t
in that p e r i o d
MR. MARINACCIO:
stand
5
6
I bring
I have a blurry memory
3
4
And
Is it a l s o
the c a s e
that o f t e n t i m e s
the
516
437
2
contract
or a n a m e n d m e n t w i l l s p e a k a s of a d a t e , to b e
2
effective
3
a c t u a l l y c o n s u m m a t e d , as we h a v e
a s of the d a t e p r i o r
4
Number
seen with
MR. GALERSTEIN:
procedure
often
MR. DOHERTY:
8
though
9
e f f e c t i v e as of
the c o n t r a c t
or
But
the d a t e p r i o r
to t h e t i m e
s i g n e d , is it the u s u a l p r o c e d u r e
11
of
that
it is
12
procedure
14
if—
May
for
the L e g a l D e p a r t m e n t
I e x p a n d a b i t on
15
procedure.
Because
18
implications
19
I am aware
20
there
of the
21
or e x e c u t e d
is a n
22
a s of
fact
that
I do not b e l i e v e
the L e g a l
the
to d o t h a t .
That
as
usual
And
is n o t
that
my
technical
of p r o c e s s .
that when you date an
That
is,
article,
the s i g n a t u r e w a s
processed
date.
But that I w i l l say
24
the d o c u m e n t
It is n o t
of the
in t h a t k i n d
implication
23
I am aware
involved
actually
Certainly.
MR. GALERSTEIN:
17
it's
that?
MR. DOHERTY:
16
to d a t e
even
become
signed?
MR. GALERSTEIN:
13
is a
in t h o s e c a s e s ,
the a m e n d m e n t m i g h t
10
the t i m e
Y e s , that
followed.
7
2 5
it's
Amendment
1?
5
6
to t h e t i m e t h a t
is a p p r e c i a t e d
in a l l h o n e s t y a n d
candor
by most people outside
of
Department.
And
if I m a y , w i t h y o u r p e r m i s s i o n , g i v e y o u mj
517
436
interpretation
of w h a t
I saw
yesterday?
MR. DOHERTY:
Certainly.
MR. GALERSTEIN:
proposed
agreement was meant
tion as the e x e c u t e d
was
it 2 1 ,
It
to h a v e
a g r e e m e n t , and
is t h a t
the
the s a m e
that
interpreta-
the d a t e
April—>
1968?
M R . DOHERTY:
1.
M R . COLLINS:
April
MR. GALERSTEIN:
1.
April
1, 1968, was
intended-—
MR. DOHERTY:
Excuse m e , April
M R . SOUTTER:
MR. GALERSTEIN:
1972, was
that
instrument certainly
effective
reading
indicates
l a s t p a g e , it
"In w i t n e s s
have caused
hereof
document,
it i n d i c a t e s
that
that
date.
it w o u l d
on E x h i b i t
to b e d u l y
set f o r t h
agree
the
t h o u g h the b o d y
the p a r t i e s
6 3 - A c a r r i e s a d a t e of A p r i l
So y o u w o u l d
1,
of
be
63-A,
just
states:
this a m e n d m e n t
a s of t h e d a y a n d y e a r
And
Even
a s of A p r i l 1 , a l t h o u g h
f r o m the
to c a r r y
it is e f f e c t i v e a s of t h a t
MR. DOHERTY:
the
1972.
I'm sorry, A p r i l
intended by non l e g a l p e o p l e
connotation
1,
'72.
1,
hereto
executed
below."
1972.
t h a t o n the f a c e
it h a s b e e n s i g n e d
of
this
on A p r i l
1,
518
436
i
1972?
2
3
MR. GALERSTEIN:
your—what
you say.
4
not have done
5
belief
6
didn't understand
7
from
that.
10
it a t
this
MR. DOHERTY:
involved
that
take your w o r d .
I haven't
MR. DOHERTY:
signature.
15
significance
You
of
think
But
M R . DOHERTY:
that with him
that
were
is
Thank
23
j u s t so
long d i s c u s s i o n
looked.
It h a s M r .
That's
Rudning's
the
correct.
discuss
Certainly.
P e r h a p s he would
p e r s o n on t h a t p a r t i c u l a r
be
the
point.
you.
MR. MARINACCIO:
question
it.
in.
MR. DOHERTY:
most knowledgeable
looking at
I guess we can
then w h e n he comes
M R . GALERSTEIN:
deriving
there?
19
22
I'm not
Yes.
20
a
the people
even
M R . GALERSTEIN:
17
25
such as w e are
that perhaps he didn't realize
the d i s t i n c t i o n
16
24
who
correct?
14
21
strong
in t h e s e a m e n d m e n t s w e r e , for B e l l , M r . R u d n i n g ,
MR. GALERSTEIN:
I'll
and
legal people
point.
13
18
implications
with
it, I would
But my h o n e s t belief
the
11
12
if I h a d w r i t t e n
is t h a t t h i s w a s d o n e b y n o n
8
9
And
Well, I agree
that
the r e c o r d
on t h a t A p r i l
I have one
clarifying
right now—-there's
1, 1972
date.
been
519
436
15/12
What's
l
2
d a t e of
your best understanding
the e x e c u t i o n
of
that
MR. GALERSTEIN:
I don't
4
MR. MARINACCIO:
Was
5
August
or S e p t e m b e r
7
of
I really
MR. MARINACCIO:
9
At
back
11
oath.
into
it l a t e r
this p o i n t
Thank
don't
12
returned
proceedings were
back
into
15
the r o o m , a f t e r w h i c h
t i o n of
This
the S e n a t e B a n k i n g C o m m i t t e e
17
into
18
m i l l i o n p a y m e n t by T e x t r o n r e l a t i n g
19
approximately
20
payment
21
in the
1973,
22
by
Senate Banking
the f a c t s a n d c i r c u m s t a n c e s
the
489 helicopters
to A i r T a x i
23
Freed
25
all working
and John
for
time
under
Sylvester,
the
is the
Staff
followin
to the
continua-
inquiry
surrounding
the
$2.9
sale
of
to t h e G o v e r n m e n t
of
in c o n n e c t i o n w i t h
' 7 4 , '75 t i m e p e r i o d .
My name
24
Sylvester
had.)
MR. MARINACCIO:
16
know.
testimony
( W h e r e u p o n , the w i t n e s s , M r .
13
in
you.
I think we'll call M r ,
the r o o m a n d p r o c e e d w i t h h i s
14
on
knowledge.
8
10
know.
1972?
M R . GALERSTEIN:
I don't have any
actual
document?
3
6
o f the
that
Iran,
transaction
That's been
ordered
Committee.
is C h a r l e s M a r i n a c c i o ,
this
Collins and David D o h e r t y .
the S e n a t e
Banking Committee
is
And we
on
Bruce
are
this
520
441
1
inquiry.
Dave Doherty
is a s s i g n e d
2
Committee
and
to the C o m m i t t e e
3
r e q u e s t of o u r C h a i r m a n
4
Commiss ion.
A
5
detailed
letter
to t h e S e n a t e
f r o m the S e c u r i t i e s
from
and
the C h a i r m a n of t h e
6
Banking C o m m i t t e e , M r . S y l v e s t e r , has b e e n put
7
record
authorizing
8
of w i t n e s s e s
9
to t h i s
into
oath
in
the
oaths
respect
oath
And
that,
in t h a t c o n t e x t
though you are appearing
is u n d e r
15
with
16
United
17
given by w i t n e s s e s
o a t h , and
respect
I would
very
y o u ' l l be
any
information
20
enforcement agency
21
p e r j u r y and
in U n i t e d
elicited
States
Department.
And
subjected
to a l l
false
Senate
proceedings.
it is p o s s i b l e
States
opportunity
record, I will state
24
here
to b e r e p r e s e n t e d
that
an
Executive
by c o u n s e l .
have
A n d , for
that you are r e p r e s e n t e d
by
t o d a y i n t h e p e r s o n of M r . S o u t t e r a n d M r .
you please
of.
the
testimony
in those c o n t e x t s , y o u c e r t a i n l y
23
Would
testimony
from you could be used by
of the U n i t e d
22
even
t e s t i m o n y , a l l of t h e l a w s of
I m i g h t also say that
19
add
here v o l u n t a r i l y , your
therefore
to y o u r
States respecting
18
Senate
So, I will be putting you under
14
25
Exchange
to a d m i n i s t e r
under
the
shortly.
12
13
take testimony
to
matter.
10
11
and
the f o u r of u s
Banking
pursuant
the
the
counsel
Galerstein
stand and raise your
right
521
436
j
hand
so that
2
I can administer
Do you solemnly
3
that y o u ' r e a b o u t
4
nothing but
the
swear
to g i v e w i l l b e
that
MR. SYLVESTER:
you.
the
testimony
truth
and
God?
I do.
M R . MARINACCIO:
6
to
the w h o l e
t r u t h , so h e l p y o u ,
5
7
the o a t h
Thank you.
Please
be
seated.
8
9
FRANK M.
10
having been first duly sworn
11
whole
12
follows,
truth and n o t h i n g but
as
MARINACCIO
Q
position
17
Would
A
Vice
19
Helicopter,
20
you please
at T e x t r o n
18
21
the t r u t h , t e s t i f i e d
EXAMINATION
BY M R .
15
16
the
to-wit:
13
14
SYLVESTER,
to t e l l the t r u t h ,
for
the
My full name
state your full name
record?
is F r a n k M . S y l v e s t e r .
President, International Marketing
Q
and
for
I'm
Bell
Textron.
And
how
long have you been employed
in
that
capacity?
22
A
Since October
1969.
23
Q
And w h e r e had
you been employed
24
A
I was
Q
—in
2 5
previous—>
the
1965
to 1 9 6 9
period?
previously—•
522
443
1
2
3
A
Piper Aircraft
in L o c k H a v e n ,
Q
S o , you were a new employee
A
That's
Q
W i t h w h o m did y o u h a v e _ y o u r
Pennsylvania.
of T e x t r o n
1969?
4
5
6
you became
7
by M r . A t k i n s ?
employed
correct.
by Textron
discussions
in 1 9 6 9 , w e r e
you
8
A
Yes.
9
Q
And w h a t did h e d i s c u s s w i t h you at
10
Was
o n e of the s u b j e c t s
11
that you would
12
Iran?
A
No.
14
Q
Did
the m a t t e r
under
discussion
have relating
13
way
16
and M r . Zanganeh
the
Iran?
that
time,
Taxi
A
At
18
Q
When you became employed by Textron
19
w h a t did you understand w o u l d be your
responsibilities ?
marketing
marketplace
outside
24
C a n a d a , and
eastern block
25
Q
the company's p r o d u c t s
in the
of t h e U n i t e d
Do you know
in a n y
Company
w o u l d be
1969,
for
international
States, except
countries.
G. William
in
principal
My principal responsibilities
22
time?
no.
20
23
that
time
17
A
hired
responsibiliti5 S
that
of the r e p r e s e n t a t i v e , A i r
in
when
to the s a l e of h e l i c o p t e r s
you discuss with him at
15
21
in
Miller?
for
to
523
444
1
A
Yes, I do.
2
Q
Do you know him
3
A
W e l l , ours has b e e n a business
Q
What has been your business
4
(Brief
5
6
A
7
met him
8
pause.)
and had c o n t a c t w i t h him from
(Brief
10
A
11
12
the
13
pretty
I was
I have
to t i m e o n
times
his
abroad.
Iran?
leaving.
into Iran one
If I m e t h i m
time just
about
in I r a n , it w a s
m u c h in p a s s i n g , I g u e s s .
What was
the a p p r o x i m a t e
14
Q
15
A
I don't
16
Q
Do you remember
17
A
Not specifically,
18
Q
Do you remember
20
A
W e l l , I would
21
Q
What were
19
one.
pause.)
I think he came
time
time
have met him several
H a v e y o u m e t h i m in
Q
9
relationship.
relationship?
W e l l , it's been a fairly d i s t a n t
here , and
visits
personally?
d a t e of
that
meeting
remember.
the
year?
no.
the a p p r o x i m a t e
year,
time
frame ?
guess
22
him
Iran at
24
A
N o , I don't
think I
25
Q
Did
him?
t h e r e , w h a t did y o u u n d e r s t a n d
that time?
it w o u l d
the c i r c u m s t a n c e s
23
23-533 0 - 78 - 34
that
him
of y o u r
you see
'74,
Iran?
'75
meeting
to b e d o i n g
D i d y o u t a l k to h i m i n
did.
be
in
524
=
445
1
A
I believe
2
Q
W h e r e did
3
A
Probably
4
Q
Did
5
him?
hotel.
any meetings with any
o f f i c i a l w i t h M r . M i l l e r w h e n he w a s
6
A
I don't
Q
What
y o u did or
9
A
10
is t h a t
11
Q
12
yeah.
you see
in the
you attend
7
8
I did,
think
so.
is y o u r b e s t r e c o l l e c t i o n
My best recollection
I did
with G. William
A
No.
Q
Did
the name
conversation
16
present
17
A
No.
18
Q
-—at any
time?
19
A
(Witness
shakes head
I d i d or
the m a t t e r
of A i r
in a n y w a y w h e n y o u a n d M r . M i l l e r
one w i t h
20
the
not
question and
from side
THE WITNESS:
23
MR. GALERSTEIN:
each
in a n y
were
to
side.)
I think he got
the
answer.
22
answer crossed
Taxi
other—
M R . GALERSTEIN:
of w h e t h e r
"Air T a x i " ever come up
15
2 5
whether
Miller?
13
24
of
not.
Did you ever discuss
answer—the
present?
not?
14
21
Iranian
Pardon
me?
The q u e s t i o n
and
other.
MR. MARINACCIO:
Would
the C o u r t
Reporte
525
446
1
please
2
witness
read
Che q u e s t i o n
answer?
to the w i t n e s s
I t h o u g h t he did
THE REPORTER
3
"Did
4
Taxi with G. William
5
(Reading
you ever discuss
6
Answer:
7
Question:
Did
the n a m e
'Air T a x i
y o u and M r . Miller w e r e present
in a n y w a y
1
ever
when
one with
the
other—."
11
Answer:
12
Question:
13
Answer:
to
14
No.
—-at any
(Witness
time?
shakes head
M R . GALERSTEIN:
Excuse
17
BY M R .
O h , I'm
sorry.
No.
MARINACCIO
Q
indicate
Do your k n o w l e d g e , did M r . M i l l e r
to a n y o n e ,
ever
including y o u r s e l f , that he
21
or h a d a n y k n o w l e d g e o f
22
Air
the o w n e r s h i p
knew
or r e p u t a t i o n
of
Taxi?
23
A
No.
24
Q
Did
you ever mention
Miller ever mention
side
me.
A
19
from
side.)"
15
25
Air
Miller?
9
10
20
of
notes):
No.
c o m e u p in a n y c o n v e r s a t i o n
18
the
from his
the m a t t e r
8
16
and have
answer.
the name or did
the n a m e of G e n e r a l K h a t a m i
Mr.
to
you?
526
436
A
No.
Q
Do you have any knowledge whatsoever
Mr. Miller
ever knew
of G e n e r a l K h a t a m i ' s
t h e s a l e of t h e B e l l h e l i c o p t e r s
(Brief
A
Would
to
the
Iran?
y o u say
that a g a i n ,
you please
read
question?
THE REPORTER
that M r . Miller
participation
helicopters
A
(Reading
Can
to
ever knew
in the
from his
the
notes):
whatsoever
of G e n e r a l
s a l e of
Khatami's
Bell
Iran?"
I t a l k to
him?
M R . SOUTTER:
Sure.
MARINACCIO
Q
Talk
A
To
to w h o ?
Q
Your
A
Yes.
Q
O h , by a l l m e a n s . S u r e , y o u ' r e a l l o w e d
counsel.
lawyer?
confer with your counsel.
Go
(Off r e c o r d
Soutter and
please?
Would
"Do y o u h a v e a n y k n o w l e d g e
BY M R .
participation
pause.)
MR. MARINACCIO:
back
that
the
to
ahead.
discussion between
Mr.
witness.)
MR. GALERSTEIN:
Mr. Sylvester,
Mr.
in
527
448
1
Marinaccio
2
is j u s t
is n o t p o s i n g a n y
trying
May
3
to g e t
MR. MARINACCIO:
whatever you
MR. GALERSTEIN:
7
witness
8
question
s a y , he feels
Marinaccio?
Sure, you
may,
From what
I heard
9
that assumption which
that there
is a n a s s u m p t i o n
t h a t w i l l m a k e a " y e s " or a " n o " a n s w e r
10
actually
11
Bell.
12
intention.
is t h a t G e n e r a l K h a t a m i
had, participation
And
I am assuring
implication
15
the specific
him that
16
later
that
That's
of G e n e r a l K h a t a m i ' s
THE WITNESS:
Okay.
19
M R . SOUTTER:
Just be
20
THE WITNESS:
Yes.
it i s ,
the
into
participation
Then my answer
to
straightforward.
MARINACCIO
Q
And
if y o u w a n t
your a n s w e r s , we're here
24
A
Sure.
25
Q
So p l e a s e
your
no.
BY MR.
22
23
not
from
on.
17
21
is n o t
the
had,
of t h a t q u e s t i o n , a l t h o u g h w e m a y g e t
matter
in
the
accept
in the s a l e of t h e s h i p s
MR. MARINACCIO:
13
14
really
want.
6
18
He
information.
I say s o m e t h i n g , M r .
4
5
trick questions.
to q u a l i f y
or d i s c u s s
to g e t a l l o f y o u r
feel free
to d i s c u s s
any
testimony.
this
matter
of
528
449
1
w i t h us
2
A
Okay.
3
Q
So I ask you once a g a i n :
4
to d e v e l o p
did M r . M i l l e r
5
or a n y o n e
6
Khatami,
ever
record.
e l s e , to y o u or a n y o n e
A
No.
8
Q
Did
10
No.
11
Q
Did
else, about
General
payment
Miller?
you ever have a conversation with
else concerning
13
$2.9 million
14
A
No.
15
Q
N o w , in y o u r p o s i t i o n a s V i c e
16
International
G. William Miller's
knowledge
of
anyone
the
payment?
Sales at Bell H e l i c o p t e r ,
17
your responsibilities
18
A i r Taxi's and M r . Z a n g a n e h ' s
19
representative
20
helicopters
to k e e p y o u r s e l f
President
it w a s
21
22
Q
And
of
of
manufacturer's
the s a l e of
to the I r a n i a n G o v e r n m e n t , w a s
Yes,
one
for
fully apprised
efforts as
in I r a n r e s p e c t i n g
A
it
the
not?
sir.
in r e s p e c t
23
and kept yourself
24
General Khatami may
Khatami
the $ 2 . 9 m i l l i o n
12
25
knowledge,
knowledge?
you ever discuss
to A i r T a x i w i t h G . W i l l i a m
A
To your
t a l k to y o u a b o u t G e n e r a l
to the b e s t of y o u r
7
9
the
apprised
of t h i s m a t t e r , w e r e
of w h a t e v e r
have had
(Brief
in t h a t
pause.)
you
participation
transaction?
aware
529
436
1
A
Say
that a g a i n ,
"And
in r e s p e c t
2
please.
THE REPORTER
3
(Reading
from his
4
you aware and kept yourself apprised
5
whatever
participation
6
h a v e had
in t h a t
7
A
8
9
Q
Mr.
10
questioning
11
primarily
12
matter
13
preliminary
14
ground
15
some
16
specifics.
General Khatami
think so.
in t h a t
over
I —
I now w a n t
to M r . F r e e d w h o ' s
this'morning.
questions
may
I'm not aware
going
for d e v e l o p i n g
I just wanted
to g e t for
and r e s p o n s i b i l i t i e s
to t u r n
the
to b e
the r e c o r d
to a s k
the r e c o r d
I'll now ask him
your
to c o n d u c t
gets
the
into
18
(Soto voce discussion b e t w e e n
21
further clarifying
22
extremely happy
23
like
25
Did you have a
MR. MARINACCIO:
24
statement
for
right.
question?
Mr.
Did you want
the r e c o r d ?
to m a k e
We'd
to r e c e i v e a n y s t a t e m e n t w h i c h y o u
Please
do
be
would
so.
THE WITNESS:
all
of
the
witness.)
20
to m a k e .
back-
questioning.
M R . SOUTTER:
the
this
and your general k n o w l e d g e
of these m a t t e r s b e f o r e M r . Freed
S o u t t e r and
on
those
17
19
of
transaction.
Sylvester,
responsible
of
transaction?"
No, I don't
his p a r t i c i p a t i o n
notes):
of t h i s m a t t e r , w e r e
No, I —
I think
we're
a
530
436
EXAMINATION
BY M R .
FREED
Q
M r . Sylvester, why was Air Taxi rehired
Bell Helicopter
in
A
Why was Air
Q
Y e s , Air Taxi
Bell's manufacturing
A
I don't
Q
After
Air Taxi's
Taxi-—
Taxi's
in I r a n — i n
representative
Teheran, rehired
in I r a n
in
as
1968?
know.
you joined
B e l l , w h a t did
you hear
about
reputation?
(Brief
A
by
1968?
pause.)
I don't remember hearing anything
about
Air
reputation.
Q
What about Air Taxi's
Government officials
contacts
with
in I r a n , its r e p u t a t i o n
influencing high Government
for
officials, having access
to
them?
A
W e l l , I didn't hear anything at all
those lines about Air
You joined
A
That's
Q
What responsibility
A
were
Taxi.
Q
after you
along
Bell
in O c t o b e r
1969, am I correct?
correct.
did y o u h a v e
for
Iran
joined?
W e l l , my responsibilities
no d i f f e r e n t
than for a n y other
with respect
international
to
Iran
531
452
1
marketplace.
2
Q
And what would
that
3
A
To promote
s a l e of the
4
products wherever
5
oppor tunity.
Q
6
the
possible, wherever
Could
an
y o u g i v e us a b r i e f r u n - t h r o u g h
of
Iran, with
7
8
s a y , late 1969 and early
A
Early
10
Q
Yes.
11
A
Sure.
the I r a n i a n m a r k e t ,
We
pause.)
then had an office
14
the p e o p l e
15
for sales and marketing activities
in t h a t o f f i c e h a d
16
And
17
1 9 7 0 , he v i s i t e d
on a r o u t i n e
trip
government
19
e v e n t , that p r o d u c e d
20
take a look at
21
then existed
22
briefings
officials.
And
an
(Soto voce
witness.)
late
of
to c o m e
in
out
s i t u a t i o n as
F o r c e s , and also
to
here.
discussion between
any
and
it
conduct
helicopter.
to c l e a r a t i m e p o i n t
of
East.
in, uhmm,
to us
their present helicopter
I need
the
that area
one
responsibility
in the M i d d l e
I don't know w h o , but
o n the A H - l G , a r m e d
Soutter and
delegated
invitation
in t h e i r A r m e d
24
25
through
in B r u s s e l s , a n d
T e h e r a n and met with a number
18
23
what
between,
1971?
(Brief
A
I could
'71?
12
13
company's
find
y o u did w i t h
9
be?
Mr.
532
444
A
Okay.
marketplace was
out
to d o w h a t
So o u r f i r s t r e a l e x p o s u r e
in e a r l y
your
In late
Brussels
And
The man
I think
that—
I
the B e l l o f f i c i a l
officials
did he m e e t
that I^-that we had
traveling
going
with?
out
of
office?
Q
Uh huh,
A
His
yes.
name was Chris
know w h o he met w i t h
Horsley and—-and
in I r a n o t h e r
of h i s r e p o r t
and w e n t out
to do w h a t
that we pulled
I just
But
a team
W h e n did you m a k e your
A
Early
in
Q
Could
you be more
A
Not much more.
Q
April?
A
Maybe April.
Q
So y o u h a d b e e n w i t h B e l l s i n c e
trip
A
That's
Q
Could
your own words
of
it w a s
on
together
described.
Q
and your first
I don't
t h a n he-*-he d i d h a v e
meeting, I think, with General Toufanian.
the b a s i s
people
question.
1970, who was
to I r a n a n d w h i c h G o v e r n m e n t
A
that
I t o o k a t e a m of
I just described.
think that answers
Q
'71 w h e n
to
first
t r i p to
Iran?
1971.
precise?
I think
March,
to I r a n w a s
it w a s a b o u t
March.
April.
in e a r l y
late
1969
1971?
correct.
y o u p l e a s e g i v e us a c h r o n o l o g y
the d e v e l o p m e n t
of B e l l ' s
in
eventual
a
533
454
1
2
contract
for
the p u r c h a s e — o f
eventual contract
for
A
4
1971, there followed
6
ourselves
and
a pretty
Iranian
8
made a decision
9
very
similar
to o u r o w n
m i s s i o n s , and
11
still unresolved.
12
would
that
go i n t o the
each
trip r e s p o n d i n g
15
each
time we went
16
that
the s i t u a t i o n
17
proposal
in t e r m s
had c h a n g e d
that o r g a n i z a t i o n
the h e l i c o p t e r s
were
that
trips
to
for a p r o p o s a l .
sufficiently
so w e ' d — w e ' d
And
to m a k e
spend w h a t e v e r
to d e t e r m i n e w h a t c h a n g e s
21
be-—-come b a c k , p r e p a r e a n o t h e r
t h i n k i n g and w h a t
time
had
find
our
proposal and
this w a s a — ' t h i s w a s a
procedure
until—continuihg
24
a half until we finally came
25
you've
was
occurred
the next proposal step
23
mentioned.
Iran,
responsive.
20
of
had
and
to I r a n w i t h a p r o p o s a l , w e w o u l d
in t h e i r
just
they
organization
t h r o u g h a s e r i e s of
necessary
And
in
between
of o r g a n i z a t i o n
so-^so were
19
22
trip
that they w e r e — t h a t
to a r e q u e s t
not completely
there
helicopters ?
organization.
14
And
initial
steady dialogue
the s p e c i f i c s
And
So w e w e n t
18
that
to f o r m a n A r m y a v i a t i o n
10
13
of 4 8 9 B e l l
officials.
We were aware
7
Government's
pause.)
Well, beginning with
5
Iranian
the p u r c h a s e
(Brief
3
the
go o u t
should
again.
continuing
p r o c e d u r e for a b o u t a y e a r
to t h e h a r d w a r e
sale
that
and
534
455
Q
Which was
A
I t h i n k the h e l i c o p t e r
1
2
3
4
government basis was
Q
Was
meeting with
that p e r h a p s
the
(Brief
A
8
No.
q u e s t i o n as
Q
10
11
met with
12
of
I'm not
1
government-to-
72? —*for
earlier when
the
487
Mr. Atkins
the
there was
a
pause.)
sure
to a m e e t i n g w i t h
that I u n d e r s t a n d
the
testified
Shah, I think
your
Shah.
yesterday
that he
it w a s
in A u g u s t
up
numbers.
or
had
September
1972.
13
A
Ye a h .
14
Q
And
that firmed
M R . SOUTTER:
15
16
at the m e e t i n g
17
and
18
the n u m b e r s
the d e c i s i o n
I thought he said
came
20
then
in h i s
is
that
announced
testimony
later
Yeah,
but—.
—approximately
in the f a l l — I t h o u g h t
a
week
it w a s
22
t h a t it w a s D e c e m b e r , it m a y h a v e b e e n N o v e m b e r ,
but
23
late
of
24
o f f e r , the f i r s t
25
were entered
that
that
down—-
M R . SOUTTER:
And
My recollection
subsequently
MR. FREED:
later.
the
to g o f o r w a r d w a s
19
21
sale on a
of
Shah?
7
9
in N o v e m b e r
helicopters.
5
6
when?
time—I believe what
they c a l l a letter
letter agreements with
into, and
then
they were
the U . S .
definitized
said
Government
the
535
456
1
following
June.
MR. FREED:
2
3
clarified
4
at
least
at
that m e e t i n g w i t h
this
situation
the Shah
in
was
A u g u s t - S e p t e m b e :•
they—•
5
6
But
M R . SOUTTER:
recollection
of
the
7
I'm just recounting
testimony.
MR. COLLINS:
8
gave a directive
9
don't know
I believe
that he w a n t e d
if t h e r e w a s a n y
any
11
directive was given by the S h a h , as I
to t h e n u m b e r
that
the
Bell helicopters.
i n d i c a t i o n as
10
testimony as
my
Shah
I
to the n u m b e r
from M r . A t k i n s , but
the
understand.
12
EXAMINATION
13
14
BY M R .
Q
15
16
MARINACCIO
were
If I m a y , M r . S y l v e s t e r :
you personally
present with
17
A
Meetings?
18
Q
Yes.
19
A
One.
20
Q
With Mr. Atkins?
21
A
One.
22
Q
One?
23
A
Uh
24
Q
And who else was
25
A
General
How many
the S h a h of
meetings
Iran?
huh.
present at that
Toufanian.
meeting?
or
>
536
457
2
and
4
5
nods head up and
Q
A n d w h e r e did
this m e e t i n g
A
At
What
the:—huh.
down.)
take
they call
the
place?
Summer
Teheran.
Do you remember
Q
the a p p r o x i m a t e
date
of
the
m e e t ing ?
9
10
11
12
13
14
15
(Witness
in
Toufanian
Iran?
A
Palace
7
8
it w a s y o u , M r . A t k i n s , G e n e r a l
the S h a h of
3
6
So
Q
1
A
I think A u g u s t
Q
August
A
Yeah, yes.
I think
s e t u p the
of
is a b o u t
1972?
Q
A n d w h o had
A
W h o had
Q
Yes.
s e t u p the
Who arranged
S h a h of I r a n , w a s n ' t
right.
so.
meeting?
meeting?
to h a v e y o u m e e t w i t h
it A i r T a x i a n d M r .
the
Zanganeh?
A
N o , it w a s
17
Q
Who was
18
A
It w a s G e n e r a l
19
Q
W h o had r e q u e s t e d
General Toufanian
to s e t
up
20
the m e e t i n g ?
Did you request
General Toufanian
to s e t
up
21
the m e e t ing ?
16
A
22
Q
23
24
25
s e t up
not.
it?
Toufanian.
No.
Did M r . A t k i n s request
General Toufanian
to
the m e e t i n g ?
A
No.
My understanding
i s , it w a s o n
the
Genera]
537
458
1
iniciat ive.
2
3
4
5
For whac
I guess
desire
whom
Co m e e t
how
purpose?
Che S h a h of I r a n h a d e x p r e s s e d
Che P r e s i d e n C
he was a p p a r e n C l y
Q
6
7
Q
A
And how
long did
of B e l l H e l i c o p t e r ,
g o i n g Co d o s o m e
take
8
Oh, twenty
9
Q
A n d w h a t w a s s a i d , w h a t did
did M r . Atkins
11
w h a t did you
s a y , w h a t did
12
13
Q
What
14
A
And
17
say
the
the o t h e r s
General Toufanian
say
and
Shah,
say?
didn't say much
after
over.
between M r . Atkins
and-—
18
Q
About
what?
19
A
About
helicopters.
20
Q
Well, was
this just a g e n e r a l
21
discussion about nothing
22
d i d e a c h p e r s o n s a y , to the b e s t of y o u r
23
We
do h a v e to m o v e
in p a r t i c u l a r ?
this proceeding
24
A
Yeah.
25
Q
W i t h a l l due
Shah say, what
anything.
There was conversation
and
the
General Toufanian
did y o u h e a r
introductions were
16
meeting,
say?
Well, I didn't
the
the
minutes?
A
15
at
place?
A
10
wiCh
business.
long were y o u p r e s e n C
the m e e t i n g
a
W e l l , I'm
not—.
respect—
along.
roundtable
I mean,
what
recollection?
538
459
A
1
2
about
I'm not being
something
Q
3
obstructive
Please just
5
on at
that
8
Government
talking
time.
of w h a t
My best recollection
that m e e t i n g was a — a
intended
of w h a t w e n t
s t a t e m e n t b y the
to b u y B e l l
Shah
that
mentioned, a n d — t h e r e
11
there was
12
effort whereby
some
13
or p a r t l y m a d e
in I r a n .
14
in the e s t a b l i s h m e n t
some
Q
17
had a m e e t i n g w i t h
18
informed all
19
Bell
assembled
interested
industry.
it b e
this short m e e t i n g y o u w e n t
the S h a h , a n d b a s i c a l l y ,
Che p a r t i e s
present
fair
in a n d
the
that he would
Y e a h , I t h i n k — y e a h , uh
Q
Mainly
23
decision
m i g h t be
saying, would
A
Shah
25
that at
think
Shah
be
buying
helicopters?
22
24
of a n a i r c r a f t
I
co-production
Shah was obviously
So f r o m w h a t y o u ' r e
to c o n c l u d e
20
of the h e l i c o p t e r s
The
his
being
some discussion a b o u t —
discussion about a possible
16
21
was
on
helicopters.
N o w , I don't remember any quantities
9
10
15
went
meeting.
Okay.
at
for a l o n g , long
t e l l us y o u r b e s t r e c o l l e c t i o n
A
7
but we're
happened—•
A n d w e ' l l be h e r e
4
6
that
to t h e r e s t
A
huh.
it w a s a n i n f o r m a t i v e
of
t h a t h e had
the p e o p l e a t
session
the m e e t i n g
of
from
the
the
made?
I think so,
yeah.
MR. GALERSTEIN:
Mr. Marinaccio,
just
539
460
1
the
2
Sylvester's
n o r m a l s t y l e of c o n v e r s a t i o n .
3
want
on t h e r e c o r d
4
M r . Sylvester
5
conversations w i t h him are conducted
6
I appreciate
7
get moving more
8
t h a t , y o u k n o w , this
9
k n o w , and
10
"pauses"
to p u t
referred
to o n t h e r e c o r d , t h a t
these pauses
is r e f l e c t i v e w h e n h e
that we w a n t
than I.
I'd h a t e
w i t n e s s , speed
12
13
an awful
14
I'm not sure
15
initially when
long time
But
nature
had been extremely
18
time
19
nothing a n d s t a r i n g .
of m y d i s c u s s i o n
only reason
immediate reactions
And
I mentioned
to the
that w i t h r e s p e c t
precisely what
25
his r e a c t i o n , normal reactions
I am responding
to.
Exactly
the
And
mind
that was
The
impression
to t h a t .
MR. GALERSTEIN:
to h i s
the
pauses
taking an a w f u l
it w a s m y
entitled
other
to the q u e s t i o n s .
is a s k e d .
24
23-553 O - 78 - 35
well
taking
there for q u i t e a w h i l e ,
I think that we're
23
think
is
of t h e l o n g p a u s e s .
And
to
W e l l , f r a n k l y , for
l o n g , and h e ' s
to r e s p o n d , s i t s
22
normal
thinking.
getting what comes
the q u e s t i o n
17
not g e t t i n g his
sinister.
fashion.
I do
is t h a t M r . S y l v e s t e r
in r e s p o n d i n g
16
And
in t h i s
I do w a n t —
talk before
that we're
21
are not
talks and my
to s e e a n y w i t n e s s , t h i s or a n y
impression
20
I just
to g e t m o v i n g , n o b o d y w a n t s
MR. MARINACCIO:
r e c o r d , my
And
Mr.
is a s e r i o u s m a t t e r , as y o u
up a n d
11
is
long
saying
that
we're
questions.
And
that's
to t h e
the
pauses.
point,
You are entitled
and a n s w e r s , and
the
to
I think
it
540
461
1
is i m p r o p e r
to i m p l y o n the r e c o r d
2
not giving
you
3
I'm r e a l l y
t r y i n g to b e of a s s i s t a n c e ,
4
speaks normally
that, b e c a u s e he
in t h i s s l o w
Okay.
5
gave you my observations
8
of
the
this witness
And
is
I'm telling
that
this
y o u , a nd
witness
manner.
Why don't we just go
7
ahead.
All right.
f r o m l o o k i n g a t the
I just
demeanor
witness.
THE WITNESS:
9
10
that
11
I'm i g o i n g
12
ability and
impression
because
to a n s w e r
W e l l , I'm sorry you
it's—'it's
your questions
to t h e b e s t of m y
that you
pretty
got
inaccurate.
to the b e s t
of
my
recollection.
MR. MARINACCIO:
13
14
is.
MR. MARINACCIO:
6
that
Thank you.
Appreciate
are.
15
EXAMINATION
16
17
BY M R .
Q
18
19
FREED
M r . S y l v e s t e r , how many
you
make
to I r a n ?
20
A
From when
21
Q
Let's
22
was
23
p e r iod .
24
A
25
Q
trips did
in A p r i l of
when?
'71, w e ' l l say
'73?
Uh
to
say from—.you
huh.
said your
in the
first
trip
'71 t h r o u g h
'73
541
444
i
(Short
2
3
A
how many
About
trips.
pause.)
f i v e or s i x , I s u p p o s e .
I s p e n t a l o t of t i m e
4
Q
But
5
A
How many
6
Q
Y e s , how many
7
A
In
8
in
to the b e s t o f y o u r
'71.
trips between
Do you know about when
10
A
Huh.
W e l l , we made
(Short
13
A
14
and another
15
three—two
fall.
the f i r s t o n e
Probably
one
in J u n e
one
Q
November?
Probably,
Q
And
A
I really don't remember,
Q
Did
you make a trip
in c o n n e c t i o n w i t h
22
thereafter ?
24
the
letter
A
W h e n y o u say
Q
This
25
Toufanian—
in
1971?
in M a r c h
or
one
July
in
the
yeah.
in 1972 how m a n y
21
in J u n e
or J u l y a n d a n o t h e r
A
23
three
pause.)
made another
17
20
or
in the y e a r
16
19
1971?
April.
12
18
in
'73?
'71.
Q
or
there.
'71 a n d
I think about
know
recollection?
did y o u make
9
11
I don't
is t h e
trips did you
sir.
in the S p r i n g of
of i n t e n t or
"letter
letter
make?
of
of
intent"
intent
1972
shortly
—
from
General
542
444
A
Okay.
Q
—to
Mr. Atkins
the h e l i c o p t e r s
The
Iran
and
go
into
A
I had made a
Q
Uh
A
The
letter
Q
And
then later
the
intent
to
purchase
co-production.
t r i p to I r a n j u s t b e f o r e
that.
huh.
itself
followed.
in A u g u s t
of 1 9 7 2 , y o u
visited
Shah with M r . Atkins?
A
That's
Q
And when
in
correct.
did y o u — d i d
Oh, yes.
I've been
Q
Let me ask you
A
More
trips
to
I've probably
they
to s o r t of r u n
tend
s p e n t a l o t of
Q
time
twenty
together
to
W e l l , I talked
T a x i , I talked with people
in—
officials, military
I talked
staff.
Y o u k n o w , this
made
trips
talk w i t h w h e n you went
to p e o p l e
year.
trips
is
my
to I r a n ,
in, you know—*
and
I've
there.
In y o u r
A
there every
when—
than once.
problem.
I talked
you make any
1973?
A
his
about
in 1 9 7 1 a n d
1972, who did
you
Iran?
to—
I guess we
start with
in A i r T a x i , M r .
I talked
to a n u m b e r
p e o p l e , in a l l of
the
Air
Zanganeh.
of
Iranian
services.
to G e n e r a l T o u f a n i a n a n d p e o p l e
on
543
=
464
2
2
3
Assistance
I Calked
to p e o p l e
in o u r o w n
I talked
to p e o p l e
in the M A A G , t h e
Q
Did you talk
5
A
Yes, I
6
Q
Frequently when you were
7
A
I would
uh
to M r .
Dehesh?
did.
in
Iran?
see M r . D e h e s h , y e s ,
9
Q
And
A
Yes.
11
Q
—.frequently?
12
A
W e l l , less
13
or twice each
14
Q
And
15
A
Yes, I—> I met with him, b u t —
trips
did you meet with General
time I v i s i t e d
to I r a n , I m e t w i t h h i m
I n a l l of y o u r
18
A
Y e a h , that
remember
20
minute,
21
Q
Khatami?
In a l l of
my
twice.
trips, you met with him
I can—that
twice?
I can r e m e m b e r . I can
t w o , two m e e t i n g s w i t h h i m .
Well, wait
a
three.
And when were
your meetings with
General
Khatami?
23
24
once
there.
did y o u m e e t w i t h G e n e r a l
Q
19
Toufanian—
frequently, but certainly
17
22
frequently,
huh.
10
16
Military
Group.
4
8
embassy.
A
and
2 5
not
Q
W e l l , they w e r e — t h e y
after.
When
in
1972?
were
in 1 9 7 1 a n d
1972,
544
465
A
1
Okay.
I had--
I me t w i t h h i m —
2
1972 after w e had c o m p l e t e d
3
p r o g r a m on our
4
demonstration
of
the s a m e a i r c r a f t
5
general staff, we
headquarters
7
his h e a d q u a r t e r s
8
p ilot.
9
took
I met with h i m —
r e c a l l , I took
the
12
did a b r i e f i n g
of t h e — > o f
13
office.
14
Q
15
A
16
described
17
Air
18
19
Iranian
to h i s
in i t — f l e w
I —
think,
I recall—-as
team that I had w i t h me and w e — a n d
our p r o d u c t
What was General Khatami's
His reputation?
as a n A i r F o r c e
line
to h i m
W e l l , I've heard
General who could
Q
Did
you h e a r — . w h a t was his r e p u a t i o n
for
influence ?
Oh, I — I
Q
Influence with
A
W e l l , G e n e r a l K h a t a m i , as C o m m a n d e r
22
anybody's
Force—reputation.
A
25
we
in h i s
him
run
21
24
I
reputation?
20
23
to
it a s a
I met with him, I
first v i s i t , and
11
done a
"we t o o k o n e a i r c r a f t
b a s e and he flew
of m y
the
the t w o a i r c r a f t
base and h e — n o ,
on the o c c a s i o n
for
in
evaluation
two a i r c r a f t , and a f t e r w e had
6
10
the t e s t a n d
I met him
Air Force, was also
would—you
Shah
can't
speak
the
to t h a t , I d o n ' t
Shah?
of
the S h a h ' s b r o t h e r - i n - l a w , a n d
know, I would
know.
speculate with you
sought his advice on aviation matters
that
and
the
I
the
probably
545
466
1
did
so in c o n n e c t i o n w i t h
the—with
2
the Iranian A r m y a v i a t i o n u n i t .
3
aviation before.
