$3.5 Million From Iran Sale Went to Contras--Secord

The Nicaraguan rebels received only $3.5 million of the $18 million from Iran arms sale profits--far less than originally estimated--retired Air Force Maj. Gen. Richard V. Secord said Tuesday on the opening day of congressional hearings into the Iran- contra affair.

Secord, who operated a tiny fleet of airplanes that delivered privately funded arms to the contra rebels and supplied logistical help for the Reagan Administration’s Iran arms sale, provided Congress and the American public with the first nearly complete accounting of money that was siphoned from profits generated by the shipments to Iran.

Breaking a six-month silence, the one-time Defense Department official insisted his multimillion-dollar contra-supply effort was intended to carry out President Reagan’s Central American policy and had explicit support from top Administration officials--including former CIA Director William J. Casey.

Describes Casey’s Involvement

Casey was said by Secord to have conceived the idea of asking an unnamed country--believed to be the tiny, oil-rich sultanate of Brunei--to contribute $10 million to the contras. Casey told Secord at a meeting in May, 1986, that he would ask Secretary of State George P. Shultz to solicit the contribution.

Secord also offered a second-hand account of a meeting in which Vice President George Bush allegedly discussed details of the contra-supply network.

Speaking without emotion under the glare of television klieg lights and the stern gazes of the 26 members of the House and Senate investigating committees, Secord flatly insisted he had done nothing wrong--even though his contra-supply effort was clearly designed to circumvent a law on the books in 1985 and 1986 that prohibited direct U.S. military aid.

“I, for one, am not ashamed for having tried,” he declared. “If we were unconventional in some of our methods, it was only because conventional wisdom had been exhausted.”

While he praised Lt. Col. Oliver L. North and former National Security Adviser John M. Poindexter, both key White House players in the Iran-contra affair, Secord condemned Atty. Gen. Edwin Meese III for his “grossly inaccurate” and “unforgivable” disclosure last November that profits from the Iranian arms sales had been diverted to the Nicaraguan rebels.

“He could have been advised of the facts surrounding these events before his announcement,” Secord said. “This reasonable option was rejected, and we were instead betrayed, abandoned and left to defend ourselves.”

Meese estimated last November that the contras received between $10 million and $30 million.

On the contrary, according to Secord, the contras received only a small share of the $30 million that was funneled from the Iranian arms sales into the Swiss bank account of Lake Resources Inc., controlled by his business partner, Albert A. Hakim.

Reads Hakim’s Accounting

He said $12 million was used to reimburse the Defense Department for the weapons it had sold. Reading from an accounting that Hakim gave congressional investigators, his rough accounting for the remaining $18 million went as follows:

--$3.5 million for the contras. These funds, Secord said, were added to another $2 million in private donations for the contras that went through the same account. Although most of it was spent on military equipment and transport, three contra leaders--Adolfo Calero, Arthuro Cruz and Alfonso Robello--received some direct payments, Secord said.

--$3 million to transport the arms to Iran.

--About $500,000 to pay agents of the Drug Enforcement Administration for their work in a previously undisclosed operation to free American hostages in Lebanon. DEA Administrator John C. Lawn, when asked after Secord’s testimony to explain the expenditure, said it would be “inappropriate” for him to comment.

--$350,000 to procure a Danish ship, the Erria, which was “bought to be used on another government project.” The Times has reported that the Erria was purchased for an aborted plan by North to establish a platform in the Mediterranean to broadcast propaganda against Libyan leader Moammar Kadafi. It was used instead to ferry arms for the contras and to conduct other North-directed missions.

--$100,000 for radio and telephone equipment for an unidentified Caribbean country.

--$6.5 million for Hakim’s use, now being held in an account with Compagnie de Services Fiduciaires, the Swiss company that acted as a financial agent for North’s Iran-contra operations.

--$1.3 million remaining in the Lake Resources account.

--$2 million still unaccounted for. Investigators are expected to account for it as soon as all the records are reviewed.

Secord, 55, who retired in 1983 after 28 years in the Air Force because he felt he had been unfairly linked in the press to illegal munitions sales to Libya by ex-CIA agent Edwin P. Wilson, said he was first recruited by North in mid-1984 to help arrange arms sales to the contras.

After organizing four arms shipments, he said, he was persuaded by North in mid-1985 to establish a full-blown operation to provide military supplies to the contras.

$4-Million Operation

With the help of several associates, including former CIA operatives who also had been linked to Wilson, Secord said he built his operation into a highly successful airlift, valued at $4 million, that owned five planes--two large transports, two medium-sized cargo planes and one light, single-engine aircraft. The enterprise also built a 6,000-foot airstrip in Costa Rica, which quickly was declared off-limits to Americans by President Oscar Arias.

