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BOSTON
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100th Congress — 1st Session • January 6-December 22, 1987
Senate Report
No. 216
IRAN-CONTRA INVESTIGATION REPORT
United States Congressional Serial Set Serial Number 13739
United States Government Printing Office Washington : 1989
Union Calendar No. 277 100th Congress, 1st Session S. Rept. No. 100-216 H. Rept. No. 100-433
Report of the Congressional Committees Investigating the
Imn-Contra Affair
With Supplemental, Minority, and Additional Views
Daniel K. Inouye, Chairman, Senate Select Committee
Lee H. Hamilton, Chairman, House Select Committee
U.S. Senate Select Committee
On Secret Military Assistance to Iran
And the Nicaraguan Opposition
U.S. House of Representatives
Select Committee to Investigate
Covert Arms Transactions with Iran
November 17, 1987. — Ordered to be printed. November 13, 1987. — Committed to the Committee of the Whole House on the State of the Union and ordered to be printed.
Washington : 1987
For sale by the Superintendent of Documents. U.S. Government Printing Office. Washington, DC 20402
DANIEL K INOUYE. HAWAII CHAIRMAN WARREN RUDMAN NEW HAMPSHIRE. VICE CHAIRMAN
GEORGE J MITCHELL MAINE SAM NUNN GEORGIA PAUL S SARBANES MARVLANO HOWELL T HEFLIN ALABAMA DAVID L BOREN OKLAHOMA
JAMES A McCLURE. IDAHO ORRIN G HATCH UTAH WILLIAM S COHEN MAINE PAUL S TRIBLE. JR VIRGINIA
ARTHUR I LtMAN. CHIEF COUNSEL
MARK A BELNICK EXECUTIVE ASSISTANT TO THE CHIEF COUNSEL
PAUL BARBADORO. DEPUTY CHIEF COUNSEL
MARY JANE CHECCHI, EXECUTIVE DIRECTOR
ASSOCIATE COUNSELS
C H ALBRIGHT. Jn DANIEL FINN C H HOLMES CHARLES M KERR JAMES E KAPLAN
JOEL P LISKER RICHARD D PARRY JOHN 0 SAXON TERRY A SMILJANICH TIMOTHY C WOODCOCK
lanited States Senate
SELECT COMMITTEE ON SECRET MILITARY
ASSISTANCE TO IRAN AND THE NICARAGUAN OPPOSITION
WASHINGTON, DC 20510
November 17, 1987
Honorable John C. Stennis President pro tempore United States Senate Washington, DC
Dear Mr. President:
We have the pleasure to transmit herewith, pursuant to
Senate Resolution 23, the final Report of the Senate Select
Committee on Secret Military Assistance to Iran and the
Nicaraguan Opposition. We will submit such other volumes of
Appendices to the Report as are authorized and as they become
available.
Sincerely,
Daniel K. Inouye Chairman
U>Xtu»\^^ /^^^m^eU#u>\^
Warren B. Rudman Vice Chairman
DKI:WBR:cp
(III)
U.S. HOUSE OF REPRESENTATIVES
DICK CHENEV WYOMING WM S BROOMFieiO MICHIGAN HfNHY J HYDE ILLINOIS JIM COURTEH NEW JERSEY SILL MCCOLLUM. FLORIDA MICHAEL DiWINE. OHIO
LEE H HAMILTON INDIANA CHAIRMAN
DANTE B EASCELL Fl QRIDA VICE CHAIRMAN
THOMAS S FOLEY WASHINGTON
PETER W RODINO JR NEW JERSEY
JACK BROOKS TEXAS
LOUIS STOKES OHIO
lES ASPIN WISCONSIN
EDWARD P BOLAND MASSACHUSETTS
ED JENKINS, GEORGIA THOMAS R SMEETON MINORITY STAFF DIRECTOR
SELECT COMMITTEE TO INVESTIGATE george van cleve. chief minority counsel
JOHN W NIELDS JR CHIEF COUNSEL RICHARD LEON, DEPUTY CHIEF MINORITY COUNSEL
w NEIL EGGLESTON DEPUTY CHIEF COUNSEL COVERT ARMS TRANSACTIONS WITH IRAN
CASEY MILLER STAFF DIRECTOR
UNITED STATES CAPITOL
WASHINGTON, DC 20515 (202) 225-7902
November 13, 1987
The Honorable Jim Wright Speaker of the House U.S. Capitol Washington, D.C.
Dear Mr . Speaker :
Pursuant to the provisions of House Resolutions 12 and 294, 100th Congress, First Session, I transmit herewith the Report of the Congressional Committees Investigating the Iran-Contra Affair, which the Select Committee to Investigate Covert Arms Transactions with Iran ordered reported to the House on November 5, 1987. The report includes findings, conclusions and recommmendations, together with supplemental, minority and additional views.
Within the next 30 days, the Select Committee will file for printing the accompanying appendices to the report. The complete set of appendices will include volumes containing a chronology of events; a testimonial chronology; miscellaneous documents used as sources in the committee report; depositions conducted by the Committees; and an index to the report and appendices. After filing, the appendices will, where appropriate, be declassified before they are printed. If necessary, the Committees will also file an appendix containing classified information. The appendices will be published as soon as possible after declassification.
ly yours.
Lee H. Hamilton Chairman
(V)
United States Senate
Select Committee on Secret Military Assistance To Iran and the Nicaraguan Opposition
Daniel K. Inouye, Hawaii, Chairman Warren Rudman, New Hampshire, Vice Chairman
George J. Mitchell, Maine
Sam Nunn, Georgia Paul S. Sarbanes, Maryland Howell T. Heflin, Alabama David L. Boren, Oklahoma
James A. McClure, Idaho
Orrin G. Hatch, Utah
William S. Cohen, Maine
Paul S. Trible, Jr., Virginia
Arthur L. Liman Chief Counsel
Mark A. Belnick Paul Barbadoro
Executive Assistant Deputy Chief Counsel
To the Chief Counsel
Mary Jane Checchi Executive Director
Lance I. Morgan Press Officer
(VI)
United States House of Representatives
Select Committee to Investigate Covert Arms Transactions with Iran
Lee H. Hamilton, Indiana, Chairman Dante B. Fascell, Florida, Vice Chairman
Thomas S. Foley, Washington
Peter W. Rodino, Jr., New Jersey
Jack Brooks, Texas
Louis Stokes, Ohio
Les Aspin, Wisconsin
Edward P. Boland, Massachusetts
Ed Jenkins, Georgia
Dick Cheney, Wyoming, Ranking Republican
Wm. S. Broomfield, Michigan
Henry J. Hyde, Illinois
Jim Courter, New Jersey
Bill McCollum, Florida
Michael DeWine, Ohio
John W. Nields, Jr. Chief Counsel
W. Neil Eggleston Deputy Chief Counsel
Kevin C. Miller Staff Director
Thomas R. Smeeton Minority Staff Director
George W. Van Cleve Chief Minority Counsel
Richard J. Leon Deputy Chief Minority Counsel
(VII)
United States Senate Select Committee on Secret Military Assistance to Iran and the Nicaraguan Opposition
Arthur L. Liman Chief Counsel
Mark A. Belnick Paul Barbadoro
Executive Assistant Deputy Chief Counsel
to the Chief Counsel
Mary Jane Checchi Executive Director
Lance I. Morgan Press Officer
Associate Counsels
C. H. Albright, Jr. Daniel Finn C. H. Holmes James E. Kaplan Charles M. Kerr Joel P. Lisker
W. T. McGough, Jr. Richard D. Parry John D. Saxon Terry A. Smiljanich Timothy C. Woodcock
Committee Staff
Assistant Counsels
Legal Counsel Intelligence/ Foreign
Policy Analysts Investigators
Press Assistant General Accounting Office Detailees
Security Officer Security Assistants
Chief Clerk Deputy Chief Clerk
Steven D. Arkin* Isabel K. McGinty John R. Monsky Victoria F. Nourse Philip Bobbitt Rand H. Fishbein Thomas Polgar Lawrence R. Embrey, Sr. David E. Faulkner Henry J. Flynn Samuel Hirsch John J. Cronin Olga E. Johnson John C. Martin Melinda Suddes* Robert Wagner Louis H. Zanardi Benjamin C. Marshall Georgiana Badovinac David Carty Kim Lasater Scott R. Thompson Judith M. Keating* Scott R. Ferguson
Staff Assistants
Committee Members' Designated Liaison
Senator Inouye Senator Rudman
Senator Mitchell Senator Nunn
Senator Sarbanes Senator Heflin Senator Boren
Senator McClure Senator Hatch
Senator Cohen
Senator Trible
Peter Simons William V. Cowan Thomas C. Polgar Richard H. Arenberg Eleanore Hill Jeffrey H. Smith Frederick Millhiser Thomas J. Young Sven Holmes Blythe Thomas Jack Gerard Dee V. Benson James G. Phillips James Dykstra L. Britt Snider Richard CuUen
Administrative Staff
Secretaries
Receptionist
Computer Center Detailee
Part Time*
John K Appleby Ruth Balin Robert E. Esler Ken Foster* Martin H. Garvey Rachel D. KaganofT* Craig L. Keller Hawley K. Manwarring Stephen G. Miller Jennie L. Pickford* Michael A. Raynor Joseph D. Smallwood* Kristin K. Trenholm Thomas E. Tremble Bruce Vaughn Laura J. Ison Hilary Phillips Winifred A. Williams* Nancy S. Durflinger Shari D. Jenifer Kathryn A. Momot Cindy Pearson Debra S. Sheffield* Ramona H. Green Preston Sweet
Assistant Counsel Hearings Coordinator Staff Assistants
Interns
Document Analyst
Historian
Volunteers
Peter V. Letsou Joan M. Ansheles Edward P. Flaherty, Jr. Barbara H. Hummell David G. Wiencek Nona Balaban Edward E. Eldridge, III Elizabeth J. Glennie Stephen A. Higginson Laura T. Kunian Julia F. Kogan Catherine L Udell Lyndal L. Shaneyfelt Edward L. Keenan Lewis Liman Catherine Roe Susan Walsh
•The staff member was not with the Select Committee when the Report was filed but had, during the life of the Committee, provided services.
(VIII)
United States House of Representatives Select Committee to Investigate Covert Arms Transactions with Iran
Majority Staff
Special Deputy
Chief Counsel Staff Counsels
Press Liasion Chief Clerk Assistant Clerk Research Director Research Assistants
John W. Nields, Jr. Chief Counsel
W. Neil Eggleston Deputy Chief Counsel
Kevin C. Miller Staff Director
Charles Tiefer
Kenneth M. Ballen Patrick J. Carome V. Thomas Fryman, Jr. Pamela J. Naughton Joseph P. Saba Robert J. Havel Ellen P. Rayner Debra M. Cabral Louis Fisher Christine C. Birmann Julius M. Genachowski Ruth D. Harvey James E. Rosenthal
Systems Administrator Systems
Programmer/Analysts Executive Assistant Staff Assistants
Catherine L. Zimmer Charles G. Ratchff Stephen M. Rosenthal Elizabeth S. Wright Bonnie J. Brown Christina Kalbouss Sandra L. Koehler Jan L. Suter Katherine E. Urban Kristine Willie Mary K. Yount
Minority Staff
Associate Minority Counsel Assistant Minority Counsel Minority Research Director
Thomas R. Smeeton Minority Staff Director
George W. Van Cleve Chief Minority Counsel
Richard J. Leon Deputy Chief Minority Counsel
Robert W. Genzman Kenneth R. Buck Bruce E. Fein
Minority Staff Editor/ tyriter Michael J. Malbin
Minority Executive Assistant Molly W. Tully Minority Staff Assistant Margaret A. Dillenburg
Committee Staff
Associate Staff
Investigators
Director of Security Security Officers
Editor
Deputy Editor Associate Editor Production Editor Hearings Editors
Printing Clerk
Robert A. Bermingham James J. Black Thomas N. Ciehanski William A. Davis, III Clark B. Hall Allan E. Hobron Roger L. Kreuzer Donald Remstein Jack W. Taylor Timothy E. Traylor Bobby E. Pope Rafael Luna, Jr. Theresa M. Martin Milagros Martinez Clayton C. Miller Angel R. Torres Joseph Foote Lisa L. Berger Nina Graybill Mary J. Scroggins David L. White Stephen G. Regan G. R Beckett
Representative Hamilton Representative Fascell
Representative Foley
Representative Rodino
Representative Brooks Representative Stokes
Representative Aspin
Representative Boland Representative Jenkins Representative Broomfield
Representative Hyde Representative Courier Representative McCollum Representative De Wine
Michael H. Van Dusen Christopher Kojm R. Spencer Oliver Bert D. Hammond Victor Zangla Heather S. Foley Werner W. Brandt M. Elaine Mieike James J. Schweitzer William M. Jones Michael J. O'Neil Richard M. Giza Richard E. Clark Warren L. Nelson Michael W. Sheehy Robert H. Brink Steven K. Berry David S. Addington Diane S. Dornan Dennis E. Teti Tina L. Westby Nicholas P. Wise
General Counsel to the Clerk Steven R. Ross
(IX)
Contents
Origins of This Report XV
Section I: The Report
Part I Executive Summary
Executive Summary 3
Part II Central America
Chapter 1 Introduction: Background on U.S. -Nicaragua Relations 25
Chapter 2 The NSC Staff Takes Contra Policy Underground 31
Chapter 3 The Enterprise Assumes Control of Contra Support 59
Chapter 4 Private Fundraising: The Channell-Miller Operation 85
Chapter 5 NSC Staff Involvement in Criminal Investigations and Prosecutions 105
Chapter 6 Keeping "USG Fingerprints" Off the Contra Operation: 1984-1985 117
Chapter 7 Keeping "USG Fingerprints" Off the Contra Operation: 1986 137
Part III The Arms Sales to Iran
Chapter 8 U.S. -Iran Relations and the Hostages in Lebanon 157
Chapter 9 The Iran Arms Sales: The Beginning 163
Chapter 10 Arms to Iran: A Shipment of HAWKs Ends in Failure 175
Chapter 11 Clearing Hurdles: The President Approves a New Plan 193
Chapter 12 Arms Sales to Iran: The United States Takes Control 213
Chapter 13 Deadlock in Tehran 237
Chapter 14 "Taken to the Cleaners": The Iran Initiative Continues 245
Chapter 15 The Diversion 269
Chapter 16 Summary: The Iran Initiative 277
Part IV Exposure and Concealment
Chapter 17 Exposure and Concealment: Introduction 285
Chapter 18 October 1986: Exposure Threatened 287
Chapter 19 November 1986: Concealment 293
Chapter 20 November 1986: The Attorney General's Inquiry 305
Part V The Enterprise
Chapter 21 Introduction to the Enterprise 327
Chapter 22 The Enterprise 331
Chapter 23 Other Privately Funded Covert Operations 361
Part VI Conclusions and Recommendations
Chapter 24 Covert Action in a Democratic Society 375
XI
Chapter 25 Powers of Congress and the President in the Field of Foreign Policy 387
Chapter 26 The Boland Amendments and the NSC Staff 395
Chapter 27 Rule of Law 41 1
Chapter 28 Recommendations 423
Section II The Minority Report
The Minority Views of Mr. Cheney, Mr. Broomfield, Mr. Hyde, Mr. Courter, Mr.
McCollum, Mr. DeWine, Sen. McClure, and Sen. Hatch 431
Part I Introduction
Chapter 1 Introduction 437
Part II The Foreign Affairs Powers of the Constitution and the Iran-Contra Affair
Chapter 2 The Foreign Affairs Powers and the Framers' Intentions 457
Chapter 3 The President's Foreign Policy Powers in Early Constitutional History 463
Chapter 4 Constitutional Principles in Court 471
Part III Nicaragua
Chapter 5 Nicaragua: The Context 483
Chapter 6 The Boland Amendments 489
Chapter 7 Who Did What to Help the Democratic Resistance 501
Part IV Iran
Chapter 8 The Iran Initiative 519
Chapter 9 Iran: The Legal Issues 539
Chapter 10 The Diversion 549
Part V Disclosures and Investigations
Chapter 11 The Disclosure and the Uncovering 561
Chapter 12 The NSC's Role in Investigations 567
Part VI Putting Congress' House in Order
Chapter 13 The Need to Patch Leaks 575
Part VII Recommendations
Chapter 14 Recommendations 583
Part VIII Appendixes
Section III Supplemental and Additional Views
The Additional Views of Sen. Inouye and Sen. Rudman 637
The Additional Views of Mr. Rodino, Mr. Fascell, Mr. Foley, Mr. Brooks, Mr. Stokes,
Mr. Aspin, and Mr. Boland 639
The Additional Views of Mr. Rodino, Mr. Fascell, Mr. Brooks, and Mr. Stokes 643
The Additional Views of Sen. Boren and Sen. Cohen 651
The Additional and Separate Views of Sen. Heflin 655
The Additional Views of Sen. Boren 657
The Supplemental Views of Sen. McClure 659
The Additional Views of Mr. Broomfield 661
The Supplemental Views of Sen. Hatch 665
The Supplemental Views of Mr. Hyde 667
XII
The Additional Views of Sen. Cohen 673
The Supplemental Views of Mr. McCollum 675
The Additional Views of Sen. Trible 679
Section IV Appendix
Organization and Conduct of the Committees' Investigation 683
XIII
Note on Citations in This Report
Footnotes appear at the end of the each chapter and refer to a variety of sources available to the Committees. The most common are:
1. Hearings. Refers to The Iran-Contra Investigation: Joint Hearings Before the House Select Committee to Investigate Coveri Artns Transactions with Iran and the Senate Select Committee on Secret Military Assistance to Iran and the Nicaraguan Opposition, 100th Cong., 1st Sess. (Washington: Government Print- ing Office, 1987, 13 vols.). Most page references in the footnotes are to these volumes. Because of publication production necessities, however, some references are to the original transcripts of the hearings. A table converting transcript page numbers to hearings page numbers is published in the Hearings.
2. Dep. or Depo. A sworn deposition taken in the presence of one or more Members of the Committees and/or counsel for the Committees, and counsel for the deponent. Please consult other volumes of the Committees' publications for further information.
3. Int. An unsworn interview conducted by one or more Committee Members and/or Committee counsel, with counsel for the interviewee present if the interviewee wished.
4. PROF Notes. Messages generated on a computer system used by the National Security Council staff. The exact time and date of the message are recorded.
5. Tower. Report of the PresidenVs Special Review Board, John Tower, Chairman (Washington: Government Printing Office, Feb. 26, 1987).
6. Letter and Number Codes. Source and Document File Codes for materials that have been assigned a Senate letter code and stamped page number. These materials are stored in the Committees' archives in Washington, D.C.
Preface Origins of this Report
On November 3, 1986, Al-Shiraa, a Lebanese weekly, reported that the United States had secretly sold arms to Iran. Subsequent re- ports claimed that the purpose of the sales was to win the release of American hostages in Lebanon. These reports seemed unbeliev- able: Few principles of U.S. policy were stated more forcefully by the Reagan Ad- ministration than refusing to traffic with ter- rorists or sell arms to the Government of the Ayatollah Khomeini of Iran.
Although the Administration initially denied the reports, by mid-November it was clear that the accounts were true. The United States had sold arms to Iran and had hoped thereby to gain the release of Ameri- can hostages in Lebanon. However, even though the Iranians received the arms, just as many Americans remained hostage as before. Three had been freed, but three more had been taken during the period of the sales.
There was still another revelation to come: on November 25 the Attorney General an- nounced that proceeds from the Iran arms sales had been "diverted" to the Nicaraguan resistance at a time when U.S. military aid to the Contras was prohibited.
Iran and Nicaragua — twin thorns of U.S. foreign policy in the 1980s — were thus linked in a credibility crisis that raised serious ques- tions about the adherence of the Administra- tion to the Constitutional processes of Gov- ernment.
The public and Members of Congress ex- pressed deep concern over the propriety and legality of actions by the staff of the Nation- al Security Council (NSC) and other officers
of the Government regarding both the arms sales and the secret assistance to the Contras.
The issue of U.S. support for the Contras was not new. The President and Congress had engaged in vigorous debate over the proper course of U.S. policy, and Congress had barred U.S. support of Contra military operations for almost 2 years. Subsequently, senior Administration officials had assured Committees of Congress repeatedly that the Administration was abiding by the law.
The Iran-Contra Affair, as it came to be known, carried such serious implications for U.S. foreign policy, and for the rule of law in a democracy, that the 100th Congress de- termined to undertake its own investigation of the Affair.
The inquiry formally began on January 6, 1987, when the Senate, by S. Res. 23, estab- lished the Select Committee on Secret Mili- tary Assistance to Iran and the Nicaraguan Opposition. The next day, the House, by H. Res. 12, established the Select Committee to Investigate Covert Arms Transactions with Iran. The two Chambers charged their re- spective Committees with investigating four major areas: arms sales to Iran, the possible diversion of funds to aid the Contras, viola- tions of Federal law, and the involvement of the NSC staff in the conduct of foreign policy.
