The Right’s Stuff: What the Iran-Contra Report Leaves Out
December 1, 1987
When the Report of the Congressional Committees Investigating the Iran-Contra Affair was released last week, the presidential spokesmen shrugged. They knew that the debate would not stray beyond a certain boundary: did the Reagan administration merely make mistakes, or did it commit crimes? To confine itself to this question, as the Report does, is to elucidate the scandal’s parts while leaving the whole incomprehensible.
What is missing, perhaps inevitably in a bipartisan congressional investigation, is any serious attempt to situate the dense description of events in history and politics. But because the Report offers such rich detail, a deeper understanding may be drawn from its 690 pages. Set in the ideological climate of the Reagan White House, the Report chronicles the pursuit of rightist obsessions by officials contemptuous of democracy and law — and how they almost got away with it.
Like the hearings that preceded it, the report omits much important background. The interlocking careers of such figures as William Casey, John K. Singlaub, and Richard Secord, for example, are barely mentioned. The history of U.S. covert action — and the place of these people in that history — is absent.
In other words, the Enterprise’s historical roots are not explored, its bureaucratic implications — such as the conflict between the covert operators and the Pentagon brass — are not mentioned, and the political bombshell of the right’s effort to scrap the Constitution remains unexploded.
While acidly criticizing the disdain for democratic checks evident among the chief actors, the Report shies away from admitting that the “scandal” amounted to a temporarily successful coup d’état. The authors make some worthy recommendations for avoiding certain specific abuses in the future, but most are simply ways to enhance congressional power. The underlying premises of covert action are not questioned but affirmed, as is the need for a democratic nation to engage in secret operations — just as long as the appropriate committee chairmen are duly and promptly informed.
Unlike the Watergate investigation, there will be no dramatic denouement; unlike the Church committee probe of the intelligence community, there will be no major reform or reassessment. With Casey dead and Reagan immune from impeachment, all that may be left is the indictment of the foot soldiers. A series of successful prosecutions by Special Counsel Lawrence Walsh might have a deterrent effect, but even that’s not likely — especially given the possibility of a presidential pardon before Reagan leaves office.
Congress is unable to prevent another Iran-contra affair, the report asserts, because it “cannot legislate good judgment, honesty, or fidelity to law.” But the report never confronts the motivating force behind the criminality, influencing everything but hidden in plain sight: rightist ideology. Indeed, the “minority report” appended by the conservative Republicans, dismisses the White House’s gross abuses as a few “mistakes.”
The right’s scorn for governmental process is fundamentally an ideological impulse, rooted in the old McCarthyite notion that agencies like the State Department obstruct the holy rollback of Communism. Without examining that impulse, it is impossible to see why the affair’s principals blithely resorted to lying, illegal secrecy, misuse of government assets and, finally, obstruction of justice to achieve their ends. And that is why the president himself, governed by the same perspective, still sees nothing to denounce in the conduct of his faithful friends. As the report demonstrates without explicitly saying, an extreme devotion to the so-called “Reagan Doctrine” eventually corrupted nearly every federal agency whose top officers were aligned with the New Right.
This pattern of wretched excess extended into the White House, where Oliver North, Faith Whittlesey, and Patrick Buchanan held sway; into the CIA, where William Casey struggled to make the bureaucracy serve his ends; into the State Department, in the persons of Assistant Secretary Elliott Abrams and Ambassador Lewis Tambs; into the Senate, which made little effort to restrict covert adventures until last year, when the Democrats won control; and of course into the Justice Department, headed by Ed Meese and his aides, which consistently placed political considerations above the law.
What was the Enterprise created by Casey and his surrogates, and what was its purpose? The ideological engine of the Enterprise was “rollback,” the right’s long-standing dream of turning back Soviet influence on the edges of the Evil Empire. Because the existing institutions of government were inadequate to that task, and because the policy itself lacked broad popular support, the U.S. required, in Casey’s words, a “freestanding entity” financed independently of the Congress, that could wage covert guerrilla warfare across the globe.