4
it w a s
5
because
6
itself at
probably
Because
the
only done outside
of
to t h e m ,
the A i r
it c o u l d
handle
the Shah w o u l d
seek General
9
A r m y , even though General Khatami was a General
11
- A
though G e n e r a l — f o r
the C o m m a n d e r
there was no other place
13
expertise
Q
in h i s o w n
16
include
17
A
20
which
21
buy
to s a y w a s
that he could
aircraft
I don't
the
that
go to for
reliable
influence
over
p u r c h a s e s , and
that
would
know.
Was General Khatami a major
influential
in d e c i d i n g w h i c h h e l i c o p t e r w o u l d
company
the
Shah would
buy—-the
be bought
Iranians
or
would
from?
22
A
I don't know,
23
Q
N o w , w h e n you said
24
K h a t a m i on your
25
of
in
helicopters?
Q
19
tried
What was General Khatami's
15
figure
the
country.
military, specifically
18
for
Chief?
Well, what I just
12
14
in
purchases
Khatami's
advice
A i r Force as
no
and
Force
8
10
of
moment.
But
even
they had had
this w a s a new thing
the Air F o r c e had e v e r y t h i n g
Q
7
And
the establishment
no.
first visit
you met with
General
to I r a n , t h a t w a s
1 9 7 1 , w h a t did y o u and G e n e r a l K h a t a m i
talk
in A p r i l
about?
546
467
A
briefed
that was
that
W e l l , I think I said
the purpose
of
product
the v i s i t a n d
it
was—we
l i n e , and
that's—that's
all
happened.
Q
Did
A
No.
General K h a t a m i give Bell
Q
I want
Not—'not
in m y
to r e a d
can't assemble
Q
these
And
A n d , J o h n , let's
1 0 , 1970
33 is a n A i r T a x i
in w h i c h M r . Z a n g a n e h
M r . Zanganeh
if w e
internal
talks
team headed by
of
Mr.
said:
"I i m m e d i a t e l y
approached
and also General Toufanian and
related
see
34.
the u p - c o m i n g v i s i t of t h e B e l l
Sylvester.
33.
exhibits.
Exhibit
Exhibit Number
of A p r i l
advice?
presence.
from Exhibit Number
MR. FREED:
memo
that w e — . t h a t
h i m on t h e B e l l H e l i c o p t e r
the p u r p o s e
of
General
Khatami
personally
the v i s i t
of
Bell's
team.
Contrary
maximum
to B e l l ' s
decision
to m a k e a
e x p o s u r e and w i d e p u b l i c i t y ,
both
G e n e r a l K h a t a m i and G e n e r a l Toufanian as
well
as M r . D e h e s h , agreed w i t h me that Bell
should
play a very
and
adhere
would
low-key and only c o o r d i n a t e
to f u r t h e r
be given
guidance/instruetions
to t h e m . "
which
547
436
j
2
And
internal memo
Exhibit Number 43, which
of A p r i l 2 4 , M r . I r a n z a d
3
team v i s i t . And
4
1971, between M r . Sylvester
5
said:
6
Bell
This
9
team regarding
is p r e l i m i n a r y
"—.discussions
introduction
took place
11
General Khatami gave very
12
useful guidance and advice
13
s a l e s of
14
very
16
What
half.
important
the
and
future
The Bell
team
was
t y p e of a d v i c e a n d g u i d a n c e
did
reflect
the c o n t e n t
A
I don't
Do
o f the
those memos
accurately
discussions?
think so.
No.
I don't
remember
20
General Khatami giving Bell a very
important and
21
guidance and advice
sales
22
Cobra at
23
24
Q
did
25
for
the
future
of t h e
useful
Huey
all.
W e l l , to t h e b e s t of y o u r r e c o l l e c t i o n ,
General Khatami
A
General
you?
Let me ask:
19
Khatami.
impressed."
K h a t a m i g i v e to
17
18
the H u e y C o b r a .
the
friendly
for a b o u t an h o u r and a
for
of
19th,
He
Iran--r"
of G e n e r a l
in a
atmosphere
in
Bell
on A p r i l
introductions
the p r o g r a m
Taxi
the
General Khatami.
10
15
reviews
the m e e t i n g
and
"After preliminary
7
8
he t a l k s a b o u t
is a n A i r
W e l l , he
what
do?
t o o k the b r i e f i n g
on
the p r o d u c t
line
548
469
1
which
2
suggesting
included
3
advance
4
to the
6
t h e s a l e of
He never
t a c t i c s , the sales
Huh
8
Q
He never
9
gave
Absolutely
Q
Or
11
A
No.
12
Q
Or M r .
13
A
(Shakes head
on Bell's
it to y o u
Taxi?
Zanganeh?
from side
to s i d e . )
you please answer
for
19
MR. GALERSTEIN:
BY M R .
21
Was
"yes"
"Absolutely
not."
He
answered.
General K h a t a m i an important person
to k n o w a n d d e a l w i t h
A
Commanding
the r e c o r d
FREED
Q
Bell
the
Absolutely
No.
M R . SOUTTER: He said
25
sales
not.
through Air
Could
A
23
not.
directly?
18
24
helicopter
"no"?
17
22
other
best
Right?
Q
15
20
you're
uh.
A
or
or a n y
gave any advice
10
16
if
strategy?
A
not.
And
to h o w w e c o u l d
the H u e y C o b r a
7
14
helicopter.
Iranian m i l i t a r y , I can assure you that he did
Q
5
the a r m e d
that he gave a d v i c e as
top m a n
Oh, I would
in
for
Iran?
think so, sure.
He w a s
the
G e n e r a l of t h a t A i r F o r c e a n d , a s s u c h , w a s
in a n o r g a n i z a t i o n
that—that
had use
for
549
470
1
helicopters.
Q
2
3
N o w , General K h a t a m i favored
of H u e y C o b r a s by
I r a n , is t h a t
4
A
I don't
5
Q
I just want
6
the
acquisition
correct?
know.
to q u o t e
which was an aide memoir
from
Exhibit Number
that y o u w r o t e on A p r i l
7
1 9 7 1 , in w h i c h y o u t a l k a b o u t " G e n e r a l K h a t a m i h a s
8
reported
9
Air Cav
10
A
to the S h a h a s b e i n g
W e l l n o w , t h a t is a n a i d e m e m o i r
"Horsley called
12
that's
14
to a d v i s e
o n e of the
Q
on
A
the H u e y
the f o l l o w i n g
17
or n o t , I r e a l l y d o n ' t .
18
reported
19
he d i d , h e d i d .
20
He m a y h a v e g o t t e n
I don't know whether
is w h a t — i s
points,"
what
that's a correct
Horsley
to the S h a h a s b e i n g
said
and
General
23
A
W e l l , I think
24
Q
So if M r . H o r s l e y
thing
statement
that K h a t a m i
he got
it a n y w h e r e , y o u
Were
this
has
in f a v o r of the C o b r a .
If h e — s o m e w h e r e
Q
25
says,
Cobra?
Sir, all I know
16
22
the
points.
says.
21
also
for
that
N o w , was M r . Horsley correct about
Khatami favoring
15
28,
Mission."
11
13
in f a v o r of C o b r a
34,
this
If
information.
know.
the r e p o r t s b y M r . H o r s l e y a c c u r a t e
to
you?
believed
that
it w a s — t h a t
so.
said
it w a s
that, you would
the
case?
have
550
471
1
A
Well, I wouldn't have reason
2
Q
I want
3
A
4
whether
5
Q
6
7
1972.
8
cable
But my point
I want
is
t h a t I h a d no k n o w l e d g e
to q u o t e
In t h e c a b l e
10
door
11
p r o g r a m and even
it s a y s , in
to N o . 1 , T r o u t a n d
logistic
support
direct."
1" is t h e c o d e
Why did M r . Zanganeh refer
14
K h a t a m i as N u m b e r
1?
A
17
18
I don't know why.
Q
term
Was
"Number
is c o d e d a s
to
just-—any more
than
to u s e of
the
1"?
A
Not
20
Q
Especially when
to
me.
21
other names
22
d e n o m i n a t ion ?
23
A
No, n o t — n o
24
Q
Was anyone
25
Khatami
like Trout and
other people are
Skate but no
significance
else more
in the a c q u i s i t i o n
important
of a i r c r a f t
given
numerical
to m e a t
all.
than
for
General
"Trout."
there any significance
19
That's
the
training
General Khatami.
I know why Dehesh
the
Skate,
13
16
20th,
that:
N o w , in this c a b l e , " N u m b e r
15
51, which
to y o u o n S e p t e m b e r
is s t i l l o p e n for B e l l to s e c u r e
12
of
favorably.
from M r . Z a n g a n e h
in c o d e , it s a y s
"According
9
report
on E x h i b i t Number
from M r . Zanganeh
that's
it.
to—•
K h a t a m i d i d or d i d n ' t
was a cable
to d i s b e l i e v e
General
or d e c i s i o n s
to
551
472
1
buy
aircraft?
A
2
I don't know
3
decision makers
4
don't.
on t h a t — o n
Maybe
5
6
at
this point
the relative
it w o u l d
7
selling m o d e , and we were
doing our b e s t
9
thought w e m i g h t find
10
impression
11
advisory
12
attention
13
be h e l p f u l for me
of o u r h e l i c o p t e r s
Q
no—»well, we
someone who could
that
we
favorable
and have a—~any kind
of
an
close
people.
N o w , as Vice
President
for
International
14
M a r k e t i n g , did you r e c e i v e on a regular basis
15
from Air
the
memos
Taxi?
16
A
Regular?
17
Q
Basis.
18
A
Oh.
19
Q
—Air
20
Iranian
21
A
22
regular
Did
you receive
Taxi's memos
on a r e g u l a r
on their dealings
basis—
with
officials?
W e l l , we have a practice of asking
reports
f r o m a l l of o u r r e p r e s e n t a t i v e s
23
the w o r l d .
We don't always
24
been
normal f or—-espec ially
25
s i t u a t i o n , f o r A i r T a x i to r e p o r t
or
were
get a
position, we paid
that
sales
to t o u c h a l l the b a s e s a n y w h e r e
to t h o s e
the
to s a y
in a v e r y a c t i v e
leaving
or d e c i s i o n - m a k i n g
of
that p u r c h a s e , I r e a l l y
in t i m e w e w e r e
8
importance
fairly
get them:
But
around
it w o u l d
in t h i s k i n d
to us
for
of a
regularly.
have
552
444
Q
you
In this
1 9 7 1 p e r i o d , did A i r T a x i r e p o r t
to
regularly?
A
I think
so.
Q
And
they apprise
did
y o u of
their
contacts
w i t h G e n e r a l K h a t a m i and G e n e r a l T o u f a n i a n and
Mr.
Dehesh?
9
A
Y e a h , uh
Q
And
huh.
you were aware
that
they had a
close
relationship w i t h G e n e r a l K h a t a m i and T o u f a n i a n and
Mr.
Dehesh?
A
it?
is a k i n d
I don't know how close
between
jy
W e l l , "close"
those
of a n a d j e c t i v e ,
the r e l a t i o n s h i p s
Q
Well—
Or f r o m A i r T a x i
Q
M r . Z a n g a n e h and A i r T a x i
frequently met with
to
them.
officials
them?
A
Y e a h , uh h u h , I think
so.
Q
And Air Taxi apprised
y o u of a d v i c e
receiving
21
T o u f a n i a n and
22
its s a l e s — t h e
from M r . D e h e s h and
that
General
G e n e r a l K h a t a m i on how Bell should
s a l e of t h e
23
W e l l , that's, I think, a fair
24
Q
So y o u k n e w t h a t
25
a very active
interest
pursue
helicopters?
A
were
people.
A
they were
isn't
in t h e
those
statement.
three men were
taking
s a l e of B e l l h e l i c o p t e r s
to
553
474
1
Iran, certainly
A
2
in t h i s
1971 and
1972
N o , I didn't say that.
period?
I said
3
w a s a c t i n g p r o p e r l y as our r e p r e s e n t a t i v e
4
contacting
5
those
6
those p e o p l e , and
Taxi
were
then a d v i s i n g u s , based
Q
You just
advice
8
Dehesh were
9
about
that Generals
giving
selling
said
that A i r T a x i apprised
K h a t a m i and T o u f a n i a n
and gaining
M R . SOUTTER:
m a y be c o n c e r n i n g M r . S y l v e s t e r
12
selling.
13
give advice
on s e l l i n g , or I ' m n o t t r y i n g
14
his m o u t h .
But
15
or p r o c e d u r a l a d v i c e .
I think he
testified
17
(Short
Q
earlier
Huh.
that
I don't know how
to d e s c r i b e
Zanganeh with
purpose
22
and
24
Dehesh
25
strategy
Frank?
would—
our objectives
in t h a t
it.
The
Toufanian
and Dehesh a n d , I suppose, Khatami, were made
to—for
if y o u ' r e
suggesting
told Z a n g a n e h h o w — o r
ought
to b e , I d o n ' t
that s o m e o n e
what Bell's
think s o .
the
marketplace
sale.
But
in
advice
I'm—they
20
in t h a t
didn't
to p u t w o r d s
21
23
what
of
pause.)
made by A i r T a x i and
of a d v a n c i n g
go
puzzling you,
Yeah.
the
purchase.
they
technical
Is t h a t w h a t ' s
THE WITNESS:
the
is o n the a d v i c e
they may have given
16
contacts
y o u of
Mr.
If I m a y , I t h i n k
11
19
and
to A i r T a x i o n h o w B e l l s h o u l d
the h e l i c o p t e r s
10
on
contacts.
7
18
that Air
there and
tactics
We—
like
and
554
475
1
Q
Would
2
A
We 1 1 —
3
Q
Y o u said
4
were apprised
of t h e i r a d v i c e , t h a t A i r T a x i a p p r i s e d
of G e n e r a l K h a t a m i , T o u f a n i a n a n d
5
of t h e a d v i c e
6
D e h e s h , and
7
Air
8
they w e r e
you please
continue?
that y o u w e r e — • Y o u said
that y o u saw the A i r T a x i m e m o s ,
Taxi kept you closely apprised
of
9
Uh
10
Q
Now, again
11
says—that's
12
said
that
the a d v i c e
that
huh.
in E x h i b i t N u m b e r
33, Mr.
t h e A i r T a x i i n t e r n a l m e m o of A p r i l
Both
General K h a t a m i and
General
14
as w e l l as M r . D e h e s h , agreed w i t h me
15
should
play a very
16
and adhere
17
which would
18
Zanganeh
10—
And
letter
low k e y a n d
to f u r t h e r
only
Toufanian,
that
guidance/instructions
b e g i v e n to
them."
t h e n in E x h i b i t N u m b e r
28, which was
f r o m M r . I r a n z a d o f A p r i l 6 , 1 9 7 1 to y o u ,
20
they
talks about
Che
of a H u e y C o b r a — - H u e y C o b r a p r e s e n t a t i o n .
It
22
"They believe," referring
23
Dehesh, "that, contrary
24
exposure
talk a b o u t — M r . Iranzad
is m o s t
Bell
coordinate
21
you
Mr.
that"
13
25
you
receiving.
A
19
that
said—
presentation
says,
to G e n e r a l T o u f a n i a n a n d
to y o u r d e c i s i o n ,
the
a
Mr.
minimum
advisable."
N o w , the a d v i c e
that was b e i n g passed
on
was
555
476
1
more than j u s t technical or procedural advice,
2
the case?
A
3
Well,
no, I don't
think so.
is
that
The Government of
4
Iran has been very, very s e c u r i t y conscious.
They have
5
been adverse to p u b l i c i t y .
And where we—-where we may
6
have taken one d i r e c t i o n — For instance, we—we did not
7
f o l l o w an Army chain of command up to and into the Army
8
general's
staff.
And we were told by Dehesh that—'that
9
10
was—was the wrong way to go,
11
productive,
this
i t wouldn't—we wouldn't be
t h a t ' s not where the decision-makers
were,
12
there was nobody in that big Army organization that was
13
infantry and a r t i l l e r y and tanks that knew how to s p e l l
14
"helicopter."
15
But the people who were developing
the a i r
16
m o b i l i t y organization and had cognizance over i t were in
17
another organization that was j u s t
18
Q
So Mr . Dehesh—
19
A
And—
20
Q
Excuse me.
21
A
And—well,
forming.
you know, I think Dehesh gave us
22
the same kind of advice that he would,
23
i t advice,
if
you want to c a l l
that he'd give other prospective
manufacturers.
24
I know he was seeing the Sikorsky people and he was
25
r e g u l a r l y seeing the Agusta people, and probably
23-553 O - 78 - 36
others.
556
444
But in order not
to waste our time and the time of
who we might have talked
Q
sent
A
and,
Take Exhibit
33,
MR. SOUTTER:
Do you r e c a l l
for
No.
No,
seeing
it
in any kind of contemporaneous, way?
I probably did see i t .
thing.
It's—*oh,
I never saw any of
no.
their
stuff.
MR. SOUTTER:
question.
being
basis?
MR. SOUTTER:
This was an i n t e r n a l
internal
i n t e r n a l memos,
it.
Frank.
you know,
A
others
he would a d v i s e a g a i n s t
Were the Air Taxi memos,
to you on a regular
instance,
to,
I think that was the
Were you g e t t i n g copies
A
these—
No.
MR. SOUTTER:
A
of
No,
—internal
memoranda?
I was n o t .
BY MR. FREED
Q
How were you being apprised by Mr.
and A i r Taxi of
their a c t i v i t y ?
Zanganeh
I asked you b e f o r e about
whether you had seen any i n t e r n a l memos.
A
Oh, I'm s o r r y ,
I never saw any of
these
I missed the word
"internal."
i n t e r n a l memos u n t i l — y o u know.
But we would be kept apprised of a c t i v i t i e s
Air Taxi or by t e l e x e s as they f e l t
that the
by l e t t e r
occasion
from
557
478
1
warranted or as we requested
4
we kept a p r e t t y c l o s e watch in I r a n .
there was u s u a l l y
MR. SOUTTER:
A
6
Q
From B e l l .
When did you see
the A i r
Taxi
internal
A
When Mr. G a l e r s t e i n
talked
to me about
this
hear ing.
Q
12
13
From B e l l ?
memos ?
10
11
basis.
BY MR. FREED
8
9
In other words,
someone in Iran on a continuous
5
7
forth.
And I might a l s o add that in 1971 onwards,
2
3
information and so
Mr. G a l e r s t e i n showed you these b e f o r e you
appeared b e f o r e us?
A
14
That's
correct.
MR. GALERSTEIN:
15
16
about
17
in the i n t e r e s t
18
wish,
19
May I do that?
May I say
the i n t e r n a l memos which I t r i e d
I will
of advancing
something
to say
t h i s hearing?
yesterday
And i f
explain how the i n t e r n a l memos came to
20
MR. FREED:
21
MR. GALERSTEIN:
Okay.
to,
These
I think
internal
memos, and I think i t was t e s t i f i e d
23
simply repeating
24
But whether he made i t
25
requested, not p a r t i c u l a r l y as i n t e r n a l memos, but
testimony
Bell.
Yes.
22
you
I'm
that Mr. Atkins, I b e l i e v e , made.
or n o t ,
these i n t e r n a l memos were
support
558
479
1
f o r A i r T a x i ' s payment was requested
from B e l l of A i r
2
Taxi.
said,
3
accumulate a ' f i l e
In other words, we s a i d — B e l l
illustrates
In response
4
5
that
i n t e r n a l memos.
your
"We want
activities."
to t h a t , A i r Taxi sent
That i s what I understand
not
7
know i t ,
8
that had ever seen A i r Taxi i n t e r n a l memos.
9
Mr. G a l e r s t e i n ,
your r e c o l l e c t i o n
11
around December of
12
Atkins
13
requested from A i r Taxi in and around
testified
14
negotiations
15
arrangement.
16
testified
that these were d e l i v e r e d
1972?
Is
My r e c o l l e c t i o n
is
don't r e a l l y
in sometime
that Mr.
the time of
the amendments and the
the
fee-settin,I
being
I don't r e c a l l .
I
recall.
MR. SOUTTER:
20
your r e c o l l e c t i o n
21
Atkins
22
I have no f i r s t - h a n d
thought
of
My r e c o l l e c t i o n
the testimony i s c o r r e c t ,
i t was l a t e
is
that
that Mr.
' 7 2 when t h i s had come i n ,
but
knowledge.
MR. GALERSTEIN: W e l l ,
t h a t ' s my p o i n t .
I have no f i r s t - h a n d knowledge, but I think the
it
that the time frame that you r e c a l l
MR. GALERSTEIN:
is —
is
to
to?
19
25
I
these supporting documents were
surrounding
17
24
I'm
But as the honest s i t u a t i o n as
MR. DOHERTY:
23
Now,
the—-as f a r as I know, nobody at B e l l p r i o r
10
18
the
it.
6
t e s t i f y i n g and—
to
testimony
559
480
MR. MARINACCIO:
1
2
witness a q u e s t i o n ,
3
that we want to
because i t ' s
Well,
can we ask the
the w i t n e s s ' s
testimony
get.
MR. GALERSTEIN:
4
Sure.
5
EXAMINATION
6
7
BY MR. MARINACCIO
Q
8
9
A f t e r having reviewed
recently,
do you f i n d
these memoranda
the information t h e r e i n
to be
10
consistent
or i n c o n s i s t e n t with what you knew to be the
11
activities
of A i r Taxi during that period of
12
respect
13
to the s a l e of B e l l h e l i c o p t e r s
to the information contained
(Short
14
15
A
Well,
therein
time with
relating
to the Government of
Iran?
pause.)
nothing in those documents— I hope
16
I'm answering your q u e s t i o n .
17
documents had to me the appearance of anything
18
anything f o r which t h e r e — I h a v e n ' t an e x p l a n a t i o n .
19
other words,
20
as a—"with the impression of an impropriety of any kind.
Q
That w a s n ' t the
22
A
Okay.
23
Q
I asked you,
documents,
25
contained.
in
those
that—of
In
I saw nothing in there that jumped out at me
21
24
But nothing
question.
on your review of
those
you looked at what the information t h e r e i n was
560
481
1
A
Uh huh.
2
Q
I asked you i f
3
respect
Che information t h e r e i n with
Co Air T a x i ' s a c C i v i t i e s was c o n s i s t e n t
or
4
inconsistenC wich your understanding and knowledge of
5
what they were doing at
6
A
the
time?
Oh.
7
MR. GALERSTEIN:
8
and I'm going
9
wife-beating question.
to Cell you,
10
permit any witness
11
"Well,
this
is
It
f o r Che r e c o r d ,
true,
or t h i s
is not true
13
everything
14
conclude whecher everyChing
15
consistent
16
que s t i o n .
is—
and t h e r e f o r e asks
Chey say i s
And I t h i n k — l e t me suggest
It
It's
will
20
that i s r e a l l y
25
an u n f a i r
I'm sure he
But ask him a broad general question
like
unfair.
(Soto voce d i s c u s s i o n between the
witness and Mr.
23
24
or
that i t would be
much b e t t e r were you to ask him s p e c i f i c s .
22
lumps
inconsisCent
19
21
"this
Che wiCness Co
18
answer.
doesn't
I d o n ' t know," or
or accurate or not a c c u r a t e .
17
It
Che subjecC maccer and s a y ,
to the b e s t of my knowledge."
together,
object
ChaC i s a
is extremely broad.
to look at
12
I'm going to
Soutter.)
MR. MARINACCIO:
objection.
asked of
I appreciate
I think the question was a n e u t r a l
the w i t n e s s ,
didn't
your
question
i n f e r any conclusion
one way
561
482
1
or the o t h e r .
The witness
had s t a t e d
2
the documents and I asked him i f
3
documents he f e l t
4
was c o n s i s t e n t
5
activities
or i n c o n s i s t e n t
of A i r Taxi at
that
MR. SOUTTER:
A
upon h i s review of
that the information contained
6
7
that he had reviewed
Okay.
Well,
the
therein
with what he knew of
the
time.
Go ahead.
as an o p i n i o n ,
I would say
that
8
the documents that are in question were
9
c o n s i s t e n t with my understanding of what Air Taxi was
10
doing at
11
BY MR. MARINACCIO
the
Q
12
generally
time.
Thank you very
kindly.
MR. SOUTTER:
13
14
further c l a r i f y i n g point?
15
SyIvester—Hwe're
16
can corroborate
Could we make one
just
I b e l i e v e we provided Mr.
t a l k i n g about documents.
t h i s because I think h e ' s
Mr.
Galerstein
the one which
17
a c t u a l l y did i t .
18
Sylvester's
19
i n t e r n a l memoranda of A i r Taxi we have not provided
20
Mr.
21
Just p u l l
the documents
name is mentioned.
Sylvester
Because there are
in preparation f o r t h i s
MR. GALERSTEIN:
22
There were r e l a t i v e l y
23
on a general b a s i s ,
other
to
hearing.
That i s
correct.
few that he was provided w i t h .
But
those in which his name appeared.
24
MR. MARINACCIO:
25
MR. FREED:
in which Mr.
Thank you.
For the r e c o r d ,
those
that
562
483
1
we are r e f e r r i n g
2
name in them.
to,
or most of
them, had Mr.
MR. SOUTTER:
3
Sylvester's
Fine.
4
EXAMINATION
5
6
BY MR. FREED
7
Q
Mr.
Sylvester,
8
in the Iranian Government
9
per iod ?
A
10
what was Mr. Dehesh's
in the 1971 through 1973
Well,
he—he was a member of
General
staff
and had r e s p o n s i b i l i t y
for
11
Toufanian's
12
that were made by General Toufanian f o r
Now, he had a s t a f f
Services.
14
not have a l i n e r e s p o n s i b i l i t y ,
15
have a decision-making a u t h o r i t y ,
16
r e a l — h e acted in an advisory c a p a c i t y
17
Toufanian and t h e r e f o r e had a r e s p o n s i b l e
18
Q
19
c l o s e advisor
20
A
Yes .
Q
Do you r e c a l l h i s
22
responsibility.
he d i d n ' t
He did
have—-didn't
but he had a very
to General
position.
Was he a c l o s e a d v i s o r — Was Mr. Dehesh a
to General Toufanian?
formal t i t l e
or formal
pos ition—•
23
A
No.
24
Q
— w i t h General Toufanian?
25
A
I think his
procurements
the Armed
13
21
position
He—
formal t i t l e was Technical
563
494
i
Advisor.
2
Q
Do you know who owned Air
3
A
Well,
4
But i t was a—.
as an element o f — o f
payment that was made to them,
is,
Taxi?
the
settlement
I have seen the
5
I think i t
6
his a u t h o r i t y f o r r e c e i v i n g payment on behalf
that Zanganeh presented
7
And I think y o u ' r e
8
that's
9
Air
the extent
affidavit,
to u s , which was
of A i r
f a m i l i a r with that document.
Taxi.
And
of my knowledge as to the ownership
of
Taxi.
10
Q
Now, when you—>
11
A
I d i d n ' t know b e f o r e t h a t and I only saw that
12
document r e c e n t l y
Q
13
and—
When you s t a r t e d having frequent
dealings
14
with Air Taxi o r — d i d you make any e f f o r t to check out
15
A i r Taxi y o u r s e l f ,
A
16
No.
THE REPORTER:
17
A
18
19
The answer i s ,
Is your answer,
"No"?
no.
BY MR. FREED
20
21
to find out who you were d e a l i n g with?
Q
Do you know whether any other Iranian Government
o f f i c i a l s had an ownership i n t e r e s t
22
A
No,
23
Q
What c o n t a c t s
24
Department
25
Taxi?
I did
in Air
Taxi?
not.
did you have with the
in connection with Iranian s a l e s
State
or with A i r
564
1
A
2
I don't
3
4
think I had
Q
K — I think I said before
our Embassy
8
Ambassador
9
keeping him a d v i s e d
11
13
there.
including
A
don't
Q
15
of
A
the Embassy as a matter
will,
19
Khatami and o t h e r s ,
22
23
24
or
about A i r
I didn't,
Taxi?
but
I
Khatami?
an e n t r y b r i e f i n g ,
t h a t we intended
t h a t we,
We would
them
A
Oh,
Q
What c o n t a c t s
if
to
on d e p a r t u r e ,
and we kept
in
you
see
t h a t we
informed.
the Embassy mentioned
General Khatami had an ownership
to you
interest
in A i r Te xi'
no.
25
of
And nobody a t
Department,
Embassy
any.
briefing,
saw Khatami and o t h e r s ,
Q
with
the
less
and-—
the Ambassador or whoever we c o n t a c t e d
or an e x i t
whether
in c o u n t r y
about General Khatami?
18
with
of more or
Discussions
17
21
I'm sure
I—.
S e c r e t a r y and
about General
have s a i d
to
Well,
Discussions
16
20
or second
the Ambassador,
recall
State
t h a t we had c o n t a c t
our p r e s e n c e
I don't-—no,
certainly
14
The f i r s t
the
to s i d e . )
Did you have any d i s c u s s i o n s
personnel,
any.
Iran?
from time to time on the b a s i s
Q
12
involving
(Shakes head from sid.e
7
10
recall
any.
in I r a n about
A
Yeah,
I don't
Did you have any c o n t a c t s w i t h
Department
5
6
The S t a t e Department?
involving—
did you have w i t h
the D e f e n s e
565
494
A
Defense?
Q
Y e s , Defense,
A
W e l l , we worked very c l o s e l y with the MAAG,
U.S. Defense Department.
who was—which was commanded by a Major General,
then with the Army s e c t i o n of
that MAAG, which was
commanded by a One Star General,
the a v i a t i o n s e c t i o n of
close contact,
and with the people
that Army s e c t i o n .
and in f a c t
and
it was—it
in
So we had
got to be p r e t t y
much of a team e f f o r t .
Q
Did you ever d i s c u s s with them or did
they
ever d i s c u s s with you or mention to you who owned A i r
Taxi?
A
No.
Q
Whether General Khatami had an ownership
interest
in Air
Taxi?
A
No.
Q
What c o n t a c t s
intelligence
A
None.
Q
—involving—
A
None that I know o f .
Q
No c o n t a c t s with the CIA personnel or DIA
personnel or any other
A
I don't
i n t e l l i g e n c e agency
think s o .
themselves as such to me.
did you have with American
agencies—
They d i d n ' t
personnel?
identify
566
487
Q
1
2
of
3
involving
And so there would be no information from any
those sources
A
4
that you heard of or were aware of
ownership of A i r
Oh,
no.
MR. GALERSTEIN:
5
6
get
7
break?
to a good p o i n t ,
Okay, w e ' l l
take a break.
MR. MARINACCIO:
11
(Short
Five minute break.
break.)
BY MR. FREED
Q
13
14
why d o n ' t we take a
Should we take a break now?
10
12
Mr. Freed, when you
at your choosing,
MR. FREED:
8
9
Taxi?
I j u s t want to pick up the l i n e of
questioning
again.
Mr. S y l v e s t e r ,
15
I want to r e f e r
to Exhibit
16
Number 1 8 , which was an A i r Taxi i n t e r n a l memo dated
17
October 2 8 ,
1971.
It
states:
18
"On a few occasions
19
Teheran with the B e l l H e l i c o p t e r
during h i s
stay
team,
20
consisting
21
Mr. G a l l a g h e r , we v e r b a l l y
22
that s i n c e very important d i s c u s s i o n s
are
23
taking p l a c e and a c t i v i t i e s
to
24
discontinue Agusta's
25
them with BHC in t h i s market,
of Mr. S y l v e s t e r ,
in
Mr. M i t c h e l l and
informed Mr.
going on,
efforts
Horsley
in Iran and r e p l a c e
it
is
absolutely
567
488
inadvisable
1
to send r e p o r t s
in w r i t i n g .
2
stressed
3
on be e i t h e r v e r b a l ,
4
calls
5
except f o r routine a c t i v i t i e s ,
6
submit any w r i t t e n
7
long distance
or coded t e l e x messages.
A
W e l l , Agusta,
They have e x c l u s i v e r i g h t s
agreed not
to
taken?
is
our
to c e r t a i n models
countries.
11
a random p a t t e r n of e x c l u s i v i t y ,
12
by model.
14
We t h e r e f o r e ,
as you know,
10
13
from now
telephone
reports."
Why was that d e c i s i o n
8
9
that a l l our communications
We
Others are n o n - e x c l u s i v e .
licensee.
in c e r t a i n
And i t ' s
a kind of
non-exclusivity,
model
But where a model i s n o n - e x c l u s i v e , we
become i n t e n s e l y
15
competitive.
Now, I r a n ,
prior
16
helicopters,
17
p r e t t y much Agusta t e r r i t o r y .
to 1972 and in terms
was p r e t t y much in an e x c l u s i v e — ' i t was
And so when we went
18
Iran in response to that
19
mentioned, we were immediately in a v e r y , very
20
atmosphere,
21
s e c u r i t y i s very bad,
22
invitation
and we were playing
that I
to
earlier
competitive
in an arena where
s e c u r i t y of business
The same thing would apply to
communications.
Sikorski.
23
They were mounting a very a g g r e s s i v e marketing
24
And i t was j u s t prudent business p r a c t i c e
25
guarded
of
campaign.
to be very
in your communications about the advancement of
568
489
1
your o b j e c t i v e s
Q
2
3
in that arena.
Was i t common p r a c t i c e
a c t i v e l y with i t s
A
4
All right,
l e t me say i t
We have—™ Agusta
5
for Bell
one more time.
i s our l i c e n s e e
6
of our models except f o r
7
each l i c e n s e has in i t expressed a s a l e s
8
country by country,
9
non-exclus i v e .
c a t e g o r i z e d as
11
i n t e r p r e t a t i o n and t h i s company's
12
those
13
competition
licenses
close
15
we do compete.
16
fact.
18
19
20
that
to saying
to e x c l u s i v e
interpretation
compete, we w i l l compete, and
And the
A
But w e ' r e m e t i c u l o u s l y c o r r e c t
And then the reason f o r
the d i s c u s s i o n of coded t e l e x messages and
mentioned
23
knowing what B e l l was doing?
espionage,
in not
competin I
to that model.
the d e c i s i o n s
22
25
an accepted
reason—
anywhere where they have an e x c l u s i v e r i g h t
A
territories
a known f a c t and i t ' s
21
24
of
They come
Q
Q
or
t e r r i t o r i e s , my
in the l i c e n s e s .
that—we'll
And i t ' s
And
territory,
in the n o n - e x c l u s i v e
i s enshrined
14
17
is
f o r each
the armed h e l i c o p t e r .
In the n o n - e x c l u s i v e
10
to compete
licensee—licensees ?
as
secrecy
in Exhibit Number 18 was to prevent Agusta
Let's
say i t was to prevent
to try t o ,
to
from
industrial
on the part of Agusta or Sikorsky or
569
490
1
whoever.
Q
2
But in t h i s memo, i t
3
going on to d i s c o n t i n u e A g u s t a ' s
4
replace
5
was concerned
6
A
t a l k s about
efforts
them with B e l l H e l i c o p t e r
7
anything—is
8
mis sed ?
9
Q
Now I ' d
like
is
that
Absolutely.
there something
activitie 5
in this market.
that Agusta not know,
Yeah. You b e t .
the
in Iran and
improper
Bell
correct?
Is
there
in t h a t ,
that
to put in the record
I've
Exhibit
10
Number 7 6 , which is an A i r Taxi i n t e r n a l memoranda of
11
October 2 7 ,
1972.
(Exhibit No. 76
was marked f o r
identification.)
12
13
Q
14
In that
15
it
states
in p a r t :
"According
to Mr.
Sylvester's
request
16
take precautionary measures not to l e t
17
Black Hawk Demonstration be magnified, we
18
approached our f r i e n d s
in the U F A ,
19
IIGF and U N ,
to obtain a f a v o r a b l e
20
They promised
to a c t
21
What did t h i s
22
23
is
response.
involve?
Excuse me.
that?
24
MR. FREED:
25
MR. SOUTTER:
IIAA,
accordingly."
MR. GALERSTEIN:
exhibit
to
the
76.
Just read
it.
What
570
491
1
THE WITNESS:
Huh?
2
MR. SOUTTER:
Just read
3
BY MR. FREED
Q
4
Now, in t h i s case you were asking
5
steps be t a k e n , i n Exhibit Number 76,
6
Sikorsky's
7
asking
that
demonstration of
to be passed on to Iranian m i l i t a r y
A
Now, what?
Q
Do you r e c a l l — ^ Excuse me.
10
A
No, I d o n ' t r e c a l l doing t h i s .
i t would have been to say to Air T a x i ,
trap l i n e and see what you can do to o f f s e t
13
e f f o r t s , whatever
15
For passing?
Q
For passing on the request—*
18
A
No.
19
Q
—-to t h e i r c o n t a c t s
A
Well,
Sikorsky
maybe I —
military?
I'm not sure we understand
each o t h e r .
My a c t i o n would have been to t e l l A i r
to ask A i r Taxi to make c o n t a c t s across
24
and do whatever
the
in the Iranian
23
25
did,
that information to-*->
A
22
I
And Air Taxi was your conduit f o r passing on
17
21
But i f
they a r e .
16
20
personnel?
you know, run your
12
Q
certain
i t s Black Hawk, and y o u ' r e
9
14
that
to down-play
8
11
it.
they could to o f f s e t
the armed f o r c e s
the Sikorsky
and to find out what those e f f o r t s were.
Taxi—or
efforts
571
492
But,
1
2
3
4
5
6
7
8
9
10
day a t
decision,
which,
it's
product
17
this point
you d o n ' t know what
or
that
offers
s e r v i c e which,
if
of
happen.
Q
Now,
A
in E x h i b i t
our f r i e n d s "
Contact.
our c o n t a c t s
Q
This
in-—contacts
"friends"
letter
is,
offer
of
its
Government
of
it's
a
offer
contract—
government,
t h a t was
in
just
what does the term ,
to?
is—
I read
or f r i e n d s
appears
appears
that
is contractual
'72,
Number 7 6 ,
refer
But " f r i e n d s "
contacts,
the
I r a n had made
a c c e p t e d by
A letter
about
"approaching
in
to a f o r e i g n government a
And that was in October
it
to—r-we approache 3
or w h a t e v e r .
to be more
to be somebody
than
favorably
disposed.
A
18
Not t o me,
Now,
19
this
20
second
21
grammar and semantics
22
language.
no.
i s w r i t t e n by a man u s i n g a
language and h e ' s
Q
23
24
that
late
the U . S .
this
nature.
to
of
i n time
in p r e p a r i n g
becomes a c o n t r a c t .
15
16
if
i t was p r e t t y
The Government
engaged
a letter
13
14
time.
and a t
was b u s i l y
11
12
this
you know,
n o t — h e has more problem
than you and I do in the
Let me ask you t h i s :
23-553 O - 78 - 37
A
Well,
he could
English
How f l u e n t was Mr.
Zanganeh in E n g l i s h as a spoken l a n g u a g e ,
25
of
do b u s i n e s s
perhaps?
in the
language.
572
494
1
He could make h i m s e l f
2
3
Q
an
When you were w i t h him in I r a n ,
A
No.
5
Q
—or
6
A
He d i d n ' t
Q
So,
7
11
did he use
interpreter—
4
8
understood.
with
just
you
personally?
need an
he could
interpreter.
converse
f l u e n t l y and
easily
you?
A
Yeah.
Q
When you spoke w i t h Mr.
Zanganeh,
what
did
you speak about w i t h him?
12
A
What did
Q
Yes.
I speak about with him?
MR. SOUTTER:
on
Is
t h e r e a time frame
that?
BY MR. FREED
Q
on your
Let's
A
'71,
'72 period
of
our h e l i c o p t e r
in
Zanganeh about
programs,
on how our program was g o i n g ,
to do n e x t ,
Q
Toufanian,
the
I would speak to Mr.
h i s views
A
in
Iran
trips?
advancement
we ought
say
how to conduct
How w e l l did Mr.
Khatami and Mr.
How w e l l ?
get
the
from him
advice
on what
ourselves.
Zanganeh know Generals
Dehesh?
Well,
he knew them p r e t t y w e l l ,
I
573
494
1
guess.
You know, A i r Taxi was a p r e t t y
2
r e p u t a b l e operation in I r a n .
3
company.
4
aircraft.
Big a s s e t s
l a r g e and very
I t was no h o l e - i n - t h e - w a l l
on the a i r p o r t .
Flew a l o t
of
5
Q
6
A
I r e a l l y don't
7
Q
Do you know whether Mr.
8
A
I have no f e e l f o r
9
Q
Do you know whether Mr. Zanganeh had c o n t a c t
10
How w e l l did Mr. Zanganeh know the Shah?
know.
that.
with the Shah or had met with the
11
A
Zanganeh—
Shah?
I d o n ' t know that he d i d n ' t but I d o n ' t know
12
that he d i d .
13
the Shah, c e r t a i n l y not on our b e h a l f .
14
Q
He never,
to me, said
that he had met with
Did Mr. Zanganeh g i v e you advice on who would
15
be the key people
16
helicopters—
17
A
Sure.
18
Q
—in
19
A
Certainly.
20
Q
And did he d i s c u s s with you t h e i r
21
this
or the i n f l u e n c e
22
A
said
Oh,
to see
'72
in Iran in s e l l i n g
Bell
period?
reputations
that, they had?
sure.
Q
What did he say about General Khatami?
A
Well,
to you,
I think he said p r e t t y much what
that in the absence of any a v i a t i o n
I've
expertise
574
494
in the Army,
role
the A i r Force kind of played a big
in g e t t i n g
pulled
this h e l i c o p t e r ,
together and organized and i n t o o p e r a t i o n .
there were many Air Force o f f i c e r s
this
brother
t h i s Army-aviation
unit,
And
that were supportive of
activity.
Q
Did Mr. Zanganeh ever say to you that
General
Khatami was the man you had to work through?
A
fact,
Oh, no, huh uh.
Never said i t
General Khatami wasn't
to me and,
in
the man who we did work
through.
Q
General Tufanian was the man you had to work
through?
A
Uh huh, yeah.
c l e a r guidance at
the—the
He gave us very good and
the o u t s e t .
d e c i s i o n would come
But t h a t — t h e d e c i s i o n and
to us v i a Toufanian, and
Toufanian would be the procurement o r g a n i z a t i o n ,
o r g a n i z a t i o n would.
have led us o f f
marketing
Q
in g e t t i n g
contract,
And otherwise,
that
his
l o g i c would probably
i n t o other d i r e c t i o n s
in a s a l e s — - i n a
effort.
