Kennedy’s Comrade: Hunting a KGB Mole in the Democratic Party

In 1999, espionage author Christopher Andrew revealed that Soviet archives smuggled by defector Vasili Mitrokhin described an unnamed KGB agent recruited from California Democratic Party circles in the 1970s:

Following publication of Andrew’s book, I began trying to identify this individual. I worked from the clues provided in Andrew’s summary as quoted above. Unfortunately, Andrew did not include the original Russian text of the document in his book, nor have I yet been able to find it among the original documents he has reproduced in his other published work, so I should emphasize that here I am working from Andrew’s English summary of a Russian original document, not from the original document itself. Due to this, I have unanswered questions about how to interpret the significance of certain phrases mentioned above, such as the characterization of the agent as a “Democratic activist”. Hopefully the original document will be made available in the future and will shed light on these details. But in any case, here is what I have been able to find by following up on the clues Andrew has provided so far.

In the process of trying to collect details on the “Pacific Hotel” meeting with Jimmy Carter, Jerry Brown, and Alan Cranston, I learned that Los Angeles Times reporter Tyler Marshall had questioned Cranston about the meeting without success:

Jamie Dettmer also questioned Cranston, as well as Jerry Brown and Jimmy Carter, with similar results. As Dettmer reported on an intelligence community discussion forum:

A participant in the same thread as Dettmer’s post suggested that the suspect profile fit Tom Hayden.⁴ This sounded like a guess worth pursuing—Hayden certainly fit the description of a “Democratic activist in California”, and he had frequently associated with Communist front groups and toured Communist countries. But I wanted confirmation, so I began checking into Hayden and Carter’s known movements to determine whether there was any convergence with the other details given in the KGB archives. A research assistant helped me dig up any pertinent information on Carter’s visits to California during the 1976 Presidential campaign.

We soon determined that on Sunday, August 22 and Monday, August 23, 1976, Carter met with Cranston and the campaign steering committee of the Democratic National Committee at the Pacifica Hotel, also known as the Radisson Los Angeles Airport Hotel of the Pacifica Host Hotels chain. In the process we discovered there was another individual present during Carter’s visit who seemed to fit the suspect’s profile better than Tom Hayden:

The Los Angeles Times gave a detailed summary of Carter’s visit and itinerary on August 23, 1976:

Among the names mentioned in this Los Angeles Times article, several stand out for known Soviet intelligence associations, and one in particular emerges as a most likely suspect for the Carter campaign’s KGB mole.

Armand Hammer’s work for Soviet intelligence is well known.⁶ However there is no indication in the Los Angeles Times article or other sources of Hammer going back to the Pacifica with Carter after the Wasserman dinner. Nor was Hammer especially close to the other individuals described as being within the KGB agent’s circle of contacts. While we did not rule Hammer out absolutely due to a lack of exhaustive information, he did not seem to be the best match for the suspect profile.

Andrew Young is known to have been under the influence of Communist Party operative Jack “Hunter Pitts” O’Dell.⁷ However researchers considering Young as a suspect have pointed out that in the same passage where Christopher Andrew discusses the Carter campaign’s KGB mole, he mentions that the KGB met obstacles when attempting to recruit Young.⁸ This alone does not necessarily exclude Young from consideration, but when other details are considered, a better suspect emerges.

That individual is a known KGB asset mentioned in the Los Angeles Times article: California Senator John Tunney.

Tunney’s relationship with the KGB was first revealed in 1992 after Soviet archives came into Western possession, and has recently received renewed publicity from reviews of Paul Kengor’s 2006 book The Crusader⁹ The documents publicized in 1992 and 2006 focused on Tunney’s mediation between Soviet officials and Ted Kennedy from 1978 to 1983. But Tunney also seems to be the best fit for the profile of the unnamed agent the KGB had placed in Jimmy Carter’s circles during the 1976 Presidential campaign.

Like the unnamed agent, Tunney had been in the Soviet Union. His business trips there after 1978 are easily documented from the public record. I found it more difficult to determine exactly when he first visited the USSR, but it was apparently before October 1974. At that time his soon-to-be-ex-wife Mieke wrote an article for Ladies’ Home Journal describing her relationship with Senator Edward Kennedy’s husband Joan, whom she had known since 1958 when their future husbands were attending law school together.¹⁰ Mieke mentioned “days in Moscow” with Joan during the past 16 years:

When were Mieke Tunney and Joan Kennedy in Moscow between 1958 and 1974? In the wake of detente, a number of groups of Senators and Congressmen travelled to the Soviet Union between 1972 and 1974.¹² Senator Kennedy made his first trip to the USSR from April 18 through 25, 1974, visiting Moscow before going on to sightseeing in Tbilisi and Leningrad. News coverage and Kennedy biographies mention that the Senator travelled with Joan and their children Kara and Ted, Jr. While in Moscow the Senator met briefly with what news accounts describe as “American residents in Moscow”. In Tbilisi Kennedy spoke at the Dartmouth Conference, an annual Soviet-American business conference, which was attended by other Americans including Chase Manhattan Bank president David Rockefeller and Senators Hugh Scott and William Roth. The Senator also met with the Soviet USA Institute, headed by Dartmouth Conference attendee Georgi Arbatov.¹³ I did not find any direct references to the Tunneys being present on these occasions. But I did find references to the Tunneys vacationing with the Kennedys several times during 1972-1974, when both Senators were having marital difficulties and Tunney’s son Teddy was helping Ted Kennedy, Jr. work through chemotherapy for bone cancer.¹⁴ In July 1974, the Kennedy and Tunney families were reported vacationing together in Ireland.¹⁵ So it seems plausible that Mieke Tunney’s reference to “days in Moscow” may be alluding to the Kennedys’ 1974 visit to Moscow. Hopefully further research will uncover additional information.

It proved easier to find confirmation that Tunney fit some of the other items in the unnamed agent’s profile remarkably well. His circle of contacts coincided significantly with those attributed to the agent: “Governor Jerry Brown of California, Senator Alan Cranston, Senator Eugene McCarthy, Senator Edward Kennedy, Senator Abraham Ribicoff, Senator J. William Fulbright and Congressman John Conyers, Jr.”

Tunney’s political contacts stemmed partly from his close relationship with Senator Kennedy. Tunney had been Kennedy’s college roommate in law school and was an usher at Kennedy’s wedding to Joan. Joan Kennedy and Mieke Tunney became best friends over the course of the 1960s. Meanwhile their husbands travelled together and were frequently seen together in extramarital couplings with other women.¹⁶ In addition to such social contact, Kennedy and Tunney worked together politically. For instance, while Tunney was still a Congressman in 1966, he and Kennedy and their wives travelled to the Middle East on a fact-finding trip to develop an Arab-Israeli peace plan.¹⁷ Also in 1966, Joan Kennedy and her sister Candy travelled to California to stump for the re-election of Tunney and Governor Pat Brown.¹⁸ Tunney helped Jess Unruh organize Robert Kennedy’s Presidential campaign in California in 1968,¹⁹ and early that same year Tunney and Edward Kennedy both made fact-finding trips to Vietnam.²⁰ After Tunney was elected Senator in 1970, he and Kennedy served on the Senate Judiciary Committee together.²¹ They joined forces against the Nixon administration and California Governor Ed Reinecke during the Watergate investigation.²² In late 1974 and early 1975 they joined Senators Alan Cranston and Dick Clark in leading a drive to sever US aid to anti-Communist forces in Angola.²³

Tunney’s close relationship with Kennedy placed him in Kennedy’s circle of contacts, intersecting with at least three of the other politicians from the unnamed KGB agent’s list of contacts: Senators Abraham Ribicoff and Jacob Javits and Congressman John Conyers, Jr.

Ribicoff, a friend of the Kennedy family since 1949, had been John Kennedy’s campaign adviser and first cabinet appointee.²⁴ As a Senator he and his close colleague Jacob Javits had worked with Robert Kennedy on the Subcommittee on Executive Reorganization of the Senate Committee on Government Operations.²⁵ Following Robert Kennedy’s assassination, Ribicoff had supported antiwar candidate George McGovern’s Presidential aspirations in 1968 and 1972.²⁶ Edward Kennedy joined him in supporting McGovern in the 1972 campaign, and both Kennedy and Ribicoff were considered as running mates for McGovern.²⁷ At the time of Kennedy’s April 1974 trip to the USSR he was cosponsoring a major piece of legislation being promoted by Ribicoff in conjunction with Senator Javits and Senator Henry Jackson, the Jackson-Vanik Amendment.²⁸ In support of this legislation and related legislation, Tunney’s aide Mel Levine worked in coordination with Jackson’s aide Richard Perle, Javits’ aide Albert Lakeland, and Ribicoff’s aide Morris Amitay.²⁹

John Conyers, Jr. served on the House Judiciary Committee while Tunney was on the Senate Judiciary Committee. Tunney and his committee listened to a statement Conyers gave opposing the Supreme Court nomination of Lewis Powell.³⁰ Tunney also supported the efforts of Conyers and his Democratic colleagues on the House Judiciary Committee to impeach Richard Nixon, an effort in which Senator Kennedy played a large behind-the-scenes role.³¹

As a Democratic Senator from California, Tunney also worked closely with two of the unnamed KGB agent’s other contacts: Senator Cranston and Governor Brown. Cranston, who was Tunney’s senior as California Senator, was quoted in a 1971 article describing the growth of his relationship with Tunney, and in 1974-1975 he supported Tunney’s efforts to cut off US aid to Angola.³² At the 1976 Democratic National Convention, where Jerry Brown was one of Carter’s leading rivals, Tunney and Cranston attended a private unity meeting between Brown’s camp and the Carter camp.³³ Carter’s California campaign was aided by Brown, Cranston, Tunney, and Democratic State Chairman Charles Manatt, who had guided Tunney’s 1970 Senate campaign and later became Tunney’s law partner when the former Senator joined the firm of Manatt, Phelps, Rothenberg & Tunney (now Manatt, Phelps & Phillips).³⁴

In addition to being present during Carter’s Los Angeles visit on August 22, 1976, Tunney also had good opportunity for the later contact with Carter and his supporters attributed to the unnamed KGB agent: “During the final stages of the campaign the agent had what the KGB claimed were 'direct and prolonged conversations' with Carter, Governor Brown and Senators Cranston, Kennedy, Ribicoff and Jacob Javits.”

