1980 Deal Alleged : Leads, Leaps of Faith in Hostage Tale

Times Staff Writer

If this story turns out to be true, it would be the most diabolical intrigue of the century: a secret deal in 1980 between Ronald Reagan, George Bush and Iran's Ayatollah Ruhollah Khomeini to keep 52 American hostages imprisoned in Tehran until that year's election day, thus sealing Reagan's march to the White House.

And that isn't all. Since the unproven allegations of a secret Reagan-Khomeini deal surfaced, a strange parade of gun-runners and global schemers has come forward to offer new and astonishing versions of the saga--including a charge that Bush, at a secret meeting with Iranian agents in Paris, agreed to pay Tehran $40 million as part of the deal.

The story has even Jimmy Carter, the man who lost the presidency to Reagan in 1980, intrigued. "He'd like to know whether it's true," a spokesman said. Other devotees of the saga have formed grass-roots committees and staged small demonstrations in cities from Boston to Eureka, Calif., in attempts to get attention from mainstream media.

Sometimes-Wild Rumors

There are some serious problems with these charges. First, there isn't a shred of independently confirmed evidence to support them; the allegations rest on a morass of tantalizing leads, leaps of faith and sometimes-wild rumors. Second, some of the purported witnesses contradict each other over details, and several have made statements that are simply not credible. Third, of course, spokesmen for President Reagan and Vice President Bush hotly deny that any of the stories are true.

"It's absolutely false--a pure fabrication," Bush spokesman Steve Hart said.

But the denials have done little to stop the spread of rumors and tall tales about purported secret operations during the 1980 campaign. And beneath the tangle of allegations remains a set of intriguing circumstances--and a few knots of genuine mystery:

--Three men from the 1980 Reagan campaign, including later National Security Adviser Robert C. McFarlane, did meet with a self-described Iranian agent during the campaign to discuss the fate of the U.S. hostages in Tehran; none of the three can recall the man's name or find their notes of the meeting.

Negotiations Cooled Off

--According to former Carter Administration officials, the Iranian government's interest in a negotiated settlement to the hostage crisis did seem to cool off at about the same time; the hostages were not released, in fact, until Reagan's inauguration day.

--And senior officials in the new Reagan Administration did quietly authorize Israel to sell military equipment to Iran soon after, in the spring of 1981.

None of that, however, quite adds up to a convincing case that Reagan actually made a secret deal with Khomeini. And the Reagan aides who were purportedly involved angrily dismiss the allegations as absurd.

"It's goofball stuff," said Richard V. Allen, who was Reagan's chief foreign policy adviser during the 1980 campaign. "It comes from Mars. . . . It's nothing but a fascinating hodgepodge of lies."

Nevertheless, some otherwise sober people say they, too, are beginning to wonder whether something strange was going on in that other election campaign, eight years ago.

"There obviously is no smoking gun here," said Gary Sick, a former National Security Council official who worked on the 1980 hostage negotiations for Carter. "But there's an accumulating body of circumstantial evidence. . . . I used to pooh-pooh these charges," Sick said. "I don't do that any more."

The story is called the "October Surprise." The name is taken from the fear that gripped the 1980 Reagan campaign that Carter would make a sudden deal with Iran to free the 52 Americans then held hostage in Tehran--and thus reverse Reagan's surge toward victory at the polls. Reagan's men organized an intelligence network to seek information about the Carter Administration's plans, and an "October Surprise Group," chaired by Allen, met to work out possible responses to a hostage release.

In September of 1980, Khomeini sent an envoy to West Germany to open hostage negotiations with U.S. officials. The chief of the American delegation was then-Deputy Secretary of State Warren Christopher, now a prominent Los Angeles lawyer.

"The first meetings were very promising," Christopher recalled in an interview. Christopher met with Khomeini's son-in-law, Sadegh Tabatabai, who presented a set of relatively moderate demands: a U.S. commitment to refrain from military intervention in Iran, unfreeze Iranian assets in the United States and aid in returning the wealth of the late shah to Tehran.