What was Mr. Zanganeh's and A i r T a x i ' s
the large c o n t r a c t
helicopter
contract
or arranging
for
the
role
large
Bell?
A
His
role?
Q
Both Mr. Zanganeh 1 s — Mr. Zanganeh's
A
Well,
as I s a i d ,
he's
the one that
role.
introduced
575
496
1
2
3
4
us around town and s e t up appointments
us with a place
if
not
impossible.
we—where we had e s t a b l i s h e d
7
Toufanian as people of
8
position
9
played an invaluable r o l e .
of
trust,
ourselves with General
i n t e g r i t y and had e s t a b l i s h e d a
which we did with him,
10
things
11
problems,
12
around.
13
go somewhere and get
Zanganeh
You know, you c a n ' t — • In I r a n ,
that you and I take f o r granted here become b i g
j u s t g e t t i n g around town, f i n d i n g your way
You and I c a n ' t stop a t a x i and s a y ,
there.
That d o e s n ' t
So, anyway, up u n t i l
14
this
I want
to
happen.
the time that we had
15
established
16
people
17
o r g a n i z a t i o n , we were very dependent on him.
good p o s i t i o n with Toufanian and with the
in the Army a v i a t i o n o r g a n i z a t i o n ,
18
Q
Mr. Zanganeh then was your
19
A
Yes.
20
Q
— t o General Khatami,
21
assistance
without which l i f e would have been
In the e a r l y stages and up to a point where
5
6
to work and some s e c r e t a r i a l
and t r a n s p o r t a t i o n ,
very d i f f i c u l t
f o r us and provided
the newly formed
entree—
General Toufanian and
Mr. Dehesh?
22
A
Yeah,
23
Q
And what type of advice did he give you on
24
sure.
s a l e s and on s t r a t e g y and
25
A
I described
it
tactics?
all.
576
494
Q
Was that
A
No.
advice—
Q
—important?
A
B e l l needs t o — B e l l needs
presence known across
organization,
to make
the Armed F o r c e s ,
in the A i r Force,
its
in T o u f a n i a n ' s
in the Army,
in the Navy,
and—
Q
Mr. Zanganeh gave a d v i c e ,
of approaches,
I'm t a l k i n g about,
A
Well,
s t r a t e g y and
to a degree,
Although I c a n ' t be more
Q
A
tactics.
I suppose he d i d .
that advice
Sure.
world,
like
We l i s t e n e d
to i t .
We were
a whole new arena, very strange
in time.
We
one.
Q
And you followed h i s
A
Not always,
Q
Well,
how much did you f o l l o w h i s
A
Well,
his advice,
described.
listening
I s a y , we were performing in a brand new
went as f a r a s — v e r y
advice?
no.
little
advice?
you know, h i s advice
further
than what I ' v e
You know, here are the people that are
to use the h e l i c o p t e r s
important on
tactics?
to anybody we could find a t that point
were,
on timing
T h a t ' s what
specific.
But you considered
s t r a t e g y and
though,
on how to make an approach?
only
just
going
and you need to know them and
577
498
1
they need to be convinced
2
And here are the people
3
here are the people
4
exper t i s e ,
5
that
t h a t ' s what they need.
that are going to buy them.
that a r e — t h a t have got
the r e a l deep e x p e r t i s e
the
And
aviation
in c o u n t r y .
And from then on, we simply responded
to the
6
reques t s l a i d on us by Toufanian and the newly formed
7
Army a v i a t i o n
people.
8
Q
And
9
A
And the MAAG.
10
Q
But with Toufanian and the Iranian
they—
11
they would sometimes pass requests
12
through Mr. Zanganeh?
13
A
I would say n o t .
14
to come a t a point
15
presence
16
Q
17
facts
18
19
doubt
20
21
22
23
24
25
Only i f
to
Bell,
such a request were
in time when there was no B e l l
in the c o u n t r y ,
generally.
Did you at any time doubt
in the r e p o r t s
A
to you,
military,
the v e r a c i t y
t h a t were submitted by A i r
Did I ever doubt the v e r a c i t y ?
of
the
Taxi?
You mean
t h e i r truth?
Q
Uh huh.
A
I don't
remember.
Q
To the b e s t of
A
To the b e s t of your r e c o l l e c t i o n ,
your
recollection?
Q
You d o n ' t remember what?
A
I d o n ' t remember his r e p o r t s causing me any
yes.
578
499
1
doubts as to t h e i r
Q
2
3
Were you ever concerned about Mr.
or A i r Taxi trying
A
4
5
of
6
his
veracity.
to i n f l a t e
their
role?
Oh, you always have to make your assessment
that because any agent
is going
to try to
Q
Was there any exaggeration
8
A
I d o n ' t know.
But—I
in t h e i r
9
Q
To the best of your
A
To the b e s t of my r e c o l l e c t i o n ,
recollection?
11
remember anything
12
Except f o r the general statement
13
any agent
14
f o r you,
trying
15
services
in a c o u n t r y ,
16
to impress you with his
17
makes
18
that
A
capacity
to advance the s a l e of your products
or
is going to do everything he can
importance.
You know t h a t ' s what
At any point did you doubt Mr.
I d o n ' t r e c a l l any cause f o r doubts.
know,
And you j u s t — y o u s o r t of
23
and try to get a t some f a c t s .
there was always a l o t of
Q
Iran?
Zanganeh's
it?
22
that
his—
Q
in
that I j u s t made,
is working in a r e p r e s e n t a t i v e
21
25
I don't
that I regarded as an e x a g g e r a t i o n .
importance or q u e s t i o n
20
reports?
don't—
10
24
exaggerate
importance to you, you know.
7
19
Zanganeh
name-dropping going on.
sweep that a s i d e
Who did you report
You
to in B e l l
(Indicating)
on your
dealings
579
500
1
A
To Jim A t k i n s .
2
Q
Did you report a t a l l
3
A
No.
4
Q
Did you report to anyone in T e x t r o n ' s — -
5
A
No.
6
Q
—-Providence
7
A
Huh uh.
8
Q
So Jim
to Mr.
Miller?
headquarters?
Atkins was the man who received
9
of your
10
A
That's
11
Q
Who reported
12
A
Well,
all
reports?
correct.
to you within
Bell?
I have an o r g a n i z a t i o n
that has in
it
13
a s a l e s manager, an a d m i n i s t r a t i v e manager, and a s a l e s
14
engineer ing u n i t .
15
subordinates.
16
17
Q
you involving d e a l i n g s
A
19
about d e a l i n g s
20
21
23
organization.
in
Iran?
There must have been r e p o r t s by me or to me
in I r a n .
Sure.
Q
Yes.
In the
'71,
A
Oh, of c o u r s e .
'73
period?
We were undertaking
the
advancement of a very b i g program and there were most
c e r t a i n l y communications
24
25
them has a—.have
a very normal marketing
Were there any w r i t t e n r e p o r t s by you or to
18
22
And each of
It's
Q
Did you have w r i t t e n communications,
in the broadest
to me and from me.
sense,
to Mr. Atkins
on your
"written"
Iranian
580
494
dealings ?
I think n o t .
A
All
of
that would have been
verbal.
Q
There were
A
I don't
no—
say that there were none.
w r i t t e n to him or telexed
w r i t t e n a summary of
to him from Iran or may have
the s i t u a t i o n
remember s p e c i f i c a l l y .
But f o r
to him.
Was i t
your p r a c t i c e — d i d
of meetings or c o n v e r s a t i o n s
about Iranian
communica-
verbal.
you ever keep notes
that you had with Mr. Atkins
sales?
A
I don't
think
Q
Did you ever prepare menorandum or memoranda
a f t e r your conversations
memory at a l a t e r
so.
to be a b l e to r e f r e s h your
point?
A
I d o n ' t remember doing anything
Q
To the best of your
A
To the b e s t of my r e c o l l e c t i o n ,
Q
Did you ever prepare memoranda or notes on
conversations
any of
I don't
the most part
t i o n s between us on Iran were o n e - o n - o n e ,
Q
I may have
that.
recollection?
no.
that you had with Mr. Zanganeh or with
the B e l l r e p r e s e n t a t i v e s
A
like
Well,
yeah,
in Iran on d e a l i n g s
I probably did
that.
Q
Memoranda—
A
You know, maybe I would j u s t come from a
there?
581
494
j
meeting and s i t down and make an o u t l i n e of points
2
were d i s c u s s e d ,
Q
3
4
to—>
And you did that a f t e r the meetings
A
Not on a—you know, y o u ' r e
a regular b a s i s ?
Not n e c e s s a r i l y ,
huh uh.
7
Q
On an i r r e g u l a r
A
Yeah,
9
Q
Now, at what point did B e l l decide
10
the lead
itself
11
A
12
had any other
13
Q
14
'71,
15
arranging—
16
sometimes,
on important
Along about March of
1971,
I guess.
said
that,
yesterday,
19
a possible
office,
sharing
Toufanian's
Sharing arrangement
A
Involving
go prime and sub,
23
never bore
staff,
and between
staff
Bell
about
arrangement.
Q
22
the,
i n v o l v i n g what?
you know, the s a l e .
one way or another.
Those
We would
discussions
fruit.
Could you j u s t
prime and sub mean?
in
There had been d i s c u s s i o n s between B e l l and
and Agusta and between Agusta and T o u f a n i a n ' s
Q
I never
November of
to move in and take the lead
18
24
take
charter.
Mr. Atkins
Toufanian's
21
to
contract?
17
20
meetings?
sure.
in pursuing the Iranian
B e l l decided
A
basis
t a l k i n g about on
g
25
that you
had in Iran?
5
g
that
d e s c r i b e f o r the record what
582
503
A
Prime c o n t r a c t o r and
2
Q
When were those
3
A
Oh, they would have been in
4
Q
What d i r e c t i o n s
1
5
how B e l l would deal
7
did you get from above on
in Iran a f t e r
late
1971?
Can you be somewhat more
MR. GALERSTEIN:
A
9
I'm not sure
Yes.
I—
BY MR. FREED
Q
11
12
1972.
precise ?
8
10
discussions?
MR. SOUTTER:
6
subcontractor.
Did you get i n s t r u c t i o n s
grading A i r T a x i ' s
A
13
Oh,
(Short
A
down-
okay.
14
15
on p o s s i b l y
role?
pause.)
At—*not 1971, but I think in more l i k e
16
well,
17
pretty clear
okay.
Late
' 7 1 or e a r l y
18
the Iranian m i l i t a r y by h i s
'72,
Toufanian made
'72—.
it
to us that m i l i t a r y procurements made f o r
o f f i c e would no longer
19
recognize
20
something l i k e
21
f o r you, have gotten you w e l l
introduced and you know your
22
way around
now.
23
need them any more.
24
25
the use of an a g e n t .
this:
And h i s words ran
That A i r Taxi has performed w e l l
town by yourselves
And so you d o n ' t
And he made i t p r e t t y c l e a r
that any procure-
ments made by his o r g a n i z a t i o n would not h e n c e f o r t h allow
583
504
1
as an element of c o s t any a g e n t ' s
Q
2
3
late
fees.
To the b e s t of your r e c o l l e c t i o n ,
that was in
1970 and—
A
4
' 7 1 or e a r l y
'72,
uh huh.
5
Q
Could you be more p r e c i s e
6
A
No,
7
Q
Was i t
I
in terms o f — .
couldn't.
on General T o u f a n i a n ' s a d v i c e ,
8
that B e l l d e c i d e d — t h a t B e l l made the d e c i s i o n
9
the lead and handle the deal
10
A
Wall,
11
lead,"
12
Agusta.
13
represented
take
itself?
now, I thought when you said " t a k e
you were r e f e r r i n g
If
to
then,
to take the l e a d ,
vis-a-vis,
you mean take the l e a d , v i s - a - v i s
by A i r
Bell
as
Taxi—.
14
Q
Uh huh.
15
A
—we took that
lead from day one.
You know,
16
we were—we d o n ' t deed away our r e s p o n s i b i l i t y
17
a sale
18
helping us to do business
19
i t comes to making up a—making a t r a n s a c t i o n with a
20
customer,
to an a g e n t . .
Q
22
realized
23
reduced r o l e
24
25
A
He's u s e f u l and has his
that f o r
f o r making
purposes
in a strange arena.
nobody—nobody does
21
the
in
But when
us.
What was Mr. Zanganeh's r e a c t i o n when he
or understood
that Air Taxi would be playing a
in arranging
the large h e l i c o p t e r
deal?
His r e a c t i o n was very calm.
In the f i r s t p l a c e ,
the t r a n s a c t i o n
ha^/gone
584
505
1
from something quite
2
And, you know, he understood
3
as w e l l as we d i d .
4
problems.
Q
5
6
small
to something very
proble
And i t d i d n ' t g i v e him any v i s i b l e
Were there any communications between A i r
Taxi and B e l l a f t e r
7
A
After
8
Q
Yes.
9
A
Well,
late
1972,
any w r i t t e n
I think there probably were.
A i r Taxi continued and in f a c t does
11
in the c i v i l
12
haven't
13
l a r g e l y because t h e r e ' s
14
in Iran that r e q u i r e s a h e l i c o p t e r .
sector.
in the c i v i l
almost no c i v i l
Q
But were there any w r i t t e n —
16
A
But they have w r i t t e n
sector,
activity
to us a couple of
17
about p r o s p e c t i v e s a l e s
18
the n a t i o n a l o i l company, power and l i g h t
19
of
20
helicopters.
t h i n g , where there
they
aviation
15
to c i v i l
You s e e ,
today represent us
T h e r e ' s been no b u s i n e s s ,
turned up any business
Q
communications?
1972?
10
21
large.
the order of magnitude
agencies of
government,
and t h i s
is a recognized a p p l i c a t i o n
But were there any w r i t t e n
times
sort
for
communications
22
from Air Taxi or Mr. Zanganeh during the time in 1973
23
when Air Taxi was playing a reduced r o l e a f t e r Mr.
24
Zanganeh 1 s
25
certainly
trip
to Fort Worth in l a t e
1972 or e a r l y
in the time frame between the beginning of
1973,
1973
585
=
506
1
through very l a t e
2
3
1973?
A
On the s u b j e c t
Q
Involving,
of—
you know, the Iranian
4
deal and any payments or n e g o t i a t i o n s
5
amendments or his r e a c t i o n
6
7
A
helicopter
of c o n t r a c t s
or
to—
On the c o n t r a c t s or amendments between the
Iranian Government and o u r s e l v e s
or—
8
Q
Between Air Taxi a n d —
9
A
Between Air Taxi and us?
10
Q
Yes.
11
A
About the Iranian
12
Q
Yes,
13
A
I don't
military?
sir.
think s o .
I d o n ' t r e c a l l any.
14
A f t e r — f r o m 1973 onwards, he was out of
15
and he accepted
i t and I b e l i e v e honored i t .
16
don't—' I don't
think we had any communications on that
17
s u b j e c t with him.
18
Q
19
of
files
20
arranging
business
No,
I
Mr. Zanganeh came to the U . S . with a sheath
showing h i s a c t i v i t y — w h a t
the 489 h e l i c o p t e r
r o l e he played
communications
in
acquisition.
Now, were there any communications,
21
22
that
No.
or communications of any s o r t ,
written
between
Mr. Zanganeh and B e l l on a r r a n g i n g —
25
A
Okay, on a r r a n g i n g —
Q
—arranging
or dealing with the
compensation
586
507
1
he was going to
A
2
3
4
receive?
Okay.
Now, we have—.or we had then, a
program management department which had i n s i d e
contracts
unit.
And they took over
5
negotiation—not
6
agreement or amendments.
7
that
Q
8
9
but preparation of
I never saw that f i l e and
I—
the u n i t
Well,
that
Mr. Rudning was the then Vice
dealt
President,
Program Management.
Q
So by e a r l y 1 9 7 3 , Mr.—what was the s t a t u s
13
your c o n t a c t s with Mr. Zanganeh from ' 7 3
14
negotiations
A
15
through the
W e l l , when he came to Fort Worth,
But the n e g o t i a t i o n s
17
between Zanganeh and A t k i n s .
18
of
on these amendments?
16
as
I saw him.
to that compensation were
Q
Did Mr. Atkins d i s c u s s
A
Oh, yeah,
Q
Did you keep any n o t e s ?
really
these negoations
with
you?
20
21
22
the
And I was p r e t t y w e l l out of
Who headed that p r o j e c t ,
A
12
19
of
with Mr. Zanganeh, who took over?
10
11
loop.
negotiation,
that s o r t
it a
sure.
Yes.
What did Mr.
Atkins
say to you?
A
23
Oh, I c a n ' t r e c a l l what those
conversations
24
were.
25
the r e l a t i o n s h i p as expressed by the amendments t h a t were
But they would have been the—>about the change
in
587
508
1
w r i t t e n and t h e — l e t
me talk to him a minute.
I think I signed one of
2
3
MR. GALERSTEIN:
4
MR. SOUTTER:
5
6
7
A
Okay.
9
may have signed,
Q
A
June 16,
Is
that the
1972?
'72?
MR. GALERSTEIN:
Why don't you show him
the amendments?
16
MR. FREED:
17
18
Yes.
A
That would be about
right.
Q
That's Exhibit Number 38 and Exhibit Number
A
Okay.
67.
20
21
(Off record
22
24
I
I think I did.
one in 19—->a l e t t e r dated June 16,
13
23
s a l e to the Iranian m i l i t a r y ,
That f i r s t amendment was when?
14
19
T e l l him whatever you
BY MR. FREED
11
15
him t h a t .
I think the f i r s t amendment that dealt
with the h e l i c o p t e r
12
You can t e l l
I?
Soutter.
8
10
Didn't
You can t e l l him t h a t .
MR. GALERSTEIN:
told Mr.
those.
discussion.)
MR. GALERSTEIN:
For your
Mr. Freed, we do not see Mr. S y l v e s t e r ' s
any of
25
23-553 0 - 78 - 38
information,
signature on
these—.
MR. FREED:
No, I was talking about the
588
509
1
letter.
2
MR. GALERSTEIN:
3
MR. FREED:
4
5
Yes,
I know.
The cover
letter.
MR. GALERSTEIN: Mr . S y l v e s t e r e x p r e s s e d tt e
thought that perhaps he had signed one of
6
MR. FREED:
7
saw the
8
BY MR. FREED
9
Q
No.
Mr. A t k i n s — Mr.
reduced
13
A i r Taxi from 2 . 5 per cent
14
to the n e g o t i a t e d
A
Just got
the amount of
His
Bell
the payment in the amendments
$2.9
to 1 per cent and
million?
reactions?
Q
Yes.
17
A
I think I answered that b e f o r e by saying
h i s r e a c t i o n was very calm.
19
20
Q
He accepted
A
Sure.
very e a s y - t o - u n d e r s t a n d
23
it
25
it.
time?
Because i t was—-it was supported by
22
24
that
Even though the amount of money being paid
A i r Taxi was just—-was being reduced each
21
to
eventually
16
18
I
promoted.
—what was Mr. Zanganeh's r e a c t i o n as
12
15
I thought
Sylvester—
MR. GALERSTEIN:
Q
Actually
signature.
10
11
the amendments.
rationale.
on the order of magnitude
I mean, j u s t
taking
problem.
Q
How would you c a r r y —
A
—order
Oh, excuse me.
of magnitude problem plus
General
to
589
510
1
Toufanian's
s t a t e d and known p o s i t i o n about agents
2
manufacturers doing business with h i s
MR. MARINACCIO:
3
4
of
organization.
May I ask you a
q u e s t i o n on that?
THE WITNESS:
5
Sure.
6
EXAMINATION
7
8
BY MR. MARINACCIO
Q
9
Is
it
true that you attended a meeting
10
General Toufanian and Mr. Atkins where the s u b j e c t
11
payment to agents was s p e c i f i c a l l y
with
of
discussed?
12
A
I would think i t ' s
13
Q
Do you r e c a l l a t t e n d i n g such a meeting?
true,
yes.
14
A
No, b u t — n o ,
but General Toufanian made t h a t
15
p o s i t i o n known r e p e a t e d l y ,
and in the 1 9 7 0 — l a t e
16
let's
17
h i s agenda f o r d i s c u s s i o n when you came into h i s
18
you know.
say the 1972 time frame,
MR. FREED:
A
he took great pride
22
procured
23
equipment without any a g e n t ' s
24
v o c a l on the
office,
T h a t ' s General Toufanian?
He was a—4cind of an
21
25
item on
He w a s —
19
20
i t was a r e g u l a r
1970—wel!
in being able
obsession
to say that he had
f o r h i s Government large q u a n t i t i e s
subject.
with him.
fees.
of
defense
He was v e r y ,
very
And
590
511
1
BY MR. MARINACCIO
Q
2
3
Did he s p e c i f i c a l l y
no agent
fee
to A i r Taxi
No,
5
Q
What did he say w i t h r e s p e c t
fee
to A i r
Taxi
A
in this
you need
9
indicating
t o make a r e a s o n a b l e
arrangement
quotes with f i n g e r s )
represented
you f o r many y e a r s ,
very good.
He has r e p r e s e n t e d
12
don't
need him any more.
13
going
to do b u s i n e s s
14
between
he's
together
Q
you w e l l .
What did General T o u f a n i a n
as
loyal
and
But now you
We're
no agent
Oh, he never
did.
Q
-^reasonable
fee
19
A
He d i d n ' t
do
that.
20
Q
He d i d n ' t
name a s p e c i f i c
21
A
Not
22
Q
Did he ever
in
if
he did
fee—
to A i r T a x i would
be?
fee?
ever.
commission or f e e
t h e s e 489
indicate,
to what a r e a s o n a b l e agent
A
He has
I know you.
and t h e r e ' s
17
A
(witness
been very
You know me,
to—
us."
indicate,
25
agent
w i t h your a g e n t .
18
24
to t h e
case?
11
23
be
didn't.
10
16
should
In the b e g i n n i n g he was s a y i n g , " y o u need
8
15
there
case?
A
7
he
in t h i s
that
4
6
No,
say
say
t h a t you should not pay a
to A i r T a x i w i t h r e s p e c t
to the
sale
of
helicopters?
Okay.
As
you know, we n e g o t i a t e d
down in
two
591
J12
i
steps as the program expanded.
It
seemed f o r a w h i l e
2
there
3
You know, we'd go home and do our proposal
l i k e every time we went to Iran the thing
4
come back and f i n d a whole new requirement,
5
expanded.
So as t h i s
6
thing grew, a g a i n ,
order of magnitude problem even on the f i r s t
8
And I can assure you that w e ' r e — w e ' r e
9
people
that would try
Q
to l i v e with
When you discussed
i t had been
you had the
7
10
amendment.
not the kind of
that.
the matter of agent f e e s wi^h
11
General Toufanian concerning A i r T a x i ,
12
ownership of Air
did the matter
13
A
No,
Q
— e v e r come up, was that ever
15
A
Absolutely
16
Q
Was General Khatami's name ever
17
A
No.
18
Q
—in
19
A
No.
20
Q
Do you know whether or not General
sir.
that
discussed—
connection?
Did General Toufanian ever i n d i c a t e
22
thought or had knowledge of
25
discussed?
not.
21
24
Toufanian-
to you that he
the ownership of A i r
A
No.
Q
Did he ever i n d i c a t e
Taxi?
to you that he thought or
knew that General Khatami had an ownership in A i r
of
Taxi—
14
23
doubled.
e f f o r t and
Taxi?
592
513
A
No.
Q
To the best
you not attend
of your knowledge,
Atkins at which t h i s
s u b j e c t was
discussed?
A
Of General Khatami's —
Q
No, I'm s o r r y ,
agency f e e s
helicopter
Of the s u b j e c t
of
sale?
pause.)
I d o n ' t remember i t being discussed
General Toufanian and Mr.
Q
excuse me.
to Air Taxi in connection with the 489
(Short
A
did you or did
the meeting with General Toufanian and Mr.
with
Atkins.
Where did you d e r i v e your understanding
to General T o u f a n i a n ' s p o s i t i o n
on the agency
as
commission
issue ?
A
to I r a n ,
Q
directly,
Well,
you know, I made many t r i p s by myself
or without A t k i n s .
Would you discuss
And I would be—»
t h i s with General Toufanian
you and he?
A
Oh sure,
Q
And was this at or about the time that
yeah.
the
Iranian Government had indicated
that they would rather
have B e l l
rather
supply the h e l i c o p t e r s
than eithe r
Agusta or a j o i n t production with Agusta or a j o i n t
or a program in which Agusta would be
A
Can he do that back to me?
included?
program
593
514
1
Q
Either
2
A
Okay.
that or I ' l l
clarify
it.
3
Q
I thought I understood you p r e v i o u s l y
to
4
say that
there was a time when there was c o n s i d e r a t i o n
5
whether or not Agusta would supply
6
there would be a program in which Agusta would supply a
7
part and B e l l would supply a p a r t ,
8
some discussions
these h e l i c o p t e r s
that B e l l should supply
to and those d e c i s i o n s
it
only.
that
I've
10
referred
11
contemporaneous with your d i s c u s s i o n with General
12
Toufanian about commissions or f e e s
13
all
to Air T a x i , was
A
Yes,
Q
— t a k i n g place a t about the same time?
16
A
Yeah,
17
p r e t t y much at
this
Q
they were.
they were p r e t t y much concurrent,
the same time, but not
Would they take place
19
discussions
20
meeting with General Toufanian?
A
of a l l
those matters
No, huh uh.
22
The d i s c u s s i o n s
23
p a r t i c i p a t i o n of Agusta,
24
restricted
25
country.
Iran
taking—
15
21
just
in the Government of
14
18
or
and then there were
Now, were those d i s c u s s i o n s
9
of
related.
in the same— Would
take place
The d i s c u s s i o n s
that centered around the
I
of
in the same
participation—
possible
think, were p r e t t y much
to the time or times when Atkins was in
I t wasn't my charter
to speak to t h a t .
the
My
594
513
1
c h a r t e r was to s e l l
2
to share i t with anyone.
3
4
Q
a big h e l i c o p t e r
Were these d i s c u s s i o n s
program, and not
t h a t you had with
General Toufanian about commission or a g e n t ' s
fees,
they, in your mind, b e f o r e or a f t e r T o u f a n i a n ' s
intent
on A p r i l
18th,
Both.
Q
Both b e f o r e and a f t e r ?
Yeah.
And, a g a i n ,
not r e l a t e d ,
was e i t h e r
j u s t b e f o r e or soon a f t e r
the l e t t e r
of
offer,
of
1972?
A
A
were
letter
U.S.
Government l e t t e r
was e i t h e r j u s t b e f o r e or soon a f t e r
but i t
the acceptance
of
was—it
of
offer.
It
that Toufanian made
known that he would not allow as an element of c o s t any
agent's
Q
f e e s or
commissions.
Was that sometime in the F a l l
asking him f o r his b e s t
I can perhaps j u s t
MR. MARINACCIO:
MR. SOUTTER:
are dated
I can confirm that
Oh,
—the
in December of
I'm
provide
sure.
letters
1972,
to you a t some other
MR. MARINACCIO:
Q
1972?
recollection.
MR. SOUTTER:
believe,
of
just
of o f f e r ,
to h e l p ,
time.
that he
had ever had a conversation with anyone in the U . S .
Government concerning the u n a l l o w a b i l i t y
and
Fine.
Did General Toufanian ever i n d i c a t e
of
commission
I
595
513
costs
to A i r Taxi in connection with t h i s
sale
of
helicopters ?
A
No.
MR. GALERSTEIN:
may, that when you get
near f u t u r e , we ought
Let me s u g g e s t ,
to a point
in the
to stop f o r
lunch.
MR. FREED:
May I ask with r e s p e c t
I
reasonably
I'm almost
MR. GALERSTEIN:
if
done.
Okay.
to Mr.
Sylvester,
how
long y o u ' r e going to keep him, because that may determine
whether we want to break f o r lunch or
MR. FREED:
I
MR. MARINACCIO:
l i t t l e way to go with Mr.
I think we've got a
Sylvester.
MR. GALERSTEIN:
for
not.
just—
So we had b e s t
break
lunch?
MR. SOUTTER:
At a time—.
MR. MARINACCIO:
and f i n i s h
this p a r t i c u l a r
commence again with Mr.
I would rather
continue
l i n e of questioning and then
Sylvester a f t e r
MR. GALERSTEIN:
Yes,
lunch.
fine.
EXAMINATION
BY MR. FREED
Q
Mr. S y l v e s t e r ,
how would you c h a r a c t e r i z e
the
596
517
1
$ 2 . 9 m i l l i o n payment to Air
Taxi?
2
A
My opinion?
3
Q
Yes.
4
A
Modest.
Q
Was i t a commission payment, a s e t t l e m e n t ,
5
6
termination
A
7
Oh, w e l l ,
i t was—•
(Short
8
A
9
pause.)
Excuse me.
MR. SOUTTER:
10
I've just
presented
11
Mr. S y l v e s t e r with a copy of E x h i b i t Number 65 which
12
Amendment Number 3 .
A
13
14
Well,
commiss ion-.—what were your
Q
Settlement
16
A
Settlement?
or termination
Well,
of a c o n t r a c t u a l
18
with them and i t was a p e r f e c t l y good,
19
relationship,
obligation.
20
happened, and then i t was as w r i t t e n ,
until
21
I would say n e i t h e r
22
us .
25
other—
payment.
I think i t was a s e t t l e m e n t
17
23
is
BY MR. FREED
15
24
a
payment?
We had t h i s
the things
side could
relationship
normal business
that we've
described
a relationship
l i v e with,
certainly
And we had to find a way out of
MR. MARINACCIO:
happened," what do you mean,
that
not
it.
When you say "what
the s a l e of
the h e l i c o p t e r s o
597
518
1
General T o u f a n i a n ' s
A
2
decree about no commissions?
The order of magnitude and the Government of
3
Iran's
s t a t e d p o s i t i o n as to a g e n t s ,
4
BY MR. FREED
5
Q
6
Miller's
7
this helicopter
Mr. S y l v e s t e r ,
involvement
in the n e g o t i a t i o n s
I d o n ' t know of
9
Q
Did anyone at B e l l
10
make a payoff
11
1973 p e r i o d ?
any.
t e l l you that you s h o u l d n ' t
to get a c o n t r a c t
12
A
Say i t
again,
13
Q
I say,
up to 1 9 7 3 ,
in t h i s ,
15
s h o u l d n ' t make a payoff
18
that.
It's
Q
20
A
Not to my r e c o l l e c t i o n .
21
Q
Mr. Atkins
But did anybody t e l l
or anyone
sir,
that t h i s was B e l l p o l i c y ?
24
for
25
A
Okay.
No.
that
that would
style
to do
you?
else?
So nobody gave you that
23
record.
Bell
not my s t y l e or B e l l ' s
19
the
or that
tell
to get a c o n t r a c t ?
I would submit to you,
not be n e c e s s a r y .
through the
did anyone at B e l l
you that you s h o u l d n ' t make a payoff
17
say,
please.
14
22
with Iran on
sale?
A
A
relationships.
what do you know of Mr.
8
16
agency
I'm j u s t
instruction
trying
or
said
to c l a r i f y
this
598
519
1
Q
2
I'm not impugning
anyone.
Did anybody at B e l l
3
Bell
4
contracts ?
shouldn't
deal with agents who made p a y o f f s
5
(Short
6
A
I--.no,
make assumptions about
8
think are p r e t t y
Q
10
or any other
11
c ivilian?
to get
pause.)
huh uh.
7
9
t e l l you that you or
I,
you know—we a l l
sort
i n t e g r i t y around h e r e , which I
valid.
Do you know of any p a y o f f s
to General Khatami
Iranian Government o f f i c i a l s ,
military
12
A
No.
13
Q
No p a y o f f s by G e l l
14
A
(Shakes head from side
Q
Do you know of any p a y o f f s by Air Taxi
15
16
connec t i o n with t h i s
17
18
19
this
20
21
22
23
24
or
or—
to
side.)
in
contract?
A
No.
Q
No p a y o f f s by Mr. Zanganeh in connection with
contract?
A
Not that I know o f ,
no.
Q
Did anybody ever d i s c u s s p a y o f f s with you?
A
No.
Q
Did anybody o f f e r you a b r i b e ?
A
No.
Q
— i n connection w i t h —
25
of
Did anybody ever
offer
603
520
1
A i r Taxi a b r i b e
in connection with the c o n t r a c t
2
A
Did anybody o f f e r A i r Taxi a b r i b e
3
Q
——in connection with the c o n t r a c t
4
A
No, not
or—•
in—
or—
to my knowledge.
5
Q
Or General Khatami?
6
A
No.
7
Q
Do you know of any o f f - b o o k funds held by
8
Textron or any of
A
9
No,
10
I
its
divisions
or
don't.
MR. MARINACCIO:
11
Mr.
subsidiaries?
All
right.
Collins?
12
13
EXAMINATION
14
BY MR. COLLINS
15
Q
16
I'd
like
Yes.
Mr.
Sylvester,
I have a few q u e s t i o n s
to ask you.
17
MR. GALERSTEIN:
Excuse me f o r a
18
second.
19
one break and we've gone since 9 : 0 0 o ' c l o c k or
20
and i t ' s
21
he's
Are you ready t o — We've gone— We've only had
now 1 2 : 1 5 .
And I want to ask the witness
MR. MARINACCIO:
23
if
24
a quarter of
whether
ready to eat o r n o t .
22
25
thereabouts
h e ' d rather break now or i f
1 : 0 0 or 1 : 0 0
I would ask the witness
he can go maybe u n t i l
o'clock?
THE WITNESS:
That's
f i n e with me.
600
521
1
MR. GALERSTEIN:
2
THE WITNESS:
3
(Short
4
BY MR. COLLINS
5
Q
Okay.
You know,
Fine.
it's
your show.
recess.)
Mr. S y l v e s t e r ,
what was the r e l a t i o n s h i p
6
your o f f i c e and B r u s s e l s ,
7
o f f i c e of B e l l H e l i c o p t e r ,
8
people from your o f f i c e and those from the Brussels
A
9
Okay.
I believe
i t was the
and in p a r t i c u l a r
betwe Jn
sales
the r o l e
of
office
I t was as though we l i f t e d a s e c t i o n
10
of my s a l e s group up and put
11
the same kind of
12
had, had they been h e r e .
13
manager with a couple of r e g i o n a l people and a
technical
14
guy and i t was supposed
marketing
15
unit.
them down in Brussels
responsibilities
as
I t was headed up by an area
to be a s e l f - c o n t a i n e d
16
Q
Now, who oversaw that o f f i c e ' s work?
17
A
Me.
18
Q
And what was—
19
A
Well,
me and my s t a f f .
20
Q
Well,
I'd
like
to know what the d u t i e s
21
Mr. Gallagher were on your s t a f f ,
22
could you i n d i c a t e what t i t l e s
23
A
24
s a l e s manager.
25
Q
Yeah,
with
they would have
that
is,
I
he held during
of
believe—
1971-'72?
I guess you could c a l l him a r e g i o n a l
And there was d u p l i c a t i o n
He did not supervise
because—>
the B r u s s e l s
office?
601
522
1
A
No,
2
Q
That was your
no.
3
A
Yes.
4
Q
With r e s p e c t
responsibility?
to the amendments to the
5
Manufacturer's Representative Agreement between
6
and A i r T a x i , Amendment Number 1 was made e f f e c t i v e
7
April
1,
1972.
I'd
8
9
10
I believe
11
was dated A p r i l
13
like
to know i f
t h e r e ' s any
significance
in that d a t e , making i t e f f e c t i v e as of A p r i l
A
12
really,
the l e t t e r
No,
none at
Q
14
of
18th,
i n t e n t from General
there's
no r e l a t i o n s h i p
or
significance,
all.
The l e t t e r
that you signed
dated June
16
the Amendment Number 1 that was then proposed,
17
sent
indicates
to Air T a x i , would be e f f e c t i v e as of
18
i t was s i g n e d ,
1 was s i g n e d ,
20
All
these
1972?
Toufanian
1972 that Mr. Freed showed you e a r l i e r
19
1,
1972.
15
21
Bell
and that
16th,
that
that you
the date
that
subsequently when Amendment Number
the e f f e c t i v e date was made to be A p r i l
1.
activities-^-
A
Yeah.
22
Q
—were post A p r i l
23
A
Right.
24
Q
And at some point a d e c i s i o n was made to make
25
the e f f e c t i v e date A p r i l
1?
1.
606
523
1
2
A
I don't
remember why that was, but
bearing on the l e t t e r of
3
Q
4
i n t e n t at
Mr. G a l l a g h e r ,
the summer, or I b e l i e v e
was in Iran during
he was there
in May of
5
and again in the summer of
6
with you,
7
Number 1 to the Manufacturer's R e p r e s e n t a t i v e
8
is
that c o r r e c t ,
do you
A
Well,
10
Q
And I r d j u s t
12
and had communications
regarding
I don't
r e c a l l but i t ' s
like
the Amendment
Agreement,
probable.
to know whether he was
engaged in any way in the n e g o t i a t i o n s
Air
1972
recall?
9
11
1972,
had no
all.
I believe,
cable communications,
it
between B e l l and
Taxi—.
13
A
No,
14
Q
—-with respect
A
He had no n e g o t i a t i n g a u t h o r i t y a t a l l
15
16
19
20
21
22
to the compensation
arrangement
in
that.
17
18
sir.
Q
I'd
a cable
1972,
like
that Mr,
and i t ' s
to show you E x h i b i t Number 7 0 ,
Gallagher sent
in r e f e r e n c e ,
cable which I c o u l d n ' t
But one item,
quoting,
23
one of
find
to you dated July
I believe,
to an e a r l i e r
in the documents we r e c e i v e d .
the three items
listed,
and I ' m
sates:
"Am using max e f f o r t .
24
Joe w i l l
agreement a f t e r c o n s u l t a t i o n with
sign
Alice."
25
That's
in code,
it's
26,
Joe standing f o r A i r T a x i , A l i c e
for
603
524
1
Dehesh,
That's
the code that i s l i s t e d
2
t h e — i s w r i t t e n in on the bottom of the c a b l e .
3
A
Uh huh.
4
Q
I'd just
5
like
to show t h i s
on the bottom of
to you and get
your impression as to what caused Mr. Gallagher
to send
6
this
7
consulting with Mr. Dehesh about Amendment Number 1 to
to you and why M r . — w e l l , Air Taxi would be
8
the Manufacturer's Representative Agreement?
A
9
Just pure s p e c u l a t i o n .
But I would say that
10
Toufanian would probably make i t his business
11
out what kind of a settlement we—-or what kind of an
12
amendment arrangement we had made, make i t his
13
to find out.
And i t ' s
a pretty
to find
business
small—
14
Q
For what purpose would he do that?
15
A
To judge
16
you know, he's
17
probably went and got Dehesh's advice, and Dehesh probably
18
went to the old man and s a i d ,
19
g e t t i n g ready to do, and i s
20
sort of
on the reasonableness.
the-—he ' s an Iranian businessman and he
"Hey,
Q
A
No.
23
Q
—with respect to—while
realize
i s what
Do you r e c a l l
is
that this was done —
this amendment,
I
the only one, but with respect to Amendment
Number 2 and the f i n a l Amendment Number 3 , a l l
23-553 O - 78 - 39
they're
thing.
22
25
this
that what you had in mind?"
21
24
Zanganeh,
three
604
525
1
2
amendments,
I b e l i e v e , were executed within a period
about a y e a r .
3
A
Yes .
4
Q
Do you r e c a l l whether Dehesh or anyone
5
was consulted by A i r T a x i ,
6
to you at
did that
all?
7
No.
8
Q
This was the only ind i c a t i o n
recall
10
11
that you can
that-"
A
Yes.
Q
And what i s the use of
12
13
with Agusta and what purpose would that serve
14
d e s c r i b e A i r Taxi and Mr. Dehesh in code?
A
at
this
the code in this
of a c a b l e ,
15
time y o u ' r e s t i l l
I guess we j u s t got
16
these
17
t h i s one,
18
from A i r Taxi or the h o t e l ,
19
know, we s t i l l
20
Q
21
just
22
23
in
I think,
type
competition
to
i n t o that h a b i t .
t e l e x e s were, f o r the most p a r t , went out
was sent from Air T a x i ,
but
And
from—well,
either
and we j u s t d i d n ' t want—you
had a s e c u r i t y problem, we f e l t .
So you would put something l i k e
that in code,
the—
A
Yeah.
Q
—fact
that someone was c o n s u l t i n g ,
24
was c o n s u l t i n g with Dehesh,
25
be—that
else
information come back
A
9
of
you would f e e l
i t would be necessary
that
Air
Taxi
that would
to put that in code?
605
513
1
2
A
thing
We j u s t ,
that way,
at
that point
3
Q
Whose p o l i c y was t h a t ,
4
A
I don't
^
®
in time,
did
every-
just—
to put things
in code?
remember.
Q
You d o n ' t remember who s t a r t e d
A
No.
Q
The f i r s t
indication
that
I had in going
or—
through
these documents was that sometime in 1971 Mr.
Horsley
from the Brussels
believe,
Zanganeh,
A
o f f i c e said something
to,
I
in code.
Yeah.
put that thing
I think h e — I think he sat down and
together.
I think he was the author of
that.
Q
But i t wasn't at your
A
No,
Q
At your
A
(Witness shakes
Q
of
for
1972.
direction?
head.)
The Amendment Number 1 was signed
Do you r e c a l l
in August
that?
A
Let me—>
Q
Yes.
A
—-\just make a—maybe I can c l a r i f y
something
you.
As a f o r
instance,
than once that Telex' o p e r a t o r ,
direction?
no.
we had i t as a report more
operator
or
operators,
606
52 7
1
in Che h o t e l were very good leaks of
2
know.
3
and learn a whole l o t
4
country.
5
Q
information,
Someone could go through the h o t e l ' s
of
things
Amendment Number 1,
telex
that—that's
I believe,
you
files
a funny
was signed by
6
Air Taxi and then by B e l l , Mr. Rudning,
7
in the month of
August;
one signed August 9th or t h e r e a b o u t s ,
8
clarify
that.
9
Bell
a n d — l e t me
Air Taxi signed on August 9th and then
then signed on August
16th.
