EATSCO

History of the Egyptian-American Transport and Services Corporation (EATSCO)

The Egyptian-American Transport and Services Corporation (EATSCO) was a CIA front company established in 1979 to handle the shipment of U.S. military equipment to Egypt following the Camp David Accords. Its history is marked by its role in covert arms logistics, financial fraud, and ties to controversial CIA figures, including Edwin P. Wilson, Thomas G. Clines, and Ted Shackley.

Formation

EATSCO was incorporated in Delaware in 1979 by Thomas G. Clines, a former senior CIA official, and Hussein K. Salem, a former Egyptian military intelligence officer. Headquartered in Falls Church, Virginia, with offices in Egypt, the company was formed to capitalize on the 1978 Camp David Accords, which established peace between Israel and Egypt and led to significant U.S. military aid to Egypt.

• Purpose: EATSCO secured an exclusive contract with the Egyptian government to ship over $3 billion in U.S. military equipment, including electronics, artillery, tanks, and other hardware, to Egypt. The contract was negotiated with high-level Egyptian officials, including Kamal Hassan Ali (then defense minister) and Mohammad Abu Ghazala (military attaché), and approved by the Pentagon.

• Ownership: Clines owned 49% of EATSCO, with Salem holding the majority. Other CIA-linked figures, including Richard Secord and Ted Shackley, were associated with the company, though their ownership roles are less clear.

• CIA Front: EATSCO was a CIA front, designed to facilitate covert arms shipments while maintaining plausible deniability. Its creation aligned with the CIA’s practice of using private companies for sensitive operations, similar to Air America and Nugan Hand Bank.

Operations

EATSCO’s primary role was to manage the logistics of shipping U.S. military aid to Egypt, leveraging the post-Camp David influx of equipment. However, its operations extended beyond legitimate transport to include covert activities and financial misconduct.

• Logistics and Arms Shipments: ◦ EATSCO handled billions of dollars in military equipment, coordinating sea and air transport from the U.S. to Egyptian ports like Alexandria and Suez. It used aircraft, including a Boeing 707-323C operated through Global International Airways, a CIA-linked company owned by Farhad Azima, which also shipped arms to the Nicaraguan Contras. ◦ The company’s exclusive contract gave it significant control over Egypt’s military supply chain, raising questions about how it secured such a lucrative deal.

• Covert Operations: ◦ EATSCO was used in several CIA weapons supply operations, including covert shipments to support anti-communist groups. Its role mirrored other CIA fronts like Consultants International (run by Edwin P. Wilson), which facilitated arms logistics. ◦ Global International Airways, EATSCO’s biggest customer, was implicated in shipping arms to the Contras and possibly cocaine back to the U.S., suggesting EATSCO’s involvement in broader CIA covert networks.

• Financial Fraud: ◦ From 1979 to 1981, EATSCO submitted inflated invoices totaling $51 million to Egypt, overcharging the Pentagon by $8 million for arms shipments. Some funds were diverted to EATSCO, with Egyptian officials reportedly aware of the overcharges but not objecting. ◦ The company justified high bills by citing expedited deliveries requiring expensive chartering, but federal investigators found the charges excessive for the $300 million in arms shipped.

CIA Connections

EATSCO’s ties to the CIA were rooted in its leadership and operations:

• Key Figures: ◦ Thomas G. Clines: A former CIA official under Ted Shackley, Clines was a co-founder and key figure in EATSCO’s operations. He later played a central role in the Iran-Contra affair alongside Richard Secord. ◦ Hussein K. Salem: A former Egyptian military intelligence officer, Salem had close ties to Egyptian officials like Kamal Hassan Ali. U.S. intelligence sources confirmed his intelligence background, though he denied it. ◦ Theodore Shackley: A senior CIA officer and associate of Clines, Shackley was linked to EATSCO through his network of former CIA operatives. His role in Le Cercle and oversight of Air America in Laos suggest he influenced EATSCO’s covert activities, though direct ownership is unconfirmed. ◦ Edwin P. Wilson: A former CIA officer, Wilson provided funding for EATSCO and was investigated for his ties to the company. His involvement in Nugan Hand Bank and Libyan arms deals linked him to similar CIA networks.

• Connection to Nugan Hand Bank: ◦ EATSCO’s operations overlapped with Nugan Hand Bank, a CIA-linked Australian bank co-founded by Michael Jon Hand. Wilson’s 1974 arms deal through Nugan Hand, shipping 10 million rounds of ammunition and 3,000 weapons to southern Africa, paralleled EATSCO’s arms logistics. Both entities served as financial and logistical conduits for CIA operations, with Hand’s CIA background and Wilson’s ties to both suggesting a shared network. ◦ Michael Jon Hand: As a former CIA contractor in Laos, Hand’s experience with Air America and connections to Shackley mirrored EATSCO’s leadership profile. While no direct evidence ties Hand to EATSCO, his role in Nugan Hand’s arms deals and CIA operations suggests a parallel structure. Hand’s disappearance in 1980 coincided with EATSCO’s scrutiny, limiting further connections.

• Broader CIA Network: EATSCO’s leadership, including Ray Clines, Secord, and Shackley, were active in the Iran-Contra affair, indicating a continuity of CIA covert operations. The company’s use of Global International Airways and ties to Wilson’s other fronts (e.g., A.P.I. Distributors Inc., established by Wilson for Clines in 1978) reinforced its role as a CIA asset.

Collapse and Investigations

EATSCO’s fraudulent practices led to its downfall:

• Investigation: ◦ In 1982, the U.S. Justice Department began investigating EATSCO for overcharging Egypt $51 million, with $8 million in inflated invoices to the Pentagon. The probe, reported by The Washington Post and The New York Times, also examined how EATSCO secured its exclusive contract, though no Egyptian officials were accused of wrongdoing. ◦ Egyptian officials, including Kamal Hassan Ali, were interviewed, and Egypt conducted its own investigations, concluding no impropriety. The Egyptian government privately complained about the U.S. probe, citing satisfaction with EATSCO’s performance.

• Guilty Plea (1983): ◦ In July 1983, EATSCO pleaded guilty in federal court in Alexandria, Virginia, to filing false statements through inflated invoices from 1979 to 1981. The company paid a $20,000 fine, and Hussein Salem paid $3.04 million in fines and restitution. ◦ Thomas G. Clines was implicated in the scheme but faced no charges in this case, though his later Iran-Contra involvement led to legal consequences.

• Wilson’s Role: The investigation tied EATSCO to Edwin P. Wilson, who was convicted in 1983 for illegally selling 20 tons of C-4 explosives to Libya. Federal investigators explored Wilson’s funding of EATSCO, but Egyptian officials denied his involvement, citing his Libyan ties as a sensitive issue given Egypt-Libya tensions.

• FOIA Requests: A 2016 Freedom of Information Act request by Michael Best to the FBI sought records on EATSCO, revealing 6,858 pages of documents, though processing was delayed due to volume. This indicates significant classified material on the company’s activities.

Legacy

EATSCO’s brief history (1979–1983) encapsulates the CIA’s use of front companies to manage covert arms logistics, echoing operations like Air America and Nugan Hand Bank. Its collapse, marked by fraud and ties to figures like Wilson, Clines, and Shackley, highlighted the murky intersection of intelligence, profit, and geopolitics. The company’s role in the Camp David arms pipeline and its links to Iran-Contra operatives cemented its place in Cold War espionage history, as documented in sources like The New York Times.