Their aspirations for worldwide “low-intensity conflict” could only be achieved, the devout Reaganites eventually realized, outside the realm of public debate and congressional oversight. The Reagan platform had pledged to revitalize the CIA and expand covert operations, but this wasn’t accomplished by repealing the restrictive laws of the 1970s. Instead, the covert operators simply turned the CIA into a branch of their private, “off-the-shelf” spy network, beyond the reach of post-Watergate reforms.
The headlines the day after the report’s release proclaimed what had been obvious for many months: that while Ronald Reagan was oblivious when it came to the most sensitive matters, what he did know he repeatedly lied about. But Reagan’s terrible shortcomings as president, only recently understood by most Americans, are yesterday’s news.
THE MAN WHO GOT AWAY
But while the press, and the Congress, focused attention on the already wounded Reagan, one man at the center of events got away unscathed. At this writing, George Bush is likely to be our next president, and it is significant that for such typical Enterprise operators as North and Rodriguez, the vice president (and former CIA director) was and is the preferred candidate.
Despite the evidence presented in public testimony, newly discovered documents, and depositions regarding Bush’s role in both the Iran arms deals and the contra operations, the Report essentially ignores the vice president. His key advisers never testified in public. His own role was never probed; his cloak of political protection never withdrawn. The committees’ repeatedly stated position is that no one could ever remember what Bush thought or said about the Iran-contra affair, an assertion not supported by the facts they developed.
Bush has adamantly denied knowledge of and participation in the contra resupply policy. As the contra operation broke apart last year, there was considerable scrutiny of the relationship between the vice president’s office and Felix Rodriguez, a Cuban émigré and ex-CIA employee. The Bay of Pigs veteran knew Bush’s national security assistant Donald Gregg, a former CIA official, from the days when both served in Vietnam.
In late 1985 Rodriguez went to El Salvador to help the Salvadoran air force with his personal specialty — “long range reconnaissance patrols” against the leftist guerrillas. While in El Salvador, Rodriguez was approached by North to help set up the air resupply operation run by General Secord; by the spring of 1986, he had become indispensable.
During this crucial period Rodriguez met with the vice president at least twice, and maintained close contact with Gregg. On one occasion Gregg’s assistant, Colonel Sam Watson, visited El Salvador to discuss counterinsurgency operations. Rodriguez did not like Secord or his subordinates, and he had several confrontations with North. During the summer, he became so angry about how the Enterprise was run that he went directly to the vice president’s office to seek help.
Bush acknowledges meeting Rodriguez, but says he knew nothing of the contra resupply operation. Gregg has said, “Members of my staff and I maintained periodic contact with Felix Rodriguez, but we were never involved in directing, coordinating, or approving military aid to the contras in Nicaragua. Nor did I or members of my office know of the diversion of funds to the contras.” Gregg first denied ever discussing contra operations with Rodriguez, then corrected himself, admitting that on August 8, 1986, Rodriguez had “shared his personal concern with me regarding the informal contra supply organization he had observed [italics added] in El Salvador.”
This version of events had to be changed again when, during the course of the congressional hearings, the committees unearthed a document that raised more questions about the vice president’s role. In a scheduling proposal dated April 16, 1986, Gregg requested a “meeting with Felix Rodriguez, a counterinsurgency expert visiting from El Salvador.” The purpose was “to brief the Vice President on the status of the war in El Salvador and resupply of the contras [italics added].” Under “Background,” the proposal said, “The Vice President has met previously with Mr. Rodriguez during his visits to Washington and will be interested in the current information he will be able to provide.”
Bush denied discussing contra aid with Rodriguez, and both Gregg and his deputy Watson discount the schedule proposal’s telltale reference to contra resupply — which was retained through several drafts and found its way into a final memorandum given to the vice president. But Phyllis M. Byrne, an assistant to Gregg, told the committee in a sworn deposition that “the purpose of the meeting was given to me by Colonel Watson.” She added, “I don’t believe that he gave me those precise words, but he did tell me — the resupply of the contras was the phrase that he provided me.” It is hardly credible that Byrne just added the contra reference to the memo by herself.