Christopher said Tabatabai also asked for the delivery of some $350 million in weapons and other military equipment that the shah had bought but that remained in U.S. warehouses. "I discouraged it, and it never came back onto the table," Christopher said.

Invasion by Iraq

One week later, Iran was invaded by the army of neighboring Iraq. The war interrupted Tabatabai's negotiations with Christopher; not until Nov. 2 did Iran come back with a precise proposal for freeing the hostages--too late to prevent Carter from going down to defeat on Nov. 4.

"It is an interesting question why the promising meetings we had in September ended so abruptly," Christopher said. "The conversations were really quite encouraging, and it was a letdown when they did not continue. But I've always felt that the outbreak of the war seemed a sufficient explanation."

In the interim, Khomeini's government formally dropped its demand for weapons as part of the deal. That seemed strange to Gary Sick, the NSC's Iran expert at the time. "I thought it was amazing," he said last week. "They were at war, after all. One of the things they would definitely want, we thought, was the military equipment they already owned."

Christopher is less impressed by the apparent oddity. "The issue of the weapons stayed on the table only briefly," he said. "I think they were just testing us."

In any case, serious negotiations over the hostages' release did not get started until after Reagan won the election, and the 52 Americans were not actually freed until a few minutes after the new President took office on Jan. 20, 1981.

Jimmy Carter had negotiated the hostages' release, but it was Ronald Reagan who welcomed them home.

Barbara Honegger and Abolhassan Bani-Sadr offer another answer to Christopher's question about the interruption of the hostage negotiations. Honegger, a former Reagan White House aide, and Bani-Sadr, who was president of Iran in 1980, charge that Reagan's aides deliberately sabotaged the talks--by offering Khomeini weapons if he would delay the Americans' release until after Election Day.

It is a monstrous accusation, as both Honegger and Bani-Sadr cheerfully admit.

"This may be the crime of the century," Honegger said in an interview earlier this month. "It may mean that Ronald Reagan stole the 1980 election."

Honegger served as a minor official in the White House and the Justice Department from 1981 until 1983, when she publicly accused Reagan of breaking his promise to promote women's rights and resigned. (She told a reporter at the time that she had been guided by insights which she described as "channeled information . . . as if it were from the future.")

Quest for Secret History

Honegger now lives in Pacific Grove, Calif., in a pink stucco house with a panoramic view of the ocean--and rooms jammed with books, papers and tape recordings to aid her quest for the secret history of the 1980 campaign.

During October, 1980, Honegger was working at Reagan-Bush campaign headquarters, and fear of a sudden move by Carter to free the hostages was running high. On the evening of Oct. 22, she recalled, a woman--she cannot remember whom--walked into the room she was in and announced: "We don't have to worry about an October Surprise--Dick cut a deal."

"To be fair, I don't know that she was talking about Dick Allen," Honegger added. "It could have been some other Dick. But Dick Allen was the only one who had anything to do with the October Surprise Group."

Honegger's conclusion: "I think Dick Allen made some kind of arrangement to delay the return of the hostages, probably in exchange for weapons after Reagan was elected."

Allen's response: "Ridiculous."

'No Messing With . . . Problem'

"This girl was nowhere in the policy loop," he said. "She couldn't possibly have known what was going on. In fact, exactly the opposite was our behavior. . . . We had a rule: there was to be no messing with the hostage problem whatever."

But Honegger has turned into an indefatigable promoter of her story, appearing on radio and television shows and in a widely distributed documentary film about the affair called "Coverup," and living largely off lecture fees. She has also turned from a Reaganite Republican into a Jesse Jackson Democrat, "because of civil rights."

Honegger's chief ally in her crusade has been Bani-Sadr, the one-time president of Iran who lost power and fled his country in 1981.

