Did Menem tango with terrorists? A former intelligence official claims Argentina's former president accepted a $10 million payment from Iran in cover-up of bombing of a Jewish community center

0 Comments | Insight on the News, August 19, 2002 | by Martin Edwin Andersen

The front-page story in the New York Times wasn't exactly new but it certainly was news. Former Argentine president Carlos Menem, it claimed, received $10 million from Iran while president of Argentina in exchange for helping cover up Tehran's alleged participation in a July 18, 1994, bombing of a Jewish community center in Buenos Aires in which 85 people were killed. The Times reported that Menem, once the toast of official Washington and a current presidential candidate, received the money in a numbered account in the Bank of Luxembourg in Geneva, Switzerland.

In its account, the Times published the once-secret deposition of a former Iranian intelligence official, Abdolghassem Mesbahi, who claimed that a Menem envoy had traveled to Tehran four times to negotiate the deal. Mesbahi charged that the money was paid to silence claims by the Menem government that Iran was behind the outrage. The high-level informant defected to Germany in 1996, the Times said, and "had provided valuable information about Iranian terrorist operations in Europe and Asia through the mid-1990s."

The account given by Mesbahi, still a protected witness in Germany, was confirmed by a second Iranian source in Tehran, Argentine investigators say. The attack allegedly was planned in Buenos Aires by the Iranian cultural attache and supervised by a senior intelligence official. According to Mesbahi, the task of one cell involved in the operation was "cooperating with members of the Argentine police, corrupting them or threatening them to collaborate with the attack."

Before the Times article, much of Mesbahi's story appeared in Buenos Aires newspapers, which referred to the high-level defector as "Witness C." The Times account produced an international bombshell, however, both because of professional respect afforded the newspaper and because Menem had just launched his bid for a third term.

Described by associates as "wounded and enraged" by the account, Menem charged the story was a fabrication peddled by associates of longtime rival and sitting president Eduardo Duhalde. A clearly rattled Menem told CNN that the only Swiss account he possessed was opened in 1986, with $200,000 from a settlement with the government for having been unjustly imprisoned by a former military regime. "With the accrued interest," he added, "there is no more than $600,000 [there] now."

Menem's defense proved to be a self-inflicted wound. Previously he steadfastly had claimed not to possess a Swiss bank account. In response, the Argentine Anti-Corruption Office announced it was opening an investigation of the account, which it pointed out Menem never declared in the official financial-disclosure forms he had filed since 1989. Argentine officials said that Menem may face charges of filing false statements, tax evasion and illegal enrichment.

Financial analysts say that, even at the most favorable interest rates, it would be unimaginable legitimately to triple bank holdings in 16 years.

Although senior Iranian officials expressed delight in the aftermath of the 1994 bombing, Hamid Reza Asefi, the Foreign Ministry spokesman in Tehran, reacted to the Times story by claiming it was planted by "Zionist circles unable to determine the real authors of the attack." Intelligence sources consulted by INSIGHT say Mesbahi's story tracks closely with circumstantial evidence already gathered in the case, but that further proof is needed. "Every indication points to it being true, but there is no hard evidence that I'm aware of," cautioned one official familiar with the Argentine investigation.

To date nearly 20 people, mostly police officers, have been detained in connection with the case, but the highly politicized judiciary left in place by Menem appears unwilling or unable to move forward with the investigation. Last year a senior U.S. law-enforcement source told INSIGHT that, "Those in the know understand that complicity for the attack reaches pretty high up into Menem's inner circle." [See "Al-Qaeda Across the Americas," Nov. 2, 2001.]

The biggest impact made by the Times article and the subsequent revelations appeared to be a mortal blow to Menem's political fortunes. According to Argentine law, conviction on the charges would prevent Menem, who ruled Argentina from 1989 to 1999, from seeking any public office.

Analysts say Menem's greatest political assets to date have been his claim to be the favored candidate of Washington and the international financial community and, as such, the best bet to restore Argentina's tattered foreign creditworthiness and depressed domestic economy.

Among the names of influential "friends" Menem frequently invokes are "George" (for former president George H.W. Bush) and "Bill" (for former president Clinton). During Menem's years in office, U.S. officials seemed to compete in the fulsomeness of their praise for a man who demanded that the U.S. ambassador be expelled from Buenos Aires after president Ronald Reagan ordered the bombing of Muammar Qaddafi's Libya in retaliation for terrorist attacks against Americans in Europe. "The Western world owes a debt of gratitude to Carlos Menem," Arturo Valenzuela, Clinton's national-security adviser for Latin America, once declared.