In 1958, Mohammad Khatami and Ahmad Chafik -- the first, the commander of the Iranian Air Force, the second a former director of civil aviation, and both married to sisters of Shah Mohammad Reza Pahlavi -- became majority owners of a new company that received millions of dollars in commissions from U.S. aircraft firms over the next 20 years.
The company, called Air Taxi, was one of several Khatami-controlled enterprises that U.S. and foreign companies dealt with when they wanted to sell planes, helicopters and spare parts to the Iranian government or armed forces.
"All aviation developments in Iran are controlled by General Khatami, commander of the Air Force, president of the board of Iran Air and brother-in-law of the shah," wrote a Pentagon intelligence analyst in a realistic assessment of defense business opportunities in Iran in March 1970.
A Washington Post examination of land records, bank statements, canceled checks and testimony before Senate committees provides a far more detailed picture of Air Taxi's financial operations and of the benefits they brought to members of the royal family:
Air Force commander Khatami personally received $616,700 from two Air Taxi bank accounts in Oklahoma City during a seven-month period in 1972 and 1973 when he was still on active duty. Khatami, described in a 1975 obituary as "Iran's high-flying eagle of the skies," deposited the money in a Swiss bank, according to canceled checks.
Such giant U.S. aircraft companies as Bell Helicopter, Rockwell International (then North American Rockwell) and Avco Lycoming acknowledge that they paid commissions to Air Taxi in this period. Deposit slips show that some of the funds in the Oklahoma City Air Taxi accounts sent to Khatami originated with them.
Chafik, the second husband of the shah's twin sister, Princess Ashraf, received checks totaling $436,000 from the same Oklahoma City accounts between July 1972 and February 1974. His were signed over to Rhoninter, S.A., a Geneva-based concern.
$1.2 million of the money that Air Taxi moved into the Oklahoma City bank accounts was channeled into the purchase between 1973 and 1975 of more than 1,000 acres of potentially valuable but then undeveloped land on the outskirts of Oklahoma City.
Khatami's widow, the shah's half sister, Princess Fatima, is listed as president of one Oklahoma corporation set up to hold part of the real estate. She was a director until 1979 of another Oklahoma company that has the rest.
The records reviewed by The Post provide one of the clearest examples so far of how the shah's family members and inlaws personally profited from the transactions of Iranian companies that controlled key sectors of the economy.
The records, however, give only a limited look at the wealth of the Pahlavi family and at the complex financial operations that have kept much of it hidden. It is a glimpse at only one company, through accounts in only one bank, during a period of only four years.
The revolutionary government that replaced the shah last year has charged repeatedly that the ruler and his family "plundered" the nation, funneling wealth out of the country for private investment abroad with the aid of dozens of companies and foreign bank accounts.
Even before the Iranian revolution, investigators in the U.S. Senate and in the U.S. Securities and Exchange Commission were examining the nature of U.S. corporations' involvement with Air Taxi.
Existence of Air Taxi's accounts in Oklahoma City came to light when Bell Helicopter supplied to the Senate Banking Committee three canceled commission checks. One of them was endorsed to a First National City Bank account in Paris. But the other two were endorsed to the Oklahoma accounts by Amir Hossein Zanganeh, shareholder and managing director of Air Taxi.
Oklahoma City is the closest large city to the Aero Commander division of Rockville, with which Air Taxi was doing business then. A former Rockwell employe in Iran, John Thompson, said Zanganeh often traveled to Oklahoma City in connection with Aero Commander business.
Zanganeh, now said by former associates to reside in France, could not be located for comment.
In early 1978, Sen. William Proxmire (D-Wis.) of the Senate Banking Committee, held extensive hearings to determine whether G. William Miller knew of any financial interest by Khatami or other Iranian government officials when Air Taxi was representing Bell Helicopter in Iran.
Miller, chairman of Bell's parent company, Textron, was seeking Senate confirmation of his nomination to the Federal Reserve Board.