I'll
show you these two
10
exhibits,
11
yourself
12
indicating
13
Joe, meaning Air T a x i ; and then you've got a return
14
from Mr. M i t c h e l l ,
15
1972,
16
Air T a x i ,
17
signed on behalf
18
19
20
Exhibit* 71 and 72,
71 being a c a b l e from
to Mr. M i t c h e l l dated August 9 t h ,
1972,
that Amendment Number 1 had been executed by
indicating
that's
that
received
Exhibit
the agreements
dated August
signed by Joe,
16th,
as
today and that Mr. Rudning had
of
Bell.
A
Okay.
Q
And you had sent
1 on June 1 6 t h ,
72,
cable
1972,
the proposed Amendment Number
to Mr. Zanganeh,
to h i s
attention.
21
A
Yeah.
22
Q
Do you know why the n e g o t i a t i o n s , from the
23
you sent
24
signed—until
25
the proposed Amendment Number 1 u n t i l
three months?
i t was s i g n e d ,
Is
took a period of
time
they were
approximately
there anything about the process
or
607
i
what went on, whether A i r Taxi refused
2
the content of what had been proposed
3
4
No.
I—there—
r e f u s a l or even
A
resistance.
5
Q
All
6
A
But I w i l l
I don't
to go along
in June?
think there was any
right.
say to you that a t
that—-in
7
time span, we were-—everyone connected with that
8
was extremely
9
Q
10
believe.
Well,
you were a t a demonstration,
A
We had
12
Q
You had a demonstration?
13
program
A
Well,
we had a t e s t and e v a l u a t i o n
took us a l l around the country,
15
30,
16
thing w e r e —
17
to anything
35 p e o p l e .
I
a—
14
Q
that
busy.
11
18
with
And j u s t
thing
and with a team of
the l o g i s t i c s
of running
that
about
that
You know, nobody was paying much a t t e n t i o n
else.
I j u s t wondered whether during
that period
19
time you were involved
20
a i r c r a f t , whether you would come in contact with people
21
who were engaging in n e g o t i a t i o n s with Air Taxi and
22
any knowledge from t h a t ?
in the demonstrations
23
A
No,
24
Q
From those
A
(Shakes head from s i d e
25
sir.
contacts?
to
side.)
of
of
the
gain
608
529
Q
1
Did you ever gain any knowledge or have any
2
d i s c u s s i o n s with any persons about p e r s o n a l
3
by General Toufanian,
4
any other people
General Khatami or Mr. Dehesh or
in the Government of
5
A
No.
6
Q
You never heard whether
7
in any c o n s u l t i n g
investments
Iran?
No.
firms,
sales
they had an
interest
agencies?
8
A
No.
9
Q
I'm not t a l k i n g about j u s t A i r
10
A
No, not at
Taxi.
all.
11
MR. COLLINS:
Mr.
12
MR. MARINACCIO:
Marinaccio.
Thank you very much.
13
EXAMINATION
14
15
BY MR. MARINACCIO
Q
16
Mr. S y l v e s t e r ,
17
ever heard
18
paid by B e l l
19
of
Iran,
that any part of
do you know or have you
the $ 2 . 9 m i l l i o n t h a t was
to A i r Taxi went to any Government
military
or
official
civilian?
20
A
The answer i s ,
21
Q
You did not and you do not?
22
A
Do n o t .
Q
Do you know or have you ever heard of any
23
no,
I did
not.
24
d i s c u s s i o n between Textron or B e l l about any p o r t i o n
25
that $ 2 . 9 m i l l i o n payment going
to any o f f i c i a l of
of
the
609
530
1
Government of
2
A
No,
Q
I include
3
Iran?
sir.
in that q u e s t i o n any d i s c u s s i o n
4
you may be f a m i l i a r with pursuant
5
g a t i o n conducted by B e l l
6
payment,
7
been made to the Audit
i n t o the circumstances
including any report
A
8
No.
to any i n t e r n a l
Committee?
MR. GALERSTEIN:
investigation.
The witness has
10
he was not even aware of any i n v e s t i g a t i o n ,
11
that j u s t
that
13
Marinacc io ?
there was an i n v e s t i g a t i o n .
MR. MARINACCIO:
14
15
imply i t .
MR. GALERSTEIN:
17
the question led him that way.
18
BY MR. MARINACCIO
20
Q
My q u e s t i o n
I know.
imply
Mr.
didn't
knowledge.
But the form oj
Do you know or have you ever heard a t any
time that General Khatami had an ownership or a monetary
21
or a p r o p r i e t a r y
22
ever
23
in A i r
A
interest
or any other
One more time,
whatso-
please.
MR. MARINACCIO:
question back,
interest
Taxi?
24
25
that c o r r e c t ,
I was asking f o r the w i t n e s s ' s
16
19
Is
said
and I say
to remind him that your q u e s t i o n did not
12
that
that may or may not have
I wasn't even aware of an
9
of
that
investi-
please?
Would you read
that
610
=
531
1
THE REPORTER (Reading from his
notes):
"Do you know or have you ever heard at
2
3
any time that General Khatami had an ownership
4
or a monetary or a p r o p r i e t a r y
5
other
i n t e r e s t whatsoever
6
A
Don't
7
c l i m a t e of
8
hearsay,
9
impressions
13
think s o . You know,
that
they are
if
trying
Q
A
source,
Yeah,
Q
—that
if
I
like
17
discussion
that may have come to your
wasn't
recall.
what source
interest
any rumor, any g o s s i p ,
any
attention—
Well—
19
Q
—r_I wish you would s t a t e
20
A
Yeah.
21
Q
— f r o m any source whatsoever.
22
A
Yeah,
it
for
the record—>
I am aware and many people are aware
23
that
24
personal f r i e n d s h i p ,
there was a personal
tennis
it
and I d o n ' t
A
that,
General Khatami had any
in Air T a x i ,
played
for
just—
whatsoever
25
business
you did —
16
18
a—the
To the b e s t of your r e c o l l e c t i o n ,
did you hear from,
15
it's
to c r e a t e .
I heard something
from a r e l i a b l e or r e p u t a b l e
14
Taxi?"
Iran i s a constant b l i z z a r d of rumors and
So,
12
in Air
or any
and people g o s s i p and t a l k about each other
10
11
interest
friendship,
pretty
close
between Zanganeh and Khatami.
together,
they were good f r i e n d s ,
They
obviously.
611
494
1
But that 1 s — t h a t ' s
2
relationship.
3
Q
the e x t e n t of my knowledge of any
Were there rumors i n Iran that you know of
4
that Khatami had an ownership i n t e r e s t
5
you ever heard such rumors?
6
A
7
at a complete
8
You know, I j u s t ,
9
10
Well,
Q
in A i r T a x i ,
I think I probably d i d ,
loss
to carry i t any f u r t h e r
but I'm
than
just
that.
you know-—.
When would you have heard those rumors, would
you have picked
those rumors up in
nowhere
Iran?
11
A
Sure,
12
Q
And who would you have heard them from,
13
else.
would you c o n t a c t —
14
A
Oh, other I r a n i a n s ,
15
Q
Can you s p e c i f y
16
have
who would have given you that
17
A
where,
are
No, I c o u l d n ' t .
as I said b e f o r e ,
things
Q
But i t ' s
the kind of a world
hear rumors and hearsay
that people have almost as a s t o c k in
trade.
Would you have picked up that rumor from
the Air Taxi
employees?
A
No.
Q
Would they have ever bragged,
in name dropping
interest
individuals
rumor?
you j u s t
Mr. Zanganeh or any one of
you know.
the names of any
in A i r
for
example,
that General Khatami may have had an
Taxi?
612
513
j
A
No,
not-*-not in Chat
2
(Shore
3
A
I guess
4
Chat I c a n ' t
organization.
pause.)
Che besc I can do i s
say that
I d i d n ' t hear that
I did,
Co say Co you
somewhere.
5
Where I did or i f
6
wouldn't have been an u n u s u a l — i n
I'm r e a l l y not s u r e .
7
wouldn't have been an unusual or remarkable
8
heard.
There are l o t s
9
in that country,
11
one point
12
character a s s a s s i n a t i o n and things
13
a l l around you.
14
your antenna
Q
it
it
of very scratchy
10
15
But
that environment
thing to have
relationships
people vying f o r power and power i s
in that country.
And t h e r e ' s a l l
like
kinds
at
of
that going on
You can hear anything you want to turn
to.
Did you e v e r ,
to the b e s t of your
knowledge,
16
d i s c u s s any such rumors about General
17
p o s s i b l e or rumored i n t e r e s t
18
Atkins?
19
A
I don't
20
Q
What i s your b e s t r e c o l l e c t i o n and your b e s t
21
think s o .
in Air
I
Khatami's—any
Taxi with Mr.
don't—
testimony as to whether or not you did?
22
A
My b e s t r e c o l l e c t i o n
23
Q
That you did not?
24
A
Did n o t ,
Q
Did you ever wonder about the ownership of
25
is
that
I
didn't.
uh huh.
613
5 34
1
A i r Taxi?
And I say that
2
t h i s was,
3
f i f t y million,
4
A
That many?
5
Q
—at
I understand,
in t h i s c o n t e x t ,
a capitalized
after
all,
country of
had three or four hundred employees
least
one of
in—
the documents that we've
6
seen from h e r e .
And so I would have concluded
7
was an operating company and not j u s t a mail box in
8
A
Oh, y e s , very much s o .
9
Q
And in those circumstances,
your a g e n t , would you have,
11
b u s i n e s s , wondered about who owned the
12
did you wonder about who owned the
A
No,
since
Iran.
they were
in the normal course
I guess n o t .
it
Sure.
10
13
that
of
company, and
company?
They had no—'you know,
they—
14
they performed f o r us in the manner that we expected them
15
to perform.
16
no o b l i g a t i o n s ,
They had no f i n a n c i a l
r e l a t i o n s h i p with u s ,
there was no reason f o r me to go and seek
17
out a balance sheet or an annual report or anything
18
that.
19
that program in ' 7 1 ,
20
any time to think about
In f a c t ,
from the onset of
the development
I r e a l l y didn't
that s o r t
of
thing.
o b v i o u s l y w e l l organized and e f f i c i e n t ,
22
doing an operating
Q
When they
24
A
You know, j u s t
They were
effective
people
job.
23
business,
of
have much cause or
21
25
like
delivered—
looking at
t h e i r place
of
you had no cause t o — I had no cause to ask
614
535
1
questions
like
Q
2
that.
When they delivered, in terms of
effectiveness,
3
the way they did with r e s p e c t
4
officials
5
to a very l a r g e order f o r Textron,
6
wonder
7
a u t h o r i t y and power in A i r Taxi came from, did you wonder
8
in that c o n t e x t who owned A i r Taxi and think about
9
beyond
of
the Government of
in your own mind as
Iran that subsequently
No, no,
did that cause you to
to where the r e a l — o r where the
f o r granted
that
I didn't.
11
it
12
placed p e o p l e .
13
influence
14
very c l o s e held commodity.
You know, you j u s t
it,
they are what I would c a l l
in the country.
You d o n ' t
no p r i v a t e a v i a t i o n ,
as we understand i t ,
17
there are two commercial operating e n t i t i e s ,
18
them i s
it
Iran A i r , which is
other
subs t a n t i a l l y .
21
Q
and one of
service,
from what y o u ' v e
22
said,
23
you're
24
r e a l l y held in the hands of a few p e o p l e ,
25
with r e s p e c t
that you kind of have an i m p l i c i t
in I r a n ,
And so
and the
i s A i r T a x i , which was then a c h a r t e r
it,
feeling
just
that when
because most of what goes on there
to a v i a t i o n ,
or
general
in this country.
the a i r l i n e ,
Do I understand
is a
see m u c h - — l i t t l e
a v i a t i o n as we understand
19
well
And Iranian a i r space
16
20
take
They are people of p o s i t i o n and
15
led
Zanganeh?
A
10
to c o n t a c t s with various
and
is
particularly
that when y o u ' r e d e a l i n g with
615
537
1
the country y o u ' r e dealing with the government?
2
A
When y o u ' r e dealing with A i r
3
Q
Yes.
4
A
No, no.
5
Q
Well,
7
A
Yes,
8
Q
I kind of
10
I d i d n ' t mean to c r e a t e
that
impress i o n .
6
9
Taxi?
I'm j u s t
trying
I understand.
saying and I'm trying
to
get—
But I'm
trying—
sensed something from what
you're
to understand what you were
getting
at.
A
11
Well,
I d o n ' t know what I was trying
to get
12
at,
13
a v i a t i o n operating e n t i t i e s
14
know, I d o n ' t know what or how the thing got s t a r t e d
15
who s t a r t e d
16
the two people on that a f f i d a v i t
Q
17
18
except to say that Air Taxi was one of very few
in the country.
i t or who owned i t ,
if
A
I think i t would have.
in A i r
to u s .
that
Taxi?
I d o n ' t know,
20
but I think i t would have.
21
would have put a very d i f f e r e n t complexion upon our
22
relationships,
23
24
Q
that's
A
You know, that c e r t a i n knowledj
sure.
What kind of a d i f f e r e n t complexion would
have put on your
25
for
Well,
or
not Zanganeh and
Would i t have surprised you to learn
Yeah,
you
that he presented
General Khatami had an ownership i n t e r e s t
19
And,
it
relationship?
if
we'd had pre-knowledge of
that kind
616
538
1
of
2
say
3
relationship
4
we'd have done,
5
and c l e a r
an ownership
in A i r
Taxi,
I
t h i n k I can p r e t t y
to you t h a t Jim A t k i n s w o u l d n ' t
6
to e x i s t ,
but
on that
Q
have p e r m i t t e d
to c o n t i n u e .
I don't
I c a n — I can come a c r o s s
pretty
Would your c o n c l u s i o n
be the same even in
light
Zanganeh who was your a g e n t ,
were meeting with
9
from time
in the p r e s e n c e
to t i m e ,
that persons
sometimes
and sometimes, I b e l i e v e , even in
11
individuals
12
e f f u s i v e anyway about h i s
13
purchases
14
15
16
17
19
21
22
23
24
A
Oh,
close
to the
the p r e s e n c e
scene,
to
like
Khatami
of
the
Shah
of
when Khatami would be
desire
the
transfer a l l
somewhat
of
his
and—-
oh—
Q
—things
A
I never heard him say a n y t h i n g
of
that
nature,
and—
Q
You never
A
And I never heard him in an e f f u s i v e mode or
like
t h a t and
I—
18
20
like yourself
to B e l l
loud
one.
8
10
the
know what
7
of knowledge
clearly
mood.
heard—
He was always v e r y c o r r e c t
the r i g h t
questions,
performance of
accomplished
w i t h him,
and p o l i t e
you know, about
the h e l i c o p t e r s ,
helicopter
pilot
own r i g h t .
I rode
the knobs and b u t t o n s
25
s w i t c h e s were and what
and asked
technical—the
and was a p r e t t y
in h i s
and he knew where a l l
the
they were f o r ,
and—
and
617
539
1
Q
2
General
Khatami's
3
the
489
helicopters
4
any?
A
If a n y ?
5
How
6
such
decisions
7
this
is w h e r e
8
to b e
found,
would
are
10
A
In h i s
12
would
13
Shah
decided
14
Army,
that
and
Shah.
be
most
to m e
of
1 9
20
of
And
Pardon
Q
And
before,
sale
Iran by
Now,
in
He's
of
Bell,
as
one
that
thing
all
more
time,
country
was
most
the
he
expertise
or were
you
he was
wasn't
the
when
unit
in
find
and
thing
General
think
world
could
natural
for
the
in
I would
it
the
his
the
best
advice.
And
in
aware
the
at
world.
that
time,
Khatami?
Shah's
brother-in-law,
any—
Shah made
the
decisions?
Shah made
the
decisions,
me?
the
as
believe?
25
A
if
brother-in-law
aviation
to w h e r e
that
the
Shah very-—
knew,
that
I
Shah.
us,
else
an Army
go
that
the
decision,
expertise
Force.
the
there
a
of
tell
Khatami?
Air
you
I knew
that
the
nowhere
a role
Q
said
and
the
A
you
It was
helicopter
22
24
Government
by
natural
21
23
the
Okay.
so
be
And
I knew
to
he w o u l d
kind
in
to c r e a t e
trusted
A
and
And
it w o u l d
this
participation
General
the m o s t
Q
1 8
or
taken
there
In
the
and
the.aviation
Q
of
characterize,
role
9
11
you
Yeah, well,
sure,
I—of
course
I did,
yeah.
618
558
1
Q
And
2
A
I was—we
3
generate
4
and
in
5
5
helicopter
the
Navy.
Q
And
that was
7
other
®
presence
an
of
discussed
in
Atkins
the
who
in
important
factors,
but
Khatami.
Now,
that
is
a
a
I'm
factor
discussions
was
My
your
that
superior,
reports
Q
No,
not
your
but
about
personal
about
the
A
Sure,
certainly.
Q
— y o u
know, people
that
there
were
many
generally
been
have
in r e p o r t i n g
to A t k i n s
his-
said
you would
he have
situation
in
at
well,
you've
was
that
you would
to
busy.
sure
factor
trying
Force, as
pretty
from what
f a c t o r , as
General
were
the A i r
were
gather
and
my
have
aware
had
to
of
with
Mr.
him?
contacts
contacts
the
with
with
General
Iran—
the
top
making
decisions.
20
21
22
23
24
programs
Khatami
Khatami
trying—we
We were-^we
General
1 7
19
were
with Mr. Atkins, would
A
1 4
you—
I would
important
9
this
did
A
Oh,
Q
General
A
You
Q
—aviation
important
25
Atkins ?
role,
decisions.
bet,
Oh,
Khatami
yeah.
being
the—
yeah.
guy,
you would
so
have
to
speak, and
discussed
this
playing
with
an
Mr.
619
541
1
A
Yes .
2
Q
Would
you
3
management
affairs
4
Mr . Atkins
would
5
6
A
I
7
Q
be
don't
of
Mr. Atkins
9
General
Khatami
10
A
No,
11
Q
—with
12
A
No,
13
Q
Have
14
A
No.
15
Q
Did
16
A
N o , s ir .
17
Q
Did
18
he
ever
did
discuss
I
you
he
you
$2. 9 million
full
payment
delivery
the
judge
that.
know
whether
Shah's
or
not
relationship
with
Miller?
heard
mention
ever
think
of
it
your
to A i r
the
489
A
(No
response.)
Q
Can
I refresh
25
A
I couldn't
Miller?
that
he
to y o u
that
he
did?
that he
should
did?
have,
if
didn't?
Now, was
23-553 O - 78 - 40
ever
ever
Q
24
G. William
that
s ir .
No.
23
factor
of
it.
you
G. William
A
the
a
course
don't.
20
22
been
normal
with——
19
21
for
all, do
the
with
know.
reason
8
in
have
discussing
much
First
that
this would
I really
wouldn't see
think
Sure .
understanding
Taxi was
that
partly
helicopters?
your
recollection?
the
dependent
upon
620
542
Q
1
2
there
3
be
I believe Amendment
would
reduced
be a payment
by
A
Yeah.
5
Q
— f o r
So
8
Number
9
Mr.
each
that
3 which
was
Zanganeh—and
10
testified
11
some
12
489
that
helicopter
to
helicopters.
A
14
the 4 8 9
15
words.
under
the
and
under
the
489
it
would
that
wasn't
17
purpose
of
18
date
that A m e n d m e n t
of
just
A
June
29,
20
Q
Now,
to y o u r
21
participation
22
Taxi
23
insuring
24
so
A
Zanganeh
that
on, what
in a n y
the
did
After
at
Mr.
with
it's
in
It
my
of
with
yesterday
Zanganeh
did
the
of
sale
have
the
that?
his
says
interest
so
in
recollection
question:
so
to
see
many
for
the
What was
the
services
or
3?
1973.
knowledge, what
manner, way,
have
sale
Mr.
next
Number
19
or M r .
agree
refresh
the
Amendment
arrived
completion
you
the
even Mr. Atkins
delivered.
Q
asking
of
figure
obviously,
16
Now,
terms
that agreement
see
helicopters
my
final
Would
Well,
the
I believe
under
incentive
13
million
that
sold.
7
25
$2.9
3 provided
$3,000—
4
6
of
Number
in
date?
d o —
or
subsequent
of helicopters
Zanganeh
this
the
shape
went
form,
did
delivery,
to 4 8 9
and
Air
621
543
1
Q
—after
2
A
I don't
3
thing
that
he
did
4
Who
5
A
I don't
can't
even
7
The
8
that
9
Iranian's
helicopters
with
11
meticulous
about
Q
12
Did
13
necessary
14
to b e
15
Iran?
able
16
17
were,
18
number
the—out
21
serious
And
24
line
25
But
And
or
felt
the
in f a c t
in
there
of
of
any-
was
there—
to b e
a contract
it's
style
certainly
not
They're
I
done.
between
not
to p e r f o r m
Government.
ever
believe
with
of
in m y
that we
Iranian
Iran,
the
to
a
pretty
gate.
mind
should
ground
that w a s — t h a t
did
No,
I can
advancement
at
least
forces
would
be
in
have
a
finite
gotten
remember
the
having
that
we
program.
general
been
can
off
establishing
the
of
But you
direction
of
was
order
services
put
us.
have
the
it
in
Government
their
for
that
agent
can't
never
about
mind
an
the
You
they
might
initial
as
initially
what
starting
the
in y o u r
Taxi
invaluable.
them, we
questions
taking
in
the
that
subject
certainly
the v a l u e
of
knowledge
know, what was
the
to d o b u s i n e s s
that w i t h o u t
I
You
to h a v e A i r
opinion,
say
were
you
Bell
Well,
19
no
that.
in m y
on
agreement?
recall.
ours.
U.S.
A
20
22
for
I can
record
the
that
know?
anything
and
track
contract
of
of
I have
know.
were
government
10
23
would
think
date
know.
that
Q
6
the
quite
a
trap
staff.
622
544
1
unproductive,
2
Q
By M r .
3
A
Sure.
Q
So he
4
to
5
and
we were
so
advised.
Zanganeh?
advised
you
that
it w o u l d
be
unproductive
deal with-—'
6
A
The
7
Q
-^the
8
A
And
9
Q
—who
were
A
aviation, Army
Iranian
ground
Iranian
forces
ground
i n —
forces—
General—>
actually
going
to u s e
the
equipment ?
10
11
A
12
command
of
a
new
then
Brigadier
13
Q
What
14
A
No.
15
Q
Khosrodad?
16
A
Khosrodad.
17
element
in
the
Q
18
19
should
20
what
21
go
22
Toufanian
23
would
24
implement
25
his
it.
Now,
advice
the
advice
That
the
Moshatan?
was
of
the
that
of
a very
important
transaction.
time
General
was
that
Toufanian
you
or
whom,
you?
procurement
o f f i c e , and
the
And
that
at
route
to
the
his
come from
under
General.
name,
advancement
through
and
his
unit
Khosrodad.
And
w a s3 h i s
A
was
aviation
Shah
his
new
be made
staff.
to T o u f a n i a n ,
that's what
See, we were
would
The
by
decision
Toufanian
would
happened.
boys
on
the b l o c k , we
were
623
545
1
in
a whole—very
2
Iran
3
airport
4
whole
5
a very
6
to u n d e r s t a n d
7
while
and
enabled
10
way
13
with
14
are
15
have
a whole
the
to
be
set
a
get around
doing
business
sale
what
was
by
you
with
handled
sales
of
for
for
Q
All
A
Tanks
19
Q
So
20
A
Oh,
21
Q
—their
22
A
Oh, yes,
Q
Well,
can
I ask
thing
for
you
A
Iran, a
to
the
players
it
it
while
took
position
and
make
a
and
took a
And
No.
subsequently
commodities
the
18
easy
And
into
culture,
a
that
appoint-
in
come
Iran,
Bell Helicopter
words,
Yes,
fairly
of
set
the military
A
25
new
in
have
17
24
new
ourselves
other
In o t h e r
responsibility
23
a whole
players.
position
moved
the hotel
inter-relationship.
From
the w a y
of
from
We
received.
handled?
16
way
environment,
Q
that
our
It w a s
us
and
environment.
thing.
to e s t a b l i s h
ments
about
of
know
complicated
9
11
didn't
sort
new
8
12
we
strange
does
to
purchase
is
learn
the
consistent
the
General
to
military
Toufanian
of a l l
equipment?
tanks—>
across
and
this
the
board?
guns
and
uniforms
and
purchase
is c o n s i s t e n t
military
is
the w h o l e
with
the
bit.
way—.
yes.
organized?
sure.
you, wouldn't
to a s c e r t a i n
at
that
the
have
been
outset?
a
624
546
1
Q
You
2
A
No.
3
BuC
4
chain
5
and
lisCened
6
you
know,
7
gotten
8
know
9
wasted
10
we
could
of
a
lot
people
15
Khatami
16
A
Chis
is.
And
like
Did
you
ever
they
form
have
any
had
Iranian
an
Yes.
No,
19
Q
No, American
20
A
No
to
both.
both?
Q
No
to
22
A
Uh
huh.
23
Q
I know
local
Embassy
We'd
I
don't
certainly
to
have
the
know.
moment.
with
to y o u r
or
in A i r
any
military
attention
otherwise
in
any
that
Taxi?
sir.
21
go
But
probably
military?
Q
men
received
temperament,
perhaps
fact
interest
well
track.
chats
bring
Army
have
one
any
or
Che
been
us.
and
show?
explain.
we'd
I don't
have
up
and
right
effort
the
Co
Iranian
taken
rumor
A
business
Che
the
ever
18
25
is
to b a c k t r a c k
17
24
scaff
eventually
have
and
runs
difficulC
proceeded
competitors,
I'd
or
may
And
time
our
it's
general
it w o u l d
about—did
shape
Toufanian
have
right—-on
of
of
12
way,
and
the
Q
14
easily
Co.
long
advantage
13
very
it j u s t
into
Chat
You know,
command
how
11
know,
it's
customary
overseas
and
they
military,
that
talk
to
I'm
sorry.
practice
when
American
they
oftentimes
stop
at
the
the
commercial
attache
and
625
558
1
they
get
the
lay
of
2
A
We
3
Q
You
4
A
Sure.
Q
And
5
6
the
land.
did.
did?
I said
you
went
that
into
earlier.
the
Embassy
in
Iran,
in
Teheran?
^
A
Oh,
Q
And
A
We
yes.
chatted
with-r-which
official
did
you
talk
to?
secretaries,
we
had
first
then
a
talked
I can't
pretty
couple
of
went
and
one
his
name
right
relationship
with
them
years.
away
the A m b a s s a d o r
remember
good
deteriorated.
contacts
to
But
after
And
I don't
the
necessity
the
program
mean
by
for
was
of
the
now.
for
that
those
sold
But
the
that
it
kinds
of
and
running.
Q
Did
Department
an
ownership
No.
Q
Did
of A i r
No.
Q
Did
any
of
those
mention
you
Taxi
A
Taxi with
of
interest
A
owners
ever
any
to y o u
in A i r
ever
that
in
the
State
General
Khatami
had
Taxi?
ask
any
of
those
people
who
were?
No.
you
people
That
ever
those
flows—
discuss
State
the
ownership
Department
people?
of
Air
the
626
548
1
A
No.
2
Q
What
A
You
3
4
relationship
5
much
6
intelligence
7
cus tomers.
more
did
know,
with Air
concerned
and
tell
you about Air
I don't
think
Taxi
the
with
advice
8
9
they
in
getting
from
10
1:00.
then we'll
Let's
come
back.
11
THE
12
them
you're
tired
14
finish
him
and
on
If
it w e r e
there,
22
23
24
25
really
fine,
MR.
18
21
Mr. Doherty
prospective
five
break
has
minutes
for
some
Okay,
want
at
1:45
It's
lunch
and
questions.
fine.
I
to c o n t i n u e
know
and
p.m.)
not
five
minutes.
b u t —
GALERSTEIN:
(Whereupon,
reconvene
our
were
Okay.
don't
MR. DOHERTY:
17
20
you
our
It's
minute
WITNESS:
discussed
We
up?
15
19
a 45
MR. GALERSTEIN:
13
16
take
ever
their-—ge11ing
MR. MARINACCIO:
after
we
Embassy.
Taxi?
the
Oh,
luncheon
okay.
recess
was
taken,
to
627
558
1
SATURDAY,
2
FEBRUARY
AFTERNOON
(The
3
o'clock
4
p0m.
to
1978
SESSION
proceedings
pursuant
4,
were
the
continued
luncheon
at
1:00
recess.)
5
6
MR.
7
the
witness
8
stand
and
FRANK M .
hereinbefore
testified
9
SYLVESTER,
named,
further
resumed
as
the
witness
follows:
EXAMINATION
10
BY M R .
DOHERTY
11
Q
Mr.
Sylvester,
12
the
13
and
the
14
are
discussing, would
15
Bell
16
government
negotiations
or
Textron's
A
18
Q
19
policy—and
20
well—to
contract
to
been
to m a k e
time
period
that we
respect
it h a v e
in
the
a
the
are
discussing
payments
consistent
payment
connection with
of
to
that
we
with
a
foreign
contract?
No.
when
have
controlled
22
had
or
it
have
I say
made
a
been
"Bell,"
payment
in w h i c h
consistent
a
I mean
to a
foreign
with
Textron,
company
that
government
Bell's
as
was
ownec
official
interest?
23
A
No,
24
Q
Under
with
policy
official
Would
21
some
the
negotiations
17
25
for
during
rumors
sir.
with
those
circumstances, when
respect
to a
possible
you
heard
ownership
628
558
1
interest
of
2
Bell's
3
any
4
substance
7
ing.
Q
mean,
10
a
12
in A i r
inquiry
was
or
did
you
there
was
any
clear.
I
think
whether
cause
rumor?
And
let
me
I don't
you
I don't
rumor
to
say
make
it
really
"that
remember
happening,"
that
what
happen-
do
you
the
Q
effect
I'm
testified
15
uhe
that
sorry.
that
record
you
I don't
Khatami
A
I think
it w a s
18
circulating
19
pin
entirely
and
I thought
thought
now, what
17
it
remember.
remember
had
any
hearing
involvement
Taxi.
14
is
possible
for
me
I
21
was
22
environment
23
you wanted
24
rumor
25
bubbling
trying
and
guess
to
that
to.
The
a
maybe
for
best
I
such
a
that
say
for
to
that
have
it, but, I
happened,
in
place
just
time.
us
the
hear
a
and
I —
I
Iranian
anything
firestorm
It w a s
been
can't
it b a d l y , b u t w h a t
could
the
tell
to
rumor
that
I said
previously
recollection?
heard
thing
was
had
Just
intended
have
was
you
had.
time, you
hearsay, all
situation.
or
to
get across
at
you
your
I said
d o w n as s u c h , a s
20
any
into
Taxi which
sir?
11
16
you make
that
When
A
13
that
before
Khatami and Air
be m a d e
No.
said
8
did
to
to
A
I
9
agent,
inquiry
5
6
General
just
of
a
that
629
551
1
Q
Wouldn't
2
sense
3
direct
4
there
5
government
6
under
were
A
any
that
8
futility.
one,
In a n y
people
and
Taxi people
I
Q
Let
me
marked
of
16
enter
17
dollars.
as
into
18
20
the
the
per
cent
owned
This
24
before
25
the
on
January
the
21st
as
that
some
to
whether
sort
by
environment, but
been
an
no
anyone
respect
to
you what's
57.
exercise
inquiry
to m a k e
that
of A i r
an
in
in
Taxi
inquiry
matter?
It
is
2 of
for
that
interests
by M r .
resolution
document
of
the
of
there
T a x i as
Chafik
2.9
and
million
is a
being
Board
to
referenc
a
hundrec
Eshoo.
dated—
SOUTTER:
It
it w a s
officials
1973.
been
Mr. Zanganeh
payment
in A i r
is
6,'73, and
Consulate
the
Zanganeh,
document
of M a y ,
the
previously
Taxi authorizing
MR.
held
this
show
page
22
23
direct
agreement
ownership
21
in
have
you made
with
of A i r
On
to
asked
know
of
business
didn't.
Exhibit
Directors
it w o u l d
didn't
No,
15
19
you
A
14
interests
event,
of
13
good
to h a v e
who would
it w o u l d
11
12
some
officials?
10
Air
people
ownership
I think
Q
made
circumstances
of
Perhaps
7
9
those
questions
it h a v e
in
reflects
a
legalized,
meeting
if
I
Iran, apparently
may,
on
630
558
16/4
1
BY M R .
2
DOHERTY
Q
Now,
respect
to
4
on
2 concerning
5
came
page
to be
the
sir, do
3
you
included
the
in
that
A
No,
I haven't.
7
Q
Had
you
8
have
other
9
ownership
or
10
officials
in A i r
heard
A
No, I
12
Q
Who were
13
period
we're
A
with
of a n y
kind
your
discussing
competitors
for
Well, Agusta
of
this
Italy;
W-e-s-t-1-a-n-d
17
a
A
of
23
order
to
Did
all
the
best
of
your
of
Were
your
to
you
competitors
to a n y
in
you
possible
other
Iran
government:
at
the
contract?
of
British.
United
Westland
Helicopters. They
competitors
your
are
have
agents
in
knowledge?
secure
a
concerned
might
contract
24
A
No,
Never
25
Q
This
was
did
Yes.
Q
22
57?
manufacturer.
Q
20
or
Sikorsky
Helicopters.
21
Taxi
all.
potential
16
country
of A i r
didn't.
certainly, West land,
19
at
rumors
of a n y
Technologies;
British
with
paragraph
Exhibit
respect
15
18
interest
No, none
other
the
Taxi?
11
14
knowledge
which
document,
any
information
interest
any
under
ownership
6
any
have
circumstances
had
not
at
all as
consider
to a
cause
to w h e t h e r
making
a
government
to
discussed
be
by
payoff
any
in
official?
concerned.
you
or a m o n g
Bell
the
631
558
i
people
as
2
work
3
c o n t r a ct ?
to
an
the
element
A
No, huh
5
Q
You
your
the
disadvantage
4
6
of
indicated
can
7
correct
8
agent
conclusion
9
t h e r e a f t e r , basically.,
principally
because
11
negotiations;
the
Bell
from
as
an
that
that,
13
Q
Do
know
the
lead
16
17
agents
18
I dont—
think
Q
discussing
20
in
21
Iran
22
Iran
A
Bell,
from
1970
or h a v e
that
are
any
for
used
your
country,
and
logistical
took
your
way?
the
I have
no
during
to
over
support,
the
competitors
Did
their
utilized
agents
take
sales?
knowledge
Agency
the
of
at
this
Q
Any
A
No, no.
25
Q
Could
kind
you
of
The
that,
but
tell
us,
time
other
we
are
companies
arrangements
point?
o r —
contractual
answer
of
any
contractual
relationships
24
period
date, have
other
on-going
23
the
so.
Did
19
whether
different
to n e g o t i a t e
A
I would
in a
the
paraphrase
correct?
correct.
their
might
this
it's
you had
to
essentially
That's
15
I could
support,
A
14
securing
whether
it—that
entree
12
you
in
if
t e l l me
for
people
is
Bell
that
uh.
testimony—you
10
of
competition
relationships?
is, no, we
sir, what
didn't.
the
present
in
632
558
1
policy
2
sales
3
use
4
assure
is
of
Bell and
insofar
and
the
as
Textron
the methods
controls,
compliance
5
the
with
MR.
the
SOUTTER:
you
7
presuming
for M r ,
Sylvester,
8
have
firsthand
knowledge
9
divisions
of
Textron
10
MR.
11
speak
12
what
from
he
Bell's
BY M R .
15
Q
and
I am
the
experience,
WITNESS:
present
asking
controls,
if
(Short
pause.)
Do
understand
19
A
I think
m e , has
for
a
a
the
that
I'm
not
is h e
other
That's
fine.
he
tell
can
doesn't
twenty-odd
Just
us
about
Well—
that
authority
sale
about
to
except—
the
present
policy
any?
my
question?
I understand.
And
let
me
see
if
I
a
properly.
Neither—no
24
25
you
can a d d r e s s
21
23
on
Now,
guess
how
you now
Q
22
of
to
any?
Doherty,
my
order
sell.
18
if I
but
in
to
DOHERTY
17
20
if
Textron."
DOHERTY:
THE
14
Mr.
foreign
knows.
13
16
"Bell and
to
appropriate
controls
policy,
question,
any
respect
are
internal
6
said
with
that
one
in m y
establish
organization,
an agent's
W e l l , an agent's
includin,
compensation
compensation
for
sale .
Nov
1
a
we
have
agents—we
have
standard
agency
633
558
i
agreements
that
2
representative
3
a,
4
s tated.
gets
currently, a
5
spell
Anything
and
7
reason-substantiated
8
is m a d e
9
10
My
A
Well, Mr.
12
with
13
so
14
cisions,
15
ago.
Mr.
recent
Farmer
18
A
21
tion
I
that
is a n d
he
the
and
to
clearly
thing
with
the
until
And
you
a
decision
is
you would
Yeah.
Q
—now
24
A
Yeah.
Mr.
terms
of
now
departure
I think, no
is
for
his
rests
such
just a week
the
record
who
is
deor
so
Mr.
is?
Farmer
Treff
time
Farmer's
been,
identify
Mr.
Farmer
In
But
retired, which
Mr,
Now,
to M r .
have
the
responsibility
who M r . Treff
A
Farmer
think
Yeah.
Q
to r e c o m m e n d
a
it?
there
since
23
25
up
that's
is a n e g o t i a t e d
is
Treff, T-r-e-f-f.
Q
22
makes
Could
Finance.
20
helicopters
ten. And
that
that
elsewhere.
d e p a r t u r e , and
Q
of
recommendation,
Who
17
compensation
specific
over
Q
16
the
responsibility
11
19
on
quantity
6
w e —
out
was
Vice
President
of
Treasurer.
make
then
a
direct
recommenda.
o r —
Treff?
of, again,
this
issue
of
compensat
634
558
i
does
Mr. Atkins
2
A
Q
3
4
M r . Farmer
have
a
And
how
does he
who
would
A
Yeah,
6
Q
On
the
decision
8
9
A
some
A
No,
12
Q
With
form
14
there,
procedures
sir.
I'm
you
I
us
together,
did M r .
Farmer
I can't
didn't,
but—
simply
make
you
answer
that,
know.
know?
to
entering
arrangement, what
into
are
MR.
SOUTTER:
Are
MR.
DOHERTY:
Current
current
the
the
standard
procedures
we
talking
current
BY M R .
22
Q
That's
23
A
Okay, w e —
procedures,
yes,
procedures.
WITNESS:
21
it
don 1.
respect
THE
The
appointment
of
a
new
DOHERTY
organization
given
Is
Atkins?
1
r e p r e s e n t a t ive ?
an
he
don't
20
25
of
don't—
that
discussing
19
24
involved?
o r —
17
18
yes.
to M r .
both
deicision?
any?
15
16
become
go
I really
contractual
if
this
rule,
occasions,
know
Then
11
13
then
to
himself?
I don't
Q
general
sometimes
Well,
because
10
input
Y e s , as
5
7
any
country.
correct.
that
And
We
we
located
think
I might
a —
can
add
We
locate
represent
that
this
us
a
in
happens
firm
a
very
or
635
558
i
seldom.
2
us
and
Most
stays
4
W e l l , we
5
for
6
them,
7
and
find
financial
if w e
visit
Atkins
Q
Do
A
No,
specific
inquiry
with
that
checking
16
A
with
18
responsibility
19
have
20
firms
a
22
and
23
up
24
25
23-553 O - 78 - 41
the
man,
get
a
become
who
I don't
owns
trade
to
c a n . We
report
go
w e —
on
look at
with
ask
them
them.
ahead
is
an
them?
think we
do as
who
is
in
you have
into
charge
of
a
routine
described
is m a d e
potential
new
the
selection
process
the
regional
for
that
sales
and
conditions, and
so
they—they
up w i t h
go
this
connection
who
of
doing
and
a
as
a
people
with
busine
business
selection
they
rule
has
those
familiarity
through
recommendations
in
starts
most
business
come
intimate
that
agent?
manager
a r e a . And
and
country,
seeing
a
and
come
we
go and
the approval
detailed
the
as
acquainted
very
are
in
process
passed
on
line.
Q
it
again,
Well,
17
21
and
appointment,
them
Commerce. We
you ask
And
15
We
with
thing.
Q
14
from
been
time.
of a new
much about
statements.
them
long
case
has
approval.
11
13
for a
the
as
can,
10
12
out
And,
1
representation
us
in
with
8
our
with
But,
3
9
of
And
to
you?
how
does
it
come
back
up
the
line?
Does
636
558
16/10
1
A
Oh,
sure,
2
Q
And
you
3
to
someone
A
Uh
5
Q
T e l l me
6
A
7
senior
8
the
Well,
vice
about
you
recommend
procedure, what
I work—
I report
president, Marketing, who
marketing
10
A
L. M. Horner.
11
Q
And
12
A
Atkins.
13
Q
And
14
A
Final
has
do
you
now
all
to
do?
a
three
of
is
that,
who
who
sir?
does
H-o-r-n-e-r.
he
makes
report
the
decision
to?
decision
is a n
on
Atkins
1
the
contract?
deicision,
or
approva1.
16.
Q
utilized
18
19
What
by
Q
With
with
by Textron
respect
foreign
or
to
procedures,
or Textron
Procedures
21
23
other
Bell
A
20
to
policies
business, what
A
(Short
Q
If
if a n y , a r e
you
currently
know?
t o —
respect
Bell with
that
hiring
that are
respect
to
sales
agents
presently
how
they
or
utilized
do
their
guidelines?
pause.)
24
there are
25
it
groups.
Who
22
that
I would—
Q
17
then
huh.
9
15
it a n d
else?
4
,
yes.
look at
that
you
can
think
of?
any
others
that
you
know
or
637
558
1
A
2
Q
We 1 1 ,
Let
3
4
To
that
5
you've
A
me a s k
this
I don't
memory
to
couple
Are
us
think
MR.
witness's
you a
point:
described
6
7
I —
MR.
DOHERTY:
MR.
SOUTTER:
is
in w r i t i n g
and
12
BY M R .
13
Q
14
Now,
is a n A u g u s t
"Standards
16
Agents,
One
be
WITNESS:
I refresh
piece
Exhibit
Oh,
been
1976
Textron
Conduct
Consultants,
Have
18
A
Yes,
19
Q
And
you
I
the
yes,
that
I
No.
5.
believe
okay.
20
A
Well,
Q
Of
22
Policy
seen
to
or
that
on
did
you
Noc
with
5
which
respect
to
Representatives,
Distributors."
document
first
see
or a b o u t A u g u s t
before,
sir?
that
the
document?
