More `October Surprise' Charges -- Casey Held Talks In Spain To Delay Hostages' Release, Says Arms Dealer

WASHINGTON - An Iranian arms dealer says he attended 1980 meetings in Spain with former CIA director William Casey to negotiate a delay in the release of U.S. hostages in return for delivery of $150 million worth of arms to Iran.

The Iranian dealer, Jamshid Hashemi, told Ted Koppel of ABC-TV's "Nightline" last night that he and his late brother, Cyrus, arranged and attended meetings in July and August 1980 in which Casey agreed to let Iran buy U.S. arms if Tehran would delay releasing 52 U.S. hostages it held.

At the time Casey, who died in 1987, was chairman of Ronald Reagan's presidential campaign.

According to yesterday's report:

-- ABC obtained 1980 registration records from the Hotel Plaza in Madrid listing guests with names that Hashemi said he and his brother had commonly used as aliases.

-- The record search also turned up the name Robert Gray as being registered at the hotel. A man named Robert Gray, a public-relations executive, became a top campaign deputy to Casey in the fall of 1980. Asked about the record, Gray first said he was in Madrid for his old firm. When it was pointed out the firm wasn't in existence then, he said he was wrong on the years and showed a passport indicating no foreign travel that summer.

-- ABC said interviews with Casey's former secretary, family members and former Republican campaign officials showed that his whereabouts were unaccounted for July 27-29 and Aug. 8-13, 1980. A July 30, 1980, New York Times story on an unrelated issue quoted a Reagan spokesman as saying Casey was returning from a foreign trip.

Hashemi, interviewed for four hours by Koppel off-camera, said Casey held three meetings at the Ritz and Plaza hotels in Madrid with two representatives of Iran's Ayatollah Khomeini, Mehdi Karrubi and his brother Hassan.

Hashemi said that Mehdi Karrubi had obtained approval for the deal from Khomeini, who led the fundamentalist Islamic government that had seized the U.S. hostages in December 1979.

The Reagan campaign feared what has become known as the "October Surprise" - that President Jimmy Carter would win freedom for the hostages before the fall 1980 elections, boosting the Democratic president's chances of defeating Reagan.

Gray, the deputy director of the 1980 Reagan-Bush campaign, denied last night that he attended meetings in Madrid and said that Casey took no steps to delay release of U.S. hostages.

"That would be the most despicable act any person might attempt, no less the director of a presidential campaign," Gray said. "I lived with Bill Casey day and night for the last two months of that campaign and I can swear he never undertook anything like that."

Gray said that he, Casey and other top officials on the campaign met several times in September and October 1980 to discuss how to offset the political surge that Carter's campaign would receive if the hostages were released before the election.

"We decided the best thing to do was let people know that the hostages could be released at any time and not to be surprised if it happened. That way if it did happen a week or so before the election, the public's response might not have been so overwhelming than if it happened without any warning," said Gray, a Washington lobbyist.

Last Saturday, Reagan said his campaign had worked to gain the hostages' freedom. However, he said the information was "classified" and could not provide details.

In the ABC account, Hashemi said Casey raised the idea of delaying the hostages' release in return for releasing frozen assets and arms at the first round of meetings in July 1980.

In an aside to other Iranians that went untranslated for Casey, Karrubi remarked, "I think we are now opening a new era, and we are now dealing with someone who knows how to do business," according to the report.

At the August meetings, Karrubi came back with Khomeini's OK, saying the hostages would be treated as "guests" rather than prisoners and would be released after Reagan's inauguration "as a gesture of good will to the future U.S. government."

"Casey thanked him," according to Hashemi's account. "Casey said that even though he was not in the government, he had friends, and within the next day or so he would get back to Karrubi with certain suggestions regarding arms and ammunition."

The next day, Casey told Karrubi that Cyrus Hashemi would be introduced to an Israeli general who would help him receive and execute orders on weapons, the report said. Cyrus Hashemi bought a Greek freighter for $1 million, and it secretly made four round trips between the Israeli port of Eilat and the Iranian port of Bandar Abbas from August 1980 to January 1981.

Hashemi's account said a high-ranking military officer from Israeli Defense Industries sold Iran $150 million in weapons and ammunition made in Israel under U.S. license. Payment was made to an Israeli firm in Switzerland via a Swiss bank's letter of credit.

In response to questions about the controversy, Iran's U.N. mission released a statement on behalf of the Tehran government that said, "The Islamic Republic of Iran sees no benefit to involve itself in this matter."

-- Compiled from Chicago Tribune, Boston Globe and Reuters.