Casey Misled Panel on Iran, Report Claims

CIA Director William J. Casey gave misleading testimony to the Senate Intelligence Committee and the CIA violated the law by shipping arms to Iran in November, 1985, without presidential authorization, the Senate panel’s staff concluded in a report on the arms sales controversy.

The report, which was not adopted by the committee, also portrayed an Administration that adhered to its policy of shipping arms to Iran, despite the repeated misgivings expressed by its own intelligence experts about the idea and about the middlemen crucial to carrying out the operation.

Some committee members have described the report as incomplete and possibly inaccurate, and the committee voted 7 to 6 not to release it publicly. However, numerous accounts of its contents have appeared in the news media, usually based on sources who had read the 157-page document.

Confirmed as Accurate

NBC obtained an early draft several weeks ago and broadcast the first direct accounts of the report. The full text of the report’s summary appeared in Monday’s New York Times. A committee staff member confirmed that the New York Times report was accurate.

The report--which was based on weeks of testimony by figures involved in the arms sales--has been the center of a struggle between the White House, which wants it made public, and critics of the report, who say it would be irresponsible to release it before filling in many of its gaps. Although the report cast an unfavorable light on many aspects of the operation, it said no evidence was found that President Reagan had approved or knew of the diversion of profits from the sales to the Nicaraguan rebels.

The committee is working on a second report that it plans to submit to a select Senate committee that has been established to investigate the spreading controversy.

The original report contended that when Casey briefed the committee Nov. 21--three days before the White House revealed the existence of a plan to divert the profits -- he made “several misleading statements and omitted certain significant points.”

Casey subsequently appeared in a closed session of a House committee and was asked to appear again before the Senate committee, but he was stricken with seizures the day before he was scheduled to testify. He later underwent surgery for a brain tumor and has been hospitalized since then.

‘Key Participants’

The written statement that Casey submitted to the committee in November had been prepared by “most of the key participants in the Iran program,” the staff noted.

The committee staff complained that Casey’s statement did not disclose that presidential approval of the operation had been obtained under an unusual after-the-fact procedure. He also did not tell the panel that in preparing the presidential approval, the CIA had “excluded key Cabinet members and lacked adequate or effective intelligence support,” the report said.

It noted that Defense Secretary Caspar W. Weinberger and Secretary of State George P. Shultz, critics of the operation, complained that they were not fully informed of the arms sales. “Both say that each time the issue was raised in 1985, they were surprised, because they were under the impression that the program had been terminated,” the report said.

Roles of Secord, Hakim

Casey’s statement also did not mention the major roles played in the operation by private individuals, including retired Air Force Maj. Gen. Richard V. Secord and his business partner, Albert A. Hakim, who were involved in the logistics of the plan.

Evidence obtained by the committee points to Secord in particular as having “a major role. . . . In other words, Mr. Secord appears to have been intimately involved in the Iran initiative and his absence from (Casey’s) account represents a significant omission,” the report said.

Secord was so closely involved in the operation, the report said, that he attended many of the planning sessions, including some at CIA headquarters. Secord’s role in the Iranian operation is particularly significant because he is also believed to have directed a private supply effort for the contras.

North Not Mentioned

Casey’s statement also did not mention former White House aide Oliver L. North, who was subsequently fired for his involvement in the diversion of funds to the contras, or even the possibility that such a diversion had occurred.

The omission came despite the fact that “Mr. Casey had been sufficiently concerned about Lt. Col. North’s activities that he had recommended . . . that Lt. Col. North be advised to retain an attorney,” the report said, and added that the failure to mention such concerns was “significant and troubling.”

North, Secord and former National Security Adviser John M. Poindexter declined to testify before the panel, citing the Fifth Amendment right against self-incrimination.

Law Violation Claimed

The staff concluded that CIA participation in the November, 1985, arms shipment violated a law requiring that all the agency’s covert actions be authorized in writing by the President. That approval, which is known officially as a “finding,” did not come until January, 1986.

Although the CIA has argued that it was legal for the agency to carry out the operation as long as it was later approved by the President, the staff noted that the law allows no covert action “unless and until” the CIA receives written permission.

“The CIA’s rationale also undermines the ability of the President himself to control covert actions, as it would allow the intelligence community to present him with a covert action as a fait accompli, too late to be undone,” the report said.

It also criticized the Administration’s decision not to notify Congress of the operation, saying that a policy of withholding such information could make it impossible for lawmakers to carry out their legal duty to monitor intelligence operations.

The committee staff raised the possibility that those involved in the Iranian arms sales violated legal bans that existed last year on U.S. support for the contras, but said that could not be proved without further investigation.

Official Misgivings

The report also mentioned numerous instances in which CIA officials expressed misgivings about the operation. “At least as early as October, 1986, top-level officials . . . were aware that possible improprieties had occurred in the program. Even so, they failed to take deliberate or effective action to investigate these possible improprieties,” the report said.

As far back as 1980, the CIA had decided that Manucher Ghorbanifar, the primary Iranian intermediary in the operation, was “so unreliable that it prohibited its case officers from using him in operations,” the report said. But once the National Security Council had developed its own contacts with Ghorbanifar and decided that he could be the bridge to so-called Iranian “moderates,” he was allowed to play a key role in the sales.

“Because this program was (the National Security Council’s) responsibility, the CIA appears to have allowed itself to participate in actions it may have rejected if they had been proposed for CIA implementation,” the report speculated.

Accounts Confirmed

The report disclosed few new details of the operation, but did confirm accounts that had been suggested in the news media. Among them:

--That the United States had provided intelligence to Iran. It noted that top CIA officials objected, but said that none “pressed the issue further, reportedly because they understood that (it) had the approval of the NSC, which was responsible for the operation.”

--That CIA officials in Central America had been instructed not to investigate sources of private funding for the contras . The report said the CIA hoped to avoid any appearance that it was connected with the private support.

--That the aircraft used to deliver the November, 1985, arms shipment was operated by a CIA proprietary company.

Separately, a White House spokesman said Monday that although “we have not put it firmly on the schedule,” Reagan will meet with a special board established to study the NSC and its role in light of the controversy. The Times reported Saturday that Reagan had not yet been interviewed by the panel, which is headed by former Republican Sen. John Tower of Texas, or by White House officials assembling the official account of how the arms sale plan operated.

A report by the Tower commission is expected within a few weeks.