20th.
1976?
A
Yes.
Q
Have
24
A
Well, everyone
is
Exhibit
statement
as
Dealers
23
and
shown
have.
when
21
writing?
Certainly.
you've
16,
of
17
this
questions
procedures
DOHERTY
15
25
the
Could
that would
THE
specific
of
a —
8
11
of
so.
9
10
in
SOUTTER:
with
any
you
familiar
distributed
with
that
it.
that
document
reports
to me
to
has
anyone?
read
638
558
1
2
Q
your—the
3
A
And
would
chain
of
command
Y e s , and
to
4
representation.
5
almost
6
made
7
si x months, pending
8
agreements
9
has
In
verbatim
you
some
you?
all
GALERSTEIN:
information
on
13
MR.
GALERSTEIN:
came
throughout
16
representative
17
to. And
18
19
20
21
22
23
24
which
the
in
the
I, at
we
forms
down
were
this,
in
I
think,
agreements.
change
order
set
So w e ,
We
for
of
yes.
If y o u w i s h ,
This
When
moment,
it o n a
being
of a
the
from M r . Miller,
company and
this
because
involved
letter
to
it
the
so-called
has
precise
temporary
up. But
letter
it w a s
to a l l
or
distribute^
revise
Sylvester
forget
printed
could
I was
I had
proceeded
directive
I
Sure.
agreement, as M r .
handled
the nature
people
foreign
of a new
that
DOHERTY:
directive
or a
issuance
MR.
15
our
representative
12
14
the
incorporated
temporary
the
of
representative.
MR.
give
below
of
disseminated.,
10
11
all
include
the
of a
each
been widely
include
fact, we
into
it a m a t t e r
for
that
the
alluded
form
basis
in
while
something
foreign
representatives..
THE
WITNESS:
It was
MR.
GALERSTEIN:
THE
WITNESS:
MR.
GALERSTEIN:
Uh
an amendment,
It w a s
an
Georg£.
amendment?
huh.
25
It w a s
an
amendment
to
639
558
16/13
1
the
existing
non-including
MR.
2
agency
contracts
agreements.
DOHERTY:
were
So
amended
that
even
the
substantially
existing
in
accordan
3
4
with
the
policy
5
6
I
recall
it,
8
10
now
I do r e c a l l
Mr. Atkins
11
had
12
BY M R .
13
Q
a
MR.
GALERSTEIN:
those
as
verbatim—
WITNESS:
that
5?
It w a s , a c t u a l l y ,
it w a s
it
to
signed
Yeah.
an
—copy
of
that.
amendment, and
some
extent
as
I
And
recall
to w h e t h e r
he
copies.
DOHERTY
Do
14
addition
15
taken
16
implemented
17
A
to
you
those
in o r d e r
k n o w , we have
19
sentation
20
ment
contract
21
t o —
I haven't
22
thing.
23
Q
letting
25
Board
of
a
that
sir, whether
have
made
had
you
any
know
contract
Directors?
or
position
us.
And
cause
to
whether
steps
policy
complied
of a n y
position
that
any
described
this
to b e
know
our
between
been
that
continues
I don't
accepted
Do
24
know,
to a s s u r e
and
No,
18
Exhibit
THE
pursuing
received
in
GALERSTEIN:
it w a s
7
9
articulated
MR.
have
has
clear.
as
a matter
out
been
I mean,
very
go
been
with?
steps.
I hadn't
in
Our
done
and
any
of
the
compensation
go
to
of
repreagree-
any—anyth
police
issues
the
you
the
of
Textron
n
g
640
558
1
A
S a y a ga i n ?
2
Q
Do
you
at
this
3
at
4
will
5
d e s cr ibed ?
6
A
No«
7
Q
There
Textron
pass
on a n y
8
9
you
don't
know
12
of
if
BY M R .
Board
or
you
SOUTTER:
There
is a
of
that
don't
procedure
Directors
you've
just
know?
is n o
procedure
or
procedure?
WITNESS:
I'm
not
aware
of a
pro-
DOHERTY
Does
I don't
audit
16
teams
Q
Staff
with
22
23
have
which
this
an Audit
know.
up
time
whether
undertaken
by
the
i n any w a y a r e
current
Committee?
Certainly
from
Do y o u k n o w
A
21
Bell
made
periodically
20
24
the
is a
cedure .
Q
19
there
contracts
there
A
18
the
THE
14
17
that
is n o t
13
15
whether
time
MR.
10
11
know
Textron
to
there
time,
any
Internal
policy
ad
hoc
but—
field
concerned
are
audits
are
Accounting
with
compliance
that
we
are
discussing;
are
no
field
No.
Q
Do
A
No,
you
I don't
know
Q
Are
any
that
there
know—
I am
questionnaires
sentations
sought
from
persons
sales
to
effect
not
or
aware
periodic
responsible
in
audits?
of
any.
reprethe
foreign
25
area
the
that
they
are
complying
with
641
558
1
the
current
A
2
3
policy
I don't
question, but
are
4
Q
Let
5
A
Are we
6
complying
A
I
9
Q
My
10
is
only as
11
enforced.
12
been
13
information
And
as
it
the
is a
16
continues
17
the
organization
18
the
policy?
20
aware
21
determine
is
other
what
your
basically
words—
are
they
question
that
the
implemented, and
question
is w h e t h e r ,
it a p p e a r s
continuing
to
be
As
19
part
know
that
there
there
the
to
with,
of a n y
I understand
whether
of
effort
complied
of w h e t h e r
is?
as
No.
policy
it
1,
it h a s
is
it
from
has
the
is
is
inquiry
determine
or w h e t h e r
breach
your
such
in
is
whether
people
it
within
compliance
testimony,
a
whether
with
you are
continued
effort
not
to
compliance?
Well—
MR.
23
Senate
In
representation
that
is
second
there
25
it.
provided.
The
ing
another
m e —
our
Is
question
15
rephrase
you with
haven't.
good
14
24
asking
this?
discussing?
to answer
asking
conveyed, which
A
are
Yes.
8
22
want
you
me
with
Q
7
that we
submission
Banking
made
SOUTTER:
by
May
Textron
Subcommittee,
to
I refer
the
generally
to a
Staff
of
pre-hearthe
entitled,
"Respon
642
558
16/16
1
2
to
Questions
With
Posed
Respect
to
One
3
4
be
5
set
6
December
by
the
of
the
of
company
enclosures
is a
27,
1976
to
and
Department
Officers
that
9
audit.
And
distribution
10
made
the
principal
11
divisions,
to
do
12
police
both
And
13
ment
14
Mr.
15
that's
16
Mr.
that
Sylvester
the
of
think
we
ought
But, have
19
A
Oh,
yes.
21
Q
And
have
23
24
25
have
of
to
we
have
from M r . Miller
the
datei
Corporate
he
suggested
somewhat
the
of a
was
self
to
company and
form
memorandum.
ever
seen
that
DOHERTY:
to m a r k
20
22
that
be
of
thi
abroad.
thing
MR.
I
supposed
one
of
And
that
I will
like
stateask
that, and
you are
talking
Yes,
is.
if
of,
Doherty?
17
18
is
standards
questionnaire
officers
the
if h e ' s
kind
of a
Committee
Conduct.'"
in w h i c h
and
statement,
to
of
Presidents,
Heads,
and
Senate
which
the
memorandum
ourselves
here
is a t t a c h e d
of
Division
7
the
'Standards
some
8
we
S t a f f "of
Textron's
representative
in
the
you
you
it
that
in j u s t
seen
that
been
asked
a
That's
helpful.
moment.
questionnaire,
sir?
to a n s w e r
a
such
quest ionna ire ?
A
in e a c h
Well,
of a t
I have—
least
MR.
two
I have
signed
successive
SOUTTER:
this
statement
years.
Go ahead
and
put
it
in,
if
643
558
i
you
want
to.
2
(Short
3
4
pause.)
MR.
this
entire
DOHERTY:
document
as
5
MR.
FREED:
6
MR.
DOHERTY:
7
January
8
Questions
9
Banking, Housing
10
17,
Textron's
And
the
and
Urban
of
indicates
that
ought
is
mark
that?
under
cover
"Response
Senate
Affairs
to
of
to
Committee
with
a
on
Respect
to
Conduct."
that
deal with
there
this
are
approximate!
subject.
(The d o c u m e n t r e f e r r e d to was
marked "Exhibit N o . 77" for
i d e n t if i c a t i o n .)
14
15
Q
And
it's
16
you have
seen
17
that
contained
18
19
are
22
and
your
have
in E x h i b i t
Yes,
it
Q
With
respect
dealing
A
That
Q
Are
No.
that
of
the
forms
with
the
company'
that
correct?
77?
its
to
compliance
foreign
sales;
is
correct.
there
23
procedures,
24
are
in e x i s t e n c e , a r e
25
yet
been
sir, with
covered?
Sylvester,
certain
is.
with
is
testimony, Mr.
executed
A
policy
21
It's
we
77.
one
entitled
ot
13
20
Which
document
it
six attachments
No.
Staff
Standards
11
12
1978
By the
I think
Exhibit
any
other
respect
being
current
to
this
policies
subject
implemented,
that
or
area
that
have
not
644
558
1
A
2
Q
3
have
been
4
cedures
5
in
I can't
think
Are
of
any
described
different
1970,
'71,
A
No.
7
Q
Well,
8
current
9
in t h e
policy
agency
10
illegal
11
officia1?
12
13
A
he
signs
14
15
16
or
25
which
procedures
policies
were
in
which
and
pro-
existence
'73?
for
clarity's
to
obtain
a
that
is
statement
the
conduct
sake,
agency
through
embodied
I gather
from
will not
payments
in
your
the
ths
agent
engage
to a
contract
and
it.
Q
Was
that
policy
in e x i s t e n c e
several
A
years
Sure.
clarify
the
MR.
GALERSTEIN:
MR.
DOHERTY:
question,
MR.
That
I'd
I
interject?
Certainly,
glad
GALERSTEIN:
statement
until Mr. Miller's
be
May
was
to
I think
not within
letter, and
if
have
I forget
you
can
you.
I can
the
the
clarify.
agreement
precise
da t e .
If
I may
MR.
take
the
DOHERTY:
liberty
Go
to
ahead.
ih
foreig
ago?
21
24
those
language
20
23
from
improper
18
22
and
current
contract
The
policies
being
just
is
17
19
the
any.
as
'72,
6
of
interpret—
645
558
1
MR.
2
Sylvester
3
as
4
include
5
not
6
years, I forget
7
BY M R .
8
Q
9
it
is
best we
could.
the
have
this
within
to
sign
I believe
not
the
prior
on a
those
formal
contract
to the
basis
and we
last
Mr.
policies
did
two
or
thr«
DOHERTY
Well,
11
to a g r e e
that
12
improper
conduct
19 74
let me
A
No.
Q
So
A
Q
18
recall
years
19
policies
20
ago?
21
MR.
it w o u l d
have
been
23
they not
deal
in
24
this
25
in
1971
representatives
in a n y
illegal
securing
then
a
or
contract
between
said.
other
differences
between
the
to what
they were
SOUrTER:
back
for
that
practices
Speaking
for
expected, as a matter
improper
goes
We n o w a s k
with
Was
now
so.
any
opposed
22
probably
question:
ago?
there
as
engage
is a d i f f e r e n c e
that you know
now
direct
B e l l or T e x t r o n
in c o n n e c t i o n
that
Are
or
of
not
Yeah, I guess
17
the
its m a n u f a c t u r e r ' s
they would
14
several
ask
practice
to a s k
13
did
—what
followed
which.
the p o l i c y and
16
that we
But we
form
through
and
is
statement
10
15
GALERSTEIN:
saying
or q u e s t i o n a b l e
several
confirmed
can
years
Textron,
of p o l i c y
that
practices
to w h a t M r . G a l e r s t e i n
it t o b e
you
and
in
has
and
just
writing,,
646
558
1
The
2
would
clear
expectation
have
been
3
4
is a m a t t e r
MR.
GALERSTEIN:
trouble,
if
5
dures."
And
6
has
7
procedure
to
incorporate
within
8
substance
of
the M i l l e r
letter.
always
I may, with
insofar
been
11
improper
12
whether
13
such
unwritten
a
we
I was
words
at
policy.
MR.
that Bell had
the
as
the
9
10
of
Bell are
It h a s
DOHERTY:
not
Well,
the
the
suggesting
make
payments, but
I am
asking
direct
question
of
any
procedure
the
to a s k
I
answer
procedure
to a s k
17
Q
Is
18
A
Correct.
19
Q
You
policy
that
which
he
22
agent
anymore
23
a fter .
in
And
to
you
to
the
in
not
to
make
understand.
is, no,
there
to.
earlier,
you
by
message
order
you
The
them
testified
conveyed
24
not
correct?
conveyed
21
them
payments?
GALERSTEIN:
this
been
should
there was
conveyed
always
I'm not
DOHERTY:
25
concerned,
its a g e n t s
MR.
to a
proce-
that
MR.
20
and
little
policy
kinds
no
a
the a g r e e m e n t s
15
was
having
"policy
14
16
policy
there.
to
General
that
secure
you
the
testified
that
late
or
1971
sir, with
Toufanian
didn't
contract
that
early
respect
message
1972.
in
need
an
you
were
was
647
558
1
2
Can
on
that
(Short
4
Q
If
5
I ask
6
this
7
received
you a
at
8
have
11
intend
12
A
to
15
agent, but
16
was
23
24
25
didn't
about
General
is
did
he
say
simply
to
that
the
with
date
that,
substance?
Toufanian
you
that
It w a s
the
latter0
from
the
understanding
I gather
a
can
Was
in w h i c h
you
Bell, were
that
not
didn't
you didn't
come
away
that
should
have
an
you
your
that
going
And
an a g e n t ,
relationship
should
understanding
if y o u
to
not
did
foot
have
the
that
an
bill
he
agent,
for
the
correct?
Yes, yes.
need
you
d i d , he
meeting,
it w a s
message
that
if y o u
agent?
being
A
with
the
conveying
19
placed
difficulty
for
So
the
agent;
having
questions
or
pay
Q
"you,"
you
information?
And
with
18
how
Yes.
14
22
few
an agent
13
21
you are
this
Q
10
us
pause.)
a meeting
A
9
20
tell
meeting?
3
17
you
in a n y
of
that
he
made
there
the
point
would
not
the
dealings
with
words,
it w o u l d
be
that
be an
his
we
agency
organiza-
tion.
Q
The agent
A
In
other
wouldn't
That's
be
the
correct.
middleman?
direct
dealing.
648
558
1
Q
2
recall
Did
the
this
specific
3
in r e l a t i o n s h i p
4
take
5
in A p r i l
place
to
prior
of
6
A
came
9
Toufanian
a
point
almost
think
who
had
his
organization
13
words
14
that
15
to
16
and
talked
20
24
25
letter
sure
got
an
that
we were
I think
the
obsession
about
who
same
had
an
music.
agent
And
at
almost
take
great
pride
joy
agent's
and
compensation
I really
happened,
can't
1972
in
to
the
or
to
same
seemed
eliminated
on a
I
occasion
just
procurement
light
him
sell
every
He
And
agents
function.
specific
time
but
Well, Mr. Atkins
of
in h a v i n g
from his
before:
to
getting
h i m , he w o u l d —
first
connection
came
with
to
the
Iran,
I
believ
demonstration?
No.
MR.
that
intent
agents.
trying
was
talk with
A
of
this
listen
would
Q
meeting
talking—there
I said
was
this
it
pause.)
who
in A u g u s t
day
the
the
a problem. Everyone
to
can't
recall
Did
would
22
23
of
you
can
we
when
21
events.
issuance
who
So,
19
you
to e v e r y o n e
17
18
the
pretty
11
12
certain
in t i m e w h e n —
10
he
place—if
1972?
I am
8
take
date, perhaps
to
(Short
7
meeting
he
first
SOUTTER:
came
in
I believe
November
MR.
GALERSTEIN:
MR.
DOHERTY:
All
of
he
said
'71.
I believe
right.
so.
yester-
649
558
i
2
MR.
end
of
the
demonstration
MR.
3
Q
4
5
in
shortly
7
indicated
8
product"
connection
with
after
that
9
stood
11
its a g e n t
12
included
that
he
the
came
to
that—
the
'72?
corrected
Iran
on
in A u g u s t
of
I understand
of
at
your
this
197
product
it, the
"Yes,
that
of
Shah
was
the
prior
to
be
the
time
that
compensation
footed
price
that
by
of
Bell and
the
you
that
under-
Bell made
would
not
to
be
contract?
N o w —
14
(Short
15
pause.)
Toufanian
16
disallow
17
the
18
"Your
19
for
an agent's
game.
has
served
years.
20
everything
21
and
advised
22
you
don't
23
is n e c e s s a r y
24
then
25
in
take
didn't—didn't
compensation
I said, before
agent
many
the
I stand
come
way
he
in A u g u s t
demonstration
anything, any
into
that
wanted.
it
would
A
13
did
direct
Was
10
also,
w h i c h , as
in a
And
DOHERTY:
M r , Atkins
6
SOUTTER:
He's
properly
by him.
need
him
civil
you well.
But w e ' v e
compensate
out
of m y
sector
is
He's
hard
correctly,
him anymore.
to
now
So
him
and
he
would
late
say
to
in
us,
represented
you've
having
you need
a
to
do
Continued
to y o u , w h a t e v e r
guided
point
he's
you
done
been
reached
:or w h a t
:
business.
up
that
pretty
t o d a y , he w o u l d
worked
and
say
until
where
whatever
done
and
performance
you
want
to
650
558
1
do."
2
So
3
exercise
4
after
5
were
6
to b e
and
then
that when
going
to
after
that
two-step
that—it
it b e c a m e
take a
It was
8
"And
9
"I w i l l not
also
at no
big
that
cost
have
as
was
after
that—'it
abundantly
clear
that
contract;
late
in
to m e . "
a
cost
amendment
that
we
it w a s
going
transaction.
the
game
There
to
was
the
when he
will
be,
contract
said,
you
an
know,
agent's
commiss ion."
11
And
12
caused
13
international
14
a
15
from
it
to
paragraph
16
he
be
Q
18
meetings
on
Toufanian
19
described
he
he
A
Q
Yes.
22
A
That
23
Q
Didn't
that
What
if y o u
going
kept
to
to
tie
as a
arms
it
up, he
change
to
specifically
message
did
conveying
"You
this
don't
later
our
regulations, which
excluded
government-to-government
was
said,
21
wasn't
that
discussed
20
25
and
in t h e r e
when
just
incorporated
Well, what
General
24
later,
traffic
commissions
17
did
a government-to-government
7
10
then we
you
to
think
you
in
matter
need
that
Iran
sales.
that
the
when
put
initial
as
you've
agent
any
saying
to
more?
message?
was
it.
you
the
be
feel
agent
paying
that
he w a s
after
that
for w h a t
time
that
that
agent
you
he
was
651
558
1
costing
2
A
3
you?
Oh, yeah.
That was
So
it y o u r
Q
that
5
this
6
fanian was
7
I may allow
you to
8
compensation
he's
9
earned
up
but
11
anything
12
cost, not
basically
he
charge
date;
Would
15
Q
— b e
16
A
You
17
Q
Would
your
that
rid
of
my
fair
I'm
at
say,
the
General
agent
government,
compensation
giving
you
of h i m n o w ,
time
time
Tou-
if y o u h a d a n
against
this
the Government
You
that
that
earns after
A
he's
the
message
because
is g o i n g
to be
your
Iran's.
that—
could
a
interpret
fair
could
w h a t he
interpretation
take
that be
that
your
said.
of w h a t he
said?
interpretation.
understanding?
Is
that
interpretation?
A
Well,
20
Q
Did
21
negotiation
22
A
23
on.
24
talked
conveyed
saying
you might as w e l l get
14
23-553 O - 78 - 42
was
understanding
e a r n e d , the
to t h i s
13
19
is
initial message
10
25
I would
sure.
4
18
implicit,
sure.
you have
Yeah,
about
No.
involvement.
I didn't write
Q
some
of A m e n d m e n t s
the
involvement,
1, 2 and
sir,
3 to
in
the
I knew what was
language, but
the
contrac
going
certainly
we
it.
was the
initial
message
that we've
just
been
652
558
1
discussing
2
that
3
the
4
5
was
you
some
demonstration
of
the
aircraft
a
8
a week
9
A
that
of
16
Had
prior
1971
Would
I met
you
have
discussion
Q
Anyone
to
in A u g u s t
of
talked
Toufanian
to
1972?
of an
to
the
to
it.
estimate, was
it
demonstrations,
time
It w a s
about
General
'73
with
Toufanian
a
number
demonstration?
him
any
number
of
times
any
that
think
else
record
you've
of w h e n
described
this
took
place?
so.
attend
that
particular
meeting
you?
A
I don't
21
remember.
I usually
22
would,
23
have, I would
a
August
18
depending
to have
with
prior
before?
put
that
I don't
2 5
prior
to
A
24
of months
that
onwards.
particular
20
terms
with
Oh, yes,
Q
with
in
you met
17
19
had
say
demonstrations.
months
year
period
you
time.
A
15
the
We
the
say
I couldn't
times
from
you
several
before,
Q
13
14
of
were—
before
Would
period
11
12
W e l l , we
subject
Q
7
10
Toufanian, would
to
that
6
General
conveyed
A
on
from
him
in
by
on
take
town
took—well,
the
discussions
someone
for
myself.
the
I say
with
purpose.
"I
that
usually."
I
I expected
to
me, whoever
And
I met
I
happened
sometimes
653
558
Q
i
Now,
2
Amendment
3
time
No.
around
5
was
6
time
made
7
message
think
August
Is
4
I
1 was
that
you
as
no
I don't
Q
Do
12
A
No,
13
Q
—'having
10
11
14
the
some
that Amendment
of A p r i l
1 in
issuance
longer
needed
order
to
of
General
an
agent?
No.
1
put
i t in a
Toufanian's
you
think
so.
recall
that
as
being
a
consideration
o r —
to
that
I
A
No,
16
Q
Could
17
No.
18
reached;
don't.
I
what
A
you
the
Well,
20
quantity
21
to be
22
quantity
any
discussions
with
respect
don't.
1 compensation
19
had
point?
15
paid
24
had.
You
I think
on a — u n d e r
25
might
have
set
the—on
it w a s
viewed
and
a
half
as
Amendment
a
a
of
per
No.
modified
giant
step
contractual
cent
was
know?
1 recites
And
what
Amendment
if y o u
compensation
against
the
the
were,
contemplated.
level
aircraft
know,
two
us, sir, how
considerations
a reasonable
of
tell
of
of a i r c r a f t
23
that
until
pause.)
A
9
established
executed
1972.
that
to the
(Short
8
of
it p o s s i b l e
prior
been
actually
16th
effective
period
it's
not
we
I guess
for
that
might
from
exposure.
seemed
kind
have
agreement
down
a
it
that
what
we
you
o
654
558
Q
1
The
2
on at
3
pensation
least
a
A
Uh
5
Q
And
Amendment
7
two
and
be
negotiable;
No.
then
1 was
a half
per
executed
cent
(The
9
Q
You'll have
A
Yes.
12
sale,
that
which
that
the
com-
right?
nodded
his
to a n s w e r
August
of
provided
commission;
witness
—the
A
14
Q
record
Yes,
I believe
testimony
won't
it w a s
is
1972,
for
that
a
correct?
headB)
s o —
Atkins'
16
view,
you
can
express
it—that
17
Amendment
was
entered
into
18
as
the
program
was
19
300
though
to
20
500
22
23
of
24
side
yesterday—and
that
A
Yeah.
Q
And
somewhere
to
a nod
if
you
around
in A u g u s t
somewhere
your
through
have
the
of
of
a
differen
time
1972,
Mr.
that
it
looked
in the v i c i n i t y
of
helicopters.
Is
21
reflect
established
15
simply
Q
head „
13
25
is
in a p p r o x i m a t e l y
A
11
provided
huh.
8
10
contract
government-to-government
would
4
6
original
your
(The
that
it
witness
would
between
approximately
Is
basic
your
six
understanding?
nodded
translate
or
seven
ten million
testimony
his
into
million
head.)
a
commission
on
the
on
the
high
that
you
viewed
low
side.
that
655
558
1
as
2
rendered
a
fair
and
by Air
A
3
equitable
Taxi and
Yeah,
it
compensation
fairly
yes.
it's
If
you
take
equip
5
avionics,
electronics
and
6
apply
commissions
that are
7
standard
8
12 p e r
9
carry
agreement,
cent,
four
10
Accessories
11
So
the
12
in
that
the
the
10 p e r
would
17
down
here,
18
what
he
19
he
20
five,
21
cent
start
Bell
23
agent
24
some
sold
average
on
get
cent
are
a
suit
it,
out
to
basic
20
of
and
in
the
something
aircraft
by
and
like
will
agreement.
per
cent
accessories
thing.
are
computed
had
its
I am heading
he w o u l d
one
follow
compensation
up
to
by
from
here
is
agent
that.
but he's
that
You
going
get
on a—-if
one
or
two by
might
to
he
that
start
start
had
two
with
made
or
a—if
five
by
me.
isn't
it
your
contract, not
really
support
overall
level.
them
But
sold
the
negotiating
if y o u
A
per
installed
(indicating)
thinks
Q
22
aircraft
spelled
The
parts
brings
Where
had
put an
usually
six
spare
That
16
and
to
an
accessories
cent.
services
manner.
15
25
five
applied,
13
14
you
10 p e r
to
or
the
contract?
4
the
modestly
for
only
testimony
the
provided
agent,
entree
that
essentially
that
the
and
thereafter
services?
Well, now,
I —
Mr.
Doherty,
I couldn't
put
656
558
1
a
value
2
the
on
his
sale.
I can't
3
it w i t h o u t
4
because
him.
of
one
7
at
that
in
kicked
a very
our
this
serious
on
10
to m a k e
11
thing.
12
Q
13
was
14
into
something
the
your
the
16
would
17
of
have
the
Q
18
tell
is
we
you
thing
more
like
that we
wouldn't
that we
that
the
Well,
let
off—
time, how
that
had
Between
do
it
that
was
No.
I was
put
worth
a
the
been
commission
a
finite
that
pretty
1 was
to
us
modest
entered
could
be
into
folded
contract?
me
say
the
that
your
contract
it w a s
words,
gone
my view
into
the
that
it
cost
direct.
Bell?
A
And
the
Government
of
Iran?
21
A
And
the
Government
of
Iran.
22
Q
Even
A
In
make
have
you
It was
Q
25
made
him.
19
24
did
We would
20
23
made
have
view—and
without
that?
folded, as
contract
my
time Amendment
of
been
view—in
Certainly,
the
view
cost
A
15
sale.
At
it
that
disadvantage
N o w , one
8
value
you
I can't
But,
6
tell
I know
him.
5
9
services. All
Between—yeah.
in
light
of w h a t
General
Toufanian
had
said?
saying.
light
N o w , he
of w h a t
hadn't
yet
General
come
out
Toufanian
with
his
was
no
then
elemen
657
558
i
of
cost
position.
2
Now,
3
Would
4
by
that
commission
your
have
under
6
with
those
7
a g e n t , and
8
Army Aviation
the
circumstances,
U.
S. Government
they would
Q
9
the
Systems
S o , on a n
commission
to
11
A
That's
12
Q
What
13
No.
14
tributed
15
two
16
and
a
half
A
17
what
18
magnitude
you
19
believe,
per
No.
cent
driving
thing.
assessment.
S. Government;
negotiate
for
have
2 that
know
in
to
at,
you
the
one
an
the
to
justif
correct
you
finite—
We
per
program.
that
time. And
I think we
were
22
time
accepting
in
minds
23
I haven't
24
commiss ion.
25
Q
been
the
Between
our
pretty
own
which
numbers, a
Amendment
It's
No.
well
from
sized
having
a , as
to
by
an
probably
order
of
2 represented,
a better
six
confee
cent?
know.
had
Amendment
provided-for
still bothered
20
because
is tie t
between
21
run
contrac
"They,"
intervened
And Amendment
It h a d
know,
compensation
sale, you would
U.
reduction
a more
I don't
the
would, we would
to
an
I think we were
are
into
way:
Command.
factors
the
we
in a n o t h e r
correct.
1 and Amendment
to
"folded
sale,
as
make
FMS
the
question
been
government-to-government
5
10
to a n s w e r
view
and
of
you
ten
1 in A u g u s t
put
by
difficul
it,
million
and
the
scoped
a pretty
I
and
dollar
Amendment
658
558
16/32
j
2 which
I believe
was
2
intervening
factors?
3
with
policy
4
would
5
had
6
government-to
7
can
a
sustain
there
of
A
going
the
been
think
8
9
firm
a
be
10
it
11
it, but
12
accepted,
I
a
has
Q
18
A
Yeah.
19
Q
I am
you
21
mind
22
from
Governme
that
or
non-direct,
other
factors
that
we
it
you
in
late
offer
knew
transaction,
little
was
testified
to
WITNESS:
Yeah.
hazy
or
on
presented
November,,
That's
was
and
I —
the
general
time
before.
DOHERTY
Well,
know
may
I am
just
of a n y
have
two and
not
asking
asking
a
A
No,
24
Q
Do
half
I
you
if
intervening
contributed
23
respect
like
I am a
of
SOUTTER:
been
17
the
other
out
to go
I guess
waye
letter
negotiated
BY M R .
that
the
16
25
October,
THE
Do
Any
come
to w h e t h e r
commission
any
intervened?
looked
15
20
of a
there
Toufanian
government-to-government
think
that
respect
determination
MR.
frame
General
government?
13
14
cost
that
certainly
Did
with
W e l l , by
to
in O c t o b e r , w e r e
per
cent
can't—
know
to a c c e p t i n g
a
to
for
you
one
Air
per
speculation.
that's
that
reduction
one
I really
what
know,
factors
the
to
your
in
in
per
cent?
can't
think
Taxi's
cent
view
fee as
all.
your
the
fee
of
any.
was
with
opposed
to
659
558
16/33
1
to
4
of
9
10
11
14
15
16
17
18
19
I —
disappointment,
per
I guess
but
You were
not
so
A
T h a t 's
Q
Who
A
I don't
Q
Who was
A
Well,
it m u s t
have
the
one
been
Who
A
Atkins.
Q
In
A
(The witness
Q
Do
you
know
of
the
one
million
was
Rudning
these
dollar
have
Rudning
Q
production
one
articulately
directly;
is
that
what
per
A
directly?
been—
a n d —
Rudning
Rudning
his
and
it,
Atkins.
to?
Atkins?
head
factors
cent
signed
fee,
up a n d
down.)
contributed
the
final
to
the
2.9
fee?
Sylvester,
that
shed
fee?
reporting
nods
Mr.
information
cent
negotiations,
Q
any way
per
negotiating
it m u s t
21
very
was
know.
20
25
reaction
correct.
set
I
24
their
negotiating
No,
23
fee?
it w a s n ' t
A
22
cent
correct?
8
13
Well,
Q
7
12
a half
expressed.
5
6
two and
A
2
3
the
any
don't.
we
have
light
Nothing
on
comes
do
you have
any
not
elicited
that
this
you
feel
in
matter?
to m i n d , M r .
MR. MARINACCIO:
other
Thank
Doherty.
you
very
kindly
660
558
1
for
appearing
here
2
3
today,
MR.
ask
one
question
of
SOUTTER:
the
Mr. Marinaccio, may
witness—
4
MR. MARINACCIO:
5
MR.
6
of
some
of
the
7
SOUTTER:
earlier
Have
you any
of
the
Government
9
Helicopters
was
made
Bell
of
on a n y
to
of
the
thrust
today.
believe
Iran
basis
may.
that
to acquire
other
than
the
Bell
the
merit
not,
huh
products?
11
THE
WITNESS:
13
MR.
SOUTTER:
14
MR. MARINACCIO:
12
you
—because
reason
decision
of
Sure,
questioning
8
10
I
Oh, absolutely
uh.
Thank
you.
Thank
you very
kindly.
15
16
MR.
17
the
18
to
19
the
witness
testify
truth,
the
E.
t r u t h , the
testified
20
upon
GALLAGHER,
JR.,
named, being
whole
his
first
truth
and
oath as
duly
sworn
nothing
but
follows:
EXAMINATION
21
BY M R .
22
Q
MARINACCIO
Mr.
23
the
24
concerning
25
Miller
JOHN
hereinbefore
proceeding
to
the
be
Gallagher,
this
ordered
the
by
confirmation
a member
of
the
is
the
Senate
hearing
Board
continuation
Banking
of
of
G.
of
Committee
William
Governors
of
the
661
558
i
Federal
Reserve
2
The
3
investigation
4
2.9
5
sale
6
of
million
Iran
Committee
under
to
the
489
Taxi
in
1973,
the
been
ordered
to
the
to
1974
the
and
to
Staff
with
the
Government
1975.
authorized
inquiry and
a
p a y m e n t of
connection
helicopters
period
conduct
My
the
by
the
place
witnesses
name
is M a r i n a c c i o .
I am
a
lawyer
for
Committee.
12
This
staff
member
14
is M r .
of
the
This
Minority
17
the
s ion.
He's
a
professional
Committee.
is
This
18
Freed.
John
Collins.
He's
counsel
to
the
Committee.
16
Committee
19
We
is M r .
from
the
Doherty.
He's
Securities
appreciate
on
and
detail
Exchange
your voluntary
to
Commis-
appearance
here
today.
21
Nevertheless,
22
be
23
you
24
to
25
Senate
to Air
Committee
relating
oath.
10
20
facts
W e , here, have
9
15
Banking
the
dollars
during
8
13
Senate
into
of a p p r o x i m a t e l y
7
11
System.
putting
you
give will
perjury
under
be
oath
subject
of w i t n e s s
proceedings
I must
and
and
to
that
all
applicable
any
tell
laws
of
to
you
that
I
any
testimony
the
laws
United
relating
to
will
that
relating
States
false
662
558
1
statements
thereto.
I must
2
testimony
may
4
by
S. Government,
U.
And,
5
6
represented
7
resented
9
and
counsel.
this
Raise
10
11
tell
the
12
truth,
truth,
so h e l p
the
your
the
you
possibly
Soutter
whole
hand.
truth
14
17
WITNESS:
Q
Would
you
state
Edgar
John
19
Q
How
20
Helicopter ?
21
A
Eight
and
22
Q
Going
back
23
A
1969.
be
fact,
rep-
Galerstein.
you
to
rise
now
Do
and
you
promise
nothing
but
to
the
I
do.
Thank
you very
much.
your
full name
for
the
record ?
A
25
in
to
seated.
18
24
used.
God?
THE
16
be
oath.
right
MR. MARINACCIO:
Be
like
your
proceeding
and M r .
I would
of
entitled
you are,
13
15
that any
you are
And
point,
I'll administer
you
enforcement
may
counsel, Mr.
At
8
in a n
therefore,
by
by
used
advise
3
the
be
also
Q
employed
in
long
Gallagher,
have
1969.
And
from
1969
you
half
been
Jr.
employed
by
Bell
years.
to a p p r o x i m a t e l y
what
until
capacities
now?
when,
have
1967?
you
been
663
558
16/37
A
1
As
an
international
sales
2
assistant
3
Department, area
manager,
program
4
project, and
director
of
5
copter
6
Q
7
manager
now
in
the
manager
operations
And
in
to M r .
those
positions
Marketing
for
for
the
Bell
Iran
Heli-
have
you
basically
Sylvester?
A
I reported
10
Q
And
then
who
11
A
Mr.
John
Finn, and
Q
And
during
9
International
and
International.
reported
8
area
representative
to M r .
Sylvester
until
February
of
1973.
12
13
have
responsibility
14
particularly
A
15
Primarily
16
those
for
focused
did
on
you
begin
now
the
Collins
18
Mr.
to
conduct
speaking,
this
in
Iranian
of
to?
Robert
time,
Iran?
did
Were
Williami
you
you
situation?
yes.
MR. MARINACCIO:
17
General
periods
projects
reporting
inquiry
I am
for
going
the
to
ask
record.
Collins?
19
20
EXAMINATION
21
BY M R .
22
Q
COLLINS
Thank
23
Mr.
24
record
25
A
what
you, Mr.
Gallagher,
Marinacchio.
could
Bell Helicopter
Well,
you
explain
International
Bell Helicopter
for
the
is?
International
was
Mr.
664
558
16/38
developed
to
2
mechanics
and
the
establishment
of a
3
in
of
the
hardware
of 4 8 9
4
the
support
provide
Government
of
the
Q
That
was
6
A
Yes,
sir.
7
Q
So
8
established
A
1973,
that would
Q
February?
10
A
Uh
11
Q
Prior
12
A
(The w i t n e s s
Q
And
be
after
after
to
helicopters
to
the
sale?
1973?
as
that, you worked
nodded
program
his
manager
A
That's
for
head
for
Bell
Helicopte±?
up a n d
them;
is
down.)
that
correct.
MR. MARINACCIO:
Mr.
Excuse
me,
please,
Gallagher.
18
THE
19
MR. MARINACCIO:
flect
a nod
of
your
21
22
BY M R .
23
Q
24
respect
25
What
system
huh.
16
20
and
logistics
correct ?
15
17
pilots
February.
9
14
sale
of
Iran.
5
13
training
WITNESS:
head,
Yes?
The
so a n s w e r
record
"Yes"
THE
WITNESS:
Okay, I
did
you
your
won't
or
re-
"No."
understand.
COLLINS
When
to
year
selling
was
that?
begin
Bell Helicopter
activities
products
in
with
Iran?
665
587
A
1
Q
2
3
1969.
the
And
agent
of
you
Bell
4
A
I was
5
Q
And
6
trying
to
8
response
9
from
11
they
dealing
what
the
Taxi
What
of
13
Q
Which
14
A
The
of
would
would
206,
Helicopters?
16
Helicopters.
17
Q
Spare
parts?
A
Spare
parts
aircraft,
20
Q
21
report ?
yes.
you making
or
helicopter
that
we
sales
may
have
in
received
would
it be?
Would
And
the
whole
helicopter
line.
212.
as
associated
with
the
sale
of
yes.
in
those
activities,
22
A
I would
report
23
Q
And
did
you
spend
Well, a
lot
of
Taxi,
be?
205,
Q
25
were
products
range
A
to
Air
representative.
15
24
Taxi,
sales
various
types
They
19
whom?
be h e l i c o p t e r s ?
A
the
with
Air
requirements
12
18
with
type
Generally
to
our Air
Q
10
dealing
make?
A
7
were
Helicopter?
to M r .
a
to w h o m
would
you
Sylvester.
lot
of
time
in
Iran
prior
1971?
A
time
I
spent—
I've
taken
manj
666
558
1
trips—I'd
say
maybe
five
2
Q
Since
when?
3
A
Prior
to
4
Q
And
5
Sylvester
how
when
would
Via
7
Q
Telex, And
Air
anything
10
to
Taxi
or
telex
else
for
A
12
report
13
as
when
you
a matter
of
came
15
A
Generally
short
17
18
you
19
recalled
making
with
to
that.
Mr.
Iran?
contacts
reference
down
when
there
any
you
with
notes
came
or
back
Worth?
practice
from a
into
most
it w a s
the
to w r i t e
trip, and
central
a
trip
that
goes
files.
trips, unless
just
a verbal
you went
reports
to
it w a s
very
report.
Iran
generally
since
for
1969,
each
have
trip?
Ye s , s i r .
In
come
in
your
A
23
latter
24
Q
With
25
A
In
I met
part
sales
contact
22
like
trip?
Well, when
Q
you
each
then
A
20
21
and
Q
trip
you write
back
record
For
a
making
standard
Q
16
when
in F o r t
14
communicate
take
future
It w a s
something
communications,
others, would
Bell Helicopter
11
you
you would
A
9
year,
'71.
6
8
a
of
with
General
activities
a
until
1971,
General Khatami at
Khatami
in
197—in
did
all?
the
'71.
respect
the
to
what?
presentation
of
the
sales
film
and
667
589
1
br ief ing o f
2
Q
3
the
hardware,,
Now
s a l e of
was
this—
the 489
A
Yes,
5
Q
Was
6
A
Y e s , s ir e
7
Q
Did
you
8
A
No,
sir,
part
Q
In
No,
sir.
11
Q
And
on
you
any
that
A
Yes,
Q
On
15
A
Yes.
Q
Now,
you
18
A
Yes,
sir.
19
Q
Were
p r e s ident of
21
respect
other
sales
trip,
there was
that
sales
a
you write
report
send
that
you
ever
in
him?
a
report,
written.
report
Textron,
to a n y
of
contact
in a n y
your
of
dealings
A
No , s i r .
Q
Who would
you
Primarily
with M r .
23-553 O - 78 - 43
with
presentation?
23
dealings
effort?
did
22
25
program?
to
Central
with
G. W.
Records
here ?
20
24
of
recall?
14
17
this
any
other
13
16
of
have
A
do
in a n t i c i p a t i o n
sir.
it
10
12
this
helicopters?
4
9
Was
dealings,
in
deal with
or
Miller,
with
Iran?
here
at
Bell
Heli-
copter?
A
Sylvester,
and
as
you
668
558
1
were
required
2
administrative
3
or
films
4
5
A
Yes,
the
8
sales
Atkins.
9
sir.
effort, we
Q
With
10
agent
for
11
after
a
14
brief
as
A
15
period
Q
would
have
you
agent
brief
the
him
reports
on a n y
informed
Bell
of
didn't
you were
arrive
never
22
Government
because
23
A
N o,
24
Q
What
of
in
were
during
Mr.
the
1968,
not.
to w h y
they
were
about
why
they
rehired?
that
rehired
brief
it w a s
as
anything
21
time
Helicopter?
heard
You
to
they
never
been
Not
reputation
which
You
Q
was
during
of
they became
I believe
not.
18
you
Taxi,
I was
sir.
20
required
sir.
No,
realize
be
periods
No,
A
you
to A i r
ever
for
17
2 5
various
together
certain
would
respect
Were
rehired
At
Bell Helicopter,
12
19
gathering
M r . Atkins, would
7
16
people,
the
trips?
