Casey Reportedly Admitted Knowing of Fund Diversion

Former CIA Director William J. Casey, on his sickbed, acknowledged to Washington Post investigative reporter Bob Woodward that he had known all along about the diversion to the Nicaraguan contras of money from the arms sales to Iran, it was reported Friday.

Woodward, author of “Veil: The Secret Wars of the CIA,” which will be published soon, writes in a conclusion that he visited Casey at Georgetown University Hospital earlier this year and asked him about the scandal that has enveloped the Reagan Administration.

‘I Believed’

Woodward writes that, almost rhetorically, he asked Casey whether he had known about the diversion scheme from the start. Casey nodded yes. Woodward then asked why, and Casey replied: “I believed.” Woodward asked: “What?” Casey repeated: “I believed,” then fell asleep.

Galley proofs of Woodward’s book, to be published Oct. 9, were obtained by U.S. News & World Report, which released a story Friday about part of its contents. The Washington Post is planning to run excerpts from the book.

The work focuses on the CIA, especially under the stewardship of Casey, and its worldwide secret operations.

“Veil,” Woodward writes, is the spy agency’s word for a covert operation.

Among its disclosures: The CIA had information that Egyptian President Anwar Sadat abused drugs and had anxiety attacks, Saudi Crown Prince Fahd drank heavily and Libyan leader Moammar Kadafi likes to dress in women’s clothes.

Casey, President Reagan’s campaign manager in 1980, became CIA chief in 1981 and ran the agency until Feb. 2, when he resigned. Casey underwent brain cancer surgery on Dec. 18 and died on May 6.

Specific descriptions of Casey’s role in the Iran-contra scandal have come only from other key figures--most notably from Lt. Col. Oliver L. North and Atty. Gen. Edwin Meese III during the congressional hearings this summer. Casey himself told Congress in early December that the CIA had had nothing to do with the operations.

Used Swiss Accounts

But North said an “enthusiastic” Casey had known from January, 1986, about the scheme to funnel millions of dollars in profits from U.S. arms sales to Iran through Swiss accounts to the contras.

Meese, however, said that, in a conversation on Nov. 25--the day the attorney general disclosed the diversion--Casey expressed surprise at the news of the scheme and insisted that he had never heard about it before.