Final Iran-Contra Report Refuses to Exonerate Reagan

Congress’ Iran-Contra committees, in their final report to be released today, refuse to exonerate President Reagan of complicity in the diversion of profits from the Iran arms sales to the Nicaraguan rebels, according to committee members.

The committees’ 500-page majority report, signed by 15 Democrats and three Republicans, will argue that the President should have known about the diversion of $3.8 million to the Contras and will leave open the question of whether he actually did know.

The President has repeatedly asserted that he did not know about the diversion, and John M. Poindexter, his former national security adviser, told the committees last July that he authorized then-White House aide Lt. Col. Oliver L. North to divert money to the Contras from the Iran arms sale without ever telling the President.

Seen as Central Issue

The issue of whether Reagan knew about the diversion has long been considered the central issue of the Iran-Contra scandal, and Poindexter’s testimony was widely viewed at the time it was given as the final word on the subject.

Committee members said Tuesday that the report will assert that the profits from U.S. arms sales to Iran belonged to the U.S. Treasury and that there was no legal basis for diverting any of them to Nicaragua’s rebels. The Treasury is also entitled to the approximately $11 million in arms sale profits still sitting in Swiss bank accounts controlled by Iranian-American businessman Albert A. Hakim, according to the report.

In addition, committee members said, the majority report will conclude:

--That former CIA Director William J. Casey clearly intended to create an “off-the-shelf, privately funded covert operations” unit outside the CIA.

--That Reagan violated the Constitution by encouraging third-country donations to the Contras.

--That Administration officials carried out a “systematic cover-up” of the Iran-Contra affair in late 1986, as the first details became public.

These key points came to light Tuesday when part of the committees’ minority report, signed by eight Republican members, was publicly released. The information was later confirmed by other sources within the committee majority.

Partisanship Charged

Minority members strongly objected to the report by the committees’ 18-member majority on grounds that it draws highly partisan conclusions that go beyond the evidence.

“That report is a raw political document,” said Rep. Henry J. Hyde (R-Ill.), a member of the minority. “What boggles my mind is how three Republicans could have signed it.”

The three Republicans are Sens. Warren B. Rudman of New Hampshire, Paul S. Trible Jr. of Virginia and William S. Cohen of Maine.

The dissenters particularly criticized the majority’s unwillingness to clear Reagan of any involvement in the diversion. In support of Reagan’s claim, they pointed not only to Poindexter’s testimony but also to the President’s own diaries and the testimony of North, Atty. Gen. Edwin Meese III and former White House Chief of Staff Donald T. Regan.

“The conclusion that the President did not know about the diversion . . . is one of the strongest of all the inferences one can make from the evidence before these committees,” the minority asserted.

Despite Poindexter’s testimony, the minority said, “the majority cannot even bring itself to admit there is no direct evidence that the President knew and studiously avoids reaching a conclusion, apparently out of a political compulsion to question the truthfulness both of the President and of his top Cabinet and staff officials.”

According to the minority, the majority report “does grudgingly acknowledge that it cannot refute the President’s repeated assertion that he knew nothing about the diversion,” but it also tries to “plant doubts” about the truth of this conclusion.

In defending the majority’s refusal to conclude that Reagan did not know about the diversion, a reliable majority source who declined to be identified argued that the committees, like any investigative body, were “unable to prove a negative.”

“Given the evidence, how could anybody possibly conclude he knew or how could anybody possibly conclude he didn’t know?” the source said. “Our committees had a lot of good lawyers, but no mind readers.”

Covert Operations Unit

As for Casey’s much-debated role in the Iran-Contra affair, members said that the majority will accept as fact the testimony of North that he and Casey discussed plans to create a privately funded covert operations unit to carry out Reagan Administration policy without congressional oversight. The report reportedly concludes that Casey, who died earlier this year, would have halted the development of the operation if he had opposed it.

According to the minority, this conclusion overlooks contrary testimony by two of Casey’s top lieutenants at the CIA, former Deputy Director John M. McMahon and Deputy Director for Operations Clair George. “He would never have approved it,” George told the committees.

The dissenters questioned how the majority could accept North’s testimony on this issue while rejecting it on other, unspecified matters. “It is interesting how much the majority is willing to make of one uncorroborated, disputed North statement that happens to suit its political purpose,” the minority report said.

‘Systematic Cover-up’

The majority report also will charge that a number of top Reagan Administration officials participated in “a systematic cover-up” during the investigation conducted by Meese after the Iran arms sales became public a year ago, members said. It will criticize Meese for failing to convert his inquiry into a criminal investigation as soon as he found a memo detailing the diversion of funds to the Contras.

“The report strongly tries to suggest that Meese either must have been incompetent or must have been trying to give Poindexter and North more time to cover their tracks,” the minority stated. “We consider the first of these charges to be untrue and the second to be outrageous.”

The minority objected to the allegations of cover-up so strenuously that the section of its report dealing with this issue was entitled “uncovering” instead of cover-up.

$11 Million Unspent

The issue of who rightfully controls the money generated by the sale of U.S. weapons to Iran is of major importance, not only because $11 million is yet unspent but also because it could determine whether Administration officials violated the law. The money was diverted to the Contras at a time when the law specifically prohibited direct U.S. military aid.

“If the funds do not belong to the United States, then the diversion amounted to third-country or private funds being shipped to the Contras,” the minority noted. “If they did belong to the United States, there would be legal questions about using U.S.-owned funds for purposes not specifically approved by law.”

The minority concludes that there is still some “legal doubt” about who owns it. “The answer does not seem to us to be so obvious . . . as to warrant treating the matter as if it were criminal,” it said.

Besides Hyde, those who signed the report are Sens. Orrin G. Hatch of Utah and James A. McClure of Idaho and Reps. Dick Cheney of Wyoming, Jim Courter of New Jersey, William S. Broomfield of Michigan, Michael DeWine of Ohio and Bill McCollum of Florida.

The minority report was released publicly after being leaked to the New York Times on Monday. One section that was not leaked is entitled: “The Need to Patch Leaks.”