Walsh Papers Tell of Letter to President Attached to Memo on Iran Fund Diversion

A former White House aide says that he saw a letter addressed to President Reagan attached to a key White House memorandum describing the diversion of funds from Iranian arms sales to Nicaragua’s rebels, according to court papers filed Monday by independent counsel Lawrence E. Walsh.

The existence of such a “cover letter” would make it more likely that Reagan saw the memorandum, in which then-White House aide Oliver L. North asked for authorization to send the Contras $12 million in profits from the President’s secret arms sales to Iran.

However, no evidence has come to light to indicate that Reagan actually did receive the memorandum, Walsh’s filing indicated. The President has consistently denied knowing of the diversion of funds, and Walsh disclosed last month that he has found no evidence that Reagan was aware of North’s action.

Key Document

The memorandum in question, a five-page paper written by North in April, 1986, was the key document that exposed the diversion of funds when Justice Department officials discovered it in North’s office in November, 1986.

The copy of the memorandum that they found bore no cover letter or other indication of whether the document had gone to Reagan or any of North’s other superiors.

In testimony before Congress last year, North said that he intended the memorandum for the President and believed that Reagan was aware of his diversion plan. But North’s superior, then-National Security Adviser John M. Poindexter, testified that he never passed the memorandum on to the Oval Office.

Tells of Letter

Walsh, in a letter to North’s lawyers that was filed Monday in U.S. District Court here, said that a former National Security Council official, James R. Radzimski, has told investigators that he saw a cover letter from Poindexter to Reagan attached to one copy of the memorandum.

“Attached to the memo was a letter from Poindexter to the President,” Walsh wrote. “According to Radzimski, the memo from North to Poindexter made reference to $12 million going to the Contras.”

Radzimski’s account of the cover letter also appears in a recently released transcript of his closed testimony last year before congressional committees investigating the Iran-Contra scandal.

Saw Two Memorandums

He told the investigators that he remembered seeing “two memorandums, one addressed to Adm. Poindexter from Oliver North and a second memorandum from Adm. Poindexter to the President.”

When asked whether the memorandums had been delivered to the President, Radzimski testified: “I do not know.”

Walsh filed the evidence in court to comply with trial rules that require prosecutors to provide defendants with any evidence that might aid their defense.

North has been indicted on charges of conspiracy to defraud the U.S. government and other counts in connection with the diversion of funds, and his trial is expected to begin late this year.

Must Give Evidence

North is expected to contend that he believed his actions were authorized by Reagan, and if Walsh discovered evidence that the President had approved the diversion, he would be required to divulge it.

Walsh’s filing also included two statements from Reagan himself, provided to the independent counsel in response to written questions.

In one such statement, Reagan said he believed that the law prohibiting aid to the Contras in 1985 did not apply to the NSC staff. Reagan noted that his Intelligence Oversight Board had produced a legal opinion in 1985 concluding that the law, which prohibited any U.S. agencies involved in intelligence from providing material help to the Contras, did not apply to the NSC.

McFarlane Testimony

“While I do not specifically recall reviewing this document, it is consistent with my understanding at that time,” Reagan’s written statement said. Robert C. McFarlane, Reagan’s national security adviser at the time, has testified that he believed, to the contrary, that the law did apply to his staff.

Reagan also confirmed previous reports that he once telephoned the president of a Central American country to ask him to release impounded Contra guns.

“I also telephoned the head of state of a country in Central America on April 25, 1985, to ask that he order the release of an arms shipment to the NFF (Contras) which had been impounded by an official of that government,” the President wrote. Other officials have identified the country as Honduras.