The two Committees took the unprece- dented step of merging their investigations and hearings and sharing all the information they obtained. The staffs of the two Commit- tees worked together in reviewing more than 300,000 documents and interviewing or ex- amining more than 500 witnesses. The Com- mittees held 40 days of joint public hearings
XV
Preface
and several executive sessions. The two Committees then decided to combine their findings in a joint Report.
The conclusions in this Report are based on a record marred by inconsistent testimony and failure on the part of several witnesses to recall key matters and events. Moreover, a key witness — Director of Central Intelli- gence William J. Casey — died, and members of the NSC staff shredded relevant contem- poraneous documents in the fall of 1986. Consequently, objective evidence that could have resolved the inconsistencies and over- come the failures of memory was denied to the Committees — and to history.
Under the American system. Government is accountable to the people. A public bipar- tisan investigation such as this one helps to ensure that the principle of accountability is enforced for all officials and policies. It strengthens the national commitment to the democratic values that have guided the United States for two centuries.
The President cooperated with the investi- gation. He did not assert executive privilege; he instructed all relevant agencies to produce their documents and witnesses; and
he made extracts available from his personal diaries, although he rejected the Committees' request to refer to those entries in this Report on the ground that he did not wish to estab- lish a precedent for future Presidents.
The Committees also received unprece- dented cooperation from a sovereign nation, the State of Israel. Although not willing to allow its officials to be examined, the Gov- ernment of Israel assembled and furnished the Committees with extensive materials and information, including information affecting its national security.
The Committees' investigation of the Iran- Contra Affair is not the first, following as it does the findings of the Senate Select Com- mittee on Intelligence and the President's Special Review Board (known as the Tower Board); nor will it be the last, for the investi- gation of the Independent Counsel assigned to this matter continues.
But the Committees hope this Report will make a contribution by helping to explain what happened in the Iran-Contra Affair, and by helping to restore the public's confi- dence in this Nation's Constitutional system of Government.
XVI
Section The Report
Part I Executive Summary
The full story of the Iran-Contra Affair is complicated, and, for this Nation, profoundly sad. In the narrative portion of this Report, the Committees present a comprehensive ac- count of the facts, based on 10 months of investigation, including 1 1 weeks of hearings. But the facts alone do not explain how or why the events occurred. In this Executive Summary, the Committees focus on the key issues and offer their conclusions. Minority, supplemental, and additional views are print- ed in Section II and Section III.
Summary of the Facts
The Iran-Contra Affair had its origin in two unrelated revolutions in Iran and Nicaragua.
In Nicaragua, the long-time President, General Anastasio Somoza Debayle, was overthrown in 1979 and replaced by a Gov- ernment controlled by Sandinista leftists.
In Iran, the pro-Western Government of the Shah Mohammed Riza Pahlavi was over- thrown in 1979 by Islamic fundamentalists led by the Ayatollah Khomeini. The Kho- meini Government, stridently anti-American, became a supporter of terrorism against American citizens.
Nicaragua
United States policy following the revolu- tion in Nicaragua was to encourage the San- dinista Government to keep its pledges of pluralism and democracy. However, the San- dinista regime became increasingly anti- American and autocratic; began to aid a left- ist insurgency in El Salvador; and turned toward Cuba and the Soviet Union for politi- cal, military, and economic assistance. By December 1981, the United States had begun
supporting the Nicaraguan Contras, armed opponents of the Sandinista regime.
The Central Intelligence Agency (CIA) was the U.S. Government agency that assist- ed the Contras. In accordance with Presiden- tial decisions, known as Findings, and with funds appropriated by Congress, the CIA armed, clothed, fed, and supervised the Con- tras. Despite this assistance, the Contras failed to win widespread popular support or military victories within Nicaragua.
Although the President continued to favor support of the Contras, opinion polls indicat- ed that a majority of the public was not supportive. Opponents of the Administra- tion's policy feared that U.S. involvement with the Contras would embroil the United States in another Vietnam. Supporters of the policy feared that, without U.S. support for the Contras, the Soviets would gain a dan- gerous toehold in Central America.
Congress prohibited Contra aid for the purpose of overthrowing the Sandinista Government in fiscal year 1983, and limited all aid to the Contras in fiscal year 1984 to $24 million. Following disclosure in March and April 1984 that the CIA had a role in connection with the mining of the Nicara- guan harbors without adequate notification to Congress, public criticism mounted and the Administration's Contra policy lost much of its support within Congress. After further vigorous debate. Congress exercised its Con- stitutional power over appropriations and cut off all funds for the Contras' military and paramilitary operations. The statutory provi- sion cutting off funds, known as the Boland Amendment, was part of a fiscal year 1985 omnibus appropriations bill, and was signed
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into law by the President on October 12, 1984.
Still, the President felt strongly about the Contras, and he ordered his staff, in the words of his National Security Adviser, to find a way to keep the Contras "body and soul together." Thus began the story of how the staff of a White House advisory body, the NSC, became an operational entity that secretly ran the Contra assistance effort, and later the Iran initiative. The action officer placed in charge of both operations was Lt. Col. Oliver L. North.
Denied funding by Congress, the President turned to third countries and private sources. Between June 1984 and the beginning of 1986, the President, his National Security Adviser, and the NSC staff secretly raised $34 million for the Contras from other coun- tries. An additional $2.7 million was provid- ed for the Contras during 1985 and 1986 from private contributors, who were ad- dressed by North and occasionally granted photo opportunities with the President. In the middle of this period. Assistant Secretary of State A. Langhorne Motley — from whom these contributions were concealed — gave his assurance to Congress that the Adminis- tration was not "soliciting and/or encourag- ing third countries" to give funds to the Contras because, as he conceded, the Boland Amendment prohibited such solicitation.
The first contributions were sent by the donors to bank accounts controlled and used by the Contras. However, in July 1985, North took control of the funds and — with the support of two National Security Advis- ers (Robert McFarlane and John Poindexter) and, according to North, Director Casey — used those funds to run the covert operation to support the Contras.
At the suggestion of Director Casey, North recruited Richard V. Secord, a retired Air Force Major General with experience in special operations. Secord set up Swiss bank accounts, and North steered future donations into these accounts. Using these funds, and funds later generated by the Iran arms sales, Secord and his associate, Albert Hakim, cre-
ated what they called "the Enterprise," a private organization designed to engage in covert activities on behalf of the United States.
The Enterprise, functioning largely at North's direction, had its own airplanes, pilots, airfield, operatives, ship, secure com- munications devices, and secret Swiss bank accounts. For 16 months, it served as the secret arm of the NSC staff, carrying out with private and non-appropriated money, and without the accountability or restrictions imposed by law on the CIA, a covert Contra aid program that Congress thought it had prohibited.
Although the CIA and other agencies in- volved in intelligence activities knew that the Boland Amendment barred their involve- ment in covert support for the Contras, North's Contra support operation received logistical and tactical support from various personnel in the CIA and other agencies. Certain CIA personnel in Central America gave their assistance. The U.S. Ambassador in Costa Rica, Lewis Tambs, provided his active assistance. North also enlisted the aid of Defense Department personnel in Central America, and obtained secure communica- tions equipment from the National Security Agency. The Assistant Secretary of State with responsibility for the region, Elliott Abrams, professed ignorance of this support. He later stated that he had been "careful not to ask North lots of questions."
By Executive Order and National Security Decision Directive issued by President Reagan, all covert operations must be ap- proved by the President personally and in writing. By statute. Congress must be noti- fied about each covert action. The funds used for such actions, like all government funds, must be strictly accounted for.
The covert action directed by North, however, was not approved by the President in writing. Congress was not notified about it. And the funds to support it were never accounted for. In short, the operation func- tioned without any of the accountability re- quired of Government activities. It was an
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evasion of the Constitution's most basic check on Executive action — the power of the Congress to grant or deny funding for Government programs.
Moreover, the covert action to support the Contras was concealed from Congress and the pubHc. When the press reported in the summer of 1985 that the NSC staff was en- gaged in raising money and furnishing mili- tary support to the Contras, the President assured the public that the law was being followed. His National Security Adviser, Robert C. McFarlane, assured Committees of Congress, both in person and in writing, that the NSC staff was obeying both the spirit and the letter of the law, and was neither soliciting money nor coordinating military support for the Contras.
A year later, McFarlane's successor. Vice Admiral John M. Poindexter, repeated these assurances to Congressional Committees. Then, with Poindexter's blessing. North told the House Intelligence Committee he was involved neither in fundraising for, nor in providing military advice to, the Contras.
When one of Secord's planes was shot down over Nicaragua on October 5, 1986, the President and several administration spokesmen assured the public that the U.S. Government had no connection with the flight or the captured American crew member, Eugene Hasenfus. Several senior Government officials, including Elliott Abrams, gave similar assurances to Congress.
Two months later, McFarlane told Con- gressional Committees that he had no knowl- edge of contributions made by a foreign country. Country 2, to the Contras, when in fact McFarlane and the President had dis- cussed and welcomed $32 million in contri- butions from that country. In addition, Abrams initially concealed from Congress — in testimony given to several Committees — that he had successfully solicited a contribu- tion of $10 million from Brunei.
North conceded at the Committees' public hearings that he had participated in making statements to Congress that were "false," "misleading," "evasive and wrong."
During the period when the Administra- tion was denying to Congress that it was involved in supporting the Contras' war effort, it was engaged in a campaign to alter public opinion and change the vote in Con- gress on Contra aid. Public funds were used to conduct public relations activities; and certain NSC staff members, using the pres- tige of the White House and the promise of meetings with the President, helped raise pri- vate donations both for media campaigns and for weapons to be used by the Contras.
Pursuant to a Presidential directive in 1983 the Administration adopted a "public diplo- macy" program to promote the President's Central American policy. The program was conducted by an office in the State Depart- ment known as the Office for Public Diplo- macy for Latin America and the Caribbean, (S/LPD). S/LPD's activities were coordi- nated not within the State Department, but by an interagency working group established by the NSC. The principal NSC staff officer was a former senior CIA official, with expe- rience in covert operations, who had been detailed to the NSC staff for a year with Casey's approval, and who upon retirement from the CIA became a Special Assistant to the President with responsibility for public diplomacy matters.
S/LPD produced and widely disseminated a variety of pro-Contra publications and ar- ranged speeches and press conferences. It also disseminated what one official termed "white propaganda": pro-Contra newspaper articles by paid consultants who did not dis- close their connection to the Administration. Moreover, under a series of sole source con- tracts in 1985 and 1986, S/LPD paid more than $400,000 for pro Contra public relations work to International Business Communica- tions (IBC), a company owned by Richard Miller, whose organization was described by one White House representative as a "White House outside the White House."
The Administration, like Members of Con- gress, may appeal directly to the people for support of its positions; and government agencies may legitimately disseminate infor-
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mation and educational materials to the public. However, by law appropriated funds may not be used to generate propaganda "designed to influence a Member of Con- gress;" and by law, as interpreted by the Office of the Comptroller General, appropri- ated funds may not be used by the State Department for "covert" propaganda activi- ties. A GAO report concluded that S/LPD's white propaganda activities violated the ban on arranging "covert propaganda."
Private funds were also used. North and Miller helped Carl R. "Spitz" Channell raise $10 million, most of which went to Chan- nell's tax-exempt organization, the National Endowment for the Preservation of Liberty ("NEPL"). They arranged numerous "brief- ings" at the White House complex on Cen- tral America by Administration officials for groups of potential contributors. Following these briefings, Channell reconvened the groups at the Hay-Adams Hotel, and made a pitch for tax-deductible contributions to NEPL's Central America "public education" program or, in some individual cases, for weapons. Channell's major contributors were given private briefings by North, and were afforded private visits and photo sessions with the President. On one occasion, Presi- dent Reagan participated in a briefing.
Using the donated money, Channell ran a series of television advertisements in 1985 and 1986, some of which were directed at television markets covering the home dis- tricts of Congressmen considered to be "swing" votes on Contra aid. One series of advertisements was used to attack Congress- man Mike Barnes, a principal opponent of Contra aid, and one of the Congressmen to whom Administration officials had denied violating the Boland Amendment in Septem- ber of 1985. Channell later boasted to North that he had "participated in a campaign to ensure Congressman Barnes' defeat."
Of the $10 million raised by North, Chan- nell and Miller, more than $1 million was used for pro-Contra publicity. Approximate- ly $2.7 million was sent through IBC and off-shore accounts of another Miller-con-
trolled company to Secord's Swiss accounts, or to Calero's account in Miami. Most of the remainder was spent on salaries and expenses for Channell, Miller and their business asso- ciates.
NEPL's charter did not contemplate rais- ing funds for a covert war in Nicaragua, and the Internal Revenue Service never ap- proved such activity when NEPL was grant- ed exempt status. As a consequence, Chan- nell and Miller have each pleaded guilty to the crime of conspiring to defraud the United States Treasury of revenues "by sub- verting and corrupting the lawful purposes of NEPL." Channell named North as a co- conspirator.
In private fundraising, as in the "white propaganda" campaign, the goal of support- ing the Contras was allowed to override sen- sitivity to law and to accepted norms of be- havior.
Iran
The NSC staff was already engaged in covert operations through Secord when, in the summer of 1985, the Government of Israel proposed that missiles be sold to Iran in return for the release of seven American hostages held in Lebanon and the prospect of improved relations with Iran. The Secre- taries of State and Defense repeatedly op- posed such sales to a government designated by the United States as a supporter of inter- national terrorism. They called it a straight arms-for-hostages deal that was contrary to U.S. public policy. They also argued that these sales would violate the Arms Export Control Act, as well as the U.S. arms embar- go against Iran. The embargo had been im- posed after the taking of hostages at the U.S. Embassy in Tehran on November 4, 1979, and was continued because of the Iran-Iraq war.
Nevertheless, in the summer of 1985 the President authorized Israel to proceed with the sales. The NSC staff conducting the Contra covert action also took operational control of implementing the President's deci- sion on arms sales to Iran. The President did
Executive Summary
not sign a Finding for this covert operation, nor did he notify the Congress.
Israel shipped 504 TOW anti-tank missiles to Iran in August and September 1985. Al- though the Iranians had promised to release most of the American hostages in return, only one, Reverend Benjamin Weir, was freed. The President persisted. In November, he authorized Israel to ship 80 HAWK anti- aircraft missiles in return for all the hostages, with a promise of prompt replenishment by the United States, and 40 more HAWKs to be sent directly by the United States to Iran. Eighteen HAWK missiles were actually shipped from Israel in November 1985, but no hostages were released.
In early December 1985, the President signed a retroactive Finding purporting to authorize the November HAWK transaction. That Finding contained no reference to im- proved relations with Iran. It was a straight arms-for-hostages Finding. National Security Adviser Poindexter destroyed this Finding a year later because, he testified, its disclosure would have been politically embarrassing to the President.
The November HAWK transaction had additional significance. The Enterprise re- ceived a $1 million advance from the Israe- lis. North and Secord testified this was for transportation expenses in connection with the 120 HAWK missiles. Since only 18 mis- siles were shipped, the Enterprise was left with more than $800,000 in spare cash. North directed the Enterprise to retain the money and spend it for the Contras. The "diversion" had begun.
North realized that the sale of missiles to Iran could be used to support the Contras. He told Israeli Defense Ministry officials on December 6, 1985, one day after the Presi- dent signed the Finding, that he planned to generate profits on future arms sales for ac- tivities in Nicaragua.
On December 7, 1985, the President and his top advisers met again to discuss the arms sales. Secretaries Shultz and Weinberg- er objected vigorously once more, and Wein- berger argued that the sales would be illegal.
After a meeting in London with an Iranian interlocutor and the Israelis, McFarlane rec- ommended that the sales be halted. Admiral John Poindexter (the new National Security Adviser), and Director Casey were of the opposite opinion.
The President decided to go forward with the arms sales to get the hostages back. He signed a Finding on January 6, 1986, author- izing more shipments of missiles for the hos- tages. When the CIA's General Counsel pointed out that authorizing Israel to sell its U.S. -manufactured weapons to Iran might violate the Arms Export Control Act, the President, on the legal advice of the Attor- ney General, decided to authorize direct shipments of the missiles to Iran by the United States and signed a new Finding on January 17, 1986. To carry out the sales, the NSC staff turned once again to the Enter- prise.
Although North had become skeptical that the sales would lead to the release of all the hostages or a new relationship with Iran, he believed that the prospect of generating funds for the Contras was "an attractive in- centive" for continuing the arms sales. No matter how many promises the Iranians failed to keep throughout this secret initia- tive, the arms sales continued to generate funds for the Enterprise, and North and his superior, Poindexter, were consistent advo- cates for their continuation. What North and Poindexter asserted in their testimony that they did not know, however, was that most of these arms sales profits would remain with the Enterprise and never reach the Contras.
In February 1986, the United States, acting through the Enterprise, sold 1,000 TOWs to the Iranians. The U.S. also provid- ed the Iranians with military intelligence about Iraq. All of the remaining American hostages were supposed to be released upon Iran's receipt of the first 500 TOWs. None was. But the transaction was productive in one respect. The difference between what the Enterprise paid the United States for the missiles and what it received from Iran was more than $6 million. North directed part of
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this profit for the Contras and for other covert operations. Poindexter testified that he authorized this "diversion."
The diversion, for the Contras and other covert activities, was not an isolated act by the NSC staff Poindexter saw it as "imple- menting" the President's secret policy that had been in effect since 1984 of using non- appropriated funds following passage of the Boland Amendment.
According to North, CIA Director Casey saw the "diversion" as part of a more gran- diose plan to use the Enterprise as a "stand- alone," "off-the-shelf," covert capacity that would act throughout the world while evad- ing Congressional review. To Casey, Poin- dexter, and North, the diversion was an inte- gral part of selling arms to Iran and just one of the intended uses of the proceeds.
In May 1986, the President again tried to sell weapons to get the hostages back. This time, the President agreed to ship parts for HAWK missiles but only on condition that all the American hostages in Lebanon be re- leased first. A mission headed by Robert McFarlane, the former National Security Adviser, traveled to Tehran with the first installment of the HAWK parts. When the mission arrived, McFarlane learned that the Iranians claimed they had never promised to do anything more than try to obtain the hos- tages' release. The trip ended amid misunder- standing and failure, although the first in- stallment of HAWK parts was delivered.
The Enterprise was paid, however, for all of the HAWK parts, and realized more than an $8 million profit, part of which was ap- plied, at North's direction, to the Contras. Another portion of the profit was used by North for other covert operations, including the operation of a ship for a secret mission. The idea of an off-the-shelf stand-alone covert capacity had become operational.
On July 26, 1986, another American hos- tage. Father Lawrence Jenco, was released. Despite all the arms sales, he was only the second hostage freed, and the first since Sep- tember 1985. Even though McFarlane had vowed at the Tehran meeting not to deliver
the remainder of the HAWK parts until all the hostages were released, the Administra- tion capitulated again. The balance of the HAWK parts was shipped when Father Jenco was released.
In September and October 1986, the NSC staff began negotiating with a new group of Iranians, the "Second Channel," that Albert Hakim had opened, in part, through prom- ises of bribes. Although these Iranians alleg- edly had better contacts with Iranian offi- cials, they, in fact, represented the same prin- cipals as did the First Channel and had the same arrangement in mind: missiles for hos- tages. Once again, the Administration insist- ed on release of all the hostages but settled for less.
In October, after a meeting in London, North left Hakim to negotiate with the Irani- ans. Hakim made no secret of his desire to make large profits for himself and General Secord in the $15 billion-a-year Iranian market if relations with the United States could be restored. Thus, he had every incen- tive to make an agreement, whatever conces- sions might be required.
As an unofficial "ambassador" selected by North and Secord, Hakim produced a re- markable nine-point plan, subsequently ap- proved by North and Poindexter, under which the United States would receive "one and one half hostages (later reduced to one). Under the plan, the United States agreed not only to sell the Iranians 500 more TOWs, but Secord and Hakim promised to develop a plan to induce the Kuwaiti Gov- ernment to release the Da'wa prisoners. (Seventeen Kuwaiti prisoners, connected to "al-Dawa," an Iranian revolutionary group, had been convicted and imprisoned for their part in the December 12, 1983, attacks in Kuwait on the U.S. Embassy, a U.S. civilian compound, the French Embassy, and several Kuwaiti Goverment facilities.) The plan to obtain the release of the Da'wa prisoners did not succeed, but the TOW missiles were sold for use by the Iranian Revolutionary Guard. Following the transfer of these TOWs, a third hostage, David Jacobsen, was released
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on November 2, 1986, and more profit was generated for the Enterprise.
Poindexter testified that the President ap- proved the nine-point plan. But other testi- mony raises questions about this assertion. Regardless of what Poindexter may have told the President, Secretary Shultz testified that when he informed the President on De- cember 14, 1986, that the nine-point plan in- cluded a promise about the release of the Da'wa prisoners in Kuwait, the President re- acted with shock, "like he had been kicked in the belly."
During the negotiations with the Second Channel, North and Secord told the Iranians that the President agreed with their position that Iraq's President, Saddam Hussein, had to be removed and further agreed that the United States would defend Iran against Soviet aggression. They did not clear this with the President and their representations were flatly contrary to U.S. policy.
