Deal Is Rejected by North Judge : Gesell to Await High Court’s View on Secrets

A federal judge Tuesday rejected a compromise agreement on the screening of classified information for the trial of Oliver L. North that had been worked out by the Justice Department and independent counsel Lawrence E. Walsh.

U.S. District Judge Gerhard A. Gesell, objecting to the joint request for stricter procedures as unworkable and too late, said that he will await word from the Supreme Court on whether the trial can go forward, an announcement that may come in a few days.

Gesell, meanwhile, said that Atty. Gen. Dick Thornburgh could “terminate the case or any count” in the indictment at once if he submitted an affidavit barring disclosure of state secrets that North’s lawyers say they need for his defense.

“He can act now if he wants,” Gesell told Justice Department attorney Stephen A. Saltzburg.

Last-Minute Objections

Expressing his displeasure that the Justice Department had filed last-minute objections on behalf of U.S. intelligence experts last week, just as he was choosing a jury, Gesell declared: “I find no basis for giving him (Thornburgh) a seat at the counsel table or the right to intervene by way of bits and pieces of affidavits whenever the going gets tough.”

The judge, however, granted a concession to Justice Department officials in one area in which they had expressed grave concerns--that the identities of 13 countries that had provided aid to Nicaragua’s rebels in return for U.S. assistance might be disclosed.

The judge said that he would consider masking the names of the countries as long as the identities are not essential to a fair trial for the former White House aide. He said that he would hear more from attorneys on that issue today.

Would ‘Gut Defense’

North’s attorneys had objected to the proposed compromise, contending that it would “gut the defense.”

Gesell concluded the 90-minute open-court hearing by declaring that Walsh was solely responsible for North’s prosecution under the 1978 Ethics in Government Act. That act removes the Justice Department from investigating or trying current or former high government officials who might have political influence with the department.

“Our lawyers are reviewing the judge’s order,” Thornburgh aide David Runkel told reporters, adding that Justice Department officials have been meeting with the independent counsel.

“There are a number of things being discussed back and forth,” Runkel said. “It’s a question of reviewing the options. . . . We want the trial to continue but we want to safeguard against the unauthorized release of classified information.”

The judge said that Thornburgh, who chiefly was responsible for making the eleventh-hour bid to increase restrictions on use of classified information in the Iran-Contra trial, had no right to urge the court to tighten its trial procedures. Gesell acknowledged, however, that Thornburgh--under the 1980 Classified Information Procedures Act--has the power to withhold sensitive information if he determines that its disclosure would harm national security.

In such instances, charges against North might have to be dropped--as happened last month when the primary counts of conspiracy and theft were dismissed.

The proposed Thornburgh-Walsh compromise would have required Gesell to allow government security experts to screen any evidence to be presented by North in nine specific areas. Gesell noted that he already has worked with Walsh and defense attorneys to screen hundreds of sensitive government documents over a six-month period during which Justice Department officials were silent on the issue.

Rehnquist Order

Walsh, in fact, had said that he was satisfied with the longstanding procedures for handling classified materials but had agreed to the compromise with Thornburgh to speed up the trial. Just before that agreement last weekend, Thornburgh had obtained an order from Chief Justice William H. Rehnquist that North’s trial must be delayed pending a Supreme Court review of the dispute, set for Friday.

Thornburgh had planned to ask the high court to bow out if Gesell accepted the compromise.

But Gesell said that the compromise plan would force many delays in the trial, with jurors having to be excused from the courtroom. He said that the plan also might interfere with North’s right to a fair trial.

Gesell said Tuesday that he wants to study the sensitive area of third-country support for the Contras, which U.S. officials had secretly lined up during a period in which direct U.S. military support for the Nicaraguan rebels was prohibited by Congress.

Called Essential

North’s lawyers said in court papers Monday that former President Ronald Reagan and other top officials had sought to conceal the third-country support from Congress and the public and that it was essential for North’s defense that jurors understand the matter.

They suggested that North’s use of arms-sale profits from a third country--Iran--might be more understandable to jurors in light of this broader policy. In return for aiding the Contras, part of a quid pro quo arrangement was that the United States would provide “CIA covert support” to those nations, North’s lawyers said Tuesday in new court papers.

The former National Security Council aide still faces 12 felony counts, including shredding documents and lying to Congress and then-Atty. Gen. Edwin Meese III in 1986 to hide his role in the sale of arms to Iran and the diversion of some of the proceeds to the Contras.

Gesell said that “some cynics” might view Thornburgh’s action as an attempt to protect the Reagan Administration, of which the attorney general and North had been a part. But, the judge said, he does not share that view.