Walsh Report Said to Tie Bush Aides to Cover-Up

The special prosecutor in the Iran-Contra scandal has accused two aides to then-Vice President George Bush of “acts of concealment” to cover up White House links to secret arms shipments to Central America, sources familiar with the prosecutor’s final report said Wednesday.

In his upcoming report, prosecutor Lawrence E. Walsh says Bush aides Donald P. Gregg and Samuel J. Watson knew that the White House was involved in secret weapons shipments to Nicaraguan rebels. But when government spokesmen denied the link, Gregg and Watson remained silent and allowed the attempted deception to go forward, the report says.

The secret arms shipments to the Contras were directed by White House aide Oliver L. North, although Congress had prohibited any U.S. aid to the rebels. When Nicaraguan troops shot down one of the airplanes used for the shipments in 1986, spokesmen for then-President Ronald Reagan claimed that the airlift was a private effort, with no links to the U.S. government.

Nevertheless, the denials quickly unraveled. And when it was discovered that North had skimmed profits from secret arms sales to Iran to pay for the Contra airlift, the affair turned into a scandal that virtually paralyzed the Reagan Administration.

The Bush aides’ knowledge of the secret Contra shipments was reported as early as 1986. But Walsh’s charge that Gregg and Watson acted deliberately to conceal the White House role is new.

Walsh’s conclusion was first divulged by the Associated Press, which obtained a 600-word excerpt of the still-secret, three-volume report. It was confirmed by two people who have seen the report.

Walsh, Gregg and Watson all refused to comment. Gregg, a former Central Intelligence Agency officer who served as U.S. ambassador to South Korea during the Bush Administration, is now chairman of the Korea Society in New York. Watson, a retired Army colonel, is now a consultant in suburban Virginia.

North, whose convictions for several felonies stemming from the scandal were overturned on technical grounds, is preparing to run for the U.S. Senate from Virginia.

The tone of Walsh’s judgment on the Bush aides suggests that his report, expected to be released next month, may also include tough criticism of others who played a role in the scandal but were never charged with criminal wrongdoing: then-President Reagan, then-Vice President Bush, then-Secretary of State George P. Shultz and then-Defense Secretary Caspar W. Weinberger.

After more than five years of investigation, Walsh submitted his report last month to a three-judge panel of the Court of Appeals here.