Now living in exile near Paris, Bani-Sadr said he believes the release of the hostages was sabotaged by both the Reagan campaign and his own arch-rival in Tehran, Parliament Speaker Hashemi Rafsanjani.

"It was an operation against Bani-Sadr," he said in a sitting room at his home in Versailles, a gloomy, unheated house overgrown with vines.

'Blockaded' His Effort

He claimed that he almost reached an agreement to release the hostages in October, 1980, but Rafsanjani "blockaded" his effort--"because if Bani-Sadr solves the problem of the hostages then it is Bani-Sadr who wins the arms. . . . I would be the one who came out ahead."

Asked for more details, he referred to a thick typed report in English. It had been sent to him, he said, "by Madame Honegger, a political analyst."

Christopher and Sick, on the other hand, said Bani-Sadr was not involved in hostage talks at all in October, 1980. "Bani-Sadr had nothing to do with the negotiations," Sick said. "He was completely cut out of it."

Reagan's men have acknowledged that they did have one meeting with a purported Iranian emissary in the fall of 1980, but they insist that the contact was insignificant and led nowhere.

Some time in September, 1980, Robert C. McFarlane, then a member of the staff of the Senate Armed Services Committee, was visited by a mysterious Middle Easterner.

"An individual whose name I don't even recall came to me saying that he represented people in the Iranian government, and saying he wanted to talk about U.S.-Iranian relations, to include the issue of the delivery of arms," McFarlane said in an interview.

McFarlane set up a meeting with Allen, the Reagan campaign's top foreign policy adviser. Allen brought Laurence H. Silberman, a former deputy U.S. attorney general who is now a federal appeals court judge.

"We met for no more than 15 minutes in the lobby of the L'Enfant Plaza Hotel (in Washington)," McFarlane recalled. "All of us concluded that he was a man of no substance. . . . He was rather ambiguous both as to whom he represented and what kind of proposition he wanted to make."

Proposed an Arrangement

Allen dimly remembered the mysterious intermediary as an Iranian monarchist who lived in Egypt. Unlike McFarlane, Allen said he does not believe the issue of weapons came up. "He was proposing an arrangement whereby the hostages could be released to the Reagan side (during the campaign) at a date indeterminate," Allen said. "Under no circumstances did we ever discuss a delay of the hostages' release."

Allen recalled telling the go-between: "This is preposterous."

Silberman recalled admonishing him: "We have only one President at a time."

All three Americans say they cannot remember the man's name. All three say they have no written record of what went on at the meeting; Allen said he wrote a memorandum for his files describing the conversation, but now cannot find it.

Nor did the three Republicans inform the Carter Administration of their contact with a purported go-between. "It didn't warrant referring to the Carter Administration," McFarlane said.

Warren Christopher disagrees. Notifying the State Department, he said, "certainly would have been the correct thing to do--especially since we were briefing them (the Reagan campaign) during this period."

The strangest new wrinkle in the saga of the October Surprise has been added by Richard Brenneke, a self-described international arms broker from Portland, Ore.

Brenneke told a federal judge in sworn testimony last month that Bush, William J. Casey and Richard Allen flew secretly to Paris in October, 1980--in the final weeks of the presidential campaign--to meet with agents of Khomeini's regime.

Brenneke said he attended a meeting on Oct. 20, 1980, at which Casey and Donald P. Gregg, now Bush's national security adviser, arranged to give the Iranians $40 million in exchange for their agreement to delay the release of the hostages until after Election Day.

"The logistics of transferring $40 million for the purchase of weapons was worked out," Brenneke said in his testimony. "That was the figure that William Casey and Mr. Gregg discussed at the meeting as being available for the purchase of weapons."

Brenneke said he did not see Bush in Paris, but testified that he had learned that Bush had met there with Iranian officials on Oct. 19, 1980.

Testified at Hearing

Brenneke offered his testimony at a sentencing hearing in Denver in the case of Heinrich Rupp, a longtime friend who was convicted earlier this year of bank fraud. Brenneke told the judge that he believed Rupp had been acting on behalf of the CIA when he defrauded Colorado's Aurora Bank.