The denials of both Gregg and Bush are now further eroded by the committee report, which reveals for the first time that in 1982 Gregg, as head of the NSC’s Intelligence Directorate, was deeply involved in organizing early contra operations. Gregg was also the author of a never-signed presidential finding that would have provided CIA paramilitary support to forces inside Nicaragua.
Bush has also sought to extricate himself from the Iranian quicksand that engulfed the White House. Last December, in an interview with Time, he said, “The problem on all this, of course, is the perception that arms were traded for hostages. The President is absolutely, totally convinced in his mind that that isn’t what happened. I know him, I know what his feeling is on this. I have heard what he said, and I accept it.” In an August 1987 Washington Post interview, Bush lamely explained that he did not know that Shultz and Weinberger had objected to the arms sales.
“If I’d have sat there and heard George Shultz and Cap [Weinberger] express it strongly, maybe I would have had a stronger view. But when you don’t know something, it’s hard to react.… We were not in the loop.”
But the Report cites a “White House log” showing that Bush attended the August 6, 1985, meeting about the Iran arms sale with the president, Weinberger, Shultz, Robert McFarlane (who was then national security adviser), and Donald Regan, then White House chief of staff. At that meeting, Shultz told the president the Iran deal was a “very bad idea,” and that despite talk of better relations, “we were just falling into the arms-for-hostages business and we shouldn’t do it.” Weinberger, at the same meeting, also opposed the sale. He and Shultz argued that it would contradict U.S. policy that aimed to persuade other nations to observe an arms embargo against Iran. None of the witnesses could recall the vice president’s position.
There is other evidence that contradicts Bush’s public statements on his involvement in the Iran arms sales. In the same Time interview, the vice president explained, “What we in this administration have tried to do is reach out to moderate elements in Iran. Now the dilemma we’re in is that in the hearts of the American people is a hatred and a detestation of everything that the Ayatollah Khomeini stands for. I feel that way myself.”
On February 8, 1987, two months after he made this statement, the Washington Post published the transcript of a memorandum by Craig L. Fuller, Bush’s chief of staff, along with the details of a secret meeting at the vice president’s hotel suite in Jerusalem between Bush and Amiram Nir, a top Israeli official involved in the arms deals. Nir told Bush, “We are dealing with the most radical elements” in Iran because “we’ve learned they can deliver and the moderates can’t.” In his top secret memo of this encounter Fuller wrote, “Mr. Nir indicated that he had briefed Prime Minister Peres and had been asked to brief the VP by his White House contacts [italics added].” Nir’s White House contacts were at the National Security Council. Bush’s only known response to Nir’s report that the U.S. was dealing with radicals, not moderates, was to send a copy of Fuller’s memo to Oliver North at the NSC.
A Report footnote also suggests that Bush knew more than he says. In 1976, CIA deputy director of operations Ted Shackley attempted to recruit Albert Hakim as an intelligence source, using Secord as an intermediary. Shackley’s friend Bush was then the director of the CIA.
THE IRAN VACUUM
The confusion over “radicals” versus “moderates,” like the entire arms-for-hostages deal, arose in the absence of any consistent U.S. policy toward Iran. That vacuum was easily filled by a group of Iranian exiles with their own special interests, whose machinations were assisted by the Israeli intelligence services.
The story begins with the arms merchant Manucher Ghorbanifar. Before the 1979 revolution, Ghorbanifar had been managing director of an Israeli-connected shipping firm in Iran. He is rumored to have maintained connections with both SAVAK, the Shah’s secret police, and Israeli intelligence — although according to the Report neither of these relationships has ever been confirmed. Members of Ghorbanifar’s family were involved in an unsuccessful coup against Khomeini in 1980, and thereafter he sought repeatedly to curry favor with U.S. intelligence agencies. By 1981 the CIA had dropped Ghorbanifar as an informant, on the grounds that he was solely interested in promoting his own financial enrichment. He persistently importuned American agents, becoming so obnoxious by 1984 that the CIA put out a “burn notice” warning the intelligence community that Ghorbanifar “should be regarded as an intelligence fabricator and a nuisance.”