His possible knowledge of Khatami's interest was significant because in 1976, the SEC had indicated that a U.S. company's failure to disclose commissions known to be going to foreign government officials could be a violation of securities laws.
Miller and other top Textron officials repeatedly denied any knowledge that the commissions and dealer discounts they paid Air Taxi could have gone to Khatami.
The Senate confirmed Miller in March 1978 and confirmed him again as secretary of the treasury in August 1979.
The SEC has yet to conclude its investigation of the Textron-Air Taxi case.
Whatever the outcome may be, dozens of documents filed in connection with the Proxmire hearings make clear that Air Taxi was a closed corporation under control of the royal family and a few loyal supporters from its beginning in 1958.
The third founding stockholder, after Khatami and Chafik, was Nadar Jahambani, according to Air Taxi's registration certificate. Later he became a top general and last year was executed by a revolutionary firing squad.
The initial treasurer and director, Amir Hossein Zanganeh, was connected to the royal family through his sister, the wife of the shah's half-brother, Prince Mahmoud.
In new registration papers filed in Tehran in 1965, Khatami's name was no longer listed as a public stockholder, a fact cited by Textron and other American officials to underline their ignorance of any possible Khatami financial role. Zanganeh is listed in 1965 as half-owner.
Air Taxi got its commericial start running a charter service with a few planes purchased abroad, as well as by selling and servicing planes to the royal family and government ministries.
By the late 1960s, however, it had increased its staff from a few dozen people to more than 200, and had been hired as dealer or distributor for such giant companies as Rockville's Aero Commander division, the Lycoming engine division of Avco Corp., Bell Helicopter, Champion Spark Plugs, Britain's Hawker-Siddeley and Canada's De Havilland Aircraft.
How the money generated by Air Taxi's dealer and distributorship arrangements with U.S. companies was used is traceable through canceled checks, bank statements and land records in Oklahoma City.
From these records, it is possible to trace a flow of money from U.S. aircraft companies to Air Taxi in Iran, back to accounts in First National Bank and Trust Co. of Oklahoma City in the name of Air Taxi, or Zanganeh, and finally to Khatami, Chafik, the Oklahoma land investments or other recipients.
For example, on June 22, 1972, Air Taxi's Oklahoma account received $574,612. According to a bank deposit slip, the money was identified as coming from "Aero Commander Division, North American Rockwell, Bethany, Okla., Re Commissions from sales of aircraft."
Less than a month later, according to these records, two checks drawn on Air Taxi's Oklahoma City accounts, totaling $326,700, were made out to M. Khatami. Photostats of the checks show both were deposited in the Swiss-Israel Trade Bank of Geneva. The same day, a check of $150,000 was drawn up for Chafik. This check was signed over by Chafik to a Geneva company called Rhoninter, S.A.
Additional checks written on the Air Taxi account between 1972 and 1975 went to Zanganeh's sister, Vida ($150,000); to Zanganeh himself ($30,000 -- endorsed in Monte Carlo), and to the international jeweler Bulgari ($110,000 -- endorsed in Lugano, Switzerland).
In March 1974, $300,000 was transferred to an account in the Union Bank of Switzerland identified only by the numbers 7/49723.
But by far the largest regular transfers from the Oklahoma City accounts were those beginning in July 1973 for the purchase of investment property in the fast-growing outskirts of Oklahoma City.
Land records and canceled checks show that $1.2 million was transferred from the Air Taxi account for the purchase of six parcels of land in the northeast suburbs of Edmond and Arcadia, about 15 miles from downtown Oklahoma City.
The bulk of this money went through realtor Dennis Bradford. Realtor Bradford's father is Doyle Bradford, who until leaving Rockwell Aero Commander in 1975 was vice president for international sales with responsibilities that included Iran.
In 1973 and 1974 two Oklahoma corporations listed as AZ Development Co. and the NA Corp. were established and the land bought by Bradford was transferred to them.
