Operation Seashell – How Israel Secretly Armed Iran & Later India

Operation Seashell was a clandestine Israeli operation to secretly arm Iran in exchange for continued access to Iranian oil. Later in 2009, the same Israeli arms company used as a conduit for secret arms sales to Iran was found to be involved in a major arms scandal in India.

Operation Seashell – How Israel Secretly Armed Iran
Operation Seashell – How Israel Secretly Armed Iran

1981 Mystery of Armenia mid-air collision

JULY 24, 1981: A REMOTE ARMENIAN MOUNTAINSIDE

A huge, scorched black crater gaped at the rescue team, which immediately understood there was no one left for them to rescue. All they could do was extricate the remains of eight unidentifiable bodies. The aircraft that had been carrying them had been loaded so full of munitions and fuel that when it exploded in the air and crashed into a mountainside, there was almost nothing left of it or its crew.

Media reports said that the plane had lost its way and entered Soviet airspace over Azerbaijan. One of the Soviet air force jets sent to intercept it was said to have mistakenly collided with it, causing the crash. The truth is much more sinister, and shadowy.

1981 Armenia mid-air collision - Operation Seashell
Canadair CL-44 of TAR at Basle Airport in October 1976. The same aircraft was involved in the 1981 Armenia mid-air collision during Operation Seashell

The Argentinean ambassador in Moscow at the time, Leopoldo Bravo, was with the rescue team. Authorities had informed him that an aircraft belonging to the Argentinean cargo airline TAR had penetrated Soviet airspace and collided with another plane. The embassy ran a quick check which revealed that, in fact, a Canadair jet belonging to the company had vanished from radar screens near the Soviet-Turkish border on July 18. But the ambassador had not been able to figure out why an Argentine plane was in that area and what cargo it was carrying. Inquiries in Argentina had turned up nothing.

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Israeli arms to Khomeini

In fact, the plane’s mission was well known at the time among a close circle in Israeli intelligence, and certain arms dealers. The aircraft was ferrying Israeli arms to Ayatollah Khomeini’s regime, in secret, to assist in Iran’s war with Iraq.

Saddam Hussein’s invasion was only ten months old. The war would last for eight years, and cost over a million lives, but at the time it seemed likely that Saddam’s superior forces would soon be parading through Tehran. The newly purged Iranian military was dominated by the Revolutionary Guards, and Khomeini badly needed weapons and supplies. Iran’s stockpiles were running low. During the Shah’s regime, Israel and America had kept Iran well armed; but now, following the seizure of the U.S. Embassy and the subsequent hostage crisis, America had declared a general boycott of Iran, and demanded that its allies do the same.

Khomeini in exile at Bursa, Turkey without clerical dress
Ayatollah Khomeini in exile at Bursa, Turkey without clerical dress

Not everyone complied with the U.S. demands. The French, for one, weren’t averse to bending the embargo. One French firm, apparently under the protection of a high official in French intelligence, signed a contract with a British firm to supply engines for Scorpion light tanks to Iran. On the bills of lading they claimed the engines were bound for Jordan, although the Jordanian army had no Scorpion tanks. ‘They also approached the Israel Defense Ministry’s representative in Paris, offering to act as Intermediary for sales of Israeli supplies.

Amazingly, Israel responded. Khomeini’s regime openly endorsed the destruction of Israel, yet there were enough people in Israel who thought they should sell arms to him, in secret, for the operation code-named “Seashell” to be born. It puts the later Iran-contra scandal to shame.

Operation Seashell

There were four main reasons why Operation Seashell went forward. First, Israel could not come to terms with the military, intelligence, and diplomatic losses that it had sustained with the disruption of relations with Iran after the revolution. Arms exports would at least give it a foothold in Tehran. In Israel’s defense establishment, the lesson had been learned from many cases over the years that swiftly supplying weaponry and military know-how to a totalitarian state will bring the supplier as close as possible to the rulers, because the weapons are their means of holding on to power.

Second, it was hoped that the infusion of weaponry would intensify the Iran-Iraq War and lead to the mutual destruction or, at least weakening, of two enemies.

An Iranian soldier wearing a gas mask during the Iran-Iraq War.
An Iranian soldier wearing a gas mask during the Iran-Iraq War.

Third, Israeli officials feared a victorious Saddam Hussein. Finally, more than anything else, the weapons industry wanted to make money. As one Israeli Defense Ministry official, a key figure in Operation Seashell, recalls: “I do not remember even one discussion about the ethics of the matter. All that interested us was to sell, sell, sell more and more Israeli weapons, and let them kill each other with them.”

