SOURCE
On June 27, 2012, the FBI partially declassified
and released seven additional pages [.pdf] from a 1985–2002
investigation into how a network of front companies connected to the
Israeli Ministry of Defense illegally smuggled nuclear triggers out
of the U.S.* The newly released FBI files detail how Richard Kelly
Smyth — who was convicted of running a U.S. front company — met
with Benjamin Netanyahu in Israel during the smuggling operation.
At that time, Netanyahu worked at the Israeli node of the smuggling
network, Heli Trading Company. Netanyahu, who currently serves
as Israel’s prime minister, recently issued a gag order that the
smuggling network’s unindicted ringleader refrain from discussing
“Project Pinto.”
As revealed in previously
released FBI files and the tell-all book Confidential:
The Life of Secret Agent Turned Hollywood Tycoon Arnon Milchan,
the Hollywood producer was recruited into Israel’s economic
espionage division (LAKAM) in his 20s and learned how to establish
front companies and secret bank accounts for smuggling operations.
Arnon Milchan encouraged Smyth, a California engineer, to
incorporate MILCO in 1972 and serve as a front for the Israel-based Heli Trading’s (also known as Milchan Limited) acquisitions
of sensitive military technologies on behalf of the Ministry of
Defense. Smyth fled the U.S. after being indicted for violating the
Arms Export Control Act in the mid-1980s. In July 2001, Smyth was
arrested in Spain by Interpol and returned to the U.S., and in November,
he was convicted of exporting 800 nuclear triggers (called krytrons).
FBI agents interviewed Smyth on April 16-17, 2002, at the U.S.
attorney’s office in Los Angeles. The secret interview report
details how during a trip to Israel Smyth was “spotted”
by Milchan, who claimed he worked as an exclusive purchasing agent
for the Ministry of Defense. Smyth was introduced around to high
military officials including then-general Ariel Sharon. Smyth was
also put in contact with Benjamin Netanyahu, who worked at Heli
Trading Company. According to the FBI report, “Smyth and
[Netanyahu] would meet in restaurants in Tel Aviv and in
[Netanyahu's] home and/or business. It was not uncommon for
[Netanyahu] to ask Smyth for unclassified material.”
Milchan pulled Smyth into his glamorous, star-studded movie circuit.
“While in the United States [Smyth] met with [Milchan] numerous
times in Los Angeles. … Milchan and Smyth would have dinner
frequently and would visit one another’s house often … it was
quite common for [Milchan] to invite [Smyth] to various Hollywood
parties and introduce [Smyth] to celebrities.”
During the 2002 Smyth counterintelligence debriefing, the FBI
learned that the Ministry of Defense ordered and paid Heli Trading
for krytrons. Heli in turn sourced them from MILCO in a clandestine
operation codenamed Project Pinto. The report reveals
how MILCO illegally shipped prohibited articles under general
Commerce Department export licenses rather than smuggling them out
via Israeli diplomatic pouches. The last time Smyth saw Milchan was
in 1985. The Ministry of Defense issued a burn notice on Smyth
after discussions with U.S. officials about the krytron smuggling.
According to the FBI report, “Shortly thereafter, [Smyth] fled
the United States.”
A March
2012 statement by the co-authors of Confidential claims
that “Hollywood mega-producer and former secret agent Arnon
Milchan has been asked directly by Israeli Prime Minister Benjamin
Netanyahu and President Shimon Peres to avoid any public discussion
of the book Confidential, asserting that the matter is too
sensitive at this time.” Although the book’s authors point to
the escalating tensions over Iran’s nuclear program, Netanyahu’s own
hands-on involvement in nuclear weapons–related covert action
against America is presumably a far more compelling reason for the
gag order.
* The FBI referred an additional 164 pages of the Mandatory
Declassification Review to another government agency — presumably
the CIA — for further review. The additional pages will likely
never be released. The CIA has refused requests for similar
documents in order to preserve intelligence sources and methods
abroad.