6
13
presentations,
o r —
Q
your
to build
at
heard
directly
Bell
that
involved.
until
1969.
the reason
they
had
some
your
recollection
I
they
influence
with
were
the
Iran?
s ir.
was
of A i r
Taxi as
a
sales
of
agent?
the
general
669
558
A
i
2
very
As
fine
reputation
Q
3
had
4
What
some
5
they
just
6
point
in
type
knowledge
9
with
of
11
the
12
copters.
as
a
their
sales
of
the
the
to
selections
to
of a n
Q
So
A
Yeah.
15
Q
Did
17
the
ownership
Air
their
did
Was
were—had
it
that
officials?
they
must
say
a
have
a
the
Were
strong
of A i r
Taxi?
No.
Who
20
A
Well,
I don't
did
Mr. Zanganeh
you
two
thoroug
the
countr
procedure,
c a s e , the
be
heli-
it.
Mr.
Q
And
A
I understood
24
Q
In A i r
Taxi.
25
A
He
the
have
your
know who
23
was
in
a
understanding
its
in o u r
deal with
22
what
thorough
or
was
people
and
existed
through
would
hear
What
Q
a
point was
combination?
Taxi?
A
that
go
those
you ever
19
strong
aircraft,
it w a s
18
or
helicopters;
13
owned
point?
government
requirements
I would
who
they
representative.
strong
people
government
16
is,
mind?
14
were
recollection
entree
super
respect
10
21
my
In m y m i n d ,
8
how
was
of
your
A
7
far as
any
understanding
owns
in A i r
Iranzad.
him—
president
of
it.
of
Taxi?
with
was Mr. Zanganeh's
of
them.
in A i r
I dealt
knowledge
role?
Taxi
670
558
i
Q
Mr.
2
A
Was
his
3
Q
Was
it
4
ownership
5
to
ask
Iranzad?
of A i r
them who
assistant.
your
role
Taxi?
Did
owned
6
A
No,
sir,
7
Q
You
saw
8
A
No,
s ir.
9
Q
Do
10
is w i t h
11
sales
12
13
14
your
A
No,
Q
if
that
18
the
Would
that's
in
effort.
A
19
a
and
22
were
23
proposals;
I
the
feel an
obligation
that?
Bell Helicopter's
ownership
of
one
of
policy
their
you
in
don't,
give
the
the
Can
you
us a
sale
brief
of
starting
fact, when
you
bring
actually,
glorified"gopher".
made
did
us
the
chronology
489
point
of
helicopters?
would
become
from
time?
I guess
I brought
presentations
required
Q
of
for
what
the
guess
Well,
21
25
ever
to
be
1971,
involved
that
point
in
up
to
consummation?
20
24
need
know
sir,
involvement
I
17
you
as
it?
no
to
inquire
representatives?
15
16
you
respect
to
to make
you
over
to v a r i o u s
to
There
were
the
say
I
was
presentations
authorities
presentations;
tried
could
assisted
that
in
we
writing
analyze—
several
proposals
over
this
perioc
671
558
1
A
Yes,
2
substantially
3
said
they wanted
4
Q
And
That
5
A
6
requirement
7
expand
8
questions
9
capabilities
11
as
to
12
my
primary
Q
14
though, and
15
A
a
hundred
therefore,
of
aircraft
responsibility
and
the
delivered
what
data
our
—with
the
A
and
delivery
it, you
did
Air
Iranian
ask
their
this
and
proposals
that
of
re-
was
that
present
data.
it,
Yes,
Taxi
representatives
Could
you
describe
Air
Taxi personnel
Iranian
offi-
sir.
1971 with
21
and
Government?
Q
had
some
of
the
or
meetings
officials
of
Government?
Okay.
Well, generally,
I would
23
country and
make
the
presentation
for—
24
Q
Could
you
give
dates?
25
A
Dates?
So
to
it—
in
20
A
and
the
Yes.
of
22
Iran
was
would
missions.
technical
but
Iran
they
aircraft
their
of
of
discuss
quite
of
205's.
it w a s ,
Government
meet
writing
you
changed
Government
'70, I guess
the
other
to
and
the
that?
fleet, and,
When
Q
19
in
by
capabilities
13
18
was
was
were
requirements
initial,
Cobras
when
constant
the
cials
50
on v a r i o u s
quired
16
The
the
stated
their
10
17
sir.
from
us
some
arrive
in
you
the
672
558
16/46
j
Q
Yes.
2
A
Okay.
3
Q
The
4
A
Okay,
5
time
Q
To
you
probably
6
and
7
volume
of
8
copter
of 489
9
of
that
dates
11
you
refer
concerning
and
this
to
A
Okay, well,
Q
Well,
14
A
I
15
Q
There
17
A
Okay.
18
Q
I
19
A
No,
sir.
20
Q
You
did
A
No.
Q
All
21
22
23
24
let me
these
I'm
a
the
sale
so
like
by
that
a
indicate
large
Bell
we
that.
Heli-
have
We want
complete,
so, we'd
some
to
like
dates.
not
t o —
with—
exact
Paris
I should
received
probably
start
Air
dates.
Show
in t h e
Spring
of
1971?
believe
you attended
I wasn't
not
attend
at
that
the
a n d —
paris
Air
Show.
it?
right.
A
better.
If
I
can
do
it
25
is
remember
was
and
Iran
things
of
13
16
to
record
some
can't
memory
this, we
helicopters
make
to
your
realize
documents
knowledge
12
guess.
refresh
10
sure
I
period?
Tha t ' s f ine .
in q u a r t e r s ,
I
could
remember
673
558
i
A
Is
2
Q
That's
3
A
It w a s ,
that
4
would
5
and
single
6
one
of
7
data : that
I would
8
Iranzad
that
be
the
engine
so
10
11
and
aides
13
Q
made
17
18
19
20
do
22
23
24
25
of
A
16
21
So
quarter
14
15
and
And
slide
you
go
made
As
A
Yes,
presentation
familiar
brief
with
the
and
one
and
its
in
was
Mr.
generals
their
them.
presentation
205
content.
with
to
'71
technical
various
office
presentation
I would—
the
staff
A n d —
the
first
Q
When
I think
a
of
say,
I
probabl;
'71.
updated?
were
changed?
yes.
you went
recall whom
I'm
were
to
sir.
Changed,
But
going
quarter
proposals
A
Let's
I was
in e a c h
Specifications
we made
the M o d e l s
presentation
to their
Q
'71.
that
of
1971?
Q
you
of
quarter
both Mr. Zanganeh
I would
the
presentations
'71, but
And
make
Yeah,
A
in
a
they were
then
first
presentation
brief
And
and
see, the
Cobra.
over
by appointment
12
right?
let's
original
bringing
9
all
fine.
in
you met
see.
not
the
in
the
It w a s —
sure
it w a s
quarter
Iranian
I met
that was
the
presentation
first
first
first
quarter
to h i m .
And
I
1971,
Government?
General
the
of
of
Toufanian
quarter
'71.
remember
of
674
558
16/48
j
2
making
It w a s
a
presentation
General
I
3
4
Arzarbazin.
5
tation
to
a
It w a s
I am
8
of
9
was
10
it.
not
the
Q
of
In
these
13
the
products?
A
No,
15
Q
Pricing?
16
A
No,
sir.
17
Q
Any
thing
18
A
No.
19
Q
Did
among
with,
that
22
military?
the
name
to
you
like
ever
I made
to
the
General
a
Navy
was
presen-
Commander.
the
Commander
Commander
Chafik.
He
I think
that's
did
discuss
technical
you
attributes
about
of
people
that?
discuss
who
No,
Q
Relationships
the
you may
from Air
A
Force
sir.
is, people
and
was
the
24
Zanganeh
the
Island, and
23
25
in
presentations,
14
ships
year
Kharg
in a d d i t i o n
20
later
his
anything
21
to A i r
presentation
12
Bell
presentation
I recall, what—-he
Island
commander
11
a
s u r e , as
Kharg
Army-to-be-Commander0
Khatami.
I made
7
the
Khosrodad.
made
General
6
to
various
have
Taxi and
relation-
been
those
dealing
in
the
sir.
between
General Khatami
or
Mr.
Iranzad
Prince
Chafik
or
or
Mr.
Genera
675
558
i
Toufanian?
2
A
No,
3
Q
Were
4
General
5
7
of
A
didn't.
the
a
principals
Okay.
Wait
between
The
Prince
Chafik
Taxi?
first
question,
the
only
relat i o n s h i p —
Q
Khatami and
A
Okay.
12
sister, and
13
The
To
15
A
No,
16
Q
It's
17
that
18
of A i r
19
you weren't
20
A
21
22
23
in
Prince
all
Chafik
Q
any
of
married
I know
to
the
Shah's
there.
to w h o
the
did
you
principals
disclosed
Chafik
was
in
the
some
son
in a d d i t i o n
say?
in A i r
Taxi?
a
of
of
these
documents
one
of
the
principals
nephew
of
the
Shah.
But
aware—
I knew
he
Q
You were
A
That
Q
In
A
Shah.
sir,
Taxi and,
these
the
Khatami was
that's
14
between
of A i r
now.
11
25
relationship
Shah?
relationship
the
10
24
of a n y
didn't—
Or
any
8
9
I
Q
and
I
you aware
Khatami and
A
6
sir,
was
aware
I knew,
your
nephew
of
of
the
Shah.
that?
yeah.
dealings
presentations,
General
a
what
with
role
administrative
the
Iranian
would
role
Air
Government
Taxi
play?
in a s s i s t i n g
us
676
558
1
in
2
advising
3
telephone
letting
4
us
us
tiations
6
that?
7
the
Did
or
A
contact
such
they
even
telephone
to
numbers,
Q
5
use
of w h o
as
the
sir, they
Q
You
gave
A
Yes,
did
9
10
Q
During
your
to
or w h a t
the
the
the
meetings,
meeting,
in a n y
Did
of
the
they
nego-
aid
you
in
not.
presentations?
sir.
11
come
clear
12
you
receive
from Air
13
the
Iranian
officials
you
visits
to
Yes, they
Q
They
would
16
A
Yes,
generally
17
Q
Iranzad
and
18
A
Iranzad
would
me,
telexes
and
they
21
Iranian
officials
22
good
that
23
have
and
would
one
to
it e v e r
information
the
be-
would
impressions
of
products?
report
report
various—
you
directly?
speaking,
they
would.
Zanganeh?
letters
report
I r a n , did
of
Bell
A
20
type
about
15
19
to
Taxi as
14
communicate
directly
and M r . Zanganeh,
as
to
that
this
wasn't
as
the
feeling
particular
good
as
this
with
depending,
of
the
product
one
or
various
looked
what
you.
24
Q
And
25
A
Very
up
up
transportation.
presentation?
No,
or
set
set
that,
participate
8
would
to
to
what
was
your
accurate.
impression
of
those
report
677
558
i
Q
2
record
3
impressed
We
that
have
would
with
Bell
4
A
Yes,
5
Q
And
6
Force
7
a
A
8
9
with
Q
10
some
11
relay
through
12
Helicopter
14
with Agusta
to
15
least
In
your
people
contact with
in
18
or
that
19
ship
20
21
22
from Air
or a n y
to
be
wanted
his
in
the
Khatami
was
that
to A i r
to
Bell
Iran, was
to
or
other
General Khatami
No , s i r .
Q
You
never
A
No,
sir.
Q
To
the
type
of
heard
Bell
or a t
Heli-
giving
least
to
the attempts
Iran
in
by
Bell
competition
.manufacturers.
it e v e r
in A i r
with
they were
Taxi,
with
helicopter
T a x i or a n y
A
Air
Helicopter.
there
discussions
interest
to h a v e
head.)
equipped
appear
contracts
other
17
he
nodded
referring
16
discussed
Taxi
gain
or
introduced
General
Helicopters.
strategy
Air
I'm
13
Bell
it w o u l d
in
that
witness
Or at
lessons
that
sir.
lot of
And
documents
products?
thought
(The
copters.
some
indicate
in y o u r
people
visits
you
disclosed
may
have
with
came
to
had
an
owner-
Taxi?
any
rumors
or
anything
like
that?
23
24
effect
that
General
Khatami
may
25
in
you
had
some
investment
interest
in A i r
Taxi?
have
678
600
1
No , s i r .
A
2
Q
Did
you
3
payments
4
Genera 1 Khatami
5
Government ?
6
A
No,
7
Q
When
8
here
9
you
11
12
ever
might
some
or a n y
A
other
you would
What
purpose
was
competitive.
the
We
felt
therefore
C o m p e t it i v e ?
From
17
Q
You
any
the
to
Iranian
to
the
officials
in
Iran,
I
believe
of
the
this
it w a s
used
head.)
a
codes?
potential
a very
sale
as
competitive
code.
manufacturers..
they might
get
hold
of
the
documents
what?
19
Well,
A
20
and
21
data
other
felt
his
considered
Q
forth
at
information
Telex
contains
and requirements
that
I m ight
have
that
data
sensitive
to
you were
W e l l , we
A
the
when
Q
16
25
communicate
A
situation, and
24
of
of
Taxi
sir.
15
23
aware
from Air
officials
nodded
very
22
become
made
(The w i t n e s s
13
or
or
been
codes.
14
18
hear
have
at Bell Helicopter
used
10
that
is
customer.
have the
And
same
been
we
that
in m a n y
to a s s i s t
making
data
is
information.
cases
the
or w h a t
to
didn't
in
transmitted
us a n d
feel
our
back
performance
presentation
have
its
you.
And
delivery
competitors
to
ought
679
601
Do y o u r e c a l l r e c e i v i n g a n y a d v i c e
Q
1
or M r . I r a n z a d
2
Zanganeh
3
copter maintain a
4
selling products
5
to m a i n t a i n — t o
low p r o f i l e
in
Y e s , s i r . We had a t t i m e s , I
Q
And what w a s the purpose
7
A
Well, the purpose
8
Q
If I m a y , let m e j u s t
exhibits, Exhibit
an
11
it.
of
of t h a t w a s n o t
s h o w y o u o n e of
I'll read
Yeah.
Q
The memo
14
indicates
It's
from
" G e n e r a l K h a t a m i and G e n e r a l T o u f a n i a n , as
w e l l as M r . Dehesh agree with M r .
16
that Bell should play a very
17
coordinate
and adhere
18
instructions
19
A
Okay, ask
20
Q
What
A
To answer
21
the
that:
15
25
pressure,
it?
A
24
to
internal memo by M r . Z a n g a n e h . And
13
23
recall.
10, 1971.
Y o u 've g o t
Heliin
that?
N o . 33, dated A p r i l
12
22
or
Mr.
Iran?
A
10
Bell
in n e g o t i a t i o n s
6
9
have
from
it
get
again.
you buy
b e g i v e n to
only
and
them,"
again.
was—
your question
N o t to p r e s s u r e
in a s i t u a t i o n w h e r e
pressure and
low k e y a n d
to f u r t h e r g u i d a n c e
which would
it
Zanganeh
you knock
of w h y ?
Not—ask
the s i t u a t i o n , y o u k n o w .
You
y o u w a n t the s a l e to go and
on d o o r s a n d y o u s a y , " W h y
i t ? " or " W h a t o t h e r
information
can we
give
you
don't
you
680
558
i
and at this point
2
was giving was
3
t u n i t y to t h e G o v e r n m e n t
4
these
5
that data
6
them."
7
Q
in t i m e , t h e a d v i c e
to n o t p r e s s u r e a n d
gentlemen
that M r .
of I r a n a n d
Would
evaluate
that have been presented
this a l s o be an
indication
G e n e r a l K h a t a m i and G e n e r a l T o u f a n i a n and M r .
9
wanted
Zanganeh
11
B e l l should m a i n t a i n a low profile and await
12
instruct ions.
13
A
Y e s , s ir .
14
Q
Did
that
they agreed with him
you have any knowledge
15
K h a t a m i and General Toufanian
16
giving
17
to m a k e
instructions
the
that
to B e l l H e l i c o p t e r
that
further
was
in its
efforts
sale?
A
N o , sir, only from what
19
Q
In y o u r d i s c u s s i o n s ,
this memo
told
in y o u r c o n t a c t s
20
M r . Z a n g a n e h , M r . Iranzad, what was your
21
of t h e r o l e
22
and M r . Dehesh
23
by
with
impression
o f G e n e r a l K h a t a m i , of G e n e r a l
in t h e s a l e s or p o s s i b l e
us.
Toufanian
acquisition
Iran?
24
Mr.
General
or M r . Dehesh
18
25
Dehesh
t o m a i n t a i n a low p r o f i l e ?
10
is i n d i c a t i n g
to
that
8
Bell Helicopter
oppor-
particularly
in E x h i b i t N o . 3 3 , " t i m e of
and proposals
Zanganeh
to g i v e t h e
A
being
O k a y , that the first o n e .
the C o m m a n d e r of the A i r F o r c e ,
General
had
Khatami,
considerable
681
.64 5.
1
influence with respect
to o p e r a t i n g a i r c r a f t ,
2
his air
3
the a i r s p a c e
in I r a n .
4
whatever
or s i z e a n d g a v e h i s
s p a c e , if y o u w i l l , t h e A i r F o r c e ,
make
5
with respect
6
mission
7
service
in
aircraft
9
behalf.
10
to p e r f o r m
t h e use of
thing
12
various vendors
a l l the
data
trying
13
the r e s p o n s i b i l i t y
14
the r e c o m m e n d a t i o n s
15
that was
to H i s M a j e s t y
to t h e T o u f a n i a n
17
through
18
S o , you k n o w , part
of t h e
20
that particular
part, General Toufanian being
21
t o p of t h a t a n d
f r o m t h e r e w e n t to H i s
or did he h a v e some d i s c r e t i o n
24
tion?
Were you aware
A
of
W e l l , he was
played
went
in
this—playe
the
Majesty.
role was mostly
23
25
reported
administrative
process, a l l three
M r . Dehesh's
taking
Toufanian.
decision-making
Q
by
approval.
and data
19
22
your
would—ha
out and
individual that
that these proposals
to g e t t o G e n e r a l
and
for f i n a l
in
finally
to h i m
to s u b m i t p r o p o s a l s
M r . Dehesh was the
16
that
submitted
of w e e d i n g a l l t h i s
specific
to h a v e
General Toufanian was the man
compiled
the
Iran.
is a v e r y k e y a n d a g o o d
11
of
recommendations
H i s a p p r o v a l of t h a t — o r
8
controlling
And viewed a l l a i r c r a f t ,
to its c o m p a t i b i l i t y
for w h a t e v e r
in
administrative
in m a k i n g a
recommenda-
any?
obviously a very
important
682
.64 5.
j
person
in t h e s e n s e
that you had
2
t a t i o n to h i m , a n d h e w a s a w a r e
3
and
4
m e e t t h e n e e d s , it d i d n ' t
5
And
if y o u r p a r t i c u l a r
6
to w o r k
7
procedure
8
at
to p r o v e
the n e x t h i g h e r
9
Q
10
prsentation?
11
you make
12
Toufanian
13
get past
the
like
of c o m m a n d
in a n y o t h e r
I guess
it w o u l d
I think the
15
Dehesh was
16
generals
17
the
consideration
And
19
related
to his
first presentation
I —
There were
that I made
several
Mr.
other
their
names,
technical
knowledge
r o l e , in y o u r m i n d
was
expertise?
of I r a n , w i t h r e s p e c t
21
aviation and
G e n e r a l K h a t a m i w a s r e g a r d e d as an e x p e r t .
23
f o r e , he w o u l d
24
to the p r o d u c t s
General
will.
General Khatami's
In t h e g o v e r n m e n t
And
^id
I'm f a i r l y sure
22
25
first
official?
in t h e r o o m a n d I c a n ' t r e m e m b e r
Q
the
go b a c k to 1 9 7 1 .
Iranian
in t h e r o o m .
s t a f f , if y o u
had
governmental
or G e n e r a l K h a t a m i ,
to G e n e r a l T o u f a n i a n . And
18
one
echelon.
or s o m e o t h e r
A
didn
him.
chain
y o u r s w a s w o r t h y of
it t o M r . D e h e s h
was
A
requirements,
D o y o u r e c a l l to w h o m y o u m a d e
14
20
of t h e
presen-
product wasn't any good and
s o it w a s
through, just
to m a k e your
of a v i a t i o n a n d
its
to
requirements
And,
there-
c o m m e n t a n d h a d a l o t to s a y w i t h
respec
that Iran
used.
it's f o r t h a t r e a s o n
that he
participate
683
605
16/57
1
in
it.
Did M r . I r a n z a d
2
Q
3
o r did t h e y
4
the
or M r . Z a n g a n e h e v e r
indicate
i n d i c a t e w h o , in the g o v e r n m e n t , w o u l d
final recommendations
to the
make
Shah?
A
Yes,
6
Q
Who was
that?
7
A
General
Toufanian.
8
Q
W h a t did they say about G e n e r a l
9
A
T h e y said that G e n e r a l K h a t a m i w a s a v e r y
5
sir.
10
i m p o r t a n t m a n to g i v e a — w o u l d
11
a b l e s s i n g , " Y e s , " this
12
a
13
a vote
W h a t was your relationship
Q
with M r . Horsley?
16
office?
17
18
19
you
20
Fort
standpoint
in B e l l
in t h e
Helicopter
Brussels
A
(The w i t n e s s n o d d e d h i s
Q
W e r e y o u d o i n g t h e s a m e t h i n g in I r a n or did
head.)
I believe
A
Yes,
Q
A t the time,, b a s e d
based
you were
here
in
sir.
in F o r t W o r t h .
in B r u s s e l s , but y o u w e r e b o t h a c t i v e
A
and
it's
Worth?
22
24
I b e l i e v e he w a s
have different duties?
21
23-553 O - 78 - 44
word,
"Yes,
of c o n f i d e n c e .
15
25
y o u say a g o o d
is a g o o d p r o d u c t ;
p r o d u c t the A r m y s h o u l d u s e . " A n d f r o m t h a t
14
23
Khatami?
Yes, sir.
We worked
together—on
He was
in
Iran.
the
w e r e b o t h , b a s i c a l l y , h a d the s a m e s o r t of
project >
function.
684
.64 5.
1
2
Q
We switched
Iran and
I would
3
so t h a t w e h a d
4
stand
5
responding
6
7
12
15
16
17
18
19
20
21
22
23
24
customers'
requirements,
to s o m e o n e
He reported
to
reverb
under-
keep
constantly
else;
is
to t h e m a n a g e r
that
Whereas
A
Mr.
Q
S y l v e s t e r , did y o u c o m p a r e
about
the sales
you reported
effort at
Oh,
Q
And would
A
Sure, yes,
to?
Q
Did
you discuss
things with
you ever have
discussions
Iran?
Q
copters
A
Did you e v e r
discuss with anyone
would
to g e t
h a v e to be m a d e
the
from the g o v e r n m e n t
No,
about
owned by a
the
government
sir,
that payment
Bell Helicopter
him?
sir.
official
No,
him
all?
that Air T a x i might be
in
notes with
sure.
possibility
bility
the
Sylvester.
A
A
of
office,
Q
25
report
in
then
in c o u n t r y
situation and
Yes, sir.
Brussels
11
14
presence
competitor
But he would
A
10
13
to the
sometimes and
correct ?
8
9
constant
the v a r i o u s
Q
off and h e , you k n o w , h e ,
come b a c k and
sir.
contract
of
Iran?
the
possi-
in o r d e r
for t h e 4 8 9
for
heli-
685
.64 5.
i
Q
With respect
to c o m p e t i t o r s
2
c o p t e r , did y o u ever h e a r
3
to make a p a y m e n t
4
making a payment, improper
5
o f f i c i a l of
6
A
No , s ir .
7
Q
Your
to a g o v e r n m e n t
sales effort
c o p t e r , you were as I understand
T a x i , the a g e n t , and
Was
12
sales effort
13
in I r a n ?
14
there may have
15
in t h e
I don't
sales
Y e s , if I u n d e r s t a n d
think
there was any time
total sales
I t h i n k he m e a n t
H e l i c o p t e r , I'm
the
by Air
your q u e s t i o n
Taxi
in m y
correctly,
involvement
that
efforts.
I think w h e n he said
"you,'
O h , I'm s o r r y , y e s ,
Bell
O h , I'm s o r r y , y e s .
Well,
l a t t e r p a r t o f the p r o g r a m
General Toufanian
Bell
point
sorry.
THE WITNESS:
during
sold by
the
Bell.
M R . COLLINS:
23
over
efforts.
21
25
proposal
government
taken
been an active participation
M R . SOUTTER:
24
of t h e
f r o m A i r T a x i for p r o d u c t s
19
22
Heli-
it, presenting
officials
there a time w h e n y o u had
I t o o k over the
20
government
I p r e s u m e a t s o m e p o i n t , or a t s o m e
A
18
fact,
Iran.
11
17
to a
on b e h a l f o f B e l l
to A i r
16
o f f i c i a l , o r , in
payment
9
of
Heliapproachei)
Iran?
8
10
of B e l l
of a n y of t h e m b e i n g
requested
that we
in t h e s a l e s
effort
d e a l on a m o r e
direct
686
.64 5.
1
2
3
b a s i s w i t h him and his a p p o i n t e d
the s a l e .
time, yeah, you would
4
5
6
7
A
'72.
Q
And
A
10
meeting
11
them.
14
t h a t , do you
It w o u l d b e p r o b a b l y A u g u s t ,
he communicated
That
Q
right
the
t h a t h o w , in a
demon-
meeting?
G e n e r a l T o u f a n i a n , y e a h , it w a s
in a
us to d e a l d i r e c t l y
And would you have made a record
of
with
that
meeting?
A
No, sir, because
15
16
I am not
17
reca11.
Q
there.
I don't think
sure who was at that m e e t i n g .
But most
I was
I think M r . Sylvester was
of t h e m e e t i n g s
19
would have written a memorandum
20
m e e t ing?
21
A
Yes,
22
Q
Did you ever
23
Miller
in y o u r
24
A
No,
25
Q
Was he ever
in
recall?
'72, s o m e t h i n g , right after
that he said he w a n t e d
senior member
18
furthering
stration.
9
13
in
be.
And when was
of
staff
say I g u e s s at that p o i n t
Q
after August
8
12
So, I would
I
the
there.
couldn't
you attended,
for files a b o u t
the
sir.
come
sales efforts
in c o n t a c t w i t h
in
Mr.
Iran?
sir.
there while
y o u vere
you
there?
687
.64 5.
16/61
1
A
No,
2
Q
Was he e v e r
3
in F o r t W o r t h d i s c u s s i n g
sale w h i l e y o u were here
A
4
5
sir.
sale
or—
I t h i n k he was
in F o r t W o r t h d i s c u s s i n g
Q
But you never attended a meeting
7
A
But
Q
With respect
9
I never
talked
10
the
11
m e n t , did
12
was
to
here?
him.
to t h e 2 . 9 m i l l i o n
payment by Bell Helicopter
to A i r
T a x i to
dollar
terminate
c o n t r a c t , the m a n u f a c t u r e r ' s - r e p r e s e n t a t i v e
you ever hear
to b e p a i d
t h a t a n y p a r t of t h a t
to a g o v e r n m e n t
official
in
13
No,
14
Q
A n d w h a t did y o u f e e l the p u r p o s e
15
2.9 m i l l i o n
A
18
didn't
19
read
20
know
Were
21
between
22
arrangements ?
you
involved
Bell Helicopter
in a n y of
at a l l .
that—
In f a c t , I
of p a y m e n t m a d e
in a n y of t h e
and A i r
A
No,
Q
You never attended
the
till I
papers.
24
here
involved
that kind
23
25
of
was?
of t h e r e l a t i o n s h i p
there was
it in the
Q
payments
Well, sir, I wasn't
17
money
sir.
dollar
or t h a t p o r t i o n
agree-
Iran?
A
16
the
once.
6
8
the
Taxi on
negotiations
compensation
sir.
the meetings
in F o r t W o r t h o r a n y o t h e r
place where
in Iran
the
or
688
.64 5.
1
compensation was
discussed?
2
A
No,
3
Q
In y o u r p r e s e n t a t i o n , y o u n e v e r w o u l d
4
the price
5
6
8
of the
A
the
Q
c o m e up
9
In t h e p r e s e n t a t i o n , s u r e , w e
price.
And
in t h a t
A
the
commission
to the a g e n t w o u l d
N o , s i r , it's j u s t —
It w a s
just
the
of h e l i c o p t e r , y o u k n o w , o n e e a c h , " X " n u m b e r
11
dollars.
In J u n e , 1 9 7 2 , M r . S y l v e s t e r
13
Zanganeh at Air
14
agreement
15
in t h a t
16
took place
17
proposed
20
for
24
sent
amendment
price
of
to M r .
N o . 1 to
Bell Helicopter.
to e a r l i e r
the
And
discussions
c o n c e r n i n g , I p r e s u m e , the a g r e e m e n t ,
which
the
amendment.
any knowledge
A
No, sir, I
Q
Proposed Amendment
the r e c o r d
22
23
referred
Do you have
19
21
Taxi a proposed
between Air Taxi and
l e t t e r he
18
never
context?
10
12
discuss
helicopter?
Oh, yes.
discussed
7
sir,
that
of s u c h
negotiation
don't.
N o . 1, I should
it's b o t h E x h i b i t
Were
you
in I r a n
A
Yes,
sir.
Q
And what was the purpose
indicate
38 and E x h i b i t
in t h e s p r i n g o f
67.
1972?
of y o u r v i s i t
then?
25
I believe
you were
there some
time
in m i d - M a y ;
is
that
689
.64 5.
1
corre c t ?
2
A
3
over
4
—April
5
6
Y e s , I was
in F e b r u a r y — n o ,
7
'72, I think
in M a r c h , a n d
1 9 t h or 2 0 t h , a n d c a m e
Q
May
there—in
And were
1 9 t h or
A
you there
stayed
in l a t e M a y , in
I went
back shortly
letter
10
Q
W e l l , l e t m e t r y to r e f r e s h y o u r
11
A
And
14
Y e a h , let's
intent
see.
In A p r i l
18th, I brought
Let me
introduce
for
to
M R . FREED:
M R . COLLINS:
17
remember.
the r e c o r d ,
78.
78.
Q
It's a letter
to G e n e r a l T o u f a n i a n
20
S y l v e s t e r , in w h i c h he
indicates
21
and M r . S m i t h w o u l d be
in I r a n on M a y
A
23
25
Exhibit
( T h e l e t t e r r e f e r r e d to w a s
m a r k e d " E x h i b i t N o . 78" for
identification.)
18
24
demonstra-
No.?
16
22
the
memory.
in M a y I w e n t b a c k to s e t up a
15
19
I
back.
t i o n or s o m e t h i n g , a s I ' m t r y i n g
Q
mid-May,
thereafter, but
can't—
13
April
thereabouts?
9
12
through
back.
8
of
I went
Yeah, okay, that was
M R . FREED: What
from Mr
that you and M r .
the
Rudnin
19th?
demonstration.
is t h e d a t e
of
that
letter?
M R . COLLINS:
That
is d a t e d M a y
4th,
_L
690
612
16/64
1
1972.
2
3
4
And
Q
about
the purpose
of t h a t v i s i t w a s
M a y 19th?
Well, the purpose was
A
5
demonstration
6
of t h e
7
Q
A n d that w a s the
8
A
Yes,
9
Q
Because
10
letter
11
Amendment
12
agre ement •
13
as requested
A H- 1J a n d
of J u n e
214A
I want
indicates
15
on t h i s
had
visit?
in h i s
amendment
enclosed
letter
reflects
s u b j e c t on r e c e n t m e e t i n g s
Do you know when
to t h e a g r e e m e n t
19
A
No,
sir.
Q
Did
you have any
t h r o u g h the
A
No , s ir .
23
Q
—concerning
24
A
No,
Q
Would
proposed
to M r .
Zanganeh
the a g r e e m e n t
in y o u r
on
a
react ed
office.
proposed
between Air T a x i and
20
tiat ions p r o c e s s
the
S y l v e s t e i: s
such meetings would
t a k e n p l a c e , the n e g o t i a t i o n s
22
1
b a c k to M r .
1
18
Iran
manufacturer s-representative
17
25
of
o n l y p u r p o s e of t h e
to r e f e r
16th which
tha t t h e p r o p o s e d
16
by the Government
helicopters.
N o . 1 to the
He
to t h e n s e t up a
sir.
14
21
what
have
amendment
Bell?
involvement
s u m m e r of
the c o m p e n s a t i o n
in t h e
nego-
1972—
agreements?
sir.
one of your d u t i e s h a v e b e e n
to
see
691
.64 5.
that an agreement
1
2
and Air
3
would
4
5
like this between
Taxi concerning
be
Bell
compensation,
the
Helicopter
agreement
signed?
A
No , s i r .
Q
Did
you ever
t a l k to M r . D e h e s h
or a n y
6
government
7
A
No,
8
Q
Let m e show you some exhibits and
officials
26, 1972.
11
Sylvester.
12
This
And the
third
agreement after
is E x h i b i t
item
15
A
Y e s , uh
16
Q
Then
cable
18
1, m a n u f a c t u r e r ' s
19
by Joe;
20
today.
states:
Joe w i l l
sign
Alice."
9th, M r . Sylvester
indicating
representative
t h a t , is A i r
Dehesh?
that
sent a
the A m e n d m e n t
agreement was
Taxi, and airmailed
And M r . Sylvester
22
July
Mr.
huh.
to M r . M i t c h e l l
21
to
Taxi and "Alice" being
on A u g u s t
17
possibly
70, dated
consultation with
"Joe" b e i n g A i r
14
other
agreement?
It's a t e l e x f r o m M r . G a l l a g h e r
"Am using m a x e f f o r t .
13
the
sir.
refresh your m e m o r y .
9
10
requested
to M r .
that
No.
executed
Mitchell
it b e
returne
urgently.
23
And
24
25
in I r a n a b o u t
that was
Exhibit
M r . M i t c h e l l to
Exhibit
No.
71.
N o . 72, dated A u g u s t
Sylvester
indicated
16th, 1972,
that
the
from
agreements
692
614
2
prepared by y o u , that
2
Joe, Air
3
on behalf
T a x i , and
is M r . S y l v e s t e r , s i g n e d
by
that M r . Rudning has signed
it
of B e l l a n d w i l l h a n d c a r r y
4
N o w , I r e f e r b a c k to E x h i b i t
5
have any recollection
6
Mr.
of t h a t , of s e n d i n g
A
Oh, yes.
message,
I'm—no
Q
10
A
I didn't
11
Q
N o , but you'd
But you don't
22
indicates
23
and
there
that Air
14
A
talking
15
responding
17
that
18
me
19
Air
that you
T a x i had
that
I sent
h a v e sent
the
were m a k i n g a max
information
in m y
Dehesh?
of
as w e l l as
I fairly
that Air Taxi would
m e s s a g e , as this telex
It
effort
is a c o m b i n a t i o n
b a c k to M r . S y l v e s t e r . A n d
it w a s
include
I ?
the a g r e e m e n t ?
to t h e p r o b l e m s w i t h a d e m o n s t r a t i o n
recall
have
comes
asked
from
Taxi.
Q
1 believe
s e v e r a l of t h e t e l e x e s w o u l d
been from Air Taxi's
unusual occurrence, was
doubt
to c o n s u l t w i t h M r .
22
25
to
c a r r y a n y a g r e e m e n t , or d i d
21
24
that
you
recall?
As I r e c a l l , this
15
23
Do
yeah.
g
20
70.
Sylvester?
7
g
it.
A
Q
initiated
N o , that's
offices, though.
^hat wasn't
an
it?
also—
I m e a n , it w o u l d n ' t n e c e s s a r i l y h a v e
or d i r e c t e d
have
to b e s e n t b y
them?
been
693
.64 5.
i
A
N o , but
there's a l w a y s —
2
times when there would be
3
in t h a t
4
dual's
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
t e l e x t h a t d i d n ' t n e c e s s a r i l y have
Q
So w i t h r e s p e c t
A
N o , s i r , 1 do
Q
Did y o u e v e r
M r . Iranzad
or M r .
A
No,
Q
That
copter and Air
A
Q
not.
discuss
the a g r e e m e n t s
is, the agreements
between
That wasn't my
During your visits
by a n y o n e
A
No, sir.
Q
Were
to I r a n , w e r e
I was
you aware
of
other
you
in o r d e r
ever
that
not.
that any payments
might
o f f i c i a l on
have
behali
customers?
No,
We have heard
A
Heli-
contract?
been made by Air T a x i to a g o v e r n m e n t
in f a c t h a v e
Bell
job.
to m a k e a p a y m e n t
B e l l m i g h t r e c e i v e a n y type
of a n y of t h e i r
with
Taxi?
No, sir.
solicited
with
what—
Zanganeh?
Q
indivi-'
sir,
A
25
one
to the c o n s u l t a t i o n
M r . D e h e s h , you really don't know
22
24
many
concerned
input.
21
23
There were
several subjects
sir.
other
testimony today
that they
did
clients?
Ye s , s ir .
Q
But you never heard
that
they may have
made
694
616
16/68
1
payments
2
3
4
on t h e i r b e h a l f , on b e h a l f
A
No,
Q
In a n y of the p r e s e n t a t i o n s
compensation
6
p o s s i b l e s a l e of h e l i c o p t e r s
of Air
T a x i b y B e l l for
A
Not
8
Q
Or a n y
9
A
Or
10
Q
In I r a n , I b e l i e v e
to
12
at d i f f e r e n t times
that I can
by M r .
A
Yes,
Q
Or other
you indicated
I believe
you were
17
Taxi
officials
here at
include
accompanied
Bell.
compensation
of
discusse d
Air
by Bell?
18
No , s i r .
19
Q
Do you have any knowledge
of
by General K h a t a m i , General Toufanian
is, personal
21
that
22
interest
23
Iran
were
Sylvester.
A
25
you
sir.
those meetings would
at
in
recall.
I w o n d e r w h e t h e r a n y of t h e s u b j e c t s
16
24
its e f f o r t s
meeting.
several times.
15
20
covered,
meeting?
in a
there
that
Iran?
in a n y p r e s e n t a t i o n
11
14
or m e e t i n g s
i n , w e r e a n y of t h e s u b j e c t s
5
13
client?
sir.
you participated
7
of a n o t h e r
investments, whether
investments
or M r .
Dehesh;
they had
any
in a c o r p o r a t i o n , c o m p a n y , a p a r t n e r s h i p
or h e r e
in t h e U n i t e d
States
A
Not
Q
W h o did the n e g o t i a t i n g
that
or a n y other
I can r e c a l l , n o ,
in
country?
sir.
for Air
Taxi and
for
695
.64 5.
i
2
Bell H e l i c o p t e r , that y o u know o f , w i t h r e s p e c t
compensation agreements
3
A
4
assume
5
M r . Atkins
6
7
8
9
10
I don't
that
Q
it h a d
couldn't
Q
Bell and Air
know.
But you don't
I don't
tell
know, personally
know who was
involved
Air
the products
16
17
18
19
20
21
22
23
24
25
of B e l l
Were
at that time
they ever
in I r a n
compensated
I
indicated,
to
demonstrate
for such
services
t h a t y o u cai r e c a l l ?
No,
Q
They never received
A
in t h o s e .
Helicopter.
A
anything
recollect
T a x i p r o v i d e d , I think you
12
15
highest,
you.
logistical services when you were
14
only
it in 19 72?
11
13
Taxi?
I could
to be h a n d l e d a t t h e v e r y
the
level.
who may have done
A
between
specifically
to
like
sir.
any expense money
or
that?
I wasn't aware
of a n y
compensation
at
the t i m e , n o .
Q
sibility
And
they never discussed
that with you,
p e r h a p s of b e i n g compensated
in f a c t , b e e n
compensated
by B e l l for
or that
services
they may have provided with respect
to
of t h e h e l i c o p t e r s
that?
A
or a n y t h i n g
like
No, they didn't discuss any
the
they
thepo
had
that
demonstration
compensation
696
.64 5.
i
arrangements
with
2
me.
M R . GALERSTEIN: Excuse me.
If y o u
3
to t a k e a b r e a k , s p e a k u p , o t h e r w i s e w e ' l l j u s t
4
on g o i n g , o r u n l e s s
5
6
M R . COLLINS:
five m i n u t e b r e a k . That's
7
THE
8
(Short
9
BY M R .
10
Q
11
they w a n t to take a
at
Why don't we take a
Okay.
recess.)
M r . Gallagher, when
Bell instead
of t r a v e l i n g
spot, any other country,
Air
you were working
to I r a n or a n y
how w o u l d
A
When
15
Q
Yes. What would y o u — o r
I was
communication would
17
A
the same
19
Q
A
what type
And
would
you receive
respond
in
periodic reports
the r e p r e s e n t a t i v e s
to
r e p o r t s as to their a c t i v i t i e s
on
behalf.
And
of
sales a c t i v i t i e s , on b e h a l f
Y e s , we require
submit periodic
Q
of
them?
Letters, telexes, and I would
their a c t i v i t i e s , their
with
manner.
Bell?
25
you communicate
you receive from
21
24
other
here?
20
23
here
Taxi?
14
22
break?
COLLINS
13
18
keep
good.
WITNESS:
12
16
want
they submitted
those
to
you?
of
our
697
.64 5.
1
2
Y e s , s o m e t i m e s , not as o f t e n as we
3
Q
How would
you describe Air Taxi's
4
on b e h a l f of B e l l w i t h r e s p e c t
5
helicopters
6
A
7
8
9
a
foreign
services, office
g u i d a n c e as
12
so that we
13
the r i g h t
14
could make
facturer's
activities
s u i t of t h e i r
in
I
being
the system
works
presentations
that when you were
How would
other manufacturer's
A
In?
21
Q
You say
22
A
In
Q
Yes.
A
I would
in
to
in
of o t h e r
going
to
also
manu-
Iran.
you rate A i r T a x i as
compared
to
representatives??
Iran?
Iran.
rate Air Taxi's performance
25
in the
Taxi and then
of the a c t i v i t i e s
representatives
20
Iran?
administrative
the a p p r o p r i a t e
Now, I presume
p o s s i b l y be a w a r e
best
489
folks.