The decision to designate private parties — Secord and Hakim — to carry out the arms transactions had other ramifications. First, there was virtually no accounting for the profits from the arms deals. Even North claimed that he did not know how Secord and Hakim actually spent the money com- mitted to their custody. The Committees' in- vestigation revealed that of the $16.1 million profit from the sales of arms to Iran only about $3.8 million went to support the Con- tras (the amount representing "the diver- sion"). All told, the Enterprise received nearly $48 million from the sale of arms to the Contras and Iran, and in contributions directed to it by North. A total of $16.5 million was used to support the Contras or to purchase the arms sold to (and paid for by) the Contras; $15.2 million was spent on Iran; Hakim, Secord, and their associate, Thomas Clines, took $6.6 million in commis- sions and other profit distributions; almost $1 million went for other covert operations sponsored by North; $4.2 million was held in "reserves" for use in future operations; $1.2 million remained in Swiss bank accounts of the Enterprise; and several thousand dollars
were used to pay for a security system at North's residence.
Second, by permitting private parties to conduct the arms sales, the Administration risked losing control of an important foreign policy initiative. Private citizens — whose mo- tivations of personal gain could conflict with the interests of this country — handled sensi- tive diplomatic negotiations, and purported to commit the United States to positions that were anathema to the President's public policy and wholly unknown to the Secretary of State.
The Coverup
The sale of arms to Iran was a "significant anticipated intelligence activity." By law, such an activity must be reported to Con- gress "in a timely fashion" pursuant to Sec- tion 501 of the National Security Act. If the proposal to sell arms to Iran had been re- ported, the Senate and House Intelligence Committees would likely have joined Secre- taries Shultz and Weinberger in objecting to this initiative. But Poindexter recommend- ed— and the President decided — not to report the Iran initiative to Congress.
Indeed, the Administration went to consid- erable lengths to avoid notifying Congress. The CIA General Counsel wrote on January 15, 1986, "the key issue in this entire matter revolves around whether or not there will be reports made to Congress." Shortly thereaf- ter, the transaction was restructured to avoid the pre-shipment reporting requirements of the Arms Export Control Act, and place it within the more limited reporting require- ments of the National Security Act. But even these reporting requirements were ig- nored. The President failed to notify the group of eight (the leaders of each party in the House and Senate, and the Chairmen and Ranking Minority Members of the Intelli- gence Committees) specified by law for un- usually sensitive operations.
After the disclosure of the Iran arms sales on November 3, 1986, the American public was still not told the facts. The President sought to avoid any comment on the ground
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that it might jeopardize the chance of secur- ing the remaining hostages' release. But it was impossible to remain silent, and inaccu- rate statements followed.
In his first public statement on the subject on November 6, the President said that the reports concerning the arms sales had "no foundation." A week later, on November 13, the President conceded that the United States had sold arms, but branded as "utterly false" allegations that the sales were in return for the release of the hostages. The President also maintained that there had been no violations of Federal law.
At his news conference on November 19, 1986, he denied that the United States was involved in the Israeli sales that occurred prior to the January 17, 1986 Finding. The President was asked:
Mr. President . . . are you telling us tonight that the only shipments with which we were involved were the one or two that followed your Janu- ary 17 Finding and that . . . there were no other shipments which the U.S. condoned?
The President replied:
That's right. I'm saying nothing, but the missiles we sold.
And, on November 25, 1986, the Attorney General — with the President at his side — an- nounced at a press conference that the Presi- dent did not know of the Israeli shipments until after they had occurred. He stated that the President learned of the November 1985 HAWK shipment in February 1986.
In fact, however, the Israeli sales, includ- ing the HAWK shipment, were implemented with the knowledge and approval of the President and his top advisers; and the Presi- dent himself told Shultz on the day of his press conference that he had known of the November 1985 shipment when it occurred. McFarlane, Poindexter, and North were inti- mately involved in the Israeli shipments; and the CIA had actually transported one deliv- ery from Israel to Iran.
While the President was denying any ille- gality, his subordinates were engaging in a coverup. Several of his advisers had ex- pressed concern that the 1985 sales violated the Arms Export Control Act, and a "cover story" had been agreed on if these arms sales were ever exposed. After North had three conversations on November 18, 1986, about the legal problems with the 1985 Israeli ship- ments, he, Poindexter, Casey, and McFarlane all told conforming false stories about U.S. involvement in these shipments.
With McFarlane's help, North rewrote NSC staff chronologies on November 19 and
20, 1986, in such a way that they denied contemporaneous knowledge by the Admin- istration of Israel's shipments to Iran in 1985. They asserted at one point that the U.S. Government believed the November 1985 shipment consisted of oil-drilling equipment, not arms.
Poindexter told Congressional Committees on November 21, 1986, that the United States had disapproved of the Israeli ship- ments and that, until the day before his brief- ing, he believed that Administration officials did not know about any of them until after they had occurred. He then destroyed the only Finding signed by the President that showed the opposite.
Casey told Congressional Committees on November 21, 1986, that although a CIA proprietary airline had actually carried mis- siles to Iran from Israel in 1985, the proprie- tary had been told the cargo was "oil-drill- ing equipment."
McFarlane told the Attorney General on November 21, 1986, that the Israelis said they were shipping oil-drilling equipment in November 1985 and that McFarlane did not learn otherwise until May 1986.
On learning that the President had author- ized the Attorney General to gather the rele- vant facts. North and Poindexter shredded and altered official documents on November
21, 1986, and later that weekend. On No- vember 25, 1986, North's secretary con- cealed classified documents in her clothing
10
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and, with North's knowledge, removed them from the White House.
According to North, a "fall guy" plan was proposed by Casey in which North and, if necessary, Poindexter, would take the re- sponsibility for the covert Contra support operation and the diversion. On Saturday November 22, 1986, in the midst of these efforts to conceal what had happened, Poin- dexter had a two and one half hour lunch with Casey. Yet Poindexter could not recall anything that was discussed.
North testified that he assured Poindexter that he had destroyed all documents relating to the diversion. The diversion nevertheless was discovered on November 22, 1986, when a Justice Department official, assisting the Attorney General's fact-finding inquiry, found a "diversion memorandum" that had escaped the shredder.
Prior to the discovery of the diversion memorandum, each interview by the Attor- ney General's fact finding team had been conducted in the presence of two witnesses, and careful notes were taken in accordance with standard professional practices. After discovery of the diversion memorandum — which itself gave rise to an inference of seri- ous wrongdoing — the Attorney General de- parted from these standard practices. A series of important interviews — Poindexter, McFarlane, Casey, Regan, and Bush — was conducted by the Attorney General alone, and no notes were made.
The Attorney General then announced at his November 25 press conference that the diversion had occurred and that the Presi- dent did not know of it. But he made several incorrect statements about his own investiga- tion. He stated that the President had not known of the Israeli pre-Finding shipments, and he stated that the proceeds of the arms sales had been sent directly from the Israelis to the Contras. These statements were both mistaken and inconsistent with information that had been received during the Attorney General's fact-finding inquiry.
Poindexter testified to these Committees that the President did not know of the diver-
sion. North testified that while he assumed the President had authorized each diversion, Poindexter told him on November 21, 1986, that the President had never been told of the diversion.
In light of the destruction of material evi- dence by Poindexter and North and the death of Casey, all of the facts may never be known. The Committees cannot even be sure whether they heard the whole truth or whether Casey's "fall guy" plan was carried out at the public hearings. But enough is clear to demonstrate beyond doubt that fun- damental processes of governance were dis- regarded and the rule of law was subverted.
Findings and Conclusions
The common ingredients of the Iran and Contra policies were secrecy, deception, and disdain for the law. A small group of senior officials believed that they alone knew what was right. They viewed knowledge of their actions by others in the Government as a threat to their objectives. They told neither the Secretary of State, the Congress nor the American people of their actions. When ex- posure was threatened, they destroyed offi- cial documents and lied to Cabinet officials, to the public, and to elected representatives in Congress. They testified that they even withheld key facts from the President.
The United States Constitution specifies the process by which laws and policy are to be made and executed. Constitutional process is the essence of our democracy and our democratic form of Government is the basis of our strength. Time and again we have learned that a flawed process leads to bad results, and that a lawless process leads to worse.
Policy Contradictions and Failures
The Administration's departure from democratic processes created the conditions for policy failure, and led to contradictions which undermined the credibility of the United States.
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The United States simultaneously pursued two contradictory foreign policies — a public one and a secret one:
— The public policy was not to make any concessions for the release of hostages lest such concessions encourage more hostage- taking. At the same time, the United States was secretly trading weapons to get the hos- tages back.
— The public policy was to ban arms ship- ments to Iran and to exhort other Govern- ments to observe this embargo. At the same time, the United States was secretly selling sophisticated missiles to Iran and promising more.
— The public policy was to improve rela- tions with Iraq. At the same time, the United States secretly shared military intelligence on Iraq with Iran and North told the Iranians in contradiction to United States policy that the United States would help promote the over- throw of the Iraqi head of government.
— The public policy was to urge all Gov- ernments to punish terrorism and to support, indeed encourage, the refusal of Kuwait to free the Da'wa prisoners who were convict- ed of terrorist acts. At the same time, senior officials secretly endorsed a Secord-Hakim plan to permit Iran to obtain the release of the Da'wa prisoners.
— The public policy was to observe the "letter and spirit" of the Boland Amend- ment's proscriptions against military or para- military assistance to the Contras. At the same time, the NSC staff was secretly assum- ing direction and funding of the Contras' military effort.
— The pubhc policy, embodied in agree- ments signed by Director Casey, was for the Administration to consult with the Congres- sional oversight committees about covert ac- tivities in a "new spirit of frankness and co- operation." At the same time, the CIA and the White House were secretly withholding from those Committees all information con- cerning the Iran initiative and the Contra support network.
— The public policy, embodied in Execu- tive Order 12333, was to conduct covert op- erations solely through the CIA or other
organs of the intelligence community specifi- cally authorized by the President. At the same time, although the the NSC was not so authorized, the NSC staff secretly became operational and used private, non-accounta- ble agents to engage in covert activities.
These contradictions in policy inevitably resulted in policy failure:
— The United States armed Iran, including its most radical elements, but attained neither a new relationship with that hostile regime nor a reduction in the number of American hostages.
— The arms sales did not lead to a modera- tion of Iranian policies. Moderates did not come forward, and Iran to this day sponsors actions directed against the United States in the Persian Gulf and elsewhere.
— The United States opened itself to black- mail by adversaries who might reveal the secret arms sales and who, according to North, threatened to kill the hostages if the sales stopped.
— The United States undermined its credi- bility with friends and allies, including mod- erate Arab states, by its public stance of op- posing arms sales to Iran while undertaking such arms sales in secret.
— The United States lost a $10 million contribution to the Contras from the Sultan of Brunei by directing it to the wrong bank account — the result of an improper effort to channel that humanitarian aid contribution into an account used for lethal assistance.
— The United States sought illicit funding for the Contras through profits from the secret arms sales, but a substantial portion of those profits ended up in the personal bank accounts of the private individuals executing the sales — while the exorbitant amounts charged for the weapons inflamed the Irani- ans with whom the United States was seek- ing a new relationship.
Flawed Policy Process
The record of the Iran-Contra Affair also shows a seriously flawed policymaking proc- ess.
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Confusion
There was confusion and disarray at the highest levels of Government.
— McFarlane embarked on a dangerous trip to Tehran under a complete misappre- hension. He thought the Iranians had prom- ised to secure the release of all hostages before he delivered arms, when in fact they had promised only to seek the hostages' re- lease, and then only after one planeload of arms had arrived.
— The President first told the Tower Board that he had approved the initial Israeli shipments. Then, he told the Tower Board that he had not. Finally, he told the Tower Board that he does not know whether he approved the initial Israeli arms shipments, and his top advisers disagree on the question.
— The President claims he does not recall signing a Finding approving the November 1985 HAWK shipment to Iran. But Poin- dexter testified that the President did sign a Finding on December 5, 1985, approving the shipment retroactively. Poindexter later de- stroyed the Finding to save the President from embarassment.
— That Finding was prepared without ade- quate discussion and stuck in Poindexter's safe for a year; Poindexter claimed he forgot about it; the White House asserts the Presi- dent never signed it; and when events began to unravel, Poindexter ripped it up.
— The President and the Attorney General told the public that the President did not know about the November 1985 Israeli HAWK shipment until February 1986 — an error the White House Chief of Staff ex- plained by saying that the preparation for the press conference "sort of confused the Presidential mind."
— Poindexter says the President would have approved the diversion, if he had been asked; and the President says he would not have.
— One National Security Adviser under- stood that the Boland Amendment applied to the NSC; another thought it did not. Neither sought a legal opinion on the question.
— The President incorrectly assured the American people that the NSC staff was ad- hering to the law and that the Government was not connected to the Hasenfus airplane. His staff was in fact conducting a "full serv- ice" covert operation to support the Contras which they believed he had authorized.
— North says he sent five or six completed memorandums to Poindexter seeking the President's approval for the diversion. Poin- dexter does not remember receiving any. Only one has been found.
Dishonesty and Secrecy
The Iran-Contra Affair was characterized by pervasive dishonesty and inordinate secre- cy.
North admitted that he and other officials lied repeatedly to Congress and to the Amer- ican people about the Contra covert action and Iran arms sales, and that he altered and destroyed official documents. North's testi- mony demonstrates that he also lied to mem- bers of the Executive branch, including the Attorney General, and officials of the State Department, CIA and NSC.
Secrecy became an obsession. Congress was never informed of the Iran or the Contra covert actions, notwithstanding the requirement in the law that Congress be no- tified of all covert actions in a "timely fash- ion."
Poindexter said that Donald Regan, the President's Chief of Staff, was not told of the NSC staffs fundraising activities because he might reveal it to the press. Secretary Shultz objected to third-country solicitation in 1984 shortly before the Boland Amendment was adopted; accordingly, he was not told that, in the same time period, the National Securi- ty Adviser had accepted an $8 million con- tribution from Country 2 even though the State Department had prime responsibility for dealings with that country. Nor was the Secretary of State told by the President in February 1985 that the same country had pledged another $24 million — even though the President briefed the Secretary of State on his meeting with the head of state at
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which the pledge was made. Poindexter asked North to keep secrets from Casey; Casey, North, and Poindexter agreed to keep secrets from Shultz.
Poindexter and North cited fear of leaks as a justification for these practices. But the need to prevent public disclosure cannot jus- tify the deception practiced upon Members of Congress and Executive branch officials by those who knew of the arms sales to Iran and of the Contra support network. The State and Defense Departments deal each day with the most sensitive matters affecting millions of lives here and abroad. The Con- gressional Intelligence Committees receive the most highly classified information, in- cluding information on covert activities. Yet, according to North and Poindexter, even the senior officials of these bodies could not be entrusted with the NSC staffs secrets be- cause they might leak.
While Congress's record in maintaining the confidentiality of classified information is not unblemished, it is not nearly as poor or perforated as some members of the NSC staff maintained. If the Executive branch has any basis to suspect that any member of the Intelligence Committees breached security, it has the obligation to bring that breach to the attention of the House and Senate Leaders — not to make blanket accusations. Congress has the capability and responsibility of pro- tecting secrets entrusted to it. Congress cannot fulfill its legislative responsibilities if it is denied information because members of the Executive branch, who place their faith in a band of international arms merchants and financiers, unilaterally declare Congress unworthy of trust.
In the case of the "secret" Iran arms-for- hostages deal, although the NSC staff did not inform the Secretary of State, the Chair- man of the Joint Chiefs of Staff, or the lead- ership of the United States Congress, it was content to let the following persons know:
— Manucher Ghorbanifar, who flunked every polygraph test administered by the U.S. Government;
— Iranian officials, who daily denounced the United States but received an inscribed Bible from the President;
— Officials of Iran's Revolutionary Guard, who received the U.S. weapons;
— Secord and Hakim, whose personal in- terests could conflict with the interests of the United States;
— Israeli officials, international arms mer- chants, pilots and air crews, whose interests did not always coincide with ours; and
— An unknown number of shadowy inter- mediaries and financiers who assisted with both the First and Second Iranian Channels.
While sharing the secret with this dispar- ate group, North ordered the intelligence agencies not to disseminate intelligence on the Iran initiative to the Secretaries of State and Defense. Poindexter told the Secretary of State in May 1986 that the Iran initiative was over, at the very time the McFarlane mission to Tehran was being launched. Poin- dexter also concealed from Cabinet officials the remarkable nine-point agreement negoti- ated by Hakim with the Second Channel. North assured the FBI liaison to the NSC as late as November 1986 that the United States was not bargaining for the release of hos- tages but seizing terrorists to exchange for hostages — a complete fabrication. The lies, omissions, shredding, attempts to rewrite his- tory— all continued, even after the President authorized the Attorney General to find out the facts.
It was not operational security that moti- vated such conduct — not when our own Government was the victim. Rather, the NSC staff feared, correctly, that any disclo- sure to Congress or the Cabinet of the arms- for-hostages and arms-for-profit activities would produce a storm of outrage.
As with Iran, Congress was misled about the NSC staffs support for the Contras during the period of the Boland Amendment, although the role of the NSC staff was no secret to others. North testified that his oper- ation was well-known to the press in the Soviet Union, Cuba, and Nicaragua. It was not a secret from Nicaragua's neighbors,
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with whom the NSC staff communicated throughout the period. It was not a secret from the third countries — including a totah- tarian state — from whom the NSC staff sought arms or funds. It was not a secret from the private resupply network which North recruited and supervised. According to North, even Ghorbanifar knew.
The Administration never sought to hide its desire to assist the Contras so long as such aid was authorized by statute. On the contrary, it wanted the Sandinistas to know that the United States supported the Contras. After enactment of the Boland Amendment, the Administration repeatedly and publicly called upon Congress to resume U.S. assist- ance. Only the NSC staffs Contra support activities were kept under wraps. The Com- mittees believe these actions were concealed in order to prevent Congress from learning that the Boland Amendment was being cir- cumvented.
It was stated on several occasions that the confusion, secrecy and deception surround- ing the aid program for the Nicaraguan free- dom fighters was produced in part by Con- gress' shifting positions on Contra aid.
But Congress' inconsistency mirrored the chameleon-like nature of the rationale of- fered for granting assistance in the first in- stance. Initially, Congress was told that our purpose was simply to interdict the flow of weapons from Nicaragua into El Salvador. Then Congress was told that our purpose was to harrass the Sandinistas to prevent them from consolidating their power and ex- porting their revolution. Eventually, Con- gress was told that our purpose was to elimi- nate all foreign forces from Nicaragua, to reduce the size of the Sandinista armed forces, and to restore the democratic reforms pledged by the Sandinistas during the over- throw of the Somoza regime.
Congress had cast a skeptical eye upon each rationale proffered by the Administra- tion. It suspected that the Administration's true purpose was identical to that of the Contras — the overthrow of the Sandinista regime itself Ultimately Congress yielded to
domestic political pressure to discontinue as- sistance to the Contras, but Congress was unwilling to bear responsibility for the loss of Central America to communist military and political forces. So Congress compro- mised, providing in 1985 humanitarian aid to the Contras; and the NSC staff provided what Congress prohibited: lethal support for the Contras.
Compromise is no excuse for violation of law and deceiving Congress. A law is no less a law because it is passed by a slender major- ity, or because Congress is open-minded about its reconsideration in the future.
Privatization
The NSC staff turned to private parties and third countries to do the Government's business. Funds denied by Congress were ob- tained by the Administration from third countries and private citizens. Activities nor- mally conducted by the professional intelli- gence services — which are accountable to Congress — were turned over to Secord and Hakim.
The solicitation of foreign funds by an Ad- ministration to pursue foreign policy goals rejected by Congress is dangerous and im- proper. Such solicitations, when done secret- ly and without Congressional authorization, create a risk that the foreign country will expect and demand something in return. McFarlane testified that "any responsible of- ficial has an obligation to acknowledge that every country in the world will see benefit to itself by ingratiating itself to the United States." North, in fact, proposed rewarding a Central American country with foreign as- sistance funds for facilitating arms shipments to the Contras. And Secord, who had once been in charge of the U.S. Air Force's for- eign military sales, said "where there is a quid, there is a quo."
Moreover, under the Constitution only Congress can provide funds for the Execu- tive branch. The Framers intended Con- gress's "power of the purse" to be one of the principal checks on Executive action. It was designed, among other things, to prevent the
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Executive from involving this country unilat- erally in a foreign conflict. The Constitution- al plan does not prohibit a President from asking a foreign state, or anyone else, to contribute funds to a third party. But it does prohibit such solicitation where the United States exercises control over their receipt and expenditure. By circumventing Con- gress' power of the purse through third- country and private contributions to the Contras, the Administration undermined a cardinal principle of the Constitution.
Further, by turning to private citizens, the NSC staff jeopardized its own objectives. Sensitive negotiations were conducted by parties with little experience in diplomacy, and financial interests of their own. The dip- lomatic aspect of the mission failed — the United States today has no long-term rela- tionship with Iran and no fewer hostages in captivity. But the private financial aspect succeeded — Secord and Hakim took $4.4 million in commissions and used $2.2 million more for their personal benefit; in addition, they set aside reserves of over $4 million in Swiss bank accounts of the Enterprise.
