Appendix A

 

The ISC/Ferranti Scandal

 

 

            In 1971, James H. Guerin, founded the International Signal and Control Company in Lancaster, Pennsylvania.  It was primarily an electronics company specializing in high tech sensors, optics, and other military connected equipment.  The company was modestly successful but Mr. Guerin found connections to the government and by 1974 was setting up a bogus front company for the National Security Agency to circumvent the US Governments embargo of shipping military supplies to South Africa.  ISC produced advanced electronic sensors which were shipped to the counterfeit company, Gamma Systems Associates, where they were repackaged, labeled with false descriptions, and then forwarded to South Africa by commercial Airlines without any government export licenses or documents.  The sensors were to be used to monitor Soviet submarine activity off the Cape of Good Hope and were therefore valuable as information sources to the NSA and CIA.  This covert operation was sanctioned by then Director of the National Security Agency, Admiral Bobby Inman, who later became Deputy Director of the CIA before retiring and joining the Board of Directors at ISC.  This phase of the covert sale of banned equipment to South Africa ceased to have official sanction in 1977 but continued through the Gamma Company unabated for almost another fifteen years.

 

James H. Guerin, founder of ISC

 

            South Africa had been developing nuclear technology since 1971 in its quest to have atomic capabilities in its arsenal.  James Guerin became a consultant for Armscor, the South African state arms company, and shipments of electronic and missile parts to aide in the development of a long range missile capable of delivering a nuclear warhead continued without pause.  Israel had been helping South Africa to develop, test, and produce long range missiles and rockets based on its own “Jericho-II” missile.  In 1979 Washington and Moscow pressured South Africa to shut down its nuclear test site in the Kalahari Desert, but in September of that year an American satellite detected a distinctive double flash off the southern coast of Africa which, using the satellites date, offered strong evidence that it had been caused by a low-yield nuclear explosion.  In June of 1980 the CIA reported to the National Security Council that the 2-3 kiloton nuclear test had probably involved Israel’s help since it had been tracking frequent visits to South Africa by Israeli nuclear scientists, technicians and defense officials in the years preceding the incident.

 

Carlos Cardoen, head of Chile’s Industrias Cardoen, alleges that he was approached by the U.S. to sell cluster bombs to Iraq in the early 1980’s and received U.S. assistance to provide the weapons in Chile.  His company was given access to U.S. blueprints of the “Rockeye” cluster bomb, made by James Guerin’s International Signals Corp. subsidiary Marquardt Company.  When Iraq emerged victorious against Iran in June 1988, Saddam Hussein decided to produce the cluster bombs locally since he already had the blueprints.

 

In the early 1980’s Israel wanted some top secret items from the U.S., namely the electronic fuse that triggered the Fuel-air bomb which was manufactured by ISC.  William Casey, Director of the CIA, was in favor of Israel’s request but repeated attempts to obtain the “Columbine Heads”, as the triggering devices were known, were rejected by the Carter administration.  Things were different under the Reagan regime but Casey knew he would never get approval for the transfer from Congress so he had James Guerin give it to them.  In 1983 Guerin took the plans out of the country and delivered them to Israeli agents which led to the building of new manufacturing plants in South America and Iraq.  This all came to light when in 1989 the Bank of Credit and Commerce International (BCCI) offered to sell three Columbine Heads to Iraq. 

 

All of this covert selling and delivering of high tech military equipment just sets the stage for 1983 when ISC bought a controlling interest in the Marquardt Aircraft Company.  Marquardt, at the time, was flush with contracts for Space Shuttle parts and satellite thruster rockets.  With the purchase by ISC it gained lucrative contracts for cluster and chemical bombs, among other things.  A huge expansion program started at Marquardt with new manufacturing buildings dedicated to the government contracts.  Marquardt was at its peak with nearly 3,000 employees and hundreds of millions coming into the accounts receivable department.  James Guerin continued his wheeling-dealing and between 1984-1988 ISC sent South Africa more than $30 million in military related equipment, including telemetry tracking antennae to collect data from missiles in flight, gyroscopes for guidance systems, and photo-imaging film readers, all of which would form the “backbone” of a medium range missile system and some of which would be forwarded to Iraq and used in the 1991 Gulf War against American troops. (A detonator battery found on an Iraqi artillery shell was traced to ISC)

 

In the period between 1984 and 1988, ISC set up a project to supply Iraq with a strategic air launched missile known as a “Precision Guided Munition” (PGM also known as a Paveway bomb).  1500 PGMs were to be funneled from ISC companies in the United Kingdom through the United Arab Emirates to Iraq.  Delivery of these missiles was delayed until 1991 and didn’t reach Iraq because of the Gulf War.  They are supposedly stored in the United Arab Emirates warehouses due to the lack of aircraft that can deliver them.