Carter visited California three times during the later stages of his campaign. Following his first debate with President Ford, he spent the weekend of September 24-26, 1976 in Southern California, making an appearance at the San Diego Zoo and at an Orange County barbecue and in the process appearing publicly with Governor Brown and Senators Cranston and Tunney.³⁵ Carter was in San Francisco for his second debate with Ford from October 4 through October 7.³⁶ Carter made a final campaign swing through California over the weekend of October 29 through November 1, during which he joined a San Francisco telecast featuring Tunney and other Democratic candidates on Halloween, spent that evening and the next morning in Sacramento at the El Mirador Hotel with Governor Brown, and attended a Los Angeles lunch rally with Brown, Tunney, and Cranston on November 1.³⁷

Tunney could have spoken with his best friend Kennedy at any time during this period. Kennedy had especially close access to Carter when Carter stopped in Boston on September 31 and met with Kennedy and other Democratic state leaders.³⁸ Carter was also present at the Waldorf-Astoria in New York on October 21 for the annual dinner of the Alfred E. Smith Memorial Foundation, which was attended by prominent members of both parties.³⁹ I am still trying to determine whether Tunney had any documented contact with Ribicoff or Javits during the final stages of the Carter campaign.

If Tunney was the unnamed KGB agent, what are the implications for history? If Tunney had already been recruited by the KGB before his 1976 Senate campaign, it could shed significant light on his activity during the Nixon-Ford administration. The precise date of the unnamed agent’s recruitment is unclear from Andrew’s summary, but his account makes it sound as if the agent had already been recruited during a visit to Russia sometime prior to the 1976 Presidential campaign. As mentioned above, Senator Kennedy had visited Russia in April 1974, and Mieke Tunney recorded reminiscences of “days in Moscow” with Joan Kennedy in an October 1974 article. During this period, as Kennedy sized up his odds in the next Presidential election and Tunney prepared to run for re-election to the Senate, both men were actively involved in promoting the Watergate prosecution.⁴⁰ In late 1974, Tunney initiated the Congressional antiwar bloc’s effort to cut off US aid to Angola. Soviet archives record the KGB’s enthusiastic reviews of New York Times coverage of Congress’ attack on President Ford’s Angola policy.⁴¹

While Tunney’s relationship to the KGB before the 1976 election remains only a hypothesis supported by circumstantial evidence, there is more direct evidence available after the 1976 election, when Tunney joined the law firm of his friend Charles Manatt, who would serve as the Democratic National Committee Chairman from 1981 to 1985. Soviet archives indicate that another firm Tunney was linked to, Agritech, had a relationship to a French-American company called Finatech, which was run by David Karr—a KGB agent associated with Armand Hammer—and served as an intermediary between the KGB and Ted Kennedy between 1978 and 1980. KBG reports also mention Tunney carrying messages between Kennedy and Moscow in 1983. As summarized by Herbert Romerstein:

So from 1978 to 1983, there is direct evidence from Soviet archives that Tunney was acting as a middleman between Senator Kennedy and the Soviet Union. Circumstantial evidence indicates that Tunney may have begun playing this role as early as 1974-1976.

Tunney’s role as courier to the Soviets was not limited to delivering messages from Kennedy. A review of Paul Kengor’s Crusader adds:

There is indeed a lot more to be found—or from the perspective of some, perhaps, a lot more to be covered up.

¹Christopher Andrew and Vasili Mitrokhin, The Sword and the Shield: The Mitrokhin Archive and the Secret History of the KGB, New York: Basic Books, 1999, 290-291, 627n84, citing "[Mitrokhin archives] vol. 6, app. 1, part 4; t-3,76”.

²Tyler Marshall, “California and the West; KGB Records Reveal California Espionage; Intelligence: Unidentified man described as a Democratic Party activist informed Soviets about meeting with then-Sen. Cranston and presidential candidate Jimmy Carter, papers show.”, Los Angeles Times, September 24, 1999, 3.

³Jamie Dettmer, “Re: Who Was That Spy?”, Intelligence Forum, June 26, 2000, http://archives.his.com/intelforum/2000-June/msg00328.html

⁴John Young, “Re: Who Was That Spy?”, Intelligence Forum, June 25, 2000, http://archives.his.com/intelforum/2000-June/msg00327.html

⁵Kenneth Reich, “Carter in L.A., Approves Ford’s Action in Korea”, Los Angeles Times, August 23, 1976, B1. For other accounts of Carter’s trip, see Jules Witcover, Marathon: The Pursuit of the Presidency, 1972-1976, New York Viking press, 1977, 521, 525-526; Patrick Anderson, Electing Jimmy Carter: The Campaign of 1976, Baton Rouge: Louisiana State University Press, 1994, 89-99.

⁶Joseph Finder, Red Carpet, New York: Holt, Rinehart, and Winston, 1983; Steve Weinberg, Armand Hammer: The Untold Story, Boston: Little, Brown and Company, 1989; Harvey Klehr, John Earl Haynes, and Fridrikh Igorevich Firsov, The Secret World of American Communism, New Haven: Yale University Press, 1995, 26-30; Harvey Klehr, John Haynes, and Kyrill M. Anderson, The Soviet World of American Communism, New Haven: Yale University Press, 1998; Edward Jay Epstein, Dossier: The Secret History of Armand Hammer, New York: Random House, 1996.

⁷Kenneth R. Timmerman, Shakedown: Exposing the Real Jesse Jackson, Washington, DC: Regnery Publishing, 2002, 108, 110.

⁸Andrew and Mitrokhin, The Sword and the Shield, 290; Gary Kern, “Who Was That Spy?”, Intelligence Forum, June 25, 2000, http://archives.his.com/intelforum/2000-June/msg00326.html

⁹Tim Sebastian, “Dialogue with the Kremlin”, The Sunday Times, February 2, 1992; Yevgenia Albats, “Senator Edward Kennedy Requested KGB Assistance With a Profitable Contract for his Businessman-Friend”, Izvestia, June 24, 1992, 5; Paul Kengor, The Crusader: Ronald Reagan and the Fall of Communism, New York: HarperCollins, 2006.

¹⁰Mieke Tunney, “My Friend, Joan Kennedy”, Ladies’ Home Journal, October 1974; Lester David Joan: The Reluctant Kennedy: A Biographical Profile, New York: Funk & Wagnalls, 1974, 121-122.

¹²Murray Seeger, “Humphrey Warns Russ of Diploma Tax Danger: Emphasizes That Democratic Congress Will Decide Its Own East-West Policies”, Los Angeles Times, December 2, 1972, 14; Murray Seeger, “Brezhnev Talks Trade With 7 U. S. Senators: Soviet Emphasis on Legislation”, Los Angeles Times, April 24, 1973, 4.

¹³”Kennedy, in Moscow, Backs Visit by Nixon: Impeachment Moves Should Not Keep the President Home, Democratic Senator Says”, Los Angeles Times, April 19, 1974, A4; Murray Seeger, “Kennedy-Brezhnev Talk Indicates Russ Are Looking Beyond Nixon”, Los Angeles Times, April 23, 1974, 7; “Crowds of Smiling Georgians Give Kennedy Warm Greeting”, Los Angeles Times, April 23, 1974, 2; ;”Peasants Love Them: Kennedys Make Hit in Soviet Georgia”, Los Angeles Times, April 24, 1974, A4; Murray Seeger, “A Red Carpet for Sen. Kennedy: Kremlin Opens Its Gates to Kennedy”, Los Angeles Times, April 28, 1974, F1; ”People”, TIME, May 6, 1974; Bill Adler, The Kennedy Children: Triumphs & Tragedies, New York: Franklin Watts, 1980, 266.

¹⁴David, 225, 240; Adler, 266; Richard E. Burke, The Senator: My Ten Years With Senator Ted Kennedy, with William and Marilyn Hoffer, New York: St. Martin’s Press, 1992, 52, 67-71.

¹⁵”Kara Kennedy/Foot Injury”, ABC Evening News, July 10, 1974; ”Kara Kennedy/Foot Injury”, CBS Evening News, July 10, 1974; Adler, 266; “GAA Club to benefit from draw”, Western People, August 4, 2004, http://www.westernpeople.ie/community/story.asp?j=20861

¹⁶David, 50, 121-122, 137-138, 225-228, 240; Tunney; Joe McGinniss, The Last Brother, New York: Simon & Schuster, 1993, 560; Burke, 67-71.

¹⁷Jerusalem Post, December 2, 1966, 8; Allan Kellum, “The Presidential Candidates: How They View the Middle East”, The Link, Volume 13, Issue 1, January-February 1980; George Weller, “Dateline: Palestine”, The Link, Volume 21, Issue 2, June-July 1988.

¹⁹Francis M. Carney, interview, July 20, 1998, online at Oral History: University of California, Riverside http://www.ucrhistory.ucr.edu/ ; Ronald Loveridge, interview, August 5, 1998, online at Oral History: University of California, http://www.ucrhistory.ucr.edu/pdf/loveridge.pdf ; Lawrence F. O’Brien, interview with Michael L. Gillette, July 21, 1987, online at Lyndon Baines Johnson Library Oral History Collection, http://www.lbjlib.utexas.edu/johnson/archives.hom/oralhistory.hom/obrienl/OBRIEN23.PDF

²⁰United States Congress, 91st Congress, 1st Session. House Report No. 91-25: Measuring Hamlet Security in Vietnam: Report of a Special Study Mission by Honorable John V. Tunney (California) of the Committee on Foreign Affairs, House of Representatives, Pursuant to the Provisions of H. Res. 179, 90th Congress, A Resolution Authorizing the Committee on Foreign Affairs to Conduct Thorough Studies and Investigation of All Matters Coming Within the Jurisdiction of Such Committee. Washington, DC: U.S. Government Printing Office, 1969; Harvey Meyerson, Vinh Long, with Introduction by Congressman John Tunney, illustrated with maps by Adam Nakamura, Boston: Houghton Mifflin Company, 1970; Don Luce and John Sommer, Viet Nam: The Unheard Voices, Foreword by Senator Edward Kennedy, Ithaca, New York: Cornell University Press, 1969; "Edward M. Kennedy", Encyclopedia of World Biography, 2nd Edition, 17 Volumes., Gale Research, 1998, reproduced in Biography Resource Center. Farmington Hills, Michigan: Thomson Gale, 2006, http://galenet.galegroup.com/servlet/BioRC