Secord said he personally did not profit from any of the arms deals, even though both he and Hakim originally got involved with a profit motive. He said he eventually became motivated by the desire to work in government again. He said his associates were motivated primarily by patriotism.

“All of them worked long and difficult hours,” he said. “Many worked in the face of constant danger; some died. There was indeed compensation paid to the private parties, but no one undertook these missions for compensation alone.”

Cites CIA Support

Although the CIA was prohibited by Congress from aiding the contras in 1985 and 1986, Secord said he received support from Casey and an unnamed CIA official in Honduras and received a “limited amount” of aid from a senior agency official in Costa Rica. He said the U.S. ambassadors to Honduras and Costa Rica lent “moral support.”

Secord added he was denied any additional CIA support that he sought, and he eventually went directly to Casey on two occasions to complain. The meetings were arranged by North.

At their first meeting in late 1985, he said Casey was “noncommittal” about his request for agency intelligence support in Central America. He indicated he also received no explicit pledge of cooperation when he complained to Casey in February, 1986, that CIA officials were placing obstacles in his way.

But it was during his third session with the then-CIA director in May, 1986--a chance encounter at the White House--that Casey raised the prospect of soliciting $10 million from an unnamed country believed to be Brunei, in the East Indies. This was the first time that anyone involved in the Iran-contra affair has suggested that Casey was the originator of the Brunei solicitation.

He said Casey remarked that he was in no position to make the solicitation, and he asked Secord to do it. When Secord declined, he said, Casey vowed to ask Shultz.

The Sultan of Brunei later contributed $10 million at the request of the State Department, but committee investigators have been unable to trace the funds to the contras.

Secord said that despite some initial skepticism at the CIA, agency officials were briefly convinced by him and North that they should take over running his airlift operation in late 1986 when Congress repealed its prohibition against CIA involvement with the contras.

That plan was abandoned, however, when two of Secord’s employees were killed in the well-publicized crash of a transport plane over Nicaragua that led to the capture of a third crewman, Eugene Hasenfus.

He said some CIA officials had been opposed to the agency taking over Secord’s airlift because they felt it would create the impression that they had been running it all along.

Tells of Threat to Airlift

The airlift earlier had survived a threat that Secord believed was posed by Felix Rodriguez, a former CIA operative in Central American who grew critical of the airlift and accused Secord of providing the contras with shoddy weapons. He said he was told that Rodriguez took his complaints to Bush’s national security aide, Don Gregg, and later directly to the vice president.

Secord said he later successfully opposed a White House order to abandon the airlift and the planes themselves, which he attributed to interference from Rodriguez. He said Rodriguez was contending at the time that the planes belonged to the contras.

In late 1985, while he was involved in the contra-supply effort, Secord was summoned to the White House by North to discuss another mission--which turned out to be related to U.S. arms shipments to Iran. North asked him to fly to Portugal to arrange for missiles to be transshipped through that country from Israel to Iran.

Hires German Firm

Despite some help from a CIA official in Portugal, Secord was unable to make the arrangements with the Portuguese government and later was forced to hire a West German air transport firm--believed to be a CIA-owned company--to haul the missiles to Iran.

Secord gave a deadpan account of the unexpected outcome of the flight: The Iranians declared that the weapons were not what they ordered and demanded to have them returned to Israel. The Hawk missiles were an older model than Iran already had, and the Iranians were disappointed to learn that they could not be used against high-altitude aircraft.

The committee made public a Nov. 19, 1985, letter from Robert C. McFarlane, then Reagan’s national security adviser, in which Secord was asked to participate in this mission. Secord said it was his understanding the letter actually was signed by North.

Recounts Second Donation

In addition, Secord recounted how North persuaded him to solicit money for the contras from another unidentified country, believed to be Saudi Arabia, which is known to have contributed about $32 million. He said he later heard that such a donation was received, but he took no credit for it.

Committee members expressed outrage over the story that they said will unfold before their panel over the next three months. They were particularly critical of efforts by Secord and others to circumvent the will of Congress.

“The story is both sad and sordid,” said Chairman Daniel K. Inouye (D-Hawaii). “None of the participants emerges unblemished. People of great character and ability, holding positions of trust and authority in our government, were drawn into a web of deception and despair.

‘Secret Policy Making’

“The story is one, not of covert activity alone, but of covert foreign policy. Not secret diplomacy, which Congress has always accepted, but secret policy making, which the Constitution has always rejected. It is a tale of working outside the system and of utilizing irregular channels and private parties--accountable to no one--on matters of national security, while ignoring the Congress and even the traditional agencies of executive foreign policy making.”

Nobody on the committee suggested that the President condoned illegal activity.