Covert operations of this Government should only be directed and conducted by the trained professional services that are ac- countable to the President and Congress. Such operations should never be delegated, as they were here, to private citizens in order to evade Governmental restrictions.
Lack of Accountability
The confusion, deception, and privatiza- tion which marked the Iran-Contra Affair were the inevitable products of an attempt to avoid accountability. Congress, the Cabinet, and the Joint Chiefs of Staff were denied information and excluded from the decision- making process. Democratic procedures were disregarded.
Officials who make public policy must be accountable to the public. But the public cannot hold officials accountable for policies of which the public is unaware. Policies that are known can be subjected to the test of reason, and mistakes can be corrected after
consultation with the Congress and delibera- tion within the Executive branch itself. Poli- cies that are secret become the private pre- serve of the few, mistakes are inevitably per- petuated, and the public loses control over Government. That is what happened in the Iran-Contra Affair:
— The President's NSC staff carried out a covert action in furtherance of his policy to sustain the Contras, but the President said he did not know about it.
— The President's NSC staff secretly di- verted millions of dollars in profits from the Iran arms sales to the Contras, but the Presi- dent said he did not know about it and Poin- dexter claimed he did not tell him.
— The Chairman of the Joint Chiefs of Staff was not informed of the Iran arms sales, nor was he ever consulted regarding the impact of such sales on the Iran-Iraq war or on U.S. military readiness.
— The Secretary of State was not in- formed of the millions of dollars in Contra contributions solicited by the NSC staff from foreign governments with which the State Department deals each day.
— Congress was told almost nothing — and what it was told was false.
Deniability replaced accountability. Thus, Poindexter justified his decision not to inform the President of the diversion on the ground that he wanted to give the President "deniability." Poindexter said he wanted to shield the President from political embarrass- ment if the diversion became public.
This kind of thinking is inconsistent with democratic governance. "Plausible denial," an accepted concept in intelligence activities, means structuring an authorized covert oper- ation so that, if discovered by the party against whom it is directed. United States involvement may plausibly be denied. That is a legitimate feature of authorized covert op- erations. In no circumstance, however, does "plausible denial" mean structuring an oper- ation so that it may be concealed from — or denied to — the highest elected officials of the United States Government itself.
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The very premise of democracy is that "we the people" are entitled to make our own choices on fundamental policies. But freedom of choice is illusory if policies are kept, not only from the public, but from its elected representatives.
Intelligence Abuses
Covert Operations
As former National Security Adviser Robert McFarlane testified, "it is clearly unwise to rely on covert action as the core of our policy." The Government cannot keep a policy secret and still secure the public support necessary to sustain it. Yet it was precisely because the public would not support the Contra policy, and was unlikely to favor arms deals with Iran, that the NSC staff went underground. This was a perver- sion of the proper concept of covert oper- ations:
— Covert operations should be conducted in accordance with strict rules of account- ability and oversight. In the mid-1970s, in response to disclosures of abuses within the intelligence community, the Government en- acted a series of safeguards. Each covert action was to be approved personally by the President, funded by Congressional appro- priations, and Congress was to be informed.
In the Iran-Contra Affair, these rules were violated. The President, according to Poin- dexter, was never informed of the diversion. The President says he knew nothing of the covert action to support the Contras, or the companies funded by non-appropriated monies set up by North to carry out that support. Congress was not notified of either the Iran or the Contra operations.
— Covert actions should be consistent with publicly defined U.S. foreign policy goals. Because covert operations are secret by defi- nition, they are of course not openly debated or publicly approved. So long as the policies which they further are known, and so long as they are conducted in accordance with law, covert operations are acceptable. Here, however, the Contra covert operation was carried out in violation of the country's
public policy as expressed in the Boland Amendment; and the Iran covert operation was carried out in violation of the country's stated policy against selling arms to Iran or making concessions to terrorists. These were not covert actions, they were covert policies; and covert policies are incompatible with de- mocracy.
— Finally, covert operations are intended to be kept from foreign powers, not from the Congress and responsible Executive agencies within the United States Government itself As Clair George, CIA Director of Oper- ations, testified: "to think that because we deal in lies, and overseas we may lie and we may do other such things, that therefore that gives you some permission, some right or some particular reason to operate that way with your fellow employees, I would not only disagree with that I would say it would be the destruction of a secret service in a democracy." In the Iran-Contra Affair, se- crecy was used to justify lies to Congress, the Attorney General, other Cabinet officers, and the CIA. It was used not as a shield against our adversaries, but as a weapon against our own democratic institutions.
The NSC Staff
The NSC staff was created to give the President policy advice on major national security and foreign policy issues. Here, however, it was used to gather intelligence and conduct covert operations. This depar- ture from its proper functions contributed to policy failure.
During the Iran initiative, the NSC staff became the principal body both for gather- ing and coordinating intelligence on Iran and for recommending policy to the President. The staff relied on Iranians who were inter- ested only in buying arms, including Ghor- banifar, whom CIA officials regarded as a fabricator. Poindexter, in recommending to the President the sale of weapons to Iran, gave as one of his reasons that Iraq was winning the Gulf war. That assessment was contrary to the views of intelligence profes- sionals at the State Department, the Depart-
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ment of Defense, and the CIA, who had concluded as early as 1983 that Iran was winning the war. Casey, who collaborated with North and Poindexter on the Iran and Contra programs, also tailored intelligence reports to the positions he advocated. The record shows that the President believed and acted on these erroneous reports.
Secretary Shultz pointed out that the intel- ligence and policy functions do not mix, be- cause "it is too tempting to have your analy- sis on the selection of information that is presented favor the policy that you are ad- vocating." The Committees agree on the need to separate the intelligence and policy functions. Otherwise, there is too great a risk that the interpretation of intelligence will be skewed to fit predetermined policy choices.
In the Iran-Contra Affair, the NSC staff not only combined intelligence and policy functions, but it became operational and con- ducted covert operations. As the CIA was subjected to greater Congressional scrutiny and regulation, a few Administration offi- cials— including even Director Casey — came to believe that the CIA could no longer be utilized for daring covert operations. So the NSC staff was enlisted to provide assistance in covert operations that the CIA could not or would not furnish.
This was a dangerous misuse of the NSC staff. When covert operations are conducted by those on whom the President relies to present policy options, there is no agency in government to objectively scrutinize, chal- lenge and evaluate plans and activities. Checks and balances are lost. The high policy decisions confronting a President can rarely be resolved by the methods and tech- niques used by experts in the conduct of covert operations. Problems of public policy must be dealt with through consultation, not Poindexter's "compartmentation"; with hon- esty and confidentiality, not deceit.
The NSC was created to provide candid and comprehensive advice to the President. It is the judgment of these Committees that the NSC staff should never again engage in covert operations.
Disdain for Law
In the Iran-Contra Affair, officials viewed the law not as setting boundaries for their actions, but raising impediments to their goals. When the goals and the law collided, the law gave way:
— The covert program of support for the Contras evaded the Constitution's most sig- nificant check on Executive power: the President can spend funds on a program only if he can convince Congress to appropriate the money.
When Congress enacted the Boland Amendment, cutting off funds for the war in Nicaragua, Administration officials raised funds for the Contras from other sources — foreign Governments, the Iran arms sales, and private individuals; and the NSC staff controlled the expenditures of these funds through power over the Enterprise. Con- ducting the covert program in Nicaragua with funding from the sale of U.S. Govern- ment property and contributions raised by Government officials was a flagrant violation of the Appropriations Clause of the Constitu- tion.
— In addition, the covert program of sup- port for the Contras was an evasion of the letter and spirit of the Boland Amendment. The President made it clear that while he opposed restrictions on military or paramili- tary assistance to the Contras, he recognized that compliance with the law was not op- tional. "[W]hat I might personally wish or what our Government might wish still would not justify us violating the law of the land," he said in 1983.
A year later, members of the NSC staff were devising ways to continue support and direction of Contra activities during the period of the Boland Amendment. What was previously done by the CIA — and now pro- hibited by the Boland Amendment — would be done instead by the NSC staff.
The President set the stage by welcoming a huge donation for the Contras from a for- eign Government — a contribution clearly in- tended to keep the Contras in the field while U.S. aid was barred. The NSC staff thereaf-
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ter solicited other foreign Governments for military aid, facilitated the efforts of U.S. fundraisers to provide lethal assistance to the Contras, and ultimately developed and di- rected a private network that conducted, in North's words, a "full service covert oper- ation" in support of the Contras.
This could not have been more contrary to the intent of the Boland legislation.
Numerous other laws were disregarded:
— North's full-service covert operation was a "significant anticipated intelligence ac- tivity" required to be disclosed to the Intelli- gence Committees of Congress under Sec- tion 501 of the National Security Act. No such disclosure was made.
— By Executive order, a covert operation requires a personal determination by the President before it can be conducted by an agency other than the CIA. It requires a written Finding before any agency can carry it out. In the case of North's full-service covert operation in support of the Contras, there was no such personal determination and no such Finding. In fact, the President disclaims any knowledge of this covert action.
— False statements to Congress are felonies if made with knowledge and intent. Several Administration officials gave statements de- nying NSC staff activities in support of the Contras which North later described in his testimony as "false," and "misleading, eva- sive, and wrong."
— The application of proceeds from U.S. arms sales for the benefit of the Contra war effort violated the Boland Amendment's ban on U.S. military aid to the Contras, and con- stituted a misappropriation of Government funds derived from the transfer of U.S. prop- erty.
— The U.S. Government's approval of the pre-Finding 1985 sales by Israel of arms to the Government of Iran was inconsistent with the Government's obligations under the Arms Export Control Act.
— The testimony to Congress in November 1986 that the U.S. Government had no con- temporaneous knowledge of the Israeli ship- ments, and the shredding of documents relat-
ing to the shipments while a Congressional inquiry into those shipments was pending, obstructed Congressional investigations.
— The Administration did not make, and clearly intended never to make, disclosure to the Intelligence Committees of the Finding — later destroyed — approving the November 1985 HAWK shipment, nor did it disclose the covert action to which the Finding relat- ed.
The Committees make no determination as to whether any particular individual in- volved in the Iran-Contra Affair acted with criminal intent or was guilty of any crime. That is a matter for the Independent Counsel and the courts. But the Committees reject any notion that worthy ends justify viola- tions of law by Government officials; and the Committees condemn without reserva- tion the making of false statements to Con- gress and the withholding, shredding, and alteration of documents relevant to a pend- ing inquiry.
Administration officials have, if anything, an even greater responsibility than private citizens to comply with the law. There is no place in Government for law breakers.
Congress and the President
The Constitution of the United States gives important powers to both the President and the Congress in the making of foreign policy. The President is the principal archi- tect of foreign policy in consultation with the Congress. The policies of the United States cannot succeed unless the President and the Congress work together.
Yet, in the Iran-Contra Affair, Administra- tion officials holding no elected office re- peatedly evidenced disrespect for Congress' efforts to perform its Constitutional over- sight role in foreign policy:
— Poindexter testified, referring to his ef- forts to keep the covert action in support of the Contras from Congress: "I simply did not want any outside interference."
— North testified: "I didn't want to tell Congress anything" about this covert action.
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— Abrams acknowledged in his testimony that, unless Members of Congressional Com- mittees asked "exactly the right question, using exactly the right words, they weren't going to get the right answers," regarding solicitation of third-countries for Contra sup- port.
— And numerous other officials made false statements to, and misled, the Congress.
Several witnesses at the hearings stated or implied that foreign policy should be left solely to the President to do as he chooses, arguing that shared powers have no place in a dangerous world. But the theory of our Constitution is the opposite: policies formed through consultation and the democratic process are better and wiser than those formed without it. Circumvention of Con- gress is self-defeating, for no foreign policy can succeed without the bipartisan support of Congress.
In a system of shared powers, decision- making requires mutual respect between the branches of government.
The Committees were reminded by Secre- tary Shultz during the hearings that "trust is the coin of the realm." Democratic govern- ment is not possible without trust between the branches of government and between the government and the people. Sometimes that trust is misplaced and the system falters. But for officials to work outside the system be- cause it does not produce the results they seek is a prescription for failure.
Who Was Responsible
Who was responsible for the Iran-Contra Affair? Part of our mandate was to answer that question, not in a legal sense (which is the responsibility of the Independent Coun- sel), but in order to reaffirm that those who serve the Government are accountable for their actions. Based on our investigation, we reach the following conclusions.
At the operational level, the central figure in the Iran-Contra Affair was Lt. Col. North, who coordinated all of the activities and was involved in all aspects of the secret
operations. North, however, did not act alone.
North's conduct had the express approval of Admiral John Poindexter, first as Deputy National Security Adviser, and then as Na- tional Security Adviser. North also had at least the tacit support of Robert McFarlane, who served as National Security Adviser until December 1985.
In addition, for reasons cited earlier, we believe that the late Director of Central In- telligence, William Casey, encouraged North, gave him direction, and promoted the concept of an extra-legal covert organiza- tion. Casey, for the most part, insulated CIA career employees from knowledge of what he and the NSC staff were doing. Casey's passion for covert operations — dating back to his World War II intelligence days — was well known. His close relationship with North was attested to by several witnesses. Further, it was Casey who brought Richard Secord into the secret operation, and it was Secord who, with Albert Hakim, organized the Enterprise. These facts provide strong reasons to believe that Casey was involved both with the diversion and with the plans for an "off-the-shelf covert capacity.
The Committees are mindful, however, of the fact that the evidence concerning Casey's role comes almost solely from North; that this evidence, albeit under oath, was used by North to exculpate himself; and that Casey could not respond. Although North told the Committees that Casey knew of the diver- sion from the start, he told a different story to the Attorney General in November 1986, as did Casey himself. Only one other wit- ness, Lt. Col. Robert Earl, testified that he had been told by North during Casey's life- time that Casey knew of the diversion.
The Attorney General recognized on No- vember 21, 1986 the need for an inquiry. His staff was responsible for finding the diver- sion memorandum, which the Attorney Gen- eral promptly made public. But as described earlier, his fact-finding inquiry departed from standard investigative techniques. The Attor- ney General saw Director Casey hours after
20
Executive Summary
the Attorney General learned of the diver- sion memorandum, yet he testified that he never asked Casey about the diversion. He waited two days to speak to Poindexter, North's superior, and then did not ask him what the President knew. He waited too long to seal North's offices. These lapses placed a cloud over the Attorney General's investigation.
There is no evidence that the Vice Presi- dent was aware of the diversion. The Vice President attended several meetings on the Iran initiative, but none of the participants could recall his views.
The Vice President said he did not know of the Contra resupply operation. His Na- tional Security Adviser, Donald Gregg, was told in early August 1986 by a former col- league that North was running the Contra resupply operation, and that ex-associates of Edwin Wilson — a well known ex-CIA offi- cial convicted of selling arms to Libya and plotting the murder of his prosecutors — were involved in the operation. Gregg testified that he did not consider these facts worthy of the Vice President's attention and did not report them to him, even after the Hasenfus airplane was shot down and the Administra- tion had denied any connection with it.
The central remaining question is the role of the President in the Iran-Contra Affair. On this critical point, the shredding of docu- ments by Poindexter, North, and others, and the death of Casey, leave the record incom- plete.
As it stands, the President has publicly stated that he did not know of the diversion. Poindexter testified that he shielded the President from knowledge of the diversion. North said that he never told the President, but assumed that the President knew. Poin- dexter told North on November 21, 1986 that he had not informed the President of the diversion. Secord testified that North told him he had talked with the President about the diversion, but North testified that he had fabricated this story to bolster Secord's morale.
Nevertheless, the ultimate responsibility for the events in the Iran-Contra Affair must rest with the President. If the President did not know what his National Security Advis- ers were doing, he should have. It is his responsibility to communicate unambiguous- ly to his subordinates that they must keep him advised of important actions they take for the Administration. The Constitution re- quires the President to "take care that the laws be faithfully executed." This charge en- compasses a responsibility to leave the mem- bers of his Administration in no doubt that the rule of law governs.
Members of the NSC staff appeared to believe that their actions were consistent with the President's desires. It was the Presi- dent's policy — not an isolated decision by North or Poindexter — to sell arms secretly to Iran and to maintain the Contras "body and soul," the Boland Amendment notwithstand- ing. To the NSC staff, implementation of these policies became the overriding con- cern.
Several of the President's advisers pursued a covert action to support the Contras in disregard of the Boland Amendment and of several statutes and Executive orders requir- ing Congressional notification. Several of these same advisers lied, shredded docu- ments, and covered up their actions. These facts have been on the public record for months. The actions of those individuals do not comport with the notion of a country guided by the rule of law. But the President has yet to condemn their conduct.
The President himself told the public that the U.S. Government had no connection to the Hasenfus airplane. He told the public that early reports of arms sales for hostages had "no foundation." He told the public that the United States had not traded arms for hostages. He told the public that the United States had not condoned the arms sales by Israel to Iran, when in fact he had approved them and signed a Finding, later destroyed by Poindexter, recording his approval. All of these statements by the President were wrong.
21
Executive Summary
Thus, the question whether the President knew of the diversion is not conclusive on the issue of his responsibihty. The President created or at least tolerated an environment where those who did know of the diversion believed with certainty that they were carry- ing out the President's policies.
This same environment enabled a secretary who shredded, smuggled, and altered docu- ments to tell the Committees that "some- times you have to go above the written law;" and it enabled Admiral Poindexter to testify that "frankly, we were willing to take some risks with the law." It was in such an environment that former officials of the NSC staff and their private agents could lecture the Committees that a "rightful cause" justi- fies any means, that lying to Congress and other officials in the executive branch itself is acceptable when the ends are just, and that Congress is to blame for passing laws that run counter to Administration policy. What
may aptly be called the "cabal of the zeal- ots" was in charge.
In a Constitutional democracy, it is not true, as one official maintained, that "when you take the King's shilling, you do the King's bidding." The idea of monarchy was rejected here 200 years ago and since then, the law — not any official or ideology — has been paramount. For not instilling this pre- cept in his staff, for failing to take care that the law reigned supreme, the President bears the responsibility.
Fifty years ago Supreme Court Justice Louis Brandeis observed: "Our Government is the potent, the omnipresent teacher. For good or for ill, it teaches the whole people by its example. Crime is contagious. If the Government becomes a law-breaker, it breeds contempt for law, it invites every man to become a law unto himself, it invites anarchy."
The Iran-Contra Affair resulted from a failure to heed this message.
22
Part II Central America
Chapter 1
Introduction: Background on U.S.-Nicaragua
Relations
On July 17, 1979, President Anastasio Somoza De- bayle and his family fled Nicaragua. A civil war that had devastated the nation's economy and caused more than 130,000 casualties was at an end, as was the autocratic and corrupt 43-year rule of the Somoza family. But the battle for Nicaragua's future was just beginning.
The United States had long played a role in Nicara- gua's affairs. Under the Monroe Doctrine of 1823, the United States had declared the Western hemisphere, including Central America, off-limits to European powers. For the rest of the 19th century, U.S. influ- ence was episodic. An American privateer named William Walker briefly seized control of Nicaragua in 1855, opened its borders to slavery, and appointed himself President before he was deposed and execut- ed. The opening of the Panama Canal, however, in- creased the strategic importance of Nicaragua to the United States in the early 20th century.
A treaty signed by the United States and Nicaragua in 1911 gave the United States an exclusive right of intervention in return for the reorganization of Nica- ragua's finances. One year later, President Taft in- voked this pact as a basis for dispatching 2,700 Ma- rines to Nicaragua. The Marines initially arrived at the request of a U.S. -supported Nicaraguan President, ostensibly to protect American property and citizens. They stayed, with one brief intermission, until 1933. During this period, Nicaragua was a virtual depend- ency of the United States.
From 1927 to 1933, the Marines and the Marine- trained Nicaraguan National Guard, with General Anastasio Somoza Garcia at its head, fought a guerril- la war against the forces of General Augusto Cesar Sandino, who opposed the U.S. -backed Conservative Government of Adolfo Diaz. Sandino, whose aim was to rid Nicaragua of "U.S. imperialists," became a na- tional hero to many Nicaraguans during those years; the Sandinistas were named after him. When U.S. forces withdrew in 1933, Sandino accepted a truce. He was shot dead a year later. Many authorities be- lieve Sandino was killed on direct orders from Somoza, who seized power from the civilian govern- ment in 1936.
From 1936 to 1979, Anastasio Somoza Garcia and then his son, Anastasio Somoza Debayle, ruled Nica-
ragua. The rule of Anastasio Somoza Debayle was characterized by corruption; the Somoza family owned nearly one-third of all the land and controlled much of the country's wealth.
In 1961, opponents of Somoza formed the National Liberation Front (FSLN), popularly known as the Sandinistas. This fledgling resistance organization drew much of its early support from students. Fidel Castro provided some of its initial financial backing. Through the early 1970s, the FSLN was a marginal group, unable to succeed in its low-level guerrilla war or to marshal popular support.
The 1972 earthquake that devastated the capital city of Managua, however, changed the nature of the conflict between the rebels and the Government. Fol- lowing the earthquake, Somoza reaped immense prof- its from international relief efforts. His show of greed in the face of so much suffering was an important fact in his loss of support from the growing Nicaraguan business and professional classes. Another was his grooming of his son, known as Tachito, to inherit his position.