²¹”Committee on the Judiciary”, http://a255.g.akamaitech.net/7/255/2422/06sep20050947/www.gpoaccess.gov/congress/senate/judiciary/sh92-69-267/members.pdf , ”Committee on the Judiciary”, http://a255.g.akamaitech.net/7/255/2422/26sep20051515/www.gpoaccess.gov/congress/senate/judiciary/sh94-63774/members.pdf ; U.S. National Archives and Records Administration: Legislative Branch: The Center for Legislative Archives, Guide to the Records of the U.S. Senate at the National Archives (Record Group 46): Chapter 13. Records of the Committee on the Judiciary and Related Committees, 1816-1968: Records of Subcommittees: Subcommittee on Constitutional Rights, online at http://www.archives.gov/legislative/guide/senate/chapter-13-judiciary-1947-1968.html

²²”Abuse of Governmental Power Segments”, Nixon White House Tapes, Conversation Numbers 22-84, 22-93, 23-8, 711-14, 712-6, 23-30, and 331-16, April 5-18, 1972, online at http://nixon.archives.gov/find/tapes/watergate/aogp/april_1972.pdf ; ”Gray Nom.”, ABC Evening News, March 1, 1973; ”Gray/Watergate Case”, CBS Evening News, March 9, 1973; “The Fight Over the Future of the FBI”, TIME, March 26, 1973; ”Watergate Case”, ABC Evening News, May 15, 1973; ”Watergate/Elliott Richardson”, ABC Evening News, May 22, 1973; ”Senate Probe/Cox Removal/Nixon Impeachment”, CBS Evening News, October 22, 1973;”Reinecke Arraigned”, ABC Evening News, April 10, 1974; Hearings Before the Committee on the Judiciary, House of Representatives, Ninety-Third Congress, Second Session, Pursuant to H. Res. 803, A Resolution Authorizing and Directing the Committee on the Judiciary to Investigate Whether Sufficient Grounds Exist for the House of Representatives to Exercise Its Constitutional Power to Impeach Richard M. Nixon, President of the United States of America, Presidential Statements on the Watergate Break-In and Its Investigation, May-June 1974Washington, DC: U.S. Government Printing Office, 1974, Appendix I, online at http://watergate.info/judiciary/APPI.PDF

²³Joshua Murvachik, “Kennedy’s Foreign Policy: What the Record Shows”, Commentary, Volume 68, Number 6, December 1979.

²⁴”The Campaign and the Candidates”, NBC News, October 29, 1960; "Abraham (Alexander) Ribicoff", Contemporary Authors Online, Gale, 2006, reproduced in Biography Resource Center, Farmington Hills, Michigan: Thomson Gale, 2006, http://galenet.galegroup.com/servlet/BioRC ; "Abraham Alexander Ribicoff”, The Scribner Encyclopedia of American Lives, Volume 5: 1997-1999, Charles Scribner's Sons, 2002, reproduced in Biography Resource Center, Farmington Hills, Michigan: Thomson Gale, 2006, http://galenet.galegroup.com/servlet/BioRC ; “Biographies and Profiles: Abraham Ribicoff”, John F. Kennedy Presidential Library & Museum, http://www.jfklibrary.org/Historical+Resources/Biographies+and+Profiles/Profiles/Abraham+Ribicoff.htm

²⁵Rufus King, The Drug Hang Up: America’s Fifty-Year Folly, Springfield, Illinois: Charles C. Thomas, 1972, Chapter 27, online at http://www.druglibrary.org/special/king/dhu/dhu27.htm

²⁷”Campaign `72/Vice President Offers--Ribicoff, Kennedy”, ABC Evening News, July 13, 1972.

²⁸Arlene Lazarowitz, “Senator Jacob K. Javits and Soviet Jewish Emigration”, Shofar: An Interdisciplinary Journal of Jewish Studies, Volume 21, Number 4, Summer 2003, 19-31; Murray Seeger, “Kennedy-Brezhnev Talk Indicates Russ Are Looking Beyond Nixon”, Los Angeles Times, April 23, 1974, 7.

²⁹Stephen D. Isaacs, Jews and American Politics, Garden City, New York: Doubleday & Company, Inc., 1974, 255.

³⁰John Conyers to United States Senate, November 9, 1971, from United States Senate, Nominations of William H. Rehnquist and Lewis F. Powell, Jr.: Hearings before the Committee on the Judiciary. United States Senate. November 3, 4, 8, 9 and 10, 1971., online at http://www.20thcenturyrolemodels.org/powell/LP%20Judging%20History.pdf

³¹Hearings Before the Committee on the Judiciary, House of Representatives, Ninety-Third Congress, Second Session, Pursuant to H. Res. 803, A Resolution Authorizing and Directing the Committee on the Judiciary to Investigate Whether Sufficient Grounds Exist for the House of Representatives to Exercise Its Constitutional Power to Impeach Richard M. Nixon, President of the United States of America, Presidential Statements on the Watergate Break-In and Its Investigation, May-June 1974Washington, DC: U.S. Government Printing Office, 1974, Appendix I, online at http://watergate.info/judiciary/APPI.PDF

³²Charles Powers, “Warming Up for the Big Time: Can John Tunney Make It As a Heavyweight?”, West, December 12, 1971; Carl Gershman and Bayard Rustin, “Africa, Soviet Imperialism & The Retreat of American Power”, Commentary, Volume 64, Number 4, October 1977; Murvachik; K.C. Johnson, “Clark Amendment”, http://academic.brooklyn.cuny.edu/history/johnson/clark.htm

³³”Carter Goes to See Brown--Asks His Help in Fall: Californians Join Candidate in Unity Session”, Los Angeles Times, July 15, 1976, 2.

³⁴Jack Jones, “Thousands Hear Carter at Last-Day Rally in L.A.”, Los Angeles Times, November 1, 1976, A1. On Manatt and Tunney, see e.g. David Watson, “Davis Names Pines, Five Others to Los Angeles Superior Court: Governor Also Appoints 10 to Other Courts, Leaving Only a Handful of Vacancies”, Metropolitan News-Enterprise, November 13, 2003, http://www.metnews.com/articles/appt111303.htm; Mary Ellen Leary, “The Democratic New Guard”, The Nation, Volume 212, Issue 10, March 8, 1971, 302-305; Federal Election Commission to Terry D. Garcia, “Federal Election Commission Advisory Opinion Number 1982-63”, February 10, 1983, online at http://herndon1.sdrdc.com/ao/no/820063.html ; “Decision 1984/California Primary”, NBC Evening News, March 19, 1984; Irvin Molotsky and Warren Weaver, Jr., “BRIEFING; Grassley and the Democrats”, The New York Times, August 23, 1985.

³⁵”Carter To Bring Campaign To County Sept. 26”, Los Angeles Times, September 16, 1976, OC1; “Brown Campaigns for Ohioans, Plans to Assist Carter”, Los Angeles Times, September 24, 1976, B29; Bud Lembke, “Big-Name Politicians Flock to County”, Los Angeles Times, September 27, 1976, OC1, 2 pages; Don Smith, “Carter Brings Campaign to County Parade, Barbecue: Small Crowds Greet Carter”, Los Angeles Times, September 27, 1976, OC1, 2 pages; Patrick Anderson, Electing Jimmy Carter, 116-117.

³⁶Kenneth Reich, “Carter Discusses Foreign Affairs With Schlesinger”, Los Angeles Times, October 4, 1976, B6; Kenneth Reich, “Carter in S.F., Vows to Debate Aggressively”, Los Angeles Times, October 5, 1976, B6; Kenneth Reich, “Carter Aides Assail Ford For His Remark On Poland”, Los Angeles Times, October 7, 1976, B27; Kenneth Reich, “State Democrats Buoyed By Carter California Tour”, Los Angeles Times, October 9, 1976, A1, 2 pages.

³⁷“Carter to Tour State on Nov. 1”, Los Angeles Times, October 16, 1976, A23; Ellen Hume, “Buoyant Tunney Stumps With Children: Says Private Poll Gives Him 49%-41% Lead Over Hayakawa”, Los Angeles Times; November 1, 1976, B3, 2 pages “Carter Late, But Peep Show Livens Up Crowd’s Wait”, Los Angeles Times, November 1, 1976, A1; Jack Jones, “Thousands Hear Carter at Last-Day Rally in L.A.”, Los Angeles Times, November 1, 1976, A1; Bill Boyarsky, “Ford, Carter Wind Up Race, Wait for Voting: Democrat's Hopes Buoyed by Rally in Downtown L.A.”, Los Angeles Times, November 2, 1976, B1, 3 pages; “12 Injured as Roof Collapses at Carter Rally”, Los Angeles Times, November 2, 1976, B3; Bill Boyarsky, “L.A. Rally Buoys Carter's Hopes: Crowd Enthusiastic Here on Campaign's Last Day”, Los Angeles Times, November 2, 1976, A3; “Weary Tunney Ends Campaign In Riverside”, Los Angeles Times, November 2, 1976, B3.

³⁸ Witcover, Marathon, 589-590; William Lasser, “Carter attacks Ford on leadership issue”, The Tech, Volume 96, Number 34, October 1, 1976, 1.

³⁹Bill Boyarsky, “Tradition Attracts Ford, Carter to Al Smith Fete”, Los Angeles Times, October 22, 1976, A5, 2 pages.

⁴¹Christopher Andrew and Vasili Mitrokhin, The World Was Going Our Way: The KGB and the Battle for the Third World, New York: Basic Books, 2005, 452-453.

⁴²Herbert Romerstein, “Ted Kennedy was a ‘collaborationist’, Human Events, December 8, 2003, online at http://www.findarticles.com/p/articles/mi_qa3827/is_200312/ai_n9318614 On Karr, see John Earl Haynes and Harvey Klehr, Venona: Decoding Soviet Espionage in America, New Haven: Yale University Press, 1999, 244-247.

⁴³Kevin Mooney, “KGB Letter Outlines Sen. Kennedy's Overtures to Soviets, Prof Says”, CNSNews.com, http://www.cnsnews.com/ViewNation.asp?Page=/Nation/archive/200610/NAT20061020b.html , October 20, 2006.

