Iran Probers Find Reagan Could Have Avoided It All

Shortly after he was elected President in 1980, Ronald Reagan made a little-noticed pledge to sharply curtail the growing power of the White House national security adviser. It was a promise he should have kept.

After an extraordinary three-month public inquiry ending Monday that exposed the inner workings of the Reagan White House, Congress’ Iran- contra investigating committees have concluded that Reagan could have avoided the worst scandal of his presidency if he had simply kept tighter rein on his national security adviser, John M. Poindexter, and on Poindexter’s aide, Lt. Col. Oliver L. North.

Poindexter and North went so far beyond the President’s control that they operated what Sen. Paul S. Sarbanes (D-Md.) called “a junta within the government.”

“A coup in effect had occurred in the White House,” Sarbanes said.

Many aspects of the Iran-contra affair were already common knowledge when the congressional committees convened their public hearings last May 5. The presidentially appointed commission headed by former Sen. John Tower (R-Tex.) and a profusion of news reports had laid much of the scandal bare.

What was not clear was the enormous scope of the secret activities undertaken by North and Poindexter, both of whom kept silent until they received limited immunity from prosecution last month.

If the affair had not been exposed last November, it now seems clear that North--with the encouragement of Poindexter and the late CIA Director William J. Casey--would have established a completely independent quasi-government unit funded by private money to carry out covert activities around the world that did not have the support of Congress. North envisioned it as an “off-the-shelf, self-sustaining, stand-alone entity” known as Project Democracy.

Nevertheless, although there is no proof that Reagan approved the diversion of profits from the Iran arms sale to the Nicaraguan resistance, the committees also found little evidence to support the Tower Commission’s conclusion that Reagan was too detached from the day-to-day responsibilities of his office.

On the contrary, witnesses portrayed him as a decisive, take-charge leader who should have known what was going on in Poindexter’s office, which was just a few steps down the hall from his own.

In fact, Robert C. McFarlane, Poindexter’s immediate predecessor, revealed that Reagan personally solicited money for the Nicaraguan resistance from King Fahd of Saudi Arabia, approved a plan to ransom American hostages with $2 million from Texas tycoon H. Ross Perot and intervened with Honduran President Roberto Suazo Cordova to free a seized boatload of arms intended for the contras.

Partly Successful

Before the hearings, it was well-known that Reagan sold weapons to Iran in a partly successful effort to win release of American hostages in Lebanon and that the profits were secretly diverted to the contras.

But it was not until the committees publicly questioned 29 witnesses and released more than 1,000 documents, including computer messages and handwritten notes authored by the participants, that Americans also learned these facts:

--Of the $18 million in profits from the sale of arms to Iran, only about $3.5 million was ever spent to assist the contras and only $200,000 of it went directly to the contra leadership. About $8 million of the money is still sitting in Swiss bank accounts.

--Despite a law prohibiting direct U.S. military assistance to the Nicaraguan rebels, North personally acted as the contras’ chief strategist and ran the contra-supply operation out of his White House office--even dispensing about $150,000 in traveler’s checks from his safe.

--Some CIA officials clearly violated the congressional ban on agency involvement with the contras during 1985 and 1986. With the knowledge of higher-ups in agency headquarters, CIA operatives in Central America assisted in the contra-supply network.

--With the exception of Casey, none of the President’s Cabinet officers were deeply involved in either the sale of weapons to Iran or the contra supply operation--perhaps the two most sensitive foreign policy initiatives of his Administration. In fact, both Secretary of State George P. Shultz and Defense Secretary Caspar W. Weinberger strongly opposed the sale of arms to Iran.

--Private businessmen, many of them with a clear financial stake in the outcome and none with government security clearances, were empowered by North to negotiate with high-level Iranian officials on policy matters normally within the domain of the secretary of state.

--Large profits were enjoyed by everyone recruited by North to help in his activities. Even North, who as a government employee was prohibited from accepting anything of value, received a $16,000 home security system that was paid for from the proceeds of the Iran-contra affair.

--Top officials conspired to conceal many aspects of the Iran-contra affair. Thousands of White House papers were shredded, including at least one key document signed by the President. Erroneous chronologies were drafted and false testimony was given to Congress.

