President Reagan accepted Vice Adm. John M. Poindexter’s resignation as his national security adviser Tuesday and dismissed Lt. Col. Oliver L. North, a Poindexter aide, after a Justice Department investigation disclosed that as much as $30 million in proceeds from arms sales to Iran had been diverted to Nicaraguan rebels despite a congressional ban on such military assistance.
Atty. Gen. Edwin Meese III, who has been investigating the Iranian arms deal, said that North was the only government official with full knowledge of the diversion of funds to the contras fighting the Marxist Sandinista government in Nicaragua.
Poindexter, Meese said, knew “that something of this nature was occurring” several months ago--when the congressional ban on U.S. assistance to the contras was still in place--but did not inform the President.
A government source also said it was North, acting in the face of a presidential decision to the contrary, who authorized the first shipment of U.S.-made arms from Israel to Iran in the late summer of 1985. That shipment was pivotal because it was followed by the release of American hostage Benjamin Weir and became the catalyst for the President’s fateful decision the following January to begin supplying weapons to Iran.
“In August, 1985--despite the President’s (previous) disapproval--an Israeli shipment of arms went to Iran,” said the source. “Oliver North authorized the Israelis to do it and didn’t tell Reagan.”
That official, speaking on condition that he not be named, said it is not known whether North was acting on his own or at someone else’s direction. Meese confirmed that Reagan did not learn until afterward about this shipment.
Meese said that Israel acted on its own in the arms shipment of late summer, 1985. “To my knowledge,” he said, “nobody authorized that particular shipment specifically.”
North’s Office Sealed
Meanwhile, it was learned from government sources that federal officials sealed North’s office Tuesday night--"nobody in or out,” one said--changed the combination to his office lock and began carting away boxes filled with his records.
North could not be reached at his office Tuesday. Meese indicated he would resign his Marine Corps commission, but another official said it appeared appears likely that he would be reassigned to a low-level Marine post outside Washington.
At a White House briefing for reporters, Reagan said that, although Poindexter had not been “directly involved” in the diversion of funds to the contras, he had “asked to be relieved of his assignment . . . and to return to another assignment in the Navy.” North, he said, “has been relieved of his duties on the National Security Council staff.”
The President, seeking for the first time to distance himself from an operation that has seriously undermined his Administration’s credibility, declared that he had not been “fully informed on the nature of one of the activities undertaken” by his National Security Council staff.
While insisting that the goals of his Iranian policy were “well-founded,” Reagan said he was deeply troubled to learn that implementation of the policy was “seriously flawed” and raised “serious questions of propriety.”
Grim-faced as he read a short prepared statement, Reagan said he would appoint a special review board to study the role and procedures of the White House National Security Council staff, which Poindexter headed, in the conduct of foreign affairs.
Poindexter’s deputy, Alton G. Keel Jr., 43, will serve as acting national security adviser until Reagan names a replacement for Poindexter. Keel, a career public servant, joined the National Security Council staff in July.
Government sources said Reagan has chosen a successor to Poindexter and was ready to announce his choice today.
Among top candidates, one source said, are former Sen. John G. Tower (R-Tex.); Navy Secretary John F. Lehman Jr.; Ambassador to NATO David Abshire; Kenneth L. Adelman, director of the U.S. Arms Control and Disarmament Agency; Assistant Secretary of Defense Richard N. Perle, and Max Kampelman, chief U.S. negotiator at the Geneva arms control talks.
In a lengthy briefing after Reagan’s brief appearance, Meese said that he is investigating whether anyone involved in the arms sale is subject to criminal prosecution.
In January of this year, Meese said, Reagan decided to authorize the shipment of U.S. arms to Iran in an effort to help stop the Iran-Iraq War and to secure the release of American hostages held in Lebanon by Muslim militants with ties to Iran.
“Three or four shipments” ultimately were made, all by way of Israel, Meese said, although Reagan had acknowledged only two shipments at his press conference last week. Meese said that some of the proceeds from at least one of the shipments and possibly as many as three of them were transferred to Swiss bank accounts for the use of the contras.
House Majority Leader Jim Wright (D-Tex.) said Meese told congressional leaders that Israeli and Iranian representatives negotiated a price for each arms shipment that was greater than the cost of the weapons.
In one transaction, he reported Meese as saying, the Iranians paid $19 million and the Defense Department was reimbursed $3 million, covering the actual costs of the arms. Of the remaining $16 million, Wright said, $12 million was deposited in a Swiss bank account for the contras. Wright identified Adolfo Calero, political leader of the contras’ largest army, the Nicaraguan Democratic Force, as the official authorized to draw on the Swiss account.
At a news conference in Miami, Calero denied that he had drawn funds from a Swiss account and said he knew “absolutely nothing about the money that has been referred to today.”
Meese said that members of the National Security Council, himself included, knew of the Iranian arms deal after Reagan approved it in January. But Meese said that neither he nor any other member of the council was aware of the diversion of funds to the contras until he discovered it during a “thorough” review of documents he conducted over the weekend under instructions from Reagan.
Meese, speaking in measured tones and meticulous detail as he answered reporters’ questions for almost an hour, said: “The President knew nothing about it until I reported it to him. I alerted him yesterday (Monday) morning.”