The Death of Dave Karr, and Other Mysteries Fortune December 3, 1979, Domestic Edition Copyright 1979 Time Inc. All Rights Reserved Fortune December 3, 1979, Domestic Edition SECTION: Pg. 94 LENGTH: 4823 words HEADLINE: The Death of Dave Karr, and Other Mysteries BYLINE: by ROY ROWAN; Research associate: Andrew Baird BODY: The funeral wreaths at Pere-Lachaise cemetery in Paris bore some intriguing names: Christina Onassis, Roone Arledge, the U.S.S.R. Committee for Science and Technology, and Lazard Freres, just to mention a few. A stranger among the two dozen mourners gathered for the ceremony might have wondered what secrets of the deceased could have linked the Greek shipowner's daughter with the American Broadcasting executive, the Soviet government, and eminent investment bankers. But there wasn't much time for that kind of conjecture, because an announcement was quickly made that the funeral was being canceled. So it was that the last rites for David Karr proved to be as mysterious, and as abruptly terminated, as his multi-faceted business career. Back home, the demise of the sixty-year-old Karr on July 7, 1979, did not even rate an obituary, though he had once served as chairman of a FORTUNE 500 company, and by the time of his death was very possibly America's biggest deal maker in the Soviet Union. There were other distinguishing marks to his career that merited some kind of posthumous mention. He had written articles for the Communist Daily Worker as well as a book on proxy fighting, produced a couple of Broad-way plays and Hollywood movies, and demonstrated an infatuation with the politically powerful, having traveled the campaign trail with such diverse presidential candidates as Henry Wallace, Sargent Shriver, and Jerry Brown. Brilliance and deviousness were his most widely acknowledged weapons. But his motives were variously interpreted. "He had a strong social conscience that made him an intense promoter of detente," claims his longtime friend, Senator Alan Cranston. "When I hear that David Karr was concerned about Russia's Jews, I smile," says his most recent boss, Sir Charles Forte, executive chairman of Trusthouse Forte Ltd., one of the world's largest hotel chains. "He was interested in only one thing -- money." Karr, whose name originally was Katz and whose mother was born in Russia, often bragged of privately coaching Gerald Ford and Jimmy Carter on ways to gain concessions for Soviet dissidents, just as he frequently boasted of personally helping 300 Soviet Jews emigrate to Israel. But even on this claim there is violent disagreement. "He was no friend of Israel," snaps Samuel Flatto-Sharon, a member of the Knesset (Israel's parliament), who claims that a copy of a letter thanking Karr for arranging a $10-million Soviet arms shipment to Uganda was found in Idi Amin's captured files. But Flatto-Sharon's credibility must be questioned: he is standing trial for vote buying in Tel Aviv, after fleeing an embezzlement charge in Paris. A $175-million monument Whispers of a KGB connection followed Karr everywhere, once he started commuting to Moscow in 1972. However, in his bargaining with the Russians, just as in his wheeling-dealing with everyone else, it was always difficult to be sure whose side Karr was on. "He had a tendency to be involved with two sides of every equation," said Samuel Pisar, a prominent American attorney in Paris and authority on East-West trade. "Yet he was always able to supply the missing ingredient to make the deal." Dave Karr died less than twelve hours after returning to Paris from his greatest personal triumph in the Soviet Union: dedication of the glistening new 1,777-room Kosmos Hotel. That ceremony represented the culmination of a unique $175-million contract that enabled him -- an American entrepreneur, and in principle a complete outsider -- to organize the building of a socalled French turnkey hotel (outfitted with French equipment down to the last Armagnac glass), on Soviet soil, with Western capital, and 1,200 French and Yugoslav laborers. But then Karr had repeatedly told Vladimir Alkhimov, former deputy minister of foreign trade and now chairman of the State Bank of the U.S.S.R., "When you get a deal that's so complex it turns everybody else off, try me." Kathy Karr, the businessman's twenty-five-year-old daughter, had returned from Moscow with her father and was in his 60 Avenue Foch apartment when he died. She explains that while in the U.S.S.R. her father complained of severe stomach cramps, and was forced to leave the July 5 hotel dedication ceremony fifteen minutes after it began. That night he called her into his hotel room and said he thought he might be having a heart attack. He wrote down the telephone number of a Soviet official who would be able to summon an ambulance. The next morning Karr felt much better and went to the Kremlin for a meeting with First Deputy Prime Minister Nikolai Tikhonov to discuss other business ventures. There was a possibility of building additional hotels in Leningrad and Kiev. Among his many projects, Karr also was trying to help Mitsubishi Heavy Industries build a soybean-processing plant in the U.S.S.R., to help Blue Bell Inc. (the maker of Wrangler jeans) establish a denim factory, and to help Peugeot-Citroen obtain a contract to modernize the AZLK plant that builds Moskvich cars. Karr was accompanied to the Kremlin by two of his principal French associates: Jean Guyot, senior partner of Lazard Freres et Cie., and a director of Financial Engineers, the Swiss holding company owned jointly by Karr and Lazard; and Herve Alphand, former French Ambassador to the U.S., who is now chairman of Finatec S.A., the wholly owned French subsidiary of Financial Engineers. "David was in fine fettle," reports Guyot. "He was witty and gay." That same afternoon on the flight back to Paris, Alphand reports that Karr remained in high spirits, talking exuberantly of the billions that might be invested in Soviet projects. Kathy Karr, however, continued to worry about her father's health. "He couldn't sit still on the plane," she said. "He looked thin. I don't think he ate four meals during the week." "Nobody listens to a poor man" Once, during the flight, when Kathy suggested that he should consider taking some time off to write a book about his life, Karr touched his daughter's cheek and said, "You're my sense of eternity." Then he delivered her a lecture on how it wasn't just money he was chasing. He added, however, that money can buy credibility. "Nobody listens to a poor man," he explained. "I couldn't sleep at night if I didn't do my share for peace." His peacemaking efforts, or at least those for which he credited himself, included: supplying signals to the White House for communicating policy changes to the Kremlin, smoothing the way for last year's visit to the Soviet Union by Senator Edward Kennedy, and keeping his other Senate contacts -- namely Cranston, Ribicoff, Javits, and Jackson -- abreast of the Soviet response to negotiations on the strategic-arms limitation talks or other sensitive issues. When he landed at Charles de Gaulle Airport at 7:30 P.M. on July 6, Karr was furious to learn that his thirty-year-old German wife, Evia, had flown off to New York. Evia was Karr's fourth wife. Their eleven-month marriage was described by a friend as "an exercise in china throwing and tender reconciliations." Kathy reports that the sound of Evia's voice shouting over the transatlantic telephone filled the apartment as soon as they arrived. "That woman is sick. I've got to get her out of New York," Karr told Kathy after he had hung up. He called his friend "Jack the Tiger," as the concierge at the Plaza Athenee hotel is known, and asked him to book a seat on the Concorde leaving the next day. Then, as was insomniac Karr's habit, he started calling friends and business associates in other time zones. The valet thought he'd fallen "I was with him until 2:00 A.M.," explains Kathy. "He had taken two Libriums and I could see that he was finally falling asleep. So I went to bed myself." But at 4:00 A.M. Karr called Evia again in New York. At 7:30 A.M. Karr's valet rushed into Kathy's room, exclaiming that his employer had apparently fallen. When Kathy glimpsed her father lying face down on the bedroom floor beside his unpacked suitcases, she knew he was dead. "He appeared to have toppled without having put his hands out to break his fall," she said. Karr's personal physician and a police surgeon were summoned to the apartment. Independently, the two doctors confirmed that he had died instantly of a cardiovascular attack. But the doctors' reports didn't satisfy Karr's emotional young widow. Flying back to Paris, she obtained a court order stopping the funeral service and cremation. Upon her request, the body was then delivered to the Institut Medico-Legal for an autopsy. The high drama of halting a funeral already in progress drew not only the attention of French authorities, but the concern of U.S. officials, who also questioned the widow. According to a series of confidential telexes sent to the Secretary of State by the American Embassy in Paris, Evia Karr alleged that her husband had either been poisoned by the Russians, since he felt sick on returning from each visit to the Soviet Union, or had been murdered by the KGB in their apartment, where she had seen bloodstained pillowcases and noticed that his spectacles were broken. Evia emphasized to her embassy interrogator that the Kennedy family was very interested in the case, and that she had spoken to Senator Kennedy several times about it. Also mentioned in these confidential State Department messages was the fact that Evia's French lawyer had informed the embassy death and estates officer that the Karrs had decided to divorce. The lawyer left as proof a copy of a handwritten agreement signed by David Karr on June 26, 1979, transferring to Evia Freiberg Karr more than $2 million in cash, property, and shares of stock in two of Karr's companies. While the results of the autopsy failed to bear out Evia's darkest suspicions, they did leave open a crack of doubt. No toxic substances were found present in the corpse. And in the words of the examining officer, "the cardiac lesions were sufficient to cause death." Nevertheless, a small fracture of the larynx was discovered. Although this probably occurred when Karr fell, and does not conflict with the heart-attack diagnosis, Evia pressed on with her charges of foul play, filing an action that resulted in the case being classified under French law as: "Homicide charged against persons unknown." On the question of the Karrs' intended divorce, Evia has her own version. "David and I had no intention of divorcing," she told FORTUNE. She maintains that the lawyer who had delivered the handwritten June 26 agreement to the embassy was not in her employ. Anyway, she indicated that the document was simply an affirmation of Karr's love for her. "I told David, 'I need some kind of control over you, because one day you love me and the next day you're in a bad mood.'" It was then, she said, that he agreed to give her the $2 million -- a small part of the personal fortune that, she estimates, had grown to $15 million or $20 million. Recently, Evia hired former Watergate prosecutor Richard Ben-Veniste to try to track down her husband's assets, which she believes are secreted away in many companies and countries. "You see," she said, "David had certain inhibitions until he met me. He thought it was obscene for a nice Jewish boy from Brooklyn to have more than $5 million." Cultivating future connections The nice Jewish boy from Brooklyn, who died a multimillionaire in Paris, possessed an I.Q. of 189 -- or so it was asserted by school authorities in San Antonio (where Karr lived briefly as a boy), who publicized him as a budding genius. He also had a knack for changing careers with chameleon-like quickness. By the time Karr was twenty-five, he had worked as a Fuller Brush man, New York Daily Mirror reporter, penny-a-line writer for the Communist Daily Worker, investigator for the Council against Nazi Propaganda, employee in the Office of War Information (where he was let go after being called before Martin Dies's House Un-American Activities Committee), and star legman for Washington columnist Drew Pearson. Digging up dirt for Pearson surely sharpened Karr's cloak-and-dagger instincts. But it was while cruising the capital in a telephone-equipped limousine that he also started cultivating political and business leaders. Never a man to let an introduction wither on the vine, he would later put those connections to good use. In 1948 Karr made another sudden career change -- to public relations. First, he worked for William H. Weintraub & Co., where he became the chief counselor and confidant of Lewis Rosenstiel, chairman of Schenley Industries. Then he started his own agency, Market Relations Network. During this incarnation he developed a specialty: managing proxy fights in corporate takeovers. In fact, he became an instant authority by cranking out a book in 1956 called Fight for Control. Much of the expertise that went into the book came from veteran proxy fighter Leopold Silberstein, president of Penn-Texas Corp., whom Karr had worked for and helped take over a company called Niles-Bement-Pond. It was a lesson the teacher would dearly regret giving, because in 1959 Karr joined with corporate raider Alfons Landa and engineered the takeover of Silberstein's company (which became Fairbanks Whitney, but was later renamed Colt Industries). Landa installed himself as chairman and Karr became president. (See "Dave Karr in the President's Chair," FORTUNE, June, 1961.) When Landa stepped aside, Karr became chairman. But in 1963, following charges of mismanagement, he was forced to resign. Shifting his base to Paris Dave Karr's next incarnation was in show business. With Fred Coe he produced the Broadway play Xmas in Las Vegas. Together with Max Youngstein, who remembers Karr as "incredibly imaginative," he made two movies: The Dangerous Days of Kiowa Jones, and E. L. Doctorow's Welcome to Hard Times, a title that seemed to foretell the deteriorating state of Karr's own fortunes. M.G.M. wanted to keep him on the movie lot because of an impending proxy battle. But Karr's own plans involved further big changes in his life: he married a well-to-do French lawyer (wife No. 3), shifted his operating base to Paris, and established himself as a financial consultant. Karr now traveled the Continent, dropping his accumulated store of names with reverberance. For a while he moved his offices in with Baron Edmund de Rothschild's, and was able to say, "I work for the Rothschilds." But no major deals materialized from that relationship. Then in 1968 he encountered Sir Charles Forte. Forte's hotel chain had already embarked on a vast expansion program, but had acquired no properties in Paris. It happened that three of the finest hotels there -- the Plaza Athenee, George V, and La Tremoille -- were owned