Rupp later told Denver's Rocky Mountain News that he was the pilot who flew Casey to Paris in October, 1980, and said he believes he saw Bush on the tarmac at Paris' Le Bourget Airport.

Neither Brenneke nor Rupp has offered any evidence to support their charges, however, and most of their allegations have been roundly denied.

Bush's office says he made no secret trip to Paris in October, 1980; the Secret Service, whose agents were guarding the then-vice presidential candidate, says he was in Washington during the period in question.

Allen says he did not visit Paris in October and showed a reporter his detailed, handwritten logbooks for the days in question. (They show, among many other entries, that Allen appeared on the television program "Meet the Press" on Oct. 19, which NBC confirmed, and spoke on the telephone with Casey, apparently in Washington, on Oct. 20.)

Reports Discounted

Casey died in May, 1987, but Allen said: "There isn't any way this could have been done by Casey without me . . . as stealthy as he was to become."

Moreover, the credibility of Brenneke and Rupp has been questioned by some who have interviewed them at length.

Rupp's own lawyer, Daniel Burerah, said he doesn't know whether to believe his client or not. "I've never come across anything as crazy as this," he said. "As far as the truthfulness of the guy, I really don't know."

Most of Brenneke's statements have proven difficult or impossible to confirm. He claimed in his testimony to have worked for the CIA for 18 years, much of that in Air America, the now-defunct airline the agency once owned. But the CIA, in a virtually unprecedented action, has told reporters that Brenneke never worked for the agency; and William Leary, a University of Georgia professor who has written the history of Air America, says neither Brenneke nor Rupp appears in the company's personnel records.

Brenneke has been talking to reporters for more than two years, offering detailed but unconfirmable stories about his life as a secret agent, gun-runner and occasional drug pilot. He has claimed that he supplied explosives to a Palestine Liberation Organization training camp located in western Oregon; Oregon law enforcement officials say they know of no such camp. He has talked of flying weapons to the CIA-supported Nicaraguan rebels, or Contras, and of working on secret shipments of U.S. weapons to Iran, but congressional investigators say they have been unable to confirm those claims.

Chain of Sources

Not until last month, however, did Brenneke mention any meetings with Bush and Casey in Paris. His new testimony on that score came only after Honegger told him, in August, of reports that such a meeting had occurred. Honegger, in turn, apparently received her first reports of the alleged Paris meetings from Bani-Sadr; and Bani-Sadr learned of them from a friend in Iran whom he refused to identify.

Bani-Sadr himself says he isn't sure he believes that Bush ever flew to any secret meetings in Paris.

"It is very difficult for me to believe that a candidate for vice president would participate in such a rendezvous," he said. "That would be very dangerous, very risky, because if it were discovered it would be his political death. I can imagine such a thing but whether it is true or not I do not have the slightest idea."

But Honegger is undeterred.

"Some people have doubts about Dick Brenneke's credibility, I know," she said firmly. "I don't."

The controversy, however shaky its roots, is unlikely to go away.

On Monday, a Los Angeles lawyer who sued the federal government and the Khomeini regime on behalf of 13 of the Tehran hostages announced that he is now preparing a suit against the estate of Casey, against the 1980 Reagan-Bush campaign--and possibly against Bush as well.

The lawyer, James H. Davis, said he believes the Reagan campaign may have violated the law by seeking a private deal with Iran, and probably also undercut the position of the Carter Administration's negotiators--and that may have prolonged his clients' ordeal.

"The result to my clients was they were not only kept longer, 2 1/2 months longer . . . but it also hobbled our negotiators in dealing with Iran," Davis said.

"Once we file, we will at least have the power to subpoena these people to get their sworn testimony on what happened," Davis said. "Won't that be interesting?"

Staff writers William C. Rempel in Los Angeles, Michael Ross in Cairo and Rone Tempest in Paris also contributed to this story.

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