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Iran/Arms Transaction: Congressional Material: Joint Committee Report (5)
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Iran/Arms Transaction: Congressional Material: Joint Committee Report (5)
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Records of the Office of Counsel to the President (Reagan Administration)
Arthur Culvahouse's Office Files
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Ronald Reagan Presidential Library
Digital Library Collections
This is a PDF of a folder from our textual collections.
Collection: Culvahouse, Arthur B.: Files
Folder Title: Iran/Arms Transaction: Congressional
Material: Joint Committee Report (5)
Box: CFOA 1130
To see more digitized collections visit:
https://reaganlibrary.gov/archives/digital-library
To see all Ronald Reagan Presidential Library inventories visit:
https://reaganlibrary.gov/document-collection
Contact a reference archivist at: [email protected]
Citation Guidelines: https://reaganlibrary.gov/citing
National Archives Catalogue: https://catalog.archives.gov/
THE WHITE HOUSE
WASHINGTON
November 3, 1987
MEMORANDUM FOR ARTHUR B. CULVAHOUSE, JR.
FROM:
ALAN CHARLES RAUL
Ad
SUBJECT:
Declassification of Report: "The Enterprise
Assumes Control of Contra Support"
This section of the Report is 107 pages long and arrived for
declassification on October 28. The salient points are noted
below:
P. 2 - "Lt. Col. North asked [around the summer of 1985]
Gen. Secord and his associates to assume new
responsibilities that under the Boland Amendment the U.S.
Government could not undertake. Secord agreed to continue
to handle all future weapons procurement for the Contras and
to acquire and operate a small fleet of planes to make air
drops of weapons, ammunition and other supplies to the
Contras in both northern and southern Nicaragua. North
arranged the funding for Secord to carry out these
activities, directing third-country and private
contributions to Secord that previously went to Calero.
These funds were later augmented by the diversion from the
Iranian arms sales that North, with Poindexter's approval,
initiated."
P. 3 - "The Enterprise, though nominally private, functioned as a
secret arm of the NSC staff in conducting the covert program
in Nicaragua. While Secord controlled the operational
decisions of the Enterprise, North remained in overall
charge of the Contra-support program. He set the priorities
and enlisted the support of an ambassador, CIA officials,
and military personnel to carry out the air resupply
operation. He dealt with crises as they arose, sometimes on
a daily basis. In carrying on these tasks, North had the
unqualified support of Admiral Poindexter, who had replaced
Robert McFarlane as National Security Adviser in December
1985. "
P.
4
"
-
the NSC staff had secretly achieved what Congress
had openly disapproved in the Boland Amendment -- an
extensive program of military support for the Contras. The
Boland Amendment operated as a restraint on disclosure, not
on action, as the NSC staff placed policy ends above the
law."
2
P. 15 - "North's notebooks reflect that on September 10, 1985, he
met with Col. James Steele, a U.S. Military Group Commander
in Central America and Donald Gregg, Vice President Bush's
National Security Adviser. Among the discussion topics
North listed was a 'Calero/Bermudez visit to [the Airbase]
to estab [lish] [istical] support/main [enance], as well
as other possible locations for the resupply base. Gregg,
however, testified that he did not know of the resupply
operation prior to the summer of 1986.
P. 24 - "When Poindexter returned from his one-day trip to
Central America, he briefed the President on the morning of
December 13, including informing the President on efforts to
secure the land necessary for the airstrip. Poindexter
testified, and his notes reflect, that Poindexter 'did talk
to him [the President] about the private airstrip.
P. 30 - "In March 1986, a meeting arranged for a Costa Rican
official with President Reagan at the White House occurred.
The meeting was simply a photo opportunity, attended as well
by North and Castillo.
After the Oval Office visit, North asked the official to
meet with Secord that afternoon to work out some issues
concerning the airstrip. At the meeting, the official asked
Secord for a letter, which the official dictated, to the
effect that the Costa Rican Civil Guard maintained control
of the airstrip, have access to it for training purposes,
and that ecological and environmental considerations apply."
P. 44 - "The Administration continued to seek an appropriation
for the CIA to resume its program of covert assistance to
the Contras. In early May, Poindexter said the President
told him 'If we can't move the Contra package before June 9,
I want to figure out a way to take action unilaterally to
provide assistance.' Poindexter wrote his deputy, Don
Fortier, 'The President is ready to confront the Congress on
the Constitutional question of who controls foreign policy.
George [Shultz] agrees with the President that we have
to find some way and we will not pull out.'
North, who received a copy of Poindexter's PROF note,
responded immediately with a suggestion: The Contras should
capture some territory inside Nicaragua and set up a
provisional government. The President would respond by
recognizing the Contras as the true government and provide
support. Asked by Poindexter whether he had talked to Casey
about his plan, North replied, 'Yes, in general terms. He
is supportive, as is Elliott [Abrams]. It is, to say the
least, a high risk option -- but it may be the only way we
can ever get this thing to work.
