The $5 million loan that Nation of Islam leader Louis Farrakhan said he received from Libyan leader Muammar Qaddafi will be used to establish a corporation that will hire blacks to produce toiletries such as soap, deodorant and toothpaste, Farrakhan said this week.
A State Department official said the department cannot confirm whether the money has been exchanged. There are no legal restrictions prohibiting the loan, the official said.
Farrakhan told a crowd of 3,000 at the Kennedy Center Wednesday night that "Brother Qaddafi has given me a $5 million interest-free loan" that he intended to use to set up the corporation.
Farrakhan disavowed any political affiliation with the Libyan leader and said the loan does not make him an agent of the Libyan government. "I am not a terrorist. Don't say I've taken his money to make bombs. I'm not a prostitute . . . . It is a loan to be repaid," he said.
In an interview Thursday, Farrakhan said he sent a representative to Libya to give Qaddafi a taped request for money to establish a corporation. In response to the request, Qaddafi ordered the Islamic Call Society, a religious group that has lent money around the world for the construction of schools, mosques and hospitals, to give him a loan, Farrakhan said.
Farrakhan said the loan will be paid back in 18 months and there are "no strings attached."
A spokesman for the Libyan government could not be reached.
"There's no legal restriction on the Libyans bringing money into the country," a State Department official said. "There is no restriction on any foreign government from investing in the U.S., as long as the money is not for subversive activities or sensitive technologies. If Libya wants to invest in soap and deodorant products, that's fine."
The official described the Islamic Call Society as a religious group with branches in several Middle Eastern countries. "Their deeds have been very valid, but they have also been used as a front group for Libyan terrorists. That isn't to cast a dark shadow on Minister Farrakhan's affiliation with it, but that is the fact." The official did not specify any terrorist activities associated with the society.
In October 1980, the group negotiated to buy the Calvary Church of the Nazarene at 5900 Wilson Blvd. in Arlington for $1.5 million and convert it into a mosque and a private school for children of diplomats. Arlington residents argued that the facility could be the target of a terrorist attack and the Arlington County Board eventually opposed the plan, a decision that blocked the sale, a board spokesman said.
Last February, Qaddafi offered to give Farrakhan, as spokesman for a growing number of disenchanted blacks, a huge shipment of military arms to fight " 'your racist oppressors,' " Farrakhan said. Farrakhan said he immediately rejected the offer.
In speeches across the country recently, Farrakhan has exhorted crowds of blacks to direct the billions of dollars they spend on alcohol, tobacco, drugs and food into the hands of black companies that could, in turn, help develop their communities. "The economic way is the best way. We've got power, but it's misdirected," Farrakhan said.
Farrakhan, who serves as religious leader of the Chicago-based Nation of Islam, established a company called People Organized and Working for Economic Rebirth (POWER) about a year ago, according to a spokesman for Independence Bank in Chicago, which handles a deposit account for the group.
Farrakhan said that "by the first quarter of 1986" POWER will introduce a line of toiletry products marketed to the country's 26 million blacks and their families.
The marketing concept involves employing black youths, unemployed adults and college-trained professionals as door-to-door distributors. Buyers will be able to make orders by telephone and have the products delivered homes within 24 to 48 hours, he said. Farrakhan said POWER already has 40,000 members.
Cornell McBride, president of M and M Products, a large hair-care company based in Atlanta, said Farrakhan had asked him to manufacture products by contract. "If he came to us with the money, I am sure we would make products for him," McBride said. "We are business people here. Our concern is nonpolitical . . . . We welcome him to come on into the industry. It's an open market."