Iran-Contra Affair: 1987

On 19 October 1986, the House Judiciary Committee sent a letter to Attorney General Edwin Meese, asking that he appoint an independent counsel to investigate the roles of the National Security Council, the NSC staff, and DCI Casey in the contra supply effort. Several weeks later, on 3 November 1986, what appeared at first to be an unrelated event supplanted the Hasenfus story on the front page of the country's newspapers. A Lebanese newspaper, Al-Shiraa, reported that in order to win the release of hostages in the Middle East, the United States had been selling arms to Iran. National Security Advisor Robert McFarlane, it said, had traveled to Tehran to arrange for these sales. The report created an immediate uproar. If true, the administration would appear to have violated not only the US laws pertaining to arms sales but also its own policy for dealing with terrorists and regimes that sponsor terrorism.

On 12 November 1986, President Reagan called the congressional leadership together, including the leaders of the two intelligence committees, to brief them on Iranian arms sales. The following night, in an address to the American people, he declared: "The charge . . . that the United States has shipped weapons to Iranas ransom payment for the release of American hostages . . . [is] utterly false. . . . We did not trade weapons or anything else for hostages."

On 21 November, Casey appeared before both intelligence committees to describe the Agency's role in the arms sales. He admitted the Agency had provided support to the sales but said they had been handled out of the White House, whose goals, at least, he believed to have been laudable. Although members of both committees expressed irritation at not having been provided "timely notice" of CIA's support to the arms sales, Casey argued that the president had to be able to conduct foreign policy in the manner he saw fit.

The following day, Justice Department officials responsible for investigating the NSC staff's involvement in the arms sales, discovered a memorandum that confirmed that proceeds generated from the sales of arms to Iran had been used to purchase supplies for the contras in order to help them "bridge the gap" created by the delays in getting the contra aid package through Congress.

On 25 November 1986, Attorney General Meese publicly acknowledged what became known as "the diversion." The president fired those members of the NSC staff chiefly responsible for the operation (LTC Oliver North and RADM John Poindexter). Both intelligence committees expanded their investigations to encompass the diversion. Casey was invited back to testify, but on 15 December, the day before such testimony was to occur, he had a "cerebral seizure" in his office and was hospitalized, never to return to the job.

Both committees proceeded with their inquiries, but it was clear by this point - given the predominant role played by the White House - that they lacked the jurisdiction to conduct acomprehensive probe. Accordingly, both houses created ad hoc select committees that included the leaders of their respective intelligence committees to carry out the investigation. The SSCI issued a "preliminary report" in February 1987, summarizing the results of its investigation to date, while the HPSCI chose not to do so in view of the broader, follow-on investigation.

Within weeks of being established, the two select committees decided to merge their investigations. Ultimately, their staffs reviewed 300,000 documents and interviewed 500 witnesses. They held 40 days of joint public hearings over the spring and summer of 1987, as well as several days of closedhearings. In November, the committees issued a joint public report that totaled 690 pages.

What the investigation found was that the staff of the NSC had, in effect, carried out two "covert actions" without the knowledge of the Congress. The first began in the summer of 1984 and involved soliciting support for the contras from third countries and private donors during the period when such support could not be obtained from Congress. The other began in the summer of 1985 and involved sales of arms to Iran in order to obtain the release of American hostages being held by Middle Eastern terrorists. Over time, the two operations merged. Not only did the NSC staff use some of the same private individuals in both operations, but in early 1986 it came to realize the arms sales to Iran could be used to generate excess funds that could be given the contras to supplement what was being provided by the third-party donors.

As far as CIA's involvement was concerned, the investigation produced evidence that DCI Casey had known about both operations. The principal NSC staff member involved in the operations, Oliver North, testified that Casey also had known of the "diversion" of money from the arms sales to the contras. By that point, however, Casey had died, and while the investigation confirmed that CIA officers had raised the possibility of a diversion with the DCI in the fall of 1986, it failed to produce documentary evidence to substantiate North's claim. Other CIA officers had become aware of the NSC staff's efforts to solicit support for the contras from third parties as well as their subsequent efforts to procure and deliver weapons to the contras. A few Agency officers in Central America, in fact, were later shown to have facilitated these efforts, which raises the issue of why a presidential finding was not in place.

The more confounding problem created for the Agency officers witting of the NSC staff's activities, however, involved their dealings with Congress. They were, in fact,the same officers who interacted with the two intelligence committees on CIA's operations in Central America during the period at issue. On the one hand, they realized the NSC staff's operation was intended to circumvent congressional restrictions and knew the White House was intent on keeping it secret. On the other hand, they were regularly briefing the committees on the Agency's operations in the region and accompanying them on trips there. As one of them later observed, it was like being trapped in a "giant nutcracker." A detailed account of these events is in the Report of the Congres-sional Committees Investigating the Iran-Contra Affair.

