Bermuda led to the leaking of the Iran-Contra scandal by Israeli Intelligence.

"Profits of War'' alleges the arrest of former Israeli Brig. Gen. Avraham Bar-Am and four other arms dealers in April, 1986, was part of an elaborate "sting'' to close down the Israeli Intelligence Service's arms sales channel with Iran.

And Mr. Ari Ben-Menashe, a former officer of Mossad, the Israeli Secret Service, claims that President George Bush was fully briefed on arms sales to Iran, which he has denied, and authorised sales of arms to Iraq throughout the 1980s.

The book claims that former National Security Council aide Lt. Col. Oliver North helped devise the arms deal to stop Israeli sales to Iran while diverting attention from the US sales.

The US sales were aimed at securing the release of US hostages in Lebanon and to finance the Contras in the Nicaraguan civil war. They were also aimed at convincing Iranian moderates to back the US.

The book details how Iranian emigre Mr. Cyrus Hashemi became an informant for the US Customs service in return for acquittal on charges of arms smuggling.

It says that Hashemi was to embroil as many people as possible involved in arms sales.

Mr. Ben-Menashe says: "Some of the victims came to New York and were immediately arrested but others were not willing to sign deals in the US.

Cyrus was able to lure Gen. Bar Am and others to Bermuda.'' The author claims he was warned off visiting Bermuda, and avoided the "sting.'' The five dealers were arrested at the Airport, on grounds that they were arms dealers and made false representations about the purpose of their visit.

They were finally deported. Mr. Ben-Menashe continued: "Even though a court hearing was scheduled they were hustled, against Bermudian law, onto a plane to New York. On arrival at Kennedy Airport they were all arrested by Customs officials.'' Mr. Hashemi was the chief prosecution witness in the trial but was found dead in July of that year.

Calling the death a "strange coincidence,' Mr. Ben-Menashe said: "Cyrus Hashemi's death was explained as a sudden case of virulent leukaemia. The only thing unusual, according to Israeli intelligence reports, was the discovery on Cyrus's elbow joint of needle punctures.'' The author said a telephone argument between Mr. Hashemi and one of his controllers had been taped by Mossad.

Mr Ben-Menashe continued: "We were left with the conclusion that someone had decided that it was better for Cyrus to become the victim of a mysterious death than for him to be at the centre of a public scandal by announcing that he was not going to testify.'' The five men arrested in Bermuda were freed when Judge Leonard Sand said: "I will not hold anybody in jail for doing what the US Government is doing.'' The book's American publishers claim that the CIA and the Israelis tried to stop publication.