Walsh Clears Reagan, Bush on Contra Funds : Probe Produces No Evidence That They Knew About Diversion of Arms Profits, Counsel Says

The independent counsel in the Iran-Contra case asserted for the first time Monday that his investigation has produced no evidence that President Reagan or Vice President George Bush knew of the diversion of Iran arms sales profits to the Nicaraguan Contras.

Independent counsel Lawrence E. Walsh, in briefs filed in federal court, indicated there will be no action against the top two executive branch officials even though prosecution of more figures in the arms sale affair is considered likely.

‘Not Aware of Any Superior’

After 18 months of grand jury deliberations on the scandal, Walsh said, his staff is “not aware of any superior” of Lt. Col. Oliver L. North, aside from Robert C. McFarlane or John M. Poindexter, former national security advisers, “who knew enough about North’s activities to have conveyed even informal or implicit approval.”

Walsh’s assertion echoes the conclusions of the two previous extensive investigations of the affair, conducted by the presidentially appointed Tower Commission and by a joint congressional committee, that there was no evidence of illegal conduct by Reagan or Bush.

Walsh addressed the issue of the President and vice president’s knowledge of the funds diversion in a brief that called on the court to postpone a deadline for furnishing North with more classified documents for use in preparing his defense.

Walsh said that culling out these documents is a time-consuming process and that the material is irrelevant anyway.

The prosecution, which has introduced to the grand jury information from scores of witnesses, including Reagan and Bush, “knows of no presidential decision that North can point to as authorizing his activities,” Walsh said.

“If North believes that some document shows the contrary, let him specify more narrowly where to look for it,” Walsh said in his court motion.

North, a former National Security Council aide, is scheduled to go on trial Sept. 20 on charges that he conspired to defraud the government by diverting profits from the arms sales to help support the Nicaraguan rebels. The three other defendants, Poindexter and middlemen Richard V. Secord and Albert A. Hakim, are to be tried later.

North is expected to argue that he believed his covert operations were approved at the highest level of the executive branch, and he has pledged to summon the “highest ranking officials” to testify.

Reagan and Bush and other top officials have consistently insisted that the President knew nothing of the effort to subsidize the Contras’ cause.

Charges Spelled Out

The indictment against the four defendants charged that the conspirators acted “together with others unknown and known to the grand jury” in pursuing the alleged fraud. Sources have indicated that several CIA officials may yet be subject to prosecution, but Walsh’s statement signaled that no higher executive branch officers are implicated.

While Walsh asked for more time to turn over the classified documents, he also asked U.S. District Judge Gerhard A. Gesell, who is presiding over the case, to reject North’s request for a six-month trial delay.

Walsh argued that North himself has made a political event out of the affair and now holds “little credibility in complaining” that the political attention of a trial during the presidential campaign would rob him of a fair hearing.

North “is now grasping at the criminal defendant’s maneuver of last resort--delay” and has offered “a distorted picture” of his case, Walsh charged.

“To the extent that North’s trial may become a political issue in the upcoming elections, North bears at least a substantial measure of responsibility, and, therefore, has little credibility in complaining,” Walsh said.

Assails ‘Use’ of Media

“This trial in particular should not be held hostage to a media which the defendant himself has strenuously sought to inflame,” Walsh said. By delaying the trial, he said, Judge Gesell would only be submitting to “North’s transparent attempt to transform this trial from a criminal into a political one.”

As evidence of North’s own politicization of the trial, Walsh offered the court a packet of press clippings that the prosecutor maintained showed North’s attempts to place his indictment in a political context.

Since he resigned from the Marine Corps after his indictment, North has made a number of speeches around the country in which he has harshly criticized Congress for its involvement in Central American policy and contended that the legislative branch has attempted to control foreign policy initiatives that are properly the jurisdiction of the executive branch.