To deal with the situation, the investigation found, the CIA officers involved adopted a strategy of learning as little as possible about what the NSC staff was doing. But this purposeful avoidance went only so far. At times, in appearances before the intelligence committees and other congressional committees, certain officers responded to direct questions with statements that a court later found to have been false or misleading. The Agency's involvement with the arms sales to Iran was more substantial. Not only was there greater awareness among Agency officials, the Agency was directly involved in supporting the sales.

In August 1985, President Reagan approved an Israeli government request to sell US-made TOW antitank missiles to Iran, and as a result, one of the American hostages was released. North asked a CIA official to monitor what was happening in Iran during the intervening period in an effort to ascertain how its government may be responding. In November 1985, a second shipment (HAWK anti-aircraft missiles) was ready and North sought CIA's help in arranging transport from Israel to Tehran, which it did, using an aircraft owned by one of its proprietaries. When DDCI John McMahon learned of the flight after the fact, he insisted that the Agency's role in the operation and the operation itself be authorized in a presidential finding. President Reagan did this by signing a finding on 5 December 1985 that retroactively approved the sale of the HAWKs and the support the Agency had rendered.

At the same time, fearing that if the intelligence committees were told they would object and that the finding would likely be leaked, jeopardizing the release of additional hostages, Reagan specifically directed that the committees not be notified. Since the arms sales to Iran were expected to continue, the Agency sought a new finding that authorized it to provide operational and logistical support for such sales in the future. The president signed this finding on 17 January 1986. It, too, specifically directed the DCI to refrain from notifying the intelligence committees until the president directed him to do so. (Although Attorney General Meese later testified he interpreted this to mean that Congress would be given notice once the hostages were released, this was not spelled out in the finding per se.)

An NSC memorandum that accompanied the finding also called for a change in CIA's role in the sales. No longer would arms be sold to Iran out of Israeli stocks (and then replenished), but rather CIA would purchase the arms out of DoD stocks and transfer them directly to Iran, using the NSC's private operatives to broker the sale. New sales of arms and spare parts followed in February and May 1986 - each generating profits that were sent to the contras - but no more American hostages were released.

Increasingly dissatisfied with the results the sales were producing, North, with CIA's assistance, arranged for National Security Advisor McFarlane to fly to Tehran in May 1986 to meet with Iranian officialsin an effort to break the deadlock. No results were immediately forth comingbut a second hostage was set free on 29 July, leading Reagan to approve the sale of additional spare parts. But, again, nothing happened as a result. In September, its frustration increasing, the NSC staff, using the private brokers who had been involved in the sales and with the assistance of CIA officers, began searching for new intermediaries within Iran. Before they could be found, however, the arms sales were disclosed in a Lebanese newspaper.

While CIA made an additional shipment of arms after the disclosure, for all practical purposes, the operation had come to an end. According to the final report of the investigation, North never told the CIA officers involved in the arms sales that he was using the surpluses the sales generated to support the contras. However, in the fall of 1986, two of those involved in the arms sales learned that one of the private individuals working for North suspected it. This information was reported to DCI Casey who took it up with Admiral Poindexter, North's boss,. This would seem to suggest, in fact, that Casey had not had prior knowledge of the diversion, but the investigation was never able to reach this conclusion.

The Iran-contra affair had profound, long-term consequences for the oversight arrangements then in place. The revelations that seemed to come in an endless stream, each more stunning than the last, shattered the trust that had taken so much time and effort to build. The committees had been repeatedly misled and deceived, and at least some in the Agency had been a party to it. While the Agency could point to the fact that ithad been acting pursuant to directions from the White House, the committees had expected the Agency not to stand idly by when its political bosses did things that clearly violated and undermined its relationship with the committees. They were wrong.

The Agency's commitment to the oversight processhad taken a backseat to the demands of the administration. While the committees had no doubt where Casey's loyalties lay, they had expected that the "system" would hold together to overcome the predilections of a particular DCI. It obviously had not, and for the committees this realization was unsettling. In the aftermath of Iran-contra, not only did the committees seek to change the existing oversight arrangements for covert action, they began to subject such programs to greater oversight. In the fall of 1987, SSCI Chairman Boren announced the committee would institute quarterly reviews of all covert action programs on the books.

The Agency's administration of the $100 million aid package for the contras that Congress had approvedshortly before Iran-contra broke received especially close scrutiny from both committees. They also became increasingly skeptical of new proposals and cut off funding for certain of them. To improve the lines of communication with the committees, new DCI Webster and his deputy, Robert Gates, instituted monthly meetings with the leaders of the intelligence committees in the fall of 1987 to provide regular opportunities not only to apprise them of sensitive operational matters but for the committee leaders to express any misgivings they may have about the Agency. While both committees welcomed the initiative, CIA records reflect that HPSCI Chairman Stokes cautioned that the monthly meetings could not beseen as a substitute for notice to the full committees when that was required.