3
P. 47 - "On May 16, 1986, the President and his advisers
discussed the issue of obtaining funds from third countries.
In a memorandum to the President for the NSPG meeting, North
suggested three ways to 'bridge the gap' in funding: (1) a
reprogramming of funds from DOD to the CIA ($15 million in
humanitarian aid) ; (2) a Presidential appeal for private
donations by U.S. citizens; and (3) a 'direct and very
private Presidential overture to certain Heads of State.
The last source of funds would, as North put it, eliminate
the need 'to endure further domestic partisan political
debate.
Director Casey opened the meeting and explained the Contras'
needs. The good news, he told the President, was that the
Contras had infiltrated more troops into Nicaragua than ever
before, and the troops were now being resupplied by air.
The 'bad news' was that the resistance was operating under
the assumption that it would receive new funding at the end
of May. Only $2 million remained from the humanitarian
assistance appropriation.
P. 48 - "Later in the discussion, Secretary Shultz returned to
the subject of money: 'If we don't get money for the
freedom fighters, they will be out of business.' Noting the
unlikelihood of an immediate Congressional appropriation,
and the improbability that the intelligence committees could
be persuaded to reprogram funds, Shultz suggested that 'It
would be better to go to other countries and get it
[funding] there. North added that the Intelligence
Authorization Act of 1986 permitted the 'State Department to
approach other governments for non-military aid.'
No one at the meeting discussed the fact that a Middle
Eastern country had already given $32 million to the
Contras, including a $24 million donation committed to the
President personally. Nor was it mentioned that several Far
Eastern countries had been approached for donations had
given $2 million only 6 months earlier. Instead, Shultz was
instructed to prepare for review by the President a list of
countries that could be solicited."
P. 49 - "Poindexter testified that he understood the $6 million
to which North referred was coming from the Iranian arms
sales, but he did not tell the President the $6 million was
available. North testified that as he was leaving the NSPG
meeting he mentioned to Poindexter that Iran was supplying
$6 million for the Contras but that he did not know whether
he was overheard.
North wrote Poindexter that he did not know whether all
those present at the NSPG meeting, such as Chief of Staff
Donald Regan, knew of 'my private U.S. operation.' On the
other hand, North noted to Poindexter, 'the President
4
obviously knows why he has been meeting with several select
people to thank them for their 'support for Democracy' in
CentAm.
North also realized that disclosure of a significant sum of
money earmarked for Contra support, but only made possible
by arms sales to Iran, could prove politically embarrassing.
The more money there is (and we will have a
considerable amount in a few more days) the
more visible the program becomes (airplanes,
pilots, weapons, deliveries, etc.) and the
more inquisitive will become people like
Kerry, Barnes, Harkins, et al. While I care
not a whit what they may say about me, it
could well become a political embarrassment
for the President and you.
P. 50 - "Poindexter approved North's recommendation to seek the
$15 million reprogramming and responded to his concerns:
Go ahead and work up the paper needed for the $15M
reprogramming
I understand your concerns and agree.
I just didn't want you to bring it up at NSPG. I guessed at
what you were going to say. Don Regan knows very little of
your operation and that is just as well.
P. 53 - "Asked by the official what Brunei would receive in
return, Abrams responded, 'Well,
the President will
know of this, and you will have the gratitude of the
Secretary and of the President for helping us out in this
jam. The official persisted, asking, 'What concrete do we
get out of this?' Abrams responded, 'You don't get anything
concrete out of it. 1 Abrams then handed the account number
North had given him which he had copied onto a slip of paper
to the Brunei official."
P. 54 - "Rodriguez met with Vice President Bush in Washington
on May 1. He had arranged the meeting through the Vice
President's National Security Adviser, Donald Gregg. The
appointment scheduling memo for the meeting states: 'To
brief the Vice President on the status of the war in [a
Central American country] and resupply of the Contras.'
Members of the Vice President's staff gave conflicting
testimony over how this description was printed on his
schedule. Sam Watson, the Vice President's Deputy National
Security Adviser, testified that the memo was inaccurate,
and that he did not provide the description. Phyllis Byrne,
the secretary who typed the memo, testified that Watson had
given her the description.
In the Old Executive Office Building on his way to the Vice
President's office, Rodriguez stopped by to tell North he
was leaving the operation. Rodriguez said North asked him
5
to remain in Central America, but he ignored the request.
Escorted by Gregg and Watson, Rodriguez then met with the
Vice President.
Before Rodriguez could tell the Vice President that he was
leaving Central America, North arrived and told the Vice
President about the good job Rodriguez was doing.
Embarrassed to tell the Vice President he was going to
leave, Rodriguez left the meeting without discussing his
resignation, and eventually returned to Central America.
Rodriguez testified that 'at no point in any of this
conversation did I ever mention doing anything that was
remotely connected to Nicaragua and the contras.' Moreover,
former Senator Nicholas Brady, who was also present at the
meeting, testified that the resupply operation was not
discussed."
