200. Editorial Note

On January 2, 1977, The Washington Post published an article by reporter Bob Woodward entitled “IBEX: Deadly Symbol of U.S. Arms Sales Problems.” Recalling that IBEX had briefly appeared in the news 5 months earlier when three Rockwell employees from the project were murdered (see Document 186), Woodward reported that the $500 million electronic surveillance system for Iran’s borders embodied the problems that plagued U.S. arms sales to Iran. He cited the use of agents, widespread corruption, and doubts that the system, which employed overly complex equipment, would ever function. According to notes kept by Richard Hallock, a consultant to former Secretary of Defense James R. Schlesinger and later arms purchase adviser to General Toufanian, the Shah lost patience with U.S. officials’ malfeasance, cut off meaningful relations with top Pentagon representatives in Iran, spoke dismissively of Secretary of Defense Rumsfeld, and asked Hal [Page 593] lock to see that Erich Von Marbod be fired for his advocacy for U.S. defense contractors.

Telegram 64 from Tehran, January 4, reported that Toufanian telephoned Hallock in Von Marbod’s presence and denied the allegations. The Shah also refuted the report and asserted that someone was trying to harm U.S.-Iranian relations. Yet Hallock, who initially claimed that his memoranda of conversation had never left his possession, conceded that some of his papers were lost. (National Archives, RG 59, Central Foreign Policy Files, D770003–0123) In a subsequent comment to Newsweek, reported in telegram 468 from Tehran, January 17, the Shah reaffirmed his denials and suggested that the notion that IBEX was employing impractical U.S. equipment came from “internal rivalry between some American factions.” (Ibid., D770016–1007)

The CIA prepared a paper on the Woodward article for Director of Central Intelligence George Bush, January 4, which contested the article’s central arguments that Rockwell had paid agents’ fees, that contractors were paid covertly, and that IBEX made use of discarded or overly complex machinery. However, the factual elements of the article, the paper noted, “raise serious security concerns re the possible sources of classified information that are available to him [Woodward].” On the basis of the article, moreover, the Securities and Exchange Commission had requested Rockwell to testify and explain its position. (Ford Library, National Security Adviser, Presidential Country Files for Middle East and South Asia, Box 13, Iran (13))