Oklahoma County land records list Khatami's widow, Princess Fatima, as a director of AZ Deveopment Co. until 1979, and Doyle and Dennis Bradford as current directors.
Current records on NA Corp. list Princess Fatima as president and her son by a first marriage, Kayvon Hillyear, as director.
Oklahoma real estate sources say the more than 1,000 acres of land was near the site of a proposed reservoir, making it ideal for new housing developments. However, those plans were scuttled after the reservoir was delayed.
Dennis Bradford, the Oklahoma real estate broker who handled the transactions, said last week that his father, Doyle Bradford, the former vice president of Aero Commander, had only become a director of AZ Deveopment Co. as "favor" to Zangeneh and was no longer associated with the company.
In June and November 1976, the title on the land was transferred to American First Title and Trust Co., a subsidiary of First Oklahoma Bank holding company, which also owns the bank with which Air Taxi has its account. The AZ and NA companies retained ownership, Oklahoma real estate sources said.
Khatami was killed in September 1975 when the hang glider he was flying in Iran crashed into a mountain outcropping. One Iranian press account blamed high winds for the "dreadful accident."
Zanganeh resigned as managing director of Air Taxi the same year.
Two years before Khatami's death, the shah began a well-publicized effort to eliminate commissions in government-to-government equipment procurement -- a measure that reduced some of Air Taxi's activities as dealer.
This step, coupled with the death of Khatami in 1975, ended the era marked by the general's strong control over the air transport business -- a control attested to in numerous documents now in the public record.
The March 1970 Pentagon intelligence report noted in commenting on Khatami's power that the general was "controlling the majority of stock in Air Taxi."
Other companies said by half a dozen sources to have been in the Air Taxi group of enterprises in Iran were Pars Air, of which Chafik was president, and Air Service with which such U.S. companies as Beech Aircraft had a distributor relationship until 1976.
"Aviation in Iran is and has been for some time entirely controlled by General Khatami," wrote C. Roberts Bell, a Wichita lawyer who went to Iran in 1966 on behalf of a client.
His letter, now on file with the Senate Banking Committee in connection with the Miller confirmation hearings, described as holding stock directly or indirectly in Air Taxi and Heli-taxi -- "the only two companies which would be authorized to conduct civil aviation business in Iran."
A document on file with the Senate Foreign Relations Committee also stated that Khatami was until 1970 a shareholder in Iran Aircraft Industries (IACI), which purchased planes for the nation's air force.
According to this internal company memorandum, written by Kermit Roosevelt while he was Northrop Corp.'s Iranian representative in 1970, the shah's government bought out the interests of Khatami and others in IACI because the shah decided their ownership "presented a conflict of interest which could prove embarrassing."
A 1971 "trip report" by Bell Helicopter's C.P.B. Horsley noted that "in reality anything that flies [in Iran] he [Khatami] has an interest in."
According to one set of documents given to the Banking Committee, an American businessman's refusal to do business through Air Taxi in the 1960s resulted in his losing his businesses in Iran.
The businessman, William H. French, was running an air charter service in Iran in 1964 when he was told it would be necessary for him to become an Air Taxi subcontractor if he wanted to stay in business, letters from him and his attorney assert.
When French declined, he was unable to renew his visa to reenter Iran, one of the planes in his Iran company was impounded, his pilot in Iran was arrested and French himself learned that he faced charges, pressed by Khatami, of violating civil aviation law.
After his difficulties in Iran, French lost his contract to represent Bell Helicopter and the Geotronics division of Teledyne Inc., letters from those companies show.
Teledyne's C. Larry MacFarlaine explained to French that "further association with your firm" could be "hazardous" to Geotronics' interests in Iran.
Bell Helicopter dropped French as its Tehran representative in late 1967. Bell's export sales manager, J. H. Orpen, advised French that a trip to Tehran that had included a meeting with Khatami "raised a serious question as to whether you would be able to re-establish effective representation in government circles."
In early 1968, Bell Helicopter switched to a new Iran representative: Air Taxi.