P. 57 - "According to Rodriguez, North looked at the television
and said: 'Those people want me but they cannot touch me
because the old man loves my ass.' North did not recall
that part of his conversation with Rodriguez."
P. 62 - "North later complained to Gregg that Rodriguez had 'made
off with an airplane,' and asked him, 'Will you call him and
find out what the hell is going on?' Rodriguez told Gregg
he had decided to tell Gregg 'about what had been going
on. "
P. 63 - "On August 8, Rodriguez met with Gregg and set out his
allegations about the Secord group. Gregg noted the points
Rodriguez made: 'using Ed Wilson group for supplies;'
'Felix used by Ollie to get Contra plane repaired
'a
swap of weapons for $ was arranged to get aid for Contras,
Clines and General Secord tied in'; 'Hand grenades bought
for $3 - sold for $9.' Gregg, according to Earl, expressed
shock about the involvement of Clines.
154n, p. 92 - "Sam Watson, Gregg's deputy, was also at the
meeting. His notes state: 'Felix -- Tom Clines, Secord --
Ripping off Contras -- Fraud, a crime to profit. N46663.'
P. 63 - "On August 12, Gregg convened a meeting to discuss
Rodriguez's allegations with a group of Administration
officials involved in Central American policymaking:
Steele; Ambassador Corr; Deputy Assistant Secretary of State
Walker; the Chief of the Central American Task Force; and
from the NSC, Earl and Ray Burghardt. Gregg testified that
he 'went over the notes with the people who were there.'
Without mentioning North's involvement, Gregg emphasized
that he considered Clines not reliable but that he had faith
in Rodriguez.
Gregg knew by this time that North was involved in the
6
operation. Rodriguez had made that clear at his Aug. 8
meeting, and Gregg's notes reflect that knowledge. Gregg
testified that at no time did he pass that information on to
the Vice President. Gregg did not report the meeting,
because he believed it 'was a very murky business.
We
had never discussed the Contras. We had no responsibility
for it. We had no expertise in it. I wasn't at all certain
what this amounted to
I felt I had passed along that
material to the organizations who could do something about
it, and I frankly did not think it was Vice Presidential
level.
P. 64 - "Secord responded that there was more than '1 million
dollars worth of equipment' in Central America owned by the
Enterprise, which had no intention of abandoning them.
Secord explained that the 'threat of air piracy lawsuit has
nothing to do with [the Commander]. This was comment made
to VP by Ollie ref Max [Felix Rodriguez] vice [the
Commander
P. 69 - "When Dutton returned from Central America later that
month, he met with North. North asked him to arrange a
one-day trip to the region so that he could personally thank
the pilots and crew. North told him, 'Bob, you will never
get a medal for this, but some day the President will shake
your hand and thank you for it.
Dutton had also prepared a photograph album depicting the
operation: the operational bases, drop zones, aircraft,
munitions, and the crew replete with assault machine guns
and other assorted weapons. Dutton showed the album to
North, who liked it and said he wanted to show it to 'the
top boss. North testified that he sent the album to
Poindexter to show to the President, but never heard further
about the album. Poindexter testified that he did not show
the album to the President."
P. 73 - "In his report to Poindexter, North exaggerated his own
role in the crisis. In a PROF note, North told Poindexter
he had personally forestalled the crisis by calling the
President of Costa Rica and threatening to cut off aid.
North conceded to Poindexter that he may have overstepped
the bounds of his authority: 'I recognize that I was well
beyond my charter in dealing with a head of state this way
and in making threats/offers that may be impossible to
deliver.' Poindexter responded: 'Thanks, Ollie, you did
the right thing, but let's try to keep it quiet. North
admitted in his testimony that he had not called President
Arias. He claimed, instead, that the PROFS message 'was
specifically cast the way it was to protect the other two
parties engaged. By North's account, he misrepresented his
actions to Poindexter, his boss, in order to conceal Abrams'
and Tambs' contact with a foreign head of state."
7
P. 77 - "Presidential Authorization and Knowledge - The President
told the Tower Review Board that he did not know that the
NSC staff was assisting the Contras. After the Tower Report
was issued, however, the President said that private support
for the Contras was 'my idea.' The President knew of the
contributions from a Middle Eastern Country and, in fact,
received the pledge on the largest of them. According to
Poindexter, the President's policy was 'to get what support
we could from third countries.'
In general, Poindexter understood that the President wanted
the NSC staff to support the Contras, including encouraging
private contributions. The President also knew, according
to Poindexter, that North was the chief staff officer on
Central America who was responsible for carrying out the
President's general charter to keep the Contras alive.
Poindexter regularly reported to the President on the status
of the Contras, the fact that they were surviving, and 'in
general terms' North's role in facilitating their survival.
As a result of these briefings, Poindexter thought that the
President understood that both he and North were
coordinating the effort to support the Contras. Poindexter
also believed the President understood that 'Col. North was
instrumental in keeping the Contras supported without maybe
understanding details of exactly what he was doing.'
