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by John Connolly
Additional reporting by Erzc Reguly,
Margie Sloan and Wendell Smith
SPY Magazine - Volume 6
Sept 1992
from
TheCatBirdSeat Website
What? A big private company - one with a board of former CIA, FBI
and Pentagon officials; one in charge of protecting Nuclear-Weapons
facilities, nuclear reactors, the Alaskan oil pipeline and more than
a dozen American embassies abroad; one with long-standing ties to a
radical ring-wing organization; one with 30,000 men and women under
arms - secretly helped IRAQ in its effort to obtain sophisticated
weapons?
And fueled unrest in Venezuela?
This is all the plot of a
new best-selling thriller, right? Or the ravings of some overheated
conspiracy buff, right?
Right?
WRONG!
In the WINTER OF 1990, David Ramirez, a 24 year-old member of the
Special Investigations Division of the Wackenhut Corporation, was
sent by his superiors on an unusual mission.
Ramirez a former Marine Corps sergeant based in Miami, was told to
fly immediately to San Antonio along with three other members of
SID-a unit, known as founder and chairman George Wackenhut’s
"private FBI," that provided executive protection and conducted
undercover investigations and sting operations. Once they arrived,
they rented two gray Ford Tauruses and drove four hours to a
desolate town on the Mexican border called Eagle Pass.
There, just
after dark, they met two truck drivers who had been flown in from
Houston. Inside a nearby warehouse was an 18 -wheel tractor-trailer,
which the two truck drivers and the four Wackenhut agents in their
rented cars were supposed to transport to Chicago.
"My instructions were very clear," Ramirez recalls. "Do not look
into the trailer, secure it, and make sure it safely gets to
Chicago."
It went without saying that no one else was supposed to
look in the trailer, either, which is why the Wackenhut men were
armed with fully loaded Remington 870 pump-action shotguns.
The convoy drove for 30 hours straight, stopping only for gas and
food. Even then, one of the Wackenhut agents had to stay with the
truck, standing by one of the cars, its trunk open, shotgun within
easy reach.
"Whenever we stopped, I bought a shot glass with the name of the
town on it," Ramirez recalls. "I have glasses from Oklahoma City,
Kansas City, St. Louis."
A little before 5:00 on the morning of the third day, they delivered
the trailer to a practically empty warehouse outside Chicago.
A
burly man who had been waiting for them on the loading dock told
them to take off the locks and go home, and that was that. They were
on a plane back to Miami that afternoon. Later Ramirez’s superiors
told him-as they told other SID agents about similar midnight
runs-that the trucks contained $40 million worth of food stamps.
After considering the secrecy, the way the team was assembled and
the orders not to stop or open the truck, Ramirez decided he didn’t
believe that explanation.
Neither do we. One reason is simple: A Department of Agriculture
official simply denies that food stamps are shipped that way.
"Someone is blowing smoke," he says.
Another reason is that after a six-month investigation, in the
course of which we spoke to more than 300 people, we believe we know
what the truck did contain-equipment necessary for the manufacture
of chemical weapons - and where it was headed: to Saddam Hussein’s
Iraq.
And the Wackenhut Corporation - a publicly traded company with
strong ties to the CIA and federal contracts worth $200 million a
year - was making sure Saddam would be getting his equipment intact.
The question is why.
In 1954, George Wackenhut, then a 34-year old former FBI agent,
joined up with three other former FBI agents to open a company in
Miami called Special Agent Investigators Inc. The partnership was
neither successful nor harmonious - George once knocked partner Ed
Dubois unconscious to end a disagreement over the direction the
company would take - and in 1958, George bought out his partners.
However capable Wackenhut’s detectives may have been at their work,
George Wackenhut had two personal attributes that were instrumental
in the company’s growth.
First, he got along exceptionally well with important politicians.
He was a close ally of Florida governor Claude Kirk, who hired him
to combat organized crime in the state; and was also friends with
Senator George Smathers, an intimate of John F. Kennedy’s.