Successive attacks by the FSLN were met by in- creasingly harsh reprisals by the National Guard. Strikes, street protests, and guerrilla raids prompted Somoza to order the wholesale shooting of alleged peasant collaborators and the clearance of large areas of the countryside where opposition fighters found sanctuary. Somoza's human rights abuses led the Carter Administration in April 1977 to reduce mili- tary and economic aid to the regime. Six months later, the aid was restored after Nicaragua promised to curb the excesses of the National Guard.
Despite Somoza's promises, the situation deteriorat- ed. In January 1978, Pedro Joaquin Chamorro, the editor of La Prensa, Nicaragua's foremost opposition newspaper, was assassinated. His assassins were never found, but the public reacted against the Government. A wave of protest swept the country. The ranks of the FSLN swelled with new recruits. Business, trade, and church groups joined the rebellion.
The FSLN was the only force trained and capable of opposing the National Guard. The fact that the movement had taken on the rhetorical trappings of a leftist insurgency seemed of little consequence to Nicaraguans eager to remove Somoza. Following the
25
Chapter 1
26
Chapter 1
killing of Chamorro, non-Marxist resistance groups began to gather around the FSLN, leading ultimately to the creation of the Broad Opposition Front seeking to draw all economic classes, ages, and professions. By the beginning of 1979, the movement could claim the full backing of Cuba, the unqualified support of the democracies of Venezuela and Costa Rica, and broad sympathy throughout Latin America.
In February 1979, the State Department announced that, because of Somoza's unwillingness to accept a negotiated settlement, the United States was recalling more than half of its officials in Nicaragua and sus- pending all new economic and military aid. The end of U.S. backing cut the last props of support for the Government, and the end of the Somoza dynasty came on July 17, 1979.
The Sandinistas were enormously popular when they began their rule. A Provisional Government of National Reconstruction was formed to lead the coun- try. At its head was a five-person directorate com- posed of Violetta Chamorro (widow of the murdered La Prensa editor), Alfonso Robelo, Sergio Ramirez, Moises Hassan, and Daniel Ortega. Hassan and Ortega came from the militant wing of the Sandinista Party. Members of the 18-member cabinet and the 33- member council were drawn from a broad spectrum of Nicaraguan public life. Though Nicaraguans were generally satisfied that the new Government repre- sented the Somoza opposition, the United States was not, pointing to Ortega and Hassan as left-wing radi- cals.
The Sandinistas Tal<e Over
The Sandinistas set out to court public favor and international support. They promised free elections, a free press, free enterprise, an independent judiciary, and an end to political oppression.
Yet, the Sandinistas took over television and radio stations and censored the newspaper La Prensa, which opposed repression whether by the Sandinistas or by Somoza. The Sandinistas forced the two moder- ate members of Nicaragua's governing council, Cha- morro and Robelo, to resign, pressured opposition parties, continued political detentions, and expropriat- ed land. The revolutionary party organization as- sumed the functions of state. On September 19, 1980, the Government announced that it would not hold national elections until 1985.
Americans were divided on how to interpret Sandi- nista intentions. If the Carter Administration did not openly embrace the Sandinistas, neither did it close all doors to a possible reconciliation. Immediately fol- lowing the Sandinista victory, the United States do- nated $39 million in emergency food aid to Nicara-
gua, and in 1980 Congress appropriated an additional $75 million in emergency economic assistance (Public Law 96-257). Similarly, Washington supported the provision of aid to Nicaragua from international lend- ing organizations.
The Carter Administration accepted the fact that the United States was in "competition" with Cuba to win over the Nicaraguan Government, but it hoped that friendly relations could be maintained. Yet while providing overt financial assistance. President Carter in the fall of 1979 signed a Finding authorizing sup- port to the democratic elements in Nicaragua because of the concern about the effect of the Sandinista take- over on such institutions.
In public statements, Sandinista officials expressed their desire for better relations with the United States, and insisted that they had no intention of supporting insurgencies aimed at subverting their neighbors. Their actions, however, began to raise doubts. Weap- ons and equipment sent by Cuba through Nicaragua were making their way to rebels in El Salvador.
The new regime received aid from several sources, including United States, Mexico, Venezuela, and Western Europe. But the United States, the largest single contributor, became increasingly concerned about the new regime's growing ties with the Eastern bloc. Nicaragua increased its number of Cuban advis- ers, and in 1980 and 1981 signed agreements with the Soviet Union and East bloc governments, including Bulgaria and East Germany, for advisers and military and intelligence assistance.
Candidate Ronald Reagan stated his firm opposition to any further U.S support for the Sandinistas. In January 1981, President Carter suspended aid to the Nicaraguan regime. In April 1981, the Reagan Ad- ministration continued this policy. It announced that it would withhold the remaining $15 million in un- spent U.S. assistance to Nicaragua and not request further economic aid until the revolution was democ- ratized and all assistance to the Salvadoran rebels ceased.
Concerns about Nicaragua's internal repression, its growing military force, its ties to the Soviet bloc and its support for the Salvadoran insurgency led the Ad- ministration to consider ways to assist the regime's opponents, who came to be known as the Contras.
The Contras
As the Sandinistas consolidated their hold on Nicara- gua in 1979 to 1981. the concerns of the United States were matched within Nicaragua itself. In response, a new Nicaraguan rebel movement — anti-Sandinista "Contras" — emerged.
27
Chapter 1
Figure 1-2. Map of Nicaragua
ChlnandegaO /
North "<r ITM-aXjTaVl.SanBenlto ..^../^
Pacific Ocean \^ v^-^ aipitapi-, f chontales
Puerto Sandlno^ y C* — ^^1 ( / >,
Caribbean Sea
Nicaragua
■^-^— International boundary
Departamento boundary
O National capital
© Departamento capital
Depanementos have the same name Bs their capitals except where noted
0 25 50 Kilometers
I ■— H —
QQ Boundary representation is not necessarily authoritative.
28
Chapter 1
The Contras were not a monolithic group, but a combination of three distinct elements of Nicaraguan society; former National Guardsmen and right-wing figures who had fought for Somoza and against the revolution; anti-Somocistas who had supported the revolution but felt betrayed by the Sandinista Govern- ment; and Nicaraguans who had avoided direct in- volvement in the revolution but opposed the Sandinis- tas' increasingly anti-democratic regime.
Many future Contra leaders fled to exile. Some, like Jose Francisco Cardenal, head of the Superior Coun- cil of Private Enterprise (COSEP), moved to the United States, where they began a political campaign to win support for their cause in Congress and from among the Cuban and Nicaraguan exile communities. Other anti-Sandinistas set about organizing a resist- ance movement in neighboring nations.
The largest and most active of these groups, which later came to be known as the Nicaraguan Democrat- ic Force (FDN), was led by Adolfo Calero Portocar- rero. Calero had been an accountant and businessman, and had been active in the movement to oust Somoza. Following the liberation, he served as the political coordinator of the Conservative Democratic Party and became an outspoken critic of the Sandinista Government. Calero joined the resistance movement after his office and home were attacked and he was forced into exile.
Although Calero had opposed Somoza, the FDN had its roots in two insurgent groups made up of former National Guardsmen who fled Nicaragua after the fall of Somoza. In 1981, this branch of the resist- ance consisted of only a few hundred men.
Other elements of the anti-Sandinista resistance emerged following the failure of members of the Nic-
araguan provisional government to resolve their dif- ferences over the political direction of the country. Increasingly, those who opposed the Sandinistas found themselves isolated within the Government. The resignation in 1980 of Violetta Chamorro from the ruling directorate triggered an exodus of moderate leaders from the Government.
Among those who left were Alfonso Robelo Calle- jas and Arturo J. Cruz. Robelo had entered politics during the two national strikes organized against Somoza. In March 1978, he founded the Nicaraguan Democratic Movement and was imprisoned by Somoza. After his release, he was forced into exile. He participated in the post-revolutionary Government as the head of his own political party and as an opponent of the Sandinista regime. Cruz, who would become a prominent Contra leader, was named Nica- raguan Ambassador to the United States in 1981. He resigned 2 years later in protest against Sandinista policies, and joined the resistance in 1983.
In addition to the main force of FDN fighters cen- tered primarily in the northern portion of the country, other resistance forces became active in other parts of Nicaragua. These include several Indian groups oper- ating along the Atlantic coast and, after 1981, a group formed by the charismatic figure and former Sandi- nista guerrilla leader and hero, Eden Pastora. Forces under Pastora were based along the southern border with Costa Rica.
Initial support for the Nicaraguan resistance came from another country, which organized and supplied paramilitary forces in early 1981. By the end of 1981, however, the Contras were looking to the United States for their support. They were to find a receptive audience — President Reagan.
29
Chapter 2
The NSC Staff Takes Contra Policy
Underground
In December 1981, the President authorized a Central Intelligence Agency (CIA) covert action program to support the Contras. The CIA's activity, however, did not remain covert for long: within months, it was the topic of news reports and the subject of Congres- sional debate questioning the Administration's policy in support of the Contras. The Administration re- sponded that it did not intend to overthrow the San- dinista Government in Nicaragua, but sought to check the spread of communism to El Salvador and other nations in Central America.
In 1982, in the first Boland Amendment, Congress sought to enforce that claim by barring the Adminis- tration from using Congressionally appropriated money for the "purpose" of overthrowing the Sandi- nista regime. The Administration, although not pleased with the amendment, nevertheless accepted it, because the amendment allowed the Administration to maintain support for the Contras so long as that sup- port had as its "purpose" stopping the spread of the Sandinista revolution outside Nicaragua's borders.
With the first Boland Amendment, then, came a temporary compromise between the Administration and Congress. But it was an inherently uneasy com- promise, based more on semantics than substance: The Contras were not in the field to stop Sandinista arms flowing to El Salvador; they were in the field to overthrow the Sandinistas. The Intelligence Commit- tees of Congress, while rejecting that objective, nev- ertheless approved CIA use of contingency reserve funding to support the anti-Sandinistas. And the Ad- ministration embraced the contradiction inherent in the new law, by emphasizing that U.S. support was aimed only at interdicting arms destined for other Central American Communist insurgencies.
During 1983, press reports of a "secret" CIA war in Nicaragua led to increased questioning in Congress. In July, the House voted to end all Contra aid. Mean- while, in the hopes of forestalling an aid cutoff, the Administration accepted an invitation by the Senate Select Committee on Intelligence to clarify its inten- tions in pursuing a covert program. Despite Adminis- tration efforts to meet those concerns, by the winter, the House and Senate had agreed to cap Contra fund- ing at $24 million, a sum that both the Administration
and the Congress knew would not last through fiscal 1984.
Nonetheless, the Administration decided to escalate the operations in Nicaragua. When the Nicaraguan harbor mining was disclosed in April, it created a storm of protest in Congress and around the country and, chiefly as a result. Congress declined to appro- priate more money for the Contras. With the CIA out of funds for the Contras, the NSC staff took over the program of supporting the Contras. But this time, the operation was covert in a new sense — it was con- cealed from Congress.
Beginning in May 1984, when the CIA-appropri- ated funds for the Contras ran out, the National Secu- rity Council (NSC) staff raised money for Contra military operations from third countries with the knowledge of the President, supervised the Contras' purchase of weapons, and provided guidance for the Contras' military operations. The operational responsi- bilities fell largely to Lt. Col. Oliver L. North, a member of the NSC staff who reported to the Nation- al Security Adviser, Robert C. McFarlane, and his deputy. Vice Admiral John M. Poindexter.
In October 1984, the Congress passed and the President signed the second Boland Amendment pro- hibiting the expenditure of any available funds in sup- port of Contra military operations by any agency or entity involved in intelligence activities. Rather than halting U.S. support for the Contras, the CIA's with- drawal was treated as a call for the NSC staff to take over the entire covert operation, raising more money from a third country, arranging for arms purchases, and providing military intelligence and advice. The NSC staff went operational — and underground.
The December 1981 Finding
Within 2 months of President Reagan's inauguration, the CIA proposed, and the NSC considered, plans for covert action to deal with the growing Cuban pres- ence in Nicaragua.' The United States continued to recognize the Nicaraguan Government, but diplomat- ic relations became increasingly adversarial because of the Administration's concern that the Sandinistas were continuing to receive significant military support
31
Chapter 2
from Cuba, support targeted, in part, for insurgent groups beyond Nicaraguan borders.^
In December 1981, President Reagan signed his first Finding specifically authorizing covert paramili- tary actions against the Sandinista Government in Nicaragua.^ Under the law, covert actions may be initiated only by a personal decision of the President. A Finding is an official document embodying that decision. By signing a Finding, a President not only authorizes action, but accepts responsibility for its consequences.
Sponsoring the CIA's new covert program in Cen- tral America was the Director of Central Intelligence, William J. Casey. Casey was a veteran of covert operations, having served with the Office of Strategic Services (OSS), the predecessor to the CIA, during the Second World War. In 1945, Casey, just 32 years old and a Navy lieutenant, was chief of the Secret Intelligence Branch that directed intelligence gather- ing in German-controlled Europe from OSS head- quarters in London.
After the war, Casey became a successful corporate lawyer and a wealthy investor, was appointed Chair- man of the Securities and Exchange Commission, and later became head of the President's 1980 election campaign. Following the 1980 election, Casey was named Director of Central Intelligence, the first Di- rector to enjoy Cabinet rank. Casey was a firm believ- er in the value of covert operations, and took an activist, aggressive approach to his craft. In the words of the CIA's Deputy Director of Operations, Clair George, "Bill Casey was the last great buccaneer from OSS."4
Pastora Defects
Casey saw the opportunity to make military head- way against the Sandinistas in early 1982, when rebel leader Eden Pastora defected from the ruling Sandi- nista junta. Pastora appeared to be an ideal candidate for Contra military leadership. Known to his follow- ers by the nom de guerre, "Comandante Zero," he had been one of the heroes of the fight against Somoza. From 1977 to 1978, he served in the Sandinista Na- tional Liberation Front and later held several high posts in the new Government until his abrupt resigna- tion in 1981. In April 1982, Pastora organized the Sandinista Revolutionary Front (FRS) and declared war on the Sandinista Government.
Although Pastora was a popular, charismatic leader with the potential to challenge the Sandinistas, his geographic base presented a problem for the Adminis- tration. He insisted on operating in the southern part of Nicaragua. The Administration, however, claimed that its only purpose in aiding the Contras was to interdict arms Hows to El Salvador, which lies to the north of Nicaragua. Support for Pastora in the South contradicted that claim.
Casey's deputy. Admiral Bobby R. Inman, an intel- ligence professional who had headed the National Se- curity Agency, objected to this broadening of the covert program. He believed that it was unsound, and unauthorized by the existing Presidential Finding. Yet Casey was determined to proceed. Inman retired at the end of June 1982 and the CIA supported Pastora without any change in the Presidential Finding.^
A Proposal for a New Finding
Pastora's rebel group "develop[ed] quickly."® By July 12, 1982, Donald Gregg, then head of the NSC's Intelligence Directorate and responsible for all covert action projects, proposed a new draft Finding to keep pace with Pastora's developing operations. Gregg, hke Inman, believed that broad support for Pastora was outside the scope of the December 1981 Find- ing.' He wrote to William Clark, the National Securi- ty Adviser, that "additional actions not covered by previous authority are now being proposed."* Those "additional actions" included providing "financial and material support," training, and arms supply to Pas- tora's forces.^ The problem with providing that assist- ance under the December 1981 Finding, as Gregg saw it, was that the "rationale" of the earlier Finding appeared "to be to have the anti-Sandinista forces strike against the Cuban presence in Nicaragua rather than attacking the Sandinista units."'"
Vice Admiral Poindexter, then military adviser to the National Security Adviser, disagreed. In a hand- written note, Poindexter stated: "I don't see this really needs to be approved since the earlier Finding covers it, but maybe it would be good to get a confirmation since we now have a better idea as to where we are going."" As drafted by Gregg, the proposed Finding provided for CIA paramilitary support to forces inside Nicaragua for the purpose of "effect[ing] changes in Nicaraguan government policies."'^ This draft Finding, with its broadly stated goals, was never approved by the President.
Boland I
By the fall of 1982, press reports told of a growing U.S. involvement in Nicaragua.'^ Administration spokesmen responded by stating that the U.S. Gov- ernment was seeking not to overthrow the Nicara- guan Government, but merely to prevent it from ex- porting revolution to El Salvador. Aid to the Contras was presented as an act in defense of El Salvador, not a hostile act against Nicaragua.
Congress soon began to question this explanation.'* The Contras were in the field for the announced purpose of overthrowing the Sandinistas, not simply to interdict supplies destined for El Salvador.'* Con- gress debated the issue extensively, with some Mem- bers questioning whether their own Government was
32
Chapter 2
violating the charters of both the United Nations and the Organization of American States by interfering in the internal affairs of Nicaragua.'* Members voiced concern that U.S. support for the Contras was provid- ing a "convenient pretext" for the Sandinistas to impose martial law, suppress freedom of the press, stifle religion, and undermine the rights of assembly and free elections." Those who supported these views called for a complete cutoff of aid to the Con- tras.
There was equally strong support in Congress, par- ticularly in the Senate, for aiding the Contras. Some Members believed that the Sandinistas were trying to spread a Marxist revolution to neighboring states. They argued that no Communist regime had ever stepped down or consented to free elections and that support for the Contras was necessary to bring about democracy in Nicaragua.'*
Out of this debate emerged an amendment to the Defense Appropriations bill for fiscal year 1983, later known as Boland I. Introduced by Representative Edward P. Boland, the amendment passed the House by a vote of 411-0, and was adopted, in December 1982, by a Conference Committee of the House and Senate. This first Boland Amendment prohibited CIA use of funds "for the purpose of overthrowing the Government of Nicaragua."'^
The internal contradictions of the Administration's announced Nicaragua policy ^° were carried forward in the new law: Congress appropriated funds that would be used by the CIA for Contra assistance, but at the same time rejected the Contras' objective to remove the Sandinista Government. During the floor debate on his amendment, Representative Boland indi- cated that while the Administration did not like his proposed restrictions, it would accept them.^' Con- gress had not cut Contra funding; it merely had legis- lated an impermissible purpose. The Administration still could maintain support for the Contras and did, by relying upon its original justification for Contra support— stopping arms flows to El Salvadoran Com- munist insurgents.
In December 1982, The New York Times reported intelligence officials as saying that Washington's "covert activities have . . . become the most ambitious paramilitary and political action operation mounted by the C.I. A. in nearly a decade. . . ."^'^ One month later, in January 1983, Senator Patrick J. Leahy, ac- companied by staff of the Senate Intelligence Com- mittee, visited Central America to review U.S. intelli- gence activities related to Nicaragua. His findings, supplemented by followup Committee briefings and inquiries, revealed that the covert action program was "preceding policy," that it was "growing beyond that which the Committee had initially understood to be its parameters," and that "there was uncertainty in the executive branch about U.S. objectives in Nicara- gua."^^
Questions about compliance with the Boland Amendment increased throughout 1983. In March, 37 House Members sent a letter to the President warning that CIA activities in Central America could be vio- lating the law.^* In April, news reporters visiting Contra base camps wrote that "[t]he U.S. -backed secret war against Nicaragua's leftist Sandinista regime has spilled out of the shadows."^^
Challenged to defend the Administration's compli- ance with the law, the President asserted in April that there had been no violation of the Boland Amend- ment. There would be none, said the President, be- cause even a law he disagreed with had to be ob- served; "We are complying with the law, the Boland Amendment, which is the law."^* "[W]hat I might personally wish or what our government might wish still would not justify us violating the law of the land."^'' When asked if his Administration was doing anything to overthrow the Government of Nicaragua, he replied, "No, because that would be violating the law."28
According to some in Congress, the Administration was facing a "crisis of confidence" about the legitima- cy of CIA support for the Contras. ^^ The President responded with a major address on Central America to a joint session of Congress on April 27, 1983. Rejecting images of a new Vietnam, the President stated:
But let us be clear as to the American attitude toward the Government of Nicaragua. We do not seek its overthrow. Our interest is to ensure that it does not infect its neighbors through the export of subversion and violence. Our purpose, in con- formity with American and international law, is to prevent the flow of arms to El Salvador, Hon- duras, Guatemala, and Costa Rica . . . .^°
It soon became clear, however, that the President had not made the case for the Administration's Contra support policy with either the Congress or the American people.^' He was not helped by the Con- tras' performance on the ground. The Contras had failed to win either popular support or military victo- ries in Nicaragua and could not, without both, sustain public support in the United States. ^^
The Administration Responds to Congressional Unrest: l\/lay- September 1983
In May 1983, both the House and Senate Select Com- mittees on Intelligence challenged the Administra- tion's Nicaragua policy, but in different ways. The Senate Intelligence Committee "took the rather un- usual step of requiring" that "the Administration ar- ticulate, in a clear and coherent fashion its policy
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objectives." Before the Committee would vote for more aid, it wanted a new Presidential Finding. ^^
The House Permanent Select Committee on Intelli- gence, on the other hand, favorably reported a new bill, the "Boland-Zablocki" bill, to the full House for consideration.^* The bill barred aid for the Nicaragua covert action program, but it also took the Adminis- tration at its word about the need to stop arms flows to El Salvador. The legislation provided $80 million in assistance to Central American governments to stop the flow of arms to rebel groups, but no funds for "support of military or paramilitary activities in Nicaragua."^* Despite strong Administration opposi- tion, the House passed the bill on July 28, 1983, by a vote of 228-195.36
With its implicit threat of an aid cutoff, the Boland- Zablocki measure challenged the Administration to articulate a plausible rationale for covert aid. The bill exposed the loose fit between the Administration's announced policy of stopping arms flows to El Salva- dor and its covert support of the Contras. If the Administration really wanted to stop arms flows to El Salvador, it could do so directly, said the Congress; but if its purpose was to aid the Contras in over- throwing the Nicaraguan Government, there would be no funding. 3'
The Administration responded to the threat of an aid cutoff in three different ways. First, the Adminis- tration established a public relations office in the State Department attempting to muster the public and Con- gressional support necessary for the Contras. Second, anticipating that a cutoff might nevertheless occur, the Administration developed a secret plan to stock- pile weapons for the Contras at the CIA. Finally, at the same time, to satisfy Congressional demands, the Administration agreed to draft a new Finding.