As to the level of detail provided to the President on
Contra support operation, Poindexter testified that he
'would not get into details with the
President as to who was doing what. The
President knew that there was a Boland
Amendment, he knew there were restrictions on
the government. As he has said, I think,
since November of 1986, that he did not feel
that the Boland Amendment applied to his
personal staff and that that was his feeling
all along. I knew that.
He knew the Contras were being supported, and
we simply didn't get into the details of
exactly who was doing what.'
Poindexter testified that on one occasion, he briefed the
President with some specificity about the Contra support
program, but understood that the President did not recall
the briefing:
'Now, you know, the President doesn't recall
apparently a specific briefing in which I
laid out in great detail all of the ways that
we were going about implementing the
President's policy, and I frankly don't find
8
that surprising. It would not, frankly, at
the time have been a matter of great interest
as to exactly how we were implementing the
President's policy.'
Without briefing the President on the 'extraneous details'
of how his policy was being implemented, however, Poindexter
told President Reagan of the construction of the Santa Elena
airstrip in Costa Rica. Poindexter testified that in
December, 1985, after he returned from Central America, he
specifically informed the President that 'private
individuals' were establishing the airstrip, at the same
time excluding 'the extraneous detail' that North, through
Tambs and Castillo, had facilitated the construction of the
airstrip. Similarly, while Poindexter thought that the
President was aware of North's role in supporting the
Contras, 'it did not include something as specific as
directing Col. North to conduct air supply operations.
Nonetheless, North testified that he believed that the
President approved his efforts to resupply the war. In
fact, his actions support that belief. While Poindexter
testified that he did not show the photograph album
detailing the operation to the President, North testified
that he sent the album to the President through Poindexter
and told Dutton that the President would thank Dutton for
his efforts."
P. 81 - "The covert program that North had developed outside of
the law, as well as the vagaries of the law itself,
inevitably created conflicts of loyalties and shadings of
duties among the persons whom he coopted to assist him.
Felix Rodriguez was a close associate of Donald Gregg, the
National Security Adviser to the Vice President, and was in
Central America through Gregg's good offices. Yet North
instructed Rodriguez not to tell Gregg that he was secretly
working for North, and Rodriguez testified that he complied
until the summer of 1986. According to North, Director
Casey wanted to insulate the CIA's career employees from
North's operation so that the CIA could not be charged with
a violation of the Boland Amendment. CIA felt constrained
to report on U.S. citizens and its traditional role, a
policy which 'actively shunned information. We did not want
to know how the Contras were being funded
we
actively
discouraged people from telling us things.
The CIA's Chinese Wall turned into a Potemkin facade as
North sought out and secured the assistance of CIA in
Central America. Particularly after Congress amended the
law to allow the CIA to exchange intelligence with the
Contras, many flights undertaken by the Enterprise were
reported by CIA field offices to CIA headquarters; and CIA
personnel provided information necessary for the Enterprise
to make accurate airdrops and avoid Sandinista fire.
9
North directed the Enterprise's efforts on behalf of the
Contras with Poindexter's approval and in the belief that
the President likewise concurred. The result was that, with
the help of other U.S. Government officials, North managed
to provide to the Contras what Congress would not: a
full-scale program of military assistance." "
THE WHITE HOUSE
WASHINGTON
November 4, 1987
MEMORANDUM FOR ARTHUR B. CULVAHOUSE, JR.
FROM:
ALAN CHARLES RAUL
ASC
SUBJECT:
Declassification of Report: "Covert Action in a
Democratic Society"
This section of the Report is 52 pages long and arrived for
declassification on October 30. The salient points are noted
below:
P. 1 - "The Iran-Contra Affair raises fundamental questions about
the secret intelligence operations of the U.S. government.
Can such operations, and particularly covert action, be
authorized and conducted in a manner compatible with the
American system of democratic government and the rule of
law? Is it possible for an open society like as the United
States to conduct such secret activities effectively? And
if so, by what means can these operations be controlled so
as to meet the requirements of accountability in a
democratic society?"
P. 2 - "The result of those inquiries was a concerted effort by
the executive and legislative branches to adopt laws and
procedures to control secret intelligence activities,
including covert actions, and to ensure that they would be
conducted only with the prior authorization of the President
and timely notice to Congressional committees specially
constituted to protect the secrecy necessary for effective
operations.
Experience has shown that these laws and procedures are
adequate to the task if respected. However, in the
Iran-Contra Affair they often were disregarded. The
flexibility built into the legislation and rules to allow
the executive branch to deal with extraordinary situations
was distorted beyond reasonable bounds. Laws intended to
reflect a spirit of comity between the branches were abused
when that commitment to cooperation was abandoned."
P. 3 - "The Director of the Central Intelligence Agency, William
J. Casey, and other officials showed contempt for the
democratic processed by withholding information that
Congress was seeking and by misrepresenting intelligence to
support policies advocated by Casey.