The Front Companies

Iran’s appeal for arms came through various front companies. The Zurich-based Center for Logistic Support Corporation wrote to SIBAT, the arm of the Israeli Defense Ministry that deals with defense exports, in January 1981. The letter explained that

The continuing war between Iran and Iraq has created an immediate requirement for a continuous and organized supply of spare pans and weapons to back up the anent needs of the Iranian Defense forces. As a result of the Iranians’ initiative, we are in the process of establishing a center for Logistic Support in Europe (US) which will serve the Iranian requirements in the aerospace anti defense fields. This organization is directly connected to the Iranian Ministry of War who would like to use them in its reorganization procedures for future purchases from the Western World.

The company’s support center was located on the sixth floor of NIOC House, 4 Victoria Street, London, a building belonging to the National Iranian Oil Company, which also housed the Iranian-British Chamber of Commerce.

All of the Iranian requests for help through various channels landed in the Kirya, the precinct in Tel Aviv that houses the Defense Ministry and the headquarters of the Israel Defense Forces (IDF).

Iranian President Abolhassan Banisadr, who was also commander-in-chief, on a Jeep mounted 106 mm recoilless anti-tank gun supplied secretly by Israel under Operation Seashell.
Iranian President Abolhassan Banisadr, who was also commander-in-chief, on a Jeep mounted 106mm recoilless anti-tank gun supplied secretly by Israel under Operation Seashell.

The first deal was carried out through one shrewd Iranian arms dealer via French intermediaries. The dealer bought 250 tires for Phantom jet fighters, along with communications equipment, 106mm recoilless guns, mortars, and ammunition, all from Israel. He paid $2 million up front. The goods were shipped via Lisbon. It turned out, however, that he was milking his Iranian customers. He charged them $56 million, and promptly disappeared.

But this scam did not shut the pipeline down, and orders from Iran kept on coming. SIBAT’s head, Zvi Reuter, approached the Israeli technology and arms company Elul, owned and managed by a man named David Kolitz, to examine the possibility of using it as a conduit for arms sales to Iran. Kolitz, who had done business in Iran under the Shah selling agricultural equipment, agreed to participate. In the old days he had sold automated chicken coops. Now, he would sell guns.

Portuguese Arms Dealer – George Piniol

One of the main players in Operation Seashell was a Portuguese arms dealer by the name of George Piniol. He arrived in Israel in early 1980 on a visit coordinated by SIBAT, bearing letters of credit worth tens of millions of dollars. He had already established a front company called Koller Holdings Ltd., registered on Jersey in the Channel Islands, as a cover.

His first deal was relatively modest: 150 M-40 antitank guns and 24,000 shells for each gun. Piniol used bank checks to pay for them. He had a very detailed shopping list, presumably dictated by Iran: spare parts for tank and aircraft engines; shells for 106mm recoilless rifles and for 130mm, 203mm, and 175mm guns; and TOW vehicle-mounted launchers and missiles. He was equipped with any number of fake certifications stating that the end user for his acquisitions was a company in Peru.

Iranian artillery tanks arms and munitions captured by Iraqi army
Picture released on October 1980 of Iranian artillery, tanks, arms and munitions captured by the Iraqi army during Iran / Iraq war. (Photo credit should read -/AFP/Getty Images)

Elul’s sales staff soon realized that everything the Iranians wanted—a total of 360 tons of spare parts and ammunition—was available in the warehouses of Israel Military Industries (IMI) and Israel Aircraft Industries (IAI) or at the Israel Defense Forces stockpiles. It was decided to gather all the consignments from all the different sources for each shipment in one large central hangar at the IAI’s Ben Gurion International Airport headquarters, placed under heavy guard. The hangar would be emptied and restocked many times, as the flood of Israeli arms to Iran continued.

The Airlift Operation

The Iranians wanted the goods yesterday, and shipment by sea was out of the question. Secrecy demanded that a complex airlift operation be devised, carried out entirely at night in unmarked aircraft to ensure that neither Israel nor Iran would be associated with it. Piniol managed to get officials of the Argentinean airline Transporte Aereo Rioplatense (TAR), some of them based in Miami, to assign an aircraft to the operation and ignore the fraudulent bills of lading, in exchange for nearly $300,000. The plane could carry only 20 tons at a time, so eighteen flights were required. The value of the entire deal was $75 million, paid by Iran.

In a letter to the IMI, Elul pledged that “in the event of any mishap connected to the transportation and delivery of the goods to the buyers, we will, to the best of our ability, take all necessary measures to ensure that there will be no publication of information that could link in any way at all the deal with IMI or the State of Israel.”

