Group Denies Having Covert Section Tied to Iran Deal

The head of a program reportedly started in 1982 as “Project Democracy” denied a report Sunday that it included a covert section headed by Lt. Col. Oliver L. North that was involved in secret arms sales to Iran and aid to the Nicaraguan rebels.

The New York Times reported that the clandestine operation gradually evolved into a nearly independent foreign policy branch, complete with its own leased ships and airplanes, communications systems, bank accounts and secret envoys.

The newspaper said Project Democracy is now known as the National Endowment for Democracy and was set up to give financial assistance to democratic institutions worldwide.

But Carl Gershman, president of the National Endowment for Democracy, told United Press International: “I’m not aware that anything like that exists; I have had no contact with anything by that name.

“There’s no connection,” he said. “We are a nonprofit, private institution and we have nothing to do with what was discussed in the New York Times.”

The three-member presidential Tower Commission, headed by former Sen. John Tower of Texas and charged with investigating National Security Council operations, has not turned up evidence that President Reagan authorized the secret side of Project Democracy, the newspaper reported.

The National Endowment for Democracy publicly granted federal money to foreign labor unions, book publishers, universities and other democratic institutions abroad, the newspaper said. Reagan first announced the public side of the project in a speech to the British Parliament on June 8, 1982.

The covert side was so well hidden that many Project Democracy officials and other NSC members were unaware of its existence, the newspaper reported.

North, the fired NSC aide and alleged mastermind of the Iran arms- contra aid scheme, was in charge of the secret project, the newspaper said.