2
Covert action is not defined in statute. However, Executive
Order 12333, issued by President Reagan in 1981, refers to
covert action as special activities which are defined as:
Special activities means activities conducted
in support of national foreign policy
objectives abroad which are planned and
executed so that the role of the United
States government is not apparent or
acknowledged publicly, and functions in
support of such activities.
The Executive order also provides that the authorized special
activities may not include activities that are 'intended
to influence United States political processes, public opinion,
policies, or media.
P. 6 - "What makes such activities 'covert' is not their effect,
but their implementation in a manner permitting 'plausible
denial' a concept that [Truman order] NSC 10/2 also
codified. U.S. action in support of indigenous groups were
to be
so planned and executed that any U.S.
government responsibility for them is not
evident to unauthorized persons and that if
uncovered the U.S. Government can plausibly
disclaim any responsibility for them.
P. 8 - "Covert action operations pose challenges for the
political processes of the United States. As with other
secret intelligence programs and more sensitive defense
projects, appropriations and expenditures of these
operations must necessarily be kept private. Thus, covert
assistance to foreign governments and groups does not
receive the open debate other resistance programs do.
Paramilitary covert actions are in the 'twilight area'
between war, which only Congress can declare, and diplomacy,
which the President must manage. This type of activity is
especially troublesome as a constitutional separation of
powers issue."
P. 10 - "While Congress has never provided specific authority for
the CIA or any other elements of the Government to conduct
covert actions, it has continued to appropriate funds for
these activities.
When Secretary of Defense James Forrestal asked the Director
of Central Intelligence (DCI) on 1947 whether the CIA was
empowered to conduct covert activities, the Director replied
that the CIA could do so if the NSC approved the activities
and Congress appropriated funds to carry them out.
3
A CIA's legal counsel put it in similar terms:
If the President gave us a proper directive
and Congress gave us the money, we had the
administrative authority to carry out (covert
actions) "
P. 14 - "The investigations by the Church Committee in 1975 and
1976 failed to turn up proof that Presidents had ordered
assassinations of foreign officials, but some senior
officials indicated their belief that some Presidents had
secretly approved such activities. Many in Congress felt
that the problem was not so much that the CIA was
undertaking covert action without the proper authority, but
that Executive approval had been given in a deliberately
ambiguous manner."
P. 15 - "Congress responded with the Hughes-Ryan Amendment which
altered the approval process of CIA covert action
operations. By requiring that the President personally find
and approve all covert actions as important to the national
security, Congress sought to make the President responsible
for all covert operations. The U.S. Government might still
be able to deny publicly the responsibility for specific
actions, but within the government there would be an
accountable source of authority -- the President."
P. 18 - "The law provided that the Committees were to be notified
in a 'timely fashion' of any covert action for which prior
notice was not given. The 1980 report on this provision by
the Senate Intelligence Committee states:
The Senate Select Committee and the Executive
Branch and the intelligence agencies have
come to an understanding that in rare,
extraordinary circumstances if the President
withholds prior notice of covert operations,
he is obliged to inform the two Oversight
Committees in a timely fashion of the action
and the reasons for withholding such prior
notice.
According to the Committee report, the law
was a compromise intended to codify the
'practical relationship the Executive Branch
and the intelligence oversight committees had
developed based on comity and mutual
understanding, without confrontation" and
thus to 'carry this working relationship
forward into statute."
P. 20 - "Despite occasional problems, this system [for covert
action procedures] has proved workable. The Administration
has notified the oversight Committees of its proposals
4
including those of great sensitivity in which lives might be
in danger in event of disclosure. In fact, the
Administration has said that both it and the Carter
Administration notified the intelligence committees of all
covert actions prior to implementation except the Iran arms
sale operation. The President and senior intelligence
officials have indicated to Congress their satisfaction with
the Oversight Committees' role and with the prevailing
procedures, which also protects the CIA from charges that
its actions are unauthorized. Indeed, the procedures
implemented by the Executive and by Congress preclude the
possibility that the intelligence agencies would be blamed
for activities for which elected officials might wish to
deny responsibility."
P. 22 - "The Findings process also was circumvented. Covert
actions were undertaken outside the specific authorizations of
Presidential Findings. At other times, covert actions were
undertaken without a Presidential Finding altogether.
Actions were undertaken through entities other than the CIA,
including foreign governments and private parties. There
were claims that the Findings could be used to override
provisions of the law. The statutory requirements for prior
notice to eight key congressional leaders was disregarded.
Throughout, along with the legal requirement to notify the
Intelligence Committees in a 'timely fashion.
P. 25 - "The NSC staff then raised money for the Contras and,
with Secord's assistance, created an organization outside the
Government to procure arms and resupply the Contras. There
was no Presidential Finding authorizing these activities.
While the President has said that NSC staff encouragement
of the Contras was his 'own' idea, the President had
previously told the Tower Board that he was unaware that the
NSC staff was directly assisting the Contras.