To finalize the operation, a meeting was held at IA1 headquarters on July 15, 1981, to discuss what the “top-secret” minutes of the meeting described as “The order of the Elul company in the matter of Seashell.” The Defense Ministry’s director of security, Haim Kannon, approved “the transportation of the items ordered, including ammunition, by air shipment [and] insisted that on the cargo manifests on each flight neither the nature of the goods nor their production source be specified, apart from mention of the place of loading … the terminology used in the letters of credit would be ‘pipes, cylinders, and spare parts.'”

Corporate Structure of Elul Group involved in Operation Seashell
Corporate Structure of Elul Group involved in Operation Seashell – a clandestine Israeli operation to secretly arm Iran

Following that meeting, Elul deputy CEO Dan Kay wrote a detailed letter in English to Raphael Peled of Israel’s Bank Leumi, with clear instructions for handling the transfer of funds and how to refrain from using the name of Israel or revealing the true nature of the arms shipments on any documents. The deals were carefully constructed to look utterly innocent. The “pipes, cylinders, and spare parts” were officially addressed to a German company.

To this day, David Kolitz, owner of Elul, denies the whole thing, insisting that “Elul does not trade in arms, has never exported weapons and/or ammunition to Iran at any time and has never served as a ‘front’ for such government activities, if there were any such activities.”

Question: But your signature appeals on the documents from Elul that deal with the trade with Iran and your name appears as a participant in all of the meetings on the subject.

Kolitz: I am not saying that you are a liar and I am not saying that you are insane. Despite the documents that you have mentioned and despite my signature, I repeat my earlier response.

Hezbollah’s Dirty Secret

The Iranian impresario behind Operation Seashell was a man whose name crops up frequently in the secret wars between Iran, Israel, and the West: Dr. Sadeq Tabatabaei, a distant relative of Khomeini and one of his confidants in sensitive matters. It was he who ordered the Iranian purchasing agents to contact Piniol. On April 7, 1981, Tabatabaei wrote to Koffer Holdings, Piniol’s straw company in Jersey, and made clear that Iran would be the end user of the goods to be supplied. He identified himself as a representative of the “Defense Council” of the revolution, the leading body in Iran’s security and Intelligence system, one of the most important administrative bodies in the country.

To a large extent, Tabatabaei owed his successful career to Israel. For his role in arranging the arms shipments from Israel, he gained much prestige, and Khomeini made sure he was promoted. He would become deputy interior minister and a top Iranian representative in Lebanon, where he was among the founders of Hezbollah. He was in charge of arms shipments from Iran to the militia. Following instructions from Tehran, it was Tabatabai who would later push for the abduction of two Israeli soldiers by Hezbollah that led to the war in the summer of 2006.

Sadegh Ghotbzadeh, Musa al-Sadr and Sadegh Tabatabaei
Sadegh Ghotbzadeh (former Iranian Foreign minister and close aide of Ayatollah Khomeini, executed for allegedly plotting the assassination of Ayatollah Khomeini and the overthrow of the Islamic Republic, linked to CIA), Musa al-Sadr (revered by Hezbollah followers, departed for Libya in 1978 to meet with government officials at the invitation of Muammar Gaddafi and disappeared since) and Sadegh Tabatabaei (former deputy interior minister and a top Iranian representative in Lebanon, where he was among the founders of Hezbollah).

The Israelis worked out a list of simple code names and numbers for the ingredients of the operation. A Shafrir air-to-air missile, for example, was “1,” a Howitzer gun “2,” a mini-Uzi submachine gun “8,” and the destination of Iran “11.” The plane carrying the goods was code-named “Britannia.” A problem arose at the planning stage: IA1 and Defense Ministry officials didn’t want foreign pilots to enter their secure space at the airport, but Israeli pilots weren’t keen on flying to Iran. The solution: a stopover in Cyprus. Pilots of Israel’s Arkia Airline were used on the first leg, from Tel Aviv to Larnaca, Cyprus, and were replaced by crews recruited by Piniol from South Africa and other countries for the flight to Iran.

This system worked smoothly eight times. Every few nights, the TAR plane took off, loaded to the roof with huge amounts of arms and ammunition. After the stopover and second leg, it was unloaded secretly at a military airport near Tehran, before flying back to Israel. It was on the ninth flight that the plane disappeared off the radar screens over Armenia.

