Official Claims Reagan Knew of Hostage Link : President Reportedly Briefed by Poindexter on Connection to Arms Sale Before He Approved It

President Reagan, shortly before signing the official authorization for secret arms sales to Iran, was briefed on a supporting document that explicitly linked the arms transfers to the release of all American hostages in Lebanon, White House and congressional sources said Thursday.

A White House official, who refused to be identified, said that Reagan “never saw” the supporting document. However, the official said, the President was given an oral briefing by then-National Security Adviser John M. Poindexter on what the paper contained.

Poindexter Note Cited

“There’s actually a note in that supporting document in Poindexter’s hand that says that the President was briefed verbally,” the official said, adding that the note was initialed “J. P.”

The document, which accompanied a January, 1986, intelligence finding that authorized the now-controversial arms sales, appears to contradict the President’s frequent claim that the weapons shipments were not a critical part of an arms-for-hostages deal but were instead intended primarily as a diplomatic ploy to improve long-term U.S. relations with Iranian moderates.

The White House furnished the document to the Senate Intelligence Committee, which has prepared but not released a report on the Iran arms sales and the diversion of profits to the Nicaraguan contras.

White House spokesman Larry Speakes disclosed Thursday that Administration officials persuaded the Senate Intelligence Committee to alter its report on the Iran-contras scandal by deleting references to a letter from then-Israeli Prime Minister Shimon Peres to President Reagan and to a meeting between Vice President George Bush and an Israeli anti-terrorism expert.

Speakes, although refusing to say who called for the deletions, said the Administration no longer wanted the information withheld. “(After) reviewing it, it would be fine with us to put it in the report,” Speakes said.

Among the report’s highlights, a congressional source said, was the supporting document on which Reagan was briefed last January as he ordered direct U.S. arms sales to Iran. According to the White House official, the document said that the Israelis, acting as middlemen, were sensitive to the strong U.S. desire “to free the Beirut hostages and have insisted that Iran demonstrate both influence and good intention by an early release of the five Americans.”

“Both sides (Iran and Israel) have agreed that the hostages will be immediately released upon the commencement of this action,” the source said the document stated.

“This approach, through the government of Iran, may well be our only way to achieve the release of the Americans held in Beirut,” the document said. It added: “If all the hostages are not released after the first shipment of 1,000 weapons, further transfers would cease.”

Although hostages were released only one at a time and two of the original hostages remain in Lebanon, the weapons shipments continued through much of 1986.

The report said also that Peres “had his emissaries pointedly note (to the United States) that they well understand our position on not making concessions to terrorists.”

The official noted that it was clear from the document that the Israeli plan was “premised on the assumption that moderate elements can come to power in Iran.”

The supporting document and its arms-for-hostages link was first disclosed Thursday by “NBC News,” which said it had obtained a copy of the unpublished Senate Intelligence Committee report.

Dozens of Interviews

The intelligence panel voted narrowly this week not to make public the report, in part because it is incomplete. The study is based on dozens of interviews but lacks testimony by several of the scandal’s central figures, including Poindexter and his aide, Marine Lt. Col. Oliver L. North, both of whom refused to testify before the committee, citing the Fifth Amendment protection against self-incrimination.

A knowledgeable source, citing several parts of the Senate draft, said it alleged that CIA Director William J. Casey was aware earlier than he has publicly acknowledged of the possibility that Iranian arms cash had been diverted to rebels battling the Nicaraguan government.

The source said that the Senate report criticized Casey for being “less than candid” with the panel about his knowledge of the affair.

According to the source, the Senate draft study concludes that:

--The idea of diverting arms money to the contras was raised by the Iranian go-between in the weapons deals, arms merchant Manucher Ghorbanifar, in a conversation last March with “his CIA contacts.” As previously reported, North also proposed the scheme in an April memorandum that suggested that $12 million in arms-sale profits be diverted to the rebels.

The Senate panel could not determine whether Poindexter or anyone else had seen the North memorandum, the source said.

‘Cover Story’

--Casey warned in the midst of the arms dealings that the operation could be politically devastating if exposed and that a “cover story” should be devised to conceal the arms-for-hostages aspect of the affair. The New York Times reported earlier that Casey’s memorandum suggested that the arms sales be disguised as a political opening to Iranian moderates.

--Poindexter “apparently” led a campaign to conceal the arms sales from Secretary of State George P. Shultz, even telling a suspicious Shultz last April that there were no plans to sell weapons to the Iranians.