Q
24
of
representative
t o w h o to t a l k t o a n d h o w
I r a n , you would deal with Air
23
efforts
s p a c e , transportation, a n d , as
e a r l i e r , the s t r o n g
18
19
of
their
c o u n t r y , t h a t of p r o v i d i n g
11
17
describe
a s o n e t y p i c a l of a m a n u f a c t u r e r ' s
indicated
16
to the sale
b y B e l l to t h e g o v e r n m e n t
I guess I would
10
15
wanted,
ye s .
country.
as
the
698
614
i
2
Q
For what
A
Because
reason?
of t h e i r — i n
my v i e w , my
3
with
4
k n e w the
5
d o i n g , the c o m p e t i t o r was d o i n g . And
6
always
7
Q
8
I never
found
A
To the c o m p e t i t o r s
with
the
requirements
were.
Q
Requirements
Of
13
Q
Do y o u know h o w t h e y w o u l d
of t h e
government?
the g o v e r n m e n t , as far as the
government.
gain this
type
of
information?
15
A
The
same w a y that I w o u l d
16
to t h e v a r i o u s
17
have y o u , and asking
18
Q
governmental
have been able
20
talking now about
21
stration
22
in
A
that
gain
what
to m a k e
the sale
that Bell
of h e l i c o p t e r s —
the 489 h e l i c o p t e r s — w i t h o u t
a
might
I am
demon-
Iran?
There's no doubt
in m y m i n d
that
And would
it be
in the
officials
to n o t h a v e a
without
it.
interest
of a n y
25
government
talking
questions.
demonstration, we'd have never made
Q
it, by
o f f i c e r s , g e n e r a l s , or
Is t h e r e e v e r a n y p o s s i b i l i t y
19
was
faulty.
happening
and what
A
24
was
what?
12
23
guy
They
their advice
it t o b e
11
14
other
You say they knew what was
to
association
knew what was h a p p e n i n g .
c l i m a t e , they knew w h a t the
sound.
respect
9
10
them, they always
demonstration?
of
the
699
.64 5.
*
2
3
A
I wouldn't know, I guess.
Q
L e t me show y o u Exhibit N o . 3 7 .
It's a
c a b l e t h a t y o u s e n t to M r . S y l v e s t e r d a t e d A p r i l
12th,
4
1972
progran
®
to H I M "is s c h e d u l e d
®
in w h i c h y o u i n d i c a t e
morning
the p r e s e n t a t i o n
for this a f t e r n o o n and
for a p p r o v a l .
a n d m a y r e s u l t in d e l a y of t h e p r o g r a m
10
A
Let m e see
referring
11
A
15
Q
17
18
19
t h a t c a t c h e s me c o l d , b e c a u s e
that a t
I
all.
like
Dehesh?
I honestly don't,
surprises me.
I don't r e c a l l
him—that
I don't remember him being that
the d e m o n s t r a t i o n .
negative
He w a s p r e t t y p o s i t i v e
about
it.
20
21
he's
Do y o u r e c a l l d i s c u s s i n g s o m e t h i n g
A
about
if I c a n f i n d out w h a t
I don't remember
that with M r .
16
implementation."
pause.)
I admit
wouldn't—
14
utmost
necessary
Okay.
(Short
12
13
to.
Thursday
D e h e s h s t a t e s he w i l l do
to s h o o t d o w n in c o u n t r y d e m o as it is n o t
9
of a
Q
There wouldn't be any purpose
w a n t to s h o o t d o w n t h e
22
23
24
A
Not—not
Q
A good
A
Yeahs
then for him
demonstration?
in m y
choice
mind.
of w o r d s , I g u e s s ?
it's m y c h o i c e , o b v i o u s l y .
I don't
25
remember
23-553 O - 78 - 45
that.
I don't remember
it a t a l l .
I don't
t:
700
622
1
recall any reason why he would want
2
3
M R . COLLINS:
Mr.
BY M R .
7
Q
10
that's
fine.
EXAMINATION
6
9
I believe
that.
Marinaccio.
5
8
to do
MARINACCIO
M r . G a l l a g h e r , could
you kind
on p r e c i s e l y w h a t y o u r r e s p o n s i b i l i t y
d u r i n g the period
give me
'72,
just a general
'73 a n d
'74?
of f i l l m e in
was over
in
Can you kind
Iran
of
statement?
11
A
Okay,
12
Q
Of what you were about when you were
over
the
sir.
13
A
In
14
first part
of
15
to u n d e r s t a n d
16
our p i t c h and where
17
'72, my primary responsibility
'72 w a s
t o , (1) m o n i t o r
the
situation,
w h e r e we s t o o d a s a m a n u f a c t u r e r
that was
In A p r i l of
in t h e d e c i s i o n
'72, I received
General Toufanian
19
demonstration
20
this
letter was approved
22
more
of t h e
23
that was
24
coordination, various
people and a c t i v i t i e s ,
the b i r d s
setting
25
s a y i n g t h a t he w o u l d
of t h e t w o b i r d s
in I r a n
by His
in A u g u s t .
of t h e d e m o n s t r a t i o n
there9
up the
a
And
Majesty.
to t a k e p l a c e w h i c h r e q u i r e d
over
from
l i k e to h a v e
O k a y , from that point on, I then
organizer
presentir g
cycle.
a letter
18
21
in
the re
became
activity
extensive
getting
demonstration.
701
623
1
2
Throughout
stration, I was
3
4
was
6
7
sent back
10
11
12
15
And
18
19
20
in
'73, I was
23
24
back here and
it w a s
then assigned
the e s t a b l i s h m e n t
And
in
that e f f o r t . And
the
Q
better
players
and
on the
I've
first
understand
previous
over
there
go
'73.
to B H I w i t h r e s p e c t
in
been
in B H I s i n c e
of
that
time,
time.
testimony about who
in t e r m s
to
pilots
Iran.
that b a c k g r o u n d , I can
their r e s p o n s i b i l i t i e s
so
of
of a t r a i n i n g , of
BHI thing since that
I think with
were
I didn't
' 7 4 , it w a s a c o n t i n u a t i o n
then
amoebic
home.
and m e c h a n i c s , organization and activity
or w o r k i n g
I
you?
sent back
to I r a n u n t i l I t h i n k
organizing
what
ill and
I g o t a v e r y , I g u e s s , r a r e b u g of
now
the
of w h a t t h e y w e r e
were, Khatami,
and
Toufanian,
forth.
21
22
demonstration.
A
I was
to
So then I stayed
back
demon-
home.
dysentery and
16
17
of t h a t
'72, I became very
Wnat happened
13
14
of
the
Q
8
9
the manager
In A u g u s t
5
that period, during
In a lot of y o u r b a c k g r o u n d
perience with
that p r o j e c t and
y o u r j u d g m e n t as
who absolutely
to t h e t h r e e
had
and
your
ex-
so o n , w h a t w o u l d
or f o u r p e o p l e
to s i g n o f f a n d
in
be
Iran
s a y , " Y e s , " to
the
25
purchase
of 4 8 9 h e l i c o p t e r s
before
that deal would
go
702
.64 5.
i
2
through?
would
3
4
5
6
7
8
9
11
12
A
Y e s , he
Q
Wouldn't
A
Y e s , s i r , he has
Q
Going on down
the two
could
or t h r e e
15
18
19
20
21
22
23
24
25
agree?
to.
from the S h a h , who would
others, including
Okay.
to b e .
would have
civilians
to say " Y e s , " b e f o r e
I would
The
or
the
say General Toufanian
Commander
of t h e A i r
to g i v e h i s v o t e
The Commander
be
military
deal
of
Force,
would
Khatami,
approval.
of the G r o u n d
it w a s G e n e r a l
that would
folks to
Q
And
who Zanganeh,
be your h i e r a r c h y ,
in h i s
be
c a p a c i t y as m a n u f a c t u r e r ' s
concentrating
A
Yes,
Q
N o w , do y o u r e m e m b e r
officials
M r . Atkins
it
not,
repre-
on?
sir.
discussing
with
any
in B e l l , i n c l u d i n g M r . S y l v e s t e r
or e v e n M r . M i l l e r —
ever met M r .
the
say,"yes."
t h o s e w o u l d be t h e p e o p l e , w o u l d
sentative would
higher
time,
Minbashian.
And
absolute
it w o Id
F o r c e s , as
be the A r m y , w h o was now G e n e r a l H o v e s i , at that
16
17
you
go?
13
14
Shah, I
would.
that would have
A
have
be t h e
think?
people
10
A n d , o b v i o u s l y , one w o u l d
Miller?
Incidentally, have
or
you
703
625
1
A
Ye s , s ir .
2
Q
In c o n n e c t i o n w i t h t h i s
A
No, sir.
3
project, with
sa le?
4
I was
privileged
5
Textron
6
d e v e l o p m e n t , up a t
7
l a s t p o r t i o n of t h e c o u r s e .
8
w i t h him that e v e n i n g , the c o m p l e t i o n
9
and
class, a course
that's where
10
11
12
13
I met
Q
Did
On t h o s e
On either
16
happen
17
helicopter
18
A
19
talked
20
He knew
25
And
executive
conducted
then we had
to
to m e n t i o n
of t h e
course,
to t a l k — i s
only
Miller?
sir.
o n e of t h o s e o c c a s i o n s , d i d
to h i m t h a t y o u w o r k e d
in the
you
Iranian
deal?
that I was
that had gone
going?" and
A
occasions, yes,
I can't recall any
chitchat,
Business
that the
time that
I
specifically
to h i m a b o u t my a c t i v i t i e s , my e f f o r t s
Q
the
dinner
Texas.
occasion you met M i l l e r , G. William
Q
24
for
him.
you happen
A
23
they give
the
I met him at the Textron M a n a g e m e n t
Reviews when he comes
15
22
that
to g o t o
Exeter, and Mr„ Miller
14
21
this
one of the m e m b e r
of t h e B e l l
to I r a n a n d h e m a y h a v e
I said, "Fine,"
whatever?
Not w i t h
me.
Iran.
team
said, "How's
or s o m e t h i n g
Did that g e n e r a l s u b j e c t
in
come
like
up
in
it
that.
cocktail
704
614
Q
Not w i t h
you?
A
No.
Q
D i d the n a m e
Toufanian ever
you can recall when you were
A
No,
Q
Or the
Not—not
Q
Did the name
A
No,
that
I recall,
no.
Khatami ever
come
up?
sir.
Q
Or
A
No,
Q
Getting
Dshesh?
sir.
b a c k to t h e s o r t o f k e y
Shah and
Did y o u ever m e n t i o n
immediate
superior
A
Mr.
Sylvester.
Q
M r . Sylvester.
sation with
Miller?
Shah?
T o u f a n i a n , K h a t a m i , the
your
present with
that
sir.
A
Army:
c o m e up
the G e n e r a l
to h i g h e r - u p s
during
Did
players,
that
of
the
or w h o
you ever have a
conver-
S y l v e s t e r a b o u t w h o the key p l a y e r s
A
Yes,
Q
Khatami.
was
time?
were?
sir.
Did he r e c o g n i z e , g e n e r a l l y ,
K h a t a m i , Toufanian and
the
Shah were
c r u c i a l to
that
this
effort?
A
Yes,
Q
And
s ituation?
sir.
did
y o u e v e r t a l k to A t k i n s a b o u t
that
705
627
1
A
Yes,
2
Q
Did A t k i n s
3
and
the
sir.
Shah were
recognize
c r u c i a l to t h i s
4
A
Yes,
5
Q
Did
6
A
Yes,
7
Q
Atkins?
8
A
Yes,
9
Q
I m e a n , how many
10
had w i t h
11
you would
Khatami,
sir.
you talk
to h i m a b o u t
it?
sir.
sir.
have discussed
that you needed
13
tract
could
A
be
conversations
to s i g n
the r e a l solid
off "Yes"
W e l l , I would
y o u hav<
subject
where
key
players
on b e f o r e
the
say that we had had
discussions, numbers, I couldn't
16
p r i m a r i l y , the d i s c u s s i o n s
17
the p r o p o s a l
several
centered around
getting
to M r . or G e n e r a l T o u f a n i a n a n d
18
His M a j e s t y and
that's r e a l l y — w e r e
and
point
20
to g e t
the obvious
the
t h a t w e h a d to g e t
then
two key
the
to
people
channel
approved.
So d i s c u s s i o n s
a b o u t the higher
officials
22
o n , you k n o w , who do we need
to get a p p r o v a l s
23
really
two p e o p l e a t t h a t
24
Y e s , K h a t a m i was
25
mentioned,
con-
give you a n u m b e r , but
19
it
would
made?
15
21
Toufanian
effort?
Sylvester and Atkins about that
12
14
that
centered
but—
around
those
mentioned
and
other
people
from,
were
time.
706
628
1
Q
W e l l , how was Khatami m e n t i o n e d ,
specifically?
2
W a s K h a t a m i m e n t i o n e d a n d r e c o g n i z e d a s b e i n g o n e of the
3
people
4
c o u l d g e t the
5
t h a t h a d to s i g n off on t h i s p r o j e c t b e f o r e
A
contract?
He had t o —
He d i d n ' t h a v e t o s i g n
anything.
6
H e h a d t o g i v e h i s a p p r o v a l a n d he w a s m e n t i o n e d
7
w e had t o d e m o n s t r a t e
the aircraft
8
So d i s c u s s i o n s
t h a t we n e e d e d
9
and get the schedules
10
to r i d e
ensued
to G e n e r a l
in the s h i p s a n d
t h r o u g h the v a r i o u s d e m o n s t r a t i o n s
a s he w a s a k e y m e m b e r
of the A r m e d
13
needed
it.
14
Q
on
to g e t t h e
aircraft
for
fly in t h e a i r c r a f t a n d
11
his blessing
because
Khatami,
so t h a t it w a s a p p l i c a b l e
12
on the
go
we
Did M r , A t k i n s or M r , S y l v e s t e r , e i t h e r
of t h e m , s a y t h a t t h e y n e e d e d K h a t a m i ' s
16
g e t the
blessing
A
No.
18
Q
That's your
19
to
A
I g u e s s I w a s t h e one s a y i n g , "We n e e d
conclusion
from the
conversation?
20
people a l l to agree
21
I'm trying
to—
22
Q
Would
23
A
Yes,
Q
N o w , w e r e y o u e v e r told or did y o u k n o w
one
deal?
17
25
him
aircraft,
F o r c e s , that
15
24
you
or w e ' r e n o t g o i n g t o g e t t h e
they agree with
these
sale,"
you?
sir.
have you ever heard
or
from any source w h a t s o e v e r , that
any
707
629
1
p a r t of t h e
2
ever.went
2.9 m i l l i o n
dollar payment
to a g o v e r n m e n t
o f f i c i a l of
to A i r
Iran?
3
A
N o , s i r , I did
4
Q
Either military
5
A
No , s i r .
6
Q
D o y o u k n o w or h a v e y o u e v e r h e a r d
not.
or
7
discussion at Bell Helicopter
8
to I r a n i a n G o v e r n m e n t
9
s a l e of t h o s e
10
A
11
Q
13
fellow who's
15
A
helicopters
to
of A i r T a x i ?
Iran?
in I r a n a b o u t
that would
come u p .
frankly, didn't hear any scuttlebutt.
closemouthed
18
w a s , as I s a i d e a r l i e r , t r y i n g
19
the r i g h t p e o p l e . So I r e a l l y — r e a l l y
20
you a n y s c u t t l e b u t t , as y o u c a l l
22
had an o w n e r s h i p
23
suspect
24
25
over t h e r e .
Did y o u ever
think
interest
frankly.
in a p o s i t i o n
17
Q
the
I mean you strike me as a
16
21
the
not.
I,really, was not
nation
paid
in c o n n e c t i o n w i t h
got his ear to the g r o u n d ,
in a d i s c u s s i o n w h e r e
any
about money being
W h a t was the s c u t t l e b u t t
ownership
14
civilian?
officials
N o , s i r , I have
12
Taxi
to e v e n
And
It's a
I,
thrust
the r i g h t data
couldn't
to
give
it.
that G e n e r a l
in A i r
quite
pretty
And my primary
to g e t
be
Taxi?
Toufanian
Did y o u
ever
that?
A
No, sir.
Q
Would
I never
it h a v e
did suspect
surprised
it
whatsoever.
y o u if y o u h a d
found
708
630
1
o u t t h a t he d i d h a v e
2
3
such an ownership
A
Quite
f r a n k l y , it w o u l d
Q
Did Z a n g a n e h ever m e n t i o n
5
close
6
interest
relationship
surprised
in A i r
A
N o , s i r , did
Q
Now, with respect
Had
not.
to G , W i l l i a m
heard any rumor
or c o n v e r s a t i o n
t h a t he k n e w
or was a friend
of G e n e r a l
A
No , s i r ,
Q
Now, you previously
testified
came a
General
13
that there
14
requested
time
that Bell Helicopter
15
A
Yes,
16
Q
And
17
A
O h , I don't
Q
your
21
23
25
Q
no
him?
that?
I t h i n k , as
requested
And was
longer a need
that
in
those
I—•
him."
Let's
I recall my
Well, what's
get your
own
o f f i c e r s , as I
it i m p l i c i t
was
General
recall.
in t h a t , t h a t
to d e a l w i t h A i r
words.
t e s t i m o n y , it
to d e a l d i r e c t l y w i t h
Toufanian and his assigned
24
Toufanian
Taxi?
think he said
He s a i d , "Go through
that we w e r e
today
sir.
testimony about
A
here
deal directly with
n o t go t h r o u g h A i r
specific words.
19
when
anywhere
Khatami?
12
22
Miller:
you ever
11
20
ownership
Taxi?
8
18
me,
Khatami having a
t o A i r T a x i or h a v i n g
7
9
have
yes o
4
10
interest?
T a x i o r , in
there
other
was
709
631
1
w o r d s , did
2
relation
3
that statement
to A i r
conjecture
4
p o i n t , the m a n w a s
5
up to t h e t o p .
6
w h a t I d id „
7
Q
8
Tell
us a
9
operate s, what
things he
scuttlebutt
Zanganeh?
10
11
A
Well, I —
And
13
very cordialo
15
that doesn't
chitchats
M r . Zanganeh
o t h e r than h e
SOUK
thing
done,
that's
Zanganeh?
he
about; what's
the
is a v e r y n i c e
likes
I mean,
man.
he's
gentleman.
to p l a y
of the v a r i o u s
Q
this
stand-
l i f e , how
He's a
Does he talk about his
of
his
tennis.
country
clubs.
social contacts
a
lot?
A
He—
20
Q
Did
21
A
No.
22
Q
Did he
man
he, I mean?
of influence
24
is M r .
say a whole buncho
He's a member
19
25
of a f e l l o w
He's articulate,,
s o c ia 1 a c t i v i t y
17
23
taking
s a i d he w a n t e d
Social a c t i v i t y , I know nothing
16
18
the g u y w h o w a s
A n d w h a t he
What kind
12
14
that. From my
little bit about his social
on
have
Taxi?
I could not
A
by G e n e r a l T o u f a n i a n
A
about
No.
lead
y o u to b e l i e v e
in t h e h i g h e r
The main
government
discussion
if t h e r e w a s a n y t h i n g
t h a t he w a s a
circles
that we w o u l d
to talk a b o u t , w a s his
in Ir£
talk
wife.
710
614
1
He w a s v e r y
2
b l i n d . A n d he w a s v e r y a c t i v e w i t h
3
the b l i n d
4
5
6
^
8
that a
concerned
community
about his wife
in I r a n . A n d
lot, but that's about
Q
Did
relationship
he e v e r
w i t h the
A
No,
her
in
that—
she
Q
Did y o u
No.
Q
What would
A
He would
supporting
He talked
S h a h , to
that he had a
close
you?
ever c h i t c h a t a b o u t
he s a y a b o u t
that?
General
Khatami?
say that General Khatami was a
to His M a j e s t y
and the other being
that he was
to his
helpful
c r o w n , back w h e n he back
in
D o y o u k n o w , or h a v e
slush funds
you ever
Bell Helicopter
or o f f t h e r e c o r d
for
that
severa
sister;
maintaining
into power;
he was a v e r y p o o r p i l o t , but t h a t ' s a b o u t
discussion within
very
in a v i a t i o n a f f a i r s ;
r e a s o n s , o n e of w h i c h h e w a s m a r r i e d
Q
about
it.
indicate
G e n e r a l K h a t a m i was v e r y close to His M a j e s t y
the S h a h ' s
was
sir,
A
astute advisor
because
that
it.
heard
any
of t h e u s e of
any
books?
A
No,
sir.
Q
For
the d i s t r i b u t i o n
A
No,
sir.
Q
Monies
of m o n i e s
to
government
officials?
or a n y t h i n g e l s e
of a n y
value?
711
633
1
A
No,
sir.
2
3
M R . MARINACCIO:
question with both
4
Q
Could
I raise
the w i t n e s s a n d M r .
You mentioned
almost at the outset
t e s t i m o n y t h a t w h e n y o u w e n t to I r a n a n d
6
during
7
that you would
8
further
9
make a trip report
on
make
somebody
11
Sylvester."
12
have
13
do the trip report
higher
And
in t h a t p a r t i c u l a r
I think you
on
15
Q
Is
16
Bell Helicopter
trip b y the
18
A
nodded
fellow
trips.
his
the
meeting
that
leading
That's
didn't
because
Mr.
it w o u l d
fellow
to
the
head.)
to be m a d e
on
in
every
delegation?
practice
to t r y to
document
common.
It v a r i e s a s t o w h o w r i t e s
erally
little
or c o m m o n p r a c t i c e
for a t r i p r e p o r t
W e l l , it's c o m m o n
20
s p e a k i n g , the senior member
the r e p o r t .
of t h e
group
Gen-
signs
report.
23
If
24
anything
25
report
indicated
it c o m m o n p o l i c y
17
22
'74,
that?
(The w i t n e s s
21
back
then a
S y l v e s t e r w h o w o u l d h a v e b e e n the
A
your
came
your
'72, '73,
up t h a n m e w a s t h e r e , n a m e l y ,
14
19
And
of
in y o u r t e s t i m o n y , y o u s a i d , " W e l l , I
10
been
trip r e p o r t s .
more
Soutter:
5
the r e l e v a n t p e r i o d , let's s a y ,
one
it's a v e r y short
significant
during
trip and
there
wasn't
the v i s i t , sometimes
isn't n e c e s s a r y , and a report won't
be
the
filed,
712
634
1
because
nothing
2
3
policy
4
Q
to w r i t e
a trip
s p e a k i n g , y e a h , it's
the
6
trip
7
it i n t o t h e
8
after
trip and
it w a s h i s r e p o n s i b i l i t y
report, would
file
he d i d
9
A
10
necessarily
11
Q
the
or w o u l d
he just
He g e n e r a l l y w o u l d
g i v e me a
Sure.
How many
I'd
say s e v e r a l .
15
g o i n g t o the f i l e s a n d
Q
send you a
send a c o p y .
Boy, I don't
trip reports
in
s a l e of h e l i c o p t e r s
know, but
I couldn't
it m u s t h a v e
say how m a n y
see h o w m a n y t r i p r e p o r t s y o u d i d
Air
19
A
I d o n ' t h a v e a n y of t h o s e
Q
Who's got
to
that
Zanganeh?
20
25
been—
looked at your files
check and
24
thing?
looking.
Have you recently
Taxi and
'73,
without
mentioned
23
wouldn't
'72,
18
22
put
copy
He
17
21
the
he
draft.
14
16
to w r i t e
on
final?
'74 d i d y o u d o on t h i s
A
Sylvester
he s h o w y o u a d r a f t b e f o r e
and
13
the
report.
F o r e x a m p l e , if y o u w e r e w i t h
5
12
happened.
But, generally
files.
those?
A
These
Q
And where are
files are a l l
A
I don't
Q
Over
A
I would
international
they?
know.
in S y l v e s t e r ' s
suppose
office?
so, I don't
know.
marketing.
713
635
1
Q
Did
2
A
No, sir.
3
y o u r e t a i n a n y of t h o s e
I k e p t , but that's
4
I have
yourself?
my personal notebook
that
all„
M R . MARINACCIO:
5
make a request
6
two ways:
7
reports. And,
8
look through particular
9
poena and whether
10
files,
that—well,
M r . Soutter, can I
let me a s k y o u :
(1), I think we w o u l d
( 2 ) , I'd
like
one
to l o o k a t
l i k e to a s k y o u if y o u
files
we have
in r e s p o n s e
some
of
of t h o s e
trip
would
to the
sub-
documents
or
not.
11
M R . SOUTTER:
12
through some
of what
I personally
I believe was
looked
in e x c e s s
of
13
11 cartons
14
during
15
not r e c a l l seeing a n y trip r e p o r t , as s u c h .
There
16
documents
that reflected
or A i r
17
T a x i , and
those were
18
completed
that and
of m a t e r i a l from I n t e r n a t i o n a l
the time period w e ' r e
19
an
21
know anything about
23
24
25
K h a t a m i or Z a n g a n e h
let h i m
Mr.
investigation
I believe
I could
trip
h i m , but I've
Sales, existing
large
as
files
files.
from—what
I h a v e m a d e as c o m p l e t e
reports.
I
I hear M r .
through
don't
Gallagher.
International
W e g o t up I t h i n k
we call "dead
looked at M r . Gallagher's
were
Galerstein
possibly make.
looked
do
finish.
M R . GALERSTEIN:
20
22
talking a b o u t , and
submitted.
I'll
Marketing
it w a s
storage."
p e r s o n a l d i a r y , if it
11
I have
is
714
636 1
1
such a diary.
2
a t a l l to t h e — a n d
3
It's v e r y m e a g e r and n o t
I've
4
national.
5
tion.
6
Sylvester.
7
organization
8
documents
his
gone
that
than
over
looked
Tom and I , and
10
spent, what
11
of t h o s e
12
to F i n a n c e . I w e n t
13
everything
16
he referred
opportunity
to
in
this
more
at.
up t o E s t i m a t i n g .
I don't
I went
I've done
know what else
to
W e l l , could we
to l o o k a t h i s p e r s o n a l
I,
through
that search.
MR. MARINACCIO:
the
spoken
that's Tom Soutter and
I continued
I can d o .
14
Corpora-
place
is i t , t w o f u l l d a y s , l o o k i n g
files.
15
I have
t h i n k of a n o t h e r
I c a n go t o , to g e t a n y
I have
Inter-
to B e l l O p e r a t i o n s
to M r . A t k i n s .
I cannot
9
responsive
file.
g o n e o v e r to B e l l H e l i c o p t e r
I've gone
I've
other
log
all
up
about
do.
have
that
to?
17
M R . GALERSTEIN:
18
M R . MARINACCIO:
I mean, I would
20
M R . GALERSTEIN:
— I ,
21
M R . MARINACCIO:
Wait a minute n o w .
19
ga t h e r —
22
would
23
notations
24
25
Well—
understand
I—that—
t h a t on t h a t l o g t h e r e w o u l d
that involved Zanganeh
M R . GALERSTEON:
MR. MARINACCIO:
be
and—
That's not
true.
That's not
true.
I
715
637
1
M R . GALERSTEIN:
Not
2
M R . MARINACCIO:
No n o t a t i o n s
3
Air
THE W I T N E S S :
notations
on
M R . MARINACCIO: What notations
be
in tha
l o g , in t h a t
8
9
N o . T h e r e w o u l d be
Organization
demonstration; hardware performance
10
m e to c o l l e c t a p a r t i c u l a r
11
above-ground
12
about
of
the
data; a note
chart that shows
for
hovering-
e f f e c t p e r f o r m a n c e , and that's
really
ito
13
M R . GALERSTEIN:
14
that had a n y r e f e r e n c e
15
responsive
16
s u b p o e n a , it w o u l d be h e r e b e f o r e
I guarantee
to M r . Z a n g a n e h or
that
M R . MARINACCIO:
18
in B e l l H e l i c o p t e r of d e s t r u c t i o n
19
certain
if
anything
to t h e l e t t e r a n d t h e n s u b s e q u e n t l y
17
the
you.
Is t h e r e a n y
policy
of d o c u m e n t s a f t e r a
time?
20
M R . GALERSTEIN:
Yes.
21
M R . MARINACCIO:
What
22
M R . GALERSTEIN: W e l l , each
23
has a separate
24
that Tom
25
later were scheduled
would
diary?
THE WITNESS:
23-553 O - 78 - 46
no
that.
6
7
involving
Taxi?
4
5
true.
policy.
is the
The files that w e
policy?
department
looked
Soutter and I looked t h r o u g h , I found
to be d e s t r o y e d
one w e e k
througt
out
later.
>
716
638
1
MR. MARINACCIO:Had
2
M R . GALERSTEIN:
3
been destroyed.
4
dead
5
don't
6
to m a k e
storage.
they have and
they have
7
8
f i l e s n o t be
9
them destroyed
11
of
12
d e s t r o y e d , but
13
15
reports ?
copies
these
BY M R .
DOHERTY
18
Q
The
19
gather
20
Gallagher
21
policy that
22
respect
only question
referred
governs
is r e f e r r i n g
we looked
to m e
matter
been
to—
M r . G a l l a g h e r , did
N o , s i r , I did
not.
that occurs
to me. i s :
trip r e p o r t s w e n t to w h a t
Files.
of
Mr.
Is t h e r e a
documents?
What M r .
Gallagher
the files
you
I
C e n t r a l F i l e s , if y o u k n o w , w i t h
to a s C e n t r a l F i l e s a r e
through.
As a
trip
M R . GALERSTEIN:
25
want
I don't
of y o u r
to a s C e n t r a l
to r e t e n t i o n
24
Sure.
sure they have not
it d i d n o t o c c u r
these particular
23
that
circumstances.
THE W I T N E S S :
17
morning
Can we request
in y o u r p e r s o n a l f i l e s
16
under
MR. MARINACCIO:
retain
in t h e
I
destroyed?
fact, I am absolutely
14
onto
not been destroyed.
I will check
M R . GALERSTEIN:
10
now
not.
M R . MARINACCIO:
those
destroyed?
t h e m to b e p u t b a c k
I h o p e t h e y have
believe
sure
I ordered
they been
N o , they have not
that
717
.64 5.
1
2
M R . DOHERTY:
respect
to t h o s e , t h e i r r e t e n t i o n a n d
3
4
5
6
7
Is t h e r e a p o l i c y
M R . GALERSTEIN: As
is e s t a b l i s h e d
items
number
distribution?
I s a i d , that
by each d e p a r t m e n t , except as
that we a r e
legally bound
of y e a r s . A n d
with
to m a i n t a i n
I h a v e , on m a n y
policy
to
those
for a
occasions—well,
I won't; s a y on " m a n y " o c c a s i o n s , b u t I h a v e o n
®
occasions
distributed
9
maintenance
memoranda
of t h a t t y p e o f
trip reports
with respect
have gone
I assume—with
it's a trip r e p o r t
S a l e s , it g o e s
In w h a t
having
other
produced
have gone
to do w i t h
Would
of t h e o t h e r
to t h a t
same
M R . DOHERTY:
Department.
i t , in y o u r
that
documents
best
the
that
you've:
yes.
same p o l i c y would
a s to t h e o t h e r
makes
if
International
S o , it w o u l d a p p e a r a s
M R . GALERSTEIN:
to m e f r o m t h a t . It just
that
In m y j u d g m e n t ,
to t h e e x t e n t o f t h a t p o l i c y , t h e
to the trip r e p o r t s
with
department?
M R . GALERSTEIN:
applied
I assume
to t h e s a m e d e p a r t m e n t
telexes and most
would
familiar
International Sales
M R . DOHERTY:
judgment, have gone
the
department
I a m not
the p r o c e d u r e s .
to the
to
to?
M R . GALERSTEIN:
the—
several
file.
M R . DOHERTY:
those
certain
I mean,
sense
have
documents?
it d o e s n ' t
that
thou^l
that
appe£
policy
718
1
applies
to a l l d o c u m e n t s , but I don't draw a n y
2
clusions—that
3
what
I don't
conclusion, based
M R . D O H E R T Y : W e l l , do y o u h a v e
5
explanation
6
t h i n k m a y be t h e r e a s o n
7
didn't
turn
or c a n y o u s h e d a n y
up
in t h e
that
that
keeping, and
that
that
12
M R . GALERSTEIN:
and
in a n y
apparently
explanation
it's sloppy
sloppy
I can't debate
You asked
it w i t h
dead
work.
But no report
showed
for
my
engaging
debate.
Could
16
I make a request
testimony about
of y o u , in the
17
of M r . G a l l a g h e r ' s
18
t o , in t h e n e x t
19
o f t h e s e c i r c u m s t a n c e s , of t h e d o c u m e n t s a n d m a k e
20
statement
21
these
the t r i p
few d a y s , m a k e a s e a r c h
to t h e
Senate
trip
in t h e
Banking Committee
light
reports,
light
a
concerning
reports?
22
M R . GALERSTEIN: Well, I can't make
23
statement
24
the
25
to find w h a t e v e r
up.
you.
M R . M A R I N A C C I O : We are not
14
15
I have an
it's just
M R . COLLINS:
explanation
any
search?
it's s l o p p y f i l i n g and
storage
and
you
the t r i p r e p o r t s
11
13
l i g h t on w h a t
M R . GALERSTEIN:
8
9
I find
find.
4
10
on w h a t
con-
Senate
concerning
the
trip r e p o r t s .
Banking Committee
documents
is w h a t
A l l I can
I've done
are a v a i l a b l e .
in
I never
any
tell
order
saw c
719
.64 5.
i
trip
2
context.
report.
I don't
understand
I mean, I understand
3
g e n e r a l l y , b u t a l l I can do
4
and
I have
done
5
MR. MARINACCIO:
p o i n t , since a subpoena
witness has
8
period, that I think there's
9
run down the trip reports
and
12
whether
the
find
is o u t s t a n d i n g a n d
talked about
out where
or n o t
this
are
items
Well, I think at
trip reports
since
during
an obligation
this
the
to
this
relevar
specifically
that may have been w r i t t e n
G a l l a g h e r , A t k i n s , Sylvester, and
11
in
trip reports
is l o o k for the
7
13
what
they are
that.
6
10
what
Rudning, and
they a r e , w h a t was
they should
be p r o d u c e d
in t h e m
Farmer,
and
pursuant
to
subpoena.
14
MR.
GALERSTEIN
15
MR.
MARINACCIO
Is t h a t
16
MR.
GALERSTEIN
S u r e , it's
17
MR.
MARINACCIO
Thank you very
MR.
GALERSTEIN
A n d , if I k n e w w h a t
18
19
d o , I ' d do
22
iAi,—
M R . MARINACCIO:
think
i n v o l v e d , find
23
t r y to
24
the d o c u m e n t s
25
Well, let's
you should, at a m i n i m u m , talk
find
reasonable?
reasonable.
much.
to
it.
20
21
by
out w h e r e
they
sent their
the d o c u m e n t s and have
to s e e
to t h e
if t h e y c a n
M R . GALERSTEIN:
see.
I
people
documents,
s o m e b o d y go
identify, trip
through
reports.
Well, I have g o n e —
I-
720
642
1
2
M R . MARINACCIO:
these documents
3
4
those documents more
in g e t t i n g
6
uncerta inty.
7
9
10
I know a trip
report", Mr.
i n s i s t i n g , that
18
effort.
cannot
22
24
25
it b e f o r e
Q
whether
is n e v e r
any
all
upon
hours.
Does
if—
usually.
it s a y
"trip
Usually,
yes.
S o , if it w e r e
there,
you.
I retrace
In f a c t ,
my steps and make
MR. MARINACCIO:
More
M R . GALERSTEIN:
Off the
almost
another
than t h a t , we
ask.
(Off t h e r e c o r d
BY M R .
interested
it, so, therefore,
I am perfectly w i l l i n g .
17
21
get
Gallagher?
have
19
to
through
it s a y s , " t r i p r e p o r t , "
M R . GALERSTEIN:
you would
there
I spent hours
THE WITNESS:
16
23
so t h a t
MR. MARINACCIO:
14
20
I am very much
I see
that
here.
Nobody wants
looked very carefully
report when
I m e a n , I think
13
15
I.
of t h o s e f i l e s , 11 f o l d e r s .
11
12
than
those documents
I have
It's obvious
p o s s i b l y be r e l e v a n t
M R . GALERSTEIN:
5
8
could
record.
discussion.)
MARINACCIO
I have one
this document
final question:
is m a r k e d
I don't
as an exhibit
know
for
721
643
1
reference
2
can read
3
But here's
4
dated April
5
of y o u r
t e s t i m o n y , but
it to y o u .
Perhaps
a commuique
it's
from Zanganeh
18, 1972 and
"As a r e s u l t
it
so s h o r t , I
it's b e e n m a r k e d
to A t k i n s , a n d
efforts
7
y o u that
8
i n t e n t of G o v e r n m e n t
9
AH-lJ and
of G a l l a g h e r , I a m p l e a s e d
the
letter
of i n t e n t
214A, subject
country
11
M r . G a l l a g h e r , -who is
12
W o r t h , is h a n d c a r r y i n g
demonstrations
mi h i s w a y
the
same
signed
lo
further
15
Zanganeh."
16
Q
You handcarried
17
A
Y e So
Q
That was General Toufanian's
19
intent
20
dated A p r i l
A
letter
of
intent
letter
back?
of
1972?
M R . FREED:
22
24
the
to
regards,
Ye s , s i r .
21
'72?
MR. MARINACCIO:
23
Fort
congratulations
Best personal
18,
in
today.
letter;awaiting
all concerned.
and
firm
models
to s a t i s f a c t o r y
has been
14
18
inform
evidencing
13
instructions
tireless
to
o f I r a n to a c q u i r e
10
it's
says:
of the s u p r e m e and
6
already.
Q
'72, I'm
sorry.
What were your s u p r e m e , tireless
that Z a n g a n e h was r e f e r r i n g
efforts
to?
25
A
A l l those presentations, all those
trips,
722
64 4 1
1
all
that data
2
3
5
6
7
1'ere y o u d u l y
Q
when
4
you got here about
W e l l , the
A
I think
it a n d
of
provided.
Yes, I guess
sold
12
A
21
22
23
24
25
duly
bore
upon
the
congratulated.
fruit when
demonstration,
MR. MARINACCIO:
quest ions
you
yes,
for
I haye no
your
coming here and
thank
you
your test imony.
M R . GALERSTEIN:
(The e v e n i n g
at
further
•
I appreciate
18
20
I was
it s u b s e q u e n t l y
Contingent
17
19
letter
s ir.
15
16
"is this a good
at
the h e l i c o p t e r s ?
13
14
know.
looked
know.
And
11
and a half and he
really—
9
Q
Atkins
letter was very short, you
sa i d — - i t w a s n ' t
intent V you
by M r .
that?
it w a s a s e n t e n c e
8
10
congratulated
recess
Thank you,
was
8 : 3 0 a . m . on S u n d a y , F e b r u a r y
(The
Transcript
5,
taken
to
Edgar.
reconvene
1978.)
is c o n t i n u e d
in V o l u m e
V.)
723
—• - -
1 —•-
—
-—
-
~
.64 5.
'
1
2
3
4
5
UNITED
STATES
SENATE
6
STAFF
7
8
COMMITTEE
OF
ON B A N K I N G , H O U S I N G A N D
URBAN AFFAIRS
9
10
11
STAFF
INVESTIGATION
RELATING
TO
12
THE NOMINATION
13
14
G. WILLIAM
OF
MILLER.
15
16
VOLUME
17
V
18
19
20
KEE, MEYER, STURGESS & ASSOCIATES
Registered Professional Reporters
1 1 0 2 O i l & Gas B u i l d i n g
Fort W o r t h , Texas 7 6 1 0 2
21
22
23
24
Vincent G. Meyer
Gaylord Sturgess
Larry Shatter
Donna McMullen
Ksthy Sanders
Bari Wells
Charles L. Kee
Room 410
Federal Courthouse
Fort Worth, Texas
25
Telephone: 8 1 7 336-3042
724
.64 5.
1
2
INDEX
MORNING
3
CHARLES R.
RUDNING
4
5
6
7
AFTERNOON
FARMER
V
5,
1978
Examination
Examination
Examination
Examination
Examination
Examination
SESSION, SUNDAY, FEBRUARY
EDWIN L .
8
- VOLUME
SESSION, SUNDAY, FEBRUARY
5,
Examination
Examination
Examina tion
Examination
E x a m i n a tion
E x a m i n a t ion
9
10
-
647
Marinaccio
Collins
Marinaccio
Collins
Doherty
Marinaccio
1978
649
669
690
694
704
729
735
M a r i n a c c io
Freed
Collins
Doherty
Collins
M a r i n a c c io
735
743
753
759
781
783
11
R E M A R K S BY M R .
DOHERTY
791
12
REMARKS
SOUTTER
794
13
CERTIFICATE
BY M R .
805
14
15
NUMBER
16
79
EXHIBITS
Seven-page document
Request Document
-
IDENTIFIED
Information
769
17
80
Letter,
1/27/78
Page
7 8 2 , l i n e 14 - C h e c k if i n t e r n a l a u d i t w a s
and produce related d o c u m e n t s .
Page
797, line 2
- D a t e of a u d i t c o m m i t t e e ' s
million payment.
Page
7 9 7 , line 20 - Board
of p e o p l e p r e s e n t .
792
18
INFORMATION
19
20
TO BE
FURNISHED
performed
21
22
23
24
25
meeting
dates and
$2.9
names
725
.64 5.
i
SUNDAY, FEBRUARY
2
MORNING
3
5,
1978
SESSION
( W h e r e u p o n , the p r o c e e d i n g s
4
reconvened
5
recess
at 8:30 o ' c l o c k a . m . , p u r s u a n t
on S a t u r d a y , F e b r u a r y 4 ,
6
Mr. Rudning.
8
testimony, interrupting
We appreciate
9
Happy
MR. MARINACCIO:
11
of
12
payment
the
Staff
of
inquiry
in 1 9 7 3 ,
14
to the G o v e r n m e n t
'74 a n d
15
i n t o the f a c t s
'75, and
of
your
is a
you.
continuation
surrounding
Bell
the
to A i r
i n t o t h e s a l e of 4 8 9
Taxi
helicopter!
Iran.
The purpose
of t h e i n q u i r y
16
facts relating
17
Banking Committee may be more
18
to the n o m i n a t i o n
19
the F e d e r a l R e s e r v e
20
morning,
to g i v e
to h e l p
This
the $ 2 . 9 m i l l i o n b y T e x t r o n
13
Sunday
Sunday.
MR. RUDNING:
10
Good
your c o m i n g by
your
evening
1978.)
MR. MARINACCIO:
7
were
to t h e
to t h i s
transaction
is to e l i c i t
so t h a t
fully
the
informed
of G . W i l l i a m M i l l e r
the
Senate
with
respect
to b e a m e m b e r
of
Board.