P. 26 - Efforts coordinated by North to ransom hostages
constituted another instance in which the legal requirements
for a Finding were dispensed with. This was in
contravention of the President's own directive, Executive
Order 1233, which provided specifically that all covert
actions be subject to Presidential findings. Not only was a
Finding dispensed with, but funds to support the operation
were raised from nongovernmental sources. The operation was
pursued despite the objection of CIA and some DEA officials
and Congress was not notified.
There was also no written finding when the CIA became
involved in the covert shipment of arms in November, 1985.
McFarlane said, 1 (t) he President was all for letting the
Israelis do whatever they wanted to do.' McFarlane in
November, 1986, mused that U.S. participation in the initial
Israeli TOW shipments could be justified on the grounds that
the President had made a 'mental Finding,' and Attorney
5
General Edwin Meese opined that the President's concurrence
was tantamount to an oral Finding and thus sufficient legal
authorization for the program. The Finding sought to
authorize retroactively the CIA-assisted shipment of arms.
It was drafted after the shipment was made and then signed
by the President on December 5, 1985, only because of the
insistence of CIA Deputy Director John McMahon. This
process ignored the central purpose of the Finding
requirement which is to ensure that the President has
authorized a covert action before it starts and that he is
fully aware of it and accountable for this implementation.
Further, the 'unless and until' language of the Hughes-Ryan
Amendment clearly required a Finding before the CIA could
proceed."
P. 28 - "Neither the Finding relating to the Iran arms sales, nor
any finding relating to assistance to the Nicaraguan
Resistance authorized the diversion of funds. Poindexter
testified that he believed the diversion would become
politically controversial if exposed, so he decided not to
tell the President in order to give him 'deniability.
P. 30 - "In the Iran initiative, the Administration also used the
Finding to avoid compliance with the laws regulating the
export of arms
In 1981, Attorney General William
French Smith took the position that the limitations those
statutes imposed applied only to transfers undertaken
pursuant to the statutes. Moreover, the Smith opinion
specifically observed that Congress had provided for an
alternative form of notice to the Intelligence Oversight
Committees for covert arms transfers carried out by the
CIA. "
P. 31 -- "When the Smith opinion was considered in the context of
the Iran Finding in January 1986, the requirement of some
form of Congressional notification was ignored. Without at
least timely notice to the Congress, as required by section
501 of the National Security Act, there was no justification
under the Smith opinion could not be used to conclude that
the Iran arms transfer was in compliance with applicable
statutes.
Later in 1986, after the Iran Finding was issued, the Arms
Export Control Act was amended to ban all arms exports to
countries that supported terrorism, unless there was a
Presidential waiver and a report to Congress. Administration
officials, however, continued to rely on the Finding as the
controlling authority, despite the fact that Iran was a
designated terrorist country."
P. 34 - "Reference to the Smith opinion [in the Poindexter
Jan. 17 cover memo], which was predicated on notice to the
Intelligence Oversight Committees, gave the President
misleading legal advice. Findings were intended to subject
6
covert action to the accountability of the constitutional
system, not to supplant law."
P. 38 - "Deputy Director Gates told the Senate Intelligence
Committee: 'Agency people, from the Director on down,
actively shunned information. We did not want to know how
the Contras were being funded
we actively discouraged
people from telling us things. We did not pursue lines of
questioning. 1 When Gates first heard Charles Allen's
suspicions that a diversion of funds had taken place, his
'first reaction was to tell Mr. Allen that I did not want to
hear any more about it.
P. 39 - "As Clair George, pointed out, once members of the
intelligence agencies begin to lie to others in the
Government, 'the destruction of a secret service in a
democracy' must follow. He added, 'I deeply believe (even)
with the complexities of the oversight process in the
relationship between a free legislative body and a secret
spy service, (and) that frankness is the best and only way
to make it work.
P. 47 - "The misuse of intelligence was a subject ancillary to
the mandate given the Committees by Congress. The
Committees included these examples because the serious
implications they pose for decision-making. This issue of
intelligence by a Director of Central Intelligence, the
National Security Adviser or any Senior Intelligence
official, frustrates the ability of those within the
Executive branch and Congress to arrive at decisions based
upon sound national policy judgements.
P. 48 - "The Committees conclude:
(a) Covert operations are a necessary component of our
nation's foreign policy. They can supplement, not replace,
diplomacy and normal instruments of foreign policy. As
National Security Adviser Robert McFarlane testified, 'it is
clearly unwise to rely on covert action as the core of our
policy.' The government must be able to gain and sustain
popular support for its foreign policy through open, public
debate.
(b) Covert operations are compatible with democratic
government if they are conducted in an accountable manner
and in accordance with law. Laws mandate reporting and
prior notice to Congress. Covert action findings are not a
license to violate the statutes of the United States.
(c) As the Church Committee wrote more than a dozen years
ago: 'Covert actions should be consistent with publicly
defined United States foreign policy goals.' But the
policies themselves cannot be secret.
7
(d) All government operations, including covert action
operations, must be funded from appropriated monies or from
funds known to the appropriate committees of the Congress
and subject to congressional control. This principle is at
the heart of our constitutional system of checks and
balances.
