Bush Was Scheduled to Discuss Aid to Contras : But Aide Told Probers the Possibly Illegal Effort Didn’t Arise in 1986 Meeting With North Agent

Almost seven months before the Iran- contra affair became public, Vice President George Bush met with a retired CIA agent with “resupply of the contras” on the agenda, according to a copy of Bush’s schedule released Tuesday by the congressional investigating committees.

But--although the topic was scheduled for the May 1, 1986, White House meeting--Bush’s foreign policy adviser, Donald P. Gregg, insisted in private testimony before the panels that the possibly illegal resupply effort never came up in the discussion between Bush and former CIA agent Felix Rodriguez.

A declassified transcript of Gregg’s testimony, given last May, was released Tuesday along with testimony of Gregg’s aide, Samuel J. Watson, and secretary, Phyllis M. Byrne.

Throughout his testimony, Gregg sought to lay to rest speculation that the vice president may have been informed of the supply operation being conducted by White House aide Oliver L. North at a time when official U.S. aid was illegal. Much of the conjecture has centered on Gregg’s close relationship and his repeated contacts with Rodriguez, who worked with North on the secret operation.

Speculation had grown during Rodriguez’s testimony, when investigators produced Gregg’s own handwritten notes of a subsequent August, 1986, meeting with Rodriguez mentioning that “a swap of weapons for $ was arranged to get aid for contras.”

Gregg told the committees that this did not refer to the diversion of Iran arms sale profits to the contras, but instead described how “the proceeds which were coming from the public donations” to the contras were being used to purchase weapons.

Rodriguez had also testified that he could not have referred to the Iran diversion because he did not learn of it until it became public the following November. North was fired shortly after the diversion was discovered.

Gregg, whose relationship with the Cuban-born Rodriguez dated back to 1970 and their CIA work together during the Vietnam War, said he arranged for Rodriguez to meet in May, 1986, with Bush and vice presidential staff members because “Felix had said he was in town and his morale was low. He had some pictures to show the vice president of his operations” in El Salvador, where he was working with the government on an anti-insurgency program.

Gregg said he did not review the routine typed schedule that was prepared for the meeting, and did not realize that it mentioned the contra resupply operation until he saw it last December, after the scandal had broken.

“There was no intention to discuss contra resupply, nor was contra resupply discussed in the 1 May meeting,” Gregg said.

Gregg’s version was supported by the testimony of aide Watson, who insisted that there was no discussion of Nicaragua at the meeting--”none whatsoever.”

However, it is still unclear how the phrase had come to be listed on the agenda. Watson said he could not explain the testimony of Byrne, Gregg’s secretary, who said she typed it that way upon Watson’s specific instructions.

“I can’t say she’s wrong; I can’t say she’s right,” Watson said in his deposition.

Mark A. Belnick, one of the Iran-contra committee attorneys who questioned Gregg and Watson, expressed disbelief in the transcript that neither Watson nor Gregg could recall telling Byrne to put “resupply of the contras” on the agenda.

“Because if you didn’t provide it and if Mr. Gregg didn’t provide it, and if she didn’t come up with it on her own, and if Felix Rodriguez didn’t provide it, then this was ghostwritten--literally--because there’s nobody who provided it,” Belnick said.

Several months later, in August, Rodriguez met with Gregg to complain of corruption in what Gregg said he believed was an “informal supply network” that had been developed to tide the contras over during the two-year period when official U.S. aid to the rebels was banned. It was at this session that Gregg made the notes about the swap of money for weapons.

Although Rodriguez had told Gregg that the network was supplying weapons to the rebels, and that North was involved in the network, Gregg testified: “I had no sense then, nor do I now, that anything I had heard was, ipso facto, against the law (banning official U.S. aid to the rebels). . . . As long as the funds were private, the flag of illegality did not arise in my mind at all.”

Nonetheless, Gregg said he was concerned about the character of some of the private businessmen who were involved in the network, and of possible profiteering at the expense of the contras. He met several days later with officials of various agencies to express his concerns and was later told by Rodriguez that the discussion appeared to have lessened the problems.

However, Gregg repeatedly told the committees that he did not inform the vice president of his discussion with Rodriguez, because, “I felt that it was very murky business. . . . I wasn’t at all certain what this amounted to.”

Gregg testified that he did not know of the full extent of North’s role in the resupply effort, and of the fact that North had recruited Rodriguez, until after the scandal broke.

In mid-December, he said, Rodriguez called him and “became very emotionally upset and said: ‘I truly hope that I have not caused problems for you and the vice president.’ And the unsaid thing, I think, was not telling us before that he had been involved by Oliver North more directly in the contra support effort.”

Documents released by the committee indicated that Bush himself was a great admirer of North. In a handwritten note to North dated shortly before Thanksgiving, 1985, Bush praised the Marine lieutenant colonel’s “dedication and tireless work with the hostage thing and with Central America.”

“One of the many things I have to be thankful for is the way in which you have performed, under fire, in tough situations,” Bush wrote.