It was Smathers who provided Wackenhut with his big break when the
senator’s law firm helped the company find a loophole in the
Pinkerton law, the 1893 federal statute that had made it a crime for
an employee of a private detective agency to do work for the
government.
Smathers’s firm set up a wholly owned subsidiary of Wackenhut that
provided only guards, not detectives. Shortly thereafter, Wackenhut
received multimillion-dollar contracts from the government to guard
Cape Canaveral and the Nevada nuclear-bomb test site, the first of
many extremely lucrative federal contracts that have sustained the
company to this day.
The second thing that helped make George Wackenhut successful was
that he was, and is, a hard-line right-winger. He was able to profit
from his beliefs by building up dossiers on Americans suspected of
being Communists or merely left-leaning-"subversives and
sympathizers," as he put it-and selling the information to
interested parties.
According to Frank Donner, the author of "Age of Surveillance", the
Wackenhut Corporation maintained and updated its files even after
the McCarthyite hysteria had ebbed, adding the names of antiwar
protesters and civil-rights demonstrators to its list of "derogatory
types."
By 1965, Wackenhut was boasting to potential investors that the
company maintained files on 2.5 million suspected dissidents-one in
46 American adults then living. In 1966, after acquiring the private
files of Karl Barslaag; a former staff member of the House Committee
on Un-American Activities, Wackenhut could confidently maintain
that with more than 4 million names, it had the largest privately
held file on suspected dissidents in America.
In 1975, after Congress investigated companies that had private
files, Wackenhut gave its files to the now-defunct anti-Communist
Church League of America of Wheaton, Illinois. That organization had
worked closely with the red squads of big-city police departments,
particularly in New York and L.A., spying on suspected sympathizers;
George Wackenhut was personal friends with the League’s leaders, and
was a major contributor to the group. To be sure, after giving the
League its files, Wackenhut reserved the right to use them for its
clients and friends.
Wackenhut had gone public in 1965 ; George Wackenhut retained 54
percent of the company. Between his salary and dividends, his annual
compensation approaches $2 million a year, sufficient for him to
live in a $20 million castle in Coral Gables, Florida, complete with
a moat and 18 full-time servants. Today the company is the
third-largest investigative security firm in the country, with
offices throughout the United States and in 39 foreign countries.
It is not possible to overstate the special relationship Wackenhut
enjoys with the federal government. It is close. When it comes to
security matters, Wackenhut in many respects "is" the government. In
1991, a third of the company’s $600- million in revenues came from
the federal government, and another large chunk from companies that
themselves work for the government, such as Westinghouse.
Wackenhut is the largest single company supplying security to U.S.
embassies overseas; several of the 13 embassies it guards have been
in important hotbeds of espionage, such as Chile, Greece and
El
Salvador.
It also guards nearly all the most strategic government facilities
in the U.S., including the Alaskan oil pipeline, the Hanford
nuclear-waste facility, the Savannah River plutonium plant and the
Strategic Petroleum Reserve.
Wackenhut maintains an especially close relationship with the
federal government in other ways as well.
While early boards of directors included such prominent
personalities of the political right as Captain Eddie Rickenbacker;
General Mark Clark and Ralph E. Davis, a John Birch Society leader,
current and recent members of the board have included much of the
country’s recent national-security directorate:
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former FBI director
Clarence Kelley
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former Defense secretary and former CIA deputy
director Frank Carlucci
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former Defense Intelligence Agency director
General Joseph Carroll
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former U.S. Secret Service director James J.
Rowley
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former Marine commandant P. X. Kelley
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acting chairman
of President Bush’s foreign- intelligence advisory board and former
CIA deputy director Admiral Bobby Ray Inman
Before his appointment as Reagan’s CIA director, the late
William
Casey was Wackenhut’s outside legal counsel.
The company has 30,000 armed employees on its payroll. We wanted to
know more about this special relationship; but the government was
not forthcoming. Repeated requests to the Department of Energy for
an explanation of how one company got the security contracts for
nearly all of America’s most strategic installations have gone
unanswered.
