Portugal was also accused by US officials of exporting US-calibre artillery rounds to Iran in direct government-to-government agreements. The ammunition was produced in Portuguese factories, some of which operated on American licenses. Because the quantities were relatively small, the Portuguese claimed the deliveries would not affect the course of the war. Moreover, Portuguese officials contended with Fairbanks staffers that their sales were beneficial to the West "because they opened channels of information to Iran lacking ever since the US embassy shut down, and may have helped provide the Iranian military with an alternative to a total switchover to Soviet block weaponry."

But the Portuguese deliveries were not as small as all that. In 1984, Iran edged out Iraq as Portugal's principle arms customer. By 1985, Iran was buying ammunition worth $28 million, or 43.8% of all Portuguese arms exports. In 1986, that figure was believed to climb to 67% (8). Portugal was also known for providing fake EUC's to black marketeers trying to export US equipment to Iran.

Unconfirmed reports also alleged that Norte Importadora, acting with the full approval of the Portuguese Defense Ministry, repaired Iranian F-4 fighters using spare parts out of NATO stockpiles, and that two lots of TOW missiles were shipped to Iran from Portugal in May and December 1986. The first TOW shipment was for 4,020 missiles, at a cost to Iran estimated at $50 million, using Turkey as the fictitious end-user. 2,500 additional TOWs, worth $29 million, were shipped in December disguised as "plumbing equipment and medicine"

Meanwhile, reports in Newsweek and The Washington Post in January and February 1987 revealed that a Portuguese firm, Defex-Portugal, played a leading role in supplying arms to the Contra rebels in Nicaragua. The arms were purchased by Energy Resources International, whose registered address in Vienna, Virginia coincided with an office used by General Richard Secord.