We a p p r e c i a t e
your appearing here
voluntarily
21
t h i s m o r n i n g , b u t y o u w i l l be u n d e r o a t h .
We
are
22
authorized
to
administer
23
24
25
oaths and
be under
subject
by
the S e n a t e
Banking Committee
bake testimony under
o a t h , a l l of
to a l l of t h e
oath.
the t e s t i m o n y
l a w s of
And
because
you'll
that you give w i l l
the U n i t e d
States
be
726
648
i
applicable
Co S e n a t e p r o c e e d i n g s
2
or f a l s e
3
advise
4
possibly
5
by a r e l e v e n t
statements
you that
the
be used
6
of w i t n e s s e s .
testimony
of
7
p r e s e n t with y o u , and
8
y o u , M r . Soutter
9
I'll
10
Marinaccio
11
Committee.
12
Member
13
Counsel
14
This
15
Division
and
to the S e n a t e
18
of
Banking
this
is
with
Lindy
to the S e n a t e
Banking
Professional
Committee;
of the S e n a t e
John
Banking
He's Associate
At
this
an oath for your
21
Committee
inquiry at
the S e n a t e B a n k i n g
19
Collins,
Committee.
Director
you're about
23
and
for
of
t i m e I'd
testimony.
like you
the
of
the
the
detailed
of
Chairman
to r i s e a n d
Raise your
swear
to g i v e w i l l b e t h e
nothing but
the p u r p o s e
the r e q u e s t
Staff
Committee.
Do you solemnly
22
to h a v e . c o u n s e l
of E n f o r c e m e n t a t t h e S E C , a n d h e ' s b e e n
conducting
25
Department.
My name
is B r u c e F r e e d , h e ' s
is D a v i d D o h e r t y .
could
proceeding
counsel present
identify myself.
to the M i n o r i t y
to
Galerstein.
of t h e S e n a t e B a n k i n g
17
24
the r i g h t
you do have
and M r .
perjury
I do have
enforcement
I'm Special Counsel
This
16
20
And
the E x e c u t i v e
you do h a v e
involve
that you w i l l give
in a s u b s e q u e n t
agency
And
ChaC
that
hand.
testimony
t r u t h , the w h o l e
t r u t h , so h e l p y o u ,
MR. RUDNING:
right
the
I
M R . MARINACCIO:
take
truth
God?
do.
Please be
that
seated.
727
.64 5.
i
2
3
4
CHARLES R .
having been first duly sworn
whole
t r u t h and
follows,
nothing but
BY M R .
Q
8
9
A
Charles Roger
10
Q
And
11
Textron
12
A
which
that
20
23
24
25
the
Rudning.
I'm a President
by
How
owned
of B e l l O p e r a t i o n s
subsidiary
of
Corporation
Textron.
long have you b e e n employed
by
them
in
capacity?
I believe we
of
'76.
Q
So s i n c e
And what does
company have
formed
that
the c o r p o r a t i o n
date.
that c o m p a n y d o , does
some particular
in
relationship
to t h e
that
Iranian
s ituation?
A
21
22
full name for
in w h a t c a p a c i t y a r e y o u e m p l o y e d
is a w h o l l y
January
18
you state your
Bell?
A
16
19
Would
Q
14
17
as
MARINACCIO
record ?
15
truth, testified
EXAMINATION
7
13
the
the
to-wit:
5
6
RUDNING,
to t e l l the t r u t h ,
Y e s , it d o e s .
co-production program
for
We're performing
Iran.
helicopter
industry
is t h a t w e
turn over an o p e r a t i n g
think
1983.
it's
the
We are creating
for t h e m , the u l t i m a t e
industry
a
g o a l of
to t h e m ;
which
I
728
.64 5.
Q
1
2
held
3
became
4
or B e l l
5
Would
in T e x t r o n
you describe
Bell from
P r e s i d e n t of, w h a t
B e l l O p e r a t ions-r—
Q
Bell
7
A
—Corporation.
8
This
is f r o m m e m o r y .
Q
To
A
But I would
12
I was Manager
13
Helicopter.
the b e s t of y o u r
exact
President
16
in e a r l y
Q
sixties
Bell
to
for B e l l
t h e n to the P r e s i d e n t of B e l l
Vice
Helicopter
Operations
'76.
What responsibilities
contract
20
r e t e n t i o n of A i r T a x i a s B e l l ' s
A
for
sixties
I was promoted
of P r o g r a m M a n a g e m e n t , a g a i n
19
21
the m i d d l e
of C o n t r a c t s A d m i n i s t r a t i o n
And
18
recollection.
guess about
In the l a t e r
14
officer
for B e l l
None.
heading
contractual relationships with
24
at
that point
that
you have had
agent at
that
The Contracts Department
23
up at
would
in 1 9 6 8 w i t h r e s p e c t
22
I don't remember
dates.
11
25
Company,
Operations.
10
17
you
you
International?
A
15
that
1967 u n t i l
is i t , B e l l H e l i c o p t e r
6
9
the p o s i t i o n s
the p e r i o d
time was mostly engaged
the V i e t n a m
to
time?
that
I was
in a l l o f
the U . S . G o v e r n m e n t .
situation had
our
There were separate contracts
as
the
full
our
And
attention
activities
729
651
17-07
1
within
International Marketing
2
international marketing
3
that statement
4
co-production
5
G e r m a n y , and
6
transac tion.
7
I can
that dealt w i t h
business.
t h i n k of
program working
The only e x c e p t i o n
is t h a t w e h a d
But my responsibilities
relationships with
9
I'll
Q
11
why Air
12
in
related
the U . S . G o v e r n m e n t
s a y , the D e p a r t m e n t
10
of
to
Bell's
in t h e a r e a
of,
Defense.
the r e a s o n s w h y A i r
Taxi was
the
reason
retained
1968?
13
A
W e l l my k n o w l e d g e
relates
to t h a t w e a s
14
matter
15
representatives
16
own employees
17
A i r T a x i was engaged by us as a m a n u f a c t u r e r ' s
of p o l i c y
or p r a c t i c e u t i l i z e
around
the world
i n a l l of
tive, m i d d l e - — w e l l , I guess
19
late
fifties.
20
about
21
They
22
And
23
w i t h us since
And
the f i r s t
24
I think
the
that
our
I believe
representain
the
apparently
documents.
the d a t e ' s
t h e y h a v e b e e n u n d e r a l i n e of
But
1968.
contracts
time.
I had n o t h i n g
r e l a t i o n s h i p w i t h A i r T a x i or
And
time w a s
I believe you have
c a m e b a c k on l i n e w i t h XLS .
I believe
of p u t t i n g
then there w a s a p e r i o d of
four y e a r s , and
a
manufacturer's
instead
these c o u n t r i e s .
18
25
of
that
D o y o u k n o w or h a v e y o u ever heard
T a x i or
to
a
in the F e d e r a l R e p u b l i c
I as an e x c e p t i o n was h a n d l i n g
8
the
to do w i t h
the
original
that r e l a t i o n s h i p
which
730
652
1
r e a c t i v a t e d in t h e
2
participate
3
in
Have you ever heard
Q
retained
5
had a r e l a t i o n s h i p
in 1 9 6 8 b e c a u s e
6
A
No.
7
Q
Or
8
A
No.
Q
Or s o m e
10
sixties.
I just
the
that A i r T a x i was
e i t h e r A i r T a x i or M r .
with General
Khatami?
special relationship with
A
No.
Q
N o w , could
you describe
13
your
14
the a g r e e m e n t b e t w e e n A i r T a x i a n d
15
payment
16
way, whether
17
tion you had and
familiarity with
of the $ 2 . 9 m i l l i o n , j u s t
you participated
so
W e l l , you've asked
19
Q
Y o u did
20
A
Sir?
24
Q
Y o u did
Signed
Q
I
A
You've
1, 2 and 3
Bell which
led
to
in a g e n e r a l s o r t
or d i d n ' t , w h a t
to
the
of a
participa-
me-™
s i g n s o m e of the
s i g n s o m e of
a l l of
documents.
those
them, I
documents.
believe.
see.
asked me a very big question.
25
Number
way
on?
A
A
in a g e n e r a l
the A m e n d m e n t s
18
23
General
Toufanian?
12
22
Zanganeh
Shah?
11
21
didn't
that.
4
9
late
give you some off-the-top
answers.
Let
me
731
.64 5.
I was asked
1
2
I t h i n k , in e a r l y 1972
3
to do w i t h
It w a s r e p o r t e d
5
strong possibility
6
I think my first v i s i t
10
to m e t h a t
me
there was a
to I r a n w a s
in e a r l y
'72.
s o m e h o m e w o r k , it l o o k e d
t h a t w e h a d a l i a b i l i t y , it c o u l d be a r g u e d
l i a b i l i t y w i t h A i r T a x i that c o u l d b e b i g if a
program came
11
anything
of a b i g m a r k e t d e v e l o p m e n t , a n d
A s p a r t of d o i n g
7
9
is the f i r s t t i m e I h a d
situation.
Iran.
4
8
to g e t i n t o the I r a n i a n
to
large
pass.
So m y m e m o r y
is that o n e of the t h i n g s
I was
'72 w a s
that
12
concerned about
13
liability
14
a n y b o d y at t h a t p o i n t j u s t h o w b i g a p r o g r a m m i g h t
15
to
in e a r l y
in s o m e , w a y .
And
trying
I don't
to c o n t a i n
t h i n k it w a s c l e a r
to
come
pass.
So, I b e l i e v e
16
17
to
w e had a
had difficulty
the f i r s t a m e n d m e n t , w h i c h
negotiating, was
to p u t s o m e
we
limits—and
18
I think we put some limits
in the a r e a of a b o u t
19
a half per c e n t , I believe
that's what Amendment Number
20
says .
21
At
two and
t h a t t i m e , the p r o p o s a l s w h i c h o u r
people
22
h a d f i l e d w e r e for s m a l l n u m b e r s of s h i p s , I t h i n k
in
23
t h e a r e a of 50 or less of our
and
24
50 or less of o u r g u n s h i p .
25
talk o r , any way you'd care
23-553 O - 78 - 47
transport helicopter
1
But there was h o p e , marketing
to c a l l i t , that
it m i g h t
get
732
654
1
to b e b i g g e r
than
that.
So w e w e r e
2
3
expanding
market.
And
4
the test p r o g r a m s and
B u t as
5
6
began
quite
lucky
I assume
things
it t u r n e d
to p a r t i c i p a t e
that you heard
that w e n t
on.
to g o f r o m a d i r e c t c o n t r a c t u a l r e l a t i o n s h i p
7
8
to g a t h e r u p o u r
9
move
on A m e n d m e n t - ^ I believe
10
pull
the a m o u n t w e o w e d A i r T a x i f r o m
11
per c e n t down
12
maneuvering
13
programs
the f e e l i n g
14
were
15
we would
16
training activities
to 1 p e r c e n t .
And
that point
to b e a s k e d
the w i n n e r
to a t
for
two and
least bid
some major
the
18
operation before
19
Government
20
program.
I think you said 489
21
the r i g h t
number.
22
Then
23
training and
training
24
participate
25
reduce
in t h a t .
became
and
the
2
the
Taxi.
interested
to t r y
into
Iranian
for
They asked
And we elected
our r i s k w i t h A i r
and
ships and I think
situation.
we
possibly
logistics
an FMS arrangement
the I r a n i a n s
logistic
half
to l o o k l i k e
on and
to
helicopter.
the U . S . G o v e r n m e n t
consummated
2,
a
started
to t a k e o u t
it b e g a n
to s u p p o r t
a
I believe we
So, I believe we brought Amendment
17
an
needed
it's Amendment Number
to t a k e o u t s p a r e s a n d
be
to
that we again
it
l i a b i l i t i e s w i t h A i r T a x i , and w e made
b e c a u s e at
going
an
all
into large n u m b e r s and as
FMS r e l a t i o n s h i p , we had
in
about
us
to
hardware
that's
in
the
to
further
733
655
We went
1
2
negotiations.
3
t a k e u s to c o u r t a n d
4
five
through a very difficult
T h e y had
strong
feelings
put you at, I believe
7
••nat's o u r f i n a l o f f e r , a n d a c c e p t
8
fight
it o u t
9
think
that occurred
So
10
period
the n u m b e r
And
about
this w h o l e
of a l i t t l e m o r e
And
12
during
they accepted
the m i d d l e
of
that period
t r a i n i n g and
direct contracts
logistics w h i c h we ended
17
definitive contract with
18
helicopters
about
19
in a p e r i o d
o f a b o u t , w h a t , 1 4 , 15
22
Air Taxi went
23
in t h e m i l i t a r y
24
Khatami?
25
A
that any p a r t
to a n y
over
on
up w i t h
the U . S . G o v e r n m e n t
'73, and
a
for
as
a
for
the
it w a s a l l
there
months.
or h a v e
you
of the $ 2 . 9 m i l l i o n p a y m e n t
Iranian Government
official,
or in t h e c i v i l i a n , i n c l u d i n g
N o , to b o t h
I
the
up taking
'73, we ended
the m i d d l e o f
questions.
to
1973.
N o w , M r . R u d n i n g , do you know
ever heard
And
that had c o m p e t i t i o n s
16
and
of t i m e , I t h i n k , a s
h e l i c o p t e r s , the I r a n i a n s
15
to
months.
14
21
going
it.
situation operated
y o u k n o w , the F M S s i t u a t i o n p u t t o g e t h e r
Q
the
that or w e ' l l h a v e
13
20
in
is $ 2 . 5 m i l l i o n ,
than twelve
in e a r l y
could
say
area.
6
in c o u r t . "
of
they
I'll
We finally said, "All r i g h t , we're
5
11
that
e n d up w i t h n u m b e r s
to s i x m i l l i o n d o l l a r
set
to
either
General
734
656
Are you aware
Q
1
of a n y d i s c u s s i o n
2
in B e l l , T e x t r o n B e l l , a b o u t a n y m o n e y
3
value
4
General
5
A
I'm not
6
Q
Of a n y such
7
A
That's
going
to a n y
Iranian Government
including
correct.
Q
Or
That's
10
Q
Have you ever heard
conversation?
right.
any rumors
to t h a t
effect
the c o m p a n y ?
12
A
No.
13
Q
Outside
14
A
You're
15
t h e c o m p a n y , in
My experience
plane going
17
into
18
s i t u a t i o n s in t h e M i d e a s t .
19
part
of
is t h a t
th e w o r l d
that were h y p o t h e s i z i n g
at
And
question.
if y o u g e t o n a n
to t h a t p a r t of t h e w o r l d , y o u ' r e
l o t s of p e o p l e
20
Iran?
asking me an awfully broad
16
air-
going
to
a l o t of f i s h i n g .
22
don't follow
23
I'm not an expert
in
that
all.
the
24
that
I don't relate
through
bigges t subject
to r u m o r s a n d
on those c o n v e r s a t i o n s .
in—--it w a s
p a r t of t h e w o r l d
nor did
run
about
I t h i n k y o u f i n d a l o t of p e o p l e w h o a r e
21
any
discussions?
A
25
official,
of
aware.
9
within
or a n y t h i n g
Khatami?
8
11
whatsoever
I t r y to f o l l o w
at that
the b i g g e s t
time.
But
doing
I
it's
subject
I h a v e no
down any rumors
so
in
facts,
that p e o p l e
would
735
.64 5.
1
try
to
offer.
2
I ' m of
3
companies
4
advantage.
5
And
Q
effect
7
that
8
Khatami?
9
the 2 . 9 — a n y
that
Bill made went
A
is,
1 1
1 2
!3
1 4
there was
No, I have
You heard
No.
Q
— t o
A
No.
Q
Do you know or have
I evidence
that
in A i r
25
on
an airplane
official
time.
to
or
own
the
payment
General
that.
The
answer
rumor—
effect?
Taxi at any
know
I don't
you
ever heard
interest
that
of any
nature
time?
it, and
believe
to t h e b e s t
I ever
heard
of
it.
my
I have
no
it.
Did
you ever hear
going
to
a rumor
to t h a t
I r a n , or c h i t - c h a t
A
That's
Q
Yes, I know
recollection
no
an ownership
I don't
Q
24
that
rumors
no p r o b l e m w i t h
Q
recollection
23
at
of
their
the $ 2 , 9 m i l l i o n
Iranian
A
A
22
a lot
for
no.
whatsoever
21
there's
a big market
p a r t of
to a n
G e n e r a l K h a t a m i had
2 0
that
expeditions
N o w , my question w a s , any
6
10
the o p i n i o n
that go on fishing
a very big
of w h e t h e r
it i s .
in
effect
on
Iran?
question.
And
I'd
or not y o u had
like your
ever
heard
best
that
736
658
1
G e n e r a l K h a t a m i had an
A
2
3
To
5
in A i r
I'm editorializing
Q
Please
A
But I think
6
is t h e a r e a w e ' r e
7
still
true
8
under very
9
cite you documents
the a v i a t i o n
to p r o v e
it.
internal communications
Just
their
11
n e t w o r k , et c e t e r a , under very
12
they ever wanted
13
for their o w n p u r p o s e s , they could
14
there's very
to g r o u n d
head
of
of t h a t
like
everything
do
it.
over
about
relate
to s a y
19
government.
21
flight
think
purpose, you encounter
And
24
25
t h a t t i m e a l l of A i r
try
to t a k e
so I ' m
the
in a c i v i l a i r c r a f t
same
trying
Iran
that
And
for
I
any
situation.
to t a l k a b o u t a
o p e r a t i o n a l c o n t r o l of e v e r y t h i n g
the
Taxi's
were under very direct control.
22
to
is.
20
if y o u n o w
know—
there.
to a n y b o d y
I believe Air Taxi is, I meant
23
if
country
They
is, you very quickly
it
keep
A i r , u n d e r v e r y d i r e c t c o n t r o l of s o m e o n e w i t h i n
operations
country
So t h a t
in t h a t
f e w , if a n y , c i v i l a i r c r a f t
I think at
it's
radio
tight control.
the A i r F o r c e , w h o e v e r
18
they
n e t w o r k , their
S o , w h e n y o u go s p e a k
impression
1972
I think
That's my o p i n i o n , I can't
10
17
point.
in, oh,
talking a b o u t , and
tight c o n t r o l .
a v i a t i o n , my
this
if y o u l o o k b a c k
t o d a y , they keep
16
at
interest
do.
which
15
Taxi?
t h e q u e s t i o n of K h a t a m i h a v i n g a n
in A i r T a x i , n o .
4
interest
that
flies.
management
737
659
Business
1
2
I can't
3
Q
contribute
relationshipwise,
at
W h a t r o l e or p a r t , to t h e b e s t
4
k n o w l e d g e , did G e n e r a l K h a t a m i p l a y
5
helicopters
A
6
to t h e G o v e r n m e n t
W e l l , I have
My personal
7
8
major decisions
9
Majesty.
10
I h a v e no
i n f o r m a t i on
all.
of
nothing
of
your
in t h e s a l e of
Iran?
that
impression
I can
is t h a t
prove.
the
decisions-^
in t h a t c o u n t r y a r e a l l m a d e b y
To m e , that's a premise
Bell
His
that you have
to
start
with.
I
11
think Toufanian had probably
12
s t r o n g e s t v o t e b e c a u s e he w o u l d - — h e
13
be
14
His
the c h a n n e l
next
or h i s o f f i c e
would
that presents program recommendations
to
Majesty.
Then after
15
16
j u d g m e n t s , the q u e s t i o n
17
what
they
that comes
the
is
this
want?
farther along
that
19
Air Force was
20
t h e y had o p e r a t i o n s
21
and
the A r m y w a s c o m i n g along t r y i n g
22
air
army.
23
operational
of the u s i n g f o r c e s a n d
A n d m y p e r c e p t i o n at
18
24
looking
25
planning made
over w h a t
time was
in its d e v e l o p i n g
going on very
So m y p e r c e p t i o n
the
that
sophisticated
aircraft,
to b r i n g u p
its
is t h a t t h e A i r F o r c e
the A r m y was
doing
s e n s e , t h a t it w a s
to s e e
that
in a n o r d e r l y
the
cycle,
was
their
fashion.
738
660
1
And
I d o n ' t say
2
be
3
least make a recommendation
4
was a sound
that
the A i r F o r c e
Q
And
6
A
At
F o r c e , and
10
but my guess
on w h e t h e r
to v o t e
the head
that w o u l d be
I think
of
I think
Air
correct.
in a p o s i t i o n
officers
to m a k e
I'm—
I'm trying
to d e s c r i b e
12
situation
that
13
did exist
in t h i s c o u n t r y , r o l e s a n d m i s s i o n s ,
14
Plus my perception
15
person, a very
is
strong
that K h a t a m i was a v e r y
s t r e n g t h as. b e i n g
18
in t h e c o u n t r y w a s e x t r e m e l y w e l l
the head
of
perhaps.
capable
A
One
22
Q
Do you recall when
23
A
I would
the s u m m e r
25
as an event
also
respected.
did y o u m e e t
personally
Khatami?
21
24
of
the A i r F o r c e , b u t
On how many occasions
with General
of
time.
'72.
that
or
person.
17
Q
a
is n o t u n l i k e w h a t y o u c a n a r g u e e x i s t s
So n o t o n l y d i d h e h a v e a p o s i t i o n
16
plan
this.
11
20
at
Khatami?
the
t h e r e ' s a l o t of s t a f f
in the A i r F o r c e w h o a l s o w e r e
19
would
or
the A r m y ' s
that w o u l d h a v e b e e n G e n e r a l
But
comment on
it
had an o p p o r t u n i t y
that p o i n t he w a s
I believe
8
9
I know
plan.
5
7
it b e c a u s e
guess
that o c c a s i o n
was?
i t — - t o m e it w a s p r o b a b l y
I have nothing
I can recall
I can relate
but—•
it
in
to
739
661
Q
1
2
Who was present with you and
K h a t a m i a n d w h e r e did y o u
A
3
4
Sure.
meet?
W e m e t at h i s h o u s e .
Sylvester,
Gallagher,
and, I b e l i e v e , Z a n g a n e h .
5
Q
6
W h o had
A
7
And what was
s e t the m e e t i n g
e
W ii>
the p u r p o s e of the m e e t i n g ?
up?
my r e c o l l e c t i o n
is t h a t B e l l
8
had m a d e a m o v i e - ^ w a s
9
I ' l l s a y , p e a c e f u l u s e of B e l l h e l i c o p t e r s ,
10
General
shooting a movie around
M E D - E V A C , t h a t s o r t of t h i n g .
Helicopter
the w o r l d
commercial,
A n d o n e of o u r f i l m
11
had gone into I r a n .
12
v e r y good h e l i c o p t e r p i l o t .
Khatami's wife was apparently
13
f o o t a g e of h e r f l y i n g in h e r J e t Ranger-—* I b e l i e v e
14
w a s her Jet Ranger at that
And
they h a d
taken
did w h a t y o u c a l l the f i r s t d r a f t of a f i n a l m o v i e
17
18
the film displayed w h a t the people expected
19
display properly.
20
footage
the w o r l d c h e c k i n g
to see if in
and
and
fact
it w o u l d
Y o u k n o w , y o u h a v e to c u t a lot
of
out.
So, I gather B e l l — I
this, but Bell had offered
w a s on the o u t s i d e
to s c r e e n the f i l m f o r
23
Khatami.
24
and I was a s k e d , with very little notice, would
25
to c o m e a l o n g ?
it
all this footage
were going around
22
a
some
16
21
crews
point.
A n d B e l l had c o l l e c t e d
15
of,
A n d so o n e e v e n i n g B e l l w a s
invited
I said, yes.
....
of
Mrs.
to do
this,
I like
740
662
I guess we were
1
fine
2
4
did
6
at
the
8
9
10
12
the p a r t i e s
Very
there a conversation?
say, what was
And
if s o , w h a t
discussed?
W e l l , I don't remember any business
discussed
all.
Q
7
11
And was
A
5
two h o u r s .
meeting.
Q
3
there about
Was
t h e s a l e or p u r c h a s e of h e l i c o p t e r s
Iranian Government discussed
A
No.
Q
Did
in a n y
way?
G e n e r a l K h a t a m i m e n t i o n at a l l
was enthusiastic
or f a v o r a b l y
inclined
by
toward
that
he
Bell
helicopters ?
A
13
I —
Q
14
buy
15
He hoped
I don't remember
discussed
17
the I r a n i a n G o v e r n m e n t
that e v e n i n g .
18
r e m e m b e r , he was
19
u n i f o r m , it w a s
a s i n g l e b i t of
It w a s v e r y
business
informal.
As
i n - — w e l l , it w a s n ' t a . b u s i n e s s
just a kind
Someone
20
of r e l a x e d
came and served
21
we went
to h i s
22
himself
in h i s h o m e m o v i e
23
his w i f e
p r o j e c t i o n r o o m and
talked about
her
that
kind
of
I
s u i t or a
attire.
us s o m e d r i n k s ,
he
threaded
the
and
film
s t u d i o , and w e screened
it and
flying activities.
our
24
p e o p l e were v e r y glad
25
because we had badly mistaken
would
them?
A
16
that
they had
s h o w n the
in the s e n s e
And
movie
that
apparently
741
663
1
t h e — w e had something in there in the audio about she woul a
2
fly her helicopter to Isfahan for lunch, and that's wrong.
3
Isfahan is 250 miles away, you just don't do that, and
4
she picked us up on that.
The only thing I remember is Khatami fussing
5
6
about the smog situation in Teheran and how it was
7
starting to mess up his aircraft flight activities.
When it was all over, the only thing I
8
9
•would score at is, Bell was being sized up.
The Iranians have a strong personal relation-
10
11
ship . s ituat ion .
12
unless they feel that-^again, my impression-*—unless they
13
decide what kind of person you are and if they want to
14
personally do business with you.
15
over, my feeling was that that was no accident.
16
checked out pretty well.
17
side.
19
And when it was all
I got
And it wasn't from a business
Very comfortable evening, no business.
Q
' 18
They just don't do business with people
Did you ever discuss General Khatami with
Mr. Atkins?
20
A
I believe I told him of that evening.
But I
21
w a s n o t p r e s e n t d u r i n g a n y of t h e — - Our t e a m m a d e
22
briefings around the country at the beginning, and I
23
believe they made some briefing including Khatami. And
24
I didn't participate in any of those.
25
Q
some
And
Did you ever discuss General Khatami with Mr.
742
664
1
Atkins in any way?
2
that General Khatami is head of the Air Force, had a place
3
a role, in the aviation in Iran.
4
put him in a position to make some recommendation with
5
respect to the purchase of helicopters.
8
9
10
Presumably that would
Did you discuss that with Mr. Atkins at any
6
7
And I believe you said previously
time?
A
I'm sure the answer to that is, yes, but I
can't recall when or what was said.
His Majesty had Khatami fly our two aircraft,
11
I believe, right after His Majesty flew them after the
12
test program over there.
13
that and how well he handled the helicopters and that
14
sort of thing.
15
And I'm sure we talked about
But there were just no relationships going
16
that I know of.
I'm sure we speculated as to what kind
17
of a report Khatami would give after testing
18
I b e l i e v e w e h a d o n e or two A i r F o r c e
the'ships.
19
test program, the GOI testing team itself, I believe there
officers
in
the
20
were one or two Air Force officers.
21
were of about the captain level, but I don't say that
22
because I remember exactly.
23
I would guess they
The Air Force was flying logistic support
24
for the test program.
25
to take us over and bring us home, and we had a lot of
The Air Force provided the C-130s
743
_ . _
1
665
work and problems connected with those air
lifts.
2
But I think I already told you all I know
3
about the relationships of Khatami in the procurement
4
transaction.
Q
5
6
Did Mr. Atkins ever mention to you that he had
discussed General Khatami with G. William Miller?
7
A
To the best of my recollection, no.
8
Q
Do you know G. William Miller?
9
A
Yes.
10
Q
On how many occasions have you had
opportunity
11
to talk to him in the last four or five years, on a
12
regular basis
13
A
or-"
I would be guessing. I've probably been to
14
Textron four or five times in that period of time.
15
probably been here ten or twenty
16
times.
He was very interested
in our co-production
17
program, the program I'm working now.
18
the negotiations in Iran on that.
19
Many
20
21
Q
He's
He helped us with
times.
Would you have had an occasion to meet with
Mr. Miller individually or was it always in groups?
22
23
24
25
A
Both ways.
Q
Both ways?
A
(Nods head up and
Q
And when you met with him, either
down.)
individually
744
666
1
2
or in groups, did you discuss with him the matter of
the purchase of helicopters by the Government of Iran?
A
3
I remember many conversations with him with
4
regard
to our co-production program.
5
and subsequent.
I can't recall any conversations with
6
him on the hardware program.
7
but I can't recall them.
Q
8
9
But that was '74
I'm sure there were some
Do you recall any conversation with G.
William Miller individually or when others were present
10
at which you mentioned
11
or any participation or even the name of General Khatami?
A
12
to him, you discussed any role
Khatami was not a problem to me.
So I
13
would-— I would doubt that I would ever have mentioned
14
his name to Miller.
15
Q
When you say he was not a problem to you, what
16
do you mean?
I mean, do you mean that he was favorably
17
inclined toward you so therefore you wouldn't have
18
mentioned
A
19
it?
No.
I didn't see Khatami as a problem.
20
didn't see him as contributing to our program at the
21
beginning.
I
Maybe I'm not saying it to you right.
I didn't see that Khatami had, from my side
22
23
of it, from the business side, any involvement.
I wasn't
24
worried about him, I wasn't thinking about him.
He
25
wasn't where my problems were.
745
667
So, on that basis, I would be very
1
2
surprised
if Khatami was used in any conversation, no.
Q
3
What is your best recollection with respect
4
to whether or not you discussed Air Taxi with G. William
5
Miller?
6
A
Frankly, I don't remember.
I don't remember
7
how involved Miller was in that original hardware
8
I just can't
9
Q
program.
contribute.
When did G. William Miller become involved, to
10
the best of your knowledge, in the co-production
11
and can ;you describe his involvement in the co-production
12
program?
A
13
Well, the Iranians—' I guess I'm going to have
14
to set the stage for you a little bit.
15
us at the very beginning, were we interested
16
a co-production program in Iran.?
18
now.
And
the
So they came-^
Was Mr. Miller involved
in that decision on
the part of Bell to a d v i s e -
23
A
24
25
that
that kind of a conversation was back in
'72- '73 time frame.
Q
21
22
in setting up
We will discuss it with you later."
19
20
The Iranians asked
We said, "It's too early to consider
17
program,
Not to my knowledge.
We were asked more directly in '74, would we
make proposals for a co-production program?
We did.
746
668
I don't remember any conversations
1
2
Mr. Miller and myself on that subject.
We saw the Iranians go for an FMS approach
3
4
to co-production.
5
G o v e r n m e n t — t h e U.S. Government-^in
And we participated with the
that.
The Iranians rejected the U.S. Government's
6
7
between
proposals early in 1975, and they came out with an
8
international, RFP.
9
beginning with Mr. Miller because this one had lots of
That's where I remember
discussions
10
interesting policy questions in it from a corporation
11
commitment
standpoint.
12
Q
What was the approximate date of that?
13
A
Early
'75 would be my recollection.
14
was an interesting corporate challenge.
15
where I can recall conversations with Mr. Miller about
16
Iran and the co-production area, which was where I was
17
spending all my time at that point.
Q
18
19
that's
General Khatami have any involvement at all
in the co-production aspect of it?
A
20
21
And
This
None that I know of.
And h e — h e was killed
in a glider acc.ident about then, I would guess,
22
Q
'74, '75.
Do you recall if Mr. Miller ever mentioned
to
23
you the fact that General Khatami had been killed in a
24
glider accident, commiserating over his death or anything
25
like
that?
747
669
1
A
No, I don't remember anything like that.
2
Q
Do you have any knowledge or have you ever
3
heard that Textron or Bell maintained any slush funds,
4
off-the-book slush funds, for the purpose of entertaining
5
government officials or for any other purpose, including
6
foreign government?
7
A
Your question is, have I ever heard?
8
Q
Have you ever heard, do you have any knowledge
10
A
No.
11
Q
Are you aware of?
12
A
No.
9
No.
of?
13
MR. MARINACCIO:
14
Collins to put his questions to you at this point.
15
THE WITNESS:
I'd like to ask Mr.
Okay.
16
17
18
EXAMINATION
BY MR. COLLINS
19
20
Q
that you had no problems with General Khatami.
21
With whom did you have problems, if you did?
22
23
Mr. Rudning, you mentioned to Mr. Marinaccio
A
I was trying to say it in a business sense.
I was trying to put together a contractual relationship wi :h
24 cur customer, terms and cond it ions and delivery schedules and
25
prices, and that was the area I was worrying about.
23-553 0 - 78 - 48
And
748
670
1
also trying to contain Air Taxi.
2
3
4
5
Q
The customer being?
A
The Government of Iran.
Q
I'd like to go back a little bit and get a
better understanding of exactly what you were doing with
6
respect to the Iranian contract.
That is, "your
7
responsibilities and duties in the period
1971, '72.
8
believe you said that you become involved
in Iranian
9
matters in 1972.
10
A
(Nods head up and down.)
11
Q
So let's go to that time period, whenever
12
you began, what your responsibilities were, what areas
13
were you in charge of?
A
14
15
I
Well, Bell uses a, I'll say, a management
team approach.
When we get into a big program, we have some-
16
17
one from the business side and someone from the marketing
18
side.
19
Marketing, of course, was doing the marketing side of it.
I had the business side and the
International
So my area was what kind of commitments was
20
21
the company making in configurations of helicopters,
22
delivery schedules, warranties, prices, contractual
23
rela tionships.
24
25
Q
So it would
include not only negotiating a
contract with a manufacturer's representative, but other
749
671
1
mat ters ?
A
2
Really the other way around.
All of the
3
direct contractual relationships and commitments with our
4
ultimate customer and
5
Marketing people in their relationships with their
6
manufacturer's
7
Q
in trying to help the
International
representative.
Did you ever accompany
the sales people in
8
their meetings with Air Taxi or government officials, was
9
it a dual effort, would you go in with them and meet
10
together, or would each-—-the business side meet first and
11
later on the marketing
A
12
team would
meet?
We were playing as a team at that point, and
13
the exception would be when we would go in separate
14
directions.
15
test program of theirs, I didn't participate in that at
16
all, did not participate in at all.
17
Q
Accept their—^that demonstration program, the
With whom did you deal in the Government of
18
Iran?
19
whom did you deal most often?
20
21
You were negotiating or having discussions.
A
General Toufanian and h i s — Mr. Dehesh.
I'm
trying to remember his title and I don't recall it.
22
Q
But never General Khatami?
23
A
No.
24
With
As I said before, I met Khatami once
socially and that's all.
25
Q
Did
they ever discuss in meetings with
them
750
672
1
with General Toufanian and Mr. Dehesh that General Khatami
2
would have to be consulted
3
acquisition by Iran of Bell helicopters?
A
4
in any way in the possible
I don't recall it put in that sense.
There were discussions about this very
5
6
test program that we were going to have and the Air
7
Force's participation in it.
There were other officers of the Air Force
8
9
10
who had active roles in that, and if Khatami's name was
mentioned, I don't remember it as such.
Q
11
12
How often did you visit Iran during
A
I would be guessing but probably at least
once every six weeks.
Q
15
And do these start in the spring of 1972 or
16
at what point in the year?
17
went
18
this
time period, that is, 1972, '73?
13
14
importa it
Do you recall when you first
there?
A
I would
guess it was about February of '72.
19
Q
And for what purpose did you go at that time?
20
A
Well, the first purpose was to introduce me
21
22
to Iran.
We had some proposals.
I think we were
23
taking over proposals like I previously said of 50 or
24
less of two models of our ships.
25
We had outlined a complete
contractual
751
673
transaction which we wanted
Government.
to try out on the Iranian
And we wanted to have some discussions with
the Army, the Iranian Army.
We were really in a fact-finding mode, trying
to see what the situation was that was developing over
there and how we could best handle
it.
Q
What was
A
And let me just add one thing.
the—
vote whether we were prepared
And also to
to make the major
commitment
as a company to enter that marketplace, because there were
going to be some large performance responsibilities
put
upon us schedulewise and they were apparently going
to
ask a major commitment of us.
Q
What was the involvement of Air Taxi in this
visit, the first visit, what type of information did you
have from them with respect to the program when you went
there for the first
A
time?
Well, the people who I was with
been in country.
logistics support.
had
previously
So, to me, Air Taxi was more of a
Other than the one meeting I already
mentioned, I don't believe that I ever saw Zanganeh in
a meeting that I was having with the Iranian Government.
But Zanganeh was extremely helpful to me.
We had no office, so all of the letters
we were writing, Zanganeh typed for us.
that
752
6 74
We didn't have a telex system, and communica-
1
tions out of Iran at that time were very difficult.
2
And
3
things like finding lost bags and
lost
4
excess baggage proposals, the things that you came in
5
country with, never got there with you.
So from an administrative standpoint, he was
6
7
very
helpful.
Q
8
9
Mr. Iranzad was, I believe, Mr. Zanganeh's
assistant at Air Taxi, second
in charge.
10
A
Uh huh.
11
Q
Did he ever participate?
12
A
Well, he did a lot of the detail work for
TWX 1 s and that sort of
13
me, lining up typists and sending
14
thing.
15
the meetings that I had with the Iranian
Q
16
17
But no one from Air Taxi participated
in any of
Government.
Did you ever discuss your meetings with
them,
with the people from Air Taxi?
18
A
No.
They were, in my view, they helped us
19
get started, and then they stood back.
20
principle, I didn't tell them how we were proceeding, what
21
our contractual terms were or anything else.
22
relationship with the GOI at that point and I didn't
23
think that they were trying to cut themselves in on it,
24
they weren't trying to find
25
Q
As a matter of
It was our
out.
They might find out some details if you were
753
675
1
2
sending messages back and forth through their
wouldn't
3
4
5
Of course.
Q
What type of messages would you be sending to
10
Of course.
A
I don't believe I sent a lot of TWX's.
We
tried to do most of it by phone.
I remember—-well, the only thing that comes
8
9
they?
A
Fort Worth to the Bell headquarters here?
6
7
office,
to mind
is, I was having trouble setting up a logistics
program, spare parts and that sort of thing, aid I needed
11
a lot of data and I used Air Taxi for that purpose.
12
There were some T W X 1 s
13
levels.
14
administrative sorts of traffic.
Q
15
in
spare parts areas, funding
Hotel reservations, lots of—-lots of
Did you ever have any conversations with
16
people from Air Taxi or anyone else concerning
17
ownership of Air Taxi?
A
18
the
If I did, I can't recall it.
19
Q
Then that never became an issue?
20
A
Not in my mind.
When I first got in country, I deliberately
21
22
went out to visit
their facilities
to see what they had,
23
and, in my judgment, they are a very responsible, fixed
24
base operator, they had a very large operation going on.
25
Maintenance work, there were helicopters
in there, lots of
754
676
1
aero commanders.
I believe they were the single air charter
2
3
operation active in Iran at that point.
4
cursory view on my part, they were a very viable business
5
ac tivity.
6
Q
So what was your perception of them as an
7
agent for Bell Helicopter
8
that Bell might have employed
9
A
10
answer.
And from a
in comparison to other agents
in Iran?
Well, that's a hard question for me to
I never did see or hear of alternatives
11
12
manufacturer's representatives
13
so I have no—-no reference point for that.
14
knowledgeable on other manufacturer's
15
that Bell has.
16
like a responsible and responsive, going business.
17
18
Q
for
that we might have used,
And I'm not
representatives
So I can only comment that they looked
Of course, Bell Helicopter engaged Air Taxi
as a manufacturer's representative from 1959 to about
19
1964 and then picked
20
some of the correspondence we have in these documents it
them up again in 1968.
I believe
21
indicates
there's some reference to an agent between
22
1964 and 1968.
23
not have been that much business in
24
agent may not have been used to any great degree.
25
in
I think we all recognize
that there may
Iran so that the
However, the question remains, you know, why
755
677
1
drop Air Taxi in 1964, why pick them up in 1968?
2
just wondered whether you had any knowledge as to why
3
Bell would have made that decision in 1968?
4
A
I have no information on that.
5
Q
You
6
A
I think I remember wondering about
7
And
I
never—
that.
And
I believe what I was told was that we were looking at all
8
of our representatives or dealers in that part of the
9
world.
We had some people on our staff who switched
some
10
people out, not just there but in other parts of the
11
world.
12
I think what I was told is that we maybe didn't use some
13
good judgments and we put some relationship back
14
again.
And those people aren't with us any longer.
15
together
It was just in the management of manufacturer' 5
16
representatives
in that time in that part of the world.
17
And
18
who were involved
19
that seemed
20
I don't even remember the names of the Bell people
Q
in that.
But I couldn't find
anything
to be of substance. .
Do you recall who would have been the person
21
or persons to have rehired Air Taxi in 1968 as Bell's
22
representat ive?
23
24
25
And
A
Memory tells me that it was one of our area
representatives by the name of Bud Orpen.
reaching on that one.
But I'm
756
678
Q
1
But the decision would be made here in Fort
2
Worth as to who would get final approval to act as
3
agent?
4
5
6
A
I'm outside of that loop.
I believe
the
answer is, yes, but I don't know.
Q
With respect to the negotiations with Air
7
Taxi on the compensation agreements, arrangements under
8
the Manufacturer's Representative Agreement of 1970, when
9
did those negotiations begin, that is, to negotiate the
10
commission, possible commission, on the sale of the 489
11
helicopters ?
12
A
Well, they started on my first trip in
13
country, which I think was about February.
14
guessing on the date.
15
Q
But I'm
It was early in '72.
So at that time you had discussions with
16
the Government of Iran as to the program that they were
17
interested
in?
18
A
(Nods head up and
19
Q
And also possible commissions that would
20
to Air Taxi?
21
A
Yes.
down.)
flow
I recognize, if I may, those are
22
separate transactions.
23
program together with the Government of Iran, on the
24
other hand we're trying to gather up what our potential
25
liabilities would be with an established
On one hand we're trying to put a
manufacturer's
757
679
1
representative.
2
Q
And at that point in time, what did the
3
program look like with respect to the number of heli-
4
copters ?
5
A
Well, that's hard
to answer.
Our marketing
6
people were going in with small p
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