by Mme Francois Dupre, who had steadfastly refused to sell. Karr had been introduced to Mme Dupre by his French wife and was determined to get a deal for Forte. But those particular hotels were practically part of France's patrimony, Charles de Gaulle having once declared that they must never be permitted to fall into foreign hands. They were also beset by labor problems. None of these problems stopped Karr. He brought Mme Dupre and Forte together, helped work out the terms of the sale ($25 million cash), personally ironed out the labor disputes, then took over for Sir Charles as chairman of the holding company established to operate the hotels. Later, Karr also arranged the purchase of the Hotel Pierre in New York for Forte, and explored the possibility of building Trusthouse Forte hotels in Eastern Europe and the Soviet Union. "If David Karr thought you had an interest in the Taj Mahal," explained Sir Charles, "he would have no hesitation about going to the Indian government and saying, 'Look, I've got this deal . . .'" Like most of Karr's business relation-ships (and marriages), his close association with Forte finally ruptured. They split in 1976, but as Sir Charles said, "Karr never quite abandoned a connection, because eventually it might produce a plum." About a year ago, Forte explained, Karr came limping into his office, "with some such ridiculous complaint as having banged his knee on Brezhnev's desk." But Forte was no longer taking Karr seriously. "He had become a little swollen-headed and was talking in terms of making billions in the Soviet Union." Sir Charles's suspicions Forte does not entirely dismiss the possibility that Karr was murdered, though his speculations differ from Evia's. He thinks that if foul play did occur, it could have resulted from Karr's connection with the three Paris hotels, rather than from his Soviet dealings. Forte explained how, last summer, the hotel chain was in the process of transferring Henri Manassero, manager of the Pierre in New York, to Paris to supervise the running of the Plaza Athenee, George V, and La Tremoille. On July 7, during a stopover in London, the telephone rang in Manassero's room and a voice said: "Karr is dead. Come to Paris and you're next." Forte ordered Manassero back to New York, where he still is, though he refuses to discuss with FORTUNE the question of what a possible murderer might have been trying to accomplish. The close and intriguing connection between Dave Karr and the Russians evolved out of his business association with Armand Hammer, chairman of Occidental Petroleum. (See "Occidental's Odd Couple," FORTUNE, November 16.) Hammer hired Karr as a consultant in 1972 because of Oxy's vulnerability to a takeover, stemming from costly tanker contracts, which were draining the company's finances. The two men flew around the world together renegotiating the contracts, after which Karr said to Hammer: "You're always talking about your old friend Lenin. Let's go to the Soviet Union and make a deal." Hammer, whose father, Julius, had been one of the founders of the U.S. Communist party in New York, had met Lenin in 1921. Dragging Armand along Hammer and Karr's first foray into the Soviet Union in 1972 almost aborted over the Oxy chairman's insistence on taking his company plane. Sargent Shriver, who had become a legal counsel and associate of Karr's after serving as ambassador to France, recalls that it was really he and Karr who arranged that expedition. "Hammer knew who to see to make the trip worth-while," explained Shriver. "But we organized it." Karr always referred to that initial trip as, "dragging Armand kicking and screaming to the U.S.S.R." The seemingly impossible problem of obtaining landing rights in Moscow for Hammer's Gulfstream was finally solved when Karr and Shriver had lunch in Paris with Dzherman Gvishiani, deputy chairman of the State Committee for Science and Technology. Gvishiani is an expert on American management techniques, and has a powerful voice on all contracts signed with U.S. firms. He also happens to be Premier Alexei Kosygin's son-in-law. Karr made some thirty trips to Moscow for Hammer, while the Occidental chief negotiated a $20-billion fertilizer contract with the Soviet government. However, after about a year, he broke bitterly with Hammer and went into competition with him for Soviet business. "The show wasn't big enough for those two egos," commented a mutual friend. The New York Times reported recently that Karr secretly testified before the Securities and Exchange Commission that Hammer had made payoffs in the Soviet Union. The SEC refuses to comment. However, Karr's wife, Evia, says: "David felt he had been used by Hammer." So it would not be surprising if he sought revenge. Operating on his own, Karr proved remarkably adept at ingratiating himself with the Russians. He brought them the latest political gossip, business rumors -- and, some say, intelligence information -- together with an endless store of jokes and stories. "Dave Karr became the George Jessel of the Soviet circuit," said an American businessman watching him perform. He even told jokes at the expense of the Soviets themselves. Requested once to address a seminar of 500 Intourist officials in Moscow, Karr asked them: "How do you deal with Russians? Just like you eat an elephant. Bite by bite." While it was Kosygin's son-in-law, Gvishiani, who had invited him back to the Soviet Union after his break with Hammer, Karr's coterie of Soviet officials grew to include Vladimir Alkhimov, chairman of the State Bank; Yuri Ivanov, chairman of the Foreign Trade Bank; Leonid Kostandov, minister of Chemical Industries; and Ignaty Novikov, Deputy Premier, chairman of the State Committee for Construction Affairs, and president of the Olympic Organizing Committee. These were powerful friends and -- as some of the people who believe that Karr was murdered point out -- potential enemies as well. Sometimes back in Western Europe or the U.S., Karr would boast indiscreetly that he had a few of these high-up Russians in his hip pocket. It was through his contacts, he claimed, that the way was paved for Christina Onassis to marry a Soviet shipping official and move to Moscow. The linkup with Lazard However, Sargent Shriver, who made more than a dozen trips to Moscow with Karr, detected a basic flaw in his operation. "Karr was chiaroscuric," says Shriver. "He sketched out the most imaginative proposals. What he needed was to be part of an entity that could also offer solid financial backing." It was Shriver who encouraged the linkup with Lazard Freres et Cie. and who coined the name Financial Engineers -- of which Lazard partner Augustin Herve-Gruyer became chairman. Shriver also became a member of the firm, though he later "agreed to disagree" with Karr and resigned. This curious Karr-Lazard entity signed the Kosmos Hotel contract and arranged the first large syndicated loan to the Soviet Union by private banks: $250 million in 1975. But the most highly complicated, hotly-competed-for Soviet deal in which Karr and Lazard ended up with a big piece of the action was on another front. It involved the marketing rights to the silver, gold, and platinum coins commemorating the 1980 Olympics. The fierce Olympic bidding actually began with the competition for television rights. Here Karr had the inside track, working on behalf of his good friend Roone Arledge of ABC. But Arledge was not as aggressive as Karr wanted him to be (even though Lazard Freres et Cie. had agreed to finance the deal for ABC), and ignored Karr's pleas to return to Moscow. Arledge finally rushed back, but only after NBC already had the contract sewn up. Karr was furious. To pacify him, Gvishiani suggested that he get into the bidding for the lucrative Olympic-coin contract. Shriver had already signed a contract whereby Financial Engineers gained exclusive rights to the Olympic symbol.A subsidiary called Sports Licensing was established to handle the symbol's franchising, and it embarked on a joint venture with Image Factory Sports, Inc. (headed by former California Senator John Tunney) to make sub-licensing agreements for the sale of T-shirts, jewelry, and other Olympic merchandise. Competing for the much richer coin deal (which had an estimated retail value of $250 million to $300 million) was an imposing array of business muscle. There were more than thirty bidders, including American Express, Engelhard Minerals, the Dresdner Bank, and an American syndicate composed of Occidental Petroleum, Loeb Rhoades, the New York Times Co., MCA, Summa Corp., and an entertainment company called United Euram. The shuttle to Moscow Herve-Gruyer reports that he, often with Karr, shuttled from Paris to Moscow some seventeen times in 1977 chasing the coin contract. "We were building a close relationship with the commercial department of the Foreign Trade Bank," he said, which handles the sale abroad of all of Russia's precious metals, including the Olympic coins. At the same time, Leo Henzel of United Euram, the organizer of the American syndicate, together with Dudley Cates, executive vice president of Loeb Rhoades, was similarly winging back and forth between New York and Moscow, trying to clinch the contract for the rival group. In the end, the Russians found a solution: merge the competitors. Reluctantly, Karr and Hammer found themselves reunited in the coin deal. Immediately, however, infighting within the American syndicate caused rever-berations all the way to the top at the Kremlin. The New York Times Co., MCA, and Summa had previously dropped out, but Loeb Rhoades and organizer Henzel's United Euram were still part of the syndicate. Hammer offered to buy Henzel out, and when the offer was turned down, forced him out. Henzel retaliated by telling the small New York newspaper Jewish Week that he had been "cut out" of the coin deal "just to make room" for Karr's good friend Gvishiani. Interviewed by telephone, Karr furiously denied the story, but Loeb Rhoades Vice President Cates, who was also interviewed, corroborated Henzel's charge. Cates resigned a month later, and Henzel is presently suing both Occidental and Loeb Rhoades. But Jewish Week's front-page story (headlined OLYMPIC PROMOTERS NAME KOSYGIN KIN AS SHARING IN DEAL) may have already destroyed trust in Karr at the Kremlin. Splitting up the coin deal The Olympic-coin contract ended up being split six ways. Financial Engineers got the biggest piece -- 40 percent -- half of that going to Karr personally. Occidental received 33 percent. Paramount Coin Co. of Columbus, Ohio, which had been brought in to assist in the marketing, was given a 10 percent interest, and Loeb Rhoades got 7 percent. In addition, Lazard Brothers of London and Banque Nationale de Paris, both of which helped finance the deal, received 5 percent each. A company called Numinter B.V. was created to handle worldwide (excluding Communist-bloc countries) sales, and Charles Simonelli, formerly executive vice president of Technicolor, and an old friend of Karr's from his movie-making days, was hired to run it. "David always called me Kid," says Simonelli. "This is going to be your biggest hit, Kid," he told me. "You'll be a superstar." Apparently Simonelli, who resigned on September 30, did, indeed, perform well, as three-quarters of the coins have already been sold -- and at a substantial profit to all of the investors. But according to Evia Karr, it was Eliezer Preminger, a confidant and silent partner of Karr's, who was his behind-the-scenes adviser on the coin deal. Preminger (once head of the Hebrew Communist party) was Israel's deputy director of the Ministry of Development when Karr, then president of Fairbanks Whitney, contracted with him to produce water-desalinization machinery for Israel. Now living in Amsterdam, he refuses to discuss his close business relationship with Karr. However, Evia asserts that Preminger devised a system to inflate expenses and conceal profits on the coin contract, so that Soviet authorities would not be able to determine precisely how much Karr was making. The Israeli explanation Israeli security officials, who have never subscribed to the notion that Karr died a natural death (and who add that Preminger has good reason for fearing to talk to FORTUNE), hint that the Russians discovered Karr was cheating them on the coin contract. Evia Karr made many trips to the Soviet Union with her husband, and she confirms that the Russians were growing suspicious of the deal. But the Russians had better reasons for getting rid of Karr, say the Israelis, who claim also to have evidence that Karr was involved in Soviet arms sales to Libya and the P.L.O. as well as to Uganda. The implication of this charge is that Karr was cheating in that business, too, by charging the Russians and their customers "double commissions." Obviously, it will take a long time for Dave Karr's partners and heirs, and perhaps the police, to sort out all his secrets. A master at screening one corporate entity with another, he had in his final years spun an intricate web of Swiss, Lichtenstein, and island of Jersey holding companies, with a dozen or more subsidiaries and joint ventures, which made it terribly difficult to trace the proceeds from such a complex deal as the Olympic-coin program. It will take a long time, too, for the controversy surrounding both his life and his death to subside, because even after so many careers, his motives never became clear. Was he merely a shrewd fixer who depended on cultivating friends in high places? Or was he a more sinister figure, capable of betraying his colleagues and his country?Or then again, was he, as his son Andrew contends: "Simply a surfer in the rough world of business, searching for the perfect wave"? GRAPHIC: Picture 1, David Karr always said he was happiest aboard his yacht, Ottellia, on which he used to cruise the Mediterranean. He hoped to leave on a vacation aboard the Ottellia on July 8, the day after he died in Paris. A yacht he had owned previously caught fire, exploded, and sank at her dock in Cannes in 1971, Dominique; Picture 2, Evia Karr, who believes that her husband was murdered, leaves the Palais de Justice in Paris after filing charges of homicide "against persons unknown." A German model, she was Karr's fourth wife, and had been close to him for seven years before they were married, Raymond Delalande-L'Aurore; Picture 3, Karr and a Soviet official, Dzherman Gvishiani, signed the contract in 1974 to build Moscow's Kosmos Hotel. Between them is Paul Bougenaux, then Director General of the Plaza Athenee hotel in Paris. He and Karr later had a falling out, and shortly before he died, Karr told friends that he had "fixed Bougenaux's clock." Six days after Karr's death, Bougenaux and the Plaza Athenee parted ways; Picture 4, Olympic coins, minted in silver, gold, and platinum, are being sold all over the world by a company called Numinter. They are redeemable only in the Soviet Union and in rubles. Courtesy Moswow 1980 Olympic Coin Programme SBD