 

            In 1987 along comes Ferranti International Corporation, a long established, well respected leading-edge defense electronics supplier based in Edinburgh, Scotland, and plunks down $700 million to buy ISC and its subsidiaries, ISC (UK) Ltd., ISC Technologies, and the Marquardt Aircraft Company, among the 48-company network* of front companies Guerin had set up with at least 61 bank accounts all over the world.  James Guerin becomes the Deputy Chairperson of Ferranti and a multi-millionaire in one quick stroke of the pen.  Ferranti’s profits soared the first year after the merger and then started a downward spiral that eventually bankrupted the company which was then swallowed-up by the military electronics giant, GEC, in 1991.  It was alleged that pure fraud on the part of James Guerin caused the collapse; that he listed as assets large overseas contracts that simply did not exist.  While this may or may not be true due to the fact that the CIA and NSA were involved, another factor was probably the collapse of the Soviet Union and the end of the cold war in 1989.  The government had little use for more cluster bombs if there wasn’t an enemy to fight so many military contracts were immediately canceled.  This had severe effects on the Marquardt Company and massive layoffs were initiated by its administration to downsize the company.

 

            The empire started to unravel quickly after the take-over by Ferranti and in 1991 Ferranti declared bankruptcy and sued Guerin for claiming to have hundreds of millions of dollars’ worth of pending contracts that had never materialized.  The nonperforming contracts turned out to be military deals with Pakistan and Abu Dhabi and it was Guerin’s contention that they had come unraveled after General Zia was killed in 1988.  A federal grand jury indicted James Guerin; Guerin’s partner, Robert Clyde Ivy; Thomas P Jasin, CEO of ISC Technologies; Armscor of South Africa; and a host of others connected with James Guerin in some way.  At his trial, James Guerin, tried to plead his ties with the government, former Secretary of State, Alexander Haig, Deputy Director of the CIA, Bobby Inman and the CIA as proof he was acting under government orders but, typically, the government abandoned him with denials of his involvement.  He was convicted of defrauding Ferranti of $1.1 billion, money laundering over $950 million, and illegally exporting military technologies to South Africa and Iraq.  In June of 1992 he was sentenced to 15 years in federal prison at Titusville, Florida.  Admiral Bobby Inman (Ret.), former Deputy Director of the CIA wrote a letter to the sentencing judge extolling the “patriotism” of James Guerin and his services to the country…..it didn’t help.

 

            Because of the Ferranti bankruptcy the Marquardt Company was split into two separate companies and the Marquardt Jet Laboratory (the rocket building side) was sold to Kaiser Aerospace and Electronics Corp of Foster City, California, for the reported sum of $1,000,000, while the Marquardt Manufacturing Company sank into oblivion.  It was bargain basement time for Kaiser because Marquardt had about $50 million in Space Shuttle orders on the books at the time they took over.  Kaiser believed that Ferranti would fold and disappear due to the bankruptcy so the debt would never have to be paid off.  This proved to be a mistake as Ferranti survived and ten years later, when Kaiser wanted to sell the Marquardt rocket business to Primex, it extracted its pound of flesh.

 

            Thomas P. Jasin, former President of ISC Technologies, was convicted of exporting “Striker Missile” parts and sentenced to two years.  Robert Clyde Ivy, former Director, President, and CEO of ISC International was sentenced to 6 months in jail and a $50 fine which was served in 1997.  Others have escaped by leaving the country.

 

Sources: 

            AMR Management Bulletin, September 1997

            The Outlaw Bank, by Jonathan Beaty & S.C. Gwynne

            Fraud Awareness Newsletter, April 1-15, 1997

            US link in South African missile technology, by Norm Dixon

United States of America vs. Thomas P. Jasin, No. 91-602-08, Pennsylvania Eastern District Court

United States of America vs. Thomas P. Jasin, No. 00-4185, 3rd Circuit Court of Appeals

Whatever happened to Iraqgate?, by Kenneth R. Timmerman, American Spectator 1996         

            South Africa’s Nuclear Autopsy, The Risk Report, January-February 1996

           

(*)  Some of the companies listed in the grand jury indictment were:

Barco Holding Ltd.;  Barco Ltd.;  Bosque Rosa South Africa;  Damaral Corporation;  Elverton South Africa;  Gamma Systems Associates;  Gamma Systems Associates South Africa;  Hoyer of Denmark;  KP Industries PVT Ltd.;  Navarino Development Corporation;  Parent Industries Inc.;  Parent Universal;  Sestri Associates South Africa;  Technology Associates International;  Technology Associations International South Africa;  Triangle Engineering;  et al.