Report Puts Ultimate Iran Blame on Reagan : Probers Say He Failed His Oath of Office

President Reagan failed to carry out his constitutional oath of office to “take care that the laws be faithfully executed” and bears ultimate responsibility for the Iran-Contra scandal, the House and Senate committees that investigated the affair declared Wednesday in their final report.

The sharply worded report, signed by three Republican senators as well as all Democrats on the special committees, charged that Reagan repeatedly misled Congress and the public about secret activities, failed to supervise his subordinates properly and created an environment in which a small band of Administration zealots believed that lying to Congress and defying established rules and procedures were justified in pursuit of the President’s goals.

“The common ingredients of the Iran and Contra policies were secrecy, deception and disdain for the law,” declared the long-awaited report, which capped a 10-month investigation by the two special committees.

“What may aptly be called ‘the cabal of the zealots’ was in charge,” the report said.

“A small group of senior officials believed that they alone knew what was right. They viewed knowledge of their actions by others in the government as a threat to their objectives,” said the report, which was based on three months of nationally televised hearings and about 500 interviews with government officials and other participants in the scandal.

An Array of Officials

In denouncing those who disregarded “the rule of law,” the committees referred to an array of Administration officials, including Lt. Col. Oliver L. North, the central figure in the scandal; former National Security Adviser John M. Poindexter, who authorized North’s activities but said that he kept many of them secret from the President; former National Security Adviser Robert C. McFarlane, whose testimony is riddled with inconsistencies, and the late CIA Director William J. Casey, who the committee believed directed North’s activities.

One of the most revealing moments of the hearings came when North’s secretary, Fawn Hall, offered this defense of activities that included destroying and removing evidence: “Sometimes you just have to go above the written law.”

These officials, the committees said, told neither the secretary of state, Congress nor the American people of their actions and when exposure was threatened, “they destroyed official documents and lied to Cabinet officials, to the public and to elected representatives.”

In this atmosphere, the committees continued, former officials of the National Security Council staff and their private agents “could lecture the committees that a ‘rightful cause’ justifies any means, that lying to Congress and other officials in the executive branch itself is acceptable when the ends are just and that Congress is to blame for passing laws that run counter to Administration policy.”

A minority report, signed by all six Republican House members and two GOP senators on the committees, challenged the thrust of the majority report and accepted Reagan’s explanation that the Iran-Contra affair involved only “mistakes” that amounted to little more than errors of judgment.

“There was no constitutional crisis, no systematic disrespect for ‘the rule of law,’ no grand conspiracy,” the minority report said.

On one of the most crucial questions raised by the scandal, the committees’ majority report did not accept or reject Reagan’s contention that he had not known about the diversion of funds from the Iranian arms sales to the Nicaraguan rebels. The evidence on this issue was inconclusive, the majority concluded, although it said there was no evidence to disprove the President’s assertion.

Nonetheless, “the President created or at least tolerated an environment where those who did know of the diversion believed with certainty that they were carrying out the President’s policies,” the majority said.

Among other points and conclusions contained in the majority report:

--Atty. Gen. Edwin Meese III “poorly served” the President in his legal advice on the Iran initiative and then seriously “departed from standard investigative techniques” in a later probe, casting doubt on his credibility.

--Meese, despite his denials that he ever authorized using private money to ransom hostages, did in fact approve North’s use of Contra funds in one case: the failed scheme in which special agents of the Drug Enforcement Administration tried to make contact with the captors.

--Although there was contradictory testimony on the matter, the committees concluded that “at least $3.8 million of the $16.1 million in arms sales profits were used for Contra assistance.”

“The diversion did occur,” the report states. “Money generated by arms sales authorized by a presidential finding for only one covert purpose--the Iran initiative--was used for a wholly different covert purpose--Contra support. Arms-for-hostages also became arms-for-Contras, a purpose that was not authorized by any finding and that was proscribed by the Boland Amendment for appropriated funds.”

--The late CIA Director Casey “and other government officials showed contempt for the democratic process by withholding information that Congress was seeking and by misrepresenting intelligence to support policies advocated by Casey.”

A variety of facts “provide strong evidence that Casey was involved both with the diversion and with the plans for an ‘off-the-shelf’ covert capacity” that could be run outside of normal government channels.

--In approving the sale of arms to Iran, Reagan, the victim of a monumental deception, unwittingly entered into negotiations with the Ayatollah Ruhollah Khomeini’s agents, rather than a dissident faction in Iran as portrayed by his advisers.

--The “enterprise”--the term used to describe the government-directed, privately operated covert operation linking the Iran arms sales and the Contra supply operation--was designed specifically to subvert the U.S. Constitution, according to the report. The Constitution states that all government functions must be funded by Congress.