Similarly, efforts to get the State Department to explain whether
embassy contracts were awarded arbitrarily or through competitive
bidding were fruitless; essentially, the State Department said,
"Some of both."
Wackenhut’s competitors - who, understandably, asked not to be
quoted by name - have their own version.
"All those contracts;" said
one security-firm executive, "are just another way to pay Wackenhut
for their clandestine help."
And what is the nature of that help?
"It is known throughout the industry," said retired FBI special
agent William Hinshaw, "that if you want a dirty job done, call Wackenhut."
We met George Wackenhut in his swanky, muy macho offices in Coral
Gables.
The rooms are paneled in a dark, rich rosewood, accented
with gray-blue stone. The main office is dominated by Wackenhut’s
12-foot-long desk and a pair of chairs shaped like elephants -
"Republican chairs," he calls them-complete with real tusks, which,
the old man says with some amusement, tend to stick his visitors.
The highlight of the usual collection of pictures and awards is the
Republican presidential exhibit: an autographed photo of Wackenhut
shaking hands with George Bush (whom Wackenhut, according to a
former associate, used to call "that pinko") as well as framed
photos of Presidents Reagan, Nixon and Bush, each accompanied by a
handwritten note.
The chairman looks every inch the comfortable Florida
septuagenarian. The day we spoke, his clothing ranged across the
color spectrum from baby blue to light baby blue, and he wore a lot
of jewelry - a huge gold watch on a thick gold band, two massive gold
rings.
But Wackenhut was, at 72, quick and tough in his responses. Near the
end of our two-and-a-half hour interview, when asked if his company
was an arm of the CIA, he snapped, "No!"
Of course, this may just be a matter of semantics.
We have spoken to numerous experts, including current and former CIA
agents and analysts, current and former agents of the Drug
Enforcement Administration and current and former Wackenhut
executives and employees, all of whom have said that in the
mid-197O’s, after the Senate Intelligence Committee’s revelations of
the CIA’s covert and sometimes illegal overseas operations, the
agency and Wackenhut grew very, very close.
Those revelations had forced the CIA to do a housecleaning, and it
became CIA policy that certain kinds of activities would no longer
officially be performed. But that didn’t always mean that the need
or the desire to undertake such operations disappeared.
And that’s where Wackenhut came in.
Our sources confirm that Wackenhut has had a long-standing
relationship with the CIA, and that it has deepened over the last
decade or so. Bruce Berckmans, who was assigned to the CIA station
in Mexico City, left the agency in January 1975 (putatively) to
become a Wackenhut international-operations vice president.
Berckmans, who left Wackenhut in 1981, told SPY that he has seen a
formal proposal George Wackenhut submitted to the CIA to allow the
agency to use Wackenhut offices throughout the world as fronts for
CIA activities.
Kichard Babayan, who says he was a CIA contract employee and is
currently in jail awaiting trial on fraud and racketeering charges,
has been cooperating with federal and congressional investigators
looking into illegal shipments of nuclear-and-chemical-weapons -
making supplies to Iraq.
"Wackenhut has been used by the CIA and other intelligence agencies
for years," he told SPY. "When they [the CIA] need cover, Wackenhut
is there to provide it for them."
Canadian prime minister Pierre Trudeau was said to have rebuffed Wackenhut’s effort in the 1980’s to purchase a weapons propellant
manufacturer in Quebec with the remark "We just got rid of the CIA -
we don’t want them back."
Phillip Agee, the left-wing former CIA agent who wrote an expose’ of
the agency in 1975, told us, "I don’t have the slightest doubt that
the CIA and Wackenhut overlap."
There is also testimony from people who are not convicts, renegades
or Canadians.
William Corbett, a terrorism expert who spent 18 years as a
CIA
analyst and is now an ABC News consultant based in Europe, confirmed
the relationship between Wackenhut and the agency.
"For years Wackenhut has been involved with the CIA and other
intelligence organizations, including the DEA," he told SPY. "Wackenhut
would allow the CIA to occupy positions within the company [in order
to carry out] clandestine operations."