Ghorbanifar sought to enlist former CIA official Theodore Shackley as a conduit for an arms-for-hostage trade, but when the State Department turned down that offer as a “scam,” he fastened onto Roy Furmark, an American businessman associated with Saudi arms dealer Adnan Khashoggi and a former law client of CIA director Casey. Furmark introduced Ghorbanifar to Khashoggi, who sent Ghorbanifar to meet several times with a group of Israelis that included Al Schwimmer, an adviser to Prime Minister Shimon Peres, and Ya’accov Nimrodi, an Israeli businessman with previous service in the government. In April 1985 Ghorbanifar proposed that he be permitted to purchase TOW antitank missiles for Iran from Israel, and in return, he would obtain the release of William Buckley, the CIA station chief held hostage in Beirut.
It was also in the spring of 1985 that Michael Ledeen, a self-styled terrorism expert, attempted to persuade national security adviser McFarlane to employ him as an informal liaison for Israeli intelligence about Iran. The NSC staff was hesitant about using Ledeen but impressed by his access to Peres, and he was eventually authorized by McFarlane to make contact with the Israeli prime minister.
In May 1985 Ledeen met in Israel with Peres. Ledeen says the hostages were not discussed, but the Report notes that an Israeli official “recalls Ledeen telling him about offers by various Iranians to help get the hostages released.”
According to Ledeen, Peres asked him to tell McFarlane that the Israelis wanted to sell artillery equipment to the Iranians, but would only do so with U.S. consent. McFarlane gave Ledeen approval for a single arms sale, “but just that and nothing else.” According to the Report: “One of the Israeli participants reported to another Israeli participant, however, that the authorization conveyed by Ledeen from McFarlane was for a transfer of TOW missiles” — a far more sophisticated and dangerous weapon.
While aiming to gain credit in the White House, Israel also pursued its own interests by manipulating the muddled captains of the Enterprise. The Report’s chronology makes clear that while the Israelis pushed hard for weapons sales, they were simultaneously negotiating with North for cooperative intelligence ventures with the U.S. This must have been especially tempting since the Israeli intelligence services are hampered by few of the democratic restrictions in place here. The Report shows that the Americans considered a diversion of Iranian arms sale profits from the beginning and that the Israelis proposed to spend some of their own take from the arms sales on joint covert operations.
THE URGE TO DIVERT
The uproar over the “diversion” last year, and the subsequent focus upon it by the press and Congress, suggested this was a novelty. Yet if the switching of funds from arms sales to covert operations was “a neat idea,” in North’s juvenile idiom, it was probably not a new one. What better method could there be to raise millions for secret projects — or to conceal them from the prying of both Congress and the intelligence bureaucracy?
Tantalizing reference to a similar scheme, involving several Iran-contra figures, is made in Manhunt, Peter Maas’s book about the Edwin Wilson case. Maas provides an important, if briefly noted, clue that was apparently missed by the congressional investigators. In the early days of the Reagan administration, according to Maas, Michael Ledeen told a federal prosecutor investigating billing abuses in arms sales to Egypt that the missing funds “might have gone for a covert operation.” Ledeen was attempting to protect his friend Ted Shackley, and Shackley’s associate Tom Clines, from indictment in the scandal surrounding the Egyptian-American Transport Services Corporation, better known as EATSCO. Perhaps there was something to Ledeen’s story, since the EATSCO case was settled with a fine and no criminal prosecutions.
The Report does show that some type of diversion had been discussed within the White House as early as 1985. General Singlaub proposed a diversion scheme to both North and Casey in a memo prepared by his associate Barbara Studley.
Weapons dealer Studley framed her 1985 proposal using Reagan Doctrine buzz words. Her “objective” was “to create a conduit for maintaining a continuous flow of Soviet weapons and technology, to be utilized by the United States in support of Freedom Fighters in Nicaragua, Afghanistan, Angola, Cambodia, Ethiopia, etc.” Soviet bloc matériel was compatible with weapons and ammunition captured by the “freedom fighters.”