The Death of Dave Karr, and Other Mysteries Fortune December 3, 1979, Domestic Edition

December 3, 1979, Domestic Edition SECTION: Pg. 94 LENGTH: 4823 words HEADLINE: The Death of Dave Karr, and Other Mysteries BYLINE: by ROY ROWAN; Research associate: Andrew Baird

BODY: The funeral wreaths at Pere-Lachaise cemetery in Paris bore some intriguing names: Christina Onassis, Roone Arledge, the U.S.S.R. Committee for Science and Technology, and Lazard Freres, just to mention a few. A stranger among the two dozen mourners gathered for the ceremony might have wondered what secrets of the deceased could have linked the Greek shipowner's daughter with the American Broadcasting executive, the Soviet government, and eminent investment bankers. But there wasn't much time for that kind of conjecture, because an announcement was quickly made that the funeral was being canceled. So it was that the last rites for David Karr proved to be as mysterious, and as abruptly terminated, as his multi-faceted business career.

Back home, the demise of the sixty-year-old Karr on July 7, 1979, did not even rate an obituary, though he had once served as chairman of a FORTUNE 500 company, and by the time of his death was very possibly America's biggest deal maker in the Soviet Union. There were other distinguishing marks to his career that merited some kind of posthumous mention. He had written articles for the Communist Daily Worker as well as a book on proxy fighting, produced a couple of Broad-way plays and Hollywood movies, and demonstrated an infatuation with the politically powerful, having traveled the campaign trail with such diverse presidential candidates as Henry Wallace, Sargent Shriver, and Jerry Brown. Brilliance and deviousness were his most widely acknowledged weapons. But his motives were variously interpreted.

"He had a strong social conscience that made him an intense promoter of detente," claims his longtime friend, Senator Alan Cranston.

"When I hear that David Karr was concerned about Russia's Jews, I smile," says his most recent boss, Sir Charles Forte, executive chairman of Trusthouse Forte Ltd., one of the world's largest hotel chains. "He was interested in only one thing -- money."

Karr, whose name originally was Katz and whose mother was born in Russia, often bragged of privately coaching Gerald Ford and Jimmy Carter on ways to gain concessions for Soviet dissidents, just as he frequently boasted of personally helping 300 Soviet Jews emigrate to Israel. But even on this claim there is violent disagreement. "He was no friend of Israel," snaps Samuel Flatto-Sharon, a member of the Knesset (Israel's parliament), who claims that a copy of a letter thanking Karr for arranging a $10-million Soviet arms shipment to Uganda was found in Idi Amin's captured files. But Flatto-Sharon's credibility must be questioned: he is standing trial for vote buying in Tel Aviv, after fleeing an embezzlement charge in Paris.

A $175-million monument

Whispers of a KGB connection followed Karr everywhere, once he started commuting to Moscow in 1972. However, in his bargaining with the Russians, just as in his wheeling-dealing with everyone else, it was always difficult to be sure whose side Karr was on. "He had a tendency to be involved with two sides of every equation," said Samuel Pisar, a prominent American attorney in Paris and authority on East-West trade. "Yet he was always able to supply the missing ingredient to make the deal."

Dave Karr died less than twelve hours after returning to Paris from his greatest personal triumph in the Soviet Union: dedication of the glistening new 1,777-room Kosmos Hotel. That ceremony represented the culmination of a unique $175-million contract that enabled him -- an American entrepreneur, and in principle a complete outsider -- to organize the building of a socalled French turnkey hotel (outfitted with French equipment down to the last Armagnac glass), on Soviet soil, with Western capital, and 1,200 French and Yugoslav laborers. But then Karr had repeatedly told Vladimir Alkhimov, former deputy minister of foreign trade and now chairman of the State Bank of the U.S.S.R., "When you get a deal that's so complex it turns everybody else off, try me."

Kathy Karr, the businessman's twenty-five-year-old daughter, had returned from Moscow with her father and was in his 60 Avenue Foch apartment when he died. She explains that while in the U.S.S.R. her father complained of severe stomach cramps, and was forced to leave the July 5 hotel dedication ceremony fifteen minutes after it began. That night he called her into his hotel room and said he thought he might be having a heart attack. He wrote down the telephone number of a Soviet official who would be able to summon an ambulance.

The next morning Karr felt much better and went to the Kremlin for a meeting with First Deputy Prime Minister Nikolai Tikhonov to discuss other business ventures. There was a possibility of building additional hotels in Leningrad and Kiev. Among his many projects, Karr also was trying to help Mitsubishi Heavy Industries build a soybean-processing plant in the U.S.S.R., to help Blue Bell Inc. (the maker of Wrangler jeans) establish a denim factory, and to help Peugeot-Citroen obtain a contract to modernize the AZLK plant that builds Moskvich cars.

Karr was accompanied to the Kremlin by two of his principal French associates: Jean Guyot, senior partner of Lazard Freres et Cie., and a director of Financial Engineers, the Swiss holding company owned jointly by Karr and Lazard; and Herve Alphand, former French Ambassador to the U.S., who is now chairman of Finatec S.A., the wholly owned French subsidiary of Financial Engineers. "David was in fine fettle," reports Guyot. "He was witty and gay." That same afternoon on the flight back to Paris, Alphand reports that Karr remained in high spirits, talking exuberantly of the billions that might be invested in Soviet projects.

