THE IRAN-CONTRA HEARINGS : Assumed Reagan Knew Funds Were Diverted, North Testifies : He Can’t Say if President Authorized It

A defiant Lt. Col. Oliver L. North, ending seven months of silence, testified Tuesday that he diverted Iran arms sales profits to Nicaragua’s contras on the assumption that President Reagan had approved the move--but that he does not recall seeing evidence of presidential authorization.

“I never raised it with (Reagan) and he never raised it with me during my entire tenure at the National Security Council staff,” the former White House aide told the House and Senate committees investigating the scandal. “I assumed that the President was aware of what I was doing and had, through my superiors, approved it.”

However, North said, Reagan denied any knowledge of the diversion in a telephone call that he placed to North several hours after that scandal became public and the White House aide was fired last Nov. 25.

‘Just Didn’t Know’

“In the course of that call, the President said to me words to the effect that ‘I just didn’t know,’ ” North said. He added that Rear Adm. John M. Poindexter, North’s boss as the President’s national security adviser until he resigned on the day North was fired, also told him Reagan did not know of the diversion.

North disclosed that he had written five memos to be presented to the President last year with references to the diversion of funds to the contras. But he said he did not know whether Poindexter, who received those memos, forwarded them to Reagan. He insisted that none of the memos were returned to him with any markings to indicate that Reagan had used them to make decisions.

Only one of those memos has been found in White House files. Rep. Lee H. Hamilton (D-Ind.), chairman of the House investigating committee, said the other four may have been among the documents that North shredded before being fired.

‘Who Authorized What?’

“The question of who authorized Col. North to do what remains largely unanswered,” Hamilton said after the first of four scheduled days of testimony by North. He suggested that Reagan’s role may be revealed when the committee hears next week from Poindexter.

At the White House, presidential spokesman Marlin Fitzwater continued to insist that Reagan was unaware that North had diverted Iran arms profits to the contras during a two-year period when Congress had banned U.S. government support for the rebels.

“The President said he was unaware of the diversion, and to me, that means he was not aware of the diversion by any source or any means,” he told reporters.

During the first day of his long-awaited testimony, North asserted that Atty. Gen. Edwin Meese III played a central role in covering up one aspect of the Iran-contra affair--U.S. involvement in an Israeli shipment of U.S.-made arms to Iran in November, 1985.

He also matter-of-factly admitted that as Meese was launching an investigation last November of the Iran arms sales, he shredded key documents dealing with the secret contra financing. And he said he falsified an official White House chronology to cover up the U.S. role in an Israeli shipment of arms to Iran in November, 1985.

But North stoutly insisted: “I don’t believe that anything I did at the NSC was a violation of the law.” He also disputed characterizing the channeling of Iran arms sales profits to the contras as a “diversion.”

“Those were ‘residuals,’ and not diverted,” he asserted. “The only thing we did was divert money out of Mr. Ghorbanifar’s pocket and put it to better use.” Manucher Ghorbanifar was the Iranian middleman in the arms sales to Iran.

Retroactive Approval

North also said Reagan, as early as November, 1985, gave retroactive written approval to the two earlier transfers by Israel to Iran of U.S.-made arms.

A presidential signature on that “finding”--which would contradict the White House claim that Reagan did not approve the deals until the following January--would further undermine Administration claims that the arms deals were not an effort to swap arms for hostages in violation of official U.S. policy against making concessions to terrorists.

Unlike the later version, that initial draft made no mention of an effort to build diplomatic bridges to so-called Iranian moderates, which Reagan and other officials have claimed was their principal goal.

North acknowledged that a portrayal of the deals as “nothing more than an arms-for-hostages swap” would have meant “enormous international embarrassment” and “domestic disaster” for the President.

Sen. William S. Cohen (R-Me.) said the committee has additional evidence that will come out later--presumably including Poindexter’s testimony--that the November finding was signed by Reagan and later shredded as part of the coverup.

North, 43, wearing his olive-green summer service Marine uniform emblazoned with medals and ribbons, vowed: “I came here to tell you the truth--the good, the bad and the ugly. I am here to tell it all, pleasant and unpleasant, and am here to accept responsiblity for that which I did.”

But it took a congressional grant of limited immunity--assuring that he cannot be prosecuted on the basis of anything he says before the panel--to force North to tell his story. He had previously claimed his Fifth Amendment right against self-incrimination.

North’s appearance got off to a hostile start when his attorney, Brendan V. Sullivan Jr., protested that he had insufficient time to study the evidence the commitee had collected against his client. Sullivan contended that the documents delivered--a stack taller than the 5-foot-9 North--were unorganized and “cannot possibly be read, studied in a week.”

He also asked that North be allowed to read an opening statement. Senate committee Chairman Daniel K. Inouye (D-Hawaii), noting that rules require that such statements be submitted 48 hours in advance, told North he could deliver his statement on Thursday.