Though the Studley scheme was never implemented, Israel was already involved in a similar plan to use arms sales to finance covert operations. According to the Israelis, North proposed in early October 1985 that excess funds from the TOW missile sales be used to support “pragmatists” in Iran. By the end of November, the Enterprise had received a portion of the arms sales proceeds. At North’s request the Israeli intermediaries paid Secord’s Lake Resources account $1 million from the proceeds of its August-September TOW shipments.
North and Secord both said the money was to cover the Enterprise’s expenses in arranging five shipments of HAWKs to Iran. But when the deliveries were stopped after one shipment, the Enterprise held $800,000 in unexpended funds. North then received Israeli permission to use the $800,000 for “whatever purpose we wanted,” and he told Secord to spend the money for the contras.
According to the notes of an Israeli Defense Ministry official who met with North on December 6, 1985, the NSC aide said he needed money and intended to divert profits from future Iranian transactions to Nicaragua. Three days later North recommended to his boss John Poindexter that the U.S. take control of arms sales from Israel, and use “Secord as our conduit to control Ghorbanifar and the delivery operation.” This mechanism was adopted in the intelligence finding signed by the president on January 17, 1986.
Among the Report’s accomplishments is its painstaking audit of the Enterprise’s finances. Its authors understood that the unseen movement of money made the Enterprise a scandal and a threat to democratic order.
North testified that as early as 1984, CIA director Casey wanted to set up “an overseas entity that was capable of conducting operations or activities of assistance to U.S. foreign policy goals that was… self-financing, independent of appropriated monies,” and thus beyond congressional oversight. The Enterprise was in fact a maze of different companies, created at the direction of North, Hakim, and Secord by William Zucker, a former IRS lawyer living in Switzerland who had worked for Hakim for two decades.
The operation was made up of three kinds of firms. First were the disposable “collecting” companies that received funds for the overall operation. When a collecting company became too visible, it could be jettisoned and replaced. The collecting company fed money into a series of “treasury” companies, each one assigned to a different part of the world. These regional accounts would then finance the activities of “operating” companies: for example the Udall Corporation, which built the secret airstrip in Costa Rica and owned the aircraft used in the contra resupply effort; or Toyco, which bought and sold weapons for the contras.
In 1985 and 1986, revenues of the Enterprise totaled nearly $48 million. They poured in from the wealthy American contributors recruited by Carl “Spitz” Channell, from countries like Saudi Arabia and South Korea, from arms sales not only to Iran but to the contras, and even from sales of weapons to the CIA.
And while the secret effort to resupply the contras on the southern front — the major stated purpose of the Enterprise — never materialized, the “owners” were becoming wealthy. In its two-year history, the Enterprise’s income exceeded expenditures by $12.2 million, out of which Secord, Hakim, and Clines dealt themselves “commissions” amounting to $4.4 million.
Hakim and Secord took an additional $2.2 million for personal business ventures and expenses. Another $4.2 million was held as “Reserves” for future projects, and $1.2 million remained as undistributed cash at the end of 1986 when the scandal was exposed. Had the contribution from Brunei solicited by Abrams not been misplaced, the Enterprise would have been $10 million richer.
But in addition to profiting from the Enterprise, Secord and Hakim had their own business agenda. They wanted to manufacture submachine guns through a partnership called Tri-American Arms. In its initial phase, this project was to manufacture 4000 guns for the contras. The projected investment cost was $3 million; the projected profit, $4.2 million. The partners also planned to purchase timberlands in the American Northwest, with a loan collateralized against Enterprise accounts. They discussed investments in biotechnology, and in the “bulk manufacturing of opium alkaloids.”
In addition, the partners wanted to buy into Forways, a military spare-parts firm in which Zucker already was a 25 per cent owner. At the same time negotiations for the Iran arms sales were going forward, Hakim gave a set of Forways catalogues to the negotiators with an optimistic remark: “Once things get going then we will be able to sell directly from Forways.”
To Secord and Hakim, the Enterprise meant money and, in Secord’s case, a chance to revive his career in special operations. But for their sponsors in government — North, Casey, Poindexter, and perhaps the president — the Enterprise represented something much larger: an unaccountable mechanism for working their will outside the strictures of public opinion and congressional sanction.
