North: Casey Sought Funds for Super-CIA

Lt. Col. Oliver North testified Friday that the late CIA director, William J. Casey, embraced the fund created by arms sales to Iran because he could use it for secret operations other than supplying the Nicaraguan contras with weapons.

But in his fourth day of testimony before the congressional Iran-contra committees, North denied that using the fund meant “a CIA outside of the CIA” was being created, as a committee lawyer suggested.

Sen. William S. Cohen (R-Me.), a member of the panel, said the testimony about the fund was “perhaps one of the most serious revelations” of the hearings because it showed a plan to circumvent Congress for secret operations.

Senate committee Chairman Daniel K. Inouye (D-Hawaii) saw the plan as “the creation and maintenance of a secret government within our government.”

Obtained a Ship

North said that once, by using the funds, he was able to obtain a ship overnight after Casey had said, “We can’t find one anywhere else: Get a ship.”

After that success, North said, he received a note from Adm. John M. Poindexter, his boss at the National Security Council, objecting that North’s operational role was becoming too public and ordering him not to talk to anyone else, including Casey, about it.

At one point, North said, Poindexter said to him in regard to the diversion of Iranian arms sales profits to the contra rebels, “This had better never come out.”

“I took steps to ensure that it didn’t and they failed,” North said.

Long Day of Testimony

The committees had planned to complete North’s questioning last week, but announced that he would return for more on Monday after finishing another long day of testimony Friday.

He will be followed on Tuesday, and the rest of this week, by Poindexter, whom Sen. Warren B. Rudman (R-N.H.) called “the single most important witness” of the hearings.

Committee members finally got their first chance to question North Friday afternoon after 3 1/2 days of lawyers’ questions.

North told Rep. Dick Cheney (R-Wyo.), the ranking House Republican, that the Hostage Act dating back to the 1800s says, in effect, “Here is the authority to do whatever is necessary to recover the hostages,” and Congress may be notified after the fact.

Strong Actions Defended

“We ought to think very carefully about proscribing presidential authority to do those kind of things . . . to bind him in such a way that he cannot act,” North said.

He said the United States has not seen the last of hostage-taking, no matter what happens to the men still held in Lebanon. However, North said, strong actions, like those the United States took after the Achille Lauro hijacking, will lead terrorists “to come to the conclusion that it’s not wise to mess with Americans.”

North, who has apparently been winning wide national favor with his impassioned comments, wound up his week by declaring, “The cause of the Nicaraguan resistance is our own.

“Hang whatever you want around the neck of Ollie North,” he said. “But for the love of God and for the love of this nation, don’t hang around Ollie North’s neck the cutoff of (money to the) Nicaraguan resistance again.”

Supportive Telegrams

Before Friday’s session, North placed two big stacks of what he said were supportive telegrams on the witness table in view of the committees and the television cameras.

On a somber note, security at the hearings was increased after a death threat against North was received, a committee aide said, who spoke on condition of anonymity. No details about the threat were revealed.

For the first time since the hearings began, members of the House and Senate committees squabbled publicly with each other, arguing over the questioning of North by Senate committee counsel Arthur Liman.

There were complaints of unfairness from House Republicans, including Florida Rep. Bill McCollum, who said Liman was “acting like a prosecutor . . . instead of a fact-finder.”

‘Within Proper Bounds’

Senators of both parties disagreed, and Sen. Paul S. Sarbanes (D-Md.) retorted that he thought Liman’s questioning was “clearly within proper bounds,” citing McCollum’s previous words as supporting the need for close interrogation.

McCollum, he said, had declared in regard to earlier testimony about secret activities by North and others, “I think that that in itself may well be a crime. If it is not a crime it is certainly one of the highest acts of insubordination.”

North, during his testimony, repeated his earlier statement that he lied to Congress about his activities with the contras to save lives, but Liman asked him if the real reason was because Congress did not want to support the contras.

“If Congress decided nobody in the United States should render support whatsoever to the Nicaraguan democratic resistance, then it should have passed a law saying that,” North replied. The law passed by Congress forbade military support and covert aid by intelligence agencies.

Tone Less Tense

Despite the seriousness of some of the topics, the tone during much of Friday’s proceeding seemed less tense than on previous days.

Once, North asked Liman with a smile if the attorney was criticizing him for not shredding well enough.

“My eyesight has suffered from reading what you left behind,” Liman answered, provoking laughter in the Senate Caucus Room.

As the hearings continued on Capitol Hill:

- In a legal setback for North at the nearby U.S. Courthouse, Chief U.S. District Judge Aubrey E. Robinson Jr. upheld the Justice Department’s March 5 backup appointment of independent counsel Lawrence E. Walsh, whose authority to investigate the Iran-contra affair has been challenged by North on several fronts.

- At the White House, presidential spokesman Marlin Fitzwater said North’s testimony has provided President Reagan with a wealth of new information about events that occurred in his White House. “We don’t know the facts of what happened. We don’t know about meetings. We don’t know about conversations,” he said.

Fitzwater also corrected initial White House statements last week that said Reagan had not taken any time out during his workday to watch North’s testimony. He said Friday that Reagan watched the live broadcast of the hearings Wednesday for half an hour before a speech-making trip to New Britain, Conn., and also watched for half an hour Thursday afternoon, in addition to keeping up with news reports.

At the hearing, Liman questioned North about the Poindexter memo on not sharing information with Casey.

‘Ultimate Covert Operation’

“Would you agree this here is the ultimate covert operation--even one you should not talk to the director of central intelligence about?” Liman asked.

“The problem that generated this note was that Director Casey had told someone on his staff that they could go to me for the ship,” North responded. “I was out of town or out of the office.”

The call was placed to the office of Ken deGraffenreid, then senior director of intelligence programs for the National Security Council, a man whom North identified as the normal contact with the CIA.

“That’s what generated this note,” North said. “It was not my indiscretion in that case, it was Director Casey’s, unfortunately.”

Wanted to Protect Sources

To that Liman responded: “So this business of covert operations reached a point where not only Congress was regarded as too indiscreet to be told, but that even the director of central intelligence made that list.” He referred back to North’s earlier testimony that he lied to Congress and withheld information because he wanted to protect secret sources.

North said Casey, who died of brain cancer May 6, “was interested in the ability to have an off-the-shelf, self-sustaining entity to do certain activities on behalf of the Unites States.”

Asked whether he was not shocked by the proposal, North said there was not necessarily a violation of laws if Casey used the organization for covert activities. “Maybe I’m overly naive,” he said, “but what would be wrong with that?”

On another topic, North testified that Reagan pressed his aides to seek the release of American hostages in Lebanon “as early as possible,” but never suggested a target date linked to the 1986 elections--as North had told one of his Iran-contra operatives--or any other key domestic event such as his State of the Union address.