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On Nov. 4,1979, the militants in Tehran stormed the U.S. embassy, seizing its occupants as hostages. Apparently without any prompting from the U.S., Libya's foreign ministry on Nov. 20 publicly called on the Khomeini government to release the Americans.
Later that month, Zbigniew Brzezinski, the President's National Security Adviser, committed one of the more ill considered acts in the whole affair. He asked Billy to use his friendship with the Libyans to get Gaddafi to lean harder on Khomeini to free the hostages. After talking to Brzezinski, Billy called on Ali Houderi, a recently acquired friend who happened to be Libya's chargé d'affaires in Washington. Billy set up a meeting on Nov. 27 between Houderi and Brzezinski and went along to the White House to make the introduction.
Up to a point, this ploy seems to have been successful. Gaddafi did send a personal note to Khomeini urging once again that the hostages be freed. But the request had no impact at all on the Ayatullah for a reason that should have been quite clear to the White House: Gaddafi had no influence with Khomeini. Even more baffling was Brzezinski's use of the unorthodox Billy channel when State Department routes for approaching Gaddafi had been carefully cultivated.
By turning to Billy Carter, Brzezinski greatly strengthened his image among the Libyans as a power broker in Washington. And all of this at a time when Brzezinski knew that the President's brother was under investigation for his failure to register as a Libyan agent.
When the U.S. embassy in Tripoli was stormed by mobs on Dec. 2, it was obvious that none of the U.S. channels to Gaddafi, whether official or secret, were having much effect. Four days after the embassy attack, Brzezinski called Houderi directly to protest the lack of Libyan security for Americans. Jimmy Carter asked Brzezinski to bring Houderi to the Oval Office, where the President chewed out the Libyan for 10 minutes. Billy was not involved in these sessions.
Billy Carter got his first cash from the Libyans, so far as is known, in January, when he received an installment on his $500,000 "loan": a check for $20,000. FBI agents quizzed Billy that month and he denied getting any cash from Tripoli. Whether this was before or after he got his check is not clear, but at that point it would seem he knew the cash was coming.
In March, Brzezinski learned through an intelligence report that Billy had a deal with Charter that could make him millions. The National Security Adviser telephoned Billy to warn him that he "should not engage in any activity that could cause embarrassment to the Administration." Zbig told the President about this call. In April, Billy received his biggest bonanza yet: a $200,000 check.
On June 2, through sources it refuses to reveal, the Justice Department learned about the cash payments to Billy. Department lawyers then moved rapidly to wrap up the case. Before informing Billy of what they had discovered, however, they were surprised on June 10 when Carter called the department and asked if he could talk to the