69. Memorandum From the Executive Secretary of the Department of State (Read) to the President’s Special Assistant for National Security Affairs (Bundy)1
SUBJECT
- Strong Reaction by Shah of Iran to Gudarzian Affair
A major irritant in our relations with Iran for some months has been the affair of Khaibar Gudarzian, an Iranian national who has been misusing the procedures of both our courts and our Congress. In cases now pending in the New York courts the information available to us indicates he is attempting to obtain money from the Shah’s brother and sister by means of false allegations, forged documents, and fraudulent claims of service of process. As long ago as May 1963 he began airing false charges of corruption in our aid program in Iran before the McClellan Committee, through the press, and to the Department of Justice. Investigations of practically all of those charges by the Departments of State and Justice have disclosed that the evidence submitted by Gudarzian consists of forgeries and fabrications, but there has thus far been no public refutation by the Executive Branch or by the McClellan Committee.
This Department has taken a number of steps during the past several months to ensure that justice is done and to counteract the harmful publicity Gudarzian’s activities have generated. Late in December, Secretary [Page 130] Rusk brought the problem directly to the attention of the Attorney General, the Secretary of the Treasury, and the Governor of New York. Background briefings were given to the press in early January. The Department of Justice has been cooperating, within limits imposed by our federal system and by the separation of executive and judicial powers on its capacity to intervene where private litigation is involved. Competent private counsel is defending the Prince and Princess and there is good prospect that the default judgment previously awarded to Gudarzian will be set aside. The New York Court has ordered that its referee go to Tehran at an early date to hear witnesses who will testify that the Prince and Princess were in Iran on the date they are alleged to have been served with process in New York. A Federal grand jury investigation into Gudarzian’s activities was launched in December to determine whether sufficient evidence could be obtained to try him on criminal charges for some of his questionable activities.
Throughout these developments, the Shah has become increasingly frustrated over our inability to halt Gudarzian’s machinations once and for all, bring him rapidly to book, and dispel in some dramatic fashion the adverse publicity generated about the royal family and Iran in general. On February 13, the Shah’s anger erupted violently in the decision to discharge his excellent Ambassador to Washington who has, in fact, done all any Ambassador could have done. The Shah is clearly over-reacting, and we cannot be sure that he will not take further and even more extreme steps before there is any very decisive resolution of the Gudarzian affair. Our relationship with the Shah must be maintained at a tolerable level as it is a key factor in our efforts to extend the stability and progress shown by Iran in the past decade.
The Department of State is exploring with the Department of Justice whether there might be any extraordinary steps the Department of Justice could take at this point that would quickly extricate the Prince and Princess and end Gudarzian’s abuse of our judicial system.2
- Source: Johnson Library, National Security File, Country File, Iran, Vol. I, Memos & Miscellaneous, 1/64–12/65. Confidential.↩
- A February 22 memorandum from McGeorge Bundy to Attorney General Kennedy reads: “The so-called Gudarzian case is causing great distress and no little annoyance to our good friend, the Shah of Iran. Therefore, the President hopes that the Justice Department will do what it can to help bring about a prompt resolution of this matter, of course with all due regard for our judicial processes. I understand that Secretary Rusk will also be in touch with you with the same plea.” (Ibid., Robert W. Komer Files, Iran—Gudarzian Case, 1965)↩
- Signed for Read in an unidentified hand.↩