Inouye pointed out that the dates for North’s testimony had been set and the committee evidence delivered according to a schedule set by North and Sullivan. “Once again, (North) is asking us to bend the law and to suggest that he may be above the law,” Inouye said.

Under an unusual arrangement with North and Sullivan, the committee had agreed that a private initial session with North last week would be limited to questioning about Reagan’s role. As a result, the committee went into its public session with little idea of what lines of questioning would prove fruitful.

Disputes Characterizations

North repeatedly disputed the unflattering characterizations of him that have been offered by other witnesses in the hearings and in the news media. He added his own interpretation to some of the wilder stories that have circulated about him.

For example, he dismissed earlier testimony that he had joked with Reagan about the fact that Iran’s Ayatollah Ruhollah Khomeini was underwriting the contra effort. That account had been offered by retired Air Force Maj. Gen. Richard V. Secord, a major partner in both the Iran arms sales and the private network supplying the contras.

North said he had made that comment at the conclusion of a meeting attended by Reagan last summer but that he had aimed the quip as “an aside” to Poindexter. “I do not believe the President could have heard it,” he said. “And I exaggerated that to Gen. Secord.”

Some of the most bitter exchanges came as House counsel John W. Nields Jr. probed North’s memory of the memos that he had prepared--at Poindexter’s request--to keep Reagan abreast of developments in the arms sales and plans to divert profits from those deals to the contras.

Each of the memos ended with blanks in which Reagan or Poindexter was to put check marks or initials that would indicate presidential approval or rejection of North’s plans.

North acknowledged he had shredded all of the memos except one dated April, 1986, but added that he could not recall seeing any indication of whether Reagan had approved the plans.

Nields asked: “Well, that’s the whole reason for shredding documents, isn’t it, Col. North--so that you can later say you don’t remember whether you had them and you don’t remember what’s in them?”

Dislikes Insinuation

North shot back: “I don’t like the insinuation that I’m up here having a convenient memory lapse.” He added: “The reason the government of the United States gave me a shredder--I mean, I didn’t buy it myself--was to destroy documents that were no longer relevant, that did not apply or that should not be divulged.”

A senior White House official said Reagan was unaware of any such memos except the April, 1986, version that was found in North’s safe last November.

“We’ve never seen any others, never heard of any others,” said the official, speaking on the condition of anonymity. “We don’t know what he’s referring to.”

The April, 1986, memo was taken to Reagan by Meese last Nov. 24, and Meese has said it was the first indication that money was being diverted to the contras. The official quoted Meese as asserting: “The President said at the time that he had never seen anything like it.”

The tension was evident at another point in the questioning, when Nields asked North to “take my word” that a certain piece of information was in a stack of documents on the witness table.

“Will you take my word?” North countered.

North said he began destroying documents pertaining to the Iran-contra affair long before Nov. 21--the date of what has been dubbed by previous witnesses as his “shredding party.” He said his shredding only took on “increased intensity” on Nov. 21, after he was informed by Poindexter that Meese was undertaking an investigation of the Iran-contra affair.

His former secretary, Fawn Hall, had previously testified that she and North shredded an 18-inch-high stack of documents that day with such vigor that they jammed the machine.

North said he actually began systematically destroying documents in early October, 1986, when it was first apparent to him that the whole scheme was coming “unraveled” and he began to realize that “my tenure at NSC was coming to a close.”

His first warning, he said, came from the late CIA Director William J. Casey, who was told in early October by a friend, Roy M. Furmark, that two Canadian investors in the Iranian arms sales were threatening to make it public because they had not received their money back.

However, North was not as efficient as he had thought in destroying evidence of his activities. When Poindexter warned him that an internal White House investigation was beginning last November, “I assured Adm. Poindexter--incorrectly, it seems--that all of those documents no longer existed,” North said. “I assured the admiral: ‘Don’t worry. It’s all taken care of.’ ”

Computer Communications

Crucial pieces of evidence were records of computer communications between North and other key players in the scandal. North thought he had erased those messages by pushing the “delete” button on his computer terminal.

“Wow, were we wrong,” North said.

Nields replied sharply: “Are you also saying that if it was gone from the system, that you could pretend it never happened?”

North said he was given the job of helping the Nicaraguan resistance even before October, 1984, when Congress cut off direct U.S. military aid. “It fell to me by default,” he said.

In that role, he said, he either initiated or was directly involved in discussions designed to encourage donations to the contras from high-level officials of at least four countries--identified by sources as China, Taiwan, Korea and one other unnamed country. He said he also provided former National Security Adviser Robert C. McFarlane with the number of the offshore bank account into which Saudi Arabia contributed $24 million for the contras.

But North said he never actually solicited money from these countries.

“I sense that somehow or another we’ve tried to create the impression that Oliver North picked up his hat and wandered around Washington and foreign capitals begging for money,” he said. “I didn’t do that. I didn’t have to do it because others were more willing to put up the money than the Congress.”

Staff writers James Gerstenzang and Josh Getlin contributed to this story.