(e) The intelligence agencies must deal in a spirit of good
faith with the Congress. Both new and ongoing covert action
operations must be fully reported, not cloaked by broad
findings. Answers that are technically true, but
misleading, are unacceptable.
(f) Congress must have the will to exercise oversight over
covert operations. The intelligence committees are the
surrogates for the public on covert action operations. They
must monitor the intelligence agencies with that
responsibility in mind.
(g) The Congress also has a responsibility to ensure that
sensitive information form the Executive branch remains
secure when it is shared with the Congress. A need exists
for greater consensus between the Legislative and Executive
branches on the sharing and protection of information.
(h) The gathering, analysis of and reporting of
intelligence should be done in such a way that there can be
no question that the conclusions are driven by the actual
facts, rather than by what a policy advocate hopes these
facts will be."
P. 50 - "History reflects that the prospects for peaceful
settlement are greater if this country has adequate means
for its own defense, including effective intelligence and
the means to influence developments abroad."
P. 51 - "This country has been fortunate to have a military that
is sensitive to the constraints built into the Constitution
and to the necessity of respecting the Congress's
responsibilities. 'Like the military, the intelligence
services can function only with the trust and support of
their countrymen.
THE WHITE HOUSE
WASHINGTON
November 4, 1987
MEMORANDUM FOR ARTHUR B. CULVAHOUSE, JR.
FROM:
ALAN CHARLES RAUL Are
SUBJECT:
Declassification of Report: The Enterprise
This section of the Report is 97 pages long and arrived for
declassification on October 30. The salient points are noted
below:
P. 1 - "Almost $48 million flowed into the Enterprise. It came
from contributions directed to the Enterprise by North from
Carl "Spitz" Channel and Richard Miller, third countries,
and others. It came from the sales of arms to the Contras
and missiles to Iran. It came from the sale of weapons to
the CIA. The total would have been at least $10 million
greater had the Brunei contribution not been misdirected."
P. 2 - "In the financial records of the Enterprise, the
Committees found that:
-- The plan -- which North attributed to Casey -- to create
a worldwise private covert operation organizations, with
significant financial resources, was being implemented
through a network of offshore companies administered in
Switzerland.
-- The Enterprise took in nearly $48 million during its
first 2 years. Its income-generating capacity came almost
entirely from its access to U.S. Government resources and
connections: the contributions directed to it by North, the
missiles sold to Iran, and the brokering of arms to the
Contras as arranged by North.
-- The Enterprise spent almost $35.8 million. It used its
resources to finance covert operations not reported to
Congress as required by law and, in some instances, not
disclosed to the President.
-- The Enterprise generated a $16.1 million surplus from
arms sales to Iran. Before its operation came to a halt,
the Enterprise managed to spend at least $3.8 million of
that surplus on direct support for the Contras.
-- Secord, Hakim, and Clines took self-determined
"commissions" to reward themselves for their work on arms
deliveries to the Contras and the CIA. The commissions
2
totaled approximately $4.4 million, with an average markup
of about 38 percent over the cost of the arms -- not 20
percent as asserted by Secord.
-- Contrary to their testimony that they only took
"commissions" out of the Enterprise accounts, Hakim and
Secord also took more than $2.1 million out of the
Enterprise companies for personal business ventures and
personal use. Some of these business ventures involved
plans to sell weapons to the Contras at substantial profits.
-- $7.8 million of the $12.2 million surplus generated by
the Enterprise remained under management in Switzerland when
the Enterprise ceased its operations. Most of the money was
left in the Enterprise bank accounts or in reserve accounts
held for the Enterprise. However, approximately $2.2
million was held in several separate fiduciary accounts for
the benefit of the members of the Enterprise.'
P. 24 - "Hakim testified that, as a result of these kinds of
demands [by North], he was not sure who was making the
decision about the use of the Enterprise's funds -- North
acting as an official of the U.S. Government, or he and
Secord. As Hakim put it: 'whoever designed this structure,
had a situation that they could have their cake and eat it
too. Whichever they wanted to have, a private organization,
it was private; when they didn't want it to be a private
organization it wasn't.
P. 47 - "In this Report, the term 'diversion' refers to that
portion of the surplus from the Iran arms sale which was
used to pay Contra-related expenses."
P. 48 - "The Iran arms sales generated a $16.1 million surplus
for the Enterprise. However, the Enterprise spent only part
of that money, $3.8 million, for the Contras before its
operations were stopped.
As of November 19, 1986, the day before the first money from
the Iran arms transactions was deposited into the
Enterprise, the Enterprise had a cash balance of
approximately $1 million. From November 20, 1985, through
December 1986, the Enterprise received an additional $2.4
million from donations to the Contras. During the same
period, the Enterprise spent approximately $7.2 million on
behalf of the Contras. The shortfall -- $3.8 million -- was
diverted from the Iran arms sale surplus.