White Propaganda
In June of 1983, the Administration decided upon a new method of trying to win public support for the President's policy in Central America. On July 1, 1983, then National Security Adviser Clark an- nounced that "the President had decided that the Ad- ministration must increase our efforts in the public diplomacy field to deepen the understanding of the support for our policies in Central America."^*
As a result, an office of Public Diplomacy for Latin American and the Caribbean (S/LPD) was estab- lished in the State Department, headed by Otto Reich, ''^ who eventually was given the rank of Am- bassador.*" The S/LPD was an interagency office with personnel contributed by the Department of State, the Department of Defense (DOD), the Agency for International Development, and the U.S. Information Agency. Although created as part of the State Department, the office was established at the direction of the National Security Council.'" The S/ LPD's activities were coordinated by an interagency
working group staffed by the NSC. The principal NSC staff officer was a former senior CIA official. With the knowledge and approval of Director Casey, he was detailed to the NSC staff for a year. He later became Special Assistant to the President with re- sponsibility for public diplomacy matters.
The mission of the office — public diplomacy — was a "new, non-traditional activity for the United States government," according to the State Department. In fact, "public diplomacy" turned out to mean public relations-lobbying, all at taxpayers' expense. The office arranged speaking engagements, published pam- phlets, and sent materials to editorial writers.*^ In its campaign to persuade the public and Congress to support appropriations for the Contras, the office used Government employees and outside contractors — in- cluding Richard Miller and Francis Gomez who would later work with North to provide Contra as- sistance. ^^
A Deputy Director of S/LPD, Jonathan Miller, reported the office's success in what he labeled a "White Propaganda Operation," which sought to place op-ed pieces in major papers by secret consult- ants to the office.** By Reich's own description, the office adopted "a very aggressive posture vis-a-vis a sometimes hostile press." It "briefed Members of Con- gress, reached out to audiences previously over- looked, found new ways of reaching traditional audi- ences, and generally did not give the critics of the policy any quarter in the debate."*^ It claimed that "[a]ttacking the President was no longer cost free."*®
Later, the Comptroller General would find that some of the office's efforts, in particular Jonathan Miller's "White Propaganda," were "prohibited, covert propaganda activities,""' "beyond the range of acceptable agency public information activities. . . ."" In a September 30, 1987, letter, the Comptroller General concluded that S/LPD had violated "a restriction on the State Department's annual appropriations prohibiting the use of federal funds for publicity or propaganda purposes not authorized by Congress.""^
The CIA Tries to Stoclcpiie
In the summer of 1983, while efforts were under- way at the State Department to change public opin- ion, the CIA began secret preparations in the event Congress decided to cut off aid to the Contras. In that event, the Agency planned to obtain equipment free of charge from the DOD.
On July 12, the President directed that the DOD provide enhanced support for the CIA in its efforts to assist the Contras.^" One day later, the CIA sent a "wish list" to the DOD, requesting that $28 million in equipment be transferred to it, "free-of-charge."*' The list covered everything from medical supplies to aircraft, and included a request for personnel.*^ The
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Joint Chiefs of StafT proposed that each of the four services carry a quarter of the cost of these trans- fers.^' The equipment then could be stockpiled by the CIA and provided to the Contras if the need arose. The CIA would not run afoul of any aid ceiling since it had not paid for the equipment. The equipment involved had been paid for out of the normal DOD budget allocation. In short, money appropriated by Congress for one purpose would be used for another, bypassing any limits Congress might place on CIA appropriations, such as the then-pending Boland- Zablocki bill.^"
By late summer, the DOD's General Counsel con- cluded that a nonreimbursable transfer would violate the Economy Act, a law requiring that the DOD be reimbursed for the cost of interagency transfers. ^^ The CIA would have to pay for all items except surplus equipment. From the CIA's perspective, this defeated the purpose of the plan: to avoid the expend- iture of CIA funds and shift the cost to the DOD.^^ The project was finally terminated on February 12, 1985, after the CIA had obtained, without cost, 3 surplus Cessna aircraft and, at cost, 10 night vision goggles, 1 night vision sight, and a Bushmaster cannon.^'
The September 1983 Finding: A New Rationale for Covert Aid
Trying to forestall a complete cutoff of Congres- sional aid, the Administration accepted the Senate Intelligence Committee's proposal that it draft a new Finding defining and delimiting the purposes of the covert program. By August, Director Casey had pre- sented the Committee with a first draft and later, in September, proceeded to "informally discuss the find- ing with Senator Goldwater and other key Senators of the SSCI."^* Within the Administration, the Find- ing was, as North put it, "thoroughly scrubbed" by the State Department and NSC staff as well by as the Justice Department and lawyers from DOD and CIA.59
On September 16, 1983, at a National Security Planning Group (NSPG) meeting. Director Casey briefed the President and his advisers from the State and Defense Departments on the draft Finding. The Director explained that the earlier Finding had been "modified to reflect [a] change of objectives. . . ."^° No longer was the covert program justified solely by the need to curb Cuban support for the Sandinistas or to stop arms flows out of Nicaragua. A new, and broader, rationale was added: covert aid was intended to pressure the Sandinistas to negotiate a treaty with nearby countries.®'
The new Finding also reflected a change of tactics. Congress would not accept a Finding broad enough to permit paramilitary operations conducted by U. S. citizens. The Administration gave its assurances that aid for paramilitary operations would be limited to
third -country nationals.®^ Casey told the President that the "new Finding no longer lets us engage in PM [paramilitary operations]."®'
Three days later, on September 19, 1983, the Find- ing was signed.®* The next day, the Intelligence Committees received briefings on it. Shortly thereaf- ter, the Senate Intelligence Committee voted to pro- vide aid for a continued covert operation in Nicara- gua.®^
The new Finding, however, was not without prob- lems. The Administration's stated objective in sup- porting the Contras was now to pressure the Sandinis- tas into accepting a treaty that had to include free elections. If, as the President believed, the Sandinistas could not win such an election, they would never agree to such a treaty.®® Only the prospect of a military defeat would push them toward a negotiating posture. Yet, the renunciation of a military victory was the price set by Congress for a bipartisan com- promise. The Finding thus contained within it a para- dox that would haunt the Administration's Nicaragua policy.
Forcing the Issue: The December Funding Cap and Intensifying Covert Operations
One day after the September Finding was briefed to the Intelligence Committees, an unnamed Administra- tion official was quoted in The New York Times explaining the rationale of the new Finding: "Yes, we are supporting the rebels until the Nicaraguans stop their subversion," an "approach," the official urged, that "should end the argument over whether the Ad- ministration was violating its pledge by doing more than just stopping the arms flow."®'
But Administration hopes that the September Find- ing, and its new rationale for covert action, would end the debate on Contra aid were quickly dashed. Discussions were held on the House floor over the advisability of continuing covert aid, and the Presi- dent took his cause to the public in his radio address- es. In October, the House voted to halt all aid to paramilitary groups fighting the Nicaraguan Govern- ment.®* The Senate, however, wanted to continue aid. In early December, the House and Senate agreed to a compromise: A "cap" of $24 million would be placed on Contra funding, and the CIA would be barred from using its contingency reserves to make up any shortfall.®^
Congress and the Administration recognized that the $24 million appropriation would be insufficient to sustain a covert operation through the fiscal year.'" Therefore, the door was left open for a future Admin- istration funding request to carry the program for the balance of the year if negotiations for a peace treaty were thwarted by the Sandinistas. The President was
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required to report to Congress by March 15 on the steps taken to achieve a negotiated settlement in Cen- tral America.'"
The Decision to Bring the Situation to a Head
Having survived the threat of a total cutoff of funds for the Contras, the Administration decided to intensi- fy the CIA's covert activities while funding still re- mained.'^ Charged by the new National Security Ad- viser, Robert McFarlane, to prepare an "in-depth review" of the Administration's Central America policy, ''^ a Special Interagency Working Group (SIG)''' concluded: "Given the distinct possibility that we may be unable to obtain additional funding in FY-84 or FY-85, our objective should be to bring the Nicaragua situation to a head in 1984.""^ At a Janu- ary 6 NSPG meeting, the President and his advisers concurred in the SIG recommendation: "Our covert action program should proceed with stepped up inten- sity."''^
Even before the decision had been officially ac- knowledged, plans had been implemented to step-up paramilitary operations in Central America. In the fall, speedboats carried out attacks against Sandinista patrol craft and fuel tanks.'® By November, a more heavily armed speedboat had been developed for follow-on operations."
At the end of December, and thereafter, the mining and other operations increased. In early January, the CIA proposed attacks against fuel supply depots and transmission lines along the "entire Pacific coast of Nicaragua."'* On January 7, three magnetic mines were placed in Sandino harbor;''^ on February 3, an air attack destroyed a Sandinista "communications and naval arms depot"*"; and on February 29, more mines were placed at Corinto.*' By March 29, plans had been made to support an attack by Eden Pastora on San Juan del Norte; it was hoped that the attack would result in the installation of a provisional gov- ernment.*^
The Role of Lt. Col. Oliver North
At the NSC, Lt. Col. Oliver North became the liaison with the CIA in its intensified covert effort. A graduate of the U. S. Naval Academy, he had distin- guished himself on the battlefield in Vietnam, winning a Silver Star, a Bronze Star, and two Purple Hearts.*^ He was assigned to the NSC in October 1981, where he quickly established a reputation with his superiors as a staffer who could get a job done.***
North was energetic, articulate, action-oriented, and had a reputation for bypassing red tape.*^ His superi- ors could depend on him not only to carry out orders, but to keep them informed.*® North was a prodigious writer, often staying in his office until late at night to complete lengthy papers or other work.*''
As described by a number of his colleagues. North's relationship to McFarlane was very close.** With McFarlane's rise to the position of National Security Adviser, North came to play an increasingly large role not only in the operational aspects of Contra policy, but also in forging that policy. North already had contacts in Central America who were pleased with his success. On November 7, 1983, John Hull, Indiana native, ranch owner in Costa Rica, and Contra supporter, wrote that "B.G.," or "blood and guts," as North was known, was to have a new boss, Robert McFarlane. Hull hoped this would make North "more powerful as we need more like him."*^
North became a strong advocate within the NSC staff of intensified covert support for the Contras. He was the point of contact, transferring information from the CIA to the National Security Adviser for the President's approval.®" For every significant, and sometimes insignificant, operation, he provided a memorandum to the National Security Adviser des- tined for the President. His reports were detailed and enthusiastic, his recommendations supportive of fur- ther operations.®'
In his new assignment, North looked to Casey for guidance. In his words. Director Casey was a "teach- er or philosophical mentor" of sorts, to whom he looked for help and advice on a regular basis. ®^ "Bill Casey was for me a man of immense proportions," North testified, "a man whose advice I valued greatly and a man whose concern for this country and the future of this land were, I thought, on the right track." "History," North stated "will bear that out."®^
Tension Between the 1983 Finding and Intensified Operations
In a series of memorandums written between Oc- tober 1983 and March 1984, North recorded the CIA's increasing covert presence in the region. Rela- tively minor operational details were given to the President, as on November 4, when North advised McFarlane to suggest an increase in the number of weapons supplied to the Contras by 3,000. The Presi- dent approved the recommendation.®'* North not only sought approval for, but also reported the results of, various actions proposed to him by Agency person- nel. On February 3, he reported a successful attack on a Sandinista communications and naval arms depot. Admiral Poindexter penned, "Well done." and checked North's recommendation that the President would be briefed.®^
North frequently stated in his memorandums that the actions recommended were within the Septem- ber 1983 Finding.®^ Yet, progress toward negotiations and success in arms interdiction were not the focus of his attention; instead, the destruction of Sandinista fuel supply lines or the mining of harbors was the
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subjects of these memorandums. North kept his superiors advised of Contra actions that would weaken the Sandinista regime, explaining that the purpose of the mining and attacks was to enhance the Contras' military strength, while "reduc[ing] the mobility of Sandinista military units. "^'
North could contend that such military activities were within the scope of the Finding because of the Finding's essential ambiguity. Paramilitary action, once authorized, may be used to promote a diplomat- ic end while at the same time furthering the cause of military victory. But by March of 1984, it had become clear that the diplomatic end the Finding described was not what North anticipated or encour- aged. In memoranda to McFarlane, he proposed sig- nificant military actions against the Sandinistas, the details of which cannot be disclosed for national secu- rity reasons, but which give substance to the testimo- ny of Clair George, CIA Deputy Director for Oper- ations, that North's ideas were often extreme, "crazy," or "hairbrained."** The memos reveal the same enthusiasm for covert paramilitary operations that North would later bring to his work as the "switching point" for Contra support during the next 2 years. ^8
The Money Begins to Run Out
By February 1984, the $24 million earmarked by Congress for the Contras was being quickly depleted. On February 13, North wrote to McFarlane, empha- sizing the importance of obtaining "relief from the $24M ceiling,"""' but recognizing that "[c]ongres- sional resistance on this issue is formidable":
[P]rospects for success are bleak even with a concerted effort. At some point, we may have to reassess our prospects and decide whether pru- dence requires that we somehow stretch our FY- 84 effort to avoid running out of funds.'*"
In a memorandum drafted by North for the President, McFarlane concluded that "[u]nless an additional $14M [million] is made available, the [Contra aid] program will have to be drastically curtailed by May or June of this year.""'^
the September 1983 Finding.'"^ Senator Barry Goldwater, Senate Intelligence Committee Chairman, charged that his Committee Members had been de- ceived at the very moment they were being asked to vote to support Contra aid. "[I]t is indefensible on the part of the Administration to ask us to back its for- eign policy when we don't even know what is going on," he declared.'"^
After initial assertions by Director Casey and the National Security Adviser"" that full and detailed disclosure had been provided to Congress, the Ad- ministration decided to end the escalating battle and offered a truce. On April 26, Director Casey "apologize[d] profoundly," conceding inadequate dis- closure.'"* But the "apology" could not heal the "fracture" between Congress and the Administration that the mining had created. '°^ The Administration's policy to bring the situation "to a head" had back- fired: the plan, rather than attracting support, lost it.
Keeping the Contras Together: Spring-Summer 1984
The Administration's proposal for $21 million in supplemental assistance for the Contras now lay in doubt as Congress debated the course of U. S. policy in Central America. The uproar over the mining inci- dent made any further appropriation unlikely. Indeed, House Speaker Thomas P. (Tip) O'Neill, Jr. declared that, in his view, the President's funding request was "dead."''"
With or without appropriated funds, the Adminis- tration planned to continue supporting the Contras. In McFarlane's words, the President directed the NSC staff to keep the Contras together "body and soul."''"^ In Poindexter's words, the President "wanted to be sure that the contras were support- ed."'^
McFarlane assigned this responsibility to North, who testified:
I was given the job of holding them together in body and in soul. ' ' ^
The Harbor Mining Disclosures
In early April, the country learned that the U.S. Government was involved in the mining of Nicara- guan harbors. U.S. Government presence in Nicara- gua had become "embarrassingly overt." '"^ As McFarlane testified: "The disclosure that harbors had been mined in Nicaragua was received very badly. . . ."""■
Some in Congress believed that the Administration had misrepresented the activities it conducted under
To keep them together as a viable political oppo- sition, to keep them alive in the field, to bridge the time between the time when we would have no money and the time when the Congress would vote again, to keep the effort alive, be- cause the President committed publicly to go back, in his words, again and again and again to support the Nicaraguan resistance. ' ' *
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Tapping Foreign Sources — The First Efforts
With the appropriated funds projected to run out in May or June, the Contras could be kept together only if an alternative source of funding could be found. The Administration began to look beyond the U.S. Treasury to foreign countries for monetary support. As early as February, North drafted a National Secu- rity Decision Directive recommending "immediate ef- forts to obtain additional funding of $10-$ 15 million from foreign or domestic sources to make up for the fact that the current $24 million appropriation will sustain operations only through June 1984."*''* While McFarlane struck this language from an official pol- icymaking document,"^ he quietly pursued the same idea.