He also said that Wackenhut would supply intelligence agencies with
information, and that it was compensated for this- "in a quid pro
quo arrangement," Corbett says - with government contracts worth
billions of dollars over the years.
We have uncovered considerable evidence that Wackenhut carried the
CIA’s water in fighting Communist encroachment in Central America in
the 1980s (that is to say, during the Reagan administration when the
CIA director was former Wackenhut lawyer William Casey, the late superpatriot who had a proclivity for extralegal and illegal
anti-Communist covert operations such as Iran-contra).
In 1981, Berckmans, the CIA agent turned Wackenhut vice president,
joined with other senior Wackenhut executives to form the company’s
Special Projects Division. It was this division that linked up with
ex-CIA man John Phillip Nichols, who had taken over the Cabazon
Indian reservation in California, as we described in a previous
article ["Badlands," April 1992], in pursuit of a scheme to
manufacture explosives, poison gas and biological weapons - and
then, by virtue of the tribe’s status as a sovereign nation, to
export the weapons to the contras.
This maneuver was designed to evade congressional prohibitions
against the U.S. government’s helping the contras. Indeed, in an
interview with SPY, Eden Pastora, the contras’ famous Commander
Zero, who had been spotted at a test of some night-vision goggles at
a firing range near the Cabazon reservation in the company of
Nichols and a Wackenhut executive, offhandedly identified that
executive, A. Robert Frye, as "the man from the CIA."
(In a subsequent conversation he denied knowing Frye at all; of
course, in that same talk he quite unbelievably denied having ever
been a contra.)
In addition to attempted weapons supply, Wackenhut seems to have
been involved in Central America in other ways. Ernesto Bermudez who
was Wackenhut’s director of international operations from 1987 to
’89, admitted to SPY that during 1985 and ’86 he ran Wackenhut’s
operations in El Salvador, where he was in charge of 1,500 men.
When asked what 1 ,500 men were doing for Wackenhut in El Salvador,
Bermudez replied coyly, "Things."
Pressed, he elaborated: "Things you wouldn’t want your mother to
know about."
It’s worth noting that Wackenhut’s annual revenues from government
contracts--the alleged reward for cooperation in the government’s
clandestine activities - increased by 150 million, a 45 percent
jump, while Ronald Reagan was in office.
"You’ve done an awful lot of research, George Wackenhut said to me
as I was leaving. "How would you like to run all our New York
operations?"
If that was the extent of Wackenhut’s possible involvement in a
government agency’s attempt to circumvent the law, then we might
dismiss it as an interesting footnote to the overheated, cowboy
anti-Communist 1980s.
However, the U.S. Attorney for the Southern
District of Florida has been conducting an investigation into the
illegal export of dual-use technology-that is, seemingly innocuous
technology that can also be used to make nuclear weapons to Iraq and
Libya. And SPY has learned that Wackenhut’s name has come up in the
federal investigation, but not at present as a target.
Between 1987 and ’89, three companies in the United States received
investments from an Iraqi architect named Ihsan Barbouti. The
colorful Barbouti owned an engineering company in Frankfort that had
a $552 million contract to build airfields in Iraq. He also admitted
having designed Mu’ammar Qaddafi’s infamous German-built chemical-
weapons plant in Rabta, Libya.
According to an attorney for one of the companies in which Barbouti
invested, the architect owned $100 million worth of real estate and
oil-drilling equipment in Texas and Oklahoma.
He may also be dead, there being reports that he died of heart
failure in Hospital in London on July 1, 1990, his 63rd birthday.
Barbouti, however, had faked his death once before, in 1969, after
the Ba’ath takeover in Iraq which brought Saddam Hussein to power as
the second-in-command. That time, Barbouti escaped Iraq; resurfacing
several years later in Lebanon and Libya. There are no reports that
he is living in Jordan - or, according to other reports, in a CIA
safe house in Florida.
Those reports can be considered no better than rumor; what follows,
though, is fact.
