Special prosecutor Lawrence Walsh has won access to documents crucial to determining whether funds were misappropriated by individuals involved in arms sales to Iran and diversion of profits to the Nicaraguan contras. Switzerland's highest court ruled yesterday that Mr. Walsh's investigators can examine records of secret Swiss bank accounts set up to hold the arms-sale funds. The Federal Tribunal rejected an appeal by retired United States Air Force Maj. Gen. Richard Secord and two associates of a lower Swiss court's ruling giving Walsh access to the account records.
Walsh said he was ``gratified in light of the urgency of this matter.'' He added: ``The Swiss Office of Police Matters and the Geneva Magistrate, charged with the execution of the Federal Tribunal order, have assured us they will proceed promptly.''
Walsh has a lot riding on what the bank records show. So do potential defendants in criminal actions that could stem from the information in the accounts.
Iranian arms dealer Manucher Ghorbanifar and Iranian-born US businessman Albert Hakim had joined General Secord in the appeal.
Secord, in testimony before the congressional Iran-contra committees, said nearly $8 million in the Swiss accounts belonged to ``the enterprise'' that he and Mr. Hakim operated. But Walsh is inclined to believe the money should have been turned in to the US government.
A Swiss Justice Ministry spokesman said he expected that the bank documents could be turned over ``shortly'' to US authorities, but that the disposal of the money would require further court action.
Mr. Ghorbanifar, who served as go-between for the Secord ``enterprise'' and Iran, says he lost $10 million on the deal, and his attorney is considering laying claim on the money. Ghorbanifar's associate, Saudi financier Adnan Khashoggi, also claims to have lost money in the deal. The Tower commission reported that Mr. Khashoggi put $15 million in Lake Resources, the Hakim-Secord account, but was repaid only $8 million.
According to sources close to the Walsh investigation, speaking on condition of anonymity, the money in question will be argued as, ``illegally converted ... United States government funds.'' The sources say ``there was fraud involved.''
At a press conference in San Francisco last week, Walsh said his work had ``been slowed'' by legal objections to his application for the financial records in Switzerland.
Sam Hirsch, a spokesman for the Senate Iran-contra committee, says that $1.4 million is in a Swiss bank account under the name of Lake Resources and $6.5 million is in a Swiss fiduciary known as CSF. Of the $6.5 million, $5.5 million is in a subsidiary Merrill Lynch account in Geneva, and about $1 million in Strauss Turnbull, a London investment house. After the Iran-contra link was exposed last November, the Justice Department froze disbursement of the money under provisions of a US-Swiss legal aid treaty.
Special prosecutor Walsh said in last week's press conference that the congressional Iran-contra committees had ``no choice'' but to make a political decision to grant immunity to certain witnesses in order to bring to light activities surrounding the arms transactions.
However, Walsh said, the joint probe by the committees was the ``most serious external threat to the outcome of the investigation.'' He added: ``We urged not granting immunity, but they have their schedule to meet.''
The grant of so-called ``use immunity'' to central figures has placed upon Walsh what he terms the ``tough burden'' of collecting evidence from sources independent of compelled testimony protected by immunity. Prior to the public Iran-contra hearings, Walsh sequestered himself and portions of his staff and put in place a system of data collection that shielded them from press accounts and leads, drawn either directly or indirectly from committee activity.
``Based upon the holdings of courts in prior cases, we believe that the rigorous insulation procedures employed in this case will be upheld by the courts,'' Walsh said.
He added that Lt. Col. Oliver North is ``prosecutable,'' adding that witnesses granted immunity by the select House and Senate committees probing the Iran-contra affair ``will not be able to escape criminal responsibility.''
Another thorn in the side of the Walsh investigation is the inability thus far to question Israeli citizens about their involvement in the Iran-contra affair. Sources confirm published reports indicating Walsh wants to question David Kimche, former director general of the Israeli Foreign Ministry; Adolph Schwimmer, an Israeli arms dealer; Amiram Nir, an Israeli government counterterrorism adviser, and Yaacov Nimrodi, an arms salesman.
Sources say the grand jury subpoenaed Mr. Kimche, alleged to have played a major role, and Mr. Schwimmer, a holder of dual citizenship, in June. The Israeli government protested and took court action to thwart the Walsh initiative.
It has been recently reported that US District Judge Aubrey E. Robinson, chief judge supervising the Iran-contra grand jury, has decided to look over questions the special prosecutor wants to ask and determine if the Israelis should answer.
Walsh continues to press forward. The grand jury has conducted more than 1,000 witness interviews since January. The cost of the probe is estimated at around $1.79 million up to this point.
Former federal judge Walsh has said there will be ``no short-circuiting'' of the investigation. ``Secrecy is one thing, lying is another. No policy, no well-intended policy, is above the law. Popularity or unpopularity is not contemplated. No person is treated differently, no matter how high.''