--The United States, as part of the weapons deals, also supplied Iran with “intelligence information” on the Soviet Union and on Iraq, a neighboring country with which it has waged a long and bloody war. The United States has also supplied Iraq with intelligence data on Iran, sources have said.

White House officials were invited to participate in revising the still-unpublished report last weekend, shortly before the committee switched from Republican to Democratic control with the convening of the 100th Congress Tuesday. On Monday night, just hours before that transition, committee members voted 7 to 6 against making the report public.

According to Senate sources, an estimated 20 to 25 pages were excised during the revision of the report.

Although most of the deletions were attributed to concern for preserving national security secrets, Republican Senate sources said that the Bush passages clearly were removed for no other reason than to avoid embarrassing the vice president. That assertion was disputed by White House officials, who said the deletions were made only out of diplomatic concerns.

The deletions and the disclosure reflected the problem that the Senate report posed for the President and his aides:

The committee delved into some of the particularly sensitive aspects of the operation that diverted Iranian arms sales funds to the anti-Sandinista rebels in Nicaragua at a time when such aid was forbidden by Congress. Although the Administration says it is eager to see the unclassified contents of the report published, elements of it could be embarrassing.

Bush Met With Israeli

The Bush meeting that was deleted from the Senate Intelligence Committee report involved Amiram Nir, an Israeli anti-terrorism expert, on July 29, 1986, Speakes said. He said that there was no reference in the meeting to the diversion of money to the contras.

“Mr. Nir said that Prime Minister Peres had asked him to brief the vice president, and Mr. Nir met with the vice president July 29 and discussed the plight of American hostages, other terrorism matters and the status of U.S. arms sales to Iran,” Speakes said.

The meeting took place at the King David Hotel in Jerusalem at the request of North when the vice president was on a tour of the Middle East. North, then a member of the National Security Council staff, has been identified as a central figure in the Iran arms affair.

Details of the meeting were provided by Bush to Sen. Dave Durenberger (R-Minn.), who was chairman of the Intelligence Committee before the 100th Congress convened.

Deletion Regretted

“The meeting was entirely appropriate and should be a part of the Senate Intelligence Committee report, and they regret and so do we that it was deleted by anyone for any reason,” Speakes said.

White House spokesmen have said that the review of the report was conducted by representatives of several government offices under the direction Peter Wallison, the White House counsel.

“It was a diplomatic motive,” Speakes said of the reason for deleting the references to Bush, Nir and Peres.

Another White House official, speaking on the condition that he not be identified, said that representatives of the State Department insisted the references to the Bush meeting be deleted.

Peres Letter

Concerns about potential diplomatic embarrassment were also cited in the removal of the references to the Peres letter, and Speakes said that White House members of the review team did not object. Speakes would not give details of the letter from Peres, who has since become Israel’s foreign minister.

According to Durenberger, the report indicates that Nir was responsible for persuading the Reagan Administration to begin direct shipments of arms to Iran in January, 1986, after the idea had been rejected by the President in the previous month. Nir visited Washington during that period and met with North.

“The policy changed because the persuader changed,” Durenberger said. “Nir wasn’t in the act before. Now (in early 1986) Nir is in the act.”

Even though Reagan has strongly urged the committee to make the report public, Democrats have opposed publication on grounds that their investigation is incomplete, in part because many key witnesses, including North, took the Fifth Amendment and refused to testify. Under pressure from the Republicans, Sen. David L. Boren (D-Okla.), the new chairman of the committee, has agreed to produce a modified version of the report within the next week or two.

According to those who have read the document, its publication is certain to embarrass Reagan.

“For the President, the worst part is that the report gives a stronger sense that he didn’t know what was going on,” a source said. “The White House wants it out to prove they did nothing wrong, but it also reinforces the concept that they did nothing right either.”

But Boren said he assumed the President wants the report made public, despite the embarrassment, to demonstrate that the investigation so far has uncovered no “smoking gun” implicating Reagan in wrongdoing.

The report helps to vindicate the President by portraying North, who was removed from the White House staff on Nov. 25 when details of the Iran-contra affair became public, as an “activist” with many contacts in the government who would take actions without getting specific approval from his superiors, Senate sources said.

Likewise, according to these sources, Poindexter, North’s supervisor, is portrayed in the report as a “passive” administrator who was meticulous about meetings and paper work but who did not keep close tabs on the activities of his staff.

Staff writer Michael Wines contributed to this story.