It was shortly after Congress banned direct military assistance to the contras in late 1984 that the Iran-contra scandal had its beginnings. Seeking to provide an alternative source of weapons for the rebels, North called on retired Air Force Maj. Gen. Richard V. Secord to establish a private network funded by private donations and foreign contributions.

With the help of his Iranian-American business partner, Albert A. Hakim, Secord eventually established an elaborate “enterprise,” as he called it, with assets valued at $4 million that included five airplanes, a Costa Rican airstrip and a Danish ship. It was this operation that North hoped to expand into an all-purpose unit for covert activities.

Secord’s operation relied heavily on former associates of Edwin P. Wilson, the ex-CIA agent who was convicted in 1984 of illegally shipping munitions to Libya. Money raised for the contras was deposited in a complex web of secret Swiss bank accounts controlled entirely by Hakim.

Business Ventures

Although Secord insisted that he took no profit from the operation except a $6,000-a-month salary, the committees found evidence that he and Hakim tapped the fund to invest in other business ventures. In addition, investigators said that Secord bought a sports car and a private airplane and paid for a visit to a luxury health spa with more than $80,000 from the enterprise.

Secord took his orders directly from North, who acted as “quartermaster” for the contras--arranging every shipment of weapons, plotting their strategy and supplying them with U.S. intelligence information, even though the law forbade it. North regularly communicated with his associates in Central America with top-secret KL-43 encryption devices, identifying himself by such code names as “Steelhammer” and “Mr. Goode.”

At North’s direction, then-U.S. Ambassador to Costa Rica Lewis A. Tambs assisted the contras in opening a “southern front.” The CIA station chief in Costa Rica, Joe Fernandez, coordinated the airlift--with the apparent blessing of his superiors in the United States.

‘One-Two Punch’

Potential private donors to the contras were subjected to what Sen. Warren B. Rudman (R-N.H.) called the “one-two punch”--a lecture from North about the dire needs of the resistance followed by a hard-edged pitch for money by conservative fund-raiser Carl R. (Spitz) Channell. Their clever technique yielded several million dollars.

Even more lucrative were direct appeals to leaders of third countries by top government officials, all done with the explicit approval of the President. Saudi Arabia kicked in $32 million and Taiwan gave $2 million. The Sultan of Brunei volunteered $10 million, but the money was never received because he was mistakenly given the wrong bank account number.

All these efforts were concealed from Congress, which had been assured by McFarlane, North and Poindexter that the Administration was doing nothing to violate the restriction on U.S. assistance to the contras. When North intentionally misled a congressional committee about his activities, Poindexter told him: “Well done.”

Just when the contras’ third-country funding was running dry, an entirely new source of funds opened up in late 1985 with the beginning of the Iranian initiative.

Secord’s enterprise got involved in the Iran arm sales almost from the outset, assisting in an Israeli shipment of U.S.-made weapons to Tehran in November, 1985. In exchange, about $800,000 in excess payments made by Israel to Secord for transport of the November shipment was turned over to the account that was used to support the contras--the very first diversion of funds.

But the diversion scheme did not become an integral part of the Iran initiative until early 1986 after it was proposed by Manucher Ghorbanifar, the Iranian businessman with whom U.S. officials were dealing. North instantly thought it was “a neat idea.”

Poindexter told the committees that he approved the diversion when it was proposed to him by North but that he never sought the approval of the President because he assumed it was consistent with Reagan policy. Not until last November, when Justice Department officials found a memo on the diversion written by North the previous April, did the matter become public.

Because of Poindexter’s reputation as a meticulous, by-the-book administrator, his willingness to usurp the rightful role of the President seemed completely out of character. But committee investigators speculate that the pipe-smoking rear admiral may have been strongly influenced by North, a gung-ho Marine with a flair for the dramatic and a remarkable ability to manipulate others.

Taken together, the evidence uncovered by the committees appears to undercut the Administration’s contention that the arms sales represented a small part of a broad strategic plan to build relationships with so-called moderate factions in Iran.

Brushes Aside Warning

Shultz said the sales were “simply and purely an effort to trade arms for hostages,” a direct violation of Reagan’s oft-repeated pledge never to bargain with terrorists. He recalled the President once brushing aside a warning that the sales might be illegal by saying: “The American people will never forgive me if I fail to get these hostages out over this legal question.”