As reported on ABC’s "Nightline" last year, the three companies in
which Barbouti invested were TK-7 of Oklahoma City, which makes a
fuel additive; Pipeline Recovery Systems of Dallas, which makes an
anti-corrosive chemical that preserves pipes; and Product Ingredient
Technology of Boca Raton, which makes food flavorings. None of these
companies was looking to do business with Iraq; Barbouti sought them
out.
Why was he interested?
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because TK-7 had formulas that could extend the range of jet
aircraft and liquid-fueled missiles such as the SCUD
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because
Pipeline Recovery knows how to coat pipes to make them usable in
nuclear reactors and chemical-weapons plants
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because one of the
by- products in making cherry flavoring is ferric ferrocyanide, a
chemical that’s used to manufacture hydrogen cyanide, which can
penetrate gas masks and protective clothing
Hydrogen cyanide was used by Saddam Hussein against the Kurds in the
Iran-Iraq war.
Barbouti was more than a passive investor, and soon he began
pressuring the companies to ship not only their products but also
their manufacturing technology to corporations he owned in Europe,
on which, he told the businessmen, it would be sent to Libya and
Iraq.
In doing so, Barbouti was attempting to violate the law.
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First, the U.S. forbade sending anything to
Libya, which was
embargoed as a terrorist nation
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Second, the U.S. specified that material of this sort must be sent
to its final destination, not to an intermediate locale, where the
U.S. would risk losing control of its distribution
According to former CIA contract employee
Richard Babayan, in late
1989 Barbouti met in London with Ibrahim Sabawai, Saddam Hussein’s
half brother and European head of Iraqi intelligence, who grew
excited about the work Pipeline Recovery was doing and called for
the company’s technology to be rushed to Iraq, so that it could be
in place by early 1990.
And the owner of TK-7 swears that Barbouti told him he was
developing an atom device for Qaddafi that would be used against the
U.S. in retaliation for the 1986 U.S. air strike against Libya.
Barbouri also wanted the ferrocyanide from Product Ingredient.
Assisting Barbouti with these investments was New Orleans exporter
Don Seaton, business associate of Richard Secord, the right-wing
U.S. Army general turned war profiteer who was so deeply enmeshed in
the Iran-contra affair.
It was Secord who connected Barbouti with Wackenhut.
Barbouti met with Secord in Florida on several occasions, and phone
records show that several calls were placed from Barbouti’s office
to Secord’s private number in McLean, Virginia; Secord has
acknowledged knowing Barbouti. He is currently a partner of
Washington businessman James Tully (who is the man who leaked
Bill
Clinton’s draft-dodge letter to ABC) and Jack Brennan, a former
Marine Corps colonel and longtime aide to Richard Nixon both in the
White House and in exile.
Brennan has gone back to the White House, where he works as a
director of administrative operations in President Bush’s office. He
refused to return repeated calls from SPY.
Interestingly, Brennan and Tully had previously been involved in a
$181 million business deal to supply uniforms to the Iraqi army.
Oddly, they arranged to have the uniforms manufactured in Nicolae
Ceaucescu’s Romania.
The partners in that deal were former U.S. attorney general and
Watergate felon John Mitchell and Sarkis Soghanalian, a Turkish-born
Lebanese citizen.
Soghanalian, who has been credited with being Saddam Hussein’s
leading arms procurer and with introducing the demonic weapons
inventor Gerald Bull to the Iraqis, is currently serving a six-year
sentence in federal prison in Miami for the illegal sale of 103
military helicopters to Iraq.
According to former Wackenhut agent David Ramirez, the company
considered Soghanalian "a very valuable client."
Unfortunately for Barbouti, none of the companies in which he made
investments was willing to ship its products or technology to his
European divisions. That, however, doesn’t necessarily mean that he
didn’t get some of what he wanted.
In 1990, 2,000 gallons of ferrocyanide were found to be missing from
the cherry-flavor factory in Boca Raton. Where it went is a mystery;
Peter Kawaja, who was the head of security for all of Barbouti’s
U.S. investments, told SPY,
"We were never burglarized, but that
stuff didn’t walk out by itself."