Looking to Country 1 for Contra Support
McFarlane testified that perhaps as early as Febru- ary 1984, he considered "the possibility of in effect farming out the whole contra support operation to another country, which would not only provide the funding, but give it some direction."**^ In February or March, McFarlane pursued the idea with an offi- cial from Country 1."'' He inquired whether Country 1 would have any interest in instructing "the contras in basic tactics, maneuver[s], and so forth."''* Coun- try 1 officials eventually declined the invitation. "^
But McFarlane was not dissuaded from attempting a less ambitious plan for third-country support. On March 27, McFarlane met with Director Casey and proposed a plan to approach third countries, including Country 1, for Contra assistance. In a memorandum of that date, Casey recounted McFarlane's plan:
In view of possible difficulties in obtaining sup- plemental appropriations to carry out the Nicara- guan covert action project through the remainder of this year, I am in full agreement that you should explore funding alternatives with [Coun- try 1] and perhaps others.'^"
Others were not in "full agreement," however, about an approach to Country 1. Secretary of State George P. Shultz testified that during other discus- sions within the Administration about third-country funding, he questioned the legality and wisdom of any third-country approach. Shultz testified that by April 18, McFarlane knew he (Shultz) felt it was a mistake to approach Country 1 for Contra support. '2'
Nevertheless, McFarlane followed through with the plan recounted in Director Casey's March 27 memo. He directed Howard J. Teicher, the Director of Near East Affairs at the NSC, to speak to an official in Country Ts Ministry of Foreign Affairs about obtain- ing monetary support. Teicher made the approach, but Country 1 declined to be a part of the plan.'^^ McFarlane, in a memorandum of April 20, told
Teicher that he was "disappointed in the outcome but we will not raise it further . . . [w]e will not press them on the question of assistance to the contras." '^^ In May, Secretary Shultz learned of Teicher's ap- proach from the U. S. Ambassador to Country 1, and he confronted McFarlane at the White House. '^'' Ac- cording to Shultz, McFarlane told him that Teicher's approach to Country 1 was without authorization and that Teicher was operating "on his own hook."'^* But Shultz later learned, to the contrary, from his Ambassador, that Teicher had made a point of telling the Ambassador he was in Country 1 at McFarlane's instructions. '2^ Later, McFarlane told the Commit- tees that he had directed Teicher to seek a contribu- tion from Country 1.'^'
Looking to Country 6 for Contra Support
Another third-country funding option considered by the CIA during the spring of 1984 was an ap- proach to Country 6. In his March 27 memorandum, Casey indicated that Country 6 officials already had been approached and that the initial reaction had been favorable. '2* Between April 10 and 13, 1984, Duane (Dewey) Clarridge, Chief of the Latin American Di- vision of the CIA Directorate of Operations traveled to Country 6.'-^ While there, CIA Deputy Director John N. McMahon, told Clarridge to "hold off on his discussions because of the recent harbor mining disclosures.'^" Upon his return to the United States, Clarridge wrote:
Current furor here over the Nicaraguan project urges that we postpone taking [Country 6] up on their offer of assistance. Please express to [Coun- try 6 official] my deep regret that we must do this, at least for the time being, and I fully realize that he cannot crank up assistance on a moment's notice, should we decide to go forward in the future. ' ^ '
Clarridge testified that neither Casey's March 27 memorandum nor the cable traffic (in some cases cap- tioned, "[Country 6] Assistance to the Nicaraguan Project" '^^), represented CIA efforts to solicit Contra assistance from Country 6.'^^ He conceded that the documents showed that, prior to his arrival. Country 6 had offered to aid the Contras, and that an offer may have been made as early as January 1984 in a meeting between Director Casey and a Country 6 official.'^'' But before he arrived in Country 6, Clarridge testified, "a decision had been taken . . . that we would neither ask for any assistance nor would we accept any . . . ."'^s clarridge did not explain why, if the Country 6 offer of assistance was dead before his visit, he urged on his return "we postpone taking [Country 6] up on their offer of as- sistance."'^*
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Country 2 Contributes Funds
By May 1984, the Contras had exhausted the last portion of the $24 million Congressional appropriation for fiscal 1984. McFarlane testified that possibly as early as May,'^' he met with the Ambassador from Country 2 and explained that it was almost "inevita- ble that the Administration would fail" to win Con- gressional support for the Contras.*'* According to McFarlane, the Ambassador offered to "provide a contribution of $1 million per month, ostensibly from private funds that would be devoted to — as a humani- tarian gesture — to sustenance of the Contras through the end of the year."''^ In his testimony, McFarlane denied that any solicitation of Country 2 had oc- curred, and insisted the Country 2 contribution was merely a gift.'*"
After receiving the contribution and informing his deputy, Admiral Poindexter, McFarlane charged North with the responsibility for arranging the trans- fer of funds: "[I] asked him to be in touch with the contra leaders and to find out where the bank account was kept. . . . Lieutenant Colonel North came back and provided the name of the bank, its address and the contras' account number for the bank in Miami. . . ."*'" McFarlane communicated this to the Ambassador by handing him an index card with the account number on it."^ North testified that it was McFarlane who asked him "to establish the initial resistance account offshore to which money was sent by a foreign government."'"'^
According to McFarlane, the President was in- formed of the Country 2 contribution shortly after it took place. McFarlane placed a note card into the President's morning briefing book. He chose this method of informing the President of the contribution to reduce any chance that others at the President's daily briefing might become aware of the funding scheme. After the meeting, McFarlane was called in to "pick up the note card which," he recalled, "ex- pressed the President's satisfaction and pleasure that this had occurred."''*'*
McFarlane also testified he informed selected mem- bers of the executive branch of the funding. "Within a day or so," he told Vice President George Bush, and at a weekly breakfast with the Secretaries of State and Defense, he "drew them aside" and informed them that the Contras would be "provided for" until the end of the year. Neither Secretary, according to McFarlane's testimony, asked the source of the funds.'''* McFarlane testified that it was "likely" he told then-Chief of Staff, James A. Baker III "[i]n the spring of '84," and that it was "possible" he told then- Counselor to the President Edwin Meese III of the Country 2 contribution.'*® McFarlane claimed he did not inform Director Casey of the Country 2 fund- ing.'*'
But McFarlane's account was disputed by other witnesses. Secretary of Defense Caspar W. Weinberg-
er had no recollection of being so advised by McFar- lane;'•** and Secretary Shultz testified that he was told of the contribution for the first time in June 1986 after Admiral Poindexter became concerned that the Secretary of State had not been told of the Country 2 contribution.'*^ Baker denied any knowledge of the contribution. '*°
The June National Security Planning Group Meeting
On June 25, the National Security Planning Group met to consider options for funding the Contras. In attendance were the President, Vice President Bush, Secretary Shultz, Secretary Weinberger, Director Casey, Meese, and McFarlane. Director Casey urged the President to seek third-country aid. Secretary Shultz responded that Chief of Staff James Baker had told him that if the U.S. Government acted as a conduit for third-country funding to the Contras, that would be an "impeachable offense."'*' Casey re- sponded that it was permissible if the plan called for direct contributions from third countries to the Con- tras. Meese recalled that there was an opinion by Attorney General William French Smith that provid- ed authority for such a plan, but also noted that if an opinion were sought. Justice Department lawyers should be given guidance on what the opinion should say. The meeting ended without any firm conclusion. McFarlane advised that no one was to do anything without the necessary Justice Department opinion. Although McFarlane had already secured the contri- bution from Country 2, neither he nor anyone else mentioned it. '*^
And although McFarlane had urged those at the National Security Planning Group meeting not to do anything, that very day North arranged for the trans- fer of Country 2 funds to Contra leader Adolfo Calero. North's notes reveal that on June 25, 1984, he told Calero that funds would be transferred "w/in 24 hrs.," through an offshore account. North issued a series of instructions to Calero: "Never let agency know of amt, source, or even availability" of the funds; "No one in our govt, can be aware"; and "Your organization must not be aware."'*'
North made these plans to send the Country 2 funds to Calero despite his apparent knowledge of the legal difficulties expressed earlier that day at the Na- tional Security Planning Group meeting. His notes reflect that he was advised of those discussions by Clarridge of the CIA. North recorded phrases such as "impeachable offense" (presumably referring to Sec- retary Shultz's remark), and "going to French Smith — reading on US seeking alternative funding." The note continues: "Seek 3d party funding."'**
The next day, Director Casey met with Attorney General Smith along with members of the Justice Department and the CIA legal staff. In a memoran-
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dum recording the meeting, the CIA's General Coun- sel, Stanley Sporkin, reported that in response to Di- rector Casey's question about the "legal limits" of funding options, the Attorney General stated:
that he saw no legal concern if the United States Government discussed this matter with other na- tions so long as it was made clear that they would be using their own funds to support the Contras and no U.S. appropriated funds would be used for this purpose. The Attorney General also said that any nation agreeing to supply aid could not look to the United States to repay that com- mitment in the future. The DCI [Director of Central Intelligence] made it clear that if there is a possibility this option might be used, he would advise the CIA oversight committees. '^^
The Intelligence Committees were not advised of the Country 2 contribution until 1987.
Providing Support— The Private Networl(
With funds available from Country 2, North turned to creating a mechanism for providing materiel sup- port for the Contras. "When we ran out of money," North testified, "when people started to look in Nica- ragua and Honduras and Guatemala and El Salvador and Costa Rica for some sign of what the Americans were really going to do," a decision was made to create an infrastructure, what North termed a "covert operation" to provide the operational support denied by Congress. '^^
North testified that, at Casey's suggestion, he turned to Retired U.S. Air Force Maj. General Rich- ard V. Secord: '^''
[I]n 1984, we were approaching the proscriptions under Boland, Director Casey and I had had a number of discussions. I had made a number of trips, and obviously by then I had become much more engaged in the support for the resistance.
Director Casey is the one who had suggested General Secord to me as a person who had a background in covert operations . . . and was a man who, by Director Casey's definition, got things done, and who had been poorly treated. Those were his words.
I approached General Secord in 1984 and asked that he become engaged in these activities. . . .
I went back to him again and at some point in '84, he agreed to become actively engaged. He agreed to establish, and did, private commercial entities outside the United States that could help carry out these activities. '•''*' It was always viewed by myself, by Mr. McFarlane, by Direc- tor Casey, that these were private commercial ventures, private commercial activities . . . .'^^
It was clearly indicated that Mr. McFarlane and Admiral Poindexter and in fact almost drawn up by Director Casey, how these would be outside the U.S. Government, and that I told them right from the very beginning that those things that he did deserved fair and just compensation.'^"
[I]t was always the intention to make this a self- sustaining operation and that there always be something there which you could reach out and grab when you needed it. Director Casey said he wanted something you could pull off the shelf and use at a moment's notice.'®'
The network, albeit privately run, was created for the purpose of pursuing "foreign policy goals." Accord- ing to North: "It was never envisioned in my mind that this would be hidden from the President." '^^ The President has publicly stated that he was kept informed of some of the efforts by private citizens to aid the Contras.'®^ Poindexter testified the President "knew the contras were being supported ... by third-country funds and by private support activity. . . ." "''' There is no evidence, however, to suggest that the President was ever informed about an "off-the-shelf covert operation.
Secord's Initial Role
General Secord had served in the Air Force until 1983, when he retired and entered private business. During his service in the Air Force, he was involved in special operations with the CIA in Laos. From 1978 to 1981, Secord headed the U.S. Air Force International Programs office.'®^
In summer 1984, Secord's first assignment from North was to assist the Contras in buying weapons with the funds sent to Calero by Country 2. In July, Secord, accompanied by his associate and former CIA operative, Rafael Quintero, met with Calero to dis- cuss the Contras' need for low-priced weapons. He left the meeting with a weapons list.'^® Although Secord was not an arms dealer, he agreed to act as a broker to procure the weapons with his business part- ner, Albert A. Hakim, a naturalized American of Ira- nian descent.'^' In his testimony. Secord referred to the operation that he and Hakim used for Contra support as "the Enterprise." '**
Owen's Role
North also obtained the assistance of Robert W. Owen to act on his behalf with Contra leaders. Owen was a private citizen who was a teacher before he joined the staff of Senator Dan Quayle in 1982. After leaving Senator Quayle's staff in 1983, Owen joined Gray & Co., a public relations firm in Washington, D.C.'«»
In the spring of 1984, while Owen was at Gray & Co., a Contra representative approached the firm
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seeking representation. Owen was asked to contact the Nicaraguan Democratic Forces (FDN). He turned to North, whom he had met the year before while working for Senator Quayle. Owen learned from North that the Contras needed money, and they dis- cussed a plan to set up a group of European proprie- tary companies to purchase weapons overseas. During the discussions, North asked Owen to travel to Cen- tral America to determine the Contras' requirements over the next several months. Owen agreed.''"'
Taking a leave of absence from his firm, Owen traveled to Central America in late May or early June 1984 and met with Contra leaders. He was told, and subsequently repeated to North, that the Contras "would need $1 million a month, and if they wanted to increase in size they would need about a million and a half dollars a month." "' Between October 1984 and March 1986, Owen made more than seven trips to Central America collecting information and delivering intelligence and money to the Contras on North's behalf.'''^ He was given the code name "T.C." (The Courier), and in his own words, he served as North's "eyes and ears" in Central Amer- ica. •''^
Boland II
In the summer of 1984, CIA covert assistance to the Contras began to wane as funds were depleted. Mean- while, legislation — the second Boland Amendment — that would bar the Agency from future support for the Contras had been passed by the House in early August. According to McFarlane, as the CIA stepped out of the picture, the task of supporting the Contras fell to the NSC: "[t]he President had made clear that he wanted a job done. The net result was that the job fell to the National Security Council staff." '''*
In late August, North traveled to Central America to meet with Calero to resolve "immediate operation- al/logistic problems." McFarlane advised North: "Ex- ercise absolute 'stealth.' No visible meeting. No press awareness of your presence in the area." '''^ On Sep- tember 1, North proposed to McFarlane that he obtain a "private donor" for a new helicopter to re- place one shot down the day before. The National Security Adviser penned a note: "I don't think this is legal." "^ One month later, on October 9, North proposed a National Security Decision Directive call- ing "for the CIA to provide assistance to the Nicara- guan Resistance Forces in interdicting Soviet arms bound for the FSLN in Managua." Once again, McFarlane wrote on the cover sheet: "Ollie/Ken [de- Graffenreid]. '''■' pis check w/ CIA legal counsel promptly to confirm this is legal ... ." •'*
By early October, Congress had adopted the Boland Amendment to an omnibus appropriations bill. Signed into law by the President on October 12, 1984,
the bill would later be referred to as Boland II. It provided in relevant part:
During fiscal year 1985, no funds available to the Central Intelligence Agency, the Department of Defense, or any other agency or entity involved in intelligence activities may be obligated or ex- pended for the purpose or which would have the effect of supporting, directly or indirectly, mili- tary or paramilitary operations in Nicaragua by any nation, group, organization, movement or individual.
Similar provisions were adopted as parts of the De- fense and Intelligence Authorization bills.
While Boland II cut off all funding for the Contras, it held out some hope for renewing Contra aid in the future by providing that the Administration could seek a $14 million appropriation on an expedited basis after February 28, 1985. But, even as the bill held out a future hope, its sponsors made clear that the law was intended to achieve an immediate cutoff of aid. As Representative Boland put it, the law "clearly ends U.S. support for the war in Nicaragua. Such support can only be renewed if the President can convince the Congress that this very strict prohibition should be overturned." '"
Poindexter and North, who admitted assisting the Contras in their military activities, had a different view. Both testified that they did not believe that Boland II was applicable to the NSC staff and that while the CIA could no longer provide any assistance to the Contras, the NSC staff was free to do so.**" Poindexter put it succinctly: "I never believed, and I don't believe today, that the Boland Amendment ever applied to the National Security Council staff. . . ." '»'
Their former superior, Robert McFarlane, was sur- prised by that view.'^^ McFarlane, who denied au- thorizing the NSC staff to provide military assistance to the Contras, maintained that the "Amendment gov- erned our actions." '*^ In "cutting off money for the Contras," he understood Congress to say "we don't want any money raised for the Contras." McFarlane testified that he repeatedly addressed the NSC staff with "a kind of litany of mine, . . . [not to] 'solicit, encourage, coerce, or broker' " financial contributions for the Contras. 1^* According to McFarlane, he spe- cifically told North to "stay within the law and to be particularly careful not to be associated with or take part in any fundraising activities." '*^ He dismissed his instruction to North to keep the Contras "together body and soul" as meaning nothing more than "smoke and mirrors." '^^ What he intended North to provide was only moral and political, not military, support.'*''
North and Poindexter both denied hearing McFarlane's warnings against solicitation and en- treaties to observe the law.'** Both claimed that they were acting within their legal rights in aiding the
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Contras. North stated that all of his acts were author- ized by his superiors, '^^ and Poindexter, speaking as one of those superiors, confirmed that he had given North a "broad charter" to support the Contras and had "authorized in general" North's actions in carry- ing out that charter. **° McFarlane testified he was unaware of the breadth of North's activities. '* '
In any case, Poindexter and North were not de- terred by Boland II in assisting the Contras. Thus, after the Boland Amendment passed, Poindexter ex- plained to McFarlane his Nicaraguan strategy for the future: "continue active negotiations but agree on no treaty and agree to work out some way to support the Contras either directly or indirectly. Withhold true objectives from staffs." '^^
Indeed, Boland II was a spur to action. The CIA had to withdraw from supporting the Contras and, according to North, this meant he "was the only person left talking to them." '^^ As North put it: "The U.S. contact with the Nicaraguan resistance was me, and I turned to others to help carry out that activity." '^^ Poindexter saw it the same way:
Very frankly, we were willing to take some risks in order to keep the Contras alive, as I said, until we could eventually win the legislative battle.
So for all intents and purposes. Colonel North largely took over the — much of the activity that [the] CIA had been doing prior to their being prohibited from carrying [on] activity because of the Boland Amendment."^
As Poindexter summed up North's role, "[0]nce the CIA was restricted," North was the "switching point that made the whole system work . . . the kingpin to the Central American opposition . . . ." >^^
Boland II did not deter North — it simply reinforced the need to keep what he was doing secret from Congress, the public, and others in the Government. The CIA support of the Contras had not been kept from Congress — it was openly debated on the floor and was funded by appropriations. With Boland II, the assistance— now handled by the NSC staff— went underground.
Contra Aid— Fall 1984 to Winter 1985
Boland II did not cause any immediate crisis for the Contras. Steps taken months before ensured their sur- vival. As McFarlane testified, "[T]here wasn't any need" for funds at the time.'^' The $1 million-a- month pledged by Country 2 in June 1984 would "bridge the gap" at least until December. And as North testified, by the time the Boland Amendment was passed, "General Secord had been engaged and money had started to flow to the Nicaraguan Resist- ance from outside sources." '^*
Arms Shipments Begin and Blowpipes Are Sought
While Secord undertook to procure weapons, North remained heavily involved. Calero testified that he consulted with North regarding weapons needs and purchases '^^ and North's notebooks confirm this.^oo
In the fall, the Contras' most pressing need was ground-to-air missiles. The Sandinistas had just ob- tained Soviet-designed HIND-D helicopters, sophisti- cated assault helicopters. North devoted his efforts to finding a missile capable of shooting them down.
North learned in December 1984 that Blowpipe missiles were available in a Latin American country and, on his advice, Calero visited the country to ne- gotiate for their purchase.^"' On December 17, Calero reported back to North that the Latin Ameri- can country was willing to donate Blowpipes provid- ed that Calero bought eight launchers for $200,000.^°^ Permission was required and North tried to get that permission, recommending to McFarlane that the President take it up directly with the perti- nent head of state. ^°^ McFarlane denied he ever asked "the President to intercede with any person for the obtaining of Blowpipes for the Contras." ^°'* In any event, permission was not secured and on January 3, 1985, Calero reported to North that the "Blow Pipe deal is off" ^"^ North would try the following year to revive it.
In the meantime, Secord had located ground-to-air missiles in Country 4. But in December, North learned that Secord was having difficulty in arranging their shipment to the Contras. North asked Gaston Sigur, an NSC consultant and expert in Far Eastern Affairs, to set up a meeting in Washington between a representative of the originating country. Country 4, and North. ^°^ At the meeting, North told the Coun- try 4 official that the missiles were going to the Contras, not to the Central American country identi- fied in the official documents.^"'' North said that while he was "actually seeking to facilitate the trans- portation" of the missiles, he hoped that he could persuade Country 4 to donate them.^"^ Ultimately, Country 4 agreed to sell the missiles to the Contras.
North sent McFarlane and Poindexter a memoran- dum reporting on the meeting. Although McFarlane could not recall the memorandum, he testified that it would likely have prompted him to ask "Admiral Poindexter to find out what was going on . . . and how his [North's] actions squared with the law." McFarlane did not recall how his questions were re- solved.^°^ North testified that McFarlane and Poin- dexter approved the meeting with the Country 4 rep- resentative described in his memo.^'°
Meanwhile, the Contras were also running out of basic weapons. According to Secord, in November, Secord, using money provided by Calero, made a
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downpayment on a shipment of arms which was to come by sea from the Far East. But the shipment was delayed and, in fact, it would not arrive until the spring of 1985. 2"
To make the first arms shipment, the Enterprise needed an end-user certificate (EUC) — a document certifying that the arms were for the exclusive use of the country to which the arms were being sent. The Contras could not issue end-user certificates because they were not a recognized government. Thus, false certificates had to be procured for the Enterprise, and again it fell to North to arrange their procurement. By the end of January, he was engaged in the task. He wrote in his notebooks: "Mtg. w/ Adolfo [Calero]-. . . . [Central American Leader] re: EUC for M-79 Rounds. [Leader of Central American country] turned down." ^" "Private mtg. w/ [U.S. Ambassador to a Central American country], offline items — EUC- $5000 M-79 Rds." ^'^ By early February, there was urgency in the request: Second met with North and told him that he "need[ed] to get a bunch of EUC's from [Country 14] NOW for next shipment." ^"' By February 14, 1985, North had the end-user certificates, and Secord was able to ship more than 90,000 pounds of East European munitions by chartered aircraft from Defex, a European arms dealer, to a Central American country for the Contras. ^'^
Providing Intelligence and Military Advice
North's role was not limited to assisting arms pur- chases. On direction from McFarlane, he gave politi- cal advice to the Contras on unifying the different factions and adopting a platform recognizing human rights and pledging a pluralistic society.^ '^ Even more critical for the Contras, North provided military intelligence and advice.
The CIA and the DOD could not provide military intelligence directly to the Contras, so North provid- ed it himself North would obtain maps and other intelligence on the Sandinista positions from the CIA and DOD, ostensibly for his own use.^''' North would then pass the intelligence to the Contras using Owen as a courier.^'* North explained the reasons for this system:
Q: Did you believe that you were complying with Boland when you took intelligence from the CIA and passed it to the Contras through Robert Owen?
A: Yes. And the intelligence that I passed myself personally, and it wasn't all from the CIA, much of it came from the Department of Defense.
Q: And did you understand at the time that the CIA and the Department of Defense couldn't pass that intelligence directly?
A: Exactly.
Q: And you believed that it was compliance with Boland, that it was fulfilling the purposes of Boland for you to take the intelligence from the CIA or the Department of Defense and pass it to the Contras? That is what you are saying?
A: I am not saying that it was fulfilling the pur- poses of Boland. I am saying it was working around the problem that Boland would have cre- ated in trying to comply with Boland that al- lowed me to do that.^'^
Director Casey was eager to keep the CIA bu- reaucracy insulated from North's activities in support- ing the Contras. Indeed, in November, Casey com- plained to Poindexter that North was conducting his support activities "indiscreetly," '^^° and had disclosed to CIA officials that he was raising funds for, and providing intelligence to, the Contras.^ ^'
Learning of the complaint. North wrote McFarlane on November 7, 1984, to defend his behavior. North insisted he had not implicated the Chief of the CIA's Central American Task Force in his Contra support activities. "Clarifying who said what to whom," North acknowledged that he had passed intelligence to Calero to assist him in destroying the Sandinistas' newly acquired HIND-D helicopters. North stated that he had gone to both the CIA and to the DOD for information on the helicopters' location and passed this on to Calero.^^^
North denied, however, that he had disclosed his purpose to the Chief of the Central American Task Force, or advised him about the "financial arrange- ments of the FDN." ^^^ In fact, the memo recounts a conversation showing that North misled the Task Force Chief, telling him that the intelligence request had been "a fall out of the CPPG [the Crisis Pre- planning Group]," and that he (North) had no idea where the Contras were obtaining their funding. In the memorandum. North reported that he encouraged the Task Force Chiefs impression that the funding had been obtained from "outside" sources. ^^^
McFarlane testified that he did not authorize North to pass intelligence to the Contras and if, as the memo indicated. North had passed that information to Calero, Boland II would had been violated.^^^ North admitted that he had provided the intelligence but maintained that Boland II did not "prevent the trans- fer of basic intelligence information to the Con- tras." 226
In early February 1985, North became concerned about a shipment of weapons bound for the Sandinis- tas aboard the ship, the Monimbo. In a memorandum to McFarlane and Poindexter, North recommended the vessel be seized or sunk:
If asked, Calero would be willing to finance the operation. He does not, however, have sufficient numbers of trained maritime special operations
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personnel or a method of delivery for seizing the ship on the high seas. ... If time does not permit a special operation [on the high seas] . . . Calero can quickly be provided with the maritime assets required to sink the vessel before it can reach port at Corinto. He is in contact with maritime operations experts and purveyors of materiel nec- essary to conduct such an operation. ^^''
North asked McFarlane for authorization to provide Calero "with the information on Monimbo" and for permission to approach him "on the matter of seizing or sinking the ship." ^^^
This time, Admiral Poindexter raised a legal ques- tion, but only to advise McFarlane about how North's recommendation should be handled. On the bottom of the memorandum, Poindexter agreed with North that, "We need to take action to make sure ship does not arrive in Nicaragua. JP."229 But in a cover note to McFarlane, Admiral Poindexter wrote:
Except for the prohibition of the intelligence community doing anything to assist the Freedom Fighters I would readily recommend I bring this up to CPPG [Crisis Pre-Planning Group] at 2:00 today. Of course we could discuss it from the standpoint of keeping the arms away from Nica- ragua without any involvement of Calero and Freedom Fighters. What do you think?23°
No action was taken on North's recommendation to seize the Monimbo.