The hostages became almost an obsession with the President. Handwritten notes of Atty. Gen. Edwin Meese III’s interview with North last Nov. 23 indicated that North told Meese: “With RR it always came back to hostages. . . . Terrible mistake to say RR wanted the strategic relationship because RR wanted the hostages.”

According to McFarlane, the President informally approved two shipments of U.S.-made weapons to Iran from Israel in 1985. But it was not until Dec. 5, 1985, that he signed a document that retroactively sanctioned CIA assistance in the previous month’s Israeli shipment.

That document was never found, apparently because Poindexter destroyed it last November after the Iran arms sales first became public knowledge. Poindexter said he tore it up because it portrayed the Iran arms sales simply as an arms-for-hostages swap.

“I thought it was a significant political embarrassment to the President,” he said.

Israeli shipments of U.S.-made weapons to Iran in August and November of 1985 had failed to produce satisfactory results--only one hostage, the Rev. Benjamin Weir, was released. Nevertheless, Reagan agreed in January, 1986, to begin direct U.S. arms shipments to Iran.

Poindexter and Casey strongly advocated that course. They bolstered their case, according to Weinberger, by feeding the President faulty intelligence that contradicted all other U.S. assessments of the situation in Iran.

Shultz and Weinberger, who opposed the arms sales, later received only sporadic information about them, and neither was informed when McFarlane and North flew to Tehran with a planeload of weapons in May, 1986. Obsessed by a need for secrecy, Poindexter wanted to share the information with as few people as possible.

The United States sent three shipments to Iran last year before the operation was exposed last November: a February delivery of 1,000 TOW anti-tank missiles, followed by spare parts for Hawk anti-aircraft missiles in May and finally another 500 TOWs in October. The average markup on each sale was calculated by committee members as 130%.

However, U.S. hopes for a release of all American hostages held in Lebanon repeatedly were dashed. Only Father Lawrence M. Jenco and David P. Jacobsen were freed in 1986. Two hostages remained in Lebanon from earlier kidnapings, as did three who were taken even as the Iran arms deals were proceeding.

Sole U.S. Negotiator

Because the State Department played no part in the arms sales, the task of negotiating with the Iranians fell to private citizens who worked for North. Hakim found himself the sole U.S. negotiator in talks last October that produced a nine-point agreement with Iranian representatives.

In that agreement, dubbed the “Hakim accords” by astonished committee members, Hakim and Secord made promises contrary to U.S. policy--including a pledge to work for the release of 17 Shia Muslims convicted in Kuwait of terrorist acts against Americans. Reagan previously had vowed that he would never seek the release of these men.

Hakim was unabashed about serving--in the words of Senate committee counsel Arthur L. Liman--as “secretary of state for a day.” He told the committees: “What bothered me was that we didn’t have the competence within the government to do what I could do.”

After the Iran arms sales became public early last November, the fiercely secretive Poindexter argued that the President should divulge as little information as possible. Reagan was persuaded to follow Poindexter’s advice after Jacobsen, newly released from Lebanon, visited the White House on Nov. 7 and told reporters that their stories about the arms sales would jeopardize the lives of the Americans still being held.

Administration officials were particularly sensitive about revealing their support for the 1985 Israeli shipments, apparently because the U.S. role was not formally authorized in advance by Reagan. With the help of McFarlane, North prepared several versions of a false chronology that was intended to conceal their 1985 activities.

At a Nov. 20 White House meeting, North, Casey, Poindexter and Meese agreed that the CIA director would tell members of Congress on the following day that U.S. officials had been under the impression in November, 1985, that the Israelis were shipping oil-drilling equipment to Iran. North, Casey and Poindexter knew this story to be untrue; Meese said he was unaware that it was false.

It was not until Shultz challenged the account of the 1985 shipments that the President asked Meese on Nov. 21 to conduct an informal inquiry into what had actually occurred. The news of Meese’s inquiry caused a flurry of document destruction by North and Poindexter.

One document that escaped the shredder--but did not elude the Justice Department investigators--described the diversion. Its discovery on Nov. 22 set in motion a series of events that led to the resignation of Poindexter, the dismissal of North and the Nov. 25 press conference in which Meese announced that money was diverted from the Iran arms sales to the contras.