Changes Proposed

In addition to its conclusions, the report set out a series of recommendations focusing on ways to improve congressional oversight of covert operations. The proposed changes in law are much more modest than those that resulted from the Watergate scandal, reflecting the committees’ view that the Iran-Contra scandal “resulted from the failure of individuals to observe the law, not from deficiencies in existing law or in our system of governance.”

Despite minority objections, the majority concluded that the profits from the sale of weapons to Iran belong to the U.S. Treasury. That conclusion could have far-reaching legal ramifications, not only because about $11 million of the money is still sitting in Swiss bank accounts controlled by Iranian-American businessman Albert A. Hakim, but also because those involved could be open to charges of misappropriating U.S. government funds.

The committees’ work is but one aspect of the governmental investigation into the affair. Independent counsel Lawrence E. Walsh is expected to obtain grand jury indictments sometime after Jan. 1. But the report could prove to be a road map of the laws that were broken, including tax statutes and restrictions on foreign arms sales. The panels, however, avoided drawing any conclusions about who may have taken illegal actions.

Blame Put on Reagan

Unlike the presidential commission headed by former Sen. John Tower (R-Tex.), which earlier this year concentrated most of its fire on Reagan’s top aides and criticized the President primarily for his management style, the congressional committees put the blame squarely on Reagan for the scandal that rocked his Administration and evolved into the most severe crisis of his presidency.

The Tower Commission, appointed by Reagan shortly after the Iran-Contra scandal first surfaced in early November, 1986, sharply rebuked the President’s top aides--particularly his national security advisers and Donald T. Regan, his chief of staff--for failing to compensate for the President’s hands-off management style.

Reagan reacted quickly to that report, replacing Regan with former Sen. Howard H. Baker Jr. (R-Tenn.) and later declaring in a televised address to the nation that he was “angry” and “disappointed” with subordinates’ actions in the affair and that in the future laws mandating continuing consultation with Congress on covert actions would be followed “not only in letter but in spirit.”

President Shielded

But on Wednesday the White House took a sharply different approach to the committees’ report. Aides shielded the President from reporters’ questions at two different photo opportunities and White House spokesman Marlin Fitzwater dismissed the report as nothing new except “the subjective views of individual members.”

“The President did not violate any laws,” Fitzwater said. “Even the majority report does not so state. We are moving on. And we trust that out of this experience has come a new wisdom about the process of governing in America.”

Even though indictments and criminal trials could continue well into the 1988 presidential election year, Reagan supporters contend that with the release of the committees’ report the worst of the Iran-Contra affair probably is behind the President and he should now be able to concentrate on other matters.

Patrick J. Buchanan, Reagan’s former communications director, said he thinks the President “is up and away” from the scandal. “But one or two strings are lingering on,” he said, “the possibility if not probability of going through an enactment of this episode next summer because of potential indictments, and the question of whether they’re going to call the President to testify at trials. But it’s no longer a burning issue.”

Senate Minority Whip Alan K. Simpson (R-Wyo.), commended the committees for “a helluva job” and said that “mistakes were made and the President was not well-advised and hopefully we’ve learned some lessons, but it’s time to turn our attention to many other pressing issues.”

The congressional committees declared that while Reagan’s national security advisers and other top aides may have kept vital information from the President, he should have known what his subordinates were doing.

‘Should Have’ Known

The “ultimate responsibility for the events in the Iran-Contra affair must rest with the President,” the committees concluded. “If the President did not know what his national security advisers were doing, he should have. It is his responsibility to communicate unambiguously to his subordinates that they must keep him advised of important actions they take for the Administration.

“The Constitution requires the President ‘to take care that the laws be faithfully executed.’ This charge encompasses a responsibility to leave the members of his Administration in no doubt that the rule of law governs,” the report said.

The committees emphasized that it was Reagan’s policy--not an isolated decision by National Security Adviser Poindexter or his aide, Lt. Col. North--to sell arms secretly to Iran and to maintain the Contras “body and soul,” despite the congressional ban authored by Rep. Edward P. Boland (D-Mass.) on aid to the Contras.

“Several of the President’s advisers pursued a covert action to support the Contras in disregard of the Boland Amendment and of several statutes and executive orders requiring congressional notification,” the majority report said. “Several of the same advisers lied, shredded documents and covered up their actions. These facts have been on the public record for months. The actions of those individuals do not comport with the notion of a country guided by the rule of law. But the President has yet to condemn their conduct.”

Staff writer Melissa Healy contributed to this story.