Kathy Karr, however, continued to worry about her father's health. "He couldn't sit still on the plane," she said. "He looked thin. I don't think he ate four meals during the week."

"Nobody listens to a poor man"

Once, during the flight, when Kathy suggested that he should consider taking some time off to write a book about his life, Karr touched his daughter's cheek and said, "You're my sense of eternity." Then he delivered her a lecture on how it wasn't just money he was chasing. He added, however, that money can buy credibility.

"Nobody listens to a poor man," he explained. "I couldn't sleep at night if I didn't do my share for peace." His peacemaking efforts, or at least those for which he credited himself, included: supplying signals to the White House for communicating policy changes to the Kremlin, smoothing the way for last year's visit to the Soviet Union by Senator Edward Kennedy, and keeping his other Senate contacts -- namely Cranston, Ribicoff, Javits, and Jackson -- abreast of the Soviet response to negotiations on the strategic-arms limitation talks or other sensitive issues.

When he landed at Charles de Gaulle Airport at 7:30 P.M. on July 6, Karr was furious to learn that his thirty-year-old German wife, Evia, had flown off to New York. Evia was Karr's fourth wife. Their eleven-month marriage was described by a friend as "an exercise in china throwing and tender reconciliations." Kathy reports that the sound of Evia's voice shouting over the transatlantic telephone filled the apartment as soon as they arrived.

"That woman is sick. I've got to get her out of New York," Karr told Kathy after he had hung up. He called his friend "Jack the Tiger," as the concierge at the Plaza Athenee hotel is known, and asked him to book a seat on the Concorde leaving the next day. Then, as was insomniac Karr's habit, he started calling friends and business associates in other time zones.

The valet thought he'd fallen

"I was with him until 2:00 A.M.," explains Kathy. "He had taken two Libriums and I could see that he was finally falling asleep. So I went to bed myself." But at 4:00 A.M. Karr called Evia again in New York. At 7:30 A.M. Karr's valet rushed into Kathy's room, exclaiming that his employer had apparently fallen. When Kathy glimpsed her father lying face down on the bedroom floor beside his unpacked suitcases, she knew he was dead. "He appeared to have toppled without having put his hands out to break his fall," she said. Karr's personal physician and a police surgeon were summoned to the apartment. Independently, the two doctors confirmed that he had died instantly of a cardiovascular attack.

But the doctors' reports didn't satisfy Karr's emotional young widow. Flying back to Paris, she obtained a court order stopping the funeral service and cremation. Upon her request, the body was then delivered to the Institut Medico-Legal for an autopsy.

The high drama of halting a funeral already in progress drew not only the attention of French authorities, but the concern of U.S. officials, who also questioned the widow. According to a series of confidential telexes sent to the Secretary of State by the American Embassy in Paris, Evia Karr alleged that her husband had either been poisoned by the Russians, since he felt sick on returning from each visit to the Soviet Union, or had been murdered by the KGB in their apartment, where she had seen bloodstained pillowcases and noticed that his spectacles were broken. Evia emphasized to her embassy interrogator that the Kennedy family was very interested in the case, and that she had spoken to Senator Kennedy several times about it.

Also mentioned in these confidential State Department messages was the fact that Evia's French lawyer had informed the embassy death and estates officer that the Karrs had decided to divorce. The lawyer left as proof a copy of a handwritten agreement signed by David Karr on June 26, 1979, transferring to Evia Freiberg Karr more than $2 million in cash, property, and shares of stock in two of Karr's companies.

While the results of the autopsy failed to bear out Evia's darkest suspicions, they did leave open a crack of doubt. No toxic substances were found present in the corpse. And in the words of the examining officer, "the cardiac lesions were sufficient to cause death." Nevertheless, a small fracture of the larynx was discovered. Although this probably occurred when Karr fell, and does not conflict with the heart-attack diagnosis, Evia pressed on with her charges of foul play, filing an action that resulted in the case being classified under French law as: "Homicide charged against persons unknown."

On the question of the Karrs' intended divorce, Evia has her own version. "David and I had no intention of divorcing," she told FORTUNE. She maintains that the lawyer who had delivered the handwritten June 26 agreement to the embassy was not in her employ. Anyway, she indicated that the document was simply an affirmation of Karr's love for her. "I told David, 'I need some kind of control over you, because one day you love me and the next day you're in a bad mood.'" It was then, she said, that he agreed to give her the $2 million -- a small part of the personal fortune that, she estimates, had grown to $15 million or $20 million.

Recently, Evia hired former Watergate prosecutor Richard Ben-Veniste to try to track down her husband's assets, which she believes are secreted away in many companies and countries. "You see," she said, "David had certain inhibitions until he met me. He thought it was obscene for a nice Jewish boy from Brooklyn to have more than $5 million."

Cultivating future connections

The nice Jewish boy from Brooklyn, who died a multimillionaire in Paris, possessed an I.Q. of 189 -- or so it was asserted by school authorities in San Antonio (where Karr lived briefly as a boy), who publicized him as a budding genius. He also had a knack for changing careers with chameleon-like quickness. By the time Karr was twenty-five, he had worked as a Fuller Brush man, New York Daily Mirror reporter, penny-a-line writer for the Communist Daily Worker, investigator for the Council against Nazi Propaganda, employee in the Office of War Information (where he was let go after being called before Martin Dies's House Un-American Activities Committee), and star legman for Washington columnist Drew Pearson.

Digging up dirt for Pearson surely sharpened Karr's cloak-and-dagger instincts. But it was while cruising the capital in a telephone-equipped limousine that he also started cultivating political and business leaders. Never a man to let an introduction wither on the vine, he would later put those connections to good use.

In 1948 Karr made another sudden career change -- to public relations. First, he worked for William H. Weintraub & Co., where he became the chief counselor and confidant of Lewis Rosenstiel, chairman of Schenley Industries. Then he started his own agency, Market Relations Network. During this incarnation he developed a specialty: managing proxy fights in corporate takeovers. In fact, he became an instant authority by cranking out a book in 1956 called Fight for Control.

Much of the expertise that went into the book came from veteran proxy fighter Leopold Silberstein, president of Penn-Texas Corp., whom Karr had worked for and helped take over a company called Niles-Bement-Pond. It was a lesson the teacher would dearly regret giving, because in 1959 Karr joined with corporate raider Alfons Landa and engineered the takeover of Silberstein's company (which became Fairbanks Whitney, but was later renamed Colt Industries). Landa installed himself as chairman and Karr became president. (See "Dave Karr in the President's Chair," FORTUNE, June, 1961.) When Landa stepped aside, Karr became chairman. But in 1963, following charges of mismanagement, he was forced to resign.

Shifting his base to Paris

Dave Karr's next incarnation was in show business. With Fred Coe he produced the Broadway play Xmas in Las Vegas. Together with Max Youngstein, who remembers Karr as "incredibly imaginative," he made two movies: The Dangerous Days of Kiowa Jones, and E. L. Doctorow's Welcome to Hard Times, a title that seemed to foretell the deteriorating state of Karr's own fortunes. M.G.M. wanted to keep him on the movie lot because of an impending proxy battle. But Karr's own plans involved further big changes in his life: he married a well-to-do French lawyer (wife No. 3), shifted his operating base to Paris, and established himself as a financial consultant.

Karr now traveled the Continent, dropping his accumulated store of names with reverberance. For a while he moved his offices in with Baron Edmund de Rothschild's, and was able to say, "I work for the Rothschilds." But no major deals materialized from that relationship. Then in 1968 he encountered Sir Charles Forte.

Forte's hotel chain had already embarked on a vast expansion program, but had acquired no properties in Paris. It happened that three of the finest hotels there -- the Plaza Athenee, George V, and La Tremoille -- were owned by Mme Francois Dupre, who had steadfastly refused to sell. Karr had been introduced to Mme Dupre by his French wife and was determined to get a deal for Forte. But those particular hotels were practically part of France's patrimony, Charles de Gaulle having once declared that they must never be permitted to fall into foreign hands. They were also beset by labor problems.

None of these problems stopped Karr. He brought Mme Dupre and Forte together, helped work out the terms of the sale ($25 million cash), personally ironed out the labor disputes, then took over for Sir Charles as chairman of the holding company established to operate the hotels. Later, Karr also arranged the purchase of the Hotel Pierre in New York for Forte, and explored the possibility of building Trusthouse Forte hotels in Eastern Europe and the Soviet Union. "If David Karr thought you had an interest in the Taj Mahal," explained Sir Charles, "he would have no hesitation about going to the Indian government and saying, 'Look, I've got this deal . . .'"

Like most of Karr's business relation-ships (and marriages), his close association with Forte finally ruptured. They split in 1976, but as Sir Charles said, "Karr never quite abandoned a connection, because eventually it might produce a plum." About a year ago, Forte explained, Karr came limping into his office, "with some such ridiculous complaint as having banged his knee on Brezhnev's desk." But Forte was no longer taking Karr seriously. "He had become a little swollen-headed and was talking in terms of making billions in the Soviet Union."

Sir Charles's suspicions

Forte does not entirely dismiss the possibility that Karr was murdered, though his speculations differ from Evia's. He thinks that if foul play did occur, it could have resulted from Karr's connection with the three Paris hotels, rather than from his Soviet dealings. Forte explained how, last summer, the hotel chain was in the process of transferring Henri Manassero, manager of the Pierre in New York, to Paris to supervise the running of the Plaza Athenee, George V, and La Tremoille. On July 7, during a stopover in London, the telephone rang in Manassero's room and a voice said: "Karr is dead. Come to Paris and you're next." Forte ordered Manassero back to New York, where he still is, though he refuses to discuss with FORTUNE the question of what a possible murderer might have been trying to accomplish.

The close and intriguing connection between Dave Karr and the Russians evolved out of his business association with Armand Hammer, chairman of Occidental Petroleum. (See "Occidental's Odd Couple," FORTUNE, November 16.) Hammer hired Karr as a consultant in 1972 because of Oxy's vulnerability to a takeover, stemming from costly tanker contracts, which were draining the company's finances. The two men flew around the world together renegotiating the contracts, after which Karr said to Hammer: "You're always talking about your old friend Lenin. Let's go to the Soviet Union and make a deal." Hammer, whose father, Julius, had been one of the founders of the U.S. Communist party in New York, had met Lenin in 1921.