The Democratic majority’s anger about this secret government is reflected when the Report says that it “violated cardinal principles of the Constitution.… The Constitution contemplates that the Government will conduct its affairs only with funds appropriated by Congress. By resorting to funds not appropriated by Congress — indeed funds denied to the executive branch by Congress — Administration officials committed a transgression far more basic than a violation of the Boland Amendment.”
Yet the committees demand no sanction against Ronald Reagan for the abuses committed under his authority. And when administration officials first deceived Congress about secret activities in Nicaragua back in 1985, the congressional response was feeble. The only remaining barrier to the Enterprise’s assault on the law was the Justice Department, which the Report makes plain was utterly compromised under the direction of Attorney General Meese.
Meese was a poor constitutional watchdog even before the Enterprise got under way. The Report examines in some detail his response to Oliver North’s ludicrous scheme to ransom the Beirut hostages using two Drug Enforcement Administration agents and unappropriated private funds. After the CIA and the DEA refused to cooperate, North turned to Meese for help. On June 10, 1985, he prepared a memorandum for the attorney general explaining how a private donation of $2 million would be deposited in a secret account “to bribe those in control of the hostages.” Meese complied with North’s request that the two DEA agents be detailed directly to the National Security Council. “No notice of any kind was provided to Congress about this operation,” concludes the Report, “and no decision was ever made by the President that prior notice should be withheld or delayed. Thus, the failure to notify Congress of the DEA covert operation violated the law.”
But this tale, as Chapter Five of the Report explains, was only prologue to the Justice Department’s mishandling of seven other investigations that, “if pursued, would [have] expose[d] the NSC staff’s covert operations.” Among those stymied cases was the probe of contra gunrunning and mercenary recruitment by the U.S. Attorney in Miami, the subject of extensive coverage by the Voice, whose key details are largely confirmed in the Report. As a result of intervention by North and Poindexter, all seven investigations were to some degree hampered or delayed. Inexplicably, the committees let Meese and his subordinates off lightly, laying the blame for obstructions of justice on North and the NSC staff, and adding, “We do not mean to impugn the integrity of the law enforcement officials involved.”
Although the Report offers a devastating, step-by-step chapter about Meese’s bungling — or coverup — of the early investigation of the Iran-contra diversion a year ago, the sharpest criticism of the attorney general is to be found in additional comments signed by House Judiciary Committee chairman Peter Rodino and three other Democrats. “As the chief law enforcement officer of our country,” they note, the attorney general “bears a special responsibility — not only to uphold and defend the Constitution, but also to assist the President in seeing that our laws are faithfully executed.… Yet, when one reviews the Attorney General’s conduct during the Iran-Contra episode, it is impossible to avoid questions about his actions.”
Even Rodino and his colleagues refrain from joining the recent chorus of calls for Meese to resign. Instead, they confine themselves to recommending a series of new congressional investigations of the Justice Department. At least one such probe is already under way in Rodino’s own committee, where crime subcommittee chairman William Hughes has been taking testimony about the Miami gunrunning case.
The Report’s flaccid handling of Meese reflects a wider passivity among congressional Democrats that, in some ways, is the unmentioned culprit of the Iran-contra affair. Fearful of being red-baited, and checked by the gag rules of its own intelligence committees, the Democratic majority in the House allowed Oliver North to run amok long after his activities in Central America had been exposed by the media. The Republican minority claims in its dissent from the Report that leaks of classified information should be the chief future concern of lawmakers. But if future intelligence abuses are to be checked, both Democrats and Republicans committed to constitutional processes will have to worry less about Capitol Hill leaks, and more about White House lies.
The ideologues and operatives of the New Right have lost a few friends, but they have by no means abandoned their covert methods or bloody aspirations. They merely await a more hospitable climate, perhaps in the next administration. The committees’ investigation and the Report itself leave a critical question unanswered: Will anyone in Congress be prepared to restrain a government headed by George Bush? ■
Research: Jeff Nason, Frédérique Pressmann, William Hollister, Jason Moody