Meese said that at least three people--Poindexter, North and Robert C. McFarlane, whom Poindexter succeeded as national security adviser last December--knew about the diversion of funds to the contras. But North, Meese said, was the only person in the U.S. government who “knew precisely” about the affair.
Poindexter “did know that something of this nature was occurring, but he did not look into it further,” Meese said. He added that Poindexter learned of the money transfer sometime during the last year but “did not try to stop it.”
And McFarlane, who accompanied North on a visit to Tehran in May in connection with the arms shipments, learned of the diversion of funds in April or May of this year after he had already left the government, Meese said. He said it was his understanding that McFarlane knew of the transfer of funds while it was still going on.
McFarlane, in London for a speech, confirmed in a statement that North told him of the diversion of money to the contras “in general terms” last May.
“Based upon the summary account, I took it to have been a matter of approved policy sanctioned by higher authority,” McFarlane’s statement said. “These transfers were reported to have taken place this year. At no time was it raised or considered during my service in government.”
The disclosure that money had been diverted to the contras at a time when Congress had banned formal U.S. government military aid to them stirred a new storm of criticism on Capitol Hill.
Congress May Block Funds
Congress last month approved $100 million in formal U.S. aid to the contras, but $40 million of that is not scheduled to be released until Feb. 15, and Senate Intelligence Committee Chairman Dave Durenberger (R-Minn.) predicted that Congress would block that $40 million.
Even before the diversion of funds to the contras was exposed, Reagan’s image as a leader had been seriously eroded by the arms-and-hostages controversy, which a Beirut magazine had made public almost three weeks ago.
A recent poll by Richard B. Wirthlin, who does polling for the White House, showed Reagan with a 60% negative rating in handling foreign affairs, according to an Administration source. A former senior White House aide, who still advises the President, said the poll’s numbers were “horrendous,” but he declined to elaborate.
Although some of Reagan’s closest political allies had called for the removal of Poindexter and North, their departure did not quell the call for a more thorough shake-up that would oust both White House Chief of Staff Donald T. Regan and Secretary of State George P. Shultz.
A group of Reagan’s longtime California confidants is seeking Regan’s dismissal for giving the President poor advice on the Iranian arms controversy and Shultz’s ouster for repudiating the initiative in public and undermining Reagan’s credibility.
Didn’t Express Confidence
Shultz’s future with the Administration appeared more uncertain than ever Tuesday, even though Reagan has adopted Shultz’s position and agreed that there will be no more arms shipments to Iran. Reagan declined to express confidence in him at the press briefing. Meese, in answer to a question, said any Cabinet officer “has a responsibility either to support the President or get out.”
Meese had been “just waiting for that question,” according to a longtime Meese associate who is a member of the California group seeking a wider shake-up. According to this confidant of the President, Shultz is likely to be the next official to leave over the controversy.
Shultz Digging in His Heels
However, Shultz, an ex-Marine known for his tenacity, apparently is digging in his heels. After the White House briefing, State Department spokesman Charles Redman released a statement saying: “The President now intends that the management and implementation of that (Iran) policy be handled in normal channels. . . . That means under the direction of the secretary and the Department of State.”
At the White House briefing, the President said he expects to receive reports from Meese’s continuing investigation and from the special review board “at the earliest possible date.”
“Upon the completion of these reports,” said Reagan, who has been widely criticized for failing to disclose information about the Iranian initiative earlier, “I will share their findings and conclusions with the Congress and the American people.”
Reagan said that, while he could not “reverse what has happened,” the steps he was initiating are “to assure that the implementation of all future foreign and national security policy initiatives will proceed only in accordance with my authorization.”
Several Questions Ignored
In answer to questions shouted at him as he turned the rostrum over to Meese, Reagan again said he had not made a mistake in ordering the Iranian arms deal. He ignored several questions about Shultz’s future and, when asked if he could give Shultz “a vote of confidence,” replied: “May I give you Attorney General Meese.”
Meese, fielding a barrage of questions, revealed a Byzantine operation in which North, acting without authorization, dealt clandestinely with representatives of Israel and Iran and siphoned off between $10 million and $30 million for the rebel forces in Nicaragua.
Meese called the cash transfers “an aberration of the policy” Reagan had set in motion when he condoned arms shipments by Israel to Iran as evidence of U.S. good will in attempting to establish ties with more moderate factions of the government of the Ayatollah Ruhollah Khomeini.
North, 43, a six-year veteran of the National Security Council staff, had been the point of contact at the White House for the rebel leaders in Nicaragua during the period when Congress had cut off U.S. aid. A shadowy figure who has preferred to operate under cover, North temporarily moved his family to a military post last year after his identity was revealed in the Washington Post and threats were made against him by opponents of the Administration’s Central America policy.
After North became publicly identified with the contras, he was thought to be less effective and was moved to another policy area that focused on terrorism and the Middle East. It was there that he got involved in the secret arms shipments to Iran and developed the contra connection that eventually proved his downfall.
Meese said that North’s operation surfaced when Justice Department investigators stumbled upon an “intercept” that revealed a discrepancy between the price Iran paid for the arms and the amount received by the U.S. government. Justice Department investigators grilled North extensively Saturday. Poindexter, who was also questioned, said that he knew “generally” of North’s activities but “did not look into it further,” Meese said.
Meese, Reagan texts, Page 7. Other stories, photos, Pages 4, 5, 6, 8 and 9.