The Investigation

The mystery of the plane’s crash on that remote Armenian mountainside remains unsolved to this day. A combined Mossad—Defense Ministry investigation concluded that all signs indicated the Soviet Union was responsible. One view is that the aircraft penetrated Soviet airspace in error, and was shot down. A second is that the Russians had learned of the arms shipments to Iran and viewed them as an extension of America’s long arm in the Middle East, and so they intentionally intervened. Yet another hypothesis, for which no serious foundation exists, was that a very prominent American media figure who was visiting Israel at the time heard about the operation and found it so objectionable that he leaked its details so that the Iraqis got wind of it, and it was they who shot the plane down.

Yet the crash and the loss of the crew did not stop Operation Seashell. Piniol, the Elul company, and the Israeli defense establishment were too determined. There were still large amounts of military equipment in the IA1 hangar and Iran was planning a major counteroffensive, for which it needed massive amounts of weaponry. Ten days after the crash, Piniol turned up in Israel and tripled his orders. He had managed to set up a link between Israel’s Red Sea port of Eilat and the Iranian port at Bandar Abbas. Israel’s Energy Ministry helped organize this route in the belief that it would be possible to get oil in exchange for the arms shipments. Oil was not forthcoming, but a great deal of money changed hands as a large number of shipments, comprising hundreds of tons of arms and ammunition, ensued by sea. (One of the machine guns sold to Iran at that time would be used by Hezbollah twenty-five years later to kill Israeli troops in the July 12, 2006, incident that led to Israel’s most recent war in Lebanon.)

Piniol’s deals were not the only ones in Operation Seashell. There were other channels through which Israeli arms, ammunition, and parts were reaching Iran. With that equipment, Iran succeeded in turning the tide of the war.

Iraqi prisoners are put on show before the media during Iran-Iraq War
Iraqi prisoners are put on show before the media and Iranian General, Zahir Nehzad, by members of the Iranian army. Also present at the gathering are the “Martyrs of the Revolution” injured in combat in the 1980 Iran-Iraq conflict. (Photo by Jean Guichard/Sygma/Sygma via Getty Images)

The Revolutionary Guards relaxed their control of Iran’s military, and the old professional officer corps reasserted itself. The army chief of staff, General Kassam All Zaher-Nijad, proved to be a skilled military leader. Under his command, with the help of the Israeli arms, Iran launched a successful counteroffensive in early October 1981 to break the Iraqi siege of Abadan, a key oil city. Subsequently Iran retook almost all of the land conquered by Iraq, including twelve cities and more than a thousand villages. In July 1982, Iranian forces invaded Iraqi territory for the first time.

With the outbreak of the Iran-Iraq War, the Israelis faced a classic conundrum in foreign policy: If two of your enemies are fighting each other, whom should you help? It can be hard to sit on the sidelines, rooting for a draw, and it is somewhat understandable that key Israelis feared a total victory by Saddam Hussein. But Iran would soon start using the arms Israel had shipped to it on Israel itself, and on Western targets.

The Indian Connection

In 2009 a major arms scandal broke out in India. It was revealed that a controversial Israeli arms agent has been playing a crucial role in swinging several defence deals in India. David Kolitz, his partner Israel Yaniv, and their Elul Group are key to many arms deals in India, according to several sources in India and abroad. It was reported that they work as agents for Israeli firms and operate in India through a prominent Indian arms dealer who is related to a Union minister.

That Elul takes commissions on its India deals is no secret. That the costs are loaded on to the Indian taxpayer are less known. In an article as far back as September 2001, Israel’s Ha’aretz newspaper quoted Elul Group vice-president Joseph Ravkaie as confirming that the “company has had a commercial agreement with Rafael for five or six years”. He did not give details about the level of commissions paid in deals beyond saying that it was “not 5%”.

Sources among private players in the Indian defence sector told DNA that they were aware of the power of Kolitz in swinging defence deals. In fact, one of them said Kolitz may have had a significant role in firming up a strong partnership between an Indian industrial house and a leading Israeli defence firm.

According to DNA’s investigation, the Israelis engaged Sudhir Choudhary to handle local political, bureaucratic, and military contacts. Choudhary is related to a prominent Union minister.

Choudhary replaced Suresh Nanda, Israel’s earlier arms dealer, against whom the Central Bureau of Investigation (CBI) instituted a case. Nanda, son of a former navy chief SM Nanda, came under scrutiny for handling the purchase of Barak missiles from IAI and Rafael in 2000.

The above article is excerpted from the book The Secret War with Iran by Ronen Bergman an Israeli investigative journalist and author. He is a senior political and military analyst for Yedioth Ahronoth, Israel’s largest-circulation daily. The last section on the Indian Connection is excerpted from the investigation by DNA, an English broadsheet daily.

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