In the glittering list of Iranians who became rich and influential under the shah, Abolfath Mahvi is said by friends and business acquaintances to have been in a class by himself.
His shadowy business dealings earned him millions as middleman for some of the costliest of all the projects ordered by his close friend, Shah Mohammad Reza Pahlavi: the acquisition of billions of dollars worth of sophisticated computers, military aircraft and nuclear reactors.
Today, this "high tech" equipment, much of which never worked even under the shah's regime, has become one of the most visible monuments to the controversial spending of the former monarch.
The revolutionary government has charged that the shah's spending of billions of dollars on computer and other high technology programs wasted the nation's resources. The now-deposed shah and his supporters say these expenditures were aimed at modernizing primitive Iranian society, but the critics argue that many of the programs went far beyond Iran's real needs or capabilities, and benefited primarily the shah's friends or relatives. n
For U.S. policymakers these charges have a significance that goes beyond the now historical question of the shah's personal conduct or of corruption in his regime.
If the enrichment of the shah and his entourage through such programs was one factor in rising political unrest, it could also be a problem for Saudi Arabia and other developing countries that are also caught up in similar feverish procurement of U.S. high technology.
In the case of Iran, Mahvi's personal wealth is cited by members of the revolutionary government as evidence that while few ordinary Iranians benefited from these grand schemes, the shah's friends or family did.
"He was one of the richest men in town," said an American corporate executive who knew Mahvi and others in the Iranian elite socially.
His mansion, richly adorned with French antiques and paintings, was located on a sprawling, guarded estate less than a mile from the shah's main palace. Sometimes he led his guests to s sunken discotheque and bar, from which the visitors could look through an underwater glass window at swimmers cavorting in an Olympic size pool.
Today Mahvi is said by friends to be living incommunicado in exile in Monte Carlo while back in Tehran officials of the revolutionary government say they are delving into his far-flung business activities for clues to whether the shah personally participated or profited from them.
What is known from documents and from interviews with numerous U.S. and Iranian businessmen is that Mahvi presided over a complex of companies, some of which were located in Bermuda and Panama, and to which U.S. companies were told to send money generated from doing business with him in Iran.
The origin of the relationship between the shah and Mahvi is not known. One American businessman who lived many years in Tehran suggested the friendship could have stemmed from Mahvi's own "royal" background -- he was descended from the Quajars, the ruling family that was ousted from power in 1921 by the shah's father.
So far, there is no evidence that any of the millions of dollars sent overseas through Mahvi's operations went to the shah himself. But a memorandum written in 1978 by an attorney for Texas millionaire H. Ross Perot's Electronic Data Systems Inc. -- which went into business with Mahvi -- described him as a man with "close connections to His Majesty [who] could be very important in developing business in Iran."
American executives flattered him by calling him "prince," a reference to his family ties to a previous Persian royal dynasty.
Mahvi told U.S. businessmen that he spent three mornings a week conferring with the shah or with his minister of court, Asadollah Alam. He rode on the shah's plane and was sometimes mistaken for the shah, to whom he bore a remarkable physical resemblance. And in October 1976, the shah became president of a "cultural foundation" set up in Mahvi's name with initial assets of $23 million.
The Abolfath Mahvi Cultural Foundation subsequently became 49 percent owner of a Post subsidiary that was in the computer business in Iran. pIn this way, the foundation was to share in Perot's profits.
For Mahvi, computers were only the latest in a long list of ventures that put him, as a U.S. executive recently said, "always at the forefront of the next wave of the business."
During the 1960s and 1970s, he represented, was a partner of or had business dealings with a long list of U.S. companies at the forward edge of advanced technology: Litton Aero Products, General Electric, Honeywell, Westinghouse, Electronic Data, Computer Sciences, Northrop, and Standard Oil of Indiana.
When the shah ordered a massive computerization program in the early 1970s, Mahvi became a contact for U.S. companies plying their electronic wares to the monarch.
Between 1970 and 1976, the number of computers installed in Iran rose from 63 to 290, and plans called for the figure to reach 500 by 1980. As oil money was allocated to computerization, Iran became one of the most lucrative markets in the world for U.S. computer firms.
IBM sold its 370-series computer machines to banks and universities. Honeywell shipped its large 6000-series computers to the Iranian armed forces, to go along with sophisticated U.S. aircraft and weaponry that the shah was buying.
Perot's Electronic Data Systems and Computer Sciences Corp., of California sold Iran hundreds of millions of dollars worth of computer programs and "software" to go along with the electronic hardware.
EDS had a $41 million contract to centralize computer operations of the Iranian Social Security Organization; Computer Sciences had a series of contracts totaling in the millions for automating the logistic and management information systems of the Imperial Iranian Army headquarters.
The desire for computerization was so great that when the shah's government fell, one U.S. company had a $2.8 million contract to sell the Iranian military a mini-computer that the firm claimed could translate English documents into Farsi.
U.S. computer executives, who asked not to be quoted, now acknowledge that much of this equipment never became operational because of its complexity and the lack of qualified Iranians to run it. "The Iranians were willing buyers but the western burden is there," said one such executive.
Of the advanced computers that Honeywell sold to the military in the early 1970s, and that were later programmed by Computer Sciences Corp., a U.S. executive declared: "Very little came on stream."
A Pentagon source said that Iranian military officers complained at one time they they were paying for the development of U.S. computer programs that, in fact, already had been produced in the United States. In addition, this source said, there were complaints that the equipment, and programs, did not function as they had been told it would.
