The Iran Deception : REAGAN’S GREATEST CRISIS : CHAPTER 10 : Looking for the ‘Smoking Gun’

After six years of magic, President Reagan broke the spell. By deceiving the nation, he and those around him badly damaged his presidency. This traumatic tale is still unfolding, with no end in sight. This is how it developed.

The dirt arena at the rodeo grounds in Twin Falls, Ida., was decked out with old wagon wheels, fence posts and pumpkins. More than 5,000 people were on their feet cheering. At least 2,000 more stood outside, listening to loudspeakers. “We love Ronnie!” they chanted. “We love Ronnie!”

The President rode to the platform on a buckboard: part Gary Cooper; part John Wayne.

“You know,” Ronald Reagan told the campaign rally, one of more than a dozen on a national pre-election swing aimed vainly at retaining Republican control of the Senate, “America used to wear a ‘Kick Me’ sign around its neck. . . . (But) today every nickel-and-dime dictator around the world knows that if he tangles with the United States of America he will have a price to pay.”

It was early November, 1986. Reagan was trying one more time to do what needed to be done: sell the Reagan Revolution.

Half a world away, two foot soldiers of Khomeini’s Islamic revolution had slipped into Beirut from Syria and were quietly making the rounds of local newspapers peddling something of their own. They had a story that could blow the cover off America’s secret arms-for-hostages deals and destroy the U.S. effort to open a dialogue with “moderate” Iranians.

The story also would demolish Reagan’s claims that a “strong and proud and free” America did not bargain with terrorists.

The two men made their way through the narrow, war-scarred streets of the old Museitbeh quarter, just west of the Green Line that divides Beirut into its Muslim and Christian sectors. They arrived at the office of Hassan Sabra, 38-year-old editor of the pro-Syrian magazine Al Shiraa.

They closeted themselves with Sabra and discussed the story for three hours.

In a way, the account seemed to verge on fantasy. It was about Robert McFarlane’s trip to Tehran.

A devout Shia Muslim and disciple of Iran’s revolution, Sabra knew his sources from the days of the Shah, when he had visited Khomeini in his Paris exile. He trusted them and called them “my friends” in comments to reporters later.

A decision to publish the story would be dangerous, particularly after the kidnap threat Sabra had received only a week before. But to him, the news had to be told. Weeks later, Reagan would call Sabra’s little newsmagazine “that rag in Beirut.” But Sabra would point to his scoop as “the greatest achievement of my life.”

Reporters in Beirut picked up the Al Shiraa report on Nov. 2, the day David Jacobsen was released. The State Department, which did not know of McFarlane’s trip, insisted that Sabra’s story was not true. But then, in Tehran, Parliament Speaker Rafsanjani said it was.

On Nov. 4, the day the Republicans would lose their hold on the Senate, John Poindexter was flying back to Washington with Reagan on Air Force One. It was his job to draft the Administration’s official response to the rising chorus of questions about the Al Shiraa story and Rafsanjani’s speech. “As long as Iran advocates the use of terrorism,” Poindexter wrote in longhand, “the U.S. arms embargo will continue.” Technically, at least, that might be true, but it was far from the whole truth.

American newspapers began reporting more of the story two days later.

What followed, said Sen. Paul Laxalt, the Nevada Republican who is Reagan’s closest friend on Capitol Hill, amounted to “Chinese water torture.” And it came from all sides.

There was an uproar on Capitol Hill and a barrage of demands for a full-blown investigation. At the Pentagon, the Joint Chiefs of Staff complained they had “zero knowledge” of the secret shipments to Iran. On national television, Secretary of State Shultz made no secret of his feelings about the plan. He was reported to be considering resigning.

The White House thought it could contain the uproar, just as it had deftly changed the public’s perception of the President’s performance at the arms control summit with the Soviets in Iceland only a few weeks before. The idea was to draw upon a beloved President’s huge store of personal credibility, the same warm relationship with the country that had generated the emotional outpouring in Twin Falls before the election.

Reagan took to television twice in four days. He acknowledged an 18-month “secret diplomatic initiative,” but insisted, “We did not, repeat, did not, trade weapons or anything else for hostages, nor will we.”

But the damage-control effort faltered, in part because the accounts of what had happened from various quarters of the Administration were loaded with inconsistencies. In one particularly embarrassing instance, the White House had to issue a “clarification” moments after the end of a press conference in which Reagan insisted that no third country was involved in the shipments.

More important, adjust the statements as it might, the White House could not gloss over the glaring inconsistency between the Administration’s unbending public statements about dealing with terrorists and the indisputable fact that secret negotiations had gone on for months over arms shipments and the hostages.

Shortly after the White House launched its media blitz, a Los Angeles Times poll showed that three-quarters of the American public still thought that Reagan’s explanation, though technically true, was “in reality misleading.”

Some presidential advisers began counseling Reagan to admit that the whole thing had been a mistake. A group of long-time confidants from California urged him to rid the White House of all who had gotten him into this rapidly spreading mess--starting with Regan and Poindexter.