In addition to providing intelligence. North also secured the logistical assistance of a paramilitary op- erations expert. He described those efforts in the same December 4 memorandum to McFarlane in which he had outlined his intervention with Country 4 to secure surface-to-air missiles. According to the memo. Secretary of the Navy John Lehman had suggested to North that he meet with David Walker, a former British SAS officer, to discuss the services Walker's company could provide. North met with Walker, and proposed to McFarlane that Walker:
establish[ ] an arrangement with the FDN for certain special operations expertise aimed particu- larly at destroying HIND helicopters. . . . Unless otherwise directed. Walker will be introduced to Calero and efforts will be made to defray the cost of operations from other than Calero's limit- ed assets.^^'
In his testimony. North confirmed that he had ar- ranged for Walker to "provide operational support for certain activities in the region," and that Walker was paid either by the Contras or Secord. This step, according to North, was approved by Poindexter or McFarlane.232 McFarlane testified that he referred North's memo on the subject to Poindexter,^^^ and
Poindexter said that, if asked, he would have ap- proved North's actions. ^3''
Three months later. Walker provided two techni- cians to help carry out a military operation in Nicara- gua. North testified that he was involved in the oper- ation. ^^^ A subsequent PROF note confirms Walker's
role 2 36
Singlaub Efforts with Countries 3 and 5
Country 2 had pledged funds only through the end of 1984. Therefore, by the end of the year, an urgent need existed to find money for the Contras to contin- ue into 1985.
In late November 1984, North approved the efforts of Retired U.S. Army Maj. Gen. John K. Singlaub to obtain funds from third countries to support the Con- tras. ^^'^ Singlaub met in Washington with officials of Country 3 and Country 5 to request aid. Singlaub was blunt about the Contras' needs: bullets, guns, and anti- aircraft missiles. The foreign country officials, howev- er, expressed concern about running afoul of "Con- gress by openly defying the Boland Amendment." At the same time they were willing to help "if this could be done in a way that did not attract attention." They agreed to send Singlaub's request to their respective governments.^^*
On November 28, Singlaub reported to North the reaction of the officials of Countries 3 and 5, inform- ing him he "was prepared to go and meet with senior officials in those governments." According to Sing- laub, North concurred and gave the plan "his bless- ing. . . . [I]t was a good idea, he saw no objec- tion . . ." 239
Whether North was authorized to "bless" Sing- laub's efforts is a matter of confiicting testimony. Ac- cording to McFarlane, to solicit or facilitate aid from a third country was barred by the Boland Amend- ment and he did not authorize North to pursue fund- ing from third countries.^'"' But according to North, he believed McFarlane had approved: "he was aware of each and every one of [my] actions to obtain money from foreign countries and approved of it.''^*' North defended his actions, testifying that Country 3 had offered to make a contribution;^''^ he had never made any "solicitation" because that would be an improper act for a Government official. ^^^
Singlaub followed up on his request, travelling to Countries 3 and 5 in January. He met with highly placed officials and reiterated his earlier request for military donations to the Contras. ^'''^ Singlaub provid- ed the officials with an index card bearing the name of the bank and account number, under Calero's con- trol, where the funds could be deposited directly. ^""^ Singlaub told the officials he was a private citizen, but wanted to make it clear he was not an "unguided missile ricocheting around to that part of the world." ^""^ He expressed the belief that "it would be possible ... to have someone in the Admin-
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istration send a signal to them ... to indicate that [he] . . . was not operating entirely on [his] . . . own, without the knowledge of the Administration."^'"
On February 1, 1985, North's notes reflect that Singlaub called North and told him that Country 3 needed a signal that the Administration would be "greatly pleased" by a donation before Country 3 would be willing to contribute.^** On February 6, North wrote McFarlane and reported that: "Singlaub will be here to see me tomorrow. With your permis- sion, I will ask him to approach [the Country 3 and 5] Embass[ies] urging that they proceed with their offer. Singlaub would then put Calero in direct contact with each of these officers. No White House/NSC solicita- tion would be made."^''^ McFarlane made no re- sponse on the memo to North's recommendations.^^"
Singlaub testified that he returned to Washington on February 7, met with North to report his results, and recounted his "entire presentation. "^^^ He rec- ommended that now was the time for a U.S. Govern- ment representative to send a signal to Countries 3 and 5. According to Singlaub's testimony, North re- sponded that he would "brief his superiors," and eventually told him (Singlaub) that he had informed his superior, whom Singlaub assumed to be McFar- lane. ^^^
Countries 3 and 5 did not contribute any money as a result of Singlaub's efforts. Not until late 1985, after a signal was in fact given by an NSC official, did Country 3 make a contribution.^^*
Country 2 Makes an Additional Contribution
With the Contras running out of funds, McFarlane turned once more to Country 2. McFarlane made the initial approach to its Ambassador for more funds. He testified that he did not "solicit" funds because the Boland Amendment prohibited such solicitation. He merely told the Ambassador of the plight of the Con- tras and hoped for a contribution.^^* According to Secord, North asked him to follow up on McFarlane's initial meeting.^^^
Secord testified that he did in fact follow up with the Ambassador, with whom he "had dealt ... in the past with respect to possible contributions to the Con- tras." When Secord raised the subject, the Ambassa- dor responded curtly, "You can stop twisting my arm .... I have decided to take it up with the head of state. "^^® McFarlane did not recall Secord's involve- ment.^*''
In early February 1985, Country 2 agreed to con- tribute an additional $24 million.^** McFarlane in- formed the President of the contribution by placing a note card in the President's daily briefing book. The President again reacted with "gratitude and satisfac- tion," expressing no surprise. ^^^ Unknown to McFar- lane, the Country 2 head of state had already in- formed the President directly of the new contribution.
But the President did not mention this when he briefed the Secretary of State and McFarlane on his meeting with the government leader.^®"
Nor did McFarlane tell the Secretary of De- fense.^®' Both Secretary Weinberger and General John W. Vessey, Jr., the Chairman of the Joint Chiefs of Staff, learned of the contribution from other sources.^®^ Secretary Shultz, who dealt regularly with Country 2, was not told of the contribution until June 1986.2^3 This was an omission "not of conscious choice," according to McFarlane. ^^^
The new donation from Country 2, like its prede- cessor, was sent to Calero's accounts. Between June 1984 and March 1985, Country 2's contributions, to- taling $32 million, were virtually the only funds the Contras had.^®^
Contra Aid: Winter-Spring 1985 Tlie Administration Returns to Congress
When the President signed the Boland Amendment, he made it clear he would return to Congress for additional Contra support:
I sincerely regret the inability of the Congress to resolve the issue of continuing certain activities in Nicaragua .... I am signing this act with every expectation that shortly after the next Congress convenes it will provide adequate support for programs to assist the development of democracy in Central America.^® ^
In the winter of 1985, the Administration pinned its hopes on obtaining the $14 million in aid held out by the Boland legislation. The law provided for expedit- ed consideration of such a request after February 28, 1985, if the President certified to Congress that Nica- ragua was supporting other Central American com- munist insurgencies. McFarlane conveyed to his staff, in particular to North and Donald R. Fortier, then Senior Director for Policy Development, the Presi- dent's "strong wish that we not break faith with the Contras. . . . [We need] to do everything possible to reverse the course of the Congress, and get the fund- ing renewed," he said. "[T]he mission was to win the vote the next time . . . ."^st
The chances for success were dim from the start. The new Chairman of the Senate Intelligence Com- mittee, David Durenberger, had warned publicly that he would oppose both the release of the $14 million and any future Contra aid.^** But the President had not given up. He told a group of reporters, "We're going to do our best."^®^
Defense Secretary Weinberger called for an updat- ed legislative strategy and new funding alternatives to win the battle in Congress. ^^^ White House officials considered a number of legislative proposals including third-country assistance and/or the supply of non-
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lethal aid coupled with third-country lethal assist- ance.^" Legislative strategy groups met to consider the proposals. McFarlane, accompanied by North, traveled to Central America to gauge the reaction of leaders in the region. Donald Fortier was dispatched to Capitol Hill to assess Congressional sentiment. ^''^ While North assisted in drafting various legislative proposals, his preferred option was to seek Congres- sional approval for sufficient sums to fund an in- creased covert action program "adequate to achieve victory. "^■'^ North understood that foreign contribu- tions would ensure Contra survival, but success could only be achieved with increased funding:
[RJesources available to the resistance from sym- pathetic government(s) and/or individuals will permit current small-scale operations to continue for at least another 6 to 8 months. A resumption of USG funding or additional alternative re- sources would be essential in order to bring the scale of activity to that which existed in the spring of 1984 and, over time, to prevent an erosion of the will and determination of the FDN combatants.^''*
North was optimistic that "[w]ith adequate support the resistance could be in Managua by the end of
1985." 275
Any legislative proposal for increased aid depended upon the Contras' survival in the field. McFarlane testified he told North that "unless the Contras become a credible military force, they would never gain political support in Congress and among the American people. "^'s North was counting on the En- terprise to provide the support necessary to maintain the Contras as a viable force.
The Weapons Shipments from the Enterprise Continue
In the spring of 1985, two weapons shipments ar- ranged by Secord in consultation with North and Calero would finally reach the Contras: first, in Feb- ruary, a planeload of 90,000 pounds of munitions from Europe and, second, in the spring, a sealift. Both shipments were arranged through Transworld Arma- ment, and both apparently required end-user certifi- cates. ^^ 7
North needed the cooperation of Central American countries to provide documentation and to receive the shipments for the Contras. On March 5, 1985, he proposed that one country be rewarded for its assis- tance. In a memorandum to McFarlane, North sug- gested that the Secretaries of State and Defense and Chairman Vessey of the Joint Chiefs of Staff be asked to grant the Central American country additional se- curity assistance.27 8
The "real purpose" of this memo, North explained, was to:
find a way by which we can compensate [Coun- try 14] for the extraordinary assistance they are providing to the Nicaraguan freedom fighters. At Tab II are end-user certificates which [Country 14] provided for the purchase of nearly $8M worth of munitions to be delivered to the FDN.279
In the attached memorandum to Weinberger, Shultz, and Vessey, drafted by North, the real purpose behind the request was not stated. The memorandum contained no reference to the end-user certificates, "to the arrangements which have been made for support- ing the resistance through [Country 14],"2«o or to the Country 14 munitions "wish list" North attached for McFarlane's information. ^^^ Instead, the request for aid was predicated on its merits.
McFarlane testified that he recommended that the Cabinet approve increased assistance based solely on his assessment of Country 14's need, without taking into account its support of the Contras. ^^2 North testified that he had not promised a "quid pro quo." There was no "need" to make such a promise to a
country threatened by the Sandinista presence, he said. 283
Disbursements to Other Contra Leaders
During the winter and spring of 1985, North decid- ed to use the money sent directly to Calero from Country 2 to support other Contra leaders. To do this, funds were withdrawn from Calero's account using traveler's checks, and hand-carried to North. North stored the checks in his safe. Additional cash was secured from Secord. ^^^
North testified that the idea for maintaining this fund came from Director Casey:^^^
My recollection is that the very first traveler's checks came either very late '84 or certainly early 1985 and that the sum total of traveler's checks was probably in excess of $100,000 or thereabouts.
I also had cash which I estimated to be some- where in the neighborhood of 50 to 75 thousand dollars in cash, so we are talking about an oper- ational account that went from somewhere around 150 to 175 thousand dollars. At various points in time there would be considerable sums in it and at various points in time there would be none in it.
My recollection is that I got the traveler's checks in packages of less than $10,000. I understand that others have remembered elsewise, but that is how I remember it.
Those funds were used to support the operations that we were conducting. They were used to
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support the covert operation in Nicaragua, and then eventually were used to support other ac- tivities as well.
The fact that I had those funds available was known to Mr. McFarlane, to Admiral Poin- dexter, to Director Casey, and eventually to Ad- miral Art Moreau over at the Pentagon. It also came to be known to others, some of whom you have had testimony here.^*^
What is important that you realize is that meticu- lous records were kept on all of this. I kept a detailed account of every single penny that came into that account and that left that account. All of the transactions were recorded on a ledger that Director Casey gave me for that purpose. Every time I got a group of traveler's checks in, I would report them, and I would report them when they went out, even going so far as to record the traveler's check numbers themselves.
The ledger for this operational account was given to me by Director Casey, and when he told me to do so, I destroyed it because it had within it the details of every single person who had been supported by this fund, the addresses, their names, and placed them at extraordinary risk.287
Poindexter testified that he knew of the account almost from the start, in 1984:
[I]t was associated with the first contribution of Country 2, I think it came to my attention, by Colonel North reporting to me, that Mr. Calero had provided some funds to him, and it was my understanding it was cash, at least that's my recollection of my understanding.^®*
Poindexter "didn't see anything illegal about it," but, as he testified, "any time you handle cash there are perception problems that can certainly develop .... And so I told Colonel North he should get rid of the money by returning it or whatever, that I didn't think that was a good idea."^*' In fact, the money was instead funneled to various Contra leaders throughout 1985 and 1986.
One of the principal beneficiaries of North's fund was a Resistance leader. With McFarlane's approval. North decided to assume support for the Resistance leader, using funds drawn from the Calero ac- count.^*" North assured McFarlane that Casey had been told that North would maintain contact with the Contra leader.^" Later, though. North reported that "the CIA will not be told of the new source for [Resistance leader's] funds. "^^^
By February 27, 1985, "Adolfo [Calero] ha[d] agreed to provide [the] requisite funds in the blind
without [the] [Resistance leader] becoming aware of the source. "^*^ Eventually, Calero was to "deposit $6,250 per month in [Resistance leader's] checking account without [his] knowledge [of the source]. "^^^ But before the direct deposit mechanism could be put into operation. North enlisted Robert Owen and Jona- than Miller, then-Deputy Coordinator for Public Di- plomacy at the State Department, to pass the money to the Resistance leader. Sometime in early March, North handed Owen and Miller traveler's checks from his office safe, and requested that the checks be cashed. Miller and Owen did so, and returned to North's office. Later that day, at his apartment, Owen passed $6,000 to $7,000 in cash to the Resistance leader.28^
Owen handled a number of transfers to Contra leaders. He testified that he paid "[s]omewhere be- tween six and ten" Contra leaders, and the total amount paid was "[s]omewhere around $30,000."^*® On March 22, 1985, for example, Owen traveled to Central America carrying several thousand dollars in cash or traveler's checks for delivery to a Contra leader.^®'' In some cases, Owen's efforts did not take him far from the White House itself In April, for example, he waited outside the Old Executive Office Building in the rain. A car drove up, and Owen passed cash to a Nicaraguan Indian leader sitting inside.^®* These payments had a number of purposes: One payment was made to an Indian leader as a "quid pro quo" for ceasing negotiations with the Sandinistas and joining instead with other Indian leaders to "work together in a united front."^*^
Keeping the Operation Secret
North provided the logistical and funding assistance the Contras needed to keep going in Central America at the same time that he worked to keep their cause alive in Washington. To persuade Congress to vote for renewed aid, it was critical that the NSC staffs Contra assistance remain secret. As North warned Calero: "Too much is becoming known by too many people. We need to make sure that this new financing does not become known. The Congress must believe that there continues to be an urgent need for fund- ing"3oo
North actively cultivated an image of Contra self- sufficiency within the Administration. For example, he urged the CIA's Chief of the Central American Task Force to reject the State Department's opinion that the Resistance had become largely ineffective since U.S. funding ran out in May 1984. "I told [the Chief of the Central American Task Force]," wrote North, "that it was important that the SNIE [Special National Intelligence Estimate] reflect the fact that there was substantial outside support which had con- tinued for some months and showed no signs of abat-
47
Chapter 2
But even without such active encouragement, the secrecy shrouding North's efforts contributed to the appearance of Contra self-sufficiency. As funds ar- rived and weapons were shipped, CIA intelHgence reports confirmed that the Contras remained not only a viable force, but were surviving on their own, with- out apparent U.S. Government assistance. By March, close to a year after U.S. Government aid had ceased. Director Casey's subordinates provided Casey with briefing materials, reporting surprise at the Contras' survival, but noting there was little intelligence on how the Contras had managed to flourish:
Since the cutoff of official funds to the anti-San- dinistas in May 1984 they have been able to field a viable guerrilla fighting force, have increased their numbers, and improved their tactical effi- ciency. It is estimated that to maintain the level of activity that they have it would cost an esti- mated one and one half to two million dollars per month. There is, however, no intelligence on the source of this income, except that it comes from private groups, and possibly some U.S. business corporations.^"^
The secret of North's involvement, however, was not to last. North's name had begun to appear periodi- cally in the press along with that of Singlaub. By March, Singlaub already had become something of a "lightning rod" in the press, attracting attention as a private fundraiser for the Contras. ^os According to Singlaub, North told him that his frequent visits to the NSC were a source of concern.^"* But North "understood and agreed" that Singlaub had to keep a "high profile" in order to raise funds, and he support- ed the effort. If Singlaub "had high visibility, [he] might be the lightning rod and take the attention away from [North] and others who were involved in the covert side of support. "^°^
Covert Operation and Legislative Strategy Intertwine
While maintaining the secrecy of his Contra support activities, North worked to promote a legislative strategy that would change both the Congressional and the public perception of the Nicaraguan threat. ^°^ In March, he and Donald Fortier spon- sored an elaborate plan calling for lobbying, a media blitz, and culminating in almost daily Presidential speeches and phone calls in support of the initiative. At its most ambitious stage, the plan included a 10- page, day-by-day chronology to describe each of the players' appointed tasks. ^"^
At the same time. North proposed a "Fallback Plan," should Congress refuse to provide aid or lift the Boland Amendment restrictions.^"* In a memo- randum to McFarlane, North noted that the Contras had sufficient funding for munitions to carry them
through October 1, 1985, but they needed money for the following year.^"^ The fallback plan, sent to McFarlane on March 16, called for Country 2, de- scribed as the "current donor," to contribute an addi- tional $25 million to $30 million to the Resistance for the purchase of arms and munitions; for the President to appeal to the public for contributions instead of seeking a Congressional appropriation; and for a tax- exempt foundation to be established to receive the contributions. McFarlane rejected the idea of the Presidential appeal, expressed doubt about seeking more money from Country 2, and approved the estab- hshment of a tax-exempt foundation.^'"
With McFarlane ruling out a return to Country 2, a return to Congress was the Administration's only hope for renewed Contra funding. During March 1985, North focused his attention on the elaborate legislative strategy plan he had been working on since late February. The plan was developed in conjunction with a peace initiative drafted by North in a Miami hotel room with FDN head Adolfo Calero and other Contra leaders, which became known as the San Jose Declaration. North arranged the deadline for a Sandi- nista response to the peace plan to coincide with the vote by Congress. If the Sandinistas rejected the over- ture, as North anticipated, then "special operations against highly visible military targets in Nicaragua," were timed to follow in the hopes that successful and "visible" Contra military activities might favorably influence Congress's decision on Contra aid.^''
At the last minute, however, the Administration considered delaying the submission of the Administra- tion's new aid request to Congress.^'^ North recog- nized that if the vote were delayed, the Contras' planned military operations would not serve as an effective tool in influencing Congress's decision on the aid proposal. He strongly recommended to McFarlane that the vote take place as originally scheduled. He wrote:
The deadline for substantive negotiations . . . was carefully chosen to ensure that the internal oppo- sition would have a specific date for their own planning purposes. Military operations were planned based on the expiration of the offer on April 20. . . . [A]n attack is scheduled for April 25. Based on my request Calero has agreed to postpone the attack for five days. The force which is being inserted to conduct this operation cannot be logistically supported in this area after May 5. The resupply situation will require that they be withdrawn after that date.
It is my belief that urging the resistance leaders (particularly Calero) to accept a major delay . . . will result in a breakdown of the unity we have achieved. [Calero] has only cooperated to date