Computer company sources say the shah chose Honeywell so Iran's armed forces would be compatible with the U.S. World Wide Military Command and Control System (Wymex), which employs 35 Honeywell 600-series machines. a
A team of U.S. government auditors recently concluded that the computers are deficient in design and cannot be used effectively for U.S. military command purposes.
A Mahvi company, Information Systems Iran (ISIRAN), acted as distributor of the Honeywell computers to the Iranian armed services. When some U.S. computer executives warned Mahvi that Iran's military computer procurement was too ambitious for a country lacking trained operators, Mahvi advised them that the purchases were the shah's orders, they recalled.
Documents that have become available in a law suit in Dallas' federal district court, as well as interviews with Iranian and American businessmen, show that Mahvi was a power long before the computer era.
His early business dealings were in oil, the first source of Iran's new wealth. An EDS internal memo introduced into evidence said that Mahvi once had interests in Iran Pan American Co., a joint venture between the National Iranian Oil Co. and Standard Oil of Indiana. The company leased oil concessions in the Persian Gulf.
Subsequently, Mahvi apparently moved into the growing field of military aircraft. Northrop Corp. documents released by the Senate multinational subcommittee in 1975 identify Mahvi as "expecting a commission to be paid on the sale on F5Es," a jet fighter bomber that Iran purchased.
The author of the Northrop document further stated that Mahvi had indicated that "Gen. [Mohammed] Khatami is part of his [Mahvi's] group." Khatami, a brother-in-law of the shah, was head of the Iranian air force at the time, but an active businessman at the same time.
In 1971, Mahvi made his move into the computer field through a series of companies -- the most visible of which was ISIRAN.
ISIRAN became Honeywell's distributor in Iran -- purchasing tens of millions of dollars worth of computers from the U.S. company and reselling them at a profit to Iranian military customers.
At that time, IBM dominated computer sales to Iran.However, the shah's decision to buy Honeywell computers through Mahvi's company for his armed forces altered this by providing a guaranteed outlet for IBM's competitor.
This complicated computer deal is a good illustration of Mahvi's offshore financial activities. For Honeywell's contract, according to a source with first-hand knowledge, was with Management and Technical Consultants Ltd. a Bermuda-based firm described as ISIRAN's parent enterprise.
According to documents obtained by The Washington Post in 1977, MTC is the same Bermuda company that between 1973 and 1976 was paid $7.7 million by the Iranian Air Force to help develop a computerized logistics program on which the U.S. Air Force already was at work.
MTC used the same Bermuda post office box address as a company called Universal Aero Services Co. (USAC), to which Rockwell International paid in 1975 $4.5 million as a secret commission for helping it obtain the contract to install the CIA-managed, $500 million IBEX electronic surveillance intelligence program.
In January 1975, at a time when U.S. Senate investigators were looking into questionable payments by U.S. arms companies to foreign governments, the Iranian government bought ISIRAN from Mahvi and his partners for $45 million. Sources said the purchase price was arrived at by calculating the value of ISIRAN's five-story Tehran office building, its employes and the "good will" developed by the firm in its dealings with foreign firms.
According to one source, the shah personally handed Mahvi the check while both were in Switzerland.
At this time, Mahvi had already begun negotiations, through his New York City representative, Mossa Hagani, to set up a joint venture with Perot's EDS in Iran to program computers for the Iranian Navy.
A new company, Pars Data Service, was set up, but plans went awry when the military procurement chief, Gen. Hassan Toufanian, placed Mahvi on a "blacklist" eliminating him and others as eligible military contractors. This was after Mahvi was named as a middleman in the Senate investigations.
Perot's company then contracted directly with the government, eliminating Mahvi and his associates from participation.
Nevertheless, after Mahvi had been removed from the blacklist, EDS, in 1977, paid $400,000 to a Mahvi designated company. This sum was identified in documents filed in connection with a Dallas court suit as being for "services rendered as agreed."
The recipient of these funds was a Panama company called Cumana Investment Co. S.A., which had been designated by Mahvi. EDS first transferred the money to Cumana as a loan but later converted this to a payment for services. In this way, money generated by an Iranian government contract reached the Panamanian firm of a private Iranian citizen.
Prior to this agreement, a dispute involving an even larger contract had developed between Mahvi and EDS. It centered on a $40 million contract from the Ministry of Health and Social Welfare for programming the social security and health care systems.
On Sept. 10, 1976, Mahvi insisted in a cable to EDS that their business agreement guaranteed him a share in the profits of this new contract.
A month later, the ministry informed EDS that it was delaying final approval of the contract until the dispute with Mahvi was settled.
"Go solve your problems," a senior official of the ministry told the EDS representatives.
Soon after, EDS agreed to hire as a subcontractor a newly formed EDS subsidiary in which Mahvi's foundation received a 49 percent interest, in return for putting up more than $100,000. On Nov. 2, the ministry gave final approval to the contract.
EDS currently is suing the Iranian government in Dallas for $23 million to recover unpaid debts, relocation costs and lost profits caused when the shah's regime halted payments in the ministry of health contract in June 1978. In a brief defending the Iranian governments, lawyers contended that the EDS contract was "procured by fraud or other impropriety." U.S. District Court Judge Robert W. Porter said at the end of a long trial that ended in January that he saw "no proof of bribery, fraud or other impropriety." A final verdict, however, has not yet been announced.