Trafficking in Terror for Libya

By Ed Magnuson

Former CIA agents and U.S. suppliers reap profits

The world's most notorious supporter of international terrorism is Libya's mercurial strongman, Colonel Muammar Gaddafi. The Reagan Administration is so convinced of the Gaddafi connection with terrorism that last month it ordered Libya's diplomatic mission in Washington to close up shop and leave the U.S. But who is helping to train and arm Gaddafi's terrorists? The astonishing and embarrassing answer: former agents of the Central Intelligence Agency and private U.S. companies that have long supplied the CIA with such tricks of the trade as gun silencers, concealable explosives, delayed-triggering timers and electronic snooping devices.

So claims a two-part story in The New York Times Magazine by Seymour Hersh, a former Times reporter and current freelance journalist. His account of Americans putting their pursuit of personal wealth above the national interest has been confirmed in its essential details by TIME correspondents. Hersh's tale of intrigue also raised questions about the Government's attitude toward the export of expertise in terrorism. The Justice Department and the FBI investigated the case seemingly with less than full enthusiasm. The State Department and the CIA. appear unable to stop this peculiar kind of profiteering.

The main source for Hersh's story is Kevin Mulcahy, 38, a former computer and communications expert for the CIA. He left the agency in 1968, worked in electronics and computers, overcame a struggle with alcoholism, and in 1976 was coaxed into the business of exporting high-speed communications and computer gear. His scheming partners in InterTechnology, Inc., were two former CIA undercover agents: Edwin P. Wilson, 52, who had helped to organize the disastrous Bay of Pigs invasion of Cuba, and Frank E. Terpil, 41, who had worked overseas for the agency as a communications technician. Wilson, known as "the ice-man" at the agency, was a cold yet charming operative who kept in gregarious touch with his CIA buddies. He often took Mulcahy along to suburban Washington bars, like the Rough Rider Lounge at the Ramada Inn in Tyson Corners, Va., where agents gathered. Mulcahy was convinced that his partner was still working "under deep cover" for the CIA.

Thus Mulcahy was not alarmed when his two partners told him that they planned to visit Gaddafi in Tripoli. One reason: Wilson, in Mulcahy's presence, had told Theodore G. Shackley, then an assistant to the CIA's highest clandestine operations official, about the trip. Gaddafi wanted to buy thousands of tuners that could set off explosives at a specified hour, ostensibly to clear Israeli mines left from the October War of 1973--even though there is no evidence that any such mines were in Libyan waters or territory.

A firm called American Electronic Laboratories, Inc., of Falls Church, Va., which had long furnished the CIA with classified equipment, agreed to build prototypes for Gaddafi's order. The deal was set at a meeting in a Virginia bar attended by William Weisenburger, then on active duty with the CIA, and another agent working undercover at American Electronic. Libya eventually placed an order for 300,000 timers--far more than needed to blow up any possible number of imagined Israeli mines.

American Electronic balked at the size of this order. Wilson then recruited another CIA supplier, Scientific Communications, Inc., of Dallas, to provide a second batch of prototypes. They were delivered to Wilson and Mulcahy at a motel near CIA headquarters in Langley, Va., by Joe Halpain, the Dallas firm's president. The final Gaddafi order was for 500,000 of the timers, for which he promised to pay $35 million. They cost only $2.5 million to produce. Explosives to go with the timers were illegally supplied by J.S. Brower & Associates of Pomona, Calif, another CIA contractor. Some 40,000 Ibs. of the high explosive RDX--the largest nonmilitary shipment on record--were flown to Libya in 55-gal. drums marked "industrial solvent." This was a risky enterprise since the drums could have exploded in flight in turbulent weather.

Mulcahy finally decided his partners were acting on their own, not for the agency, when they directed him to arrange for purchase of a Redeye ground-to-air missile for Gaddafi. Mulcahy feared Gaddafi might be planning to arm a Redeye with a nuclear warhead. Alarmed, he searched through his company's files, found documents he had never seen--and reported his findings to both the CIA and the FBI.

The documents, according to Hersh, disclose that Wilson and Terpil had set up a training program in Libya in "espionage, sabotage and general psychological warfare." It included a laboratory near Tripoli for making assassination bombs disguised as ashtrays, lamps or teakettles. An active CIA agent, Pat Loomis, allegedly helped induce some Green Berets training at Fort Bragg, N.C., to leave the Special Forces and join the Libyan operation as instructors.

Mulcahy also discovered that Terpil had provided arms, explosives and torture devices under a $3.2 million contract with Idi Amin Dada's brutal government in Uganda. Terpil had once bragged about testing a new poison on someone in Uganda whom he had no reason to kill He also told two New York City undercover police posing as arms buyers, ""If you're knocking off Americans, it will cost you 40% more.""

Fearing retaliation from his former partners after talking to federal investigators. Mulcahy went into hiding under assumed names. It took until April 1980, nearly four years after Mulcahy talked, for Wilson and Terpil to be finally charged with conspiring to sell explosives to Libya and to commit murder. Both are fugitives overseas and federal investigators believe they are still training terrorists in Tripoli. Their work pays well. They have bought more than $5 million worth of real estate in the U.S. and England.

Federal prosecutors contend that jurisdictional problems, lack of effective laws and the priority of other cases caused the long delay in following through on Mulcahy's information. But some Justice officials suggest that CIA agents had impeded faster action. One prosecutor told TIME, "When you deal with the CIA everything is done with a wink and a nod. And there was a lot of winking and nodding going on."

Former CIA Director Stansfield Turner, who inherited the Wilson-Terpil problem in 1977, promptly fired two agents, Loomis and Weisenburger. Shackley's role is still being studied. Action against former agents is difficult because there is no law, or even a CIA regulation, banning them from selling their expertise, short of national security secrets, or exploiting past CIA commercial connections once they leave the agency. One formidable reason is that the CIA often wants to use such "former" operatives in future undercover work.

The CIA's apparent reluctance to help push the Wilson-Terpil case faster carries more ominous undertones. Wilson's lawyers have hinted to the prosecutors that they would turn any trial into a case against the CIA and would include the claim that Wilson, at the time of his deals with Gaddafi, was still working for the agency. Some investigators suspect that Wilson would try to link other former and even current senior CIA officials with similar arms deals for private profit.

Joel Lisker, chief counsel to the Senate Subcommittee on Security and Terrorism, doubts that the number of former agents involved in such traffic is large. "But it doesn't need to be," he adds. "Terpil and Wilson alone could keep Gaddafi and Idi Amin supplied with everything they need." Lisker suspects that the CIA probably did know about the Wilson and Terpil dealings with the Libyan dictator, explaining, "Gaddafi is the No. 1 guy the CIA wants to get next to. He's a bad guy --and so are Wilson and Terpil. How else could the CIA get close?"

But the problem of former high U.S. officials profiteering in shady deals with unfriendly nations may go beyond the CIA, if Mulcahy is to be believed. He told TIME last week, "I know former U.S. military officers of flag rank who are in illegal arms sales. The problem is so big that people in Washington are afraid to deal with it." --By Ed Magnuson.

Reported by Jonathan Beaty/Washington

With reporting by Jonathan Beaty/Washington

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