Dragging Armand along

Hammer and Karr's first foray into the Soviet Union in 1972 almost aborted over the Oxy chairman's insistence on taking his company plane. Sargent Shriver, who had become a legal counsel and associate of Karr's after serving as ambassador to France, recalls that it was really he and Karr who arranged that expedition. "Hammer knew who to see to make the trip worth-while," explained Shriver. "But we organized it." Karr always referred to that initial trip as, "dragging Armand kicking and screaming to the U.S.S.R."

The seemingly impossible problem of obtaining landing rights in Moscow for Hammer's Gulfstream was finally solved when Karr and Shriver had lunch in Paris with Dzherman Gvishiani, deputy chairman of the State Committee for Science and Technology. Gvishiani is an expert on American management techniques, and has a powerful voice on all contracts signed with U.S. firms. He also happens to be Premier Alexei Kosygin's son-in-law.

Karr made some thirty trips to Moscow for Hammer, while the Occidental chief negotiated a $20-billion fertilizer contract with the Soviet government. However, after about a year, he broke bitterly with Hammer and went into competition with him for Soviet business. "The show wasn't big enough for those two egos," commented a mutual friend. The New York Times reported recently that Karr secretly testified before the Securities and Exchange Commission that Hammer had made payoffs in the Soviet Union. The SEC refuses to comment. However, Karr's wife, Evia, says: "David felt he had been used by Hammer." So it would not be surprising if he sought revenge.

Operating on his own, Karr proved remarkably adept at ingratiating himself with the Russians. He brought them the latest political gossip, business rumors -- and, some say, intelligence information -- together with an endless store of jokes and stories. "Dave Karr became the George Jessel of the Soviet circuit," said an American businessman watching him perform. He even told jokes at the expense of the Soviets themselves. Requested once to address a seminar of 500 Intourist officials in Moscow, Karr asked them: "How do you deal with Russians? Just like you eat an elephant. Bite by bite."

While it was Kosygin's son-in-law, Gvishiani, who had invited him back to the Soviet Union after his break with Hammer, Karr's coterie of Soviet officials grew to include Vladimir Alkhimov, chairman of the State Bank; Yuri Ivanov, chairman of the Foreign Trade Bank; Leonid Kostandov, minister of Chemical Industries; and Ignaty Novikov, Deputy Premier, chairman of the State Committee for Construction Affairs, and president of the Olympic Organizing Committee. These were powerful friends and -- as some of the people who believe that Karr was murdered point out -- potential enemies as well. Sometimes back in Western Europe or the U.S., Karr would boast indiscreetly that he had a few of these high-up Russians in his hip pocket. It was through his contacts, he claimed, that the way was paved for Christina Onassis to marry a Soviet shipping official and move to Moscow.

The linkup with Lazard

However, Sargent Shriver, who made more than a dozen trips to Moscow with Karr, detected a basic flaw in his operation. "Karr was chiaroscuric," says Shriver. "He sketched out the most imaginative proposals. What he needed was to be part of an entity that could also offer solid financial backing." It was Shriver who encouraged the linkup with Lazard Freres et Cie. and who coined the name Financial Engineers -- of which Lazard partner Augustin Herve-Gruyer became chairman. Shriver also became a member of the firm, though he later "agreed to disagree" with Karr and resigned.

This curious Karr-Lazard entity signed the Kosmos Hotel contract and arranged the first large syndicated loan to the Soviet Union by private banks: $250 million in 1975. But the most highly complicated, hotly-competed-for Soviet deal in which Karr and Lazard ended up with a big piece of the action was on another front. It involved the marketing rights to the silver, gold, and platinum coins commemorating the 1980 Olympics.

The fierce Olympic bidding actually began with the competition for television rights. Here Karr had the inside track, working on behalf of his good friend Roone Arledge of ABC. But Arledge was not as aggressive as Karr wanted him to be (even though Lazard Freres et Cie. had agreed to finance the deal for ABC), and ignored Karr's pleas to return to Moscow. Arledge finally rushed back, but only after NBC already had the contract sewn up.

Karr was furious. To pacify him, Gvishiani suggested that he get into the bidding for the lucrative Olympic-coin contract. Shriver had already signed a contract whereby Financial Engineers gained exclusive rights to the Olympic symbol.A subsidiary called Sports Licensing was established to handle the symbol's franchising, and it embarked on a joint venture with Image Factory Sports, Inc. (headed by former California Senator John Tunney) to make sub-licensing agreements for the sale of T-shirts, jewelry, and other Olympic merchandise.

Competing for the much richer coin deal (which had an estimated retail value of $250 million to $300 million) was an imposing array of business muscle. There were more than thirty bidders, including American Express, Engelhard Minerals, the Dresdner Bank, and an American syndicate composed of Occidental Petroleum, Loeb Rhoades, the New York Times Co., MCA, Summa Corp., and an entertainment company called United Euram.

The shuttle to Moscow

Herve-Gruyer reports that he, often with Karr, shuttled from Paris to Moscow some seventeen times in 1977 chasing the coin contract. "We were building a close relationship with the commercial department of the Foreign Trade Bank," he said, which handles the sale abroad of all of Russia's precious metals, including the Olympic coins. At the same time, Leo Henzel of United Euram, the organizer of the American syndicate, together with Dudley Cates, executive vice president of Loeb Rhoades, was similarly winging back and forth between New York and Moscow, trying to clinch the contract for the rival group. In the end, the Russians found a solution: merge the competitors. Reluctantly, Karr and Hammer found themselves reunited in the coin deal.

Immediately, however, infighting within the American syndicate caused rever-berations all the way to the top at the Kremlin. The New York Times Co., MCA, and Summa had previously dropped out, but Loeb Rhoades and organizer Henzel's United Euram were still part of the syndicate. Hammer offered to buy Henzel out, and when the offer was turned down, forced him out. Henzel retaliated by telling the small New York newspaper Jewish Week that he had been "cut out" of the coin deal "just to make room" for Karr's good friend Gvishiani. Interviewed by telephone, Karr furiously denied the story, but Loeb Rhoades Vice President Cates, who was also interviewed, corroborated Henzel's charge. Cates resigned a month later, and Henzel is presently suing both Occidental and Loeb Rhoades. But Jewish Week's front-page story (headlined OLYMPIC PROMOTERS NAME KOSYGIN KIN AS SHARING IN DEAL) may have already destroyed trust in Karr at the Kremlin.

Splitting up the coin deal

The Olympic-coin contract ended up being split six ways. Financial Engineers got the biggest piece -- 40 percent -- half of that going to Karr personally. Occidental received 33 percent. Paramount Coin Co. of Columbus, Ohio, which had been brought in to assist in the marketing, was given a 10 percent interest, and Loeb Rhoades got 7 percent. In addition, Lazard Brothers of London and Banque Nationale de Paris, both of which helped finance the deal, received 5 percent each.

A company called Numinter B.V. was created to handle worldwide (excluding Communist-bloc countries) sales, and Charles Simonelli, formerly executive vice president of Technicolor, and an old friend of Karr's from his movie-making days, was hired to run it. "David always called me Kid," says Simonelli. "This is going to be your biggest hit, Kid," he told me. "You'll be a superstar." Apparently Simonelli, who resigned on September 30, did, indeed, perform well, as three-quarters of the coins have already been sold -- and at a substantial profit to all of the investors.

But according to Evia Karr, it was Eliezer Preminger, a confidant and silent partner of Karr's, who was his behind-the-scenes adviser on the coin deal. Preminger (once head of the Hebrew Communist party) was Israel's deputy director of the Ministry of Development when Karr, then president of Fairbanks Whitney, contracted with him to produce water-desalinization machinery for Israel. Now living in Amsterdam, he refuses to discuss his close business relationship with Karr. However, Evia asserts that Preminger devised a system to inflate expenses and conceal profits on the coin contract, so that Soviet authorities would not be able to determine precisely how much Karr was making.

The Israeli explanation

Israeli security officials, who have never subscribed to the notion that Karr died a natural death (and who add that Preminger has good reason for fearing to talk to FORTUNE), hint that the Russians discovered Karr was cheating them on the coin contract. Evia Karr made many trips to the Soviet Union with her husband, and she confirms that the Russians were growing suspicious of the deal. But the Russians had better reasons for getting rid of Karr, say the Israelis, who claim also to have evidence that Karr was involved in Soviet arms sales to Libya and the P.L.O. as well as to Uganda. The implication of this charge is that Karr was cheating in that business, too, by charging the Russians and their customers "double commissions."

Obviously, it will take a long time for Dave Karr's partners and heirs, and perhaps the police, to sort out all his secrets. A master at screening one corporate entity with another, he had in his final years spun an intricate web of Swiss, Lichtenstein, and island of Jersey holding companies, with a dozen or more subsidiaries and joint ventures, which made it terribly difficult to trace the proceeds from such a complex deal as the Olympic-coin program.

It will take a long time, too, for the controversy surrounding both his life and his death to subside, because even after so many careers, his motives never became clear. Was he merely a shrewd fixer who depended on cultivating friends in high places? Or was he a more sinister figure, capable of betraying his colleagues and his country?Or then again, was he, as his son Andrew contends: "Simply a surfer in the rough world of business, searching for the perfect wave"?

GRAPHIC: Picture 1, David Karr always said he was happiest aboard his yacht, Ottellia, on which he used to cruise the Mediterranean. He hoped to leave on a vacation aboard the Ottellia on July 8, the day after he died in Paris. A yacht he had owned previously caught fire, exploded, and sank at her dock in Cannes in 1971, Dominique;

Picture 2, Evia Karr, who believes that her husband was murdered, leaves the Palais de Justice in Paris after filing charges of homicide "against persons unknown." A German model, she was Karr's fourth wife, and had been close to him for seven years before they were married, Raymond Delalande-L'Aurore;

Picture 3, Karr and a Soviet official, Dzherman Gvishiani, signed the contract in 1974 to build Moscow's Kosmos Hotel. Between them is Paul Bougenaux, then Director General of the Plaza Athenee hotel in Paris. He and Karr later had a falling out, and shortly before he died, Karr told friends that he had "fixed Bougenaux's clock." Six days after Karr's death, Bougenaux and the Plaza Athenee parted ways;

Picture 4, Olympic coins, minted in silver, gold, and platinum, are being sold all over the world by a company called Numinter. They are redeemable only in the Soviet Union and in rubles. Courtesy Moswow 1980 Olympic Coin Programme

SBD

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.