But the President insisted: “I did not make a mistake. . . . I’m not firing anybody.”

That was before he heard the next round of bad news.

It came by way of an unusual procedure: Atty. Gen. Meese and Charles J. Cooper, assistant attorney general in charge of the Justice Department’s office of legal counsel, had been reviewing the prepared testimony of CIA Director Casey and others who had been asked to appear before Congress about the arms-and-hostages deal.

Meese and Cooper found gaps so disturbing that Meese took the problem to the President.

At his request, Meese--whose assistance to Reagan since his days as governor of California had won him the title “Mr. Fixit”--then assembled a small team of Justice Department officials. Along with Cooper, the team included William Bradford Reynolds, assistant attorney general for civil rights and a trusted Meese adviser; Allan Gerson, who is Cooper’s deputy, and chief of staff John N. Richardson Jr.

Carefully chosen, members of the group were all highly conservative and came to the Justice Department as political appointees. As it happened, however, none of the lieutenants chosen had significant experience with investigations involving federal criminal law.

The team talked with the President, with Regan, Shultz, Weinberger, Casey, Poindexter, North, McFarlane and others. It soon became clear that North was a key to the sequence of events. The team pored over documents with him, then questioned North for an entire afternoon. At some point, sources say, before his access to the White House compound was cut off, North destroyed a number of his secret papers without Meese’s knowledge.

On Saturday, Nov. 22, Meese’s group got its first hint that money from the Iranian arms sales might have been diverted to the contras-- the skimming McFarlane says he heard about from North in May and that Furmark would warn Casey about two days later. The hint is said to have come from intelligence that showed the prices paid by Iran for the arms did not square with amounts that Casey had planned to cite in his testimony to Congress.

One knowledgeable source said Meese took what he had found to Casey and told him, “You’ve got a problem here.”

As the team dug deeper, the evidence mounted that, while the United States had charged about $12 million for the arms, they had actually been sold for a much higher price. The profits had been diverted to a numbered Swiss bank account for the contras.

Meese took what he had found to the President on Monday, Nov. 24. The attorney general later was quoted as telling Reagan that transferring Iranian profits to the contras was “a smoking gun.”

Next Meese told Vice President Bush. The vice president said it was the first he had heard of any Iranian- contra link.

By Tuesday morning, Poindexter had informed the President’s chief of staff that he wanted to resign. Reportedly, no one tried to talk him out of it.

Meese met again with the President. At 10 a.m., key congressional leaders were surprised by a summons to the White House for a briefing by Meese and Reagan. Bush attended but said nothing.

Meese described to the lawmakers what he had found.

“I was shocked. I couldn’t believe that this thing could happen,” Rep. William S. Broomfield (R-Mich.), ranking Republican on the House Foreign Affairs Committee, said afterward. He had been a chief defender of Reagan’s foreign policy.

A clearly shaken President summoned reporters to a press conference.

“Yesterday, Secretary Meese provided me and the White House chief of staff with a report on his preliminary findings,” Reagan said, cryptically. “And this report led me to conclude that I was not fully informed on the nature of one of the activities undertaken in connection with (the Iranian) initiative.” He went on to say that Poindexter had resigned and North had been fired.

He turned the microphone over to Meese and left the room. Reporters shouted questions, but the President ignored them.

Speaking carefully and in an even tone, the attorney general delivered the shocker:

“What is involved is that in the course of the arms transfer . . . certain monies, which were received in the transaction between representatives of Israel and representatives of Iran, were taken and made available to the forces in Central America who are opposing the Sandinista government there.”

The contras.

There was a gasp from the reporters. The questions came rapid fire.

How much money? Why wasn’t the President told? Could Meese say who was running national security policy? Who had the authorization ability, if not the President?

Many in Congress were outraged. Republicans and Democrats, conservatives and liberals, those who had fought for Reagan’s policies and those who had opposed them--all streamed to broadcast studios to say for the record that they felt angry, shocked and betrayed.

House Majority Leader Jim Wright (D-Tex.) demanded: “How could the President not know?” Senate Intelligence Committee Chairman Dave Durenberger (R-Minn.) added: “I suspect it will be a cold day in Washington before any more money goes into Nicaragua.”

That night, federal officials sealed North’s office--at least two days after Meese first confronted him. They changed the combinations to his office locks and began carrying away boxes filled with his records.

The President appointed a three-man commission, headed by former Sen. John Tower of Texas, to investigate the Administration’s foreign-policy machinery. The move did little to dampen the furor. Some accused the Administration of trying to divert attention from the real issues: Who had known and ordered what.

Much of the speculation centered on Regan, the President’s chief of staff. He had prided himself on his close control of every facet of White House operations. But when he was challenged by ABC News, he asked: “Does the bank president know whether a teller in the bank is fiddling with the books? No.”

Reagan headed for California to spend Thanksgiving--hoping, aides said, that the storm would soon blow over.