What does all this have to do with Wackenhut?
Lots: According to Louis Champon, the owner of Product Ingredient
Technology, it was Wackenhut that guarded his Boca Raton plant, a
fact confirmed by Murray Levine, a Wackenhut vice president.
Champon also says, and Wackenhut also confirms, that the security
for the plant consisted of one unarmed guard. While a Wackenhut
spokesperson maintains that this was the only job they were doing
for Barbouti, he also says that they were never paid, that Barbouti
stiffed them.
This does not seem true. SPY has obtained four checks from Barbouti
to Wackenhut. All were written within ten days in 1990:
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one on March
27 for $168.89
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one on March 28 for $24,828.07
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another on April 5
for $756
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the last on April 6 for $40,116.25
We asked Richard Kneip, Wackenhut’s senior vice president for
corporate planning, to explain why a single guard was worth $66,000
a year; Kneip was at a loss to do so. He was similarly at a loss to
explain a fifth check, from another Barbouti company to Wackenhut’s
travel-service division in 1987, almost two years before Wackenhut
has acknowledged providing security for the Boca Raton plant .
Two former CIA operatives, separately interviewed, have the
explanation.
Charles Hayes, who describes himself as "a CIA asset " says
Wackenhut was helping Barbouti ship chemicals to Iraq.
"Supplying Iraq was originally a good idea," he maintains, "but then
it got out of hand. Wackenhut was just in it for the money."
Richard Babayan the former CIA contract employee, confirmed Hayes’s
account.
He says that Wackenhut’s relationship with Barbouti existed before
the Boca Raton plant opened:
"Barbouti was placed in the hands of
Secord by the CIA, and Secord called in Wackenhut to handle security
and travel and protection for Barbouti and his export plans."
Wackenhut, Babayan says was working for the
CIA in helping Barbouti
ship the chemical-and-nuclear-weapons-making equipment first to
Texas, then to Chicago, and then to Baltimore to be shipped
overseas.
All of which makes the story of the midnight convoy ride of David
Ramirez, recounted at the beginning of this article rather less
mysterious. SPY has learned that this shipment is now the subject of
a joint USDA-Customs investigation.
When we asked George Wackenhut what was being shipped from Eagle
Pass to Chicago, the sharp, straightforward chairman at first
claimed they were protecting an unnamed executive. He then directed
an aide to get back to me.
Two days later, Richard Kneip did, repeating the tale that had been
passed on to David Ramirez - that the trucks contained food stamps.
We told him that we had spoken to a Department of Agriculture
official, who informed us that food stamps are shipped from Chicago
to outlying areas, never the other way around, and that food stamps,
unlike money, are used once and then destroyed.
All Kneip would say then was, "We do not reveal the names of our
clients."
Wackenhut’s connection to the CIA and to other government agencies
raises several troubling questions:
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First, is the CIA using Wackenhut to conduct operations that it has
been forbidden to undertake?
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Second, is the White House or some other party in the executive
branch working through Wackenhut to conduct operations that it
doesn’t want Congress to know about?
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Third, has Wackenhut’s cozy relationship with the government given
it a feeling of security-or worse, an outright knowledge of
sensitive or embarrassing information-that allows the company to
believe that it can conduct itself as though it were above the law?
A congressional investigation into Wackenhut’s activities in the
Alyeska affair last November began to shed some light on Wackenhut’s
way of doing business; clearly it’s time for Congress to investigate
just how far Wackenhut’s other tentacles extend.
AND WHO OWN’S WAKENHUT?
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The #1 institutional stockholder is Britain’s
Barclays Global
Investors International (a key member of
the Committee of 300).
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Other top stockholders (as if 03/31/01) include:
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Zurich Scudder
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Goldman Sachs
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Merrill Lynch
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Deutsche Bankers Trust
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And top purchasers (for the quarter ending 03/31/01) included:
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