ABC LAUNCHES REVIEW OF TANGLED REWALD AFFAIR

ABC News has launched a review and investigation of the tangled Ronald R. Rewald story that forced the network into an unprecedented legal conflict with the Central Intelligence Agency.

The review--supported and directed by ABC News President Roone Arledge and Vice President David Burke--began months ago but only now has been officially acknowledged by network news personnel.

A senior ABC News correspondent said in an interview here last week that the network has committed itself to an extraordinary effort to get to the truth behind a story that ABC claimed to have verified more than a year ago.

“It’s unique in journalism to devote the resources, time and effort that we have mounted in the follow-up coverage (of the Rewald story),” said John Scali, ABC’s senior national security correspondent assigned to oversee the review.

The network’s coverage of the Rewald affair became a major public policy issue last fall. The CIA complained to the Federal Communications Commission that ABC deliberately distorted the Rewald story and violated the FCC’s fairness doctrine in a two-part September, 1984, “World News Tonight” investigative report.

It was the first such complaint ever brought by an agency of the federal government.

In its disputed broadcasts, ABC claimed to have proved that the CIA used Rewald’s now bankrupt investment firm as a front for clandestine and illegal operations throughout Asia and the Pacific.

The CIA charged that ABC created the story out of “thin air.” Initially, the CIA requested that the FCC punish ABC by revoking its broadcast licenses.

The FCC subsequently denied the CIA’s complaint but affirmed the right of government agencies to bring such actions. Legal scholars argued that the FCC’s decision could leave the way clear for other arms of government to attempt to punish broadcasters.

What may be most unusual about the CIA-ABC case is that it surrounds a story that may have been a flawed piece of journalism.

Taking pains not to criticize the early ABC reports, Scali said that evidence in Rewald’s federal trial here seems to indicate far less of a CIA connection to Rewald than the network originally alleged.

He and a team of other ABC News personnel have spent “hundreds of hours investigating and reviewing” the Rewald story since the network’s early broadcasts, Scali said.

“We have been pursuing this with painstaking care. (This is an) extraordinarily responsible effort to get to the truth,” Scali said.

“I’m not sure how much, if any, connection Rewald had with the CIA except to provide light commercial cover for some CIA agents in the Far East area,” Scali, who has covered the intelligence community for 35 years, said.

That is a far cry from the major covert CIA operation that ABC officials were calling Rewald’s Bishop, Baldwin, Rewald, Dillingham & Wong firm just a few months ago. As recently as June, during ABC’s annual stockholders meeting, news division chief Arledge was still defending ABC’s early reporting.

However, as Rewald’s 10-week-old fraud, tax evasion and perjury trial has progressed here, little evidence supporting his or ABC’s charges has come to light. The defense in the Rewald case unexpectedly rested on Thursday, and the case may go to the jury as soon as Wednesday.

Among the more explosive charges in the ABC reports were that the CIA used Rewald’s company for an illegal arms deal with Taiwan, plotted to kill Rewald and threatened the life of an investor in his firm.

ABC later retracted the Rewald murder charge, a move that prompted a $145-million libel suit by the source of the story.

Rewald, 43, faces 98 federal criminal charges arising from the 1983 collapse of Bishop Baldwin. He is accused of swindling more than $22 million from about 400 persons in what government prosecutors characterize as a “Ponzi scheme.”

In his defense case, Rewald has acknowledged many of the government’s accusations against him. He has insisted on his innocence because, he says, he operated his company under the direction of the CIA. In a surprise move last week, Rewald declined to testify in his own defense when Federal District Judge Harold M. Fong ruled that much of his story would be inadmissible.

“I’m making no criticism of anyone,” Scali said. “I’m not going to point fingers at the practices of the media. All I know, and I feel very proud about this, is what ABC is doing now in mounting this extraordinary effort. Our goal is to cover this story as honestly and in as much depth as a serious, responsible news organization warrants.”

After backing down from its initial request for tough FCC action, the intelligence agency argued that ABC should conduct an internal examination of its reporting and make the results public. That was what CBS News did early in its conflict with retired Gen. William C. Westmoreland over a Vietnam War documentary.

Unlike the CBS study, ABC’s review of the Rewald matter appears to be concentrating on the case itself and not ABC’s actions in reporting it.

Scali and a team that includes two producers, a second on-air correspondent and a courtroom artist, appear to be re-reporting the Rewald story. They appear to be concentrating on the evidence presented in the trial.

No one on the current ABC crew participated in the original broadcasts, and the correspondent and producer who worked on the original story are not on the follow-up team.

The team, which also includes a technical crew on call in Los Angeles, has produced one on-air report, an overview of the case on the trial’s opening day. A network producer has been in the courtroom every day for the last 10 weeks. He has filed frequent written reports to ABC headquarters in New York.

“I don’t know what the result of all of this investigation is going to be,” Scali said. “The schedule is flexible . . . We’re open-minded about how many more pieces this story will warrant.”

Scali, a former White House adviser and ambassador to the United Nations, believes that the CIA’s refusal to deal with reporters contributes to the problems that it has had “on this and other stories.”

Scali called the CIA’s effort to punish ABC “bizarre” and “unprecedented” but self- defeating because the CIA’s attitude toward the press “winds up hurting itself.”

Scali acknowledged, however, that an uncooperative news source such as the CIA doesn’t automatically grant reporters the license to be less than fair, accurate or responsible in their reporting.

“Despite all of these hazards, this doesn’t excuse any news organization or make it impossible to dig deep enough to get at the truth,” Scali said. “It just makes it necessary to be a lot more careful.”