Couldn’t Get Data Court Demanded : Walsh Caught Between Judge, Reagan Advisers

Two full years after the Iran-Contra scandal burst into public view, top Reagan Administration officials gathered at the White House four days before Christmas for a meeting that will go down in history as a crucial turning point in the criminal prosecution of the star defendant, retired Lt. Col. Oliver L. North.

It was then that key members of President Reagan’s inner circle--including Atty. Gen. Dick Thornburgh and CIA Director William H. Webster--decided finally and irrevocably that they would not yield to prosecutors’ requests for classified material to be used at North’s trial.

Their decision, based on their contention that disclosure of the materials would jeopardize national security, threw the staff of independent counsel Lawrence E. Walsh into a legal tailspin. It ultimately led to Walsh’s decision, announced Thursday, to seek dismissal of the two key charges against the former White House aide.

Because of its pivotal importance in the prosecution of North and other Iran-Contra defendants, the Administration’s decision and how it was made will be scrutinized by legal scholars as well as members of Congress for months and perhaps years to come.

On Friday, in fact, three key Democratic senators sent a letter to Thornburgh demanding “a full explanation.” The request, from Majority Leader George J. Mitchell of Maine, Intelligence Committee Chairman David L. Boren of Oklahoma and Judiciary Committee Chairman Joseph R. Biden Jr. of Delaware, noted that the 1980 Classified Information Procedures Act entitles Congress to an explanation.

To the senators, the details of the decision are crucial not only because of the impact it has on the prosecution of North. More than that, the case has become an important test of Congress’ efforts, embodied in the 1980 statute, to prevent criminal defendants from avoiding prosecution by threatening to expose national security secrets--a phenomenon called “graymail.”

The lawmakers want to know also whether Reagan Administration officials can be trusted to make a fair decision when it affects the reputation of the presidency. Two years earlier, the CIA director--then William J. Casey--and the attorney general--then Edwin Meese III--had held a meeting at the White House with North at which they have been accused of trying to impede the unraveling of the Iran-Contra affair.

The 1980 law ensures that Administration officials will have a chance to review all requests by prosecutors and defense lawyers to see classified government documents. That was why Thornburgh, Webster and others met at the White House last Dec. 21.

Ruling by Judge

Just nine days earlier, U.S. District Judge Gerhard A. Gesell, presiding in North’s case, had ruled that some classified information must be disclosed in the courtroom if Walsh hopes to try North on a wide variety of charges, including conspiracy and theft of government property.

Otherwise, he held, Walsh could not present a complete picture of North’s allegedly criminal activities.

Among other things, Gesell said, the jury would have to be told the names of many of the countries involved in the case--countries such as Israel and several Central American nations that were referred to only by numbers during the televised congressional Iran-Contra hearings in 1987. In addition, he ruled that the names of American citizens--with the exception of CIA agents--could not be blacked out in the documents presented into evidence.

After Gesell’s ruling, Walsh appealed to the Reagan Administration to permit disclosure of the classified information he sought. But his request was denied at the Dec. 21 meeting, and Gesell subsequently refused to change his position.

Major Victory for North

For North, the Administration’s firm stance marked a major victory in the tenacious legal fight that he has waged ever since he was fired by the President more than two years ago for his role in the diversion of Iran arms sale profits to Nicaragua’s Contra rebels.

But, for Walsh, it represented a major setback after months and months of diligent work in constructing a case against North.

When he was unable to persuade either the judge or the Administration to compromise, according to knowledgeable sources, Walsh saw that he had only two options--either to “bumble through” and risk a pretrial dismissal of the case or to seek dismissal of the charges of conspiracy and theft, which relied heavily on the classified material.

A petition to the U.S. Appeals Court seeking the reversal of Gesell’s ruling was considered briefly and even discussed in a meeting of Walsh’s staff, including associate counsel Christian J. Mixter. But Walsh quickly ruled out that option because none of his advisers believed it could succeed.

No Appeal to Reagan

An appeal to Reagan also was discussed, but sources said that members of Walsh’s staff quickly concluded that it would be futile. No one thought that the President would side with Walsh as long as his own Cabinet officers were unanimously opposed to any further disclosure of classified material.

The next step came late Tuesday night when Walsh and his staff began to analyze their case against North if they dropped the two major charges of conspiracy and theft. Overnight, according to sources, Walsh himself--a former judge and an experienced attorney--came to the conclusion that the two charges should be dropped to allow the rest of the case to proceed.

On Wednesday, the independent counsel and top staff members conferred with State Department legal adviser Abraham D. Sofaer, who--like Walsh--previously had served as a federal judge in New York.

Had Worked Together

Walsh and Sofaer had worked together in recent months on legal problems involving several international aspects of the Iran-Contra case, including the involvement of Israel and the effort to obtain the records of the Swiss bank accounts into which the profits of the arms sale had been deposited.

According to sources, Walsh came away from his meeting with Sofaer with the feeling that his decision to drop the two major charges would be understood and accepted in the legal community.

Next, Walsh went to the Justice Department Wednesday afternoon to tell Thornburgh his decision. He assured the attorney general that he did not doubt that the Administration’s decision was based entirely on a desire to protect national security.

Had to Tell Staff

Then came the hardest task still facing Walsh--telling his staff that he had decided to drop the two major charges. According to those who were there, the meeting between Walsh and his staff lasted more than an hour--perhaps as long as two hours--and was characterized by what they described as “a lively discussion” of the issues. About 20 or 25 people attended.

Some staff members questioned the timing of the decision and others wanted to know why Walsh had chosen to announce the dismissal himself instead of leaving it to Thornburgh, as some staff members had suggested. But the independent counsel was determined to take the lead himself--and as soon as possible.

Thus, when Walsh filed his motion Thursday seeking dismissal of the charges, it came as no surprise to either his staff or Administration officials--only to North and the American public.