The Contra Con

By John S. DeMott

For a supposed Saudi prince, Ibrahim Bin Abdul Aziz Saud Masoud certainly had a name to befit a royal title. But what impressed Lieut. Colonel Oliver North even more was the prince's offer to donate a hefty sum of money to aid the Nicaraguan contras. North was so taken with the prince that he went to Ronald Reagan and National Security Council Adviser Robert McFarlane and told them of the expected donation. As matters turned out, there was no money and no prince: the would-be contra benefactor was Mousalreza Ibrahim Zadeh, an expatriate Iranian swindler who has pleaded guilty to bank fraud and faces five years in jail.

Before that setback, however, Zadeh was quite a convincing con man: he stung one of North's associates for $250,000, and the colonel himself interceded with the FBI on his behalf in July 1985. The bizarre incident, which outgoing FBI Director William Webster disclosed to the Senate Intelligence Committee last week, offers yet another example of North's overreaching, amateurish operations. More significantly, it indicates that North told Reagan at least once of his efforts to raise money for the contras, despite the official ban on U.S. Government aid to the Nicaraguan rebels.

From the outset, North was not exactly cautious in his dealings with the purported Saudi prince. When he was first approached through an intermediary in 1984, he made only a cursory check of public sources about the Saudi royal family. Even though he could find no Prince Ibrahim, North did not pursue the matter. Rather than deal with the prince directly, however, he steered him to Richard Miller, a public relations agent and associate of Fund Raiser Carl ("Spitz") Channell. Last week Channell pleaded guilty to conspiring with North and Miller to raise money for the contras through a fraudulent tax- exempt foundation.

The phony prince enticed Miller with visions of Saudi oil millions that could be diverted to the Nicaraguan freedom fighters. Of course, Miller had to provide a few assurances of his good faith: the Philadelphia Inquirer has reported that over a period of several months, Miller fronted about $250,000 of his own and a relative's money for the prince's exorbitant expenses. In return, the wide-eyed p.r. man was promised he would be made the "exclusive agent for Saudi oil in the U.S.," with commissions of 20% of sales flowing to him. One deal involving shipments of 500,000 bbl. a day, Miller was assured, could realize up to $14 million, which would go to the contras through CIA operatives in El Salvador.

So credible was the prince that Miller even vouched for him after Zadeh had bounced a $250,000 check at the William Penn Bank in Philadelphia. In documents released last week, Miller was said to have repeated the yarn that the prince was being victimized as a result of "religious differences" within the Saudi royal family, and even offered to cover the amount of the bad check. Bank officials, however, called in the FBI.

Investigators went to North about the matter in July 1985. The NSC aide asked them to leave the situation alone for several days, the FBI later reported, "due to the critical timing of the prince's possible but remote large donation." The prince, North said, was in Europe "arranging transfer of funds to Nicaraguan freedom fighters." North told the agents that he had discussed the matter with Reagan and McFarlane a month earlier.

North's account to the FBI could have blown the lid off the NSC's contra- aid effort long before November 1986, when Attorney General Edwin Meese first disclosed it. But the FBI report never made it from the bureau's Washington field office to the FBI's nearby headquarters. The reason, said Webster last week, was "an unusual technological failure" while a new communications system was being tested.

The FBI was guilty of another disturbing lapse last spring, after Zadeh's true identity had been exposed and he was under investigation for bank fraud. When Miller was subpoenaed to appear before a grand jury in Philadelphia in April 1986, North interfered in the case once again, asking the bureau to postpone Miller's appearance "to avoid possible adverse impact on negotiations connected with the hostages in Lebanon." Miller, as it turned out, never went before the grand jury. Zadeh was convicted of bank fraud, but the damage he did to the Reagan Administration is just now being felt.

With reporting by Elaine Shannon/Washington