P. 48, 49 - "The diversion did not take place by accident. In
fact, North helped set the price of the arms so level that a
surplus would be created which could to be used for the
Contras. According to Secord, North consistently instructed
him to use the surpluses generated from the Iranian arms
sales for the Contra project. North apparently thought that
3
at least $6 million of the Iran surplus from the May
transaction alone would be used for the Contras. He sent
Poindexter a PROF note on May 16, saying that the Enterprise
had 'more than $6 million available for immediate
disbursement. I Poindexter testified that he believed that
the Enterprise was giving the Contras all of the surplus."
P. 84 - "The CSF fiduciary agreement governing [Enterprise Fund]
Reserve 1 -- the one for covert operations -- provided that
should Hakim die, Secord would have direct control over it
and should Secord die, North would have direct control.
Should North die, the remaining portion of the Reserve would
be divided equally among the estates of all three men. The
instructions to CSF were irrevocable without the consent of
all the beneficiaries. Hakim said that in setting up
Reserve 1, he simply followed the structure of the
Enterprise from top to bottom as he understood it -- with
North on the top."
THE WHITE HOUSE
WASHINGTON
November 4, 1987
MEMORANDUM FOR ARTHUR B. CULVAHOUSE, JR.
FROM:
ALAN CHARLES RAUL ACR
SUBJECT:
Declassification of Report/House Minority:
"The Boland Amendments"
This section of the Report is 32 pages long and arrived for
declassification on October 29. The salient points are noted
below:
P. 1 - "People listening to the public hearings on the
Iran-Contra Affair heard many statements about the "spirit
of the Boland Amendments." Everyone knows, the argument
goes, that Congress wanted to cut off all U.S. aid to the
Nicaraguan resistance. Congress did not anticipate that
anyone on the National Security Council staff would support
private and third country fundraising or give advice and
help coordinate the private resupply effort. Colonel
North's activities were a clear attempt, the argument
concludes, to circumvent the law.
There are two basic problems with this line of reasoning.
First as Justice Frankfurter said in Addison V. Holly Hill
Co., 'Congress expresses its meaning by words
It
is
no warrant for extending a statute that experience may
disclose that it should have been made more comprehensive.
One of the reasons there was so much discussion of the
'spirit of the law' at the hearings is, as we shall show,
that it is difficult to argue the letter of the law had been
violated. In an important sense, however, this last
statement concedes too much. The fact is that Congress was
not animated by a single 'spirit' when it passed the Boland
Amendments."
=
P. 4 - "Finally, for fiscal 1987, Congress resumed full funding
for the resistance at a level of $100 million. As McFarlane
said to Representative Courter during testimony, 'It is
absolutely out of the question to have a coherent policy
with that kind of a change in the legal framework.
Congress's ambivalence expressed itself not only from year
to year, but within years as well -- including the year of
the strictest Boland prohibition. If all we were talking
about was a clear expression of Congressional intent in the
form of a strict prohibition, that clear statement would
have to govern for as long as it stayed in effect. The
2
fact, however, is that Congress was of more than one mind --
even within the statute that contained the strictest Boland
prohibition.'
P. 7 - "The Senate supporters of Contra aid were willing to agree
to the conference report, and the President's was willing to
sign the bill, only because there was a general
understanding that a second vote [on $14M in Contra aid]
would be forthcoming, after the 1984 elections were out of
the way. Clearly, that understanding would have made no
sense unless the resistance continued to exist. Thus,
President Reagan's instructions to his staff to do whatever
they could within the law to keep the 'body and soul' of the
democratic resistance together, and the actions he took that
were consistent with Congress's findings about the OAS
charter, all were entirely in keeping with the full spirit
-- the spirit expressed by all of the participating members
of Congress -- of even the strictest Boland prohibition."
P. 9 - "If Congress had simply wanted to prohibit all U.S.
activity that might help the resistance, there were plenty
of easier ways available for it to have done SO. All it
needed to do was look at another very well known and similar
law, the Clark Amendment, that cut off support to the
resistance fighters in Angola in 1976. That language read
as follows:
Notwithstanding any other provision of law,
no assistance of any kind may be provided for
the purpose, or which would have the effect,
of promoting or augmenting, directly or
indirectly, the capacity of any nation,
group, organization, movement or individual
to conduct military or paramilitary
operations in Angola.
Congress obviously knows how to write an air tight
prohibition when it wants to. As in this example, it does
not write about agencies or entities, but simply bars
'assistance of any kind' from any source."
P. 11 - "The Boland Amendment was not contained in the same
appropriations bill that provides funds for the NSC. The
Department of Defense Appropriations Act includes all of the
traditional elements of the Intelligence Community. The
National Security Council, in contrast, is and traditionally
has been funded together with the rest of the White House in
an entirely separate appropriations bill for Treasury,
Postal Service and General Government that is considered by
a separate appropriations subcommittee. If Congress had
intended to cover the funds made available to the NSC staff
for salaries, in other words, it could easily have followed
the broad language of the Clark Amendment, the Arms Export