A subsidiary of International Telephone and Telegraph Corp. sold electrical equipment in 1980 to the Iranian government, delivered with the help of a Finnish firm over the Soviet railroad system, in apparent violation of a U.S. trade embargo during the hostage crisis, according to a former ITT manager who set up the deal.
The former manager, Bengt K. Beckmann, 39, said in a series of interviews in recent weeks that ITT officials in St. Louis worked with him to circumvent the April 1980 presidential executive order banning the shipment of American goods to Iran. Also, an internal ITT worldwide policy memorandum issued the same month expressly forbade "the sale, supply or other transfer of any . . . product . . . to or destined for, Iran."
Officials at ITT's headquarters in New York announced Wednesday that the company had suspended an executive of its St. Louis ITT-Blackburn division, pending the outcome of an investigation of the charges. "As far as our position right now," said Edwin Kilburn, an ITT associate general counsel involved in the investigation, "it is not clear the extent to which we violated the Iranian boycott. We cannot say that we did not."
Yesterday, ITT officials identified the suspended St. Louis executive as Peter E. Fuerst, the president of the division whose total annual sales are about $75 million. "If the investigation now underway establishes that violations have occurred, disciplinary actions will be taken in keeping with the company's stringent policies," the multinational communications concern said in a statement.
A spokesman for the Treasury Department, which will review the results of ITT's internal investigation, said yesterday that the maximum penalty for willful violations of the trade ban is 10 years in prison and fines up to $10,000 for each violation.
ITT officials said that top management first learned of the charges during a May 26 meeting with Beckmann. But the corporation said in its statement that Beckmann tried to extort $2 million from ITT officials in return for destruction of documents supporting his charges.
Beckmann, a Swedish citizen who worked for ITT for 10 years, denied the blackmail charge, saying that he met with the ITT officials in May to settle a breach-of-contract claim for commissions allegedly due him on the Iran sales. Beckmann does not deny threatening to turn over his documentation to the news media. "Yes," said Beckmann, "that was my blackmail, I said, 'Either settle out of court, work together on a new contract or . . . the sh-- will hit the fan.' " ITT officials met with an assistant district attorney in New York yesterday and asked him to consider charges against Beckmann.
Beckmann initially detailed his allegations in early June to Washington Post special correspondent Mary Anne Fitzgerald in Nairobi, Kenya, where Beckmann currently maintains his business as a manufacturer's representative to African and Middle Eastern countries.
He supported his allegations by providing to Fitzgerald and The Post more than 100 pages of letters, telex messages, invoices and bills of lading supporting his claim that ITT equipment was manufactured to the specification of the Iranian Ministry of Energy, shipped from New Orleans to Helsinki and then relabeled in special containers compatible with the Soviet railway system for delivery to Djulfa, on the Soviet border with Iran.
The shipments were valued at about $3 million and comprised split bolts and other hardware used to construct electric transmission facilities in rural Iran. The order was placed by the Iranian ministry in the summer of 1980, Beckmann said. The St. Louis plant manufactured the equipment in the late summer and fall and the shipments began in November 1980 during the final negotiations for the release of the 54 hostages at the American Embassy in Tehran, according to Beckmann and the records.
In an interview yesterday, ITT's senior legal counsel in New York, Albert L. Beswick, said the company is also investigating Beckmann's allegation that an ITT subsidiary in Spain sold telecommunications equipment to Iran during the same period in violation of ITT's worldwide ban on such sales. ITT's Kilburn said the company had not yet determined whether other ITT divisions began selling goods through Finland after President Carter imposed the trading ban.
Beckmann told The Washington Post that ITT employes he met in Tehran during 1980 told him they were shipping other ITT products to Iran through various means to get around the embargo. He did not indicate that any top officials of the corporation knew about the alleged circumventions.
According to Beckmann, ITT's Fuerst and his manager for international sales, Allan R. Mallanik, both were aware of and helped plan the sale of the ITT goods to Iran in May 1980--six months after president Carter imposed the trade boycott against Iran.
Fuerst and Mallanik could not be reached for comment yesterday. ITT officials in New York said they had advised Fuerst to obtain his own counsel. Mallanik, they added, resigned from the company earlier this year for unrelated reasons.
A spokesman for the Finnish firm, Kaukomarkinnat, said the company would not comment on the allegations, but the spokesman added that Finland was not a party to the Iranian boycott as most West European nations were.
Beckmann said in a lengthy telephone interview from Stockholm that he worked closely with ITT's St. Louis division during much of 1979 to continue the division's business with Iran after the fall of shah Mohammad Reza Pahlavi. He described his efforts to win contracts for a major rural electrification program that was undertaken by the new mullah-based government.
He was in Tehran with an ITT Blackburn official when the hostages were taken on Nov. 4, 1979, Beckmann said. In subsequent months, as the Carter administration escalated its threat of sanctions against Iran, Beckmann said he worked with an Iranian agent in Tehran.
"We hoped all of this madness would go over right away," Beckmann said, "but in the spring of 1980, we realized that our dreams had not come true and that we had to do something about it." He said he used his "old-school ties" to find a firm in Finland that was willing to purchase equipment from ITT in St. Louis, relabel it and ship it by Soviet railway to the border between Iran and the Soviet Union.
In a June 24, 1980 letter to an Iranian energy official, Beckmann wrote, "We are busy trying to arrange delivery via Finland and are fighting every hour with the factory in St. Louis to have them accept these very low prices." Telexes provided by Beckmann show that ITT officials in St. Louis were directly familiar with Beckmann's dealings with sales agents in Iran. At one point, just days after the hostages were released, Mallanik wired Beckman about a shipment that had been in transit for some weeks: "All were sent in a . . . [Finnish] container bound for Russia."
Said Beckmann: "I was never under special pressure from ITT to do these things." But, he added, when he laid out his plans to ITT officials in St. Louis, "they were very happy."
As the shipments were prepared for delivery in late 1980, Beckmann said, his relationship with ITT officials in St. Louis began to deteriorate over the 10 percent commission he said was stipulated in the three-year agency contract signed with ITT in 1979. "They ITT officials said, 'Look, Beckmann, this stuff is so big, it's going to be five percent for you, and if you don't like it, it's going to be no percent and we'll ship it anyway.' "
ITT officials yesterday quoted from a document Beckmann gave them during the May meeting in which Beckmann "relinquishes the right to and immediately hands over to ITT Blackburn a file of letters and telexes from his previous engagement with ITT Blackburn and expressly agrees not to disseminate information on any of his or ITT Blackburn's activities in the past, present or future to any certain party." In return, Beckmann wrote, "Mr. Beckmann will be paid one lump sum for his consultancy activities, the sum of $2,124,549."
Beckmann said in an interview that the $2 million was an estimate of commissions he would earn if the company had extended his contract for the next three years. He said he had a right to demand advance payment because of prior nonpayment.
"I never had moral scruples about an American company selling to Iran," Beckmann said. "I'm not an American. That's their business. I don't give a damn." He added, "Personally, I don't believe in boycotts."