U.S. Asylum for Iraqi Tied to Arms Deals Is Questioned

WASHINGTON — For years, Anees Mansour Wadi seemed to live a charmed life. The Iraqi businessman had lavish flats in London, a $3.4-million mansion in Beverly Hills and what appeared to be a blank check from Baghdad.

When Iraq’s invasion of Kuwait in 1990 cast a shadow over Iraqi business connections, Wadi was among 30 Iraqi nationals expelled from Britain. But he already had moved to the United States, where he later consummated his greatest deal of all: He applied for and received the rare gift of political asylum from the U.S. government, even though he had been identified by a U.S. agency as a participant in Iraqi leader Saddam Hussein’s arms network.

The decision by the Justice Department to grant asylum to Wadi, thereby protecting him from deportation, has baffled some officials in the agencies working worldwide to unravel Iraq’s prewar procurement operation. Some U.S. officials suggest that the move was a bizarre mistake in judgment. Others wonder whether Wadi’s special status hints at yet another level in the murky and tangled pre-Persian Gulf War relationship between the United States and Iraq.

“The reason for granting Wadi asylum has remained very vague,” said one frustrated federal investigator who has spent more than a year examining Wadi’s Iraqi links. “All we get is polite evasion when we ask about it.”

Victoria Toensing, Wadi’s attorney, said that her client had legitimate reasons for seeking asylum. Toensing said that Wadi had fled Iraq many years ago and feared he would be killed if forced to return. She denied that the asylum was linked to Wadi’s business activities involving Iraq, which she said violated neither U.S. nor British laws.

“I hate to see my client hounded for doing the very same thing a lot of American businesses did, selling goods to Iraq,” said Toensing, who headed anti-terrorism efforts at the Justice Department in the Ronald Reagan Administration and was once chief counsel to the Senate Intelligence Committee.

Yet intelligence documents and Wadi’s business records indicate that he was dealing in far deadlier wares than most American companies.

Among the items sought by Wadi for Iraq were specialized tanks for attaching chemical weapons to aircraft, an assembly line for mortar shells and a factory for manufacturing high-precision glass fiber for possible use in ballistic missiles and nuclear weapons.

“Wadi was at the core of the Iraqi network,” said Kevin Robinson, a lawyer for a former executive of Matrix Churchill Ltd., a British machine-tool factory owned secretly by Iraq through a maze of corporations that included one controlled by Wadi.

Wadi appeared on the London scene in 1987 as head of a firm called Meed International. He told some British businessmen that he had earned a fortune selling air-conditioning equipment in the Middle East. But a report by Kroll Associates, an international investigative firm, says that Wadi received $4 million from the Iraqi government to set up his business in London.

According to a dossier prepared by another investigative firm, Wadi lived well. He had a Mercedes-Benz and sometimes rented an entire floor at London’s Inn of the Park Hotel along with several luxury apartments.

Wadi, then 42, worked closely with Safa al-Habobi, the Iraqi government official who ran the growing arms-buying network out of a London office building that he shared with Wadi. Habobi was later indicted in an Atlanta bank fraud but has never been tried.

As early as 1987, a sales manager at Matrix Churchill warned British intelligence that Meed International was placing large orders for machine tools to be used to produce advanced 155-millimeter howitzer shells at two Iraqi factories, according to the intelligence reports.

Other records confirm that Wadi brokered a deal for Iraq to buy machinery from a British firm to set up an entire factory to produce mortar shells in Iraq. Earlier this year, the British firm paid a fine for selling the equipment to Iraq.

Records show that another deal involved negotiationsH Metalform, a German company, to acquire tanks that could be attached to aircraft and used to spread chemical weapons. Gary Milhollin, director of the Wisconsin Project on Nuclear Arms Control in Washington, said that H & H literature boasts about the effectiveness of its “drop tanks” in dispersing toxic chemicals.

Records do not indicate whether the tank deal was completed, but United Nations inspectors found that H & H machinery was used to produce high-strength steel as part of Iraq’s attempt to make bomb-grade uranium.

Wadi’s lawyer said Wednesday that he was unavailable for comment. But in a CBS-TV “60 Minutes” interview last year, Wadi said that he had done $50 million to $60 million in business with Iraq. He denied any direct connections with the Iraqi government, however, saying: “We were just lucky people.”

In 1988, Wadi told friends that he was taking his family to California for the climate. In October, he bought a $3.4-million estate on Sunset Boulevard in Beverly Hills and set up a business, Bay Industries, in a Century City high-rise.

A few months later, Wadi’s name showed up in an analysis of Iraq’s arms network by the Pentagon’s Defense Intelligence Agency. In June, 1989, the DIA asserted that his British companies were Iraqi fronts and that Wadi was involved in obtaining missile equipment.

There was no mention of his U.S. presence, but Wadi also tried to arrange purchases for Iraq. He attempted unsuccessfully to broker the sale of an entire steel factory to Iraq for $272 million but was more successful in assisting in Iraq’s purchase of a glass-fiber factory from Glass Inc. in Chino, Calif.

The deal ran into financial trouble in late 1989 and Wadi met with Glass’ owner and its lawyer in Los Angeles. He promised to arrange new financing for a 5% commission on the $15-million deal, according to a written account of the meeting.

The lawyer, Evan Williams, played down Wadi’s role. “He mostly talked about the great house he had bought in Los Angeles and his cosmopolitan travels,” Williams said in an interview.

The transaction went through in May, 1990. Pentagon officials said that the plant was part of an Iraqi missile project but Williams said the facility had no military uses and that all necessary export licenses were granted.

In March, 1991, a U.S. Treasury Department investigation of Iraq’s arms-supply network identified Wadi as a participant and froze his U.S. assets. He has not been charged with a crime here or in Britain. When his assets were seized, Wadi’s U.S. visa was running out and he faced leaving the country voluntarily or being deported by the end of March.

In June, 1991, the department learned that Wadi and his wife had applied for political asylum. Treasury passed along its evidence to the State Department, where records show that an official said it would be provided to the Immigration and Naturalization Service at the Justice Department, which decides asylum applications.

A spokesman for the INS declined to comment, saying that asylum matters are protected by privacy laws. But a Justice Department official, speaking on condition that his name be withheld, said the information was provided to the INS but the asylum request was approved anyway.

“The asylum process is not a pure science,” the official said. “Sometimes it defies logic.”

A senior federal investigator said there are suspicions Wadi received asylum to keep him from disclosing that the U.S. government knew about elements of the Iraqi network but allowed it to operate before the war to strengthen ties to Baghdad. But the investigator acknowledged that he has nothing to confirm that suspicion.