What the Iran-Contra Report Leaves Out

“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.”


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.


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 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 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