Probe Ties Reagan, Bush to Iran-Contra Cover-Up : Inquiry: Report says neither broke law but allowed effort to deceive. Ex-Presidents call conclusions unfair.

Former Presidents Ronald Reagan and George Bush engaged in conduct that contributed to “a concerted effort to deceive Congress and the public” about the Iran-Contra scandal, according to the final report issued Tuesday by the independent counsel who investigated the affair.

In his findings, Lawrence E. Walsh concluded that neither Reagan nor Bush violated any criminal laws in connection with the affair--in which the Reagan Administration secretly sold weapons to Iran in the mid-1980s in order to gain the release of American hostages in Lebanon and to generate funds to aid rebel forces in Nicaragua.

But Reagan’s “disregard” for limits imposed by Congress emboldened some of his Administration’s highest-ranking officials to engage in illegal actions, Walsh said.

He charged that Reagan “set the stage for the illegal activities of others by encouraging and, in general terms, ordering support of the Contras” during a two-year period when Congress had prohibited military aid to the rebels.

As for then-Vice President Bush, Walsh said: “Contrary to his public pronouncements, . . . he was fully aware of the Iran arms sales. Bush was regularly briefed, along with the President (Reagan), on the Iran arms sales, and he participated in discussions to obtain third-country support for the Contras.”

In separate statements released Tuesday, Reagan, Bush and several other former officials named in the report called Walsh’s conclusions inaccurate and unfair.

Reagan termed the report “an expensive, self-administered pat on the back and a vehicle for baseless accusations that he could never have proven in court.”

Bush said no one should try to criminalize what was “a political dispute between the executive and legislative branches over foreign policy.”

Walsh’s report, released by order of the panel of U.S. appellate judges who appointed him in December, 1986, marks the official end of a seven-year investigation that cost $40 million.

All told, 11 people--including former White House aides Oliver L. North and John M. Poindexter--were convicted of charges stemming from the investigation. North’s and Poindexter’s convictions were later overturned on appeal.

The report forecloses further legal action against any of the figures named in the probe and ends all scrutiny of them in conjunction with Iran-Contra allegations.

The final report, required of all court-appointed independent counsels, was written last August but kept under seal by the federal judges until those mentioned in it could state their objections and offer their views on the findings.

Walsh, 80, a former judge and Wall Street lawyer with Republican credentials, said in an hourlong news briefing Tuesday that if facts now established had been known in 1987, Congress should have considered impeaching Reagan and his attorney general, Edwin Meese III.

It was Meese, Walsh said, who concocted a false account of key events in the scandal in order to protect Reagan.

“It certainly should have been considered,” he said of impeachment. “Whether it would ever have reached that point, I think, is doubtful. But the fact is Congress was deprived of that opportunity by the withholding of notes (by key officials).”

The report said senior officials and Reagan Cabinet members concealed notes about high-level deliberations and took part in a strategy to make lower-level staff members of the National Security Council, including North, the “scapegoats whose sacrifice would protect the Reagan Administration in its final two years.”

Walsh’s report, which is more than 1,200 pages long, concluded that “in an important sense, this strategy succeeded.” He said he and his staff attorneys “discovered much of the best evidence of the cover-up in the final year of active investigation, too late for most prosecutions.”

The arms sales to Iran during portions of 1985 and 1986, initially coming from U.S. stocks held by the Israelis, were kept secret from Congress and the public because they violated an arms embargo promoted by the United States on the grounds that Iran engaged in terrorism. Aid to the Contras--prohibited by Congress--was also kept secret.

The White House first acknowledged the arms sales and the diversion of profits to Nicaraguan rebels in a nationally televised news briefing in November, 1986, at which Meese presented results of an internal inquiry that he said he made at Reagan’s request.

But Walsh’s report charged that Meese, with help from Poindexter, “attempted to create a false account (of the arms sales) in order to protect the President.”

Reagan steadfastly insisted during the last two years of his Administration that there was no connection between the arms sales and the release in 1986 of American hostages held in Lebanon by forces believed subject to control by Iran.

He also denied knowledge of any diversion of funds to the Contras.

“The evidence indicates that Meese’s November, 1986, inquiry was more of a damage-control exercise than an effort to find the facts,” the report said.

Although Congress held televised hearings into the matter in 1987, “congressional oversight alone cannot correct the deficiencies that result when an attorney general abandons the law enforcement responsibilities of that office and undertakes instead to protect the President,” Walsh said.

At the news briefing, Walsh made clear that he thought the House and Senate investigations missed their mark widely.

“Congress didn’t even call Vice President Bush or President Reagan,” he said. “It didn’t even ask for their depositions. . . . It went off on the theory of a runaway conspiracy, which proved to be an unsound thesis.”

According to the report, former Defense Secretary Caspar W. Weinberger was among key Cabinet members who were “consistently informed of proposed and actual arms shipments to Iran,” the report said.

“The key evidence,” it said, “was handwritten notes of Weinberger which he deliberately withheld from Congress and the OIC (Walsh) until they were discovered by the independent counsel in late 1991.”

Some of Weinberger’s notes, as well as those of former White House Chief of Staff Donald T. Regan, disclosed that “Meese appeared to have spearheaded an effort among top officials to falsely deny presidential awareness of the Hawk transaction,” a 1985 shipment of antiaircraft missiles to Iran, Walsh’s report said.

Then-White House Counsel Peter Wallison also “raised concerns about a conflict of interest” in allowing Meese, a presidential appointee, to investigate a White House affair, the report said.

Referring again to Weinberger’s notes, Walsh said they “demonstrated that Weinberger’s early testimony--that he had only vague and generalized information about Iran arms sales in 1985--was false, and that he in fact had detailed information on the proposed arms sales and the actual deliveries.”

Weinberger was among 14 people prosecuted by Walsh on such charges as perjury and conspiracy, but he was pardoned by then-President Bush before his trial, along with five others, on Christmas Eve, 1992.

Sharply criticizing Bush for the pardon, Walsh said in his report that Weinberger’s case “marked the first time a President ever pardoned someone in whose trial he might have been called as a witness.”

At his news conference, Walsh singled out Bush for additional criticism, saying “he will always have to answer for his pardons--there was no public purpose served by that.” However, he declined to characterize the Weinberger pardon as part of a cover-up engineered by the Reagan-Bush administrations, saying: “I had no proof that the pardon was conceived for that purpose.”

Walsh was kinder in assessing Reagan’s motives, telling reporters: “He was carrying out policies that he strongly believed in.

“He may have been willful, but he at least thought he was serving the country in what he did,” Walsh said. “And the fact that he disregarded certain laws and statutes in the course of it was not because of any possible self-centered purpose.”

Walsh’s report noted that Weinberger and former Secretary of State George P. Shultz were the only members of Reagan’s inner circle who opposed the arms sales. Yet, Walsh said, Shultz joined Weinberger in deceiving Congress about the extent of his knowledge about the arms sales, apparently to shield Reagan.

According to notes taken by Charles Hill, Shultz’s executive assistant, “Shultz knew that the shipments were planned and that they were delivered,” Walsh said. But the report added that Shultz was never prosecuted “because there was a reasonable doubt that Shultz’s testimony was willfully false at the time it was delivered.”

Recounting notes from diaries obtained from Regan, Walsh said Shultz “expressed consternation over the Iran arms sales” shortly before congressional leaders were to be briefed on Nov. 12, 1986.

Regan’s notes quoted Shultz as objecting that “this is swapping arms for hostages no matter what we say, and undercuts our efforts with allies, particularly Italians and (then-Italian Prime Minister Bettino) Craxi, who want to sell arms.”

Regan’s notes, according to Walsh, characterized Reagan, Bush and Poindexter as feeling that it was “too risky . . . to go public” at that point.

Once the arms sales had been publicly acknowledged, Regan’s notes show that then-First Lady Nancy Reagan feared “we’re risking the presidency.”

When asked what that meant, Walsh said Regan told investigators: “That similar to Watergate, he (Reagan) might be impeached, that we were risking the President’s tenure in office, his presidency and his reputation.”

Times staff writer Doyle McManus contributed to this story.

* LOST LESSONS? Experts fear that scandal’s lessons have been obscured. A27

Iran-Contra Findings

Key findings of the report of independent counsel Lawrence E. Walsh’s investigation into the Iran-Contra scandal:

* There was no evidence that President Ronald Reagan broke laws, but he “set the stage” for illegal activities of his aides. He ordered “in general terms” the illegal efforts to aid the Contras. Reagan also authorized the illegal sale of arms to Iran in an effort to win release of American hostages in the Middle East.

* White House Chief of Staff Donald T. Regan, Secretary of State George P. Shultz and Defense Secretary Caspar W. Weinberger withheld information that would have given Congress a clearer idea of the scope of the scandal.

* Contrary to his public statements, Vice President George Bush “was fully aware of the Iran arms sale” and efforts to raise money for the Nicaraguan rebels from third countries. There was no evidence, however, that Bush broke any laws.

* Several Reagan Administration officials systematically withheld a large volume of documents relevant to the investigation. Notes kept by Regan, Shultz and Weinberger during the Iran-Contra scandal were withheld until late in the investigation.

* Atty. Gen. Edwin Meese III falsely stated that Reagan did not know about a 1985 Hawk missile shipment to Iran at the time. Walsh considered prosecuting Meese in 1992 for making a false statement but concluded that the passage of time would make it difficult to prove the case.

Source: Times wire reports

The Who, What and Where on Iran-Contra

The final report of Independent Counsel Lawrence E. Walsh, the scandal’s final chapter, concludes his seven-year investigation.

The Scandal in Review

1985

JULY, AUGUST: Presidential aide Robert C. McFarlane receives a suggestion from an Israeli official that an arms deal with Iran--using Israel as an intermediary--might lead to release of American hostages held in Lebanon. McFarlane takes the message to President Reagan, and on Aug. 30 the first planeload of U.S.-made weapons is sent from Israel to Tehran.

SEPTEMBER: An American hostage, the Rev. Benjamin Weir, is released.

NOVEMBER: At McFarlane’s request, the CIA ships a planeload of Hawk antiaircraft missiles to Iran without the legally required presidential order to authorize the action.

1986

JANUARY: Reagan signs a secret intelligence finding authorizing CIA participation in the arms deals with Iran but orders the process to be kept secret from Congress.

MAY: McFarlane and White House aide Oliver L. North fly to Tehran with a shipment of military spare parts, but negotiations break down on the release of additional hostages.

NOVEMBER: A second American hostage, David Jacobsen, is released.

NOVEMBER: The White House admits selling arms to Iran, but Reagan denies bargaining with terrorists or trading weapons for hostages. Atty. Gen. Edwin Meese III says $10 million to $30 million in arms-sale profits were improperly diverted to assist the Nicaragua contras, and asserts that no one in the White House knew about the diversion except North and national security adviser John M. Poindexter.

DECEMBER: Lawrence E. Walsh is appointed independent counsel by a panel of appellate judges, and both the Senate and House select special committees to investigate the affair.

1987-88

SUMMER, 1987: Congress holds nationally televised hearings on the scandal as Walsh pursues an independent criminal investigation with the assistance of FBI agents and a federal grand jury.

OCTOBER, 1988: Vice President George Bush runs for President, denying that he knew anything about secret arms-for-hostages deals with Iran, although other officials and White House documents contradict him.

1992

DECEMBER: Just leaving office, Bush grants Christmas Eve pardons to six major figures in the scandal, including McFarlane and former Defense Secretary Caspar W. Weinberger.

The Main Players

OLIVER L. NORTH: A retired Marine lieutenant colonel who worked at the National Security Council.

Iran-Contra connection: White House “point man” who arranged U.S. arms shipments to Iran and used the profits to assist Nicaraguan contras. Found guilty on May 4, 1989, of three felonies: altering and destroying White House records, accepting an illegal gratuity (a $13,800 home security system) and aiding and abetting in the obstruction of Congress. Sentenced to two years’ probation, fined $150,000. The U.S. Court of Appeals later reversed his conviction on grounds that tainted evidence was used. A federal judge later dismissed the convictions at the request of independent counsel.

Currently: Established a company that sells bulletproof vests; is planning to run for the U.S. Senate from Virginia.

JOHN M. POINDEXTER: A retired vice admiral who was North’s boss as national security adviser.

Iran-Contra onnection: Convicted on April 7, 1990, of two counts of lying to Congress, two counts of obstructing congressional investigators and one count of conspiring to cover up arms sales to Iran and diversion of profits to the Contras. He was sentenced to six months in prison. A three-judge appeals panel reversed the convictions on the same grounds as the North case, and the Supreme Court declined to review the case.

Currently: Runs a computer software firm in suburban Maryland.

CASPAR W. WEINBERGER: Secretary of Defense in the Reagan Administration.

Iran-Contra connection: Highest former government official to be indicted in the scandal when he was charged in 1992 with obstruction and making false statements for allegedly impeding congressional and federal grand jury investigations of the scandal. Among the accusations were charges that as a member of the National Security Council he concealed handwritten notes relating to arms-for-hostages discussions. On the eve of trial, Weinberger--who maintained his innocence--was the chief beneficiary of Christmas Eve pardons granted by former President George Bush.

Currently: Chairman of Forbes Magazine.

ROBERT C. MCFARLANE: The White House national security adviser before Poindexter.

Iran-Contra connection: First top White House aide to work with North and led him on a secret trip to Tehran. McFarlane pleaded guilty on March 11, 1988, to four misdemeanor counts of withholding information from Congress. He was sentenced to two years’ probation, fined $20,000 and required to perform community service. He was among those pardoned by Bush in 1992.

Currently: Washington consultant on international affairs.

WILLIAM J. CASEY: Director of the CIA during the years in question.

Iran-Contra connection: In appearing before congressional committees, he said no one in the U.S. government knew about 1985 shipments of U.S.-made arms from Israel to Iran, although later testimony by others--as well as official records--showed these shipments had been approved by Casey and other top officials. North testified at his trial that he kept Casey informed of his efforts to resupply the contras, but Casey never acknowledged that he knew of any diversion of arms profits. He died in May, 1987, before courts could determine his exact role in the scandal, and he never was charged with any wrongdoing.

FAWN HALL: North’s confidential secretary in the White House.

Iran-Contra connection: Testified that she systematically altered top-secret documents at North’s direction in November, 1986, a day before Justice Department investigators began interrogating him. Testifying under a grant of immunity from prosecution, Hall also told of shredding some documents and smuggling out others in her clothing so North could keep them.

Currently: Recently married to author Danny